|Joseph Grosso, Executive Chairman, President and CEO of Golden Arrow Resources (TSX-V: GRG, FSE: GAC, WKN: A0B6XQ, OTCQB: GARWF): A Pioneer in the Development of Argentina Mining|
Golden Arrow Resources Corporation (TSX-V: GRG, FSE: GAC, WKN: A0B6XQ, OTCQB: GARWF) is an exploration company earning production income. The company has a successful track record of creating value by making precious and base metal discoveries and advancing them into exceptional deposits. Golden Arrow owns a 25% share of Puna Operations Inc., a joint venture operated by SSR Mining, with more than 8 years of forecast production and upside potential at the Pirquitas -Chinchillas silver mining project. We learned from Joseph Grosso, Executive Chairman, President and CEO of Golden Arrow Resources, that he has been the pioneer in Argentina at a very early stage in 1993 and now holds close to 500,000 acres of a lease land, and has made three discoveries. According to Mr. Grosso, the 25% that Golden Arrow owns in Puna Operation has an income potential, for decades to come, and he feels that their shareholders will be drawing great values from this income.
Joseph Grosso, Executive Chairman, President and CEO of Golden Arrow Resources
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Joseph Gross, Executive Chairman, President and CEO of Golden Arrow Resources. Mr. Joseph Grosso definitely is regarded as a pioneer in the development of Argentina mining. He was an early pioneer of the Argentinian mining sector in 1993, when it first opened up to foreign investment.
Dr. Allen Alper: Joe, could you give our readers/investors an overview of your company, your strategy and focus?
Mr. Joseph Grosso: I will be as detailed as I can with the time we have available. The starting point was in 1993 when my wife and I visited an extensive number of families, who lived in Argentina from our early fifties and up. 1993 was also the year the new president, Mr. Menem, opened investment to foreign investors in Argentina, which had been long closed. I had sold my clothing empire in Canada and signed a non-compete agreement. With the new opening to foreign investment in Argentina, I was looking very actively for a new opportunity there.
The first thing that came to my attentions was that Argentina was the eighth largest country in the world with 2.7 million square kilometers and stretching from north to south for 5,300 kilometers which they shared with Chile. Chile had always been very notorious for having spent the best part of the last century, becoming one of the prominent mining developed countries in the world, which was the base for other economies which made Chile a member of the North American Trade Association. It was absolutely a shock and a revelation to me that Argentina couldn't evening spell mining. And they were sitting there with 2.7 million square kilometers of great geological destination not used.
Well, that definitely was my focus, looking at what was going on in mining. I contacted a professor at University of Buenos Aires, Dr. Vicente Mendez, a very well-known, preeminent professor in geology, who when I contacted him became red in the face and he said, "Mr. Grosso, I do not understand why mining has not been popular or developed concurrent with Chile." We knew that the Chile border was crowded, crowded with international, huge producing companies and the more I learned about it the more it was obvious there was an opportunity to pursue. I hired Dr. Mendez as a consultant to select the best location in the extension east into Argentina from Chile, contiguous or in very close proximity to major producers.
We put together a property of 350,000 hectares, well over 800,000 acres, of a lease land. I had the pleasure of being deemed the pioneer in mining in that country at a very early stage in '93. Consecutively, for 24 years, we have found what is a real rarity; three discoveries that came out of the portfolio property that Dr. Mendez put together. We developed the portfolio property and we now have 215,000 hectares of property or very close to 500,000 acres, a very sizeable company asset and extremely well located.
Golden Arrow has been recognized as a 2017 TSX Venture 50 company
The third discovery, Chinchilla Silver, which has a very strong contribution of zinc, discovered a 43-101 value, which attracted the interest of SSR Mining, a neighbor of Chinchilla. Only about 23 miles away, which is a very short distance in the mining industry. Interestingly, it opened a synergy that is extremely rare in the world. At the end of the eight years’ production with Pirquitas Mine, the owners of Pirquitas Mine announced that the company would close down their operation within a couple of years. In the meantime they were operating and they are still operating at the tail end of their mineral supply. The synergy was obviously negotiated into an agreement, which made the company partner in operations that they had in Argentina and the overall asset, the infrastructure which Chinchilla and Golden Arrow needed very badly to put Chinchilla into production. Today that would cost in excess of $330 million US. This had a great intangible positive, eight years of world experience and knowledgeable producers, producing at one of the lowest cost-per-ounces in the world.
As you can imagine, if you do have to open an infrastructure like that and develop a producing team efficiently, it takes anywhere between seven to nine years and huge debt created for the shareholders, years of risk and cost to survive the seven or eight years until you achieve production. This incredible matching synergy was just like magic, just like a lottery win. They needed our Chinchilla deposit to continue their life and we needed their experience and reputation as a highly reputable producer and their infrastructure.
From the first minute that we signed the agreement, September 29, 2015, we were awarded, as compensation for entering into this agreement, 25% of the operation up to June 30th, 2017, on which the deal closed. So when we closed the deal we had some $19 million given to us. As of June the 1st, we're now on a 75% for SSR Mining, for the huge value and knowledge that they brought into the partnership. We had a very, very rewarding compensation for putting up a very early stage resource.
The cash cost to SSR Mining to reach the closing date of May 30, 2017,was approximately $40 million in developing costs and the $19.8 million that they gave us. Their cost for becoming a partner with us was $40 million dollars in cash and cost them 25% of the future operation.
