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Almadex Minerals (TSX-V: AMZ) CEO Morgan Poliquin on the Discovery of Raya Tembrillo Copper-Gold Porphyry, the Fourth Porphyry Target at El Cobre Project

November 29, 2017

Gerardo Del Real: This Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Almadex Minerals (TSX-V: AMZ)(OTC: AXDDF), Mr. Morgan Poliquin. Morgan, how are you this afternoon?

Morgan Poliquin: I'm excellent. Thank you very much. How are you?

Gerardo Del Real: I'm doing well, Morgan. Thank you for asking. First off, let me congratulate you. It looks like you are onto the discovery of a new and what I think is going to be a very important zone at the Raya Tembrillo area, which is a part of the very large Villa Rica Zone. So, you had some excellent results today. And I'd love to get into the details, but again first off congratulations.

Morgan Poliquin: Well, thank you very much for that. We're very pleased to be able to finally report on our drilling here. It's been awhile since we've last reported on drilling and these are our first holes on this part of the property. For me, it's a long time coming. You know, I've been working in this area on this project since the mid-1990s. So, we always identified that this part of the property had potential and we found boulders coming out of this area 10 years ago that had good grades. So, finally at Almadex we're able to put the first drill holes in here and we're delighted to report them. We're really excited by these results.

Gerardo Del Real: Before I read the headline and we get into the numbers, Morgan, I think it's important to provide some context. Now you're currently drilling at the Norte Zone, which is approximately two kilometers south, I believe, of where the Raya Tembrillo area is, which is part of the Villa Rica Zone. So this discovery isn't a step out of 300 meters or 400 meters, it's several kilometers away. Is that correct?

Morgan Poliquin: Yeah, that's right. This is two kilometers south of the Norte Zone and we've had some interesting results from what we call the El Porvenir Zone and the Encinal Zone, which are also, in that order, a kilometer and a half to the southeast and east of this area. The project as a whole, we think we control an entire porphyry district. Porphyries very often, particularly this kind with high gold, come in clusters. You see that around the world. That's what we're starting to see here. We've proven now that there's porphyry mineralization in this area. We had some good surface outcrop that we defined a couple of different styles of mineralization. Raya Tembrillo now has got some meat on the bone, so to speak. So, you're right. There's a cluster of porphyries all of which are separate. How they relate to each other, we are not 100% certain yet, but they certainly do in some way or another. There's multiple zones here.

Gerardo Del Real: Excellent. Let's get into the assays and the numbers. Let me read the headline, and then everybody please keep in mind that we're reporting assays from the first three holes ever in this zone. So, the headline reads, “Almadex Reports First Holes from Raya Tembrillo (Villa Rica) Intersects Enriched Copper Zone and Hypogene Copper-Gold Porphyry.” Some of those numbers include 83.90 meters of 0.75% copper and 0.13 grams per tonne gold and 115.0 meters of 0.57 grams per tonne gold and 0.27% copper. Now, there's some terminology there that some people may not be familiar with, but it's very important because it's a new type of mineralization as I understand it, Morgan.

Morgan Poliquin: Just to kind of give the frame of reference here we're talking about enriched copper and we're talking about hypogene. Essentially this is a weathering product. Hypogene is the sulfur and the copper minerals that are formed initially that make a porphyry deposit, the initial minerals formed. And what can happen is that in an arid environment particularly or a wet environment where there's lots of weathering, those copper minerals can be dissolved and they can be washed down to what we call the water table where they can reprecipitate and create a concentrated zone of copper mineralization that's a product of weathering of the original hypogene ore. It can be higher grade than the original copper mineralization in the first place. So, it often is distributed in the form of a blanket and it's controlled by permeability and things of that nature. But it's just simply the result of weathering the original copper mineralization, which we have also found and that's what we call hypogene.

