Chakana Copper (PERU) – Long-Awaited Permit Catalyst Imminent says CEO

Chakana Copper Corp.
  • TSX-V: PERU
  • Shares Outstanding: 93M
  • Share price C$0.27 (07.07.2020)
  • Market Cap: C$25M

Interview with David Kelley, CEO of Chakana Copper (TSX-V: PERU)

Chakana Copper Corp. is a single-asset Canadian-based copper-gold-silver advanced exploration company. Via its 100%-owned subsidiary, Chakana Resources S.A.C., it is currently advancing the Soledad project near Aija, in the Ancash region of the ‘highly prolific’ Miocene mineral belt in central Peru. While 30,000m of drilling has taken place on Soledad, shareholders have been left frustrated by the lengthy permitting process for the last 2+ years: a notorious and typical difficulty of mining in Peru. However, with the conclusion of the permitting process looking like it will take place in the next 4-6 weeks, new shareholders may be significantly less frustrated.

A maiden resource should be available for Soledad after the next round of fully-funded drilling; 15,000m of it, in fact. Kelley claims that Chakana Copper is an exciting geological story because it is exploring tourmaline breccia pipes. These pipes are providing high grades and long runs of extended mineralisation in the drill core. There was a lot of initial excitement when these numbers first started coming out.

Matthew Gordon talks to David Kelley, 7th July 2020


However, since then, the share price has been tracking steadily and continuously downwards. Why? An early overhang caused share price depression, but this has since been “cleared out.” Overall, the bureaucratic, paper-driven, protracted permitting process has clearly put a lot of investors off, especially for a single asset company.

The business plan from day one was never for Chakana Copper to develop a vast portfolio of projects. Instead, the company intended to leverage its expertise and commercial knowhow to acquire the very best asset it could. Kelley states that acquiring projects is easy, but acquiring good projects is much more difficult. This may well be true, but investors will likely be put off by the risk profile of Chakana Copper: a single asset company in a complicated mining jurisdiction. There is not currently a contingency asset, but it is clear that Kelley always has his eyes peeled for potential quality acquisitions in the future. However, the near-term focus is entirely on Soledad.

Chakana Copper has C$6.6M in the bank today. This will see the company through its fully-planned 15,000m drill programme on 2 new targets it has not drilled yet. The market is not currently valuing Chakana Copper very highly, but Kelley thinks that evidencing a 10Mt resource will be a crucial inflection point for the value of his company. A 10Mt copper-gold-silver project with “spectacular grades” should turn into a mine in Peru. Peru has plenty of mining infrastructure and societal support for mining, but the paper-based permitting issue remains. The physical practice of carrying documents around to be manually stamped has been comprehensively disrupted by COVID-19.

The team at Chakana Copper is solid, with several familiar names. The company has 5 directors, 3 of whom are geologists. Economic geologist John Black is a renowned name, and he serves as one of the company’s directors. He was a key driver in negotiating the sale of Antares to First Quantum Minerals for C$650M. He has plenty of operating experience in Peru and has carried out Chakana’s exact strategy before for a different company: taking an asset to the point it can be developed into mine and “divesting it” so somebody else can develop it. The company has a fully functioning team in-country, and there is no requirement for Kelley to constantly have his boots on the ground.

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Gold-mining major Gold Fields invested C$8M at C$0.51 per share into Chakana Copper in May 2019. Kelley claims the company love the concept of multiple high-grade breccia pipes that are vertically extensive. He claims they are very intrigued by the upside potential of what is driving the breccia pipes. Most geologists think that breccia pipes are driven by a porphyry that sits at depth: a much larger type of deposit. The previous explorers at Soledad were solely focussed on this porphyry potential.

Chakana Copper hopes to draw on a level of technical expertise that is uncommon for a junior mining company to drive the de-risk the asset astutely. Kelley will be hoping that when this permit finally rolls in, the stock finally receives a welcome uptick. The company is currently stationary because of COVID-19, and he is itching to get back to work. Let’s see if Kelley delivers on the new permitting timescale. Then, let’s see if it has a positive impact on the share price. Long-suffering investors will certainly be hoping so.