The future operation has three stages. Stage one is projected to produce 67.1 million ounces of silver. The partnership is developing an integration of the Pirquitas Operation and Chinchilla, which is now known as Puna Operation Inc., of which Golden Arrow has 25%, SSR Mining 75% and is the operator. Obviously we're extremely happy to have their skill because exploration is in one universe and production is a total different world all together. We were lucky to find the skills of SSR Mining. The life of the Puna operation has about three stages. The first stage will produce about 67.1 million ounces of silver over the next eight years. We expect that the price over the next eight years will be at least $19.50. I consider that personally to be a very conservative approach. We're very happy because we have a good chance of doing better than that. We expect the gross sales at $19.50 silver to be $1.31 billion, $898 million for SSR Mining and $327 for Golden Arrow. That is stage one.
Stage two has already been drilled and can be developed. It needs a slightly higher price, but can be developed in a second stage of an equal size of 67.1 million ounces of silver produced over eight years, for the second eight years. However if the silver price goes up it may be concurrent. That obviously will be a decision made in the future when it's applicable. We have our 43-101 and can easily move into a production operation, concurrently or subsequently.
It's quite startling to know that the total contents, of stage one and two, was found in only 120 hectares of the total 2,023 hectare property that makes up Chinchilla. It is incredible! The third stage’s potential, if explored, will generate some pretty good value because we have 1,987 hectares of property located within the same prolific trend that comes in from Bolivia and has seven companies in production now. So with the property located on the same trend and some in close proximity, the potential is quite real on the third stage.
Overall, the 25% that Golden Arrow owns has an income potential for decades to come. We feel our shareholders will be drawing great values from this income. This, obviously, has happily changed our status from explorers and developers to producers and still 100% owners of the 215,000 hectares of property on which we have advanced numerous projects to continue, with more discoveries. I am very flattered and I say with all humility that I'm being considered as a pioneer. Our technical team is considered one of the best for discovering three discoveries, world class, and a potential for one or two more.
Now this is an incredible, exciting achievement that the team obviously is very proud of and we want to continue. Golden Arrow has changed its strategy from now on, by going from exploration only. Right now we are underway and well-advanced in creating two streams of company-producing value for the shareholders. One, the front production and the other one where we are transferring or as it's said in the industry spinning off. We'll be spinning off the 215,000 hectares of property and advanced projects into another company, which will be called New Golden Explorations Inc., which is under way right now. We feel that before we achieve a listing on a venture capital exchange, this company remains 100% owned by Golden Arrow.
Management intends to raise venture capital, for developing this important value, by diluting the Golden Arrow’s interest down to 60%. In the meantime, the partnership is developing an integration of the Pirquitas Operation and Chinchilla, which is now known as Puna Operation Inc. The other company right now Golden Arrow is also receiving a stream of offers of advanced projects, which need capital. We definitely have the reputation and the contacts to achieve earning potential from new production or existing producers who wish to get larger.
The second stream of value will come out of new discovery or advancing the 215,000 hectares of property and finding new discovery and more values put with the exploration done from the New Golden Explorations.
The market is not recognizing our value, trading at just over 50 cents US or 62 cents, 64 cents Canadian. We feel it is trading at a sizeable discount for a company with our two streams of values coming in and well run, with a good reputation both in North American and in Argentina. This is stage one, presentation one in the final format of our strategy. We are very excited to be working on it.
Dr. Allen Alper: Sounds great! Sounds like you've had fantastic achievements and are having a fantastic career. You and your team have made amazing discoveries and very wise business decisions in developing your properties. Excellent!
Mr. Joseph Grosso: We definitely feel, if anyone is interested in natural resources, we have a solid opportunity with very little risk. Also our volume speaks for itself because we've been trading at a sizeable volume. We are planning for future income, building for production. We are raising our company so we will climb up into a higher level exchange.
We hope investors will want to consider entering the mining industry as an investment for the future. We have selected gold and silver. We feel both of those choices are timely. An investor should look very seriously at Golden Arrow, with a successful history and potential to do incredibly well in the future. We have entered into production with a made team, a production team and a well-tested, excellent infrastructure. The production facility is managed by a capable producer, SSR Mining.
Dr. Allen Alper: I'm very impressed with you Joe. I admire what you have done. You're doing a great job, you're a pioneer and a successful one. I think our high-net-worth readers/investors will be impressed with your company and consider taking a very close look at investing in it.
Mr. Joseph Grosso: Argentina’s government now is more conservative and business friendly. Most of them are graduates of universities in the United States and fully conversant with economics. They have selected mining as one of the leading industries to rebuild their country. They are very supportive. I believe being in Argentina is going to be a plus. The Asian countries and Europe and everybody is coming to Argentina cautiously.
I want to work with the communities in faraway locations where most of them haven't even gone to school. These are very good people, proud of their mountains, their agriculture, their lakes, their animals. I want to sit down with them, work with them, look for values for their communities in total compliance with their hopes and wellbeing. We are very successful in Argentina that after 24 years we have not had one problem even in the most conflictive, anti-mining location. And we will continue in that vein.
Argentina has 2.7 million square kilometers of one of the best geologies in the world. It is a destination that should be considered by the major as well as the junior mining companies.
Dr. Allen Alper: You have a wonderful family and a wonderful history and I enjoy talking with you and I know our readers/investors will enjoy reading the featured article.
Mr. Joseph Grosso: I would like to visit you again.
Dr. Allen Alper: I enjoyed our discussion and I'll be looking forward, in the future, to talking with you again and seeing the great progress you've made. I know our readers/investors will be following your progress as well. I’ll be posting your news releases in Metals News for the convenience of our readers/investors.
Mr. Joseph Grosso: I will be waiting for the privilege of talking with you again. Thank you.
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