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As Drilling Continues to Grow the El Cobre Project, Almadex (TSX-V: AMZ) CEO Morgan Poliquin Shares What Initially Led Him to Explore Mexico

September 7, 2017

Gerardo Del Real: This is 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, thank you for joining me once again.

Morgan Poliquin: Well, thanks again for having me on.

Gerardo Del Real: Well, it was important that I have you on today, you just had some news. Step out Hole EC-17-030 traces high grade 200 meters northwest at the Norte Zone. So you hit 60.70 meters of 0.95 grams per tonne gold and 0.37% copper within 308.5 meters of 0.39 grams per tonne Gold and 0.20% Copper.

Now I know in the past there were critics initially of the project that thought the grade and the size wasn't there and then there were people, frankly, a lot smarter than me who believed that the deposit was cut off to the northwest and I think this 200 meter step out is important. Can you provide the details?

Morgan Poliquin: Yeah I mean, we still believe we're in exploration here, clearly the zone remains open we think to the west or northwest as this hole demonstrates, so it's an open book. We think that it's a 5 kilometer zone of alteration, which means the rock within which the copper-gold mineralization is hosted. What's controlling it exactly is yet to be determined, but we've started out with drilling where we have some past results that were significant and happily a year ago we hit some very good grades in hole 10. Subsequent to that time we've been stepping out and infill drilling, and these are long holes, it's taken us up to 2 months to get full assays for a hole and a picture is developing.

I think this step out today shows that the results that were excellent that we had achieved are part of something bigger. The exact dimensions are yet to be determined, and here we are extending them as we drill, so we're in the exploration phase. That being said, we have a number of holes within what is known to be the Norte Zone today that define a potential size there. Clearly it would be premature to put a box around it, particularly when you're still drilling and finding things.

Gerardo Del Real: Absolutely. Now Morgan, you have assays pending for holes 33 and 34 and the way it looks to me is you're trying to figure out just the continuity and the geometry of the deposit. Would that be accurate?

Morgan Poliquin: That's right, again we think it's early days and while we have a number of holes that clearly define a zone of mineralization, we have yet to fully flush it out, so what we're trying to do is both kind of, I would hesitate to call it infill drilling, but in essence that's what we're doing, we're drilling between holes, we're drilling some different angles that will enable us to determine trends. Soon we expect, obviously there's some logistical matters as well, but we expect to set out standardly oriented sections so that we can really do resource drilling.

But again, back to my previous comment, where are you doing that? We're still stepping out and finding new material. We are trying to do both things, really determine the continuity of mineralization in the area we know, while at the same time actually understanding where mineralization is, its limits.

Gerardo Del Real: Absolutely, absolutely. And speaking of stepping out, we mentioned the many different porphyry centers here, the Villa Rica Zone is 2.5 kilometers by 1 kilometer. I understand that the Raya Tembrillo target within that Villa Rica Zone is supposed to be drill tested as we speak. Is that happening now or is that happening soon, Morgan?

Morgan Poliquin: That's right. We are. Obviously we've had a couple of hurricanes and we didn't want to go up a long trail to drill this new area while that was happening, but we have a drill up there now and we're currently under way on our first hole in the Raya Tembrillo area. We anticipate doing a lot of drilling in this area. Interestingly, Raya Tembrillo where this out crop occurs is at the north end of roughly a 2 kilometer long maganomoly, which is very clear on the maps that we put out there.

While we have excellent mineralization and outcrop, we view this as just being the first step in this area, this Villa Rica area. Raya Tembrillo zone is at the north end of this Villa Rica magnetics target, which I as I say extends for 2 kilometers to the south. I think this is the beginning of a large drill campaign in this area.

Gerardo Del Real: Excellent, well it appears that we're definitely into a new copper bull market, the timing couldn't be better for Almadex. I happen to believe that the market cap, we're going to look back a year from now and laugh at it.

Tell me a bit about how many drills are turning and what the next step is here for exploration at El Cobre.

Morgan Poliquin: We're just in the middle of mobilizing drills around right now. Just today we've got one drill at Raya Tembrillo and we're moving machines around. We have 4 drills on the property and we anticipate now that the weather has gotten better and so on, and we get results in to start to plan our next drill campaign at the Norte Zone and to follow up drilling at Raya Tembrillo. We think we'll put two rigs on the Raya Tembrillo zone, but all of this is in flux at the moment.

We have multiple targets over 5 kilometers, so there are logistical things we're working on.

Gerardo Del Real: Two drill rigs to start out, that's a bit more aggressive than I'm accustomed from you, Morgan.

