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Chakana Copper (TSXV: PERU) has elected to relinquish its option to acquire three concessions from Condor Resources (TSXV: CN) due to a lack of funding to complete its outstanding payments.
The concessions, if acquired, would make up approximately 25% of Chakana’s expanded Soledad copper-gold-silver project in Ancash, central Peru. The project is located 260 km north-northwest of Lima and 35 km south of Barrick’s Pierina mine.
The company optioned these concessions from Condor in 2017 and began exploration the same year. Since then, it has identified and drilled several targets, resulting in the discovery of additional high-grade copper-gold-silver mineralization.
Based on an initial inferred resource published in February 2022, approximately 1.2 million tonnes amenable to extraction by open pit mining methods and 4.7 million tonnes to extraction by underground mining methods are located on the Condor concessions.
Explaining the decision to relinquish the concessions, Chakana’s chairman Douglas Silver said the company was told by investors that they will not fund a project with substantial outstanding property payments. According to Silver, the remaining property payments to Condor, on top of the payments already made, “greatly exceed the current value of the property.”
“We tried over multiple months to negotiate a reasonable buyout price but were ultimately unsuccessful. While our preference is to keep the consolidated land position together, doing so only makes sense if it is economically feasible,” he said.
Chakana Copper’s stock lost C$0.01 or 28.5% during the early hours of Tuesday’s session following the latest announcement. Trading at C$0.025 apiece, the junior exploration company has a market capitalization of C$5.5 million.
While Chakana’s existing exploration permits on the Condor concessions will be cancelled, it retains the surface rights over the expanded Soledad project, including the three concessions. As such, Condor must establish an agreement with Chakana to gain access to the concessions, and will also need to start a new permitting process.
As part of a 2019 royalty purchase agreement, Condor will grant a 1% net smelter returns royalty to Chakana on the Condor concessions with a 2-sq.-km. area of interest. Condor will have the right to purchase half of the royalty for $1 million.
The company will now work on the remaining 27.8 sq. km. of the Soledad property, where it has identified numerous high-grade breccia pipes that crop out at surface as well as several porphyry targets that are being drill tested for economic mineralization.
