- TSX-V: SRL
- Shares Outstanding: 127M
- Share price C$0.18 (30.04.2020)
- Market Cap: C$22M
Interview with Merlin Marr-Johnson, Director of Salazar Resources (TSX-V:SRL).
Salazar Resources is an Ecuadorian exploration company. In our last interview, we discussed how this gold explorer had farmed out its first copper-zinc-gold asset, the El Domo Curipamba VMS discovery. The PEA shows an economically viable resource. The company is fully carried for 25% and receives US$250,000 in advance royalty payments (to a limit of US$1.5M), additional recurring management fees standing at over US$350,000pa, and was also given the ability to lease out their 3 drills. At the time, they had c.$5M in the bank to continue exploration and consideration of M&A options. Salazar Resources has 3 additional copper-gold assets at varying degrees of licencing. Adventus has a 75% option on project, obtained by funding CAPEX of US$25M over five years. Fully carried for 25%, and receiving annual cash payments. Interesting. A Feasibility Study will be completed in 2022 for El Domo Curipamba, and lots of metallurgical work has been carried out. The aim is for production in 2024, possibly late 2023.
We really like project diversification and commodity diversification. It helps mitigate risk by removing a company’s reliance on a single asset performance. So, in addition to running the copper-gold side of things smartly, Salazar Resources has a zinc-exploration JV that falls within the Adventus-Salazar Exploration Alliance that contains two projects, Pijili and Santiago. Salazar Resources has no activity-funding burden at Pijili or Santiago because Adventus must provide 100% of development and construction expenditures up to a construction decision. Exploration activities of the Alliance are carried out by Salazar on a cost +10% basis.
It’s a good solid model: Salazar Resources can seek out exciting copper-gold and zinc projects, then get other companies to foot the bill. CEO, Fredy Salazar is an ex-Newmont team leader in country and Salazar Resources.
Lots of green lights here, but what about concerns and possible red flags? Ecuador a mining jurisdiction making changes to mining code. The permitting process, both water and environmental, is slow. In light of this, Salazar Resources has been quite slow to deliver on exploration ambitions in the last 18-months due to Ecuador-wide permitting issues. Like in many countries, the mining industry has some social issues in Ecuador, with the usual vocal protests and populist sentiment. However, the administration itself is very pro-mining. Another issue is that the board is a little burdensome.
Perhaps the primary reason behind Salazar Resources’ share price stagnation is the issue of a lack of liquidity in the stock. Marr-Johnson and the rest of the Salazar team are clearly aware of this. Marr-Johnson was steadfast in his response: all the team can do is get out there and tell the story to prospective investors, and continue delivering results. We feel Salazar, and in particular, Marr-Johnson, have communicated the value proposition effectively. It’s up to investors to listen and decide if they think Salazar Resources is an Ecuadorian winner.
Moving forward, what will Salazar Resources do with its US$3.5M cash? Exploration is planned. Potential catalysts in 2020 will be drilling on the 3x 100%-owned exploration licences: Rumiñahui, with copper-gold porphyry targets, Macara Mina, with VMS targets, and Los Osos, with copper-gold-silver targets. The big decision the Salazar face is to select which of their 3 assets they are going to select to develop; the other 2 likely then farmed on on a similar basis as El Domo. There is a lot to like about mining in Ecuador and lot to like about this business model.
- Company Overview
- Business Model: Uniting the Different Components
- Partnership with Adventus Mining: Terms, Conditions and Benefits. What Did They See in Salazar?
- Timing Value Creation
- Upcoming Exploration and VMS Deposit Potential
- Plans Going Forward: Focus and Money Allocation
- Ecuador as Mining Jurisdiction: Mineros Conquering the Pitches
- Solving Liquidity Issues
- Catalyst Moments and the Future for Salazar
CLICK HERE to watch the full interview.
Matthew Gordon: Hi Merlin. How are you sir?
Merlin Marr-Johnson: Good, thank you. How are you?
Matthew Gordon: Not bad. Locked up at home, as I see you are?
Merlin Marr-Johnson: Yep. Yep.
Matthew Gordon: Enjoying it?
Merlin Marr-Johnson: It has its advantages. The children are back at school, so they are all logged on, so if the Wi-Fi goes down, I know that one of them started gaming.
