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			<h1>Regulus Resources (TVE:REG) - Very Successful Exploration Team Looking to do it Again in Peru</h1>
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					    <p style="">Matthew Gordon, <br>Ptolemy Capital</p>
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					<div class="description"><p>Regulus’ focus is on their Gold / Copper AntaKori project in Northern Peru. 
1. Experienced and successful Exploration team of geologists.
2. They have $10M of cash and will continue to drill in 2019.
3. They will look to raise cash again end of 2019 from a strategic investor.
4. Have overcome three obstacles to mining this their assets.</p></div>
					
									
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																				<a class="tag-style" href="/participant-search?part=34">#John Black </a>				
										
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				<p>Hello and welcome to Crux Investor in a minute we're going to be speaking with John Black. He is the CEO of Regulus Resources. They have a Copper Gold project in Peru. We're  going to ask John about recent developments and try to understand a little bit more about some of the detail of the project. How Are you John?<br />
<br />
I'm doing well thank you. <br />
<br />
Lovely to have you on the show. First time for our viewers. Wondered if you could just start. Just give us a quick two minute elevator pitch, as it were, to help people understand a little bit about the background of the project please.<br />
<br />
Okay. Ready this has the Antakori project and we're a group of experienced Exploration geologists that specialize in identifying projects like Antakori that has potential to become a very large Copper or Copper Gold deposit. And in 2012 at the market bottom, we're fortunate to be cashed up, we identified the project and we acquired it by merging with a company called Southern Legacy. In the last two years, we completed our first major drill program. And recently in March we announced a very exciting new Resource that we consider to be an interim Resource. As we continue to drill this year, we anticipate it will continue to grow. <br />
<br />
Quickly run us through the financing component here as well. You're sitting on a lot of cash, which is great for an Explorer. But talk us through some of the shareholders and the way that that's been structured.<br />
<br />
OK as a junior Explorer we depend a lot on a loyal shareholder base. Regulus is a company that was spun out from our predecessor company called Antares Minerals. We made a nice discovery and sold that project to First Quantum in 2011. And other group of shareholders that did well from that fortunately are supporting us to continue as we move forward.<br />
<br />
There's not a lot of retail out there is that at the moment. <br />
<br />
There isn't. We have actually most of our shareholders are fairly aligned with those that are eligible and looking towards an end game where we're making a discovery we'd like to drill it out and then monetize it. We have one large shareholder called RouteOne. It's a fund based out of San Francisco. They own about 24% and it's management, we on a little over 14%. So the the shareholding is quite tight. It's difficult to get a position, but most of our shareholders are aligned in the endgame. The discovery that revealing the full value of the project and then monetizing.<br />
<br />
Okay so maybe let's just come on to that in a second. Because I'd like to start a bit more about the team and the relevant experience and obviously with Antares you had a huge success story and I can see why some institutions would continue to back. So tell us a bit about Peru. Not that it would seem quite hot. A lot people talking about it in PDAC as a good destination for mining. can you tell us a bit about it?<br />
<br />
Well Peru is... we specialize in Exploring in South America. Myself and Kevin. Kevin Heather, who's our Chief geological officer, the two drivers behind the company really. We've had many decades of experience in South America. One of the reasons we really like Peru is that it's a nice balance between being already established as a mining country, yet still having good potential for additional discoveries. And that mix, that you can Explore in most countries in South America with potential for success. But we we always seem to gravitate back towards Peru as being that place where you can find it. And if you find it you can turn it into mine.<br />
<br />
Yeah and you're also surrounded by some of some quite large interesting companies as well. You seem to be in the right postcode.<br />
<br />
Yeah. Very much so.<br />
<br />
Yeah right. So now you had you had a Resource come out recently. So what do you tell us about that? So you want to follow up quite quickly with a second resource. What's a scale of project are we talking about here?<br />
<br />
Okay. When we acquired the project it already had some previous drilling it was enough to show an Inferred Resource of about 300Mt at about a 0.8% Copper Equivalent. Having both Copper Gold and actually a little bit of Silver as well. We completed about 23,000m of drilling in our Phase 1 program in 2017, up to the end of 2018. With that we almost doubled, more than doubled, the existing drill Resource base, the drill database. And it was time for us to do an updated Resource. The resource that we recently announced it was March 1st right before PDC. It contains 250Mt of 0.48% Copper, 0.29g/t Gold and about 7.5g/t of Silver as well as 267Mt of Inferred Resource at 0.41 Copper, 0.26 Gold and also about 7.5g/t of Silver. So combined over 500Mt. A nice increase from what we started out. And also about half the deposit moving to the Indicated category now. And then we want to emphasize that this is an interim Resource as we continue to grow, as we continue to drill we anticipate the project will increase substantially.<br />