Morgan Poliquin: We think we've got a big area to work on and certainly there's a huge amount to do up there. It's an exciting time. Stayed tuned and we're approaching this in a systematic, scientific manner, and we expect to be able to report the results hopefully a lot quicker than we have in the past owing to the lab delays, but we anticipate that getting more in our favor.

Gerardo Del Real: Excellent. Exciting times, we talked a bit off air, Morgan, about the geology of the region and just how exciting it is to be able to own your own drills and work in a part of the world that, frankly, has been very under explored. I'm on record as saying I don't believe anybody outside of the Poliquins, you and your father, have the database and the expertise in this part of Mexico.

Can you talk a bit about what makes this area so attractive for you? It's proven out, your many successes, Caballo Blanco, we've had now El Cobre, and what's turning out to be a very, very robust system. Can you talk about what makes this area so special?

Morgan Poliquin: Very happy to, thanks for the opportunity. Look, we identified this part of Mexico about more than 20 years ago now. I was doing a Master's Degree in New Zealand and I was studying some rocks that hosted a huge gold deposit in the island of Fiji, in these high potassium rocks. I looked for where these rocks might exist in the world elsewhere, to look for gold potential obviously, and found that these high potassium rocks existed in this part of Mexico.

Those rocks are very unique, I could give you all the geologic verbiage, it's got a unique geologic thumbprint. This is a very special nexus of events on a planetary scale that doesn't happen very commonly. It allows for the potential for big gold and copper deposits to form.

It's called a slab window that opened up and it's a tectonic feature and we've identified the right magma chemistry with the potential to host big deposits. So you combine that with the fact that there is mineralization of the right age, of the right geochemistry there, and as you say now there's multiple deposits taking shape in the region owing to this exploration. That's the scientific premise that brought us there in the first place that keeps us focused in this area. We think geologically it's very special.

You combine that with our abilities to be flexible and dynamic with the fully integrated exploration team and our own drills, it's a unique, I would say, generational opportunity for, and clearly there's 2 generations in this company, so multi-generational opportunity.

It doesn't happen that you have proprietary knowledge and complete control, I would argue of a belt of mineralized systems and the ability to explore them thanks to our shareholders who support us. We feel very blessed with that opportunity and of course we don't control what was formed millions of years ago, but whatever was formed millions of years ago, we're going to find it.

Gerardo Del Real: Excellent. Excellent. Well, El Cobre is obviously 100% owned by Almadex, but you obviously have a portfolio of very, very prospective projects. Projects that again, you've developed over years and years of work. Can you talk a bit about the portfolio and some of the projects that might be available to companies that are looking to vend into a project.

Morgan Poliquin: We have multiple projects in this region, obviously we're the first mover and the pioneer as we discussed. We do have other projects. We have copper-gold type projects, and projects that are similar to our Ixtaca discovery. So we have identified these projects over the years and staked them. As I say, we kind of feel that there's lots of exploration to do for more subtle things, but the clearly obvious things are our program, which was basically myself flying around in a helicopter, landing on things and investigating over the course of 10 years.

We think we've identified the key areas and have staked them. We have a portfolio of projects in Almadex as well as royalties too, don't forget we also have a royalty on the Caballo Blanco Project, which Candelaria has currently submitted their full EIS for.

Gerardo Del Real: And Agnico now has bought into Candelaria, if I'm not mistaken.

Morgan Poliquin: That's right, I believe they bought 10% of that company. Absolutely, we see significant opportunities in the belt apart from these projects that I was speaking to you about. I think it's very early days, the belt is completely unexplored and in fact, Caballo Blanco, first time these claims were ever staked were, and same with Ixtaca, the first time the claims were ever staked was us staking them in 2001 in that case.

It speaks to the potential and when you think of Mexico in general terms MAG Silver is a great discovery, remarkably it's just a few kilometers from a billion-and-a-half ounce historic producer that's still in production on a clay altered hill. My professor at my Master's Degree, I mentioned earlier, did his PhD on Frisnillo and spoke of that clay altered hill 25 years ago and somebody should drill underneath it.

It took MAG Silver 25 years, but really when you think about it took 500 years. If that sort of potential exists just 2 kilometers from one of the most historic deposits in Mexico, what else is out there to find? That's been our attitude and clearly we were right in thinking that way.

Gerardo Del Real: Absolutely. Well, Morgan I hope to have you back as we get more assays. I'm excited to see all those drills stirring, and thank you for your time today, look forward to speaking.

Morgan Poliquin: Excellent. Thank you so much. Appreciate it.

Gerardo Del Real: Morgan Poliquin, Almadex Minerals, everybody.

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