Matthew Gordon: Right? That’s a control mechanism. I love it – well thought through. I think I may experience the same problem and not to mention the various animals running through the house so bear with me as well.
Well, good to speak to you, we haven’t spoken for a few months, and obviously the world is a very, very different place so I think it is worth catching up. Not to mention we have recently done a little bit of, now, we have used you as a guinea pig, Merlin, used Salazar as a guinea pig to try and help people understand South American Explorer type stories. So, it would be great to catch up with you to be able to sort of see if indeed we’re close to being correct. But first of all, let’s kick off with a one-minute overview for people new to this story and then we’ll kind of pick it up from there.
Merlin Marr-Johnson: Salazar Resources is an Ecuadorian company listed on the TSX-V. It has made a big discovery of a very rich VMS and it has farmed out a stake in that. So it’s fully carried all the way through to production, but it’s kept its exploration roots intact. And it’s an exploration company that’s well-funded, that gets a little bit of income from it’s a joint venture partner and it aims to make the next big discovery in Ecuador.
Matthew Gordon: Okay. Thanks for that. So like I said, we have produced a report recently, which is just to kind of help wade our way through the masses of exploration stories out there and try to find points of differentiation. And I think why we picked on you guys as it were is because when we spoke before, there were a couple of things I liked. I liked the newness of Ecuador and the fact that the big boys are piling in there because it’s a much-underexplored country. But the second thing was that you have got an interesting business model, and if you don’t mind, I wouldn’t mind going through that with some people. So, can you just tell us a little bit, give us a little bit of background about what you’ve done because those are kind of farm-in components plus this exploration component.
Merlin Marr-Johnson: Yes, so you know, some of these companies have a classic project generator model: that you find something and you work it up the value curve and then you farm it out and you have a retained interest and you get some cash from that. Salazar Resources has actually been listed for 13-years and it set out as a pure exploration company. It made the one discovery and it worked it up, got it into indicated resources, got it to a very advanced stage and then has done the farm-out. So, on that farm-out, we bought a 25% state code all the way through to production but we also get advanced payments through royalties and management fees, which ticks us over with about USD$600,000 a year. So, we have got income from that asset.
We have also got some drill rigs which we’re using on those joint venture properties, actually 3 projects that we have farmed out and that provides us with income as well. So as an exploration company with about USD$1M of income, we can then fund the early stage value accretive work, which is a lot of the expertise of our Ecuadorian geology, our Ecuadorian exploration team, and it’s a very low-cost but high-value point. You know, you spend USD$1M and you can mix up a big discovery. So we’re actually using the money from the advance payments, management fees to turn it into the next discovery.
Matthew Gordon: Okay. So, so let me drill down on that: so, the who are the farm-in partners? And if you could give us a sense of their capability or ability; I mean, are they desperately scrabbling around looking for money or are they fully funded to do what they need to do?
Merlin Marr-Johnson: Our funded partners are Inventus Mining, and they set up in 2016, maybe 2015, as a special purpose vehicle looking for Zinc and Copper assets backed by an A-list of investors and shareholders. So, they’ve got Altius behind them. They’ve got Wheaton Precious Metals. There’s a big group out of Ecuador called the Novus group. They’ve got RCF, you know, it’s an extraordinary shareholder list backing Adventus Mining, which is, at the moment Ecuadorian-focused, they are not in production yet, but they’ve got very good access to capital.
So, they’ve done very well raising money for the joint venture. And actually the, I think a key point for Salazar is that because we have managed our treasury very well, and because we have done the farm-out, we haven’t had to issue equity, so we are kind of a dilution protected vehicle. We haven’t actually issued equity since 2014.
Matthew Gordon: Yes, I noted that, but we’ll come onto that in a bit. But what exactly have they bought into? You know, why did they pick your asset above others which may have been available to them, give them the capital that they’ve got?
Merlin Marr-Johnson: Oh, well, I think one of the key reasons is that El Domo, which is the name of the deposit within the bigger Curipamba project, this is in central Ecuador, just South of Quito. It was a discovery made by Salazar and it’s one of the richest volcanogenic mass of sulphides in the world, discovered in the last 10 years. A really good analogue is the Degrussa deposit in Australia, which Salazar also has. Now, when they made that discovery, their share price went from $0.07 to USD$7. And they are now mining that company, they’ve taken about USD$2Bn of revenue out of that asset. Their market cap, even with the 50% drop they’ve had in the last couple of months is still around USD$500M, and it is these assets that can be the cornerstones for really big companies.
