Kodiak Copper Corp. (KDK) Earnings Call Transcript & Summary

Today, we're discussing the drill results from our MPD Copper-Gold Porphyry Project in Southern British Columbia. I'm Knox Henderson, Investor Relations for Kodiak Copper, and presenting today is the company's President and CEO, Claudia Tornquist. Hello, Claudia?

Good morning, Knox. Good morning, everybody.

And also joining us, of course, is our Chairman, Chris Taylor, who also leads our exploration team. How are you, Chris?

Doing great, Knox. How are you?

Good, good. I see you're at the corporate head office there.

The one with the air conditioning broken they should know. Yes, that's the one.

You'll be sweating in a bit. Anyways, just a little bit of housekeeping. We'll let Chris -- Claudia and Chris go through the presentation, and at the very end, we'll take some questions. [Operator Instructions] And at the end, we'll take a look at all of them, and I'll start to ask Claudia and Chris these questions in order of priority and relevance to the audience. So with that, I will now turn the webinar over to Claudia Tornquist.

Thank you, Knox. Good morning, everybody. Welcome to the webinar. Thank you very much for joining in. It's an exciting time for our company. We were able to announce the first 2021 drill results from our 30,000-meter drill campaign at MPD, big build program. And we're thrilled with the first results. We did a big step-out that was successful and extended the strike of the non-mineralization multiple times. We'll touch more on this in this webinar. First off, please keep in mind that we will be making forward-looking statements and consult the relevant guidance on our website before making investment decisions. I'd like to start with introducing the team. Most of you will know Chris, our Chairman and Founder, who's on this call, of course. Chris is a geologist, leading our technical work. Of course, many of you will know him also from our sister company, Great Bear, great major gold discovery in recent years. Myself, my background is more the business and commercial, financial side. I was, for many years, with Rio Tinto, also working on some of their large copper projects and mines like Escondida in Chile, Oyu Tolgoi in Mongolia. Also on this page, some people you might not see so often, but that's the people who really make it happen in the field. You have on the right -- sorry, on the left, our VP, Operations, Andrew Berry; and our VP Exploration, Jeff Ward, who lead our technical work. And on the right is [ Ken Barka ] also one of our senior technical members of the team. In total, we are now 16 at Kodiak. We've grown significantly since last year. Still a small company. Most of the people are now working out of our field office in Merritt that we established this year. We have 11 people working there, doing all the good work at the site. Just briefly, we're also a member of the Discovery Group, which I'm sure many of you know, a great group of companies. It gives Kodiak a great network of support, expertise, technical know-how, contacts, and I firmly believe that it makes us a much stronger company than we would be out there just by ourselves and feel very fortunate to be part of a strong growth. And now without much further ado, on to our MPD project. Here's the map where the project is located. We are in southern BC between 2 large copper mines, Highland Valley, Teck's big porphyry mine to our north 50 kilometers and Copper Mountain, whose name stake mine to our south. It's a very established mining area. A lot of other mining exploration projects around, which is, of course, fantastic because all the infrastructure is there. We can work year-round. They have everything local, whether it's workforce, services, supplies, very low-cost exploration. And what's also very important, it's a very accessible project. We can literally turn off the highway onto our project a couple of minutes on a logging road and you are at the drill pad. So great for cost-effective exploration, also great for the economics of a potential future mine. And what I'd also like to highlight is the ESG side of things, which is becoming more and more important for many investors. And I think we're also, there, very fortunate. Firstly, BC already is a good start in terms of ESG, very high standards for environmental stewardship and community engagement and ESG is certainly a topic that's very close to my and our heart at Kodiak. We have already, at this early stage, very solid environmental programs in place, and we're consulting with over 20 local First Nations one way or another and have received a lot of support so far from them. Just last week, I had a First Nations meeting and they were very complementary on the environmental work we are doing and how we're approaching our exploration work. And yes, a lot of support from the First Nations in the area. So very fortunate. This cross-section shows our starting point, where we started when we embarked on this year's drill campaign. This summarizes where we got to last year. In summary, we drilled 9 holes last year, still a relatively small drill product. And we intersected a high-grade zone at the Gate Zone, which was a real transformative event for the company. Our share price jumped from $0.50 to over $3 at the time of the discovery and we were able to raise the finance, $12.7 million, that is now driving our large drill program this year. So really fortunate to, very early on in our exploration work, make a high-grade discovery. And last year, we were able, with the 9 holes we drilled, to intersect the high-grade zone that we discovered over a width of approximately 350 meters and down to 800 meters. So already some size, but very important to understand, last year, we only drilled a strike of approximately 100 meters, of just over, of a large underlying anomaly that's related to this mineralization that we discovered. The anomaly is over a kilometer long, so we tested about 10% last year and all the rest was still wide open, and that's what we are doing now this year, working our way along this large anomaly and testing it further. This is a plan map that shows last year's and this year's drilling, so you're looking down on to the ground. The background, this pink blotched area, that's the copper-in-soil anomaly that I just referred to. It's a large anomaly, 1.2 kilometer in length. And at the top end, these long black new horizontal lines with the green and red around them, that's the 2020 drill holes. And between them, you see the sort of white dotted lines. That's approximately the strike that we drilled last year, so that's around about 100 meters. And this year, we drilled the holes that you see in yellow. Those are the holes for which we have the results today. So we stepped out north first and drilled the 2 holes from the northern platform, hole 01 and 02. And then we went west and drilled a couple of more holes, holes 03, and 04 and 06 that you see here on the map, 03 going south and 04 southeast and 06 in between in the middle. We drilled hole 05 also from that platform, but hole 05 deviated and we pulled it very quickly and drilled hole 06 instead. And then after that, we stepped out further south by quite a long way. We stepped down to where you see the mark for hole MPD-09. That's the step-out hole we reported today and marked it with a yellow arrow here. You don't see much on the map in terms of drill trace because it was a vertical hole, but that hole, when we drilled it, we knew immediately that we were onto something here. We saw a lot of bornite in it, very high-temperature alteration, really interesting mineralization and long, nice intercept. And of course, importantly, it was a big step-out. So we stepped out by over 0.5 kilometer, drilled and the system was still there. And that was, of course, fantastic. We took on MPD because we thought it has the potential to host a big porphyry system. And I think this hole that we drilled there is a big step forward towards proving that, in fact, we do have a big system here. So we were very, very happy about this hole. It means now that we have drilled mineralization over 800 meters in strike. That's from 100, 125 meters last year so we've extended the strike by a factor of 6. And yes, that's, of course, fantastic. We're very happy with that and still working and lots more to come. And now I'll hand over to Chris, who will be able to talk you through a bit more detail of our drilling results. Chris, over to you.