<br />
So what does that do to things like... we know your market cap is... what's do for you NAV numbers or have you any sense of the economics of it? Because there's a quite low cut-off point so I guess it's not some indication of the start of project that this potentially could be?<br />
<br />
Well one way to take a look at these type deposits, we're a little bit early, we're still in the resource definition stage and we don't really know how much deposit we've identified yet. We anticipate will be substantially larger than it is. So it's a bit early to be putting NAV or or say preliminary economic evaluation (PEA) around the project. But one thing you can do is we can compare the deposit to previous sales of similar type deposits on this. And what we've seen over the last couple of decades is that projects that are at the PEA or pre-feasibility stage (PFS) are demonstrated to be large and economically viable Copper deposits, typically are acquired by major mining companies for about $0.04 per pound of Copper or Copper Equivalent in the ground. If we take a look at Regulus currently with our new Resource we're valued at less than a $0.015 per pound in the ground of Copper.<br />
<br />
You've been very clear that you are Explorers. You're there to not get into the build phase or stop producing you. Your model is a sell out it's a mid-cap or large producer, is that right?<br />
<br />
Yes that's right. But having said that what we would do in order to develop the define, acquire and define and show the size of a project that might be of interest to a major mining company, it's very important that we have our eye towards economics and that we do absolutely everything just like we will build the mine. Even though we clearly state that we prefer to be on that steep value-add part of the curve between Discovery and pre-feasibility (PFS) and that our skillset is not the skill set required to take that to become a mine in the future. We do everything exactly like we'll build it ourselves. That's the best way to to demonstrate the economic viability of a project and attract a buyer.<br />
<br />
And also ensure there's no discount applied by the buyer.<br />
<br />
Absolutely. It's interesting what we've learned over the years is that when you're on a project like this, a lot of us think it's kind of simply drill it out and move it up through the stages of a valuation and PEA to Pre-Feas to Feasibility. But what we like to do is, we like to identify the potential weaknesses in the project and really emphasize on those and demonstrate what can be done about those how to move forward. So when a project like Antakori, we don't worry about grade. We have plenty of grade. But we were focusing more on characterizing the styles of mineralization. It's a fairly complex deposit. And working on identifying potential deleterious elements. And showing how we can tackle those as we move forward.<br />
<br />
So you must be quite confident about where the Copper market is going in terms of the future of Copper, Copper as part of battery minerals, because you don't have the skills today and has to build this out or get into production but again you're being very frank about that. But if the market didn't go the way you want it, I mean would you make those changes?<br />
<br />
You play your hand out as it goes forward. If we show that the size of this project is as an economically viable project, but the market's not in the right moment for potential buyers to be looking for these type projects, we have a choice of hunkering down waiting till the market improves or moving it forward ourselves by retooling the company. What we what we attempt to do is is to identify those projects that almost independent of metal price will be of interest to major companies. However the major companies tend to buy these type projects when the when the market's hot. They buy at the top of the market it is generally the case. That's when they're cashed up and that's when they're encouraged to look for new projects.<br />
<br />
Okay. And you know you alluded that the fact that you.. you've made people aware, or you try to understand, and make people aware of what the problems were and how to overcome those you again quite frank in your PowerPoint you talk about three issues that you've had to deal with. One being the land ownership position. I think you've resolved that with the JV with Southern Legacy Peru. Is that right?<br />
<br />
Yeah really. There were there were three potential challenges on this project when when we first started looking at it. The group that had it was called Southern Legacy Peru. And they were working on a challenge. The first was a rather complex land situation and Southern Legacy had done an excellent job to consolidate the district and clean up the title issues and so that that issue is largely out of the way and particularly with our joint ventures with the neighbors on this. The second issue was historic rejection from some of the communities for previous exploration activity. And when we took a close look at the situations that had happened there we realized that the previous operators on the project had been working in a way that wasn't very transparent and wasn't with full social license. It's important to point out the two communities that we're now working well with have allowed the construction of two mines since those incidents happened. So they're not anti mining whatsoever at all. They're just a demand to be treated fairly and that's our motto and how we we like to work is as we move forward. So we're finding it quite easy to work with the communities in the area.<br />
<br />