So what we're starting to see, these drill holes are all from one pad as we did our initial work here. And what we're seeing is that there is a tabular blanket-like distribution of this chalcocite mineral, which is a very high copper mineral, which is known to be a product of this weathering and concentration process that just simply happens naturally. The grades are pretty significant in this chalcocite blanket and it represents a new style of mineralization. It's not a primary, it's weathering. But we haven't seen this weathering profile elsewhere. For example in the Norte Zone there's no enriched leach zone. So, the question begs, where is this copper coming from? Usually it comes from above and down, and that may be the case, but we're seeing this enriched zone right at surface. So, we wonder if it's being transported. But it's very early days and it's very exciting to see, because it indicates that there is significant copper that is required to produce this enriched zone in the first place.

Gerardo Del Real: You mentioned that it's near surface. Can we speak to that, because I was at the property last year, if I'm not mistaken, and the infrastructure is absolutely excellent and I think that's going to bode well when you put a maiden resource out for the Norte Zone and eventually work it towards a PEA. But for this zone, this is exciting, cause it's near surface, it's high grade, and obviously it’s the first three holes, it's very, very early stage. But the potential is frankly very exciting. Can we talk about the near surface nature of it and the depth potential, because there are some good grades at depth as well.

Morgan Poliquin: That's right. So, we pointed out in the little summary table that we've hit a very good intercept of hypogene, the primary original porphyry minerals, the sulfur and the copper together in the minerals we call chalcopyrite and bornite. We've hit that, but obviously that's below the enriched zone. So, the copper and the enriched zone came from somewhere else, and as I think I alluded to earlier, I don't think we've figured that out yet, so it's very early days.

But what we do know is there is a porphyry here and we've hit it. In hole 37 we have a very nice intercept of, there was around, speaking off of the top of my head here, around 40 meters of 0.4 copper and 0.9 grams gold and it's a start of the primary mineralization. That's a target certainly to chase, and obviously it's a major focus for us now to find the Big Kahuna, which is the porphyry system you're looking for. When you're exploring for porphyries, you're looking for that big hypogene original source of copper and gold.

But, this weathering system here at Raya Tembrillo has developed this very close, right at surface essentially, blanket layer of enriched copper. Those sorts of deposits can really be significant as well and targets in and of themselves. I think there's multiple opportunities, and you're right, the infrastructure allows us to contemplate a number of potential economic opportunities here. The drilling has to explore for both.

Gerardo Del Real: Excellent. I'd love to highlight some of those higher copper grades. So starting from 37.5 meters in hole 37 you have 14.5 meters, which I think you just alluded to, at 1.2% copper. In hole 38 starting from 50 meters, you have an intercept of 15.9 meters of 1.74% copper. And in hole 39 you have 10 meters starting at 50 meters of 1.51 grams per tonne gold. So, again very high grades and very early stage, first three holes as I mentioned earlier. But you got to be excited, Morgan.

Morgan Poliquin: We're really pleased. You know, whenever you drill in a new area you have hopes. We had lots of surface indication that there was something exciting to chase here. We had some good sampling at surface, but until you drill, until you have the third dimension, you don't know. We always call the drill the Truth Machine, and we're very pleased with this start. We kind of feel like we have an elephant by the tail here, and we have two targets that have evolved from these results. One obviously is the original big porphyry system that we are focused upon, and that's the big prize here. But this enriched zone of very high copper grade near surface represents something quite special, it is not common. For example, you don't have enriched zones because of the weathering history in British Columbia and very wet climates, where there's been glaciation, where it's all been scraped away. So, you know those sorts of copper grades, even though their enriched zones aren't huge, thick things typically they represent special economic opportunities, because they're so high grade and in this case close to surface. It's a great start for us. We feel very fortunate to have encountered these things and these drill holes, and we can see a lot of work ahead of us, an exciting process to define what this represents and how big it can be.

Gerardo Del Real: I think you also benefit, not only from the good infrastructure, the great infrastructure, but most of the land package if I'm not mistaken is private land. Is that correct? There aren't any potential Ejido issues in the future that could come up and stifle this, and I think that's going to be important moving forward. Is that accurate, Morgan?

