Kodiak Copper – Right people, right project, right location, right time – Richard Mills

2024-05-28

Mineral exploration is as much a collection of data as a hunt for metals, making it a field perfectly suited to artificial intelligence (AI).

Kodiak Copperis at the forefront of the shift to utilization of new technology suitable for better identifying new exploration targets and verifying existing ones.

The Discovery Group company is one of just four clients beta-testing the VRIFY Artificial Intelligence targeting software on its MPD copper-gold porphyry project in southern British Columbia.

VRIFY uses a combination of deep learning and computer vision architectures to train predictive models with data from various exploration features like geology, geophysics, drill holes, rock geochemistry, and mineral occurrences. VRIFY’s system then combines data embedding with supervised predictive models to generate a prospectivity score, enabling probable predictions of mineralized areas.

We’ll take a deep dive into how Kodiak is using VRIFY at MPD, but first, an introduction to the company and its flagship project.

Kodiak Copper (TSXV:KDK, OTCQB:KDKCF, Frankfurt:5DD1)

Kodiak Copper was established by chairman Chris Taylor of Great Bear fame. The founder and CEO of Great Bear Resources presided over its acquisition by Kinross Gold in 2022 for $1.8 billion. Kodiak, a Discovery Group company, is led by Claudia Tornquist, previously the general manager at Rio Tinto, working with Rio’s copper operations. She was also the former director of Kennady Diamonds, leading the $176M sale of the company to Mountain Province Diamonds.

Jeff Ward as VP Exploration has managed Kodiak’s field programs for the past six years. The veteran geologist has held senior positions in companies involved in grass-roots exploration to advanced evaluation, resource definition and feasibility assessment. Prior to joining Kodiak Copper, Ward was president of Kivalliq Energy, and held a management position with Ashton Mining/ Stornoway Diamond.

Rounding out the management team are Dave Skelton as VP Project Management, Nancy Curry as VP Corporate Development, and Emily McNie as Director of Operations & Sustainability.

MPD project

In 2018 Kodiak acquired 32 mineral claims as a single land package, which consolidated three historical prospect areas for the first time — Man, Prime and Dillard. An adjoining 25 claims were added in 2021, known as MPD South or Axe, with another 11 prospective claims added to the southern project area in 2023.

The MPD property is surrounded by several producing and past-producing mines. The producers are Copper Mountain to the south, Highland Valley in the north, and New Afton, close to Kamloops, re-opened by New Gold in 2012.

The project lies within the southern portion of the Quesnel Terrane, British Columbia’s main copper-producing belt.

Historical drilling saw 384 holes completed since the 1960s by previous operators. Most of the drills tested mineralization from surface, with holes rarely testing below 200m depth.

Over the past four years, Kodiak Copper has completed 123 drill holes or 74,804 meters.

The company tasted success during its maiden drill program in 2019, with the discovery of the Gate Zone.

According to a project summary, 2020 marked the “transformative discovery” of a high-grade copper-gold zone within a wider mineralized envelope of significant size at the Gate Zone. The drill intercepts featured the highest grades in the +70-year history of the property.

The best hit was 535m of 0.49% copper and 0.29 g/t gold, including 282m of 0.70% copper and 0.49 g/t gold. Within this section was an even higher-grade 45.7m of 1.41% copper and 1.46 g/t gold.

Large drill programs in 2021 and 2022 extended the Gate Zone to 1 km x 350m, 900m depth and still open. Drilling continued to highlight significant copper-gold grades over substantial intervals and the Company found a new mineralized trend parallel to Gate at the Prime Zone (400m x 200m, 750m depth to date).

2023 exploration

The 2023 program drill-tested multiple targets, aiming to build critical mass and demonstrate MPD’s size potential. The mineralization was significantly expanded at the West, Man and South zones. The program showed that MPD hosts multiple kilometer-scale mineralized zones, including mineralization starting from surface and high-grade intervals.

Five new targets were identified — Agie, Leeside, Celeste, Orbit and Comet — bringing the number of prospective areas to 24, of which only eight have been drilled by Kodiak to date.

Regional work confirmed significant copper-gold porphyry mineralization stretching for 20 kilometers across numerous target areas, consistent with multiple porphyry centers and highlighting the district-scale potential of the MPD project.

Two new target areas are considered drill-ready: Blue and Celeste. 