What did you make of David Kelley?

Company Website: https://www.chakanacopper.com/

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.

Aztec Minerals Corp. (AZT) – A Copper-Gold Explorer that is a little too Overconfident

Aztec Minerals Corp.
  • TSX-V: AZT
  • Shares Outstanding: 41M
  • Share price C$0.35 (12.06.2020)
  • Market Cap: C$15M

Interview with Bradford Cooke, Chairman of Aztec Minerals Corp. (TSX-V: AZT).

Cooke is also the CEO of Endeavour Silver Corporation. Aztec Minerals Corp. is a mineral explorer that is focussed on the discovery of porphyry copper-gold deposits in North America. Aztec Minerals has experienced management team and board of directors who have successful track records of financing, acquiring, discovering and developing mineral discoveries in the Americas. Joseph Wilkins is the company’s CEO, and he has worked as a geologist for 30 years, including 23 years with various entities of Rio Tinto Exploration (Kennecott Exploration and US Borax). He is a porphyry specialist. The rest of the board is populated with “serial discoverers.”

Aztec went public in 2017 but had been knocking around with a focus on Mexican exploration properties for two decades.

Matthew Gordon talks to Bradford Cooke, 12th June 2020


The focus for 2020 is the Tombstone Silver District in Arizona, having already drilled on a copper-gold discovery called (65%-owned) Cervantes, in Mexico. Aztec Minerals has the option to acquire up to 75% of Tombstone, which produced 32Moz of silver, 240,000oz of gold, 65Mlbs of lead, and 1.1Mlbs of zinc from 1.5M tons of primarily oxide ores between 1878 and 1939. Arizona Mining has had great success just 40km away, with the Taylor Deposit discovery. Aztec aims to replicate this at Tombstone by drilling this year.

Aztec Minerals’ share price has been falling consistently until May when it saw a major boom. Simon Dyakowski came on board in March to help with the financial and marketing side of things. While Cooke claims getting in front of investors, telling the story and creating momentum is a major factor behind this share price discovery, but there is clearly more to it. A geophysical survey released for Tombstone last week has clearly got the market feeling excited by revealing strong conductive bodies. In fact, Tombstone looks to be a geological clone of the Taylor Deposit; that really is encouraging. High-grade massive sulphides have driven the share price up and with the historical drilling data combining with the geophysical data, Aztec Minerals could be onto a promising bulk-tonnage property. Suddenly, there are offers of financing on the table. Things can change very quickly in the junior mining space. My major concern is that Cooke is so certain at such an early stage. In reality, the company knows very little yet, and a geophysical survey is not going to give me confidence anytime soon. I want to see a lot more evidence that Tombstone can be this exciting gold-silver-lead-zinc asset, especially considering some of the historic drilling data accounts to just 1 hole!

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Aztec Minerals will shortly be raising money to use for a drill programme at Tombstone: a minimum US$1M. This should cover Aztec for a year of development at Tombstone. Cooke wants to spend c. US$700,000 drilling “several main targets.” Cervantes is firmly on the backburner because of copper prices and a lack of investor interest, but Cooke does the want the company to eventually return to drill again, even though “major gold companies” are now showing interest. The story has gone cold, and investors will be hoping the same doesn’t happen after Aztec Minerals sinks money into Tombstone. Tombstone does appear to be a more accessible, economical resource, so this was clearly a factor too.

Aztec Minerals could be actively drilling Tombstone by the end of July and will have drilled 10,000m+ by November.

With Cooke only spending “an hour a day” working for Aztec Minerals, are his priorities stretched? In addition, it is a major concern that Aztec Minerals wasn’t working effectively until Simon Dyakowski wade into the fray. I do appreciate that Cooke is candid about this, stating that the company used to be full of purely technical mines and needed some commercial knowhow. The release of drill results used to have an inverse relationship with the share price, and while markets are sometimes irrational, this is a worry.

What did you make of Bradford Cooke and Aztec Minerals Corp? What do copper-gold investors have to say for themselves? Comment below and we will respond.

Company Website: http://aztecminerals.com/

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.

