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AusQuest Chololo Project Drilling Kicks Off

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AusQuest - (ASX: AQD, Share Price: $0.031, Market Cap: $16m, coverage initiated @ $0.017 in Sep 2015 – current gain of 82%)

Key Catalyst

Milestone copper drilling program underway at Chololo Copper Project in Peru, under Strategic Alliance with South32 (ASX: S32)

AQD has been a mainstay of our coverage universe. Firstly, because of its bold exploration ambitions and secondly, due to its success in recruiting joint venture ‘big brothers’ with deep pockets to fund its exploration activities. AQD’s strategy of exclusively targeting Tier 1 exploration discoveries differentiates it from the vast majority of its junior peers, combined with the fact that it minimizes equity dilution.

AQD has most recently revitalised the ‘big brother’ concept via a unique Strategic Alliance Agreement (SAA) with diversified miner South32 (ASX: S32), where it has developed a pipeline of high-potential exploration opportunities, with South32 funding all exploration activity. The SAA with South32 represents an exciting opportunity to work alongside one of the world’s most successful diversified miners.

Latest Activity

Chololo Project Drilling Kicks Off

AQD has commenced its much-anticipated diamond drilling program on its large-scale Chololo Copper Project in southern Peru. As we indicated in our most recent note on AQD on 28th April, the company had just received all requisite permits in order to enable drilling operations to commence. The initial phase of drilling will utilise two rigs and comprise a total of 10 holes for ~5,000m of diamond drilling.

Figure 1: Chololo Porphyry Copper target showing location of the initial drill-holes

Initial drill-hole priorities have been determined by the availability of access and preparation of drill pads. Two drill rigs are currently on site with the first rig drilling at the CH06 target and the second due to commence drilling at site CH018 shortly. All holes are planned to be drilled to at least 500m depth and will take approximately two weeks each to complete. Drill-core logging/processing plus analysis should be available approximately 4-6 weeks after each hole is completed. The full drilling program is expected to take several months to complete and drilling progress will be reported on an ongoing basis.

Technical Significance

The Chololo drilling program is another important step for its Strategic Alliance with South32 and for the company’s ongoing exploration programs targeting large-scale copper discoveries in southern Peru. The Chololo drilling program will be the largest undertaken so far under the company’s broader Strategic Alliance Agreement (SAA) with South32.

Computer modelling of the IP data has confirmed the large Chololo target size (1.5km x 1.0km) and anomaly strength, suggesting potential for significant amounts of sulphide mineralisation within the source rocks (i.e. a potential ‘company-maker’).

Project Overview

The Chololo Project is subject to an agreement whereby South32 can earn a 70% interest in the project by spending US$4 million, with the right to earn an additional 10% interest by completing a Pre-Feasibility Study. AQD will be the operator during the first phase of drilling.

The Chololo Porphyry Copper Prospect is associated with the northeast-trending Chololo Fault (refer to graphic above), which controls the location of other known porphyry copper systems in the area.

Figure 2: Map showing location of AQD’s Peruvian project interests

Detailed geological mapping, rock and soil sampling has identified potential for a buried porphyry copper system in the area, as defined by advanced argillic alteration, anomalous copper (100ppm to 1220ppm), molybdenum (8ppm to 306ppm) and elevated gold values (20ppb to 815ppb). Subsequent IP surveys identified a strong chargeability anomaly thought to reflect a large-scale pyrite (+/- chalcopyrite) halo associated with a buried porphyry copper system. As stated earlier, the IP data has confirmed a large target size (1.5km x 1.0km) and anomaly strength, suggesting potential for significant amounts of sulphide mineralisation within the source rocks.


The SAA with South32 represents an exciting opportunity to work alongside one of the world’s most successful diversified miners, leveraging AQD’s skills as an explorer targeting provincial-scale discovery opportunities. The arrangement provides AQD with the financial capability to identify and evaluate opportunities, as well as providing rewards for success along the way. There are now ten projects that form part of the SAA with South32, a tribute to AQD’s technical capabilities in identifying projects of strong interest.

View More Articles By Gavin Wendt

After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.

Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.



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