Right I mean you took apart the I mean there's a slight technical one. I think it's worth getting into here because there's some confusion out there as to how you're going to tackle it. And that's with regards to the arsenic content in the ore body. I mean the think there's number of these and 54%  of the ore body is within tolerance and the rest not so much. How do you how do you tackle something like that?<br />
<br />
The first thing that is important understand that the Antakori deposit actually consists of two distinct alteration mineralization styles. There is an earlier scarn and Porphyry related mineralization that is relatively low arsenic and metallurgically similar to many operating mines and capable of producing a nice clean Concentrate. And then somewhat later and partially overlying the deposit is a high sulphidation system epithermal system that has Copper Gold sulfides as well, but those Copper Gold sulphides are associated with higher levels of arsenic. So approximately 40% of the project right now has high arsenic and approximately 60% of the project has as moderate to low arsenic. What happens is that if we have high levels of arsenic in our ore when that arsenic is associated with a mineral that also has the Copper, when we make a Copper Concentrate, we capture the arsenic. And arsenic levels make it more difficult to market your Concentrate. The Concentrate buyers have tolerances. Sometimes they charge penalties up to a certain level or if you get a very high levels it can even, it can be a Concentrate that's not attractive for people to buy. And so it requires extra treatment either at the smelter where you sell it to, or there are a variety of emerging technologies that we can apply to treat the material before we sell it to us smelter as well.<br />
<br />
Right. That it when you say emerging technology. these are well grounded well used or are they emerging?<br />
<br />
They're actually... it's a mix on this. We have conventional roasting which has been around for for a long time and is is one way to treat Concentrates that have deleterious elements like arsenic. It is been modernized in many ways. There's currently a large roaster in process at the Hena Harles Mines mine that's owned by Codelco in Central Central Chile to process this. These higher arsenic concentrates but there also was a little bit more emerging as the pressure of pressure oxidation techniques and many companies are trying to tackle this a worldwide. Arsenic contents are increasing in Copper Concentrates and people are looking at a technology that can be applied by pressure oxidation. It's essentially an autoclave that allows you to oxidize your material and sequester the arsenic into a stable safe form. And it actually has some benefits that you improve your Copper in your Gold recoveries at the same time.<br />
<br />
And I think some people were asking the question, is could you blend it?<br />
<br />
Blending is also a common technique that's used right now, either blending between materials that you have on your own site or selling your Concentrate to a group that has a lot of clean Concentrate it can blend. So they're specialist third parties that blend concentrates for you prior to sending them to smelters. But quite frankly on the project we have right now, we'd like to develop methods that that higher arsenic material is economically valuable. So we anticipate that we'll be doing quite a bit of metallurgical testing in this next year in exploring the different avenues. The pressure auction rate oxidation technique that I mentioned is highly promising, the challenge really is overcoming the capital cost and the operating cost. But that's where the higher grades that we have Antakori come to play and we anticipate we'll be able to support those higher costs associated with higher grades.<br />
<br />
So I guess your preferred solution is go and discover additional ores which are clean and focus on those initially, in terms of your optimization of the project.<br />
<br />
That's really our strategy right now. Is we we naturally want to find all of the mineralization that's on our properties or properties that we have access to. We anticipate as we move to the North we'll be finding additional minimization and that mineralization will be cleaner. So depending on what we find in the entire center of gravity of the opportunity might move towards that cleaner mineralization and input the arsenic bearing material that's a little bit more metallurgical challenging farther down the road.<br />
<br />
Right. And so there's one question from some of the chat rooms which no one had an answer to.  So what's happening with hole 30.<br />
<br />
Hole 30 we just announced a couple of weeks ago and it's a very interesting hole. It's a 500 meter step out. It's one of our first holes that moves to the north or northwest from the main area of our drilling. We had an opportunity that there was a previously existing pad that we could set up on. So the pad itself was an ideally located but was a nice step out into a new area. And we encountered both high sulphidisation mineralization and the overlying volcanic, as well as more porphyry or porphyry scarn style mineralization at depth. The grades were lower than I think some people anticipated we'd have. Approximately 0.25 Copper and about 0.15-0.25g/t Gold. But over very long runs. We find it highly encouraging. It's between 0.3 and 0.5 Copper Equivalent and it's a 500m step out. And it's it's actually between several promising geophysical anomalies. So we consider it a proof of concept, that we're moving in the right direction. And probably the most important point on hole 30, is the intercepts in the scarn and porphyry scarn mineralization are very very low arsenic. So it's  confirming the idea that there's additional then low arsenic mineralization towards the North.<br />
<br />
