Max makes high-grade copper-silver discovery

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



Good ol’ boots-on-the-ground prospecting by Max Resource (TSX-V:MXR) geologists has borne some sweet fruit in the form of a major discovery within its Cesar block of claims north of Medellin, Colombia. 

Dubbed the AM Horizon, the discovery features a stratabound copper-silver horizon that trends northeast-southwest in excess of 1.4 kilometers. The mineralized system appears to be open in both directions and dips down about 40 degrees to the northwest. 

What’s remarkable about this discovery, apart from the fact that it is brand new - a true greenfield site with no historical exploration done - is the high copper grades. 

“We are very excited with this notable discovery with highlight copper grades of 2.7%, associated silver grades to 18 g/t and strike lengths in excess of 1,400 meters. There is obviously significant upside opportunity in this region,” Max’s CEO, Brett Matich, stated in the Jan. 21 news release. No kidding.

According to the news, rock chip sample assays include an eye-popping:  

  • 2.7% copper and 17.9g/t silver over 0.5m;
  • 2.1% copper and 8.8g/t silver over 3m by 3m panel;
  • 1.6% copper and 8.2g/t silver over 3m by 3m panel;
  • 1.1% copper and 14.2g/t silver over 3m by 3m panel;
  • 1.0% copper and 8.1g/t silver over 1.2m

These are phenomenal copper grades that any copper explorer would be thrilled to find, more typically, within a porphyry, skarn or vein deposit, but Cesar hosts sedimentary copper, a less common but highly prospective type of copper mineralization. 

Sedimentary copper deposits are formed in ocean basins, where the seabed is composed of porous materials such as sandstone, limestone and black shale, through which copper and other minerals travel up and become trapped in the rock layers.   

The process of mineral deposition is quite different from a copper porphyry deposit, which is formed when a block of molten-rock magma cools. Copper porphyries can be visualized as a bag of flour with millions of grains of rice, where the grains are tiny pieces of copper and other minerals, spread throughout a large area, whereas sedimentary copper deposits are like a stack of books. Sedimentaries may also be tabular in form, though frequently folded and faulted. 

The biggest sedimentary copper deposits are found in three basins: the Paleoproterozoic Kodaro-Udokan basin of Siberia, the Neoproterozoic Katangan basin of south-central Africa, and the Permian Zechstein basin of northern Europe.

On Tuesday AOTH spoke to Matich and Max's head geologist, Piotr Lutynski, about the AM Horizon discovery. Before we get into the nitty gritty, a bit of background on why we continue to love copper, and the very exciting area play that is developing in the Andean Copper Belt where Max is working its Cesar project. 

Copper traders turn bullish 

The fundamentals for copper look extremely positive in the wake of a Phase 1 trade deal between the United States and China, and that is good news both for producers and copper juniors searching for new deposits of the red metal. 

The US-China trade war has weighed on prices, not only of copper but other base metals such as iron ore and zinc, for going on two years, even as warehouse inventories drop and there is a chronic under-investment in new mines to replace depleted mineral reserves. 

Things began to turn around in August, on heightened prospects of a trade war resolution between the world’s number one and two economies. China is the world’s top copper buyer, consuming around half of global shipments. Also, as central banks embarked on a path of monetary easing, including lower interest rates, demand for a number of raw materials including copper has been goosed. 

Last week following the signing of the Phase 1 agreement, London Metal Exchange copper hit a 9-month high of $2.87 a pound, prompting metals traders to place bullish bets on copper futures. 

For the first time since April 2019, traders are net long of the CME copper contract. Reuters reports funds turning net long around the middle of December and staying so ever since, last week hitting nearly 7,000 contracts. A similar trend has developed in the London market, according to the Commitments of Traders Report (COTR), which showed funds also turning net long in December. Up to Jan. 10 investment funds held a collective net long position of 5,433 lots. 

Copper’s sensitivity to economic growth has earned its “Dr. Copper” moniker. 

Because copper is used in a number of sectors - construction (plumbing, wiring), communications, power distribution and transportation - prices rise and fall on expectations of future demand. It is a leading indicator of economic output. 

