Salazar Resources (SRL) – This is how to become a Big Company (Transcript)

Salazar Resources Ltd
  • TSX-V: SRL
  • Shares Outstanding: 127M
  • Share price C$0.21 (15.06.2020)
  • Market Cap: C$27M

Interview with Merlin Marr-Johnson, Director of copper-gold porphyry explorer, Salazar Resources (TSX-V:SRL)


We catch up with Marr-Johnson to discuss the latest developments in the Ecuadorian mining space, in addition to the copper-gold porphyry exploits of Salazar Resources. It’s time for copper-gold investors to pay attention to Ecuador. The recent joint announcement between their JV partner Adventus Mining, suggests that things are going well. Marr-Johnson gives us an update and points to the future with some confidence.

What did you make of Merlin Marr-Johnson? Comment below and we will respond.

We Discuss:

  1. Company Overview
  2. Mining in Ecuador: The Good, The Bad and The Developing
  3. Growing Ecuadorian Market: What’s Changing the “No-Mining” Mindset?
  4. Adventus’ and Salazar’s Press Release: Simplifying the Technical
  5. Understanding the Projects: Future Interview Topics and Requests

CLICK HERE to watch the full interview.

Matthew Gordon: Merlin, how are you doing, Sir?

Merlin Marr-Johnson: Hi. All good, thanks.

Matthew Gordon: Fantastic. Well look, I thought I had better call you to talk about the press release from Adventus. I just need to understand it because there are a lot of moving parts and it is also quite technical. But I tell you what, do me a favour, could you give us that one-minute overview of the Salazar Resources business so people know what we are going to be talking about, and then we will get into that press release.

Merlin Marr-Johnson: Yes, of course. Salazar Resources is a TSX-V listed exploration, project-generated company. We are an Ecuadorian company. Very Ecuadorian; the entire team is based in Ecuador, and Freddy Salazar is one Ecuador’s leading geologists. We have got 6 projects, 3 of which are fully carried by Adventus and 3 of which are 100% our own exploration licenses that we are drilling. We are hunting big Gold and Copper targets in Ecuador.

Matthew Gordon: Brilliant. Thanks for doing that. Like I said, I want to get into the press release but I think it might be worth addressing something which is the ‘Ecuador factor’ first, because we had an interview earlier this week with Lumina Gold, and they talked about the Ecuador discount. You know, that may or may not exist in several forms, but I just think it is about people understanding what the potential of Ecuador is. Can you give us your view on Ecuador as a mining jurisdiction, please?

Merlin Marr-Johnson: Sure. The thing to remember about Ecuador is that it hasn’t really had a proper mining industry at any stage. There are three key things: the first thing is that it is on a very fertile bit of geology. The Andes run through the western spine of South America, and in Chile and Peru you have got these huge, rich Copper deposits. You get these points in the earth’s crust where there is concentration in minerals; whether it is Copper-moly or Copper-Gold, or Gold-Zinc, there’s a whole range of these minerals which are concentrated in key parts of the crust. And the Andes is one of those, and in   particular in northern Chile and Peru, and the geology and the minerality runs across into Ecuador. So, you have got the fertile geology, you have got the metal endowments, but you haven’t had the minerals industry development. And that has been political. And that brings us on the next key point which is that the government has absolutely endorsed the mining industry. They have realised that it is crucial to their economy and to their ongoing development as a country.

Ecuador is a dollar-based economy, so they can’t print their own money. They need to generate it through foreign direction investment and sales of hard currency, foreign exports or exports in hard currency, and that is mining. And the government has focussed on mining as the key growth area. So that is why the mining code has changed, and the response has been astonishing. You have seen all the big boys, all the major mining companies from around the world come into Ecuador. So, you have seen investment by BHP into the SolGold discovery up in the north. You have got Newcrest from Australia who have invested into Lundin Gold and into Sol Gold up into the North.

Lundin Gold built the billion-dollar Fruta del Norte last year. The Chinese spent more than USD$1Bn on the Copper mine up at Mirador. There’s another Chinese development at Rio Blanco, which is another billion-dollar development. You have got Anglo-American, Ro Tinto, First Quantum: all of the big boys looking for Copper, looking for Gold, they are all sniffing around Ecuador because the geological potential there.

Matthew Gordon: Okay.

Merlin Marr-Johnson: Sorry – that was kind of an impassioned description of what is happening in Ecuador. So, when you talk about the Ecuador risk, it’s not seen as a risk perhaps from the mining companies. It has taken a while to come through. It is taking a while for these discoveries to be made. It is not an overnight process. But when actually you think that the country has really been open for mining for only 3 or 4-years, and you have got all of these companies investing in exploration and geology. You have got two big mines which have opened up. Even modest little Salazar Resources; we made the discovery on the Curipamba deposit. It’s a very high-grade VMS deposit. 5% copper equivalent at surface. These grades are remarkable anywhere in the world and it is going to be a mine in a few years, in 2 or 3 or 4-years.

Matthew Gordon:  Okay. And you are carried on that for the next few years. I think it is worth reminding people of that. Let’s stick with the Ecuador component, I think it is fair enough that…you talked about 3 or 4-years. The big boys are ploughing in there and there are billions of dollars going in, and we had this conversation with Marshall Koval of Lumina Gold, and I can understand why the market is not there yet because the track record up until this point, you know; with the socialist government has been – we don’t want mining, we don’t want to ruin our ecosystems. But why the turnaround now? You gave us some clues, but is this genuine? Is this sustainable?

