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The alliance between mining project generator Cloudbreak Discovery (LSE:CDL) and Alianza Minerals (termed the Alliance by these partners) seems to be bearing fruit already with the announcement that they have optioned their first project to Allied Copper Corp (TSX.V:CPR). This covers the Klondike project in Colorado which consists of 76 unpatented mining claims, a state of Colorado exploration permit and the exclusive right to a state lease.

Under the terms of the deal, Allied Copper Corp will incur a total of CAD $4,750,000 in exploration expenditures on the property, with a minimum of CAD $500,000 to be spent prior to the first anniversary of the closing date. Allied will also issue 7,000,000 common shares and make a total of CAD $400,000 in cash payments to the alliance over a three-year period.

Upon completion of these obligations, the alliance will transfer its entire interest in the Klondike Property to Allied.

Allied Copper Corp will also issue 3,000,000 warrants exercisable for a 36 month term at a price equal to the 10-day volume-weighted average price of Allied’s common shares at the time of the issuance.

The alliance will retain a two per cent net smelter royalty which is subject to a buy down provision where Allied may, at its discretion, repurchase half of the royalty for CAD $1,500,000 within 30 days of commercial production.

If Allied files on SEDAR an NI 43-101 technical report establishing the existence of a resource on any portion of the Klondike Property of at least 50,000,000 tonnes of either copper or copper equivalent at a minimum cut-off grade of 0.5 per cent copper or copper equivalent and categorized as a combination of inferred resources, indicated resources and measured resources, then Allied will also issue a further 3,000,000 warrants exercisable for a 36 month term at a price equal to the 10-day VWAP of Allied’s common shares at the time of the issuance.

Exciting copper targets at Klondike property

“The Klondike property is an excellent project, and we are excited with the copper targets outlined to date,” said Kyler Hardy, President and CEO of Cloudbreak. “We look forward to working with Allied as they aggressively test the West Graben, East Graben and Northeast Fault targets in 2022.”

A recent reconnaissance program consisting of mapping, stream sediment sampling and rock chip sampling was undertaken at the Klondike property to help define drill targets at the West Graben Fault and East Graben Fault targets. Rock chip sampling and mapping successfully expanded the footprint of both targets and identified a new target named the Northeast Fault.

Sampling at the Northeast Fault returned 1.56 per cent copper and 1.4 grams per tonne (“g/t”) silver over a 4.6 metre chip sample of bleached, bitumen spotted and altered Jurassic sandstones of the Saltwash member of the Morrison Formation.

Copper mineralised sandstones at the Northeast Fault target can be traced along the fault and outboard from it into the adjacent sandstones over an area 200 metres long by 100 metres wide before becoming obscured beneath gravel cover. Further anomalous copper, including 2.1 metres of 463 parts per million copper, was encountered over one kilometre to the northwest where the structure and host strata next appear from beneath the same gravel cover.

Listen: Podcast with Kyler Hardy, CEO of Cloudbreak Discovery

District has not benefited from modern exploration

The Klondike project is located approximately 25 km south of Naturita, Colorado. This property lies within the Paradox Copper Belt, which includes the producing Lisbon Valley Copper Mining Complex. Numerous historical copper occurrences have been identified throughout the district, however, many of these have not been explored using modern exploration techniques.

At Klondike, documented copper exploration ceased in the 1960s with subsequent exploration targeting uranium in the 1970s. Previous workers reported high-grade copper mineralization highlighted by results of 6.3 per cent copper and 23.3 g/t silver in outcrop. In addition to its high-grade potential, disseminated copper-silver mineralisation has been observed which may be amenable to modern open pit mining with Solvent Extraction Electro Winning processing similar to the Lisbon Valley Mining Complex.

Sedimentary hosted copper deposits are an important contributor to world copper production, accounting for more than 20 per cent of the world’s copper supply annually.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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