Almaden Minerals (TSX: AMM) CEO Morgan Poliquin on Latest High-Grade Infill Drill Results as the Ixtaca Gold-Silver Project Moves Toward Feasibility

October 25, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Almaden Minerals (TSX: AMM)(NYSE: AAU), Mr. Morgan Poliquin. Morgan, how are you this afternoon?

Morgan Poliquin: I'm excellent, thank you very much. And yourself?

Gerardo Del Real: I am doing well. Thank you so much for asking. An important time for Almaden, you are pretty close to a milestone moment for the company. You are probably about a couple of months away from publishing a feasibility study, which I'm excited about. You had some news today that once again reminds the market, which is largely not paying attention to most junior resource companies right now, of the grade in not just the gold but the silver as well. You have one of the truly unique polymetallic deposits in an area that's got great community support.

Can we talk about today's news? And then I'd love to ask you how things are coming along with the feasibility study.

Morgan Poliquin: Great. Really appreciate the opportunity.

Gerardo Del Real: The highlight infill hole was 40 meters of 4 grams per tonne gold and 35.1 grams per tonne silver. I mentioned that there's not a lot of polymetallic deposits with these types of grades in an area that has the community support that you have. Can you talk about the results today?

Morgan Poliquin: Yeah, obviously these are infill results. And they're in an area that we have in a previous resource. But they're important because they confirm the continuity. It's very early in the mine life, very high up, these significant grades that we reported here. So it's nice to remind people. Obviously these results will go into the feasibility study, but it's nice to remind people of what we're dealing with in this deposit. This is the gold-rich volcanic portion of the deposit which, as I say, is the first thing to be mined as the volcanic is on top as a geologic unit.

It's a significant area of higher grades that we encountered in this particular area of the deposit. It was an area that required additional infill drilling, which we've done over the past little while. It's nice to be able to, again, remind people of what we're dealing with. This is a gold-silver deposit. The gold and the silver are recovered onsite in dore. There's not a need for a smelter as the pre-feasibility study shows. So often gold and silver, in Mexico particularly, come with lead and zinc. So silver usually goes to one smelter and gold to another. This is a very simple deposit. It's in an area with excellent infrastructure where we've been able, through our transparent communication efforts with our local stakeholders, community members and quite frankly, employees, we have deployed our own drill rigs and drill crews from the local communities over the exploration program over the last number of years. We have strong support in this area we believe and it's through being open and having continued discussions.

Where we are right now, while it's nice to remind people of drill results and the mineralization, we're just about to – by that I mean this year, as you pointed out – report our feasibility study which has been ongoing for some time. The work that goes into that obviously. And also, our full EIS permit which is called MIA is the acronym in Mexico. We're close to two major milestones and we look forward to reporting them as soon as we're able.

Gerardo Del Real: Fantastic. Now, let's pivot a little bit. Can we talk about the exploration upside that, of course, has been largely ignored as you complete the feasibility study, which again we're expecting by year end. There is a large portion, the majority of the property that has not been touched by the drill bit. Is that correct, Morgan?

Morgan Poliquin: That's right. It's a big area of hydrothermal alteration. That alteration, which is the cooked up rock that the hot fluids affect the rock while they're depositing the gold and silver, that hydrothermally altered rock is covered with a very thin veneer of volcanic ash which is just a few meters thick that obscure that underlying rock. And indeed the altered rock itself, some of the alteration is above where you expect to see gold grades and we've seen that. We've drilled through barren alteration into gold and silver. We got very lucky, in the first hole of the program of 2010 was the discovery hole. Obviously we have had a very challenging market since that time and our focus has been defining the resource and de-risking the resource and ultimately moving through the economic studies as we've done.

The focus hasn't been exploration, it hasn't been the environment. We know that the next drill discovery will probably not come as easily as the first hole in a program and we haven't had the latitude to spend that sort of time and effort. We have a significant resource already. We haven't had the latitude and the resources to expand the resource. That being said, we've shown definitively that the opportunities are there for it to potentially grow. For example, earlier this year, I believe in May, maybe you can correct me, we put out a release about a kilometer, 1.2 kilometers I believe, from the deposit area where we had near surface mineralization that was very significant.

