The PMI index of the manufacturing sector in the USA reached 56.7 points in November, which is significantly more than a year ago with around 53. China, the country that is already the largest consumer of copper, is showing significantly stronger growth. This makes companies like Hannan Metals happy, who are now increasingly focusing on further development!
After the COVID-related shutdown of exploration activities, things went behind the scenes of Hannan Metals Limited (ISIN: CA4105841064 TSX-V: HAN) continued with restructuring and approval measures, which should now be largely completed. And that fits well, as the focus is now on exploring its 100% own ‘San Martin’ copper-silver project in northern Peru.
For this purpose, teams were mobilized to restart activities on site at the beginning of November. The technical field team is focused on exploring the ‘Tabalosos’ area on ‘San Martin’ more closely. Geochemical mapping work and sampling are currently being systematically advanced there with the aim of more precisely defining the mineralized sections that are emerging. The beginning of the stream sediment sampling, which extends over a larger area, is also imminent.
After the ‘Lockdown’ there is new discoveries ahead!
Michael Hudson, CEO of Hannan Metals, is delighted with the resumption of exploration work in the San Martin District and expects to make high grade discoveries again on the prospective copper-silver project.
“With the gradual reopening of the ‘San Martin’ district, we have been able to resume our work – in accordance with the government’s strict COVID security regulations, of course. “
But even during the lockdown, Hudson continued, work continued consistently behind the scenes:
“By staking out additional ground, by gaining data, and by exploring possible partnerships, we already laid important foundations for a successful restart during the time of the lockdown. We are now pursuing these in a targeted manner together with local stakeholders and are continuing our exploration of the new copper-silver system, the definition of which had already begun. “
Definition of two occurrences on ‘Tabalosos’!
Even before the lockdown, two occurrences could be defined in the current target area. High grade copper-silver mineralization was encountered in the upper Sarayaquillo Formation. This mineralization, in turn, is correlated with a trend that extends 30 kilometers long and 5 kilometers across the defined project area of ’Tabalosos’. In addition, the trend corresponds exactly to the stratigraphic level of mineralization that has already emerged in the ‘Sacanche’ located 80 kilometers to the south.
Source: Hannan Metals
Furthermore, a copper-silver target area with structurally limited sandstone over 7 km in length and up to 5 km in width has already been identified on ‘Tabalosos’. This target area in turn is analogous to the base metal Gossanen, which was encountered at the beginning of the year not far from ‘South Sacanche’ and thus 80 kilometers south of the current target area.
Driving forward the ‘San Martin’ project together: ‘Joint Venture’ with ‘JOGMEC’!
In order to be able to advance the exploration work on the Peruvian copper-silver project even faster and better, Hannan Metals is practically parallel to the resumption of the work on ‘San Martin’ a partnership with the Japan Oil, Gas and Metals National Corporation (‘JOGMEC’) received. The partnership gives the independent administrative body of the Japanese government the option of a usufruct of up to 75% of the ‘San Martin’ project. For this, ‘JOGMEC’ has to take up to 35 million USD in hand and provide the ‘joint venture’ with a feasibility study.
The Hannan ‘JOGMEC’ partnership!
By entering into the ‘joint venture’, ‘JOGMEC’ initially secured the option of a 51% stake in the ‘San Martin’ project, for which USD 88 million in development costs would have to be raised – over a maximum period of four years. At a minimum, however, ‘JOGMEC’ must contribute USD 1 million to the joint project by March 31, 2021 and agree to reimburse Hannan for all project costs incurred before April 01, 2020.
If that happens, ‘JOGMEC’ can add another 16% stake and thus come to a total of 67% of the shares. For this one must either submit a feasibility study or assume a total of another 12 million USD of the ‘San Martin’ exploration costs or contribute at least 1 million USD per year.
In the event that ‘JOGMEC’ decides on a 67% stake, another 8% can be acquired in the project, which then increases the share to 75%. To do this, however, a feasibility study must be carried out or a further USD 15 million or at least USD 1 million per year must be invested.
Should ‘JOGMEC’ ultimately decide not to have a feasibility study carried out or not to invest a total of 20 million in the project costs, Hannan can secure a 2% stake for a total price of 1 million USD. This means that Hannan’s stake would be 51% and that of ‘JOGMEC’ 49%.
If, however, ‘JOGMEC’ has the feasibility study carried out and this is available, you can choose whether you buy another 10% stake and thus hold 85% of the shares, which corresponds to the maximum of the capped stake), or you can choose for the last 10 % Approves project development financing through a loan to Hannan, which should run until the ‘San Martin’ project generates positive cash flow!
Until ‘JOGMEC’ does not own a 51% stake, Hannan will continue to lead the exploration work. Only when ‘JOGMEC’ has the majority of the shares does this operator’s right pass to the Japanese.
If for any reason a party’s stake in the ‘Joint Venture’ is diluted to less than 5%, that party’s stake will automatically be converted into a 2% net smelting license fee (‘NSR’), of which the however, other ‘JV’ partners can acquire 1% at any time for a cash payment of USD 1 million.
Source: Hannan Metals
At the beginning of the ‘Joint Venture’ between Hannan and ‘JOGMEC’ the focus is on collecting geological, geophysical and geochemical data sets in the project area. The first exploration phase scheduled for this is expected to be completed in March 2021.
“With ‘JOGMEC’ we have found the perfect partner for our ‘San Martin’ copper-silver project, especially at this early stage for this large and promising exploration project. Precisely because, due to the size of the project, the required funds are correspondingly large and due to the allotted time, a pronounced perseverance is required, ‘JOGMECs’ investments of up to 35 million USD initially contribute to our ability to approach our exploration program in Peru even more focused and faster. At the same time, we increase our chances of discovering significant copper-silver deposits “, said Michael Hudson, CEO of Hannan Metals.
Finally, the resolutions of the annual general meeting
A new rolling 10% stock option plan was duly resolved at the most recent Hannan shareholders’ meeting. In addition, the shareholders approved the composition of the Executive Board, which consists of five members. This decision is valid until the next annual general meeting. Michael Hudson, Ciara Talbot, Georgina Carnegie, Nick DeMare and David Henstridge were elected to the board by name. Furthermore, Davidson & Company has been named as auditor for the coming year.
Following the annual general meeting, the board approved the re-election of Michael Hudson as CEO and chairman of the board. The Board also decided to elect Lars Dahlenborg as President of the Company, Harvey Lim as Chief Financial Officer, Mariana Bermudez as Secretary of the Company, and Nick DeMare, David Henstridge and Ciara Talbot as members of the Audit Committee.
At Hannan Metals Limited (ISIN: CA4105841064 TSX-V: HAN) Everything continues to go according to plan and in an orderly manner! The ‘joint venture’ was set up particularly skillfully, as it gave access to a lot of capital without diluting its own shareholders. This is the advantage for companies that have a high proportion of insiders (at Hannan 16%). The owners themselves have no interest in diluting their own shares.
Due to the resumption of exploration work, an increased flow of news is likely to set in shortly, which should bring the share back into the focus of investors. So it will be really exciting again at Hannan Metals, especially since silver and copper are extremely in demand!
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