Well, thanks, Claudia, and thanks, everybody, for listening in today. I have to say I was on site when we drilled this material. And man, this had me running around the core shack like a complete fool doing the happy bornite dance. And Claudia was there at the time. I remember Jeff Ward and Andy Berry laughing at me as well. We were all just thrilled to step out over 0.5 kilometer away from your previous drilling and hit this kind of mineralization. I mean, it was absolutely incredible. We always liked what we saw at MPD in terms of the grade distribution, the interval lengths and everything within the Gate Zone. But we'd only drilled it, like Claudia said, over 100 meters. And if I just get my -- if I get my pen out here and you just start thinking about that, what that looks like, what we had going into this drill season was basically a box drilled like this, right? So that was the total extent of mineralization. That's a 200-meter scale bar right there. So you can see really, you drilled just over 100 meters of strike length on the system. Now with what we've drilled, this is basically the box. You've gone from the little rectangular box that I've drawn there -- oops, I went a little far, to this mineralization that we're seeing right now. So you've got like basically over 6x the strike length. And in terms of the area and the volume that we're beginning to define here, it's an order of magnitude larger than what we had going into this year. So why are we so excited about this mineralization? I'm just going to undo my doodles here. And the reason is, what we're seeing in the core, and I'm going to show you some rock pictures soon. But when I began seeing this rock come out of the ground, it really reminded me of some of the stuff that I had drilled previously in a previous life when I was a project geologist back almost 15 years ago now at the Red Chris deposit, which is -- it's now owned predominantly by Newcrest, but at the time, Imperial Metals, which was the company I was working for, had bought it. And we were drilling just an astonishing-looking copper-gold mineralization. So we'll go over that. But some of these results that we've generated here, like on the step-outs like high-grade copper, this is like 87 meters of 0.5%, with 0.5-gram gold, good copper-to-gold ratio, it's about 1:1 on the percent copper to the grams per tonne gold. And you can see that sitting out here again very far away from where we had the initial system. The other important fact though is that all the intervening drill holes that we've now put in have also hit the copper-gold-silver mineralized porphyry, and we've extended the system off to the north as well. So we're going to go over some of those details. So why are we excited? So I was just talking about Red Chris because it's something I'm fairly familiar with, having done a bunch of drilling there. Well, Red Chris was a very valuable acquisition by Newcrest. It was hundreds of millions of dollars to acquire a 70% interest. But the system, when you think about it as a whole, it's not kilometers, and kilometers, and kilometers and extent. I think with our company, Great Bear, we're drilling off now what we call the LP Fault Zone, which we've got mineralization over 5 kilometers of strike length. We've actually drilled over about 12. Well, the scale bar on this Red Chris image here, remember, you're looking at one of the best copper porphyry discoveries in British Columbia. Well, that scale bar is 1 kilometer from there. I don't think you can see my cursor here, but I'll just get the -- I'll get this open, and you can see from here to here, that's 1 kilometer of strike length. So you have a pit design, which you can see I'm tracing out right here on the property, which is about roughly 1.5 kilometers in strike length, and you have a total mineralized system that I've outlined here, which is a couple of kilometers long. Now what I did was I took that same map of the central portion, the open pit portion of Red Chris and the total mineralized system, which is outlined in that sort of circular dotted line. And I flipped it around and superimposed at exactly the same scale on what we're drilling right now. And what it shows you is that thinking about that 800-kilometer strike length that we're now drilling at the Gate Zone, it's very similar to the main zone and the east zone at Red Chris. So we always were excited about what we saw at MPD but we didn't know if the system could have the sort of size that would lead it to have good potential, good economic development potential. These are questions we're still answering, but now we know the footprint of the system extends over -- basically underlies this entire copper-in-soil anomaly that we have here, which is 1.2 kilometers in strike length. We've drilled 800 meters of it, and we've hit copper in all instances where we've done that drilling. And what's really interesting with MPD as well is when you think about it contrasting to Red Chris over on the left here, now we see the sort of similarities in the scale of the footprint of the system. But at MPD, we have other targets as well. So you're looking here at Dillard. Beside -- here's the Gate Zone. It occurs in this kind of 3-kilometer-long magnetic low anomaly. And there's another one over here called Dillard, which is also overlaying by the strong copper-in-soil anomaly and another one over here called Dillard East. So at MPD, it looks like we're dealing with a cluster of at least 3 porphyry centers. We now know, unlike a couple of years ago when we acquired the project, we now know that there's very nice grades of copper and gold mineralization over significant intervals and over significant strike lengths. And we're drilling one out of our 3 targets so far. So we're very optimistic, happy with what we found and optimistic about the size of the system. The other thing is when you think about what these porphyries look like, everybody in the space, in the industry, were taught in school that porphyries look like a series of nested Russian dolls or maybe nested light bulbs, if you think about that. But something like Red Chris and something like MPD, the geometries are a bit different. So they're more like they're