Jean-Paul, could you tell us a little bit about yourself and how you got to lead Chesapeake Gold?
I am a geologist by education, having studied at the University of Toronto. My first job was with Beartooth Platinum in Montana, where I worked on a platinum palladium chromium deposit on the Stillwater property. During that time, I learned the proper approach for exploring new deposits: doing geological mapping, soil and rock sampling and conducting geophysics all before drilling. My second job was with Royal Nickel Corporation in Quebec, where I contributed to expanding a large tonnage, low-grade nickel deposit (with ~12.5Blbs of nickel) from only 27 holes in the ground when I started to over 200 holes. With this extensive drilling program and engineering studies we took the project through preliminary economic evaluation (PEA), pre-feasibility (PFS) to a feasibility study (FS) and ready for project sanctioning.
I then went back to school and did my MBA at the University of Alberta, focusing on natural resources, energy, and the environment. This helped me transition to the capital markets side of the mining business. I worked for BMO Capital Markets in Toronto. There, I covered junior gold and a fulsome range of silver companies. I developed connections, including one with Alan Pangbourne the COO at Silver Standard. Eventually, I moved to Hudbay Minerals, where I was involved in significant acquisitions and the development and execution of strategy.
During my time at Hudbay, I maintained contact with Alan Pangbourne, who was with Alderley Gold at the time. When Alderley merged with Chesapeake, Alan pitched me on Metates, a massive undeveloped gold and silver deposit and their technology to unlock refractory gold trapped in sulphides. Given my background in large deposits and my interest in innovative technologies, joining Chesapeake to advance this technology and the Metates project was an exciting opportunity.
What makes the Metates project and the associated Chesapeake technology so compelling?
Metates is a significant deposit, boasting approximately 19 million ounces of gold and over 500 million ounces of silver. However, the gold is locked in sulphide, a challenge traditionally solved with expensive autoclaves or roasters. At one point in 2016, we had a PFS that outlined a $3.5 billion CapEx for a 90,000 tonne per day operation to produce about 560,000 ounces of gold annually, a substantial investment for any junior company
Alan saw an opportunity with a sulphide oxidation technology in Alderley, which could potentially unlock this sulphide-hosted gold. Our technology replicates nature’s own oxidation process, which typically takes millions of years, but with our proprietary technology, we are able to do the same in just weeks to months. This approach significantly reduces costs and simplifies the metallurgical process, making previously uneconomical deposits viable. There is a similar transformation occurring in the copper space that is gaining traction, where companies like Nuton (owned by Rio Tinto) have developed methods to extract copper from challenging minerals without traditional flotation processes and it is time for the gold space to embrace its own technological transformation.
More generally, why are technological advancements in gold mining so important?
Just as US oil production peaked in the 1970s and moved into a period of stagnation, gold production has also reached a similar peak, with companies struggling to find new sources of precious metals, while production is in decline. The major acquisitions that we have experienced over the past few years is a reflection of this desperation. Finding gold at the surface is rare now, pushing companies to explore deeper, often in challenging jurisdictions.
In the late 2000s, US oil had a renaissance revival with the development of new technologies, which unlocked shale oil and gas reserves through the combination of directional drilling and fracking. Technological advances in mining are having a similar effect and are crucial to unlocking these latent sulphide gold deposits and bringing them into production despite the increasing difficulty and prolonged timelines due to permitting and social factors.
Can you elaborate on the practical and global implications of your technology?
If we look at Metates as an example, we have advanced the project as a heap leach with an oxidation and cyanidation stage, which reduced the CapEx to $360 million and the technology nearly doubles the gold and silver recoveries relative to leaching the unoxidized material. This process flow sheet involves blasting, mining, crushing and placing the material on an oxidation pad where nature’s chemistry accelerates oxidation, turning sulphides into oxides. This results in a more straightforward and less costly cyanide leaching process, significantly enhancing gold and silver recovery rates.
Metates is projected to produce 150,000 ounces of gold equivalent annually over a 31 year mine life at an all-in-sustaining cost of around $750 per ounce, placing it in the first quartile of the gold cost curve. The project is expected to generate a pre-tax NPV of $1.4 billion and an IRR of 35%. The project is economically robust, especially with conservative metal price assumptions of US$1,600/oz for gold and US$22/oz for silver, which are well below current prices.
What are the environmental implications of your technology? Why have you dubbed it ‘Green Gold’?
According to a 2021 report by McKinsey and Company, there are about 2.6 billion ounces of gold reserves and resources in situ globally, with ~25% being categorized as refractory. This is equivalent to 580million ounces and a US$1.5 trillion dollar market, assuming a US$2,500/oz gold price. Traditional refractory gold processes, like roasting and autoclaving, are expensive and environmentally taxing. Our Green Gold Technology, as we have called it, uses significantly less water and energy, produces less CO2 emissions and eliminates the need for a tailings dam, a sustainable alternative. This technology has the potential to reposition gold mining by making refractory deposits more accessible, economical, and sustainable by transforming the industry’s approach to these challenging resources.
Why has this technology not been widely publicized, given its potential?
We recently acquired the intellectual property rights (patents, patent applications, technology, and certain other rights) previously held under license. While we have closed this acquisition, further steps are being taken to fully establish and protect our innovations. This involves continuing our research, potentially filing additional patent applications, and proving the technology's efficacy at a larger scale.
Once these steps are completed, Chesapeake is poised to not only advance Metates but also transform the global approach to mining refractory gold deposits.
When will Metates be in production?
Metates is currently at the Preliminary Economic Assessment (PEA) stage, and we are focused on the metallurgical testwork, which will inform us about the duration of oxidation required to achieve our optimal precious metal recoveries and overall economics for the project. We are experimenting with different oxidation durations to determine the most cost-effective and efficient period. The goal is to find the balance between oxidation time, precious metal recovery rates, and cost efficiency, which will feed into a PFS study. After this PFS, we will further de-risk the project, moving towards completing a FS study in preparation for financing and sanctioning, while advancing concurrently through the permitting process.
Have you attracted attention from other mining companies?
Yes, we have garnered significant interest from both large and small mining companies. Larger companies are watching our technology results closely, seeing potential applications for their own deposits. Smaller companies are interested in the possibility of unlocking their own deposits using our proprietary chemistry. The industry is keenly observing our progress to see how effectively our technology can be applied to other projects.
Are you considering licensing your technology?
We are open to the idea of licensing our technology. There are multiple ways to approach this, and we are exploring all options. Currently, we focus on developing Metates, but licensing remains a possibility.
This year, we plan to hold a strategy session to discuss the rollout of our technology, whether internally or externally. Acquiring our license, patents and patent applications has given us the freedom to decide how best to advance and utilize this technology.
Have you received support from local authorities?
Our technology is at the lab scale and progressing towards larger-scale testwork. In the meantime, we have been conservative in our public approach, and many still view Metates as that old project with a high CapEx. Educating stakeholders about the transformative potential of our technology is my biggest challenge. Our marketing efforts aim to share this story and highlight the financial and executable path forward for Metates and other similar deposits.
How are you addressing public perception and challenges within the mining industry?
Public perception is indeed a significant challenge. Educating both the public and stakeholders about the advancements and benefits of our technology is crucial. The industry needs to understand that our technology can fundamentally change how deposits are approached and developed. This interview is an opportunity to communicate that, as well as to emphasize the potential for safer, more environmentally friendly mining practices that our technology enables.