Matthew Gordon: But why do you say that? I have got to interrupt you there. Why are you making that comparable? You know, where they are and where you are is miles apart? So in what way is it comparable?
Merlin Marr-Johnson: Their maiden discovery was 7M tons at 4.6% Copper and 1.8 grams of Gold. It then grew into 14Mt and it’s around 5% Copper with about 2g/t Gold. On a recovered value basis, their ore is worth about, today, USD$280 p/t. Our asset is 11Mt and it is running about 5% Copper equivalent. In our ore value it is about USD$260 p/t. You know, we have got Copper and Gold, Zinc, Lead and Silver. You know, they’ve just got Copper and Gold, but the value per ton is roughly similar. Our sizes are roughly similar. There’s nothing like it.
I mean, the average grade of Copper mines in the world today is around 0.5%. Our Copper equivalent grade is 5%. That’s an order of magnitude that’s 10 times higher grade than anything else. The economics on that deposit are stunning, and as a company, Salazar Resources with a market cap of USD$15M today is fully carried on 25% of that. We don’t have to issue a single share to get it into production. We don’t have to invest a single cent. We are fully carried to production.
Matthew Gordon: Which is fantastic. The fully carried, I was actually going to get onto it so you’ve answered my question. You stole my thunder, Merlin. So, you are fully carried and they are paying you money, which is fantastic. You said they haven’t started, well, where are they at the moment and when do things get moving? When can you, Salazar, expect to start seeing some value accretion for your share of this?
Merlin Marr-Johnson: Okay, Salazar Resources, because it’s been an Ecuadorian company; it’s run by Freddy Salazar, I’m the only gringo in the team, they are all based in Quito. They haven’t done over the 10-years that have been listed, remember, it’s been a downturn in their in resources sector for most of that time. They haven’t been pounding the streets telling the world what a great asset they have so it’s a slightly forgotten, slightly overlooked asset. Our liquidity is poor, but equally our value doesn’t really reflect what we have got in the portfolio.
The project is at the PEA stage where we did a PEA about a year ago. We have gone through metallurgy, we’re going to complete the Feasibility Study in 2022, sorry, 2021, and aim for production in 2024. That’s when the Ecuadorian government is expecting us to be in production.
Adventus is in a real hurry to get into production. They want it to happen. So, production date, they are probably aiming for late 2023, but 2024 is a more realistic timetable. I think the key thing about, you know, you asked about when are we going to start accreting value, that is, when does value really start being recognised; I think once we have got a mining permit and a Feasibility Study, then people will sit up and realise, well, hang on, this is a Degrussa, this is a Sandfire Resources lookalike. You know, the NPV on the PEA was USD$300M and our 25% of that is whatever you want to call it, USD$70M or USD$75M. That is at our market cap today at $15M.
Matthew Gordon: Exactly. Which is, you know, 0.2?
Merlin Marr-Johnson: 0.2 of NAV.
Matthew Gordon: Yes, it seems ludicrous in a way.
Merlin Marr-Johnson: It is ludicrous just on the value of El Domo. But then actually, El Domo is the value case for the company. But what you would want to get invested in Salazar resources for is the fact that we are Ecuadorian and that were explorers and we are going to find the next deposit.
Matthew Gordon: And we’ll come onto that. We will come onto it, but I think you’re being valued at the moment on that 25% free carry on El Domo. Okay. So, I just want to just dig down a little bit deeper on that one. So, these guys are fully funded, delivery 2024, into production 2024, there or thereabouts.
Merlin Marr-Johnson: They are not fully funded. We are fully funded. They have to keep issuing equity, but they’ve got very supportive shareholders.
