MNS: AusQuest drilling extends copper-gold discovery in Peru

Oquest Limited: Investment Opportunity & Project Updates - A Detailed Summary

Key Concepts:

• Porphyry Copper Deposit: A type of copper deposit formed from large, low-grade ore bodies associated with intrusive igneous rocks (porphyries).
• Greenfields Discovery: A mineral discovery made in an area with no prior exploration or drilling data.
• IOCG Deposit: Iron Oxide Copper Gold deposit – a significant class of mineral deposits.
• Leachability: The ability of a valuable metal to be dissolved from ore using a chemical solution (leaching).
• Oxide Copper: Copper occurring in oxide minerals, generally easier and cheaper to process than sulfide copper.
• Provincial Scale Deposit: A large, regionally significant mineral deposit attractive to major mining companies.
• Market Capitalization: The total value of a company’s outstanding shares.

1. Company Overview & Kanga Project Introduction

Oquest Limited is a project generator focused on identifying and developing large-scale mineral deposits, primarily targeting porphyry copper systems attractive to major mining companies. The company’s current primary focus is the Kanga project in Peru, a recently discovered large-scale porphyry copper deposit announced just over a year ago. Oquest is well-financed, having raised $10 million at the end of last year, and is restarting drilling operations following initial work over the Christmas/New Year period. The company’s strategy involves identifying large deposits, often in joint venture, retaining a 20-30% interest in the development stage, anticipating a potential value of several billion dollars given the resource needs of major companies (estimated at $2-5 billion). Oquest currently has 1.6 billion shares outstanding, with a market capitalization fluctuating between $80-120 million. Directors hold approximately 90% of the company’s shares, demonstrating significant commitment.

2. Kanga Project – Location, Scale & Potential

The Kanga project’s key advantage is its location – within 8 kilometers of the Peruvian coast, providing excellent access to infrastructure (power lines, workforce) and minimizing land-use conflicts. This proximity is expected to result in a lower cost structure compared to similar deposits located higher in the Andes. Currently, Kanga measures approximately 1,500 meters in length and 250-500 meters in width, with continuous mineralization down to a depth of 350-400 meters. The scale is considered significant, particularly for a company the size of Oquest. While gold is present, the focus remains on copper. Initial copper grades are comparable to other deposits in the region, and the deposit is shallow, making open-pit mining feasible. Crucially, a significant portion of the copper in the upper 200-300 meters is oxide copper, which is potentially amenable to leaching – a lower-cost processing method. Metallurgical tests have shown encouraging initial results regarding leachability. Kanga is a Greenfield discovery, meaning exploration started with no prior data, leading to a continuous learning process as drilling progresses.

3. Exploration & Development Timeline

Oquest is currently evaluating the Kanga prospect and plans to continue drilling over the next 6-12 months. The company aims to determine if higher copper grades can be identified within the deposit. Simultaneously, they are evaluating two additional promising projects located within 10-20 kilometers of Kanga, also 100% owned by Oquest, with initial drilling planned for the next 6-12 months. The goal is to potentially establish a “province” of porphyry copper and/or IOCG deposits under Oquest’s control. The company anticipates significant progress and further definition of the Kanga project within the next 6-12 months.

4. Strategic Alliance with South32 & Australian Projects

Oquest maintains a strategic alliance with South32, focused on four projects in Australia. This alliance is in its 10th year, a notable achievement for a junior company, and demonstrates Oquest’s operational capabilities and target selection. South32 funds all exploration activities on these Australian projects, providing Oquest shareholders with a “free option” and independent technical endorsement. Drilling on these projects is also planned for the next 6-12 months. The alliance is currently set to continue until the end of 2027.

5. Future Outlook & Success Metrics

Oquest’s primary focus is the development potential of the Kanga project in Peru. A successful development could result in a valuation exceeding $1 billion, even with partial ownership. The company also aims to evaluate and potentially develop the two additional projects near Kanga, potentially creating a significant regional copper resource base. Ultimately, success for Oquest is defined by a higher share price and increased market capitalization. The ongoing work with South32 in Australia provides additional upside potential, with any discovery further revaluing the company. As Graeme Drew stated, “we think there's a real real real probability of that happening.”

6. Notable Quotes

• Graeme Drew: “If we’re excited [about Kanga], then we can excite the market.” – Emphasizing the company’s confidence in the project’s potential.
• Graeme Drew: “We like drilling. We develop concepts and we test them. So that's that's sort of our modus operandi that we've been on since since listing.” – Describing the company’s core operational strategy.
• Graeme Drew: “We think we've got a low cost structure both in capital in pro and in in operating and the grades that we're running with at the moment are comparable with others.” – Highlighting the economic viability of the Kanga project.
• Graeme Drew: “...any one of those drill holes, which we'll be completing in the next 6 to 12 months, makes a discovery, then uh we we're we're re revalued again.” – Underscoring the potential for value creation through exploration in Australia.

7. Data & Statistics

• Shares on Issue: 1.6 billion
• Market Capitalization: $80 - $120 million
• Director Ownership: ~90%
• Kanga Project Dimensions: 1,500m (length) x 250-500m (width) x 350-400m (depth)
• Funding Raised (End of Last Year): $10 million
• South32 Alliance Duration: Currently in its 10th year, extending to the end of 2027.

Conclusion:

Oquest Limited presents an investment opportunity centered around the Kanga porphyry copper discovery in Peru. The project’s favorable location, scale, potential for low-cost processing (due to oxide copper and shallow mineralization), and 100% ownership position the company for significant growth. The strategic alliance with South32 provides additional exploration funding and technical expertise in Australia, offering further upside potential. Oquest’s experienced technical team, committed board, and focused exploration strategy suggest a strong potential for value creation for shareholders over the next 6-12 months and beyond.