Group Ten Metals (PGE) – PGEs, Nickel and Copper: What is the Upside?

The Group Ten Metals company logo
Group Ten Metals Inc.
  • TSX-V: PGE
  • Shares Outstanding: 119M
  • Share price C$0.25 (10.06.2020)
  • Market Cap: C$30M

Interview with Michael Rowley, President & CEO of Group Ten Metals (TSX-V: PGE).

Group Ten Metals (TSX.V: PGE / OTCQB: PGEZF) is a Canadian mineral resource exploration company focused on the advancement of the flagship, 100%-owned, district-scale Stillwater West PGE-nickel-copper project on the doorstep of the high-grade Stillwater mines in Montana, USA. Group Ten also has 100% ownership of two district-scale polymetallic assets in Canada that it has been unable to monetise.

Rowley co-founded Group Ten Metals in 2007. In 2012, the company consolidated a district in Ontario, and in 2015, it turned its attention to the nickel-copper-PGE space in Yukon. In 2017, the company obtained Stillwater. The business plan is a simple ‘bank land, de-risk, add value’ strategy.

Matthew Gordon interviews Michael Rowley, 10th June 2020


With C$3M in the bank, Group Ten could have some difficulties choosing exactly to focus on. Rowley stated that the real focus is on Stillwater, debuting the resources and presenting the potential to the market. While Rowley does attribute value to Group Ten’s non-core assets, he states there has been little investment appetite for the properties until the last two years came around. If anything, in a bear market cycle, these minerals have been viewed as liabilities by majors. With the market starting to turn, Rowley claims that majors are circling around the non-core assets like hungry sharks. We certainly hear this a lot, but he is adamant that the market is now back on Group Ten’s side.

Group Ten intends to conduct drilling on the “5 most advanced areas of Stillwater.” If these targets reveal significant potential, Rowley can revalue the company around those resources. This means Group Ten can raise money at higher prices and carry out larger, more advanced drill programmes. The market might be forgiven for feeling a little nervous about Group Ten’s ability to deliver, given that the company has had no discernable success since 2007 and failed to monetise its Canadian assets.

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With the C$3M, and potential additional investment coming in, Rowley feels the company can make a deal with a strategic partner at any time; his focus is on making the right one. However, he wants to add plenty more value to Stillwater before any of these discussions progress further. The key objective is to deliver the resources, revalue the company around the maiden resources, and determine the amount of field exploration to be conducted. Given it’s such a large land package, I’d have liked to have heard a more specific plan.

Pushing the project forward is, at its core, an experienced, successful team. Chairman, Greg Johnson, took NovaGold from C$0.10 per share all the way up to a C$2B market cap. There are several other notable presences, but some of the team are juniors. Rowley labels it a “truly world-class team.”

This “world-class” management team owns a meaningful 29% of Group Ten Metals, and they paid for all of them. The institutional component of the share registry is also solid, at 20%. Group Ten’s neighbour might have been purchased for US$2B, but I will be holding fire until Rowley can show me something more concrete that generic marketing talk; I want to see hard numbers. Existing shareholders have been long-suffering, and this huge, highly-prospective land package isn’t doing anything for them while it has a sub-par valuation attached to it.

The management team is remunerated via a contracted salary, but Rowley claims to take steps to cut costs where he can. The message to the marked it that he understand Group Ten owes the market better, more detailed information, and it owes shareholders some concrete growth. Let’s see what the rest of 2020 has to offer for Group Ten Metals.

What did you make of Michael Rowley and Group Ten Metals? Comment below and we will respond.

Company Website: https://grouptenmetals.com/

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.

The Group Ten Metals company logo

Salazar Resources (TSX-V: SRL) – An Exceptional Copper-Gold-Zinc Business Model

Salazar Resources Ltd
  • TSX-V: SRL
  • Shares Outstanding: 127M
  • Share price C$0.18 (30.04.2020)
  • Market Cap: C$23M

Crux Investor recently conducted an interview with Merlin Marr-Johnson, Director of Salazar Resources (TSX-V:SRL). We were already interested this copper-gold-zinc story based on our last interview. Were we equally impressed this time around?

