Major Drilling Campaign Targets Expansion of Ausquest’s Cangallo Discovery

Major Drilling Campaign Targets Expansion of Cangallo Discovery

AusQuest Limited (ASX: AQD) has commenced its eagerly anticipated Stage 2 drilling program at the Cangallo copper-gold project in Peru, marking a significant milestone in the company's exploration efforts. The 5,000-meter Reverse Circulation (RC) drilling campaign follows promising results from maiden drilling that confirmed the presence of a potentially significant porphyry copper-gold system.

The program is expected to take 4-6 weeks to complete, with initial assay results anticipated within 6-8 weeks from commencement. This strategic drilling initiative aims to extend the previously identified copper-gold intersections and locate the centre of the porphyry system, which could potentially host higher-grade copper mineralisation.

"We are very excited to announce the start of our Stage 2 drilling campaign, which we think will add significantly to the copper intersections reported from the maiden drilling program and further enhance the size potential of this new porphyry copper-gold discovery," said Graeme Drew, Managing Director of AusQuest.

Initial Discovery Results Show Significant Potential

The maiden drilling program at Cangallo delivered impressive results that have laid the groundwork for this expanded exploration campaign:

• Seven out of eight holes intersected broad zones of copper mineralisation
• Standout intersection of 304 meters at 0.30% copper and 0.06 g/t gold
• Mineralisation begins near surface and continues to end-of-hole in most drill holes
• Copper present as both oxides (malachite, chrysocolla, brochantite) and sulphides (mainly chalcopyrite)

The geological evidence suggests that the initial drilling only tested a small portion of a much larger porphyry system within a substantial 3km x 2km caldera-like structure. The presence of tonalite dykes, extensive hydrothermal alteration, and widespread metal distribution all point to a potentially significant copper-gold deposit.

Stage 2 Drilling: Targeting the Heart of the System

The current drilling program has been strategically designed to:

1. Extend original copper-gold intersections by redirecting drill-holes from existing pads
2. Step out to the west, south, and north to help locate the centre of the porphyry system
3. Explore the potential for a supergene blanket with higher copper grades

"Stage 2 drilling is designed to help locate the centre of the porphyry system and the possible presence of a supergene blanket – both of which hold excellent potential for high copper grades," Mr. Drew explained.

Looking ahead, AusQuest has already planned deep diamond drilling and a third stage of RC drilling, scheduled for the second half of 2025 once all necessary permits are received.

Understanding Porphyry Copper Deposits: The Prize at Stake

Porphyry copper deposits represent some of the most valuable mineral resources globally, characterised by their large size and often amenable mining conditions. These deposits typically feature:

Peru hosts numerous profitable large-scale copper operations within the Arequipa District where Cangallo is situated. Major mines like Cerro Verde, Cuajone, Toquepala, and Quellaveco, along with new developments such as Mina Justa and Zafranal, operate successfully with head grades between 0.20% and 0.40% copper.

What Are Porphyry Copper Deposits?

Porphyry copper deposits are large volumes of rock containing disseminated copper minerals, typically formed through hydrothermal processes associated with intrusive igneous rocks. These deposits are characterised by their scale, with economic mineral concentrations spread throughout the rock mass rather than confined to narrow veins.

Key characteristics include:

• Formation related to magmatic-hydrothermal systems
• Multiple stages of mineralisation often creating distinct zones
• Occurrence of copper minerals in fractures, veinlets, and disseminations
• Association with alteration zones that form recognisable patterns
• Typical depth range from surface to several kilometres
• Common occurrence of other valuable metals including gold, molybdenum, and silver

The oxidation and weathering processes that affect porphyry deposits can create zones of different mineral types from surface to depth. The upper, weathered portions often contain oxide copper minerals (like those identified at Cangallo), while deeper portions contain primary sulphide mineralisation. In favourable conditions, a higher-grade "supergene blanket" may form where copper has been leached from above and redeposited at depth – a target specifically mentioned in AusQuest's drilling strategy.