Morgan Poliquin: Yeah, I think what we found in the eastern part of Mexico with all the projects we're working on is that it developed a little bit differently. And very often you're dealing with private land owners who rather than dealing with a land collective. Sometimes those negotiations for other people whatever the industry they're in, they can be challenging from time to time. Certainly, although people have a very good history of working with the Ejido as well, but private land allows you to buy it outright and that's something we're seeing in general at El Cobre, and I think it just speaks to the developed nature of where we're working in eastern Mexico. We have excellent infrastructure, we've got power, and things have socially progressed. People are familiar with development and understand development and don't view it with fear.

We have a very strong community relations program, which involves education and introducing people to what mining is. Some of these areas that we're working, despite the fact they're developed, they're not near mines so we believe the respectful thing is to give people the opportunity of understanding it and making up their own minds. We really believe in mining. We think that mining is an excellent, wonderful human activity, a necessary human activity. Certainly like any other human activity, it can be done well or poorly, and we think when it's done well it's of enormous benefit to local communities and global communities and particularly elements like copper and gold, they have a major impact on society, positively. They're used in all manner of things, particularly in the green economy, and the more the people locally understand projects, the less susceptible they are to some of the perverse messages that are self-serving that you see in the newspaper about mining or other resource development. People have their own reasons for spreading fear about these activities. Canada is a mining country and we're a first world country and we've benefited greatly from mining. I think Mexico and other countries like Mexico can do so as well.

So our message is very simple with our local communities, moving from your question into kind of our global approach here is we see that we're partners with these communities and the more that they understand mining, the better. We've got nothing to hide. We think what we're doing is a tremendous benefit, ultimately if it's successful. It depends on exploration first. So that's the stage we're at, but should we be fortunate enough to be able to define economic resources with our work, I can tell your listeners that our local communities will at that stage have been working with us as employees or have been invited to mine tours and educational efforts that we have already initiated to ensure that they fully understand the opportunity and can make their own educated and informed decisions.

Gerardo Del Real: Well, you do an incredible job at that. Your parent company Almaden Minerals, obviously does an incredible job, I know were doing some work on that front and will be able to share that here in the near future. In the meantime, Morgan, you own your own drills, I believe it's up to six now. What can we expect both at El Norte and at Raya Tembrillo?

Morgan Poliquin: Well, we're approaching near the end of the year as you can see from the news release there's a few holes that our results are pending for and we hope to release them very soon. We won't have too many more holes before the end of the year, of course there's a substantial break in Mexico for Christmas and our team has been working hard all year. But you know, I think once we have the results from this year reported, from there it'll be very clear how we move forward. We expect a large year, 2018, of continued effort to define the potential of this area and to demonstrate the possibility of a significant resource. So, the issue that we have is logistics more than anything and what I mean by that is we've got two zones. We're very fortunate in that. We need a lot of drilling in both areas. So, you know as a group we have six drills and some of them are on loan to our sister company obviously at Ixtaca. So, you know as we go forward here we have the, I believe, quite good problem of figuring out exactly how we advance all the targets at El Cobre. But we have the resources to do that, and I can assure you we'll be taking a systematic approach.

Gerardo Del Real: Excellent. Well, I want to remind everybody you have two discoveries on your hand right now, but you have four big copper-gold porphyry targets. That includes Encinal, El Porvenir, Norte of course, and now Villa Rica. So it's going to be a busy 2018 it sounds like, Morgan.

Morgan Poliquin: Yeah, I think it will be and we're quite excited about it obviously. We kind of kicked things off here with the first results, which are a long time coming, and appreciate everyone's patience and look forward to reporting some more.

Gerardo Del Real: Well, I know we have a couple of assays pending. Hopefully they're in shortly and I'd love to have you back on to talk about those.

Morgan Poliquin: Look forward to it.

Gerardo Del Real: Thanks again, Morgan.

Morgan Poliquin Thank you.

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