Salazar Resources is an Ecuadorian exploration company. There are some important decisions on the cards for this year. Which one of Salazar Resources’ three 100% owned copper-gold-zinc assets will it develop, and which two will it farm out?

What is the plan for the Adventus Exploration Alliance in 2020? How will Salazar Resources work to resolve Ecuadorian permitting and liquidity issues? Marr-Johnson has answers to everything as he usually does.

We Discuss:

  1. Company Overview
  2. Business Model: Uniting the Different Components
  3. Partnership with Adventus Mining: Terms, Conditions and Benefits. What Did They See in Salazar?
  4. Timing Value Creation
  5. Upcoming Exploration and VMS Deposit Potential
  6. Plans Going Forward: Focus and Money Allocation
  7. Ecuador as Mining Jurisdiction: Mineros Conquering the Pitches
  8. Solving Liquidity Issues
  9. Catalyst Moments and the Future for Salazar

Company Website: https://www.salazarresources.com/

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.

Salazar Resources (TSX-V: SRL) – I saw it coming, from miles away (Transcript)

The Salazar Resources Ltd company logo
Salazar Resources
  • 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.

We Discuss:

  1. Company Overview
  2. Business Model: Uniting the Different Components
  3. Partnership with Adventus Mining: Terms, Conditions and Benefits. What Did They See in Salazar?
  4. Timing Value Creation
  5. Upcoming Exploration and VMS Deposit Potential
  6. Plans Going Forward: Focus and Money Allocation
  7. Ecuador as Mining Jurisdiction: Mineros Conquering the Pitches
  8. Solving Liquidity Issues
  9. 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/

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.

The Salazar Resources Ltd company logo

Salazar Resources (TSX-V: SRL) – A Smart Business Model That’s All About Making Money

Salazar Resources
  • TSX-V: SRL
  • Shares Outstanding: 127M
  • Share price C$0.19 (29.04.2020)
  • Market Cap: C$24M

These days, everyone’s got big ideas. “Become an established Tier-1 producer within 5-years,” “build up the gold Resource to 5Moz and then get taken out by a major,” “blow the market away with high-grade exploration,” and “deliver value through the drill-bit.’

However, an idea isn’t a plan. We are often told a story by a mining CEO, and it becomes very clear, very quickly: they have an idea, but they don’t have a plan.

If you’re going to pitch an idea to me because you want my money, I don’t just want to hear what you want to accomplish; I want to hear how you intend to accomplish it. If you can’t explain your business plan in logical, achievable steps, I’m not interested. CEOs seem to find it very easy to promise investors the world, but they are usually much less adept at explaining a systematic process for achieving returns. There’s a reason for that: some CEOs are learning on the job with your money, some are making it up as they go along, some don’t have a clue what they are doing, and some are knowingly designed as a lifestyle company.

Salazar Resources

A company that most definitely doesn’t fit into this lacklustre bracket is one we have interviewed recently: Copper and Gold Explorer Salazar Resources (TSX-V: SRL).

Director, Merlin Marr-Johnson, was able to effortlessly break down the steps that he thinks will lead Salazar Resources to the top of the mountain: becoming a meaningful South American copper-gold-zinc player.

Merlin-Marr-Johnson, Director of Salazar Resources
Merlin Marr-Johnson has really impressed us

We recently spoke with Marr-Johnson for another interview to follow on from our last conversation with him in December 2019.

We’ve previously written an article about Salazar Resources on the Crux Investor website. For those who haven’t had the chance to give it a read, Salazar Resources is an Ecuadorian mineral exploration company. The company is led by CEO, Fredy Salazar. Salazar is a renowned geologist and ex-Newmont team leader in Ecuador. He has been exploring and discovering major copper-gold assets in Ecuador for over 20-years.

El Domo Curipamba

We’ve previously discussed with Marr-Johnson how the company farmed out its first copper-zinc-gold asset, the El Domo Curipamba VMS discovery, in a JV with Canadian miner, Adventus Mining (TSX-V: ADZN).

