CHAKANA COPPER CORP.
MANAGEMENT DISCUSSION & ANALYSIS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2021
(EXPRESSED IN CANADIAN DOLLARS)
CHAKANA COPPER CORP.
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2021 (EXPRESSED IN CANADIAN DOLLARS)
GENERAL
This Management Discussion and Analysis (“MD&A”) of Chakana Copper Corp. (the “Corporation” or “Chakana”) dated January 27, 2022, provides an analysis of the Corporation’s financial results for the six months ended November 30, 2021. The following information should be read in conjunction with the accompanying unaudited condensed interim consolidated financial statements for the six months ended November 30, 2021 with accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board.
All dollar figures are expressed in Canadian dollars, unless otherwise stated. The Corporation’s condensed interim consolidated financial statements and MD&A are available on www.sedar.com.
CORPORATION OVERVIEW
Chakana Copper Corp. was incorporated on May 2, 2011, under the laws of the province of British Columbia, Canada. The Corporation is a mineral exploration corporation listed on the TSX Venture Exchange (“TSX-V”) under the symbol “PERU”. The Corporation is currently engaged in the exploration and development of mineral properties, with prospects for copper, gold and silver in Peru.
The head office and principal address is 800 West Pender Street, Suite 1430, Vancouver, British Columbia, V6C 2V6, Canada. The records office of the Corporation is located at 1055 West Pender Street, Suite 1500, Vancouver, British Columbia, V6E 4V7, Canada.
The Corporation is currently advancing the Soledad Project near Aija in the Ancash region of the highly prolific Miocene mineral belt of Peru. The Corporation’s goal is to find and advance mineral projects to an economic resource within a single commodity cycle for further development by mid-tier and/or major mining companies. The Corporation looks for de-risked projects that have the characteristics of large above average grade mineral systems with significant upside potential. The Corporation employs the latest technological innovations to test the upside potential of projects with aggressively funded exploration programs.
GENERAL OVERVIEW OF MARKET CONDITIONS
During the period May 31, 2021 through to the date of this MD&A, copper prices have fluctuated between a low of US $4.14 per pound and a high of US $4.75 per pound, closing at US $4.40 per pound. During the same period, gold and silver prices started to appreciate, with gold trading between US $1,718 per ounce and US $1,907 per ounce, closing at US $1,840 per ounce, and silver trading between US $21 per ounce and US $27 per ounce, closing at US $24.47 per ounce.
Since the second half of 2019, base metal prices have increased significantly. However, as a result of the global pandemic caused by COVID-19, many governments have mandated lockdowns affecting the ability of companies to continue with normal operations and as a result, junior companies have experienced volatile share prices over this period. During 2020 and 2021 a new wave of COVID-19 related to the Delta and Omicron variants have also created pressure in the global markets including the resource sector. In addition to the global pandemic, the political situation in Peru has caused uncertainty for the mining industry. In management’s opinion, these factors were the primary drivers for a decline in the Corporation’s share price.
The outbreak of COVID-19 and political upheavals in various countries have caused significant volatility in commodity prices. Similarly, any future emergence and spread of pathogens could also have an adverse impact on global economic conditions, which may adversely impact the Corporation’s operations, and the operations of its suppliers, contractors and service providers, the ability to obtain financing and maintain necessary liquidity, and the ability to explore the Corporation’s properties. While these effects are expected to be temporary, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time. Similarly, the Corporation cannot estimate whether or to what extent this outbreak and the potential financial impact may extend to countries outside of those currently impacted. Travel bans and other government restrictions may also adversely impact the Corporation’s operations and the ability of the Corporation to advance its projects. In particular, if any employees or consultants of the Corporation become infected with coronavirus or similar pathogens and/or the Corporation is unable to source necessary consumables or supplies, due to government restrictions or otherwise, it could have a material negative impact on the Corporation’s operations and prospects, including the complete shutdown of one or more of its exploration programs. The situation is dynamic and changing day-to-day. As a result of these uncertainties, the Corporation implemented work protocols for its employees and contractors incorporating COVID-19 prevention measures, such as installation of a stand-alone camp on the project, individual dormitory accommodations, improved
MANAGEMENT DISCUSSION AND ANALYSIS |
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CHAKANA COPPER CORP.
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2021 (EXPRESSED IN CANADIAN DOLLARS)
hygiene measures, use of masks and gloves, and mandatory social distancing. These measures have allowed the Corporation to continue operations, including its drilling program.
In Peru, the presidential runoff election on June 6, 2021 resulted in Pedro Castillo, a member of the left-wing Peru Libre party, securing majority votes. Castillo was inaugurated as President on July 28, 2021. While there is uncertainty regarding the economic and social policies that may be implemented in the future, Castillo came into power with a very narrow margin of victory, which may make most of his election promises difficult to uphold.
Peru is the world’s second largest copper producer, with large gold, silver and zinc reserves. Mining is one of Peru’s most significant industries. Peru has some US$56 billion of open mining investments, primarily in copper, and is home to mines owned by large foreign companies. Victor Gobitz, president of the Peruvian Institute of Mining Engineers, stated that if the government properly approaches an open dialogue with the mining industry and properly defines the way to develop the country’s sustainability, it could create a perfect environment to develop its copper products. However, despite the apparent positivity of talks, uncertainty remains in the industry and higher taxes is one of the main concerns.
HIGHLIGHTS
Exploration developments
- On July 27, 2021, the Corporation reported results from nine resources definition and exploration holes totaling 1,993.15 metres from the Soledad Project. Three holes were drilled through the Huancarama East breccia pipe. All holes intersected mineralized breccia with depths ranging between 70 metres and 200 metres below surface. In Paloma West three holes were drilled to further define mineralization from surface to a depth of approximately 100 metres depth. The breccia pipe demonstrates zoning with stronger gold and…
Read More: Chakana Copper : November 30, 2021 Q2 MD&A | MarketScreener