It’s not only the promise of increased demand from a trade deal that has lit a fire under copper prices.

Warehouse inventories have been dropping; Europe and developed Asia have reportedly de-stocked aggressively over the past six months, as their economies improve.

In New York, Shanghai and London warehouses, copper stocks have fallen dramatically, to a collective 302,400 tonnes held at the end of December, down 48,000 tonnes on the year, and the lowest end-of-month levels since 2014. 

China’s purchasing managers index (PMI) - a key predictor of metals demand - expanded in December for the second straight month. Europe’s latest industrial output figures offer hope that its manufacturing slump has bottomed. 

Between January and November of 2019, Chinese copper concentrate imports rose to 20.1 million tonnes, about 10% higher than the first 11 months of 2018. Trade data shows imports of refined metal at their highest since March, 2016 and concentrate shipments setting a record high. 

It’s a challenge for mines to keep up. The base metal is heading for a supply shortage by the early 2020s; in fact the copper market is already showing signs of tightening - something we at AOTH have covered extensively

According to International Copper Study Group, world mine production fell 0.4% over the first nine months of 2019. An analyst at BMO Capital Markets quoted by Reuters says 2020 will see the largest supply-demand deficit in the past decade. 

Supply is tightening owing to events in Indonesia and South America, where most of the world’s copper is mined. 

Copper concentrate exports from Indonesia’s Grasberg, the world’s second biggest copper mine, have plunged dramatically as operations shift from open pit to underground.

Major South American copper miners have also been forced to cut production. State-owned Codelco has said it will scale back an ambitious $40-billion plan to upgrade its mines over the next decade, after reporting a drop in earnings, a prolonged strike at Chuquicamata and lower metals prices. The world’s largest copper company also said it will reduce spending through 2028 by 20%, or $8 billion. 

Meanwhile demand for copper keeps going up and up. Copper products are needed in homes, vehicles, computers, TVs, microwaves, public transportation systems (trains, airplanes) and the latest copper consumable, electric vehicles. In EVs, copper is a major component used in the electric motor, batteries, inverters, wiring and in charging stations. 

The Paris-based International Energy Agency forecasts a more than quadrupling of EV sales in the next decade, from 5.1 million in 2018 to 23 million in 2030. Research quoted in Barron’s said the mining industry will need to produce 5 million tonnes of copper a month by 2030, which is about 2.5 times the amount produced this year, just to meet demand from EVs.

The bullish copper fundamentals have several international banks predicting copper demand and prices will keep rising. Citigroup is predicting a 2.6% jump in Chinese copper consumption next year, due to investments in the power grid and fresh automobile demand. BMO and Goldman Sachs, the renowned investment bank, are most sanguine on the copper market, with Goldman seeing prices heading to $3.17 per pound in 2020, and BMO forecasting a long-term copper price of $3.25/lb.  

Andean Copper area play 

We recently introduced readers to a copper belt of district-size scale, we believe we’ve tapped into, along with a few select companies conducting surveys and drilling for the next big copper mine. 

The Andean Copper Belt runs from northern Chile in the south, through Ecuador and Colombia, then arcs northwest into Panama. It hosts some huge copper porphyry (and gold, molybdenum) deposits including Escondida, Chuquicamata, Las Bambas and Collahuasi. 

The area’s geology is among the Earth’s most richly mineralized. The North Andean copper-gold province is a 2,500-kilometer mineralized arc that formed on the western edge of South America’s complex Proterozoic and Archaean shield, during the Lower Paleozoic era, around 300 million years ago. A complex of Cretaceous-era terranes (pieces of crust, broken from tectonic plates) was forged on the northwest margin of South America, connecting it to the southern tip of North America sometime between the Oligocene and Miocene epochs. 

The largest copper-molybdenum porphyry deposits are at Cerro Verde-Santa Rosa, Cuajone, Quellaveco and Toquepala in southern Peru, and Mocha, Cerro Colorado, Spence and Lomas Bayas in northern Chile. Mainly copper porphyry deposits, with moly and gold kickers, occur in Chile at the Collahuasi, Quebrada Blanca, Chuquicamata, Escondida and El Salvador mines.