long in -- like right now, we're dealing with 800 meters of strike length and about 300 meters of width. When you look at Red Chris, a cross-section from Red Chris on the left, through the east zone, the high-grade zone, the highest grade portion of the deposit and you look at ours on the right, you can see a couple of things stand out here. They both have that longer-than-they-are-wide geometry, and they both have sort of central areas of higher grade mineralization. You see this over here on Red Chris on the left. I basically illustrated this with the dotted line. You can see it outlining there. That's the bornite and chalcopyrite zone that occurs along the center of the thing, and you get these catalytic zones of very high-grade mineralization in these sort of pods. And then you show that, I -- our system at MPD looks like it's dipping about 70 or 80 degrees to the east. So I took the same thing and superimposed it. And as you can see here, you have higher-grade mineralization in the middle, and it's surrounded by the lower-grade mineralization in a halo, which is the same pattern that we see at Red Chris. So the point being here, we have similar types of geometries. And if you look at what's been drilled at Red Chris, I believe this hole here at the top, I'm just going to put a mark on it, [ RC07335 ], this was about a month of my life back in 2007. Just slowly log in this hole, it just goes down, and down, and down about 1 kilometer long. And every day, I'd get another 20 meters of this material and it was pretty much the same. So if we wanted to do that sort of duplication at MPD with what we're doing right now because of the dip, we basically have to drill the holes on this angle to go straight down the deposit like we did drilling vertically at Red Chris. That's because Red Chris is a vertical deposit and MPD is dipping slightly to the east. But regardless what you see is that pattern of that high-grade material in the middle, moderate-grade material around that and then the lower-grade halo of material around that. That's the same kind of thing that we see where we are. Obviously, with the drilling that we've done, and I'll just delete those doodles, we have only drilled now to about 850 meters depth. I know drilling almost a kilometer seems like a lot. But remember, here, they've drilled down to 1.5 kilometers. And a lot of the economic engine of Red Chris in the future is the underground, block-capable underground mining material. They're going to basically be mining this underground for decades after the open pit portion of the system is mined out. They're basically going to go underground for many, many years, and that will be a huge block gaming alteration. Red Chris, if it was only the open pit portion of the system, would have a very different valuation than what it currently has, based on that expectation of many, many years of long mining life, including the underground higher-grade component. And just some of the comparisons when you look at the rocks, what do you see that's similar in these various areas? Well, often, that peripheral halo, you see that this material here is like this. This is -- these are all rock samples that we've had from the MPD project. So that material is pyrite dominating over chalcopyrite, and that occurs in a big halo or shell around the higher-grade mineralization. The thing about porphyries is you want tonnes. You want lots of tonnes of material because ultimately, even something like Red Chris where you have lots of mineralization in the 0.5% range or up to 1% copper range, you're always blending that material together with the lower-grade mineralization from the halos, and you're putting a blended head grade through the mill. So you want to see, on these systems, the high grade like you have here and like we have here and we have here. And you want to see a big volume of lower-grade mineralization around that because ultimately, from a mining perspective, these things always end up with a blended head grade. So some of the similarities, I'll just re-highlight some of them here. When we're looking at that peripheral mineralization, it's pyrite dominating over chalcopyrite. This nice sample of rock here is from hole 02, which was, I believe, hole 02, it was about 530 meters of about 0.15% copper, so not very high grade but it had some higher-grade components in it. A sample like this would be a couple percent copper by assay grade. So it shows you that the system is still going, and in fact, it's still open to further extension in that direction, and we're happy to see that big halo of lower-grade material. What you see at Red Chris, as you get in closer to the center part of the system here is this type of rock. It's more chalcopyrite than you see with pyrite. And of course, that's what we're seeing in big areas of our drilling as well. I believe this sample here is from hole #06, which hits right there. And of course, what got me really excited doing the funny dance around the core shack was this kind of stuff here. And this is what we saw when we stepped out and we got into this area. Really reminds me of this material here. Like there's a lot of silicification, there's a lot of silica veining and there's basically bornite dominating over chalcopyrite. Why is that important? Why is the mineral species important? Because bornite is 2/3 copper by weight, whereas chalcopyrite, the normal copper sulfide mineral is only 1/3 copper by weight. So you start seeing this purple-colored stuff, you get really happy because the same amount of mineralization is going to have 30% more copper in it. Or actually, I did my math wrong. It's going to have double the amount of copper in it relative to the chalcopyrite. And of course, other similarities that we see between these things when you look at it here. These areas, these dotted outlines that you see at Red Chris, these are patches of silica-rich alteration. And I felt like at times when I was drilling down through this thing that I was drilling a giant quartz vein. And that's what you see here as well. So we see these in the middle of our mineralized zone, like these are -- this picture is from over here. But the other silicification that we've showed is from