Matthew Gordon: Sorry, bad phrase from me. They have got the ability to, I meant, I was referring to their shareholder base and the expectation that they could carry on funding themselves without coming against difficulties in the marketplace. So thanks for clarifying that. But I want to talk about, you know, where value accretes for them, because if their PEA stages is, NPV is nearly $300M, once they get into a PFS, Feasibility Study and the DFS, one would expect that to continue to gain in value. Typical Lassonde curve type structure. Right. And for you too, you can, you would hope to see that. But at the moment, I’m looking at your share price: it’s fairly static. It’s fairly flat. Non-dilutive for many, many years, which is fantastic. And you know, from what you’re saying, the money that you’re bringing in should allow you to do quite a bit and that is probably a time to talk about some of the things that you are going to do to try and drive some kind of value which people recognise and hopefully reflected in your share price, which is the exploration assets that you’ve got and that you’re working on. Can you give people a quick rundown of the, I think you’ve got three at the moment, but one which you’re focusing on in particular.
Merlin Marr-Johnson: Yes, smaller companies typically really only get the value when there are kind of good catalyst, as you say. And the best catalyst is mineralized drill core and when the market can see that you’re on a growth story. So, discovery and drill out, that’s the most exciting. And that’s when you get a rocket-fuelled share price, and that’s tremendous.
Now, we have got in Salazar Resources, we have got three kind of main exploration licenses that are 100% owned buyouts. We have got one in the North, which is a Copper porphyry. Sorry, it’s a porphyry system, but actually it’s Gold rich. And that’s kind of a Gold target with Copper associated with it. And that’s right up next to the SolGold Yuri Manhwa kind of the big deposits up in the North. Right down in the South, we have got another VMS target and that is just over the border from some fantastic VMSs in Peru and our assets in Ecuador. And then we have got another Copper-Gold asset in South-Central Ecuador, next to the Lumina Gold deposit.
Matthew Gordon: Can you just quickly explain for people what VMS is? Because some geologists love it. I like those types of deposits, but not everyone understands what the potential there is. So maybe if you just give us a quick overview.
Merlin Marr-Johnson: Okay. A VMS is a volcanogenic massive sulphide and they form on the sea floor when the ocean floor is spreading and you get hot vents coming up, paring minerals, they hit the sea water they cool down and they deposit and they, you get circulating hot water and lots of fluid flow. And these things occur in little pods along the structure on the base of the ocean floor. So, where you get the Quasi Rift, or the faulting system, you can get lots of these pods. Typically, they are very high in value and they are normally quite small. So, you get clusters of them. They are typically 2Mt to 3Mt to 5Mt. And in every cluster, you get a bigger one and it’s 10Mt or 20Mt or 30Mt.
Rio Tinto, down on the Iberian Pyrite belt, they are called down in Southern Spain, that’s where there’s a whole series of these VMSs. Rio Tinto got started on here Agnico Eagle, Kid Creek, that’s VMS. Lundean Metals up in Sweden, they are going on a VMS now. They can be company makers. And the reason why they are so attractive is because they are high-grade and relatively compact and so they are absolutely ideal for a starter company to get going. Sandfire in Australia, the Degrussa deposit, they have got there. That requires a huge amount of infrastructure. They are a small compact, high-grade deposit that really helps you get started as a mining company. And that’s why they are liked.
Matthew Gordon: Okay, so I have got to deal with this, El Domo took a while to kind of work up and get into that kind of farm-in position. The potential here is to kind of replicate that model, to keep replicating that model, you know, find assets, work it up to the point where you bring someone in who has got cash to be able to develop it and get some free carry on it. Nice model, lovely model, but it takes time and there’s no real blue sky for you in terms of the upside potential. You are kind of almost restricted by whatever deal you can construct. So, can you just help me understand what you’re going to do with the money that you have? I get that it’s non-dilutive, which is great for shareholders, it does cause problems with liquidity, I think, in the way that you’ve got things set up but we’ll discuss that in a sec. What do you do with your USD$3.5M between now and the end of next year with exploration? And how do you work out which one to focus on and which ones to potentially farm out?
Merlin Marr-Johnson: Okay. Well, just on the farm-out question, there would be the landscape and Ecuador has changed enormously. So, because they’ve reformed their mining code and because they really need their mining industry to develop, they actually prioritised it as a strategic industry. The oil price collapse has meant that they weren’t getting paid from the oil industry anyway and now they are getting even less. So, they are really pushing the mining industry and the world has woken up to that fact. And so, there is a very competitive landscape in Ecuador, and we are being called up the whole time with people wanting to do farm-in deals to get access to our expertise and our land position.
So, the ability to do a farm-out is completely different now to what it was 5-years ago, 2-years ago, 10-years ago.
Matthew Gordon: What do you mean by that?
