Project of the Week: Hannan Metals San Martin Project, Peru

14th July 2021

Happy Wednesday my fellow rock lickers! Welcome back to Spotlight Mining’s Project of the Week, where we dissect some of junior mining’s most exciting, and perhaps less talked about exploration projects from all four corners of the Earth.

In the “spotlight” this week is Hannan Metal’s (TSXV:HAN) San Martin Cu-Ag prospect situated 30 kilometers NW of the town of Tarapoto in the north of Peru. This project is an early-stage greenfield operation and Hannan have first mover advantage for the deposit type they reckon the ground is prospective for. The Andes is a region known for its porphyry copper deposits including the Cerro Verde mine in the south of the country, which has an estimated 4+ billion tonnes of ore at 0.4% copper plus over 100 million ounces of silver. The San Martin prospect is not your typical Andean copper play however, Hannan hypothesise that they are dealing with a sedimentary hosted copper and silver system, similar to that of the Zambian Copper Belt in southern Africa, one of the largest copper producing districts in the world.

The team at Hannan has been scooping up concessions for the San Martin project and currently hold 656 km2 combined in exploration permits and permits under application, including 120 km of strike along prospective lithologies for sediment hosted Cu-Ag. This holding among several others across the region put Hannan Metals in the top 10 mineral concession land holders in Peru, just ahead of Rio Tinto.

As the area has been criminally under explored for metals until very recently, data to support geological models of the area was sparse, until data from previous petroleum exploration was made public and contained thousands of kilometers of seismic and aeromagnetic surveys along with a large suite of rock samples to be used for geochemical and petrographic studies. But what does this data and mapping of the area tell us about the geology? The sub-Andean basin lies to the east of the Andes mountain range and overlies a series of retro-arc foreland basins that were inverted during the Middle-Eocene and the Miocene. This event exposed a rift sequence initiated in the late Permian, composed of thick red beds, capped by basin wide evaporites; three features you’d want to see if looking for sed-hosted copper. The rift basin and impermeable cap of evaporites form a hydrologically closed system, trapping mineralising fluids and giving them time to scavenge, concentrate and deposit metals.

Figure 1. Deposit Model of the Cu-Ag system, showing the rift basin geometry and fluid migration paths through the stratigraphy.

Copper and silver is associated with the contact between highly oxidised red bed formations and reduced carbonaceous fine-grained sandstones. In copper districts you often see lots of wacky copper minerals and the San Martin area is no different, with the majority of copper being hosted as chalcocite rather than the more common chalcopyrite.

Figure 2. Cross section of the Sam Martin area with prospective horizons marked on and nice green mineralisation in grab samples from across the traverse.

So in theory, San Martin has most of the ingredients for a copper, and where are Hannan in terms of proving it? First pass fieldwork commenced in 2018, and consisted mainly of boulder sampling which actually yielded a few nice assays with  up to 8.3% copper and over 100 g/t silver. Similar sampling the following year along a different section of prospective ground provided similar results that culminated in a return for some large scale mapping until operations were paused due to the COVID-19 pandemic. This didn’t stop the exploration as remote sensing work continued from the desktop and resulted in the definition of new and extended mineralised trends through the use of multi-band spectral imaging.

Last year Hannan received permits for 43 of their concessions which includes permissions to carry out more advanced exploration, including drilling. This will be key for the near-term development of the project and the company, and they are scheduled to get the bits turning by the end of 2021. Drilling is not cheap as we know, and to help with paying for it all, Hannan Metals entered into a joint venture with Japan Oil, Gas and Metals National Corporation (JOGMEC) in November of 2020. This deal offers JOGMEC a controlling stake in the San Martin Project in exchange for funding US$8m in exploration expenditure over the next 4 years. This should allow a significant amount of follow-up and expansive exploration work to take place and lay the groundwork for a feasibility study following the initial period.

The reason this project caught my eye was its geographical setting and the context of potentially being the first discovery in a new copper terrane. This could be so important because we, as a society, need more greenfield discoveries being put into the mineral deposit pipeline. Currently most of the exploration undertaken and capital investment by major mining companies is in brownfield and near mine work to expand already producing or previously producing mines. Figure 3 shows the sharp decrease in the number of new discoveries being made across all commodities since 2008. The fact that this is occurring in a time of booming demand for technology (actually pretty much everything) that requires large amounts of metals is shocking (this article gives a nice summary of the situation).

Figure 3. Number of discoveries by commodity type going back to the turn of the century. Notice how much base metal discoveries have fallen since 2005, when these are and will b some of the most in demand raw materials of the next decade. Source: MinEx Consulting.

 

That’s all folks, until next week.

Dan

All information in the above article is sourced from the Hannan Metals website and video conferences with CEO unless otherwise stated.

Sources:

Hannan Metals:

https://www.hannanmetals.com/

Hannan Metals @ Metals Investor Forum, Jan 2021
https://www.youtube.com/watch?v=ID3hC6g0808&list=PLyDPcTo-mBNpiJXYV5qJmt3mvGArkIqHo&index=27&ab_channel=MetalsInvestorForum

MinEx Consulting: Trends in Exploration

https://minexconsulting.com/trends-in-exploration/

BBC News: “ Move to net zero 'inevitably means more mining' “

https://www.bbc.co.uk/news/science-environment-57234610