It looks like an astute move. A PEA conducted for the asset demonstrates an economically viable resource…

What the the key figures?

  1. Measured Mineral Resources for El Domo total 1.4Mt grading 1.92% copper, 0.37% lead, 3.52% zinc, 3.75 g/t gold, and 58 g/t silver.
  2. Indicated Mineral Resources for El Domo total 7.5Mt grading 2.02% copper, 0.26% lead, 2.81% zinc, 2.33g/t gold, and 49 g/t silver.
  3. Inferred Mineral Resources for El Domo total 1.3Mt grading 1.52% copper, 0.20% lead, 2.25% zinc, 1.83 g/t gold, and 42 g/t silver.

The numbers are great on paper; most mining executives would probably leave it there. Marr-Johnson isn’t most mining executives. He was keen to get into the details of Salazar Resources’ partnership with Adventus Mining.

  1. The company is fully carried for 25% at El Domo.
  2. Salazar Resources receives US$250,000 in advance royalty payments (up to a limit of US$1.5M). The Ecuadorian miner also receives additional recurring management fees of over US$350,000pa, and will also lease out their 3 drills.
  3. Adventus has a 75% option on project, obtained by funding CAPEX of US$25M over 5-years.
  4. Exploration activities of the Alliance are carried out by Salazar on a cost +10% basis.

The FS will be completed in 2022 for El Domo Curipamba. In the meantime, Marr-Johnson explains there is some metallurgical work on the ore body still to carry out, though much of it is finished.

Salazar Resources intends to be in production by 2024. If you’re an optimist and want to go along with what Adventus is saying, production could possibly begin in late 2023.

We like that Salazar has the geological knowhow to seek out promising copper-gold resources, then get other companies to foot the bill. It’s a de-risked, substantiative and methodical plan. We like it a lot.

Adventus-Salazar Exploration Licence

Adventus Mining works with Salazar Resources on several other projects as part of the Adventus-Salazar Exploration Alliance. Salazar Resources looks to have secured a great deal.

Commodity diversification is something I value highly. If a company is reliant on the performance of a single commodity, risk is enhanced. Salazar Resources has managed to mitigate risk by adding zinc to its copper-gold formula. The Ecuador-wide variation of the Alliance covers all zinc targets. It also covers some additional specific projects:

  1. Again, as part of the Adventus-Salazar Exploration JV, Salazar Resources has two addition exploration licences, both for copper-gold porphyry exploration targets with epithermal gold/silver veins: Pijili and Santiago.
  2. Salazar Resources has a minimal financial burden on either project. It has no obligation to fund activities. As part of the agreement, Adventus must provide 100% of development and construction expenditures until a construction decision is made.
  3. You can read more about these two smaller ventures on Salazar’s website.

Aside from the alliance, Salazar Resources has an impressive portfolio of 100%-owned concessions/exploration licences:

  1. Rumiñahui – a 2,910ha exploration licence (2 concessions) held 100% by Salazar Resources that hosts copper-gold porphyry targets.
  2. Macara Mina – a 1,807ha exploration licence (2 concessions) in southern Ecuador held 100% by Salazar Resources that host VMS targets. 
  3. Los Osos – a 229ha, single concession, copper-gold-silver exploration licence in the Cerro Pelado-Cangrejos mineral district in southwest Ecuador.
  4. Lastly, as previously mentioned, Salazar Resources has a wholly-owned stand-alone subsidiary, Perforaciones Andesdrill S.A, that owns three diamond drill rigs.

Rumiñahui, Macara Mina and Los Osos could provide potential catalyst moments in 2020 and beyond. Exploration is planned for 2020. The difficult decision Salazar Resources will have to make is which one of these projects to focus on, and which two to farm out. We’re sure Fredy Salazar’s geological expertise will come in handy. The plan is clear and concise: identify the best, monetise the rest. Excellent.

All of these projects are at varying degrees of licencing, but they are conglomerating to form a comprehensive portfolio in a country that is regarded by many mining commentators as under-explored and full of potential. When we last spoke to Marr-Johnson, at the turn of the year, Salazar Resources had c. US$5M in the bank to continue exploration and the possible addition of further licences.