Strategic Location Enhances Project Economics

A critical factor enhancing Cangallo's potential is its favourable location:

• Just 25km east of the town of Chala
• Within 10km of the coast
• Close to significant infrastructure
• Lower altitude compared to many Andean porphyry deposits
• Community consultation has been ongoing with no critical issues identified

These location advantages could significantly improve project economics compared to many Peruvian copper projects that face challenges related to high altitude, limited infrastructure, and community concerns.

Peru's Copper Industry: A World-Class Jurisdiction

Peru stands as the second largest copper producer globally, behind only Chile, producing approximately 2.8 million tonnes of copper annually. The country's mining-friendly regulatory environment and established infrastructure make it an attractive jurisdiction for copper exploration and development.

The Peruvian government maintains a supportive stance toward new mine developments, recognising their substantial contribution to the national economy and local communities.

Investment Outlook: Why Cangallo Matters

AusQuest's Cangallo project represents a compelling opportunity for several key reasons:

1. Early-stage discovery potential: Initial drilling has confirmed a significant copper-gold system with substantial room for expansion
2. Size potential: Geological indicators suggest a large-scale porphyry system
3. Grade prospects: The search for the porphyry centre and potential supergene enrichment could yield higher-grade zones
4. Strategic location: Favourable position near infrastructure and the coast enhances development economics
5. Clear path forward: Well-defined exploration plan with multiple catalysts throughout 2025

"Success should create significant value for our shareholders and mark the beginning of a transformative period for the Company," noted Mr. Drew, highlighting the potential impact of positive drilling results on AusQuest's valuation.

The Geology Behind the Opportunity

The geological context at Cangallo presents several encouraging indicators for a significant copper-gold system:

• The deposit is situated within a large-scale caldera-like structure measuring 3km x 2km
• Copper and gold mineralisation occurs primarily within volcanic host rocks (andesites and dacites)
• Evidence of hydrothermal alteration includes potassic and sericitic zones, typical of porphyry systems
• Tonalite dykes identified in drilling are considered the source of hydrothermal fluids and metals
• The limited presence of these dykes relative to the extensive alteration and metal distribution suggests proximity to a larger intrusive body
• Variable oxidation depths extending beyond 200 metres in several drill holes indicate active supergene processes

Geologists interpret these findings to suggest that the initial drilling only tested the margins of a potentially much larger porphyry system. The presence of higher copper grades associated with the tonalite dykes further supports the possibility that a central porphyry stock may contain more significant mineralisation.

Why Investors Should Follow AusQuest

The commencement of Stage 2 drilling at Cangallo represents a pivotal moment for AusQuest, with multiple near-term catalysts that could drive significant shareholder value:

• Initial assay results expected within 6-8 weeks
• Deep diamond drilling and Stage 3 RC drilling planned for H2 2025
• Potential to define a major copper-gold resource in a premier mining jurisdiction
• 100% ownership of the project provides maximum leverage to exploration success

For investors seeking exposure to copper exploration in a tier-one jurisdiction, AusQuest offers a compelling opportunity at a critical stage of discovery. With copper prices supported by strong long-term fundamentals and growing demand from renewable energy and electrification trends, the timing of this discovery could prove particularly advantageous.

Key Takeaway:
AusQuest has positioned itself for potential transformation with its Cangallo copper-gold discovery in Peru. The combination of promising initial results, strategic location advantages, and a clear exploration pathway provides investors with exposure to a significant copper exploration opportunity in one of the world's premier copper jurisdictions.

Ready to Explore This Copper-Gold Investment Opportunity?

To learn more about AusQuest's promising Cangallo copper-gold project in Peru and how this strategic drilling campaign could unlock significant shareholder value, visit www.ausquest.com.au today. With initial assay results expected within weeks and multiple catalysts ahead, now is the perfect time to research this emerging opportunity in one of the world's premier copper jurisdictions.