Kodiak’s 2023 program included the collection of 2,705 soil samples, 57 rock samples, a 3D IP survey over 2.6 square kilometers, geological and geotechnical studies.

In April of this year, Kodiak Copper reported a new copper discovery at the 1516 Zone, along with final 2023 drill results.

1516 was the second zone unearthed by Kodiak following its initial Gate Zone discovery.

The new 1516 Zone is interpreted to be part of a larger, multi-centered 4.5 square km porphyry system that also hosts the South, Mid and Adit zones, based on drill core chemistry and historic copper in soils.

Final results from holes drilled in 2023 at the West, South and Man zones infill previous work and show large extents of mineralization from surface and to substantial depths. According to Kodiak, these areas continue to be priority targets for further drilling.

2024 plans

The company has submitted its plans for 2024 exploration, assisted by VRIFY artificial-intelligence software, which has generated potential new areas of interest (AOI).

In its May 8 news release, Kodiak says the program will drill new targets developed by Kodiak’s exploration team and VRIFY’s predictive modeling, and include further drilling to expand the near-surface mineralization envelopes within and adjacent to existing zones.

Kodiak has identified 24 drill-confirmed zones and prospective target areas on the MPD project. As mentioned only eight have seen drilling: Gate, Prime, Man, Dillard, Beyer, 1516, West and South zones. 

VRIFY has recognized nine AOIs, either adjacent to known copper-porphyry zones (Gamma, Zeta, Epsilon, Lambda, Omega and Sigma), or as new priority regions (Omicron, Iota and Tau) which merit follow-up.

Six target areas warrant new or further drill testing in 2024: two at MPD North (Belcarra and Blue) and four at MPD South (1516, South, Adit and Celeste). The targeting strategy involves the integration of existing data and AI model results.  

A drill program of 10,000 meters is planned in 2024, focused on multiple drill-ready targets in the MPD North and South project areas, with the goal of locating high-grade mineralization in and around known zones or making new discoveries.

VRIFY

This year’s field program at MPD is unique for Kodiak Copper in that artificial intelligence (AI) is being used to generate and confirm drill targets.

“I have no doubt that AI will revolutionize mineral exploration by vastly improving the integration and evaluation of large geological data sets, thus accelerating drill targeting, enhancing efficiency and reducing exploration costs,” CEO Claudia Tornquist said in a March 4 news release. She added:

“MPD is well suited to AI-enhanced exploration as it is a treasure trove of data, with Kodiak’s extensive project database complemented by historic information spanning many decades.”

The latter is an important distinction to make about VRIFY and other AI targeting software.

In a panel discussion at this year’s PDAC in Toronto, Franco-Nevada founder and chair emeritus Pierre Lassonde said AI has the potential to revolutionize the exploration process, but he added a caveat. To be effective, it needs a lot of data from drill programs and assay results.

Also, while AI is exciting for juniors with more advanced properties, it is not exactly new to the mining industry. At the PDAC conference, Kodiak’s Chairman & former president and CEO of Great Bear Resources Chris Taylor said the company’s use of machine-learning tools was instrumental in making the Dixie gold deposit discovery in Ontario.

“Every geologist that I know, every person that was instrumental in the Great Bear discovery, was already doing both computer modeling and interpretation and traditional field geology. So it’s not like there’s a dichotomy. These are tools that we’ve been using for a long time,” Taylor said during a panel hosted by VRIFY’s CEO Steve de Jong.

Specifically, geographic information system (GIS) programs such as Esri’s ArcGIS have been used to help model exploration data since the mid-1980s.

In an article on AI and mining, Investing News Network reports, The data modeling tools used by Great Bear are still widely employed in the mining industry, but are beginning a new phase of evolution as AI and machine learning are more widely adopted and more closely integrated into GIS tools.

So how is Kodiak Copper using VRIFY, and how effective has it been? During a recent talk with AOTH, VP Project Management, Dave Skelton said the company started working with VRIFY by handing over all of its data — including information from geophysical surveys, geochemical surveys and mapping. VRIFY then crunches the client’s data to “learn” about known mineralization, and then “predicts” new areas of interest.

VRIFY works by adding more “layers” such as topography and geology, and through a learning process, deciphers what features are responsible for, in Kodiak’s case, copper mineralization. 