Under-explored parts 

The Andean Copper Belt represents nearly half of the world’s copper production, but some of the parts underlying Colombia, Peru and Ecuador remain hugely under-explored. 

Australia’s SolGold (TSX:SOLG) has had success in northern Ecuador, having discovered a new copper-gold-moly porphyry system at its Santa Martha target. SolGold continues to advance its Alpala deposit, located on the northern section of the Andean Copper Belt - which represents nearly half of the world’s copper production. 

While there is just one producing copper mine in Colombia, in the northwestern department of Choco, the government is hoping to diversify from gold, oil and coal, into the red metal. 

Recent geological studies found copper mineralization in not only Choco but Antioquia, Córdoba, Cesar, La Guajira and Nariño departments.

A 2016 peace agreement between the government and the largest Marxist rebel group has stabilized the South American country and opened it up to foreign investment. This has allowed Colombia to explore for minerals in previously inaccessible areas. 

Meanwhile, exploration companies continue to drill targets in Colombia, Peru and Ecuador, and court partners to help them to develop their projects further. 

Max Resource (TSX.V:MXR) 

Max Resource’s (TSX.V:MXR) two sedimentary hosted copper/ silver targets are Cesar and La Guajira. The company also holds gold exploration applications in the Choco and porphyry copper/ gold North Choco areas. 

In an earlier interview, Lutynski, told AOTH that Colombia’s stratigraphy is similar to his homeland, Poland, and its Kupferschiefer sedimentary copper deposits. KGHM Polska Miedź (KGHM), the sole producer of copper in Poland, mined 30.252Mt of ore at 1.49% Cu and 48.6 g/t Ag, comprising 452,000t of Cu and 1,471t of Ag in 2018.

In-country crews at Cesar have been looking for surface outcrops, that Max thinks could be the tip of the iceberg of a giant sediment-hosted copper system below surface. The company has identified a 70 x 20-km copper-silver target area with up to 2% combined copper and silver. Eighteen outcrops identified over 9 square km indicate mineralization is open in all directions. Grades ranged from 0.3% to 4.2% copper and up to 116 g/t silver; 27 of 36 assays exceeded 1% Cu; 15 of the 43 more than 2% Cu; and 3 exceeded 3% copper.

Initial exploration at Cesar, a rock sampling program, reported grab sample assays ranging from 0.3% copper to 4.2% Cu, and 1 to 116 grams per tonne silver. Chip sampling assay results are expected soon. Recent photos from the site show visible copper oxide mineralization in samples. 

Over the past couple of months Max has been concentrating on areas in and around the 70 x 20-km copper-silver target area described above - as mentioned, sending geologists to take measurements and samples from known showings at surface. 

Tipped off by the green-hued rock, a tell-tale sign of copper oxidation, at one outcrop, the geologists followed the visible signs of mineralization for a continuous outcrop interval of about 400 meters. A virtually identical outcrop was found 1 km away, begging the obvious question: Is the 1-kilometer area in-between outcrops also mineralized? 

Horizon Discovery Strike of 1.4km Open in All Directions

Rock chip samples taken from three 3m x 3m panels are certainly encouraging. Grades ranged from 1.11% to 2.11% Cu; 22 samples had widths from 0.5m to 50m, at grades of 0.01% to 2.69% Cu. Silver values ranged from 0.25 g/t to 17.9 g/t Ag.  

“We know it’s sediment-hosted mineralization,” he said, noting the copper/ silver values and the continuity seems to be good. “We’re finding it on Cesar as well as the other properties that we explore around Cesar so as far as grades go they’re in a mineable range. We found an over-kilometer-long structure that could be a potential drill target, a mine if we’re lucky.” 

However it’s not so much the prospect of building a mine out of the AM Horizon, that is driving excitement at Cesar right now; it the prospect of finding one, two, three or more similar horizons amongst Max’s claims, that if they can be linked together, would form a district-size, maybe even a regional copper project of significant scale and expansion potential to interest a major mining company. 

