Max finds more high-grade copper and silver at Cesar

As a general rule, the most successful man in life is the man who has the best information

 

2020.04.03

Max Resource Corp. (TSX-V:MXR) continues to make good headway at its Cesar Copper + Silver Project in Colombia, having just discovered a new zone and extended an existing zone.

Since November, Max's geological teams and prospectors have been identifying copper and silver targets in the 100 km x 20 km target area at Cesar, using rock chip sampling to identify structures, continuity of thickness, and strike length, to determine potential size prior to drilling.

The company is following the theory that continuous rock chip samples are pointing to a giant sediment-hosted copper+silver mineralized system.

Wednesday’s news release concerns its AM South discovery - which features a stratabound copper-silver horizon, with mineralized structures totaling over 5 km of strike length. Earlier this year, sampling from 0.1 to 25-meter intervals returned highlight values of 5.4% copper and 63 g/t silver. 

Having recently discovered a 10-meter by 2-meter panel which returned copper and silver grades of 3.5% Cu + 26 g/t Ag, the 1.4-km stratabound copper-silver horizon has been extended 1,000m, to 2,400m. (2.4 km). The new area is shown on the map below as a dotted yellow line. 

Max says it will conduct infill sampling to determine whether there is more mineralization along the dotted yellow line. 

Max also reported a new discovery, AM-2, located 500 meters south of AM-1, represented by the lower solid yellow line.

The new zone extends for 1,000 meters, and is open along strike and dip. The fact that it is parallel to AM-2 strongly suggests stacked horizons.

That is an intriguing thought, because it would verify Max’s geological theory of “Kupfershiefer”-style mineralization. Assays at AM-2 are pending. 

 

 

Forty kilometers away, exploration results are pending at the “AM North” zone, containing two mineralized areas from which rock chip samples were taken. 

The AMN-1 zone returned impressive values of 10.4% copper and 88 g/t silver over a 1-meter interval, along 1,800m of strike. 

AMN-2 returned 24.8% copper + 230 g/t silver over a 4m x 1m rock chip panel discovery. 

In a Feb. 27 news release, Max notes AM North and AM South are both hosted in well-bedded sandstone-siltstone. They appear to be large sub-horizontal sheets, that partly outcrop at surface. 

“Ongoing exploration continues to build confidence in CESAR as a significant discovery of regional scale,” said Max’s CEO, Brett Matich. “The Company is working towards a 3D model to assess the potential size of the CESAR copper-silver project.” 

In an earlier interview with AOTH, Max’s head geologist, Piotr Lutynski, said Colombia’s stratigraphy is similar to his homeland, Poland, and its cluster of “Kupferschiefer” sediment-hosted copper-silver deposits.

Other metals recovered from copper ores at Poland’s Kupferschiefer deposits include gold, platinum, palladium and rhenium. According to the US Geological Survey, the massive volume of metal in Poland's Kupferschiefer deposits is due to continuous mineralization that extends down dip and laterally for kilometers.

Max cautions investors that the mineralization at Cesar is not necessarily indicative of similar mineralization in Poland.

It plans to bring in a major copper company as a partner, that can help finance a drill program at Cesar and bring it to a resource, then complete the rest of the steps (PEA, prefeasibility study, feasibility study, permits, etc.) required to build a mine. 

North Choco Gold and Copper Project

Max’s North Choco Gold and Copper Project features the high-grade NW gold-copper discovery, where continuous rock chip samples returned an impressive 49.8 grams per tonne gold and 4.3% copper. Max notes the open-ended discovery has similar geology to AngloGold Ashanti’s 2005 Quebradona gold-copper discovery, and IAMGold’s 2010 Caramanta gold-copper showing, located a respective 12 km northeast and 6 km west of NW. 

Quebradona has a 2014 inferred mineral resource containing 6.1 million ounces of gold, 3.95Mt copper, and four additional porphyry centers. A porphyry is a geological term for a large mass of mineralized igneous rock, that is often suitable for bulk mining. Caramata hosts five porphyry centers, where several drill intersections logged +1 g/t gold, including one intercept that cut 460.6m at 1.4 g/t gold-equivalent. 

