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American Pacific Mining (CSE: USGD) CEO Warwick Smith and President Eric Saderholm on Latest High-Grade Drill Results at the Tuscarora Gold Project in Nevada

August 21, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO and President of American Pacific Mining (CSE: USGD)(OTC: USGDF), CEO Warwick Smith and President Eric Saderholm. Gentlemen, how are you this morning?

Warwick Smith: Good, thanks for having us on.

Eric Saderholm: Doing well.

Gerardo Del Real: Thank you for coming on. You had some news a few days back, I thought it was important to catch up. I'm going to start by reading the headline, and then I'd like to backtrack, just a little bit, and provide an overview of the company and the history and the project, because I think it's important. The intercepts you drilled were 1.5 meters of 18.4 grams per tonne gold, and 9.1 meters of 5.88 grams per tonne gold at the Tuscarora project.

This is a project that you optioned from Novo when they pivoted their focus back in late 2017. I would love for you, Warwick, to start with maybe a little bit of background as to how the project came together and the team you have in place, now that I have you and Eric here.

Warwick Smith: Yeah, absolutely. Eric and I had worked together previously, and had spoken since around 2014, about at some point getting back together and teaming up and finding a project that we could really get behind and create some excitement with. We were lucky enough to be shown Tuscarora, which at the time was owned by Novo Resources, headed up by Quinton Hennigh. We were put in touch with the guys over at Novo. Quinton knows Eric, and then also knows one of our directors, Ken Cunningham, quite well, and they were kind enough to cut us what we thought was a great deal. We picked up 100% of the project for $375,000 over three years and 800,000 shares of the company.

We viewed it as something that already had a discovery on it. They had drilled some splashy grades, some extremely exciting holes. They drilled 1.5 meters of 180 grams per tonne gold. They drilled 3 meters of 75 grams per tonne. 1.5 meters of 143 grams per tonne. Just spectacular grades, and it really caught our attention. We thought, "Hey, this can work in this type of market where grade is king.” So it got us excited.

I think it helped for Eric as well that it was 45 minutes from his house, outside of Elko, Nevada. So in a great jurisdiction, right off the highway. It checked all the boxes that we were looking for. We were thrilled to pick up the project. Obviously, since then, we went public in March of this year, so March of 2018, which isn't all that long ago.

And then since then we've done 10,000 feet of drilling. We hit some great grades ourselves that we're very, very pleased with. As you mentioned, in the last holes that we put out, we had a hole actually bottom at 9 meters of just under 6 grams. We had 13 meters of 1.7 grams, we had 3 meters of 10 grams, a 1.5 meters of 16. We're thrilled with what we've drilled.

Including in that, one of the things that excited us is Eric took a bit of wildcat hole, 1,500 feet away up north from the last known intersect, and he hit 1.5 meters of 10 grams. That gets the South Navajo vein, which is one of 12 veins on the project, where most of the work has been done, that extends that vein up over a mile. That, with all the splashy grades on it, along with the other 11 untested veins on the project, leaves us with a lot of excitement going forward.

Gerardo Del Real: Eric, the project is 35 kilometers northeast of the Carlin Trend. Can you provide an overview of the geology and just what you're looking for? Warwick mentioned the fact that the drilling that was reported recently came from the South Navajo area, but there are 12 vein sets, as he just mentioned. Can you talk a little bit about the geology and why you decided to kind of swing for the fences with that wildcat hole?

Eric Saderholm: Well, the geology is a series of calderas. So it's an old mountain, a volcano essentially, with five nested calderas. You're in a really good area for this type of epithermal mineralization, in other words high-grade silver and high-grade gold. The old timers had mined where they could find the veins, and chased them into underneath the gravel. When they ran into the cross faults, or whatever it was setting these features, they lost them. And it's a good thing or they would be mined out, and we wouldn't have our project.

We are now exploring underneath relatively shallow gravel, anywhere between 0 to about 200 feet to 250 of gravel, and that's covering up these veins. We have to drill through that to get into the veins. The age of the mineralization is about the same as the Carlin Trend, so it's about 40 million years, which makes it kind of unique in this type of system. There are people that link the Carlin Trend mineralization to this type of mineralization. I don't know if I believe that or not, but it is what it is.

We have drilled 10,300 feet this year and we had some pretty good, obviously you drill a dead hole here and there, but we had some really good intercepts, as Warwick has just talked about. In the future, what we really need to do, and we will do, is to go map and project the vein sets that are up in the mountain range into the gravel, so that we can go more accurately drill them. Since they all are hidden a bit by the gravel, you don't want to go out and just drill willy-nilly. You don't want to go out and waste money. You want to go out and take your best shot.