Okay. Well thanks for getting into the technicalities of that. Can I come back to the Resource , I'm looking at page 17 of the recent PDAC PowerPoint. I believe this most recent one. You know you show the Indicated and Inferred numbers on there.  You do use quite high numbers for the Copper and the Gold in relation to the spot price today. Are you getting so some sense of the economics... I know you say you used to PEA and it's it's too early to sort of to say what precisely you've got here today but what is the process that you're going through to make this attractive to mid-caps or majors.<br />
<br />
On these it's a little bit of taking a look at volume versus grade on this. And what are appropriate cut-offs for material So we use a 0.3 Copper Equivalent cut-off. As is our reporting line grade. But you will notice in many of our presentations we show the size of the deposit at different grade cut-offs. And some of the things that we're very encouraged about on on this initial resource for us, it's our first Resource that we put out on the deposit, when we see that we have a cut-off grade. And the reported grade is more than double what the cut-off grade is. That's a that's a very good indicator that the project is quite robust. So in our case, we're using a 0.3 cut-off grade. And the Indicated category that results in a 0.48 Copper grade, 0.29g/t Gold grade and about 7.5g/t of Silver. So that's approximately 0.7 Copper equivalent. So applying a point three cut-off grade results in a 0.7 Resource reported on that on that. That's a good indicator that your Resource has substantial zones of relatively high-grade. And the reason that we use the metal prices that we use on for this stage is that's used to drive the pit. And so that that's not necessarily the the metal values that will use when we do preliminary economic. It's common to see two sets of numbers on that. One is to drive the pit and then once you have a pit, when we get to a stage we will most likely use values that are closer to current prices or even lower than those.<br />
<br />
What permits do you have now and what permits will you need to see move forward?<br />
<br />
We have a portion of a project that extends on to neighbors ground and those neighbors are a joint venture that operates the Tintaya Mine. So they tend to a timeline is immediately next door. It's operated by a joint venture company called Comolco and Comolychee is a joint venture between Beuna Ventura and Southern Copper which is Grupo Mexico's Peruvian sub, as well as a small third party group in there. And their mining the oxide cap over a very extensive Copper Gold sulphide deposit that is the same deposit that we're defining on our ground. So the neighbors have reported over 450Mt of Indicated Resource at about 0.7 Copper and 0.2 Gold and also a little over 480Mt million tonnes of inferred resource or over 900Mt of combined Resource at relatively high-grade. Immediately adjacent to the mineralization that we've just announced. So the combined deposit is significantly larger than what we've shown on our ground.<br />
<br />
All right. Okay. So that whole area is heavily industrialized, in a sense. There's gonna be no issues around the permitting component going forward?<br />
<br />
That's one of the things we like about this is, is we're in essentially a brownfield situation. Where we have an operating mine immediately next door. They're mining the oxide cap over a large Copper Gold sulphide deposit. They have about five years, six years of mine life left. And they didn't have the opportunity to make the transition into the underlying Copper Gold sulfide mineralisation. We have a portion of that deposit. So it really sets a nice timeline on the project to move forward. And what we've done is we've established agreements with the mine. They're best described as collaborative exploration agreements. If we each knew what we had, we'd probably be entering into a joint venture or some sort of a sales negotiation right now. But quite frankly, we each think we have the better part of the deposit and better could be larger higher-grade cleaner, in our case, or closer to the surface. So we until we each drill out are our mineralization, we aren't really in a position to enter into negotiations. But the nice thing is is that because that outside mine is progressing and running out of ore in the not too distant future we're highly motivated to move the project along quickly.<br />
<br />
So I just needed to get on that line of questioning, there's some discussion again chatrooms and forums around block caving as a potential option for you permitting was an issue. So I think you've knocked that on the head.<br />
<br />
Well really it's logical to make an expansion of the existing pit. And the mineralization we have when we floated the pit, much of it reported quite easily to the pit on there. So it's it's fairly...it's a good indicator. It's quite robust and it's it's very much in a geometry and an occurrence that's natural to exploit as an open pit on that. It's interesting to note that the pit that we floated, had a strip ratio of less than 1 to 1 0.85 strip ratio. So it's it's indicating that there are large volumes of mineralization close to the surface. However some of the people in the chat room might be pointing out are more recently announced hole 26. And hole 26 was a hole that we drilled farthest to the North. So the hole that we've been able to reach out is as far to the North as possible on this. And we we had the good fortune on the bottom of that hole to intercept 473m of 1.16% Copper and 0.2g/t Gold. It's a Braccia that's been healed by calpobyrite and bornite. And that style of mineralization is currently outside of the Resource that we've reported. Partly because it's a hole by itself. So there's no support around it. It's also a little deeper. We anticipate as we drill that out that some of that will be captured by the open pit. But those grades also open the possibility of underground mining, if that's a more viable operation, either in combination with an open pit or or by itself.<br />