Nothing Is Perfect – Any Red Flags?

So far, I’ve been very impressed with Salazar Resources’ business plan. The leadership also appears to be top-notch. However, there are a few concerns I’d love to see the company address.

Ecuador – Slow And Steady Wins The Race?

Ecuador isn’t a mining jurisdiction with an enormous amount of history.

While this brings with it a wealth of exploration potential, there are some shortcomings, particularly in the permitting department. Ecuador is currently modifying its mining code. As a consequence, the permitting process, including water permits and environmental permits, is slow.

This perhaps explains why Salazar Resources has been relatively slow to deliver on its exploration plans for the last 18-months. These permitting issues are Ecuador-wide, and there is little Salazar can do other than control what it is able to control. We have no doubt the management will position the company effectively despite permitting hitches.

Ecuador – Social Issues

Many of the mining companies we interview have societal issues to contend with in their respective mining jurisdictions, and it appears Salazar Resources is no different.

There is a presence of anti-mining, populist sentiment in parts of society, with occasional vocal protests taking place.

However, the much more important thing is the attitude of the national administration. The Ecuadorian government itself is actually very pro-mining. This should stand Salazar Resources in good stead as it proceeds with exploration this year and beyond.

Liquidity Difficulties

The primary concern for shareholders is that Salazar Resources has been suffering from share price stagnation.

Marr-Johnson spoke very candidly about this: the main issue for the company right now is a lack of liquidity in the stock. Low trading volumes are being driven by a great story failing to resonate in the market. How can Salazar Resources resolve this?

Marr-Johnson was confident that Salazar Resources can get this under control. The company needs to clearly communicate the value proposition in a manner that gets investors up out of their seats and heading towards their nearest broker. The company has been delivering the operational results investors will demand, but now it’s time to get out there and start telling the story.

This situation reminds me of another one of my favorite companies Crux Investor has interviewed recently: Neometals. They have an equally smart business plan but are being hampered by ineffectual storytelling to the market. The reality is that some CEOs are such good salesmen that they can sell you snake oil with consummate ease. Others can actually run their mining company properly. I know which camp I’d rather be in…

Looking To The Future

Investors will now be interested in Salazar Resources’ plan going forward; in particular, what will Salazar Resources do with its remaining US$3.5M in cash?

The Ecuador National Flag

Exploration for growth on Salazar’s 100%-owned portfolio appears to be the current priority. As previously mentioned, these operations could create the catalyst moment the company is crying out for, and turn this diligent and smart Ecuadorian miner into a copper-gold-zinc winner.

There is plenty to like about mining in Ecuador and an awful lot to appreciate about this business model. Let’s hope Salazar Resources can deliver for investors in 2020 because I have faith in the team and the model. Now, this needs to be reflected in the share price.

Company Website: https://www.salazarresources.com/

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.

GSP Resource Corp. (TSX-V: GSPR) – Changing Priorities For This Explorer

The GSP Resources Corporation company logo.
GSP Resource Corp.
  • TSX-V: GSPR
  • Shares Outstanding: 12M
  • Share price C$0.10 (16.04.2020)
  • Market Cap: C$1.2M

We’ve interviewed lots of small mineral exploration companies at Crux Investor; is this one any different? GSP Resource Corp. is copper explorer based in the “tier-1” jurisdiction of British Colombia.

This is a risky investment opportunity but if you like big upside risk then you may have the stomach for it. It is an early-stage exploration play with many hurdles to clear. However, the prize at the end of the tunnel is, potentially, enormous.

GSP Resource Corp. was focussing on its copper project, the iron, palladium and magnesium ‘rich’ Olivine Mountain Project, but after conducting a preliminary drill program, GSP clearly didn’t get the results it wanted, or the results necessary to excite the market.

The Alwin Mine Project lies in the shadow of the vast Highland Valley Copper project, which produced 101,000t of copper in 2018. This is GSP Resource Corp’s new acquisition and new focus.

