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Gainey Capital (TSX-V: GNC) CEO David Coburn on Planning a Drill Program at the Newly Acquired Las Margaritas Property in Mexico

August 14, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Gainey Capital (TSX-V: GNC)(OTC: GNYPF), Mr. David Coburn. David, how are you this morning?

David Coburn: I'm fine, Gerardo. Thank you very much. Looking forward to our chat this morning.

Gerardo Del Real: Well, thanks for taking the time, David. It's been frankly a very painful 2018 for Gainey shareholders. Back in January, you announced a private placement and at the time the thinking was that the funds would be used to drill out the exploration potential at the El Colomo district. You had a conversation and an opportunity to acquire a property that not only did you feel was very prospective, but happened to be dead smack in the middle of the El Colomo district.

So I want to start by saying congratulations because you finally signed an option agreement with First Mining Gold to acquire the Las Margaritas property in Durango, Mexico. And second, I want to ask why did it take so long? And let's talk about if it's going to be worth the wait for shareholders. But why so long between January and here we are, August 14th, and we finally have some forward movement, which is a good thing. But why did it take so long?

David Coburn: Well, it took so long, number one, we were prepared to move forward with the drilling of El Colomo and the areas that we had been drilling successfully. We had a number of our key geologists from Peter Megaw to John Wilson to numerous other geos that investors had sent on the property. They looked at this new area called Las Margaritas that is in the middle of our 50,000 acre mineralized concessions and everybody walked away, all our geologists walked away and either sat down with me and had a conversation and suggested that we divert or pivot towards this new area called Las Margaritas. And so we did.

At the direction of our smart technical people on our team, we diverted. They suggested that we don't do anything until we explore and drill this property. I immediately stepped up my negotiations on Las Margaritas. We had been sort of communicating with First Mining Gold, which was First Mining Finance a couple years ago, on the property. It's a 1,000 acre piece of property smack in the middle of our property and we then in January started to step up our negotiations on that. The reason it took so long, the property itself, First Mining Gold, had an option with a Mexican gentleman, a really, really nice fellow who's part of the Indian community there. It's a great Indian community, very happy to see us there.

They were asking far too much money for it, with respect to what work had been done on it. The negotiations took so long only because by the time we negotiated with First Mining Gold, they had to then take our negotiation and go sit down with the gentleman who had the option on it and convince him that this was the right way to go. First Mining Gold believed in us. They knew what we were doing in the area, they knew that we were led by Cascabel and Peter Megaw's group and they were very, very happy to put this deal together with us. But they just needed to convince the gentleman that they optioned the property off of that we were the right group to go with and it really needs to be an option agreement and it needed to be structured in a way that if the drill results are good moving forward that everybody wins.

It was painful, Gerardo, but I think we're all extremely happy with the option agreement and we're all extremely happy that we can get started on the property immediately.

Gerardo Del Real: Let's talk about why everybody's so excited and why we're hoping it was worth the wait. The property itself has not seen modern drilling, the way that I understand it. It's a grassroots high-grade gold target and, from what I understand, there's been a vein system identified that extends for at least 1,500 meters along strike with veins averaging approximately 1 meter in width. Is that accurate, David?

David Coburn: Yes, that's very accurate for the information that we have right now. When we get to the property next week, we will perform a detailed mapping and sampling program. It's already been laid out and, again, everybody that bid on the property, all the very, very smart senior guys that have had major discoveries over the years have told me personally this is the property that we need to focus on. It is the epicenter of the whole El Colomo district and that this is something that we need to focus on.

We have not taken any samples off the property and we have not sent them into any major lab for results, because we did not want to do this while we were negotiating. We had a fairly good idea that what was there was good and was real just from what the very experienced guys that have had major discoveries have told me. We wanted to leave it alone, we wanted to negotiate without any work being done to it and now here we are. We're ready to go and guys will be heading to the property early next week.

Gerardo Del Real: You mentioned there would be detailed mapping performed. I imagine that that will lead to specific drill targets and hopefully a drill program this year.

David Coburn: Yes. Very good question, very good comment. We feel from being on the property that there's probably about six drill targets that we'll come away with to drill immediately. Six to eight is kind of what the suggestion has been. Ironically, every geologist who has been on it has said drill six to eight holes right here. Everybody again feels it's the epicenter of the mineralization in that area. I think when we come out with the assay results, I hope everybody will be happy and I think we'll move immediately into a drill program.

Gerardo Del Real: Excellent, and when do we anticipate being able to start receiving some of those sample results?

David Coburn: I think we'll start to receive some the first or second week in September. I know that the guys want to be down from the property before Labor Day, so I'm anticipating them being down from the property 25th, 26th, 27th of August, getting our assay results in that and maybe taking a week to two weeks through ALS, which we have a great relationship with. Hoping to have those results first, second, third week in September. I'll know more on that in the next couple of days. But I don't see any later than that, maybe with some luck earlier.

Gerardo Del Real: There you go. And just to be clear, those initial assays will be from samples, correct? Just to get a better idea of what's there?

David Coburn: One hundred percent. They'll be the first official samples that have ever been taken from the Las Margaritas area and sent to a certified lab. We'll announce those and those will be the basis for us putting together a detailed drilling program.

Gerardo Del Real: Well I'm excited for that, David. I've been pretty honest and frank I think both on and off the record about my displeasure with how long everything took because of the fact that we raised cash on the premise of drilling.

David Coburn: Yes, you have.

Gerardo Del Real: So it's great of you to come on and take the time to explain why it took so long and it's absolutely music to my ears to know that we're finally moving forward and seeing some results and seeing what we have, which is the reason that Gainey was on top of the list for quite a while there, right? It's kind of retraced a bit, but let's see what the last part of the year brings.

David Coburn: Well, Gerardo, it was a tough move for me. We had raised money to continue to drill out El Colomo and it was a tough move for me. And I talked it over with our technical people and I said, "Are you guys sure that we want to pivot from El Colomo and go to Las Margaritas?”

We thought at that point in time it might take me two to three months to put the option agreement together. And everybody, again the smart people, the technical people said, "This is where you have to focus, David." So we pivoted and talked to a lot of our smart people, a lot of our smart shareholders and they said, "Absolutely, let's pivot. We can afford to wait if we think that this is where we should be." Unfortunately, it took me longer than I thought, but here we are.

Gerardo Del Real: Excellent. David, thanks again for your time. I hope to have you back when we start getting those assays from the sampling program.

David Coburn: Thank you, Gerardo. I look forward to it. Thank you for your patience and thank you shareholders for their patience also. I'm sure that we will bring fruit to our labor here. It's been a lot of labor, but there's fruits coming.

Gerardo Del Real: Looking forward to it. Thanks again, David.

David Coburn: Thanks, Gerardo. Bye, bye.

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