Sombrero Copper-Gold Project Update: “Increased Access” with Coppernico Metals CEO Ivan Bebek

Key Concepts

• Sombrero Project: A large-scale skarn alteration system in Peru, characterized by significant copper mineralization.
• Furaso and Neoch: Two primary targets within the Sombrero project, showing high-grade copper mineralization both on surface and in historical drill holes.
• Skarn Alteration: A type of hydrothermal alteration associated with intrusive igneous rocks, often hosting significant metal deposits.
• Permitting Process: The regulatory and administrative steps required to obtain approval for exploration and drilling activities.
• Community Agreements: Agreements with local communities to ensure social license and cooperation for mining projects.
• Copper Gold Skarn Porphyry System: A geological model describing a complex of mineral deposits that can include skarn, porphyry, and epithermal styles of mineralization.
• Tier One Opportunities: Exploration projects with the potential to become world-class mines.
• Commodity Bull Market: A period of sustained price increases in commodities like copper and gold.

Sombrero Project Update and Access to Drilling

Capernico Metals, through its Chair, Founder, and CEO Ivan Beck, provided an update on the Sombrero project in Peru. The company has made significant progress in securing access for drilling, particularly at the Furaso and Neoch targets.

Furaso Target

• Significance: Furaso is described as one of the most unique large-scale skarn alteration systems globally, yet to be fully explored.
• Historical Data: Eight historic drill holes in the Furaso area were assayed by Capernico for copper, revealing significant grades.
• Surface and Drill Results: Surface samples show over 200 meters of 0.5% copper, with drill holes confirming this mineralization in the third dimension, yielding up to 120 meters of similar or better grades.
• Access Progress: Capernico has reached an agreement with Aceros Arequipa, a major steel producer in Peru, to assume title and liability for previous work, thereby gaining access to drill Furaso.

Neoch Target

• Surface Samples: Recent channel samples from Neoch, limited to outcropping rocks, have shown tens of meters of plus 1% copper.
• Geological Context: Neoch is considered a unique area with large-scale targets that align geologically with surface grades and historical drill holes.

Permitting and Drilling Timeline

• Current Status: Capernico is working on permits for both Furaso and Neoch. The recent agreement with Aceros Arequipa is a major step towards permitting.
• Anticipated Drilling: Drilling is anticipated to commence in the first half of next year, ideally in late Q1 or early Q2, though the exact timeline is subject to permitting approvals.
• Past Experience: The company has been engaged in the permitting process for Sombrero since 2016, fostering a collaborative relationship with the government.

Community Relations and Social Programs

• Collaboration: Capernico has worked collaboratively with the government to implement agriculture programs (agas) in Andean towns.
• Job Creation: The company has provided numerous jobs in the region.
• Positive Rapport: The rapport with the impacted communities has been positive.
• Future Plans: Capernico is working towards a second community agreement and plans to resume sampling north of Neoch to expand on positive results.

Sombrero Project: A District of Opportunities

Ivan Beck emphasized that Sombrero is a "project of projects," with multiple individual targets that could stand alone as significant exploration opportunities.

Premier Targets

• Number of Targets: Approximately 10 different premier or large-scale tier-one exploration opportunities exist within Sombrero.
• Top Targets: Furaso and Neoch are currently the most interesting due to their significant surface exposure and confirmed third-dimension mineralization (Furaso).
• Other Promising Areas:
  • Antipa: Located north of Neoch, it shares similar rock formations (Mara Formation and lower Farra Bomba limestone units) with Furaso, which host skarn and mineralization.
  • Typiccha: Extends for nearly 3 km in strike length, showing abundant pyrite, suggesting the base of an epithermal system transitioning into a large porphyry system. It has yielded 6.23% copper over 23 meters near the surface in a small exposed window.

Geological Thesis and Discovery

• Volcanic Cover: The discovery of Sombrero was facilitated by a large blanket of volcanic ash that covered most targets, with erosion exposing key areas like Furaso and Neoch.
• District Potential: The company envisions a district-scale operation where multiple discoveries could be mined from a central facility.
• Copper Gold Belt Extension: Capernico's initial acquisition in 2016 was based on the theory of extending a pronounced copper-gold belt, similar to the large Los Bronces mine (11th largest copper producer globally) located 200 km to the east. The presence of volcanic cover was seen as an opportunity to identify analogous targets.

Investor Relations and Market Commentary

Major Shareholders

• Tech (now merging with Anglo): Ivan Beck congratulated Tech on their merger with Anglo. Tech's feedback was "business as usual," encouraging Capernico to proceed with permitting and drilling.
• Numont: Owns approximately 6% of Capernico and is keen on the emerging results from Sombrero.

Industry Events and Market Outlook

• Beaver Creek and Denver Gold Show: Beck noted these events as being among the busiest in the past decade, indicating a heating up of the junior mining space.
• Commodity Bull Market: The current environment is seen as the start of a bull market for commodities, with rising copper and gold prices.
• Tier One Opportunities: Beck highlighted that while many companies are gaining value, true tier-one opportunities like Sombrero are rare.
• Undervalued Potential: Capernico, and specifically the Sombrero project, are considered well below their speculative potential, with few analysts having visited the site and recognized the scale and grade.
• Global Shortages: The current market is characterized by shortages in copper and significant movements in gold and other commodities.

US Project Exploration

Capernico is also pursuing opportunities in the United States.

Due Diligence

• Lengthy Process: The company is nearing the end of due diligence on a couple of promising projects.
• Project Types:
  • A "massive pure gold play."
  • A copper-gold skarn porphyry system.
• Threshold: Both potential acquisitions meet Capernico's criteria for multiple tier-one targets, world-class potential, and readiness for drilling within one to two months.

Strategic Rationale

• Continuous Drilling: The US projects would allow for continuous drilling, complementing Sombrero and providing geopolitical optionality.
• US Regulatory Environment: There has been a significant shift in the US, with a more favorable environment for mining companies, reducing red tape without compromising environmental standards. This is opening up previously difficult areas for exploration.
• Complementary to Sombrero: Acquiring a US project, potentially a "gold version of Sombrero," would be a significant achievement.

Future Positioning

• Well-Positioned Junior: If successful in securing these acquisitions, Capernico would be an incredibly well-positioned junior company, undervalued with the potential for significant performance in the upcoming bull market, offering tier-one opportunities in both copper and gold.

Conclusion

Capernico Metals is making substantial progress at its Sombrero project in Peru, with a clear path towards drilling Furaso and Neoch in the first half of next year. The company's strategic approach, combined with positive community relations and a strong geological thesis, positions Sombrero as a district-scale opportunity within a favorable commodity market. Furthermore, Capernico is actively pursuing complementary tier-one projects in the United States, aiming to create a robust portfolio of copper and gold assets poised for growth.