We Discuss:

  1. Company Overview
  2. Olivine Project: New Deals and A Changed Business Model
  3. Alwin Project: An Overview of the Opportunities and Plan of Actions
  4. Financing it All: How Will They Do it?
  5. Hindsight Mining: An Observation of What Could Have Been and Lessons Learned
  6. Creating Shareholder Value: What’s the End Goal and are They Prepared to Achieve it?
  7. The Team: New Additions and Christopher Dyakowski’s Involvement

Company Website: https://gspresource.com/

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.

The GSP Resources Corporation company logo.

Vizsla Resources (TSX-V: VZLA) – Lucrative Potential?

The Vizsla Resources Logo.
Vizsla Resources Corp.
  • TSX-V: VZLA
  • Shares Outstanding: 49M
  • Share price C$0.55 (06.03.2020)
  • Market Cap: C$27M

We recently conducted an interview with Michael Konnert, the president & CEO of Vizsla Resources (TSX-V: VZLA). It was a very interesting interview with a gold-cooper-silver explorer.

While you’re here, why not check out one of our recent articles covering the gold space, or even an interview with a gold producer?

This is a risky investment opportunity at its most transparent. It is an early-stage exploration play with many hurdles to clear. However, the prize at the end of the tunnel is, potentially, enormous.

Vizsla Resources is a Mexico-based mineral exploration company listed on the TSX-V. It was founded in 2017, and is engaged in the discovery, development and acquisition of precious and base metal assets in what it claims to be safe jurisdictions. 

We Discuss:

  1. Vizsla Resources’ Gold, Silver And Copper Assets
  2. Business Model, Including Cash On Hand, Remuneration Policy and Burn Rate.
  3. Financing Plans
  4. Reasons For Investors To Be Optimistic In 2020

Company Website: https://vizslaresources.com/

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.

The Vizsla Resources Logo.

Forum Energy Metals (TSX-V: FMC) – A Play That’s Making The Big Boys Take Notice

A photo of a black Tesla Model S.
Forum Energy Metals Corp.
  • TSX-V: FMC
  • Shares Outstanding: 107.5M
  • Share price C$0.10 (25.02.2020)
  • Market Cap: C$10.2M

We recently interviewed Richard Mazur, President & CEO of Forum Energy Metals (TSX-V: FMC).

We have a variety of energy metals and uranium articles on our platform. Alternatively, you could watch a different energy metals interview.

Forum Energy Metals segued from uranium to energy metals in 2017. Now the focus is more on Copper, Cobalt and Palladium. Forum Energy Metals might look small on paper, but it has got two big boys interested: Mining giants, Rio Tinto, and Orano Canada, have reached agreements for JVs with Forum Energy Metals. Why? Mazur explains.

We discuss:

  1. Agreements With Rio Tinto And Orano Canada: How And Why?
  2. Plans For 2020: Going To Market?
  3. Copper, Cobalt and Palladium Market Outlooks.

Company Website: https://forumenergymetals.com/

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.

A photo of a black Tesla Model S.

China Gold Int (TSX: CGG) – Gold And Copper On A Grand Scale

A photo of a silhouette hand picking out a gold Chinese ring.
China Gold International Resources Corp.
  • TSX: EQX
  • Shares Outstanding: 113.5M
  • Share price C$12.6 (21.02.2020)
  • Market Cap: C$1.43B

We recently sat down for an intriguing interview with Jerry Xie, Executive Vice President and Corporate Secretary of China Gold International Resources Corp. (TSX: CGG, HKSE: 2099).

Investors may want to read one of our most recent gold-related articles, or even watch a different gold interview.

Gold had a good year and an especially positive 2H/19. However, China Gold Int. had a negative correlation on its share price throughout 2019. The company operates two producing gold mines that form a low-grade, bulk-tonnage gold operation with a copper by-product. The operational statistics look good on paper, so why this share price tail-off? We discuss:

  1. The Decline In Share Price: Why?
  2. The Gold Market Outlook For 2020
  3. How China Gold Int. Plans To Get The Share Price Back Up

Company Website: http://www.chinagoldintl.com/

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.

A photo of a silhouette hand picking out a gold Chinese ring.