here. We've got it here, we've got it over here. These are these big patches of high-grade mineralization with the high amount of silicification, so yet another similarity between these 2 deposits. And this is what some of this stuff looks like. And so I thought for the geos or others that may be on the call maybe listening in, so this is some of the alteration that we see in the big step-out. So remember, this is more than 0.5 kilometer away from our previous drilling and you're seeing the porphyry-style veins, you're seeing bornite. All the black bits in here, which is pretty amazing, it's disseminated bornite in the ground mass of this rock, and you see bornite occurring in the veins of this as well. So again, this is the higher portion of copper. You get a lot more copper bang for your buck with the bornite than you do with normal chalcopyrite-dominated mineralization. So very exciting. So again, this was -- this is the 87-meter interval in the middle of 0.5% copper, nearly 0.5 gram per gold and just under 1 gram silver. So very nice mineralization on that big step-out. And the alteration features that we see here, too. This is some of this phyllic overprint. It's a type of alteration you see. It's higher temperature alteration, but lower temperature than the potassic feldspar alteration in the middle of the system. It comes in later because of a mixing of the types of fluids in the ground mass. But you see that overprinting on the system. And why we got excited? Not only do you see the higher-temperature bornite that has more copper per volume, but you see a bigger system of multiphase overprint of these different types of alteration on top of the mineralization on our big step-out hole. And that really reminded me of the high-grade eastern portion of Red Chris. It has the same sort of multigenerational overprint of initially high-temperature magmatic fluids and then overprinting with successively lower-temperature mixed fluids as groundwater gets in and mixes with the magmatic fluid. Anyway, the point being, it looks to me and to the other geos on the project that, that area to the south is closer to a potential mineralized source than the area we initially drilled last year, which is really exciting. And here are some of these nice-looking pieces of rock. You can see all the silica in here, the chalcopyrite mineralization crackling through that, very nice-looking stuff. Here are some other images. Again, these are the drill holes in the step-out. So this is, again, you can see the bornite is the dark colored material here. It's kind of purply. There's little bits of chalcopyrite mixed in, lots of generations of vein complex, overprinting alteration, signature of a big fluid system here. Again, another image of the same thing just zoomed up on the right, the bottom right here, from what we're looking at in the news release today. And some of the holes that are in between these, and this is really interesting because what you're looking at here is you're halfway in between. Usually, you're fearful to do a 100-meter step-out, 200-meter step-out. We acted boldly with Kodiak. We did the 0.5-kilometer step-out and we did the fill-in, in between these things as well. And you can see here, you can see the potassic feldspar alteration, epidote alteration. This is pyrite over here and this is all chalcopyrite-dominated mineralization here. So here, arguably, you have about the same amount of chalcopyrite as you do pyrite. This shows that you're still not exactly in the middle of the system. I would follow this up going further down plunge. Like we did at Red Chris with the deeper drilling, I would be anticipating that there would be good potential for more discovery just below this kind of level. And this is, again, the same hole in the middle. What we're really excited about here is these -- here you are with bornite dominating over chalcopyrite. That's really nice to see. And here within the same hole, about 300 meters away. You think about that, that's 1/3 of a kilometer away in the same drill hole, high-temperature alteration and chalcopyrite dominating over pyrite, features that you really, really want to see. That's why we're getting the wider intervals of nice mineralization here. Same drill hole but basically right at the surface. You can see the difference. It's pyrite-dominated here. It just means go a little bit deeper to get into the system. So you can see that's only at 65 meters depth from surface. Here deeper down in the same hole, you're starting to see that pyrite and chalcopyrite mineralization. I'm just showing these for the geos in the audience. These are the right features, the right type of alteration. These are showing us that we're seeing what we want to see. This is the footprints of a big system. And here we go, some of the rocks that we saw in another hole in between, MPD-21-004. There is -- this is at 226 meters downhole. You see the same chalcopyrite-dominated mineralization, the silica veining around that. Here's a good example in the same hole 100 meters away of that sort of massive chalcopyrite veining that we see as well, all the signatures of a big porphyry system. Same region, same kind of features on this image. You can see the silicification. You can see the chalcopyrite. You can see multi-phases of alteration overprinting the rock in there. And you can see that the density of the spacing of this veining is very high. So again, something else that you'd like to see here too. And this is the step-out hole. Like again, this is not an area that we went into expecting to see high-grade copper-gold-silver mineralization. But it shows you that even stepping out 100 meters north of where we were last year, you're getting intervals of very nice mineralization within here that show you the system is still open to extension. So something like this, again, you may generate 500 meters of 0.15 or 150 meters of 0.24. I guess that's about a 0.3% copper equivalent. Great mineralization adds a lot of tonnage to the story, and you see that the system is still open to extension in these directions. And with that, I guess I'll hand it back over to Claudia so she can do a bit of a recap on this slide, and I'm happy to chime in as well.