<br />
So just quickly on your team. You've been together while you had a big success by 2010, 2011 was it. When was the...<br />
<br />
2010, late 2010.<br />
<br />
I mean it was... well tell people. It was it was significant.<br />
<br />
WHen we set up as a as a company really the company was founded by myself. Kevin Heather who's our Chief geologic officer and Mark Wayne who's our CFO. And we were set up by some other gentlemen who were running companies and had the idea that Copper prices might improve in South America. As we set up, we we formed a company to do just what we did with Antares, and what we think we're all well on our pathway to doing with Regulus again, is identified carefully identify a project that has that potential to be large enough and economically robust enough that a major company would like to acquire it from us. That's based on decades of experience Kevin and I have both lived and worked in South America for many decades more probably than we care to admit on this. And we we have access, we have language abilities, and we have familiarity with the ground. So we scour through our contacts and our knowledge of the area to identify these projects. There hard to find but once you find them, get on the right, one drill it out with good support from some of our major shareholders and then ideally sell that. So with Antares we had the good fortune that discover the Kira deposit. Drilled that out over a number of years, completed a PEA on it. Just at the point of deciding to move it to pre feasibility and First Quantum made a move on us and elected to acquire the project. So a project that we paid $15M to acquire in stage payments we ended up selling for about $650M at the end of 2010 to first plant them right.<br />
<br />
That was a great result for all concerned. I guess that's why you got the following you have today. So just on that you've you've got some cash which will take you three to win. How long will it last?<br />
<br />
Oh we're we have a little over $10M in the account right now. We're projecting 25,000m of drilling in calendar year 2019, on this as well as additional metallurgical work and acquisition of surface. So we will need to do some type of financing before the end of 2019. It's not immediately urgent and we have some very exciting targets we'd like to test before we get to that point. But we will seek alternatives to to do an additional financing sometime before the end of the year.<br />
<br />
And we do expect that from the current institutional shareholders you have, or you're gonna go to the retail market?<br />
<br />
Well it's kind of an interesting market for juniors like ourselves right now. It's increasingly difficult and uncommon to see more traditional private placements that we've all been accustomed to for quite some time on this. And almost all of the serious financing, the larger financings for groups like ourselves that have a good project. They've really come with the benefit of a strategic partner. Many times recently those have been mining companies that come in and supported to take a 9.9% or 19.9% position. We have the benefit of having Route One our major shareholder is kind of being our cornerstone investor. So we'll explore various combinations where even though it's a it's a difficult market we we have established large investors to support us as well as a number of new friends that are curious about watching how we move the project along and there are potential alliances that could emerge from those.<br />
<br />
Right. And I think it's a well, well known well understood that the retail market is the thing which drives the share price and clearly the better the liquidity, the better with the volume on the retail the cheaper the money is for you. Not to say you know what your institutional partners want to hear, but that's good for you and it should ultimately be good for them. So what are you doing to to drive that understanding in the marketplace at the moment?<br />
<br />
Well as we move through stages in the projects, when you really really want to make those early discovery holes you see increased volume on that. Now we have a lot of shareholders who position themselves pretty well and are kind of happy to watch their position. So we need to develop an additional wave of shareholders to come in. And we're doing that through increased interviews and increased marketing awareness to get the story out. Quite frankly I think one of the main drivers that would be for this, is that if we see the Copper price really take off on this. Where I think ...I just came out of the Osisko meeting and in Santiago and there like many other places there is a strong anticipation that there'll be a demand supply gap in the not too distant future and most likely a subsequent rise in Copper. I think everybody realizes that's on the way. It's driven by electrification of vehicles and a number of other increased uses of Copper, at the same time Copper prices or.. Copper production is declining. So I think everybody thinks it's happening but everybody's a little bit nervous to jump in. And my experience on this is that when we see prices move on that then there'll be a sudden turn and we'll see more likely increased liquidity... increased interest and opportunities just like we have.<br />
<br />
Will be interesting see how that turns out this year. I think as most commentators always say they're right they just don't know when they're going to be right. So we shall see.<br />
<br />
John thank you very much for your time today. That was very interesting and thank you for sharing that with our viewers. Appreciate it.<br />
<br />
OK great. Thank you very much.</p>		
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