Cangallo Discovery Opens Door to Low-Cost Copper Development but Questions Remain

Discovery Highlights and Assay Results

AusQuest Limited (ASX: AQD) has announced a major breakthrough at its Cangallo Project in southern Peru, confirming a large-scale porphyry copper-gold discovery. The maiden drilling program, comprising eight reverse circulation holes totaling approximately 3,000 metres, returned significant copper and gold mineralisation from near surface. Notably, one drill hole intersected 304 metres grading 0.30% copper and 0.06ppm gold starting just 34 metres below surface, highlighting the potential for a shallow, economically viable resource.

Other impressive intercepts include 154 metres at 0.37% copper and 0.06ppm gold, and 226 metres at 0.22% copper and 0.07ppm gold. Mineralisation occurs both as oxides near surface and deeper sulphides, with seven out of eight holes ending in mineralisation, indicating strong continuity and the prospect of a substantial deposit.

Geological Context and Project Location

The Cangallo Project is situated within a large caldera-like structure approximately 25 kilometres east of the town of Chala and less than 10 kilometres from the Pacific coast. The area benefits from proximity to regional power lines and relatively low elevation (under 1,500 metres), factors that could reduce development costs and operational challenges. The geological setting is typical of Andean porphyry copper systems, with mineralisation hosted in volcanic and intrusive rocks exhibiting potassic and sericite alteration.

Importantly, the project lies within Peru’s Arequipa District, a region known for several large, long-life copper mines such as Cerro Verde and Quellaveco. These operations typically exploit porphyry deposits with similar copper grades to those reported at Cangallo, underscoring the discovery’s potential significance.

Implications and Next Steps

AusQuest’s Managing Director, Graeme Drew, expressed optimism about the discovery’s scale and quality, noting that the drilling results exceeded expectations and that only a small fraction of the target area has been tested so far. The company is planning a follow-up drilling program aimed at expanding the known mineralisation and better defining the resource, with details expected in the coming weeks.

The near-surface copper oxide mineralisation offers the possibility of a low-capital development pathway, potentially using heap leach processing to produce cathode copper on site. This approach could lower upfront costs compared to traditional sulphide flotation methods and simplify logistics.

While the discovery is promising, further drilling and comprehensive geological and metallurgical studies will be essential to assess the deposit’s full economic potential. The project’s location in a stable jurisdiction with supportive government policies adds to its attractiveness.