"The vision for Soledad has always been a number of high-grade mineralized breccia pipes, vertically extensive and very close together, containing copper, gold and silver, with the ability to mine several of these pipes at the same time."

David Kelley

PRESIDENT & CEO, CHAKANA COPPER

March 03, 2021

Can you tell us about the milestones achieved by Chakana Copper in 2020, including the three new discoveries made at Soledad since drilling recommenced in August?

During the Covid lockdown in Peru, we were able to get the permit approved to drill in the central part of the project area, where we had previously only done surface work. This was a critical milestone, as we were well funded from the Gold Fields transaction and started drilling some very attractive targets.

We started at Paloma East, a fairly small outcropping breccia pipe, which gets considerably bigger at depth. We then moved 150 meters (m) to the west and tested another breccia pipe, Paloma West, with a slightly bigger footprint at surface and very high grades. Finally, we moved over to the Huancarama Breccia Complex, which is one of the targets we were most excited about, with five principal breccia’s cropping out at surface.

What has been your approach to drilling the new targets at Soledad?

We have been doing scout drilling, where we generally drill about eight to 10 holes at each new target to try to see if there is high-grade mineralization and to get a sense of the geometry of the mineralization. This allows us to set aside a new discovery for future infill drilling while still preserving additional meters to test additional targets.

We have always had the belief that these breccias are like fingers on a hand, which as your go deeper coalesce into one larger Breccia body. Our scout drilling is ongoing, but we have already confirmed that on the eastern half of the Huancarama Breccia Complex, two of the breccias do coalesce at depth, forming a larger breccia body with dimensions of about 100 m by 60 m in a horizontal extent. This target at Huancarama has mineralization open at depth, which we have drilled from surface down to about 225 m.

What have exploration results so far told you about the type of mine Soledad could become?

The vision for Soledad has always been a number of high-grade mineralized breccia pipes, vertically extensive and very close together, containing copper, gold and silver, with the ability to mine several of these pipes at the same time. The fact that these breccia pipes sit in a hillside with about 500 m of relief is a perfect setting to be able to get into the mineralized areas by simple development of horizontal tunnels to access working faces.

The scale of the mineralization we are seeing at the Paloma area, and the proximity of the breccia pipes, as well as Huancarama’s footprint, means that we can start considering the potential for small-scale open-pit mining. This would lend itself to a staged capex approach before moving underground. This creates additional optionality, which is what mining engineers have always loved about this project. You can put different breccia pipes into production, or multiple zones within a pipe into production.

In January 2021, Chakana announced a C$10 million private placement with Gold Fields increasing its ownership interest. Can you elaborate on this transaction?

When we announced the financing, we still had C$3.3 million in the treasury, which was enough to fund our current drilling campaign and get to a first resource. However, we recognized that these new discoveries will require substantial infill drilling, and we want to stay aggressive on the exploration side. Gold Fields has been a great partner from the beginning, and we meet monthly with their team, who have brought tremendous technical resources to the project. They were keen to see us ramp up and accelerate the program, and increased their equity position from 16.8% to 19.99%. We see this as validation for the project, the team that we have, and the work that we are doing.

Which areas are you targeting for the 2021 exploration campaign, and when can we expect a maiden resource?

For 2021, we have 26,000 m of drilling planned, consisting of 16,000 m of resource/infill at the new discoveries, with an additional 10,000 m of new target testing. We currently have a list of 92 targets on the property which are ranked systematically. The goal is to publish a maiden resource for Soleded in Q3 2021. This resource will be from six or seven breccia pipes down to approximately 300 m from surface, so we will still have considerable depth extent to explore in the future, in addition to new targets.

Once the resource is out, we will decide whether we do a PEA or stay aggressive with drilling to expand the resource. We will also be doing metallurgical and engineering studies, as well as expanding our permit to access more targets and explore underground.

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