Copper market 

While AM North and AM South are each potentially stand-alone projects, we are very interested to see whether additional copper and silver showings, at significant grades, can be identified along that 40-km zone to call it a mineralized district. As Max continues to explore Cesar this year, it may receive a welcome lift from copper prices. 

In a recent report, Fitch analysts revised their 2020 copper price upward by $200 per tonne, from $5,700 to $5,900, writing that they expect increased stimulus from the Chinese government to raise copper prices in the second half of the year. 

The current stock market rout is pulling the world economy down into what many fear could result in a global recession. Yet behind the apocalyptic headlines and angst-filled news reports, things are leveling off in China. 

Some factories closed in February have re-opened, and Beijing is eyeing a $570 billion infrastructure build-out, not unlike its stimulus package of 2008, to get the economy back on track. 

Among the projects that could receive a huge boost in investment, courtesy of a government rescue package, are a $44.2 billion expansion to Shanghai’s urban rail transit system, an intercity railway along the Yangtze River ($34.3B), and eight new metro lines worth $21.7 billion, to be constructed in the virus epicenter city of Wuhan. 

A massive infrastructure spending push by China and, possibly, the United States, could help to ameliorate the devastating economic impacts of covid-19, by shoring up demand for base metals like copper, nickel and zinc. 

In its 2016 report card, the American Society of Civil Engineers projected the country needed to spend about $450 billion per year to maintain an adequate level of infrastructure through 2020. This compares with actual expenditure projections of about $250 billion per year, leaving an annual “infrastructure gap” of $200 billion. 

Recently President Trump took to Twitter to repeat his pledge for infrastructure renewal, urging Congress to pass a $2 trillion plan for improving the country’s roads, bridges, water systems and broadband Internet: 

“With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4,” Trump tweeted.

A report by Roskill forecasts total copper consumption will exceed 43 million tonnes by 2035, driven by population and GDP growth, urbanization and electricity demand. Electric vehicles and associated charging infrastructure may contribute between 3.1 and 4 million tonnes of net growth by 2035, according to Roskill.

A lot of copper is also expected to be required to generate and store electric power. There is a movement away from large, remote, utility-scale power plants, towards thousands of distributed energy sources (DERs) situated closer to end users. These “microgrids” will be “smart”, in that data about generation and usage will stream back and forth between control centers and customers. And more microgrids will be hooked up to renewable energy sources like wind and solar. 

There’s also the global 5G buildout. Even though 5G is wireless, its deployment involves a lot of fiber and copper cable to connect equipment. 

But over the next two years, copper supply is expected to be weak in relation to all the demand factors mentioned.

Existing copper mines just aren’t able to crank out as much production that they must, to ensure all the demand bases are covered. 
As we wrote in The coming copper crunch, by 2035, without major new mines up and running to replace the ore that is being depleted from existing copper mines, we are looking at a 15-million-tonne supply deficit by 2035. 

The current copper pipeline is the lowest it’s been in a century. New supply is concentrated in just five mines - Chile’s Escondida, Spence and Quebrada Blanca, Cobre Panama, and Kamoto in the DRC.

A wave of popular discontent has washed over Chile, based on yawning inequality, and the country has major problems with expanding production due to water scarcity. The politically unstable, corrupt DRC is a place most mining companies want to avoid.

And while these mines are expected to account for 80% of base-case output increases between 2018 and 2022, their profitability depends on the copper price staying above $5,000 a tonne, according to analysts at Bank of America Merrill Lynch. Copper is currently trading at $4,771.91 per tonne. 

That means exploration for new copper deposits that are large and high-grade enough to be economically brought into production is of primary importance to the mining industry. Especially considering that the demand side of the equation, despite the current lull in China, is only going to get stronger. 

Right now the copper market is suffering due to the coronavirus and trade wars but we expect these to be temporary phenomena. All they mean is a delay in the inevitable copper surge that is coming - when trade impediments are solved and the covid-19 pandemic is contained, hopefully eradicated, we expect copper prices to rise again and copper miners and explorers to do very well.

 

Max Resource Corp.
TSX-V:MXR
Cdn$0.075, 2020.04.02
Shares Outstanding 27,906,155m
Market cap Cdn$2,092,961m
MXR website

Richard (Rick) Mills
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