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

Hi. Thank you very much for joining Kodiak's update on our latest results. My name is Nancy Curry. I do the corporate development for the company. I'd like to introduce Claudia Tornquist, the President and CEO; and Chris Taylor, our Chairman and Founder. We've just recently put out some more results on MPD, our flagship property. And with that, I'm going to turn it over to Claudia.

Thank you, Nancy. First off, I'd like to introduce the team. You see some of them here on the picture, the technical team on the ground: Jeff Ward, our VP Exploration; Andy Berry, our VP Operations; we also Ken Barker, senior member of the team; and Dave Skelton, who is not on this picture. So big shout out to the team on the ground who are running a big and complex exploration and drilling program this year. We had very challenging conditions brought these fires, obviously now -- early as now, and they -- they are doing a fantastic job in executing our program successfully. So I'd like to talk a little bit about what we have -- did this year, where we drilled. You have a plan map here that shows this year's drill traces. The background, the pink area, is the large copper-in-soil surface anomaly that defines our target area at the Gate Zone. That's copper on surface that is related to the high-grade mineralization we have been drilling and are drilling. You see in the north, the new horizontal lines, the drill holes, which we have with us already. The yellow ones are the drill holes that we have just reported on. In total, we have drilled 32 holes so far at the Gate Zone. We have received 15 assays for 15 holes and 9 of them are in the current release. You might remember at our last results, we did a big step-out, which was to the south from the previous drilling. And -- since we last reported, we have now more holes from the big step up to the south, and in between where we drilled the high-grade mineralization previously and the Southern locations. And we have a long section. You see on this picture the dotted line from those results where we see some of the drill holes and results that we have just reported on, and I'll hand over to Chris, who will tell you more about those results.

Yes. Thanks, Claudia. Thanks for the introduction. I was really excited to see some of these numbers coming in because what we keep seeing at the Gate Zone discovery is what we'd expect to see with drilling at a large porphyry center like this. And you can see looking at the long section in front of you, we've got about a kilometer of drill extent that we're working with here. And we keep seeing the same type of mineralization and some of the other stuff that we're really excited to see is that we're following that typical porphyry zonation, where we have the high-grade copper gold mineralization in the middle of the system and of course, as we drill out towards the margins, you're going to transition into a propylitic facies or phyllic alteration and you're going to see a pyrite dominating over chalcopyrite and you're going to get lower grade copper, but sometimes some really nice gold results, which we also saw on this release. So you can see here some of the new results. We've got 0.5% copper equivalent, over 500 meters in the middle of the zone, right in the middle. And you can, of course, see out on the right of the screen here where we had some of our initial Gate Zone discovery work. On the left of the screen where we've had some of the recent 2021 Gate Zone extension work. So very pleased with what we're seeing. These are images of some of the rocks. And if you're familiar with some of the pictures of copper gold mineralization that we showed last year, you'll see that these are very similar. You see the solicification, you see the chalcopyrite, you see bornite as well. And this is everything that you've looked for in an alkalic porphyry system like the one that we're seeing here at Gate, and we continue to see these kind of results. It's interesting when you look at the image on the right here, which is MPD-21-012, you can see that there's a significant amount of bornite in there as well. And that interval was -- it was a 48-meter intercept of just over 0.5%, almost 0.6% copper, 0.1 grams per tonne gold and about 1 gram silver, about 400 meters down the hole. On the left, you see MPD-21-016, and you see that strong solicification, brecciation. And again, about 0.5% copper, about 0.1 grams per tonne gold, about 1.5-gram silver. Quit shell, in this case, starts at about 300 meters goes to about 400 meters depth. And some of the other results, I mean this is what appeals to me as a geologist and somebody that's worked in porphyries a lot. The image on the right is actually quite interesting to me because this shows you the same type of vein-hosted chalcopyrite-dominated mineralization that we see in the high-grade zones. But this has actually drilled marginal to some of the other holes, it goes into the flank of the system. So the interval here is over 100 meters of about 0.15% copper. But you can see it still contains the same high grade copper mineralization that we see elsewhere. The sample that the geologist is holding in his hand there probably runs about 1% copper over a meter or so. And I'm not sure, I don't have the spreadsheet in front of me to show the total interval, but you can see that there was a wider interval of copper mineralization here. And the image on the left of the image MPD-21-024, that really reminds me of some of the mineralization I've seen at other core porphyry deposits in British Columbia. But there's a 42-meter interval that grades 0.32% copper, about the same amount of gold as they have copper in that hole. And you can see again, chalcopyrite, pyrite mineralization, potassic feldspar alteration and other alteration that you see within these sort of copper-bearing veins. And again, this is mineralization that reminds me of other copper porphyry deposits in British Columbia. And with that, Claudia, maybe you could speak a little bit to this as well.

Yes. I'd like to highlight of our exploration work and plans and strategy going forward. We have so far only drilled at the Gate Zone, which you see on the left side of the screen here, where this little yellow star is. What's important to understand is that Gate is only one of several target areas on the property. From all we can tell, our porphyry system is like many others in BC a multi-centered porphyry that we have here on our hands. And where we really can unlock value and bring the project to the next stage is by replicating the approach that we successfully applied at the Gate Zone, where we drilled below shale restore drilling, and we're able to discover a high-grade mineralization. If we take all we learned and this successful approach and apply it to other target zones on the property. The next one on our list is Dillard, which is 2 kilometer from where we're drilling currently and is very much of an analog to the Gate Zone. We will be drilling or are drilling Dillard in Q4, starting and we'll also drive more in the next year. And we then also have other interpreted porphyry centers that we will explore until next year, such as Man, which is south of Gate, and on the left side of the slide here, or also Axe, which isn't actually on this map, which is further south and further other targets. So lots more targets, lots more discovery potential and really unlocking the value and replicating the successful approach of what we did at Gate at these other interpreted porphyry centers, that's our strategy going forward.

