Metates: New Methodology Could Revolutionize Mining Industry

Q: What is the status of the Metates project and why is it still an attractive mining project for Chesapeake Gold? 

A: Metates is an attractive project because it has one of the largest undeveloped gold and silver deposits in the world, with 20Moz of gold and about 480Moz of silver. In the past, the project was not developed because it required a lot of investment. When I arrived two years ago, we came up with a plan to try to recover silver and gold in a different way, which has not been done anywhere else in the world. We are developing a technology, which, when it works, will revolutionize the industry as it will no longer be necessary to spend billions on an autoclave.

Q: What were the results of acquiring Alderley Gold Corp for the Metates project? 
A: We have new extraction technology that is based on the copper industry, which has been oxidizing sulfides in heaps for decades. The physical process remains the same. However, in the chemical part, an alkaline component is used, which neutralizes the acidity of the process. As a result, we do not have to worry about unexpected precipitation problems, especially when the PH changes.

Q: Why is there a legal dispute between Chesapeake and DGM for the San Vicente 3 mineral concession? 
A: Every year, there is a process for companies to maintain their concessions. We did everything we had to do. We delivered the reports in a timely manner but, for some reason, they told us that it was not enough and they canceled our concession. We filed a complaint so that a judge could deliver a verdict. We hope this will be solved as we need the concession to further develop the project.

Q: What are the main challenges for mining companies in Mexico? 
A: Beyond the changes to the Mining Law, the real issue for companies is uncertainty. For example, the government says that the profits must be shared with communities. OK, but how is this calculated and do we have the right to deduct expenses if we invest in the community? We need to know these kinds of details. The government can change the law but it is necessary to provide certainty. Another issue is how long it will take until we know these details. We, like many, have put up an injunction to protect ourselves from this political uncertainty.

Q: How will SGM’s exploration monopoly impact Chesapeake Gold? 
A: We do not know specifically whether or not this will impact the company because there are many factors to consider. The company has other exploration projects besides Metates. We think we are safe because our concessions are old and, from what I understand, the changes to the law are not retroactive. Therefore, they only apply to new companies that want to enter Mexico. We face more uncertainty with environmental permits, which have become more difficult to obtain. The problem here again is in the lack of details; projects are going to continue but we do not know how, specifically, and whether or not the government wants to reduce the concessions. More clarity is needed in all of these processes to keep all businesses moving forward.

Q: What are Chesapeake Gold's short-term priorities?
A: My No. 1 priority is to resolve the San Vicente concession issue. Meanwhile, we are continuing with our metallurgical testing to ensure our project continues to advance. We hope to have results by the end of the year. The company has a great deal of cash in the bank, which gives us the certainty of not depending on anyone else to carry out the project. This is very good because, right now, it is not so easy for mining companies to access capital.

In addition, we continue to monitor the environment and have begun negotiations with the surrounding ejido on an exploitation agreement. We are also looking at new energy and water supplies, especially as the Water Law has changed the landscape. Although we are advancing with our project, the speed and ease will depend a lot on the regulations and the government.

Chesapeake Gold Corp focuses on the exploration and development of precious metals. Chesapeake’s flagship project is the Metates gold-silver deposit in Durango. The company is also generating a strategic pipeline of exploration projects surrounding Metates.