Obviously, more than a kilometer from the known resource, we're hitting things and I think that speaks to the geologic environment. The area of alteration is big. The footprint is big and I think it's still very early days. This is the first time this part of the project, this epithermal, gold-silver area was ever drilled. Our drilling is the first ever on this project. It's a brand new discovery and there's lots to do.

Gerardo Del Real: Now the pre-feasibility study was robust by every metric. What the feasibility study will incorporate, that wasn't in the PFS, are the positive results from the ore sorting test. Can you speak to that a bit? Because I think that's a big deal, Morgan.

Morgan Poliquin: Yeah. Ore sorting is becoming a big deal and I'm confident that through my lifetime it will prove to be a big game changer. Mining sometimes is about thin margins in many mines around the world. The efficiency of modern mining pushes those boundaries and ore sorting is like a killer app for mining potentially. While it won't work in every situation, essentially the premise of it is that all mineralization whether in a resource table occurs as low grade, appears low grade, it's usually always locally and at the micro level in high grade little cracks and crevices that we call veins. Certainly in the case of Ixtaca, we have a high-grade vein zone that branches and reconnects. These veins are sort of like fingers that break apart and then reconnect. They enclose barren bits of the rock that they're passing through which in our case is limestone.

We can't model those irregular blobs of limestone in the middle of our vein zone to extract them in the resource estimation but we know we'll be able to extract them when it comes to mining. The ore sorting is also able to separate those barren zones from the actual high-grade veins. Really what it means is the same mill capacity. If you're able to remove more waste before you hit the mill, obviously you're able to produce more gold with the higher mining rate. It's a unique opportunity that I think we're seeing here at Ixtaca. The application of what is not really new technology in the sense of being able to separate ore from waste but combining high computing power with instead of using your eyeballs, using a machine. It has the potential, as we've showed in our news release, to significantly impact a deposit like Ixtaca.

Gerardo Del Real: Now you mentioned a mill. You happen to own one. The Rock Creek Mill which if I was to try to buy brand new in mint condition – let's be clear, this is a mint condition mill – it would probably cost me in the order of $70 million which is approximately your market cap today. Can you talk a bit about the dismantling of the Rock Creek Mill? I understand it's ready for shipping in 2019?

Morgan Poliquin: Well we've been around a long time. And just a prelude to your question, is just to say that our Chairman, he's seen a lot of these up and down markets. While they're unpleasant to be in, certainly to be developing in those times, they also present opportunities. This was one. This was basically a failed operation in which a brand new or fully refurbished mill had been actually used for three weeks and then it had millions spent on it to decommission it. We were able to find that. It's suitable for our deposit and our particular situation. We bought it for $6.5 million. The final payment's been made and moreover, we've got it all ready for shipping to Mexico in anticipation of our permitting process which we expect to initiate shortly. And so it's all in containers in the port we’re closest to in Alaska, ready to ship to Mexico. We did all that work this summer with cranes and all manner of things. It's a very exciting time for us.

Gerardo Del Real: Excellent. Thank you, Morgan, for the very thorough update. Is there anything else that you'd like to add?

Morgan Poliquin: You know, I think that was pretty thorough. A lot of work has gone on behind the scenes into a feasibility study and it's something that shareholders and observers can't see but we've got world-class consultants that have been working on this project since day one. The work is enormous to ensure that a mine is developed in the highest standard and that's what we're doing. And while it's not very reportable stuff – different types of feasibility level engineering studies – it has been happening and so that's why it'll be very exciting to finally release the feasibility study when that time comes. I just want to let people know that we've had our head down working very hard on this study and it's coming close.

Gerardo Del Real: I'm looking forward to the results and I'm looking forward to having you back on hopefully once those results are published. Thanks again, Morgan.

Morgan Poliquin: Excellent. Thank you so much.

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