Featured Companies: Almadex Minerals
Almadex Minerals (TSX-V: DEX)(OTC: AAMMF) CEO Morgan Poliquin on Robust Exploration & Royalty Portfolio
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Almadex Minerals, Mr. Morgan Poliquin. Morgan, how are you?
Morgan Poliquin: I'm excellent. Thank you. How are you?
Gerardo Del Real: I am well. Thank you for coming on. I think we were overdue for an update on Almadex. I joke with colleagues that Almadex, and I mean it, but I joke that Almadex is kind of like the Swiss Army knives of exploration royalty and project generator companies for the simple fact that you really do it all. You have your own drills, you have multiple, very prospective properties. You have multiple joint ventures on properties that are highly prospective for discoveries, and you also have multiple royalties. I think Almadex presents one of the better and most compelling opportunities in the entire resource space.
I would love for you to give us the context on today's news because I thought you did a great job outlining the different approaches, that multi-pronged approach that the company uses.
Morgan Poliquin: Well, thank you very much for that introduction.
Yes, we have developed a large portfolio of projects all through our exploration ideas. The source of it all is prospecting. We've done that in Mexico, we've done that in British Columbia, we've done that in Yukon, and we've done that in Nevada, and we liked the Western part of North America for its geologic terrains. Over the years, we've staked and explored various properties and option them out. In some cases we've made discoveries on those properties and actually sold them or otherwise we retain royalties on those projects. So it all comes from prospecting in the first place, and it's nice to be able to give a review of it all.
We have a lot going on. Obviously, last year was a challenging year for advancing projects. I might say that our portfolio projects over the past decade, part of that we focused as a consolidated company, formerly Almaden Minerals, we focused on individual properties and advancing them. So really now Almadex is going to get back to its knitting, which is, again, prospecting for new things, but also finding partners.
We find more things than we can advance on our own. It's an idea-based company. We traditionally have optioned things out, and we've done that again and we expect our partners to be advancing those projects. We also have retained this large portfolio of royalties, which as some of the royalty properties advance along, the promise of... In fact, at one of the properties is owned by a company that is talking about production this year. So it is a broad way of addressing exploration risk and happy to talk about all the individual things going on.
Gerardo Del Real: Absolutely. Just to be clear and make sure that we're providing the right context, I believe the property you're referencing being in production here soon is the Elk property in British Columbia, which Gold Mountain Mining has, frankly, executed brilliantly.
I mentioned to them when I initially spoke that it was aggressive, their timeline. But that I liked aggressive, and you know what? Thus far, they've done a great job of advancing that, and it appears that by year end, that will be a cashflow-generating royalty for Almadex. Correct?
Morgan Poliquin: Well, yeah, they've announced that they've signed a mining contract and an ore purchase agreement. So I guess they're in permitting, and we all know that that can take longer than otherwise, but they do have a plan once permitting is complete to get in production. We have a 2% NSR royalty on that project, so that would be very nice, obviously, to start to demonstrate through some cashflow the merits of our overall royalty portfolio.
Of course, there's a couple of biggies in there. Obviously, Ixtaca and Almaden and that's at the permitting stage right now. And we have a royalty on Azucar's El Cobre project, which recently, recently meaning last year, put out an initial resource on one of those zones there. So there's quite a lot in that side of it.
But really it's about the drill bit and making new discoveries. That's how we generate these royalties. That's how we generate all that potential is through the early stage prospecting.
Gerardo Del Real: Let's touch on Ixtaca really briefly because I think it provides a good opportunity to kind of provide an Almaden update for those that have followed myself and you and your father throughout the years.
Of course, Almaden discovered the Ixtaca project over a decade ago now, a top-notch resource. We know that the permitting did not return the decision that we all anticipated. However, in Mexico, it is not uncommon for the initial MIA to be declined and then approved upon subsequent reworking of whatever it is that the government at the time, or the department that declined the permit, sees fit in order to advance the project. So the project has a ton of great attributes. Anybody that follows my work knows how bullish I am on that project. I want to make absolutely clear to people that one permit denial is not uncommon in Mexico, and it's not uncommon to see subsequent applications approved.
Where does that stand? Because that could also be a significant, significant cash royalty for Almadex.
Morgan Poliquin: Well, that's right, and we were very disappointed to have our initial permit sort of rejected or declined at the end of last year, and that was a really tough time. Last year, it was a challenging time in many respects, and it was challenging to meet some of the new people who came into the SEMARNAT office that administrate those permits.
As much as we're incredibly disappointed with that decision, we also think that some of the new people who came in just in the autumn, I think the new director of SEMARNAT came in in September or October of last year, that hopefully this will present the opportunity, because you couldn't meet last year, to meet with them and really help them understand the project.
We think we have strong support from the project in starting rightwards most important with our local stakeholders, our local community. There's 800 people who have signed a petition in support of the project, and we have some nice interviews on our website that I think may help people understand that level of support, which we see locally.
The project has many fabulous technical attributes. When you're talking about permitting and the environmental and social side, we've got our archeological clearances, we have done an independent social impact assessment. It's called EBES in Mexico. We're trying to be a leading edge type of approach to social matters. We've engaged with the community in an extraordinary way. We've brought about 500 people to visit operating mines, so they can understand the project and what's being proposed, what's coming with their own eyes. Of course, we were able to do that pre-COVID.
