ASX:CHK Bearish Analysis

This is a bearish analysis of ASX:CHK. If a company can overcome their hurdles and risks that is actually quite bullish (therefore a bearish analysis can turn bullish if the company starts knocking down the bearish considerations).

After reviewing years of ASX:CHK announcements, these are the things that, to me, stick out most:

1) The gravity and magnetics:

ASX:CHK set themselves a challenge:

"HWDD06 is targeting coincident gravity and magnetic anomalies within a target zone extending from brecciation and strong haematite and sericite alteration intersected in drill hole CCHWDDH03"

Source: 14 Jun 2022, ASX:CHK, Exploration Update - Horse Well, Pernatty C & Warriner Creek https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02531142-3A595349

But then....

"Alteration in HWDD06W1 is consistent with distal IOCG alteration, but not a 'near miss' scenario. A Northwest-Southeast mafic intrusive body intersected in the bottom of the hole possibly represents a major fault, in which case the prospective area may lie to the north of the fault" Source: 31 Oct 2022, ASX:CHK, CHK September 2022 Quarterly Activities Report & Appendix 5B https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02591866-3A606191
But HWDD06W1 is south, why would they say to go north? lol... because HWDD06W1 gave a bad result in my opinion. Speaking of this result, what were the grades of HWDD06/HWDD06W1? Does anyone know? And if not, WHY were these not reported?


Figure 1: Location of HWDD06 drill hole with residual gravity contours on Total Magnetic Intensity (TMI) colour map and proximity to Oak Dam West deposit sourced from Source: 31 Oct 2022, ASX:CHK, CHK September 2022 Quarterly Activities Report & Appendix 5B https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02591866-3A606191

Therefore, their theory that the gravity/magnetic survey extrapolated a prospect was incorrect in my opinion. I therefore do not trust the gravity/magnetics to find the type of prospects they are after.

2) The grades:

If high grade =
"Anything over 100 metres and 1% copper equivalent or better is considered to be high-grade. For example, Serengeti Resources announced 119.6 metres of 0.9% copper equivalent (copper plus gold values added together) at depths from 180 to 300 metres." source: https://www.mining.com/web/making-the-grade-understanding-exploration-results/

Are ASX:CHK's grades commercially viable? Well, we don't know until many wells and a feasibility study is conducted, however, so far I believe they are not viable. The main problem is the location of some of their best hits were under 1190+ metres of overburden.... This itself might make a potential project hard to turn commercial in my opinion.

As anyone can see, even if you get a hit of 10.85%, it needs to be accompanied with "quantity" (otherwise it may not be worth mining). e.g 10.85% for 0.8m at 1,199m! For example: ASX:FAL a spinoff from the formerly ASX200 included ASX:CHN reported: "shallow gold intersections over ~4km of strike and up to 32.1g/t Au" source: ASX:FAL, 9 Feb 2022, "Investor Presentation". However, after additional RC and diamond drilling, the cores did not prove up this prospect in my opinion, not from a lack of trying. Therefore, if you drill around the 10.85% hit, do you find high grades with quantity?

What does a commercial copper field look like?

Source: 20/02/2024 ASX:BHP, HY2024 Results Presentationhttps://cdn-

api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02774281-3A636699

This above cross section clearly has deposits which are commercial grade of more than 100m and more than 1%. And when compared to ASX:CHK, they are superior by multiple factors.

3) Diversification:

Is it possible that even ASX:CHK knows that their Australian assets may not ever become economical? Is this why they recently diversified into Canada? A plan B if you will? This potentially takes resources away from proving up Australian permits. If the Australian permits were so valuable why would they take on more risk? Do they have the funds for this?

4) Funding:

According to their 2023 Annual report, their permits (not including Canada) take upwards of $627,200/year in "commitment per annum" source:

Source: 28 Sep 2023, ASX:CHK, 2023 Annual Report to Shareholdershttps://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02718018-3A627180

If you also consider their salary/remuneration:
e.g
Nochum Labkowski = $60,000
Mordechai Benedikt = $228,000
Andrew Graham = $180,000

total for salary + commitments = $1,095,200/year (not including Canadian permits). Notwithstanding, they paid $3,065,764 in capitalised exploration expenditure for the year 30 June 2022. source: 28 Sep 2023, ASX:CHK, 2023 Annual Report to Shareholdershttps://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02718018-3A627180

This financial situation is unsustainable in my opinion and it doesn't make sense to me why they would pick now to diversify if they thought their Australian permits were worthy of persuing.

5) Issued capital:

If approved, the number of shares on issue after the placements will be astronomical for a company that is a long way from turning any prospects commercial.


source:20 Feb 2024, ASX:CHK, Cohiba Raises Additional $850,000 Through Placementhttps://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02774384-3A636728

6) Consolidation:

Will ASX:CHK consider consolidating their shares, maybe 20:1?

7) The recent ASX query [26 Feb 2024, ASX:CHK, Response to ASX Query] this needs its own post: -see next post.