Merlin Marr-Johnson: That there are people willing to do farm-in deals now whereas they weren’t 2-years ago or 5-years ago.
Matthew Gordon: But not in the sense that the type of deals that you do, they haven’t changed. It’s just that the number of people inquiring has increased. That’s what you mean?
Merlin Marr-Johnson: The terms of the deals are better. And also, they are willing to come in and pay for much earlier stage assets. So, the farm-in deal that we did on El Domo, Curipamba was on a well-defined resource that we’d been drilling for seven years at that stage, or six years. It was indicated and inferred resources about to go to PEA state. And we did a value accretive farm-out deal at that stage. But we have now got people looking to do farm-ins at a very early stage on our exploration portfolio, which are essentially grass roots in the sense that we have got drill targets, but we haven’t drilled them yet. Now, as I said, exploration companies really get the rocket under their share price when they have a growth story that they can follow on a hundred percent basis, and we will keep our best assets or what we think is our best asset for ourselves so that we can drill it and report those results to the market.
Matthew Gordon: Which asset of your three is that?
Merlin Marr-Johnson: Well, there’s a slight discrepancy within the team over which is our best asset and so we have got to do a little bit of work first work out, which is our best assets. Freddie Salazar, great geologists, they are going to the CEO of the company. He really likes Rumiñahui, up in the North. He’s said that there’s a one Hector area where out of all the outcrops he has seen, he says it’s about an average of two grams Gold for 0.2% Copper. He said this is a really big and rich Gold target. He has seen the alteration up at Cascobel, sold all asset and he seen the alteration and the veining in our area, and he says he prefers ours and he wants to drill that as a priority and we will be drilling that later this year. So that’s got all the potential to be the company number one.
The one that I’m quite keen on is the one down in the South, Macara. It is the VMS target. It’s got a lovely Gold cap. The beauty about those Gold barite caps is that it’s often oxide Gold. So, it’s free milling, very low-cost operating. When I was at a conference, one of the old timers from who’d been working in Peru came up and he looked at our licenses and he said, wow, I like those. He said that Gold cap, he says, I reckon you have got 500,000oz, 3g/t, maybe 3.5g/t. That well, okay, that’s a nice compliment. And he says you’ve got all the indications of the VMS body underneath as well. I can’t tell if it is on the edge or on the top of it, but you need to do gravity, you need to do a gravity survey. And it’s the classic thing for VMS deposits; you have to do, or you don’t have to, but the best way to find these things is to do gravity surveys. So that means that Macara is running actually behind Rumiñahui. So the one up in the North, we can go straight in to drill, while we’re drilling that we can do the gravity survey and then come back and he’ll mock it up. Okay. And with those, we afford to do both of those and at that point farm out the one that we want to take on.
Matthew Gordon: Okay. So, that process will take what? Between now and the end of this year? Or will it take a bit longer? By the end of this year you’ll make a decision?
Merlin Marr-Johnson: Yes. Yes, absolutely. The field teams are out at the moment and kind of getting ready to go back into Rumiñahui Freddy is on the phone all the time with the landowners. He’s actually, he owns some of the land at Rumiñahui. One of the reasons he is so keen to get in there is that when he first went there 25 years ago, there were these massive blocks, 10m blocks of boulders, rocks, which obviously have not travelled very far. And he assayed them and they were running 20g/t Gold 2% Copper.
Matthew Gordon: Right, which would get everyone’s notice.
Merlin Marr-Johnson: So, you know, he really likes Rumiñahui, he thinks it has got real potential. But getting the field crews back in, as I said mining is a strategic sector for Ecuador, we are being pushed to get back into the field. Obviously, with COVID-19 concerns, people have to do it in a very safe manner and not introduce, you know, isolation, dealing with the communities, working that all out, but we’re still looking at a plan to get into the field, wrap up the final drill pads, get the water permits for drilling and aim to be drilling kind of September, October this year.
Matthew Gordon: Okay. So, you make an interesting point there: in Ecuador, as a sort of relatively new virgin territory in in many ways. Although I do appreciate that Freddy is of ex-Newmont and they’ve been working there for 20 years, but in the sense where there hasn’t been a lot of money piled in. The government is encouraging and wanting people to start mining for revenue reasons but there are some groups who are anti-mining in the country who are either looking for you to stop or looking for assurances about the way that mining is carried out. So, the government’s going through some kind of assessment at the moment. What can you tell us about where that is and what it may involve?
