SLM to acquire advanced copper exploration asset in Peru

Our exploration Investment Solis Minerals (ASX: SLM) just announced a binding agreement to acquire 75% of an advanced copper exploration project in Peru.

SLM has 90 days of exclusivity on the project.

IF SLM proceeds with the deal it will have the right to acquire up to 75% of the project via a staged earn-in agreement (more on the deal terms later).

The vendors of the project are “Q-Ex” who are a team of Peruvian geologists who have previously executed exploration and joint venture agreements for other Peruvian exploration projects with Rio Tinto, Anglo American and Freeport-McMoRan.

We think yesterday’s deal fits in nicely with SLM’s overall strategy in Peru.

SLM already owns 5 projects in Peru prospective for copper and precious metals, and is currently drilling at one of those right now (more on the drilling later).

The project SLM is aiming to acquire (Cucho) was discovered in 2008 and is a large-scale copper-molybdenum-silver porphyry system, ~44 km from the Pacific coast in Peru.

There is ~2,000m of previous diamond drilling which has confirmed copper mineralisation from surface.

Some of those old hits are as follows:

• 169.7m @ 0.24% Copper, 0.012% Molybdenum and 1.0 g/t silver (from surface)
• 178.7m @ 0.23% Copper, 0.022% Molybdenum and 0.9 g/t silver (from 38.6m)
• 269.1 m @ 0.25% Copper, 0.011% Molybdenum and 1.1 g/t silver (from surface)

Only 7% of the anomaly has been drill tested to date with the main geophysical targets being completely undrilled:

(Source)

And here is that same area in a cross section:

(Source)

Back in 2010-11 the project was mapped and had some geophysics done which confirmed a 3 x 1.8km target area.

Then in 2014 ~7 holes for a total of 2,000m were drilled with all drillholes hitting copper.

Since then, the project has largely been untouched primarily because of a lack of access to the project and not having direct access to the land packages in the north.

SLM can now take on the project and drill out all of those untested areas.

The target here will be to define something similar to Element 29’s deposit 40km away.

Element 29 has a similar project with 321Mt at 0.32% copper (also with molybdenum and silver).

Similar to the drilling intercepts on the project SLM’s acquiring.

The only difference is that Element’s project has been drilled out and had a resource defined on it.

Element 29 is capped at $155M CAD - which demonstrates the upside potential for SLM.

Next SLM will have 90 days to go through the DD process and start the permitting process for the first drill program on the project.

(Source)

What would SLM be paying for the project?

One thing we liked about the terms for the acquisition was that a lot of the payments to the vendors would be made in SLM shares tied to milestones related to drilling and advancing the project.

Most of the share issuances are weighted to when SLM would complete drilling, announce a JORC resource and an economic study and then the final payment when a Pre Feasibility Study is completed:

(Source)

So SLM would only make all the payments if the project had a 40mt+ JORC resource estimate and was at the pre-feasibility study stage…

By that time, SLM would be capped at lot higher.

(Source)

What else is SLM doing right now?

SLM recently released the initial results from the drilling program underway at its Ilo Este project.

The grades were a little below what we would have liked to have seen, but drilling is continuing with the rig to move to the southern magnetic anomaly on the project.

We already know that there has been previous drilling in that southern target area which returned an assay of ~472m at 0.11% copper with 0.09g/t gold grades, from near-surface.

(Source)

Any results that are similar or an improvement on that could bring market attention back onto this project.

What’s next for SLM?

🔄 Drilling results from the Ilo Este project

We are now looking forward to seeing results from the drilling going into the southern magnetic anomaly at Ilo Este.

🔲 Permitting on two other projects.

We mentioned earlier that SLM is drilling four different projects this year.

We did a deep dive on all four projects in our last note here: An update on SLM’s 4 shots on goal

Across the two remaining undrilled projects, we are waiting to see SLM get drilling permits granted.

Here is a quick update on those two remaining projects:

Project 3: Cinto Project

Stage: Drill targets identified, permits pending.

When is it drilling: Q4 this year

Why it is interesting:

SLM’s drill targets here are ~15km away from the Toquepala mine which has a 3.3BN tonne copper resource and is producing over 180,000tpa copper:

Project 4: Chocolate (previously Guaneros)

Stage: Target generation

When does SLM expect to drill: Q4 2025 - Q1 2026

Why is it interesting?

The Chocolate project sits between SLM’s two other main projects Chancho al Palo and Ilo Este.

A drone magnetic survey conducted by SLM showed that the area was potentially prospective for gold and copper - similar to what was found at Ilo Este.