Thank you, Chris. I'm still regretting not having video at the bornite dance. What a missed opportunity. But in more serious, just to wrap up, what's still to come? We are drilling at the Gate Zone at the moment with 2 drill rigs. In total, we have 30,000 meters, up to 30,000 meters planned this year plus also some geophysics and other exploration work. We started in March, added the second drill rig in June and will now be drilling for the remainder of the year with 2 rigs. So expect many more news and exploration results to come. We have, at the moment, both drills at the Gate Zone and are drilling here. The intention is to then also move one drill to Dillard in -- later in the summer probably. So we'll be testing Dillard this year as well. And we're fully funded for that work, which is, of course, a fantastic situation to be in. So it should be an exciting time for our investors and shareholders. Lots of news flow and lots more exciting exploration results to come. And with that, I would like to wrap it up and open the discussion, and we would be very happy to answer any questions you might have.

Well, thank you, Chris and Claudia. Certainly while you've been talking, there's been a lot of questions popping up. So I'll take them in order of priority and sequence. The first question comes from Richard. His comment, "Yes, huge step-out but the grades were 0.25 CU over 425 meters is about my average, in my opinion, and your opinion, please?" So I guess, Richard's assuming that this is 425 meters of 0.25 CU and the big step-out.

Yes. So just -- I'd make a comparison here. Like what -- can I go back? I'm just going to take the slide back on to here.

Surely. Click away.