Merlin Marr-Johnson: Yes, sure. I mean, Ecuador is an amazing country and the mining industry has really struggled to get going there, and it’s for a whole host of reasons. Some of it is political. It is historic, it’s socialist governments which have been kind of quite anti-mining. It has had a very pro-environment and tourism and ecological bent to the politics. The local communities, the indigenous communities are anti-mining. They are pro-tourism. You know, it has been tough going and in the past, they have put on windfall taxes and all kinds of things to almost inhibit mining.
The great turnaround, should we say, came around in about 2010 when the socialist government realised they couldn’t afford their welfare programs. They couldn’t afford the investment into social infrastructure education, you name it. And looking around at what sector could provide the funding for those, the societal, the country level investment that was required, the only thing that could work was mining. You know, there was X growth and they had done these bad loans to the to the Chinese oil firms for cash. Agriculture was X growth. It’s also a dollar-based economy so it’s quite hard to compete with Peru or Columbia or Bolivia for coffee or cocoa. Tourism was X growth. And then the final kind of realisation was that actually there is already mining in Ecuador. There’s a lot of illegal mining, there’s a lot of environmental degradation, and so the choice was between good mining and bad mining and if you can get good mining, which is well regulated, safe, properly done and it generates tax dollars and foreign exchange earnings for the country, so much the better. Now, that’s all the positive. The negative is that you’ve got a community that doesn’t really understand mining or if it does understand mining, it’s bad. It’s kind of criminal enterprises. It’s environmental degradation. There’s a great deal of fear in the local communities about mining, and you’ve got a couple of very, very vocal anti-mining protestors calling for referenda the whole time. So, it is one step forward, half a step back.
Matthew Gordon: But you guys, I read something that was quite interesting: I mean I like football. I think a lot of people like football, most of South America likes football. But you guys, I think Freddy has started an initiative which seems to be growing. I’m not quite sure whether you can be a mining company or a football team because you’ve created this kind of, what are the, I’ve forgotten the name what’s miners in Spanish?
Merlin Marr-Johnson: Los Mineros.
Matthew Gordon: Los Mineros – there you go. The Los Mineros program, which is about building out these local football teams who, you know, play in leagues and so forth. I guess that’s not just for the love of football, but to help spread and educate the right way to go about mining and why is it a positive for, could be a force for good. Can you tell us a little bit about that program? Because I kind of, I’ve only seen bits and pieces, but it seems great.
Merlin Marr-Johnson: Freddy is Ecuadorian. He is from the communities. You know, the El Domo project was discovered by one of our best geologists who lives in the town nearby. We are not a foreign company coming into kind of plunder the riches of the empire. It’s a very Ecuadorian company with a focus on developing the community and working for the benefit of Ecuador, and Freddy has got a real knack for knowing what is going to work in which area. In some places it’s a cattle project, in other places it is corporate projects. And around El Domo he felt that there were two things that worked really well: one was a dance school with local cultures. And the other was this football team, the football team, he sets up his little community academies. So, both male and female, boys and girls. They come through and there’s training, there’s football and he’s funded also the state football team in Bolivar state, which didn’t really have a football team. He called that Los Mineros and all the little community football teams in the areas where we’re working can feed players through to the kind of the central Academy, and we’re putting some money into that central Academy and it’s going really well through the leagues, through the division.
We are speaking to some other mining companies. We hope that they will take us up on it, but we’re looking to offer them our template so they can set up their own little football academies in the regions where they are working. And that can all feed through to the mining football team, which of course helps a country realise actually, here we go, the miners are a real deal. That’s a kind of a cultural force for good.
Matthew Gordon: No, I thought it was very interesting way to do it. Because normally you read, it’s the same old thing, you know, we built a school, it was great, built a school but then walked away. We built a well and then walked away. But there’s a kind of, there’s a real kind of legacy component to it. I really, really liked it. I thought it was a very attractive way of doing it and enabling the mining community, because you are opening it up to other mining companies in the region and the country to be able to tell and sell the same story.
Merlin Marr-Johnson: There’s one quite cool thing: Ecuador played England in a world cup match in the nineties.
Matthew Gordon: I remember. Yes.
