Insider Interview: Hannan Metals (TSX-V: HAN) (OTC: HANNF)
Dr. Quinton Hennigh is one of the most respected voices in the junior resource space with a track record of meaningful discoveries.
I had the chance to speak with Dr. Hennigh about that track record, his approach when looking to make significant discoveries, and why he’s decided to get involved with Hannan Metals (TSX-V: HAN) (OTC: HANNF) — a company with a tiny market cap but massive potential in Peru.
To your wealth,
Gerardo Del Real: This is Gerardo Del Real with the Outsider Club. Joining me today is somebody, frankly, that doesn't need much of an introduction, but I'll provide one anyway. Dr. Quinton Hennigh is the current Chairman and President of Novo Resources (TSX-V: NVO)(OTC: NSRPF) with over 25 years of experience Mr. Hennigh's worked with major gold mining companies, such as Homestake Mining, Newcrest, and Newmont. Then, in 2007, the way I understand it, you decided to pivot into the junior resource space which I want to talk about.. So, with that being said, thank you so much for joining me, Quinton.
Quinton Hennigh: Thank you.
Gerardo Del Real: Let's talk a bit about that pivot in 2007 when you decided to leave the majors and pivot into the junior space?
Quinton Hennigh: That's right, Gerardo. I had left the major mining companies in March of 2007. It was a point in time where it was clear that the major miners were not committed to exploration at the level that they were, say, in the 1990s. That's when I started my career. I thought I'd like to eventually become, say, Vice President of a major gold producer, oversee exploration, and those dreams morphed. It became clear, after the bust in late 1990s in the gold sector, that's not the way things were going to work.
After a few good years working for Newcrest, Newmont, and so forth, I decided to get into the junior sector because I felt that was where you could really explore, undertake exploration on a number of projects. Here I am, that's what I love to do, and this is how I decided I could do it.
Gerardo Del Real: I want to talk about the approach, working with the juniors versus working with the majors. Since you made the pivot, you obviously have a track record of discovery, significant discoveries, and you're well known for becoming an advisor and working with companies that are serious about exploration. The most recent one, and one I want to talk about in a bit, is Hannan Metals (TSX-V: HAN)(OTC: HANNF) and its project in Peru.
What is the major difference between exploring for a major, like a Newmont, and running the ship, per se, in the junior space?
Quinton Hennigh: You know, any major mining company has a very prescriptive approach to its exploration, and that's good. Don't get me wrong, there's a lot of logic, and there's internal competition for monies, and things like this. That's good, because that's where you have to decide, make the hard decision to decide to allocate funds and so forth.
But in the junior sector, what I find is that there's a bit more appetite for greenfields work, which is not necessarily the case in major mining companies. A lot of the exploration dollars get sucked up into the more brownfields end of the spectrum. So, I like that. I love greenfields projects.
I also like the fact that, at the junior level, you've got an ability to really look around the planet and see what attracts you, in terms of world-class potential, whereas a major mining company might have a much more focused approach. So, you work in a bit of a box there. In the junior sector, I've found that I can look around, and work on a number of different styles of mineralization. It's not just gold, it's all metals. I love to explore.
I actually did my initial work, dissertation was on VMS systems, so I worked at Kidd Creek, and then Neves Corvo in Portugal. But since then, I've spent most of my time in gold, but that doesn't mean I don't have a strong interest in base metal. So things like Hannan, when it popped up, clearly world-class potential. And it's one of those absolutely riveting, exciting opportunities to get in at an early stage. I'll talk more about that, here, in a bit.
Gerardo Del Real: Looking forward to that. Before we get to Hannan, despite your record of success with discoveries, there's been a lack of quality economic discoveries that I think is leading us into a copper and a gold super cycle here, if the markets cooperate, being as volatile as they are.
But, if you look at the fundamentals in the copper space, mid to long term, very robust. The precious metals are, specifically gold, performing beautifully as a hedge right now. It looks like there's a lot of runway there. Do you see the potential for a new discovery cycle? Because frankly, the past decade or so, there just hasn't been much.
Quinton Hennigh: Yes. Look, I think the underlying thesis for most investments in this sector right now, the theme is a lack of discovery in the last 20 years. We need discoveries. We're producing something like 93 million ounces a year at present.
A lot of that is coming from artisanal and mom-and-pop level, but the majors are churning through an order of 40, 50 million ounces in reserves and resources, every year. That's a lot of gold to replace.
Gerardo Del Real: Absolutely.
Quinton Hennigh: Yes, we have to make the next generation of discoveries. The challenge with that is, in many areas, the low-hanging fruit's been picked over. Look at Western U.S., for example, Northern Nevada. You're not going to find shallow oxide deposits, like they did. Or, even the Betze-Post-type things, where we'll call them shallow because, at this present date they are considered shallow.
But, you're not going to make just enormous discoveries like that without taking some chances. We have to look for blind deposits at this point, in many cases, or else work in jurisdictions that are less, say, appetizing.
Gerardo Del Real: Let's talk Hannan, because you're not short on big ideas. I know, obviously, the approach with Novo. I know you're involved with Irving. All of these are projects that have the potential for massive discoveries. Whether or not those happen is a separate issue, but you can't find it if you're not exploring for it. Right?
What attracted you to Hannan? A tiny company, and I think at the time you got involved with it, its market cap was somewhere along the $7, $8 million level. It's currently a bit higher than that, as people are starting to realize the potential there. But, what is it about the land package in Peru that made you decide to join the Geological Advisory team back in January?