So what you want to see on this, basically, I'm going to draw something -- like pretend there's no background on this because I don't have a blank piece of paper in front of me. So what you're going to see on, I think, these kind of deposits is, now this is surface. So if I could draw -- imagine that black blob is a tree. There's only so much I could draw with my mouse. What you see is probably something like this underneath so there'd be an intrusion underneath. I don't know why we always show those are Xs but say that's some sort of intermediate intrusion. There'll be these magmatic hooplas that go over these areas. What they'll do is they'll concentrate. As the magma cools all around here, it concentrates the fluids and the metal at the tip, at the upper levels of these things. And then basically when the fluid pressure gets too high, they crack and they go up and you get mineralization rising along these things. What that ends up doing is you get higher-grade mineralization in sort of these kind of shapes around these things and then you get lower-grade mineralization in halo. And I think what we're seeing here is this kind of pattern at Gate Zone. And what I expect is that, say, there's a magmatic center somewhere here, there's clearly something that's high temperature around here. And we have all this copper mineralization. There's a lot of trenching and other results here. So it might be a scenario kind of like this. And what that means is what you want to see is, I can't emphasize enough, is the tonnage. Like you want to be able to take what's the average grade of all this material? If I look at Red Chris as a comparison, remember, it's regarded widely as one of the best copper discoveries in BC. And I was looking at it, so just to refresh my memory. So I think if you look at the -- this is like when I was involved with the company, you had about 850 million tonnes in pit of about 0.31% copper. That was measured and indicated. And you had about another 400,000 tonnes of 0.24% copper on the inferred side, and you had higher-grade mineralization. So what that does is it averages out the entire volume of something like this. So Red Chris averages out something around 0.3%, 0.35%. So there's going to be material around the higher-grade material, which is going to be averaging. You get a lot of stuff in the 0.2%, 0.15%, those kind of ranges. And then ultimately, in any kind of operation, you blend together the high-grade material from these central zones together with the lower-grade envelope around that. So I look at this, the most important thing about the South discovery is that it has high temperature, high-grade mineralization within it. And you don't know. I'm just speculating, drying this 3-center thing. It could be a whole bunch of these that come up along strike. And if you look at the Red Chris cross-section in comparison, where is it? I'm just going to have to flip back a few slides. So -- and I'm going to undo the drawing on here and then redo the drawing on here to answer that question. So you get these higher-grade pods that occur, higher-grade, larger zones that occur and higher-grade other pods that's all blended together. So if you took an average off of everything, this is the very highest-grade portion of the deposit. You might get 0.5% or 1% copper over some really nice intervals because you're drilling straight down it. Again, we're drilling across it, which gives narrower zones, right? That's very important to remember is that these drill holes go straight down so you get really long intercepts of mineralization. Our holes are going across and that minimizes the width of mineralization. If we took drill holes and we went straight down along this thing, we would have very much wider intercepts of high-grade copper mineralization. The important part is that we're seeing the right features, the right copper zonations and a big system size. And it's all about putting together tonnes and then figuring out what the average grade of those tonnes are. The grades that we're seeing in the intercepts that we've got are very similar to what you'd generate at something like Red Chris. Keep in mind that there, they're drilling straight down the system, which gives you the maximum amount of width. We are drilling across, which reduces the width of the intercepts that you get in drill hole.

Great. Thank you, Chris. So Stefan Ioannou, a Cormark analyst, is asking, "Can you give us an idea where the pending holes 07 and 08 are located?" Maybe you don't want to mention that right now, but...

I'd have to toss that one over to Claudia.

Let me go back to the -- I think we're both kicking on the same thing. Let me go back to the plan map. We drilled more holes from this setup, the hole #07. And then move down to the step-out in drill hole 08 and some further holes there...

We can't see your cursor, Claudia, so it's a little hard to...

Oh, sorry. We drilled one more hole from the same setup that we drilled 03, 04, 05 and 06 and then moved down to the step-out and drilled 08, 09 and further holes from there. And yes, as I said before, 09 when we drilled that, we saw immediately that the core was real good, so we prioritized that hole over the holes #07 and 08. That's why this came first. 07 and 08 are being processed as we speak and the further holes being drilled from the same setup and also in between where we made the discovery, the northern setups and the step-out.

Okay, thank you. Stephen asks, "Global copper grades have fallen drastically. Can you put the CU-only grades you are finding in a global and a regional context?"

One yardstick that I always have in the back of my mind, which is Copper Mountain, which is our neighboring mine, very close, geological analog, their reserve grade is 0.24% copper and their cut-off grade is 0.1% copper. And that, I think, also gives some good perspective to what the type of grades would look like that you want to come out with in the end.

