Dear Shareholders
SPRING UPDATE
I refer you to various shareholder updates posted on our website. https://www.chalametals.com/news-media/
Since seeking to list in early 2021, we lost our main Peruvian project to fraud. Unfortunately the Peruvian legal system has failed to give us any redress and to save costs we have suspended any further action for the moment.
We then attempted some small scale mining in JV with a local Peruvian and for that venture we only just, last week, received the results of the 260 tonne trial mining we undertook. Unfortunately the average grades of Copper and Gold recovered were significantly lower than many earlier samples taken. Samples were indicating over 2.5% Cu plus 2 grams of gold whilst the final result was around 1% Cu and 0.3 grams gold. So the economics of that activity are not sustainable and we have terminated the JV. The capital invested of approximately A$200,000 is lost.
The rights issue we attempted in May this year was unsupported by shareholders so the company has been kept solvent only by injection of $100,000 new equity by me plus an additional loan by myself and another Director of approximately A$50,000. On-going holding costs, excluding any extraordinary items, are under A$5,000 per month and I shall continue to carry these for the time being through the loan account with the company. No salaries are being paid within the company.
The remaining assets of the company are the 580 Ha Concession, AMP1., where minimal sampling found some exceptionally high grades of Copper, Silver and Gold and an additional two Concessions recently secured totalling 1500 Ha additional. Our geologist has deemed these areas to be prospective for Copper, Gold and Silver also, as they are relatively close to AMP 1. Two months ago we accepted an offer to sell AMP 1 for US$2.17 Million and contracts are now in the hands of the lawyers. There is an 8% commission payable on a succesful sale and apart from a small cash component, the balance of payment will be in shares in a ( to be ) listed Canadian public company called Raya Minerals Ltd. We hope this transaction can be completed successfully in a difficult market environment either later this year or early next year.
Using my own funds, I will travel to Peru shortly where I will visit 2 areas prospective for hard rock Lithium deposits and subject to negotiating a reasonable cost, may undertake some surface exploration and sampling on our two new 1500 Ha concessions.
I will also visit a Copper Oxides project in Chile where we are waiting on analysis of some test work we are undertaking. Prospectively, we may be able to upgrade to ROM Copper ore to over 5% Cu and sell it to Enami, a Chilean Government agency, for over US$250 per tonne. This could prove to be an excellent cash generator if operating and transport costs can be contained to less than US$100 per tonne. The licence quickly available for this mine is 5000 t per month of saleable copper.
The setbacks we have endured and the Global economic outlook and fund raising market for mining projects mean that it is highly unlikely that Chala Metals Limited can be listed this financial year and any future listing now relies heavily of receiving market support for either the Lithium or Copper projects I can bring to the company in early 2023, after some further study.
Thank you for your support which we trust can continue if the new projects demonstrate strong prospectivity.
Mark Newton
Executive Chairman and CEO