Currently, we're going to be permitting the East Pediment area, which was drilled by Newcrest. Novo was going to drill it, but they never got around to it, and that did hit some pretty good mineralization, 3 meters of 25 grams. So there's another vein set that's over a mile to the east that we know of already, we just need to define it. Then, put this into context, because this really does have the potential of being a big, big district again. It was a district 100 years ago, and I think it's just a matter of being patient and taking your best shot. Getting out and drilling.

Gerardo Del Real: You talked about the cross faults and the structural intersections being pretty well mineralized. Are they mostly oxidized?

Eric Saderholm: The mineralization that we drilled, until we got down to about 500 vertical feet, was all oxidized. We didn't notice any sulfides whatsoever. The cross faults are an interesting thing. The interpretation is that the veins are all north-northwest striking, and for the most part they are. But, when you get up into the mountain range where the old timers were mining, these cross faults were mineralized. That was where they mined. They mined along these northeast faults. From our drilling, what we have come to grips with, is some of these cross faults are very highly mineralized. I mean, they're long, long, long runs. We hit, oh it was, geez, what was it, Warwick, 367 feet of 0.83 grams?

Warwick Smith: Yeah.

Eric Saderholm: That's almost a gram per tonne, and that's a long run. Oh, and there was some good mineralization in between, but that's a pretty good long run, and that was probably in one of these blowouts associated with the cross fault.

Gerardo Del Real: Interesting, interesting. We talked a little bit off air about the next steps. You mentioned wanting to do what all the great geologists, frankly, do, getting out on the field and mapping it and, frankly, getting your boots dirty. Can we talk about that a bit and the next steps?

Eric Saderholm: Yeah. That's going to be sort of the simple and the cheap way to get out and get information put into a regional picture. There has been some mapping done out there, but a lot of it's been pretty high level, 30,000 feet sort of thing. We need to get out and see what's going into our property. We have an 1,818 acre piece of property, so we really do have a nice, big parcel to go explore.

You have to be a little careful, because you're going to be mapping and projecting things under the gravel, and you're going to have to use your imagination a bit, and science a little bit to see what these cross faults are doing to the major veins. But, Novo did a pretty good job on it, and Newcrest did a really good job 20 years ago. It's just no one has done much work since, so some of it's a little dusty. We need to get out and clean the dust off the maps and figure out where we're going to drill next.

Gerardo Del Real: Warwick, you just completed Phase 1 drilling. What's the cash position look like?

Warwick Smith: Yeah, we're still in a really good spot. We went public in March of this year, raising $3 million dollars. We still have $1.5 millions dollars in cash left, so we're in a good position to get out and get doing some more work and not be in a rush to go and finance the company. So, pleased with that for sure.

Gerardo Del Real: Excellent. What can we expect the rest of the year? Obviously, you're going to get out in the field. You have some cash in the bank. Summer doldrums have been tough across the sector, but slowly but surely, we're starting to come out of that with September moving in fast.

I think hopefully we can turn. Gold has pulled back a bit recently, and hopefully we can get that final washout that I have been hoping for. But what does the rest of the year look like? What can American Pacific Mining shareholders look forward to?

Warwick Smith: Yeah, absolutely. We're all looking for this rough part of the market to be over. For American Pacific, look, our plans are going to do a few different things. One of the next things we'll do is probably look to go out and do some of the CSAMT, which is the geophysical survey, which will help target those other veins that we talked about. As Eric said, there's a bunch of boots on the ground work to be done as well, which Eric and his team will be doing.

Then, Eric and I will also be getting out on the road, which is something that we haven't had a great deal of time to do yet, because Eric's been tied up, busy on site. One of the things that Eric and I'll be doing is be out on the road, meeting with investors, talking to different brokers and funds, et cetera, as well as we've gotten a couple of site visits planned for different groups to come down and see the project itself. Eric, I'll pass off to you as well.

Eric Saderholm: Yeah. We just did straight gold assays when we were drilling. And all of the higher grade gold samples have now been submitted for metallic screens, which will give us another assay. Sometimes it upgrades, sometimes it downgrades. A lot of times, it does upgrade the assay. It's much more accurate than a fire assay or a gravimetric. We're also going to assay for silver. The silver component – obviously that was a silver district out there for 30 or 40 years – that will add a credit to whatever gold we have. It was something that we decided not to do to start off with, because we didn't want to waste a lot of money on silver on everything. Now we know where the silver will be, it'll obviously be with the higher grade gold. Those have been submitted to an independent lab.

Gerardo Del Real: Excellent. Well, hopefully I can have you back on when we start getting those assays back. That's always interesting to me how things can change, hopefully for the positive. Right?

Eric Saderholm: Absolutely.

Gerardo Del Real: Excellent. Warwick, Eric, thank you so much for your time today. Look forward to having you back on soon.

Warwick Smith: Yeah, thanks for having us.

Eric Saderholm: Thank you very much.

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