One can imagine the sparkle in his eyes, hearing Lutynski talk about the possibility of bringing on a partner to sink some drill holes into targets and expand Max’s target area beyond the current 70 X 20-km. 

“These targets are good enough, in my opinion, to present to majors, especially ones looking for copper and silver. I’m quite comfortable showing the data because I think we start to have a package that makes sense geologically. At this stage we’ve definitely demonstrated we’re in a big system, a huge system.” 

(Anglo American, AngloGold Ashanti, Cordoba Minerals and privately held Minera Cobre, partially owned by First Quantum Minerals, are among the companies exploring for copper (and gold) in the Andean Copper Belt.)

A big high-grade system, if initial rock chip assays are a guide. 

Plugging median values from the 3m x 3m-panel copper/ silver grades (2.1% Cu and 8.8 Ag) into a dollar-per-tonne formula spits out $134 per tonne rock! 

“We are getting some impressive grades in my view,” Lutynski enthuses, repeating his optimism about piquing major miner interest: “We’re just starting, the grades justify some momentum and I think they justify some attention from larger companies, at least to be on their watch list.”

Going beyond the 1.4-km AM Horizon target, Max is looking to stake ground to the west, and has identified a very interesting target in the Horseshoe claim about 60 km north of the Cesar claim. Above one side of a creek, geologists found a 15 to 20-meter cliff of copper-stained rock that could be drilled into from a plateau above the creek. 

Although, whether Max moves forward with the prospect of drilling at Horseshoe, AM Horizon or another target at Cesar, is an open question. 

According to CEO Brett Matich the business plan going forward is to identify enough mineralized areas in different locations to demonstrate how extensive the system is. At that point, Matich believes they can bring in a partner “that has the balance sheet to be able to do a lot of this staking. That’s really the plan, not just areas ‘in situ’ but to see how extensive the whole basin is,” he told AOTH. 

Lutynski agrees, asserting that “To me we don’t really need to prove the resource, we need to prove the concept, and the model is holding. He describes the basin in which they’re working as “like a piano keyboard,” [where the keys are vertical] covered with folds and down-drop and lifted blocks. 

“It’s a sediment-hosted or stratabound system.. somebody else can spend the money and do the regional drilling.” 


At Ahead of the Herd, we tend to agree. Sometimes an excellent strategy for a junior to follow is not depleting its treasury through expensive drill programs, but rather raising the profile of its property(ies) enough to have a larger company either purchase the project (often acquiring the junior too), or structuring an earn-in agreement whereby the larger company “earns in” its stake in the project through a series of payments and/or exploration spending milestones. 

At 28 million shares outstanding following a 6 for 1 rollback, it would make sense for Max Resource to avoid share dilution by selling its Cesar project to the highest major mining company bidder. 

Of course it’s still early days in terms of this exploration play. The most important take-away from Tuesday’s news release is the map showing the “Horizon Discovery Strike of 1.4 km Open in All Directions”. The first horizon has been found, how many more horizons are there on this sprawling 70 x 20-km target area? We think it could be the start of several more strike lengths found at different locations throughout, starting with the Horseshoe zone to the north. 

The other point is the grades. Finding a +2% Cu bulk-mineable copper deposit is extremely rare, yet Max seems to have found a “white unicorn” at AM Horizon. The high-grade chip sampling over 3m by 3m panels are at mineable widths and grades - it’s striking to see such a concentration in a 100%-owned area. They have, of course, plans to drill-test but Max doesn’t need to take that on. 

It’s also exciting to see Max starting to build a copper exploration and discovery story in the heart of a vast, underexplored basin that has regional opportunity written all over it. MXR is the first mover in this emerging area play that could attracts dozens of copper juniors eager to stake claims. 

As this copper-silver story unfolds, we can’t wait to see what comes next.

Max Resources
TSX.V:MXR, OTC:MXROF, Frankfurt:M1D2
Cdn$0.14 2020.01.21
Shares Outstanding 27,906,155m
Market cap Cdn$3,906,155m
MXR website

Richard (Rick) Mills
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