Okay. Dale asked, "What role has Teck Resources taken in the last 10 months? Have they reacted to these results?"

Yes. Well, they are our partners. They are a fantastic partner to have in the [ boat ]. They've been on site and have -- we've certainly have quite regular discussions with them. It's great to get their input. Their geologists obviously know the area like the back of their hands. They have their big Highland Valley copper mine only 50 kilometers north. So they've given us assistance with some things, for example, some age dating. They've helped us with safety systems and other things. And I just had an e-mail from them this morning, actually, and we'll have a discussion about these results soon and probably have them on site again soon. So yes, they're a great partner and it's certainly great to get their input, have the discussions with them and have them in the fold.

Great. So the next question is about the resource estimate down the road. We're drilling along a 1-kilometer copper-in-soil anomaly, and we have a 30,000-meter drill program, which we expect to finish this year. How much more drilling do you anticipate, knowing what you know now after the step-out, will it take to get to our maiden resource estimate, particularly on the Gate Zone?

That's very much a "how long is a piece of string" type question and very difficult answer. Certainly, what I know for sure this year, at 30,000 meters, that's all about discovery exploration drilling, finding more high-grade zones, having -- generating more good drill results. And I think at the end of these 30,000 meters, we have a much better -- we'll have a much better view of where, when, how it makes sense to focus in on the resource. Could we start working on the resource next year? Potentially, but I would certainly not promise anything. I think let's do the 30,000 meters first, and then we know a lot more about what we have on our hands and then can make an educated decision.

Okay. Thank you. With regards to permitting, are you now fully permitted for the entire area on the Gate Zone? And what do you have in the scope of a permit right now and how long does it last? Like are you permitted to drill Gate and Dillard and Axe? What exactly is the permitting landscape right now?

So the way permitting works in BC is you get an area-based permit. And we have such a permit, it's valid until 2026. And then you get approval for each individual drill site. And the way that generally works is that, sometime in advance before you want to drill, you submit a number of potential drill sites, and generally, you submit quite a lot anywhere you potentially might want to drill. And those individual drill sites then get approved. And we then -- once we have the approval for the drill site, we get a First Nations contractor on site to do a heritage survey, to just clear the site from a heritage perspective. And once that's done, then we can start working. And so it's always an iterative process. We had a number of drill sites that we had already approved. Where we drilled this year than last year after our initial discovery, we applied for a large amount of further drill sites and went through the approval process and the heritage surveys for those. And we have the ones at the Gate Zone now all approved, so everything we applied for at Gate, we can drill now. And there are other drill sites that we still have in the approval process that will also get the heritage surveys done this summer. So we'll add to our drill site -- potential drill site inventory as we go along. And Dillard, importantly also, we have approved drill sites so we can go there and start drilling any time.

Great. Let's talk a bit about the Axe property that we added this year. It's just south of MPD. What is, from a geological standpoint, Chris, what is similar to MPD? Why do we like Axe? What's -- do you anticipate a happy bornite dance at Axe?

I think like we wouldn't have taken on the project if we didn't think it had good potential. There's a zone at Axe which has similar geology, similar sort of geophysical footprint to the Gate Zone MEG blow for instance. And the property has similar accessibility to what we currently have. So I would imagine like the way that progress will extend here is it's going to be systematic. And over time, you're going to have a mix of these sort of parts [indiscernible] on new targets. And that's as the company progresses through what is probably going to be years of exploration and discovery ahead of it here. So I am quite optimistic about Axe. I know there was a very large option deal by Antofagasta, the big copper producer on the Axe property just a few years back. And they had a particular MEG-high target in mind that they drilled. Those MEG-high targets didn't work out for them, and they walked away from the project, but they still penned, prior to doing that work, it was tens of millions of dollars to earn in on that project based on the potential. And now we know if we had gone and drilled those MEG-high targets at MPD, we would have missed, right? So it's in MEG-low targets that we ended up hitting all this copper mineralization. So we're very optimistic on the discovery potential there as well.

Great. Mel asked, "Given the depth of CU copper, what would be the required tonnage to make this look commercial?" Probably not a fair question to ask at this time, but...

