AusQuest (ASX: AQD) Gains Government Backing as Major Copper Discovery Moves Towards Its Next Growth Phase

AusQuest Limited (ASX: AQD) is building momentum at its Cangallo copper-gold discovery in Peru, following a significant government endorsement, encouraging drilling results and expanded exploration approvals.

Cangallo's recognition as a Project of National Interest strengthens its development pathway, while geological results point towards a potentially substantial copper system.

With further drilling planned and additional targets emerging, AusQuest is entering an important phase that could help establish the commercial significance of its discovery.

Key Numbers

• 355.8m at 0.31% copper: Significant Cangallo intersection, including 10m at 0.73% copper.
• 2.5km by 1km: Minimum interpreted footprint of the Cangallo porphyry system.
• 20 additional drill pads: Approved for Stage 4 exploration, with another 20 being pursued.
• $2.1 million: Cash reserves at 30 September 2026 following approximately $4.3 million in quarterly exploration expenditure.
• $3.04 million: FY2026 net loss, compared with $2.11 million in FY2025.

Peru's Government Endorsement Strengthens Cangallo's Potential

On 28 October 2026, AusQuest announced that the Peruvian Government had granted Cangallo Project of National Interest status.

Cangallo became Peru's first advanced exploration project to receive the designation, providing greater protection for surface rights and additional development certainty over four years.

The recognition followed approval of 20 additional drilling pads on 20 October, enabling exploration approximately one kilometre south of existing drill coverage.

AusQuest is also pursuing approval for another 20 pads, potentially supporting an expanded drilling programme during the first half of 2027.

Together, these developments represent meaningful progress in advancing Cangallo from an emerging discovery towards a more extensively evaluated copper project.

While further technical studies and approvals remain necessary, the strengthened regulatory position provides a more supportive foundation for ongoing exploration.

Copper Results Reveal a Potentially Extensive Mineralised System

Cangallo's exploration results continue to provide encouraging evidence of a substantial copper-gold system.

Diamond drill-hole CANDD004 intersected 355.8 metres grading 0.31% copper and 0.05 grams per tonne gold from 34.2 metres, including 40 metres at 0.48% copper.

Another hole, CANDD003, returned 348 metres grading 0.23% copper and 0.06 grams per tonne gold.

Exploration has also identified copper mineralisation extending to approximately 800 metres vertical depth, reinforcing the potential for mineralisation below earlier drilling.

Geophysical surveying outlined an interpreted porphyry footprint measuring at least 2.5 kilometres by one kilometre, with significant areas remaining untested.

Previous drilling also established a mineralised corridor extending more than 1.5 kilometres along strike.

What makes these results particularly encouraging is the combination of substantial mineralised widths, deeper copper sulphides and higher-grade intervals within the broader system.

Further drilling could improve geological confidence and help identify areas with stronger potential mining economics.

However, Cangallo does not yet have a defined JORC mineral resource, making resource estimation and metallurgical testing essential milestones.

Exploration Progress Creates Opportunities Beyond Peru

AusQuest's Australian exploration portfolio provides additional opportunities alongside Cangallo.

Under its strategic alliance with South32, extended until December 2027, AusQuest is advancing projects targeting copper, zinc, nickel and other minerals.

At Coober Pedy, approximately 2,350 metres of diamond drilling tested four geophysical targets, with assay results pending at the September-quarter reporting date.

At Balladonia, permitting was progressing for a planned 8,000-metre reverse circulation drilling programme.

These activities provide further opportunities for exploration success while allowing AusQuest to leverage external funding for agreed Australian programmes.

Financial Resources Support Progress, With Funding Still Important

AusQuest reported a FY2026 net loss of approximately $3.04 million, compared with $2.11 million the previous year.

The increase reflects a business focused on exploration rather than generating mining revenue.

Cash reserves declined from approximately $6.35 million at 30 June 2026 to $2.1 million at 30 September, following substantial exploration expenditure.

The company expects another $900,000 during the December quarter under its South32 alliance.

Although additional funding may be required as Cangallo advances, AusQuest's expanded exploration opportunities provide a clearer basis for evaluating future capital requirements.

With no established mining revenue or defined project economics, conventional earnings-based valuation remains unsuitable.

The strongest measure of potential value creation will be progress towards a reliable mineral resource supported by credible development economics.

Insight: Could Cangallo Become AusQuest's Defining Asset?

We see AusQuest's strongest opportunity in transforming Cangallo's expanding copper system into a substantial, economically attractive mineral resource. The interpreted 2.5km by 1km footprint, encouraging drilling intersections and government recognition collectively strengthen the project's potential. Importantly, further exploration could identify higher-grade zones capable of improving future development economics. While funding remains a consideration, the geological opportunity is increasingly compelling. The next decisive measure will be Stage 4 drilling results and progress towards a JORC-compliant resource estimate.

The Verdict: Encouraging Momentum With Meaningful Milestones Ahead

AusQuest is making tangible progress at Cangallo, supported by substantial copper intersections, expanded drilling access and stronger government recognition.

The December 2026 quarter presents important opportunities through Stage 4 drilling, metallurgical assessments and further geological evaluation.

We believe the company's exploration progress provides a constructive foundation for future growth.

The key will be demonstrating that Cangallo's geological scale can translate into a commercially viable mineral resource while maintaining sufficient financial flexibility to advance the project.