So the strategy is to replicate what is happening or what was successful at Gate to these other targets. Chris, is this something -- why should investors be looking at this as being important?

Yes. Thanks, Nancy. The -- what really gets me -- when I think about the progress that Kodiak made over the last 2 years. I mean, it's been incredible. We've had -- the Gate Zone only is a bonafide new significant copper porphyry discovery in British Columbia. And as we continue to drill it and continue to expand it, we keep seeing those geological features that we like. But it's the method here that's really important. And I think if shareholders should get excited by anything on the go-forward basis. It's that discovery potential, but really the methods that we apply and that the company, Kodiak is applying now at the MPD project. And if I think about that, well, the same sort of strategy, the same sort of philosophy of systematic discovery, systematic work, it led to a series of major discoveries with the sister company, Great Bear, which I'm probably a little bit better known for it at this point. But it shows me there's a lot of comparisons between the early success that we've had at Kodiak and success that we've had systematically at Great Bear. So what I'm actually showing on the screen here on the top left, this is an image of the Dixie Project, which is located in Ontario that Great Bear is working on. And these are images that we put out. If you notice here, September of 2017, so 4 years ago now, what we started with is very similar to where we're at with Kodiak right now. We had a big project. This is 22 kilometers long end-to-end, and we had done geophysics. You can see the background there is magnetic geophysical data showing a number major targets and how those panned out over time. On the right is a map from October of 2018, you can see that here. And what we had was exactly what we're doing with Kodiak right now in Great Bear about 3 years ago. And we had -- this map went out in the public, and it showed a number of targets generated over a big area, several kilometers. And of course, we saw emerging from that this major structural trend, which is now the big LP Fault discovery. And it was systematically exploring and drilling these targets, which led to these sequence of discoveries. And this is the first one, that we were successful with. It was the Dixie Limb Zone. So you can see a bunch of little red dots on there from gold projected to surface. And we began systematically drilling off the the Limb Zone, and we saw that there were significant trends and plunges of high-grade gold mineralization in this zone, and we began to generate some real success for the company. In a way, this is like what Kodiak is doing right now with the Gate Zone. You have a target that has been now proven and is expanding systematically with the ongoing drilling. But you can see that there's a whole sequence of other targets still at this space with Great Bear that still needed to be tested. And one of the second major discovery that we made and really the first discovery that Great Bear found all on its own initiative with good science was the Hinge Zone discovery. So a year into drilling on the project, we found this. It was a brand-new high-grade gold zone. And at that point, the company really began to accelerate. Again, there's analogies to the current state of affairs with the Gate Zone discovery at Kodiak as well. And what Kodiak needs to do right now is step out and begin testing these other regional targets because as Great Bear began doing this at the Dixie project, we began finding more and more targets. And the big one turned out being in this area here, the LP Fault, which wasn't the first one, and it wasn't the second one. It was actually the third major target that we ended up exploring and that one is now hosting these high-grade gold zones are big bought tonnage gold envelope around that. And you can see it's become that sort of focus of effort. So really the process that you undergo as an exploration stage company, when you've defined you know the property that you're sitting on has what you're looking for, we knew this at Great Bear. Now we know at Kodiak, we have these porphyry centers. But we need to test more. So initially, you define all these targets like in the map over here, then you begin to systematically test those targets with drilling. You've seen that going on for over a year at the Gate Zone now. And you need to representatively drill those off. You need to understand what's the size, what's the continuity, what's the grade profile like, what's the geology telling you about the potential of the project, and then you need, very importantly, repeat those steps and test the other targets on the project. So when we look at Kodiak today, here we are with some excellent Gate Zone discovery core. There's the Gate Zone sitting up in this part of the project. But lone the hole you have the Man target down here, you have the Dillard target over here and we over at Axe, we have a sequence of other targets, including one within a major mag break like the Gate Zone porphyry cluster that we have up at MPD. So you've got this large project sitting in front of you, many kilometers in strike extent, there's a 2-kilometer scale bar for scale. And you can see, again, repeat the process, be systematic. You like what you see here at Gate Zone, you know that it's a major porphyry copper gold discovery, now you need to test this across the project. So again, repeating that success like we've seen on Great Bear, this is that systematic drilling of the Gate Zone target. You can see how that has generated a sequence of excellent copper gold drill results over the last couple of years. And as Claudia was speaking to, we now need to test these other targets across the project. Now that we know we're in elephant country, as the proverbial saying goes here, we need to go and see how many elephants we have. So as -- why I get excited about the project, about what we've done so far, but really about that upside potential. And I remind everybody when I talk about it, that its core from Dillard. When I was first out looking at the project, I saw this big propylitic alteration envelope over kilometers of strike length in this area. And it was actually core that was drilled from Dillard that reminded me of some of the core we drilled earlier at the Mount Polley porphyry copper deposit in Central BC, which is in the same belt of rocks. And I'm really excited to get the rigs out there, get going at Dillard, get going at Man, and get going down at Axe here, the 1516 Zone looks like a dead ringer geophysically for what we've seen up at Gate. And really, it's repeat that systematic testing process. You that you have what you want on the project and now you should -- to benefit shareholders and really show the full scale of what Kodiak might have, we should start stepping out and we should also start testing these. It doesn't mean we're going to stop working at Gate, it means that we think like we did at Great Bear that these other zones have real potential to add value to the company and the project.

Excellent. Thank you, Chris. So lots of news to come still from our current drill program, new exploration targets to be tested. So please stay tuned, sign up to our e-mail if you haven't already, if you have any questions, please give me a call. Thank you, Claudia. Thank you, Chris, and thank you, everyone, for listening.