Merlin Marr-Johnson: I would say that the Ecuadorian government is totally serious about developing a responsible mining industry. They have been incredibly consistent over the last couple of years. There has been a lot of active discussion about whether the environment should come first or indigenous rights, and the government has been consistently saying, we need to develop a mining industry. We have an illegal, irresponsible, environmentally-destructive mining industry at the moment, and we want to develop a responsible, well-regulated mining industry that is going to benefit the whole of Ecuador. It is absolutely a key part of the government focus and they have designated the mining industry as a strategic industry.

There were a few sectors that were able to work through the Corona virus and the mining industry was one of those. Exploration, as it happened, took the responsible route not to continue. So, most explorers in the country, unless they could do it in an extremely isolated manner, stopped, but the mining industry continued.

The government is totally committed to this. In fact, it is apolitical now. In fact, the government had wanted to start looking at the mining industry, wanting to develop a responsible mining industry, had previously been very anti-mining and socialist. There is irrefutable logic; there is no way that you can fund the country without having a responsible mining industry. I would say that the Ecuador discount is on its way out. The number of discoveries, the exploration activities, the drilling that is going on, the companies that are there, the level of activity, the level of interest is such that Ecuador will continue to shine brightly as a country for many years and hopefully, generations of mine development.

Matthew Gordon: Okay. Well, look. We are keeping our eye on it. It is certainly a space, a country which we think has a huge potential. And I think our view, I think, is that it is a discount to our investment, you know; we are getting in on this cheap, this is the way we view this. We have got to back the right management team of course, but that is the name of this game.

Let’s get on to this press release because I saw it. I read it. Very technical. And I wasn’t quite sure what I should be pointing at. It looks to me like you know that we have got three of Salazar’s assets. Curipamba is the main one, but they were talking about, I am going to get this pronunciation wrong on this one. Is it Pijili? Is it that? Close enough?

Merlin Marr-Johnson: That will do.

Matthew Gordon: Okay. Right. But they were talking about that specifically. The numbers, to me look okay, but what were they trying to say with this?

Merlin Marr-Johnson: The news release, yes, it was a bit technical, but the main message is relatively simple, which is that we think we have got our porphyry. We have got a mineralised porphyry that we think we are going to be drilling at Pijili. Remember that this license area was chosen by Salazar several years ago. It has been worked up by the Salazars and subsequently by a joint Adventus-Salazar combo. We have got a coincident geochemical anomaly. So we have got a geochemical anomaly, we have got rocks and we have now got geophysics over the whole thing. And we can see this standing out, and you can see it on the surface. You can see mineralised porphyry rock. I think perhaps the key thing that didn’t really come across in the news release, I would like to emphasise for investors, is to realise that actually, its position is within a chain of known, mineralised porphyry deposits. Just north of Pijili, there’s a group in Mexico with an asset there called, Chaucha, and that’s in advanced exploration. It is over half a billion tons. It has got decent grades. It is actually a Copper-moly porphyry. They are being drilled up. That is in advanced exploration at the moment.

About 8kms north of that, you have got the Rio Blanca deposit. Again, this is close to 1Bn tons of Copper-Gold mineralisation. And then you come to, well, just at the southern end of the chain of these mineralised porphyries, and within Pijili there is the showing, actually, that we are focussed on is called Zambohuayca. It is an indigenous name, and we have got good Gold showings and we have got strong Copper grades, you know, 0.4%, 0.5%. In some places 0.6%, 0.7%. Gold is there as well. This is the stuff that you are looking for.

We have got a 5,000m drill campaign. We will be putting in 500 800m holes, and we will be drilling this out over the course of the remainder of 2020. And this is really exciting stuff. This is how you make big companies and big discoveries.

Matthew Gordon:  You say ‘we’, but you are not spending a penny. You are fully carried for 20%, aren’t you?

Merlin Marr-Johnson: Well, no. It is actually slightly better than that. We get paid because our team gets a management fee for doing the exploration and they are actually using our drill rigs and we will get paid for that as well. Yes, we are carried for 20%. We are not carried, remember that on Curipamba, we are carried all the way to production on 25%.  For Pijili we are carried 20% all the way to a construction decision. But as you know, these big porphyries, when you drill them out, it is tens of millions of dollars and several years. So, we are quite comfortable to be carried 20% all the way through to a construction decision.

Matthew Gordon:  To that point. Okay. Well, look. Thanks, Merlin, for running us through that. One small request for you: we did a report on your company about a month ago. It would be great, and I think we have had a few requests from people to look at each of the three wholly-owned projects and just try to understand those a little bit better, in a bit more detail about what you know, what you are trying to discover. You talked about the decision-making when you spoke to us previously; you are going to have to pick one and focus your efforts on that or focus more of your efforts on that. Is that something that you would be prepared to join us on and talk us through?

Merlin Marr-Johnson: Of course. We can do that anywhere you like. We will find out the best method to communicate those three projects and our thinking behind that. But, yes, of course. Absolutely.

Matthew Gordon: I appreciate it. Thanks very much, Merlin, and thanks for picking up the phone today. It was great to speak to you. I hope that you are well, and we shall speak to you soon.

Merlin Marr-Johnson: Okay. Thanks a lot.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Leave a Reply

Your email address will not be published. Required fields are marked *