Merlin Marr-Johnson: And the goalkeeper, the Ecuadorian goalkeeper from that game, he is actually from a town near us and so no, it’s not one who got shot. I think that was a Venezuelan or a Colombian?
Matthew Gordon: The Scorpion, the guy who did the scorpion kick.
Merlin Marr-Johnson: No, that’s a Colombian, with the dreadlocks. I think he died, unfortunately. But the Ecuadorian goalkeeper who played against England, lives in the town local to us, a couple of communities away, which has traditionally been a very anti-mining town. He has joined Los Mineros as our coach and also as our goalkeeper, and he’s really interested in mining. So, it is a, it’s a nice kind of full circle thing. He’s is an ex-national player, playing for Los Mineros. I think he’s in his forties now.
Matthew Gordon: Okay. So, so old. So old.
Merlin Marr-Johnson: So old, right?
Matthew Gordon: Well, we better get back to how you’re going to make money for shareholders, because one of the things I talked about earlier was this liquidity issue, which I think is problematic for small companies where lots of shares are held by management or insiders, or even large institutions in some cases and they are not, they are not fully traded. What are you going to do about that?
Merlin Marr-Johnson: Well, what can you do? All you can do is tell the story, get out there and deliver results. The only two things you can do, communicate what you’re doing and the value proposition. And you can get out there and return results. So, that’s what we have got to do, and we will be drilling at Rumiñahui later this year. We will be pulling samples and maps and targets out of MACRA, the VMS project in the South. We’re applying for new licenses. We have got our eyes on, because we’re Ecuadorian, we have got our eyes on some of the best ground in Ecuador, and ongoing projects, ongoing work with our joint venture things. But what I haven’t said is that El Domo is the one that’s going to Feasibility that’s the VMS, but Adventus are also drilling a couple of big porphyry targets and they will be drilling those this year. So, we have got that funded drilling that will also generate value and results for us later this year. So, we have got five or six projects which we will be drilling this year, or advancing this year, plus the main one which is just going through to feasibility.
Matthew Gordon: Okay, Merlin. Well, I think we’ll leave it there because I mean, like I said, we have done a ton of this analysis or appraisal of your company. It was really just a case of helping us kind of wade away through the many, many South American junior explorer stories which we get on our desk every day. And this did stand out for all the right reasons. I think, like I said, I do think my concern is like if people are interested in you, it’s going to be difficult to get hold of shares because there is not that selling going on. So, I’m looking forward to seeing some of these results and if they are going to make a difference in the market in terms of these catalyst events. I’m looking at your face. Do you think they will?
Merlin Marr-Johnson: Can I just chip in with a couple of extra comments? One is that the risk-reward profile of exploration companies is always quite scary. You hope that they are going to find something but you’re never sure that they are going to. The kind of the value proposition that I see in Salazar Resources are that we have already found something and it’s not in the price and it’s marching up that value curve as it goes towards production. So, we know that the share price for Salazar is going to gradually reflect that stake in El Domo. It might take six months, it might take a year, but the value is much closer to USD$1 than it is to $0.20 and that is the kind of return that you want to be looking at as an investor over a year or two. And then we have got the kind of the spice, or the excitement of this great exploration portfolio with a team of proven geologists who know how to operate in Ecuador in one of the most fertile geological districts in the world. You know, that gives you the real excitement on this exploration story.
Now, when it comes to liquidity and can you buy the shares? The company has been listed for 13-years. It’s got 50% of the shareholder register, which is very tightly held, but the other 50% has been relatively, perhaps relatively tired, having held it on for a number of years. Liquidity will come, you know, get out there in the market, bid for a hundred thousand dollars worth of stock and you’ll see that the liquidity will come. It might not be at $0.17, but it might be at $0.25. The key thing is that I’m pretty sure that liquidity will be there, and as you approach the right valuation point, that liquidity will come back. I’ll leave it there. Thanks.
Matthew Gordon: So, we should stay in touch, please, because I think you’ve got a lot of things which are important that are coming up, once we get through this kind of COVID-19, you know, lockdown that we’re in. Like I say, pick up the phone, let us know what’s going on because it’s one of our favourite South American junior exploration stories now. We spent a lot of time on it. And we look forward to speaking again. So great. Thank you very much.
Company Website: https://www.salazarresources.com/
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