It's very early days to even speculate about mining methods, tonnages, et cetera, because at this stage, we don't know yet whether we've hit the highest grades, where they are, where they come closer to surface. We just have a lot more drilling to do and gain a lot better understanding of what we have on our hands here in terms of mineralization before we can start thinking about resource and then also mining methods. So at this stage, I think it's just really very early. What we do know is that we have a large system. We've now hit good grades over big distances, several hundreds of meters, almost 1 kilometer, 800 meters, so that's a great start. We know there is high-grade material in the mineralized system. That's also very important. And yes, now a lot more drilling to come. And then in some time, we'll be able to answer all these questions about mining resource, et cetera.

Yes. It is pretty premature. And I put up the image on the screen on top of this if anybody can -- I guess everybody can still see that as we're talking here. But that's, that Red Chris and MPD comparison. And you can see like at Red Chris, where you have the only place you really get high-grade mineralization concentrated is right there where I drew that circle. The rest of it is quite low-grade. And out here, it's even lower grade out in the Gully Zone. So they've got basically one discrete center of high-grade. There are some other ones that they've popped up now over time as they do more work. But the size of these things, it's a couple of hundred meters in strike length. We now know we've got that here and we now know we've got that here. When I look at something like the Dillard target, which only has shallow drilling and it only has a very limited amount of drilling but it's got a big copper-in-soil anomaly running across it, how many of these could you fit on this project? And my old boss, Pat McAndless at Imperial Metals, like his attitude, we found something called the Northeast Zone discovery when we were working at Mount Polley back before that went into production in 2005, again. And that was -- it was probably about 200 meters long and it would have averaged about 0.5% copper. It was what we called the Northeast Zone. And Pat used to say, well, how many of these Northeast Zones, if you think about the length, that's 3 kilometers there to there. If this had been that project, he'd be like, how many of these Northeast Zones, these little nuggets of higher-grade, they end up being the engine that drives all the lower-grade mineralization around them because the composite grade when it goes through the mill then makes great economics. And I know that's the case at Copper Mountain beside us as well. They have a big system. It's largely a 0.24, 0.24 grading system, but there are some higher-grade nuggets within it. We saw the same thing at Mount Polley. We see the same pattern at Red Chris and we're seeing the same pattern in MPD. That's the way porphyries look. You'd have to drill all of this off, and all of this off, and all of this off, prior to being able to give a reasonable idea what the project is going to be generating economically and everything over time. It's just too early days, as Claudia says, to tell, but it has all the features that we wanted to see in a big-scale porphyry system. And fortunately, for us, it looks like there's at least 3 porphyry centers on the project, which is very nice to have.

Okay. I have 2 more questions because we're running out of time. One quick one. Is there any effect on wildfires in the area? There's been fires in Kamloops and in the Okanagan. Is there any effect on our project?

Well, nobody is smoking cigarettes, I'll tell you that.

That's a good question. And actually, in our First Nations meeting last week, that's also something we discussed. We obviously have lots of safety protocols and fire protocols in place. But in general, a drill rig has water, and we are one of the few people in the forest who actually have a supply of water if a fire occurs and the drill rig in itself doesn't really cause a fire hazard. So we saw a very low risk of causing any issues and the fire surrounding us, which they are unfortunately in BC at the moment, wildfires, they have no impact, as we speak, on our work.

Okay. And actually I lied. I'm going to have 2 more questions after this. So I get this question a lot. Based on these results, is this looking more like an underground design versus an open pit design? Do either or both work in this kind of scenario?

Again, it's very, very early to speculate. As I said before, we just don't know yet what we have on our hands, where the highest grades are, where they are in terms of how deep or how close to surface. So at this stage, what's always a good yardstick is to look around us. And around us, we have 3 copper gold mines, which is Highland Valley, which is one big open pit. We then have Copper Mountain, which are 3 smaller open pits. And we have New Afton, which is higher-grade and underground. So 3 very different mining scenarios right in the vicinity. So it could go either way, and really at this stage, we can only speculate. Bear with us. We drill as fast as we can and we're going to answer these questions in due course.

Okay. Last question. Just a bit about the Mohave Project in Arizona. What's going on there?

Oh, the Mohave Project. That's an interesting question. Sometimes, I get asked whether we're selling that project because obviously, we had a lot of success now at MPD. We are not selling it. We do like Mohave, and we're actually doing some work in the background on the project, getting ready to drill. We are planning to be at site later in the year and doing some preparatory work to be then in a position to drill in the new year.

Great. Well, thank you, Chris and Claudia. Certainly lots to look forward to with Kodiak this year and next year and beyond. So thank you for joining us for this webinar. Thank you to everybody for dialing in and listening in. If you have any more questions, you could call me directly (604) 646-8362 or you could e-mail [email protected]. And that concludes our webinar. Thank you.