Kodiak ran a variety of regional and local iterations with the AI software: copper, copper-molybdenum, and copper-gold. Skelton said the software collates dozens of layers of data, something he suggested would be difficult and time consuming for a human field crew.

“We can talk about one or two or three of these different layers or features quite easily but we can’t talk about 30. We have 33 in one of the most data-dense areas and so it’s generated a lot of discussion about why is the AI seeing something in a certain area and not in another?”

VRIFY is doing two things for Kodiak Copper: it is validating anomalies already found, and it is generating new areas of interest to be followed up on.

“It’s important to understand that these VRIFY targets are not drill targets, they’re really areas of interest, because the AI looks at all of those different parameters and thinks that there’s something there. There’s a reason for it to pick it but it’s not a drill target right away, because you probably have to feed a bit more data into it to firm that up,” Skelton said.

In other words, VRIFY does not replace, but compliments boots-on-the ground mapping, prospecting, sample taking, and geophysical surveys.

“We might end up doing more geophysics for example or maybe more soil geochem because that’s what it thinks is important in those areas,” said Skelton, clarifying he wouldn’t sink a drill hole into an area of interest generated by AI alone.

Kodiak Copper’s 2024 exploration program, for example, envisions 25 line kilometers of 3D IP (induced polarization) and a 2,000-sample soil geochemical survey.

Tornquist said she’s excited about using VRIFY because of its potential for accelerating the exploration process.

“If you look back the last couple of years we identified two or three new targets or areas of interest per year with sampling, mapping and prospecting, so it’s quite a sequential process,” she said, “Whereas when we  threw more computer power at it the AI highlighted nine areas of interest. We can now check those out, determine which are the most prospective and work on them first. Had we done it in the conventional way we might have gotten to those same nine areas, but it might have taken us three to four years and we might have found the best one only in year three. To have more areas of interest identified right from the start through the AI work is in my mind is a very valuable exercise,” she said.

ICP

Artificial intelligence isn’t the only new technology that Kodiak Copper is trying out this year.

In May, the company contracted ICP Securities to provide automated market making services, including use of its proprietary algorithm, ICP Premium™.

It’s no secret that junior resource companies have been hurt by so-called “algo” traders who use complex algorithms to buy and sell blocks of shares. Often the algorithm “shorts” the stock, meaning it places a bet on the share price dropping.

According to ICP’s website, Market makers are financial firms or individuals that stand ready to buy and sell securities at publicly quoted prices. They provide liquidity to the market by continuously quoting bid and ask prices and facilitating trading activity. In essence, market makers act as intermediaries between buyers and sellers, ensuring that there is a smooth flow of trading in the market.

“Essentially they are a ‘friendly’ algorithm that trades on behalf of the company and the company’s interest to counter-balance any detrimental algo trading that there might be, like anyone who is trying to short you, or playing games in the market.” Tornquist explained.

Conclusion

The facts:

• Kodiak has a proven track record of making multiple discoveries without new VRIFY AI

• Management “has been there and done that” ie. Taylor, Robins and Tornquist’s proven success

• Innovation – using market-makers like ICP to protect shareholders

• Technology – using artificial-intelligence software like VRIFY that utilizes machine-learning to generate areas of interest on a mining property, means Kodiak Copper has definitely set itself apart from other juniors through its embrace of technology

• Right people, right project, right location, right time

I love technology, I love the fact KDK is embracing predictive AI, and I will, presumably with a lot of others, be watching closely to see how VRIFY performs at Kodiak Copper’s MPD project this summer. Success could mean a technological breakthrough rarely seen in our industry.

But let’s not take our eyes off what’s truly important…

Right people, right project, right location, right time

Kodiak has made discovery after discovery in significant copper-gold porphyry mineralization stretching for 20 kilometers with numerous target areas, consistent with multiple porphyry centers that highlights the district-scale potential of the MPD project.

A drill program of 10,000 meters is planned in 2024, focused on multiple drill-ready targets in the MPD North and South project areas, with the goal of locating high-grade mineralization in and around known zones or making new discoveries.

Kodiak Copper
TSXV:KDK
Cdn$0.58 2024.05.23
Shared Outstanding 64.1m
Market cap Cdn$37.1m
KDK website 

Richard (Rick) Mills
aheadoftheherd.com
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