Quinton Hennigh: Okay. First of all, why I got involved with Hannan. Actually it dates back to 2018. I've known Keith Barron at Aurania for quite some time. I've watched Aurania as they've explored really for gold, mainly, in Southern Ecuador.
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But, I think around November 2018, something like that, there was news out of Aurania, talking about copper mineralization, high-grade copper and silver samples that were collected. I looked at the photographs, and to me it looked very clear that this was a new type of mineralization. Bear in mind, most of the copper, gold in the Andes is associated with porphyries and things like that.
Quinton Hennigh: When you see black shale-hosted copper, you think this looks a bit different. I concluded very quickly they were onto something more like a Kepferschiefer, or African copper belt-type system. Funny enough, I started doing some research. I don't have a heap of time to do research, but when I see something really intriguing, and it just catches my attention.
So, I went back and looked, and sure enough, Hannan is basically the same geographic space, we'll call it, as what Keith is looking at, in Ecuador.
Gerardo Del Real: Right.
Quinton Hennigh: But, Hannan is in Peru, to the south. Okay, we're on the east side of the Andes, we're in a folded region. You know, the rocks are folded, and there's some overthrusting and things like this. But overall, the geology's reasonably gentle and well behaved.
What's more important is the sediments, sequence of rocks that host the base metal is very, very similar to what they see in Ecuador. In fact, it turns out this stuff is popping up elsewhere, too. It's going up in Colombia, they're finding some. Then, into Bolivia, and even, I think, Northern Argentina, you can find this style of mineralization.
But in Peru here and in Ecuador, it seems to be particularly well developed. I reviewed the story at Hannan in detail, I made contact with the company. Let me see, I think it was late last year, maybe October or November. I met with Mike, who I've known about for quite some time, never actually met him face to face. We talked about the company and its ambitions. I decided to jump in, both feet.
Think about finding a world-class copper opportunity like this, in a junior company, is truly exceptional. I did, I jumped in. I also strongly urged them to pick up additional lands, which they've done, they've staked quite a bit more ground. Yes, lo and behold, the competition now for land on this place is starting to heat up. It's got the attention of others, we'll call it. But, we have a very robust land position.
I was down there a couple of weeks ago, spent a few days driving around and looking at the new discoveries. Believe me, this is very early stage, okay. The team at Hannan is out in the bush, literally, day by day right now, following up on rumors or anecdotal information about copper occurrences here and there.
Gerardo Del Real: Sure.
Quinton Hennigh: They're out, really bush bashing and finding new things, day by day. What's really encouraging, we saw it when I was there, the guys had found an outcrop, a brand-new outcrop of high-grade copper. Interestingly, they also found a very high-grade outcrop of lead-zinc, nearby. I'm not even sure how the lead zinc fits into this story. It is present in the Kepferschiefer region in Poland, so it's not necessarily with the copper, but it's not unusual to find two world-class systems interconnected somehow. That seems to be the case here, but the copper's the main focus.
Every day, they're finding new occurrences. It's good grade, it seems to be largely controlled by the same strata from place to place. We looked at a number of occurrences along, maybe, 100 kilometers of region, where every time we drove up and looked at the outcrop or walked our way into an area, looked at the outcrop, it was the same stuff, over and over again. Which is just remarkable, that's truly an amazing sight at such an early stage.
Gerardo Del Real: Well, I know it's early stage. It sounds like the prize, however, is massive. I want to provide a bit of context. You mentioned the robust land position, I think you're being modest. I believe it's up to 600 square kilometers of mining concessions, if I'm not mistaken. Early observations, Quinton, good grade, copper everywhere, a lot of work to do, but very encouraging. Would that be accurate?
Quinton Hennigh: That is 100% accurate. It is more than encouraging. Like I said, when they find these occurrences, you look at them in context. They're basically the same strata, from place to place to place. Think about that, over 100-plus kilometers. And then, knowing that they go all the way up to Ecuador, we're looking at a basin-scale system.
Kepferschiefer, most people don't understand this but Kepferschiefer, in total metal contained, blows every other copper system on the planet out of the water. It's huge, okay. The basin covers tens of thousands of square kilometers. This bed of copper is continuous over much of that. You add up the copper in that basin, it's absolutely enormous. It dwarfs porphyries, it dwarfs even the African copper belt. If we were to find another deposit of that scale, this actually could be a future major source of copper.
Gerardo Del Real: Well, I know from my conversations with Michael Hudson that the majors have shown a lot of interest, and obviously are paying attention to developments there. You mentioned earlier, the rush to stake land around Hannan's commanding land position, I don't think that's a coincidence either.
I've got to tell you, I'm biased, I'm a shareholder, I eat my own cooking, but man, speaking with you really does make me want to go buy some more shares, because again, the market cap is tiny, relative to the potential prize.
Gerardo Del Real: Anything else, Quinton, that you'd like to add?
Quinton Hennigh: Copper is an unusual commodity for the junior sector. I mean, it's not unusual to explore for copper systems, but it's unusual for a company to be focused on, say, exclusively on copper in the junior world. There's not a lot of them out there. Copper is a challenge. These are big systems. Like I just said, this is potentially a world-class system. It's always wise to share risk, I would say.
I would urge people to understand that to tackle something that's this big, you don't want to have to issue shares over and over and over again. You want to find good partners. That is often the best way to push a story like this forward. It also gives you the longevity you need, the focus, stamina I guess, to tackle something like that.
Gerardo Del Real: Well said, well said. Well again, I'm looking forward to having you back on, Quinton. Thank you for your time today, and man, I can't wait to start getting numbers and results from the exploration work that's being done in the field right now. Thanks again.
Quinton Hennigh: Thank you.
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