But really it's the attributes of the project that are the most important for stakeholders to understand. Those are that the geography there and the geology is we have limestone host rock, which is highly buffering. There's generally concerns with acid rock drainage when you're talking about any kind of a mine. In our case, we've got buffering limestone as the lion's share of our host rock. We're building a water reservoir as part of the mine plan for mine use during mine operations, and also community use that can be handed over to communities post-closure. We've asked our engineers to design that in a permanent way. We have dry stack tailings, which means we don't have a tailings dam, which obviously eliminates the potential for a tailings dam failure as there's no tailings dam.
Those are pretty remarkable attributes that are kind of God-given, as it were. They're geography and geology-based that some of those things come about. But we think it's an excellent place to work with local stakeholders on addressing marginalization and the lack of employment in this part of Mexico. It can be a real demonstration of how well mining can respect and, in some cases, enhance access to things like fresh water, which is the nation has discussed as being one of the key factors in areas of marginalization.
So we're really excited about the project. We believe in the merits of the project, and we're focused on communicating those. As we all know last year was not a year where that was easy, and those challenges remain. But we feel that we have to focus on that side of outreach and enhancing the project wherever we can. We're committed to that so, yeah.
Right now there's a lot going on in Mexico. There's big midterm elections, I believe, coming up and in June of this year. So all of those efforts will be coordinated to a better understanding of when the best time is to be ready on the one side and the other side to resubmit our next permit application.
Gerardo Del Real: Well, I know you're hard at work on the permitting front. You recently appointed Kevin O'Kane and Alfredo Phillips. I encourage everybody to go to that news release and see the background of each of those gentlemen. It's impressive.
I also know that we're probably due for an exploration update from Ixtaca because I believe you, your father and anyone that's been to that property believes there's more to be discovered there. So I'm looking forward to that.
Coming back to Almadex, you made a comment regarding discoveries and adding value via the drill bit. So while the royalty portfolio in itself, and I've said this to you privately, Morgan, could be spun out into its own company and generate a higher market cap than the entire market cap of Almadex right now, some of the properties that you have that are going to see drilling this year have very, very good potential for discoveries. I'd love for you to chat briefly on a few of the properties you're looking forward to putting a drill bit into.
Morgan Poliquin: Well, thank you. Probably first and foremost is the property in Nevada we optioned our new partner called Makara, and we're the operator at this point in the joint venture agreement and option agreement. Then we plan to drill as soon as possible. They've mentioned later this month, and we'll see how everything comes together for that, if that timing's accurate or not. There's a few things to organize, but nevertheless, it's a great gold target.
There's two parts of the property. There's a historic mining on a vein called the Davis Vein. Then to the south of that area, there's a broad area of hydrothermal alteration, which is very similar, we think, to the geology at Paradise Peak, which was what we call a high-sulfidation gold project. So there's two styles.
I think they're probably different ages, but that's common in Nevada to have those two styles of mineralization, even though they're formed at different times, close to one another, and we think that that's indicative of a real hotspot. So it's a preliminary first phase drill program to follow up old results in the area of historic mining, and then to test this area of alteration in the south part of the property. So it's quite exciting. It's a classic Nevada exploration program and great targets.
That'll be the first one, I think. We have other partners and we're waiting on their drill permitting news. So I'm very hopeful that some of our partners in British Columbia might be able to advance to the drill stage this summer. That remains to be seen, and stay tuned. We have a few properties in Mexico that are in our portfolio that we'd like to advance and move to the drill program, if we can, this year as well.
I think there'll be lots of exploration activity and we've got our eyes open for adding to the portfolio all the time as well. The focus the last few years is really getting the portfolio back to work, the properties that we've held onto through bad markets and tougher times for their potential. Getting them advanced so that we can really free ourselves up is the idea to add to that portfolio. That's the most exciting part for me, and we're back on thinking about new things.
Gerardo Del Real: Excellent. Just to be clear, Davis, Paradise Valley, the property in Nevada that you're really high on, Almadex retains 40% of that, I believe. Correct?
Morgan Poliquin: Oh, that's right. Yeah. They have to spend, and obviously other obligations to us to earn 60%. Just while we're talking about Nevada and partners, I neglected to mention we also expect a drill program at some point there on our Willow project, which we've optioned to Abacus. They did some preliminary work a couple of years ago, I think, or maybe I don't think it was last year, it couldn't have been with COVID, the year before that, I think, so I think they plan some more drilling there. I really believe that that's an exciting copper and gold porphyry system, and there's real potential there for new discoveries. Hopefully, we'll see some drilling there as well.
Gerardo Del Real: Well, I liked that property a lot. I'm biased. I'm an Almadex shareholder personally, and an Abacus shareholder personally. So I wouldn't be speaking with you, Morgan, obviously, if there wasn't a bias to me. But yeah, no, I really like Willow. I'm excited to see a drill bit there in Q2 of this year.
Your Mexico properties, you snuck a line in there, Morgan, where you just say, and then you referenced it here a second ago, but you say you're pleased to announce your intention to drill at least three of your Mexican properties. These are a hundred percent-owned properties, correct?
Morgan Poliquin: That's right, yeah, and I leave my options open if somebody wants to option those properties. We have a lot more interest in collaboration than we have had over the past number of years with the kind of markets we've had until really the last year, so I'm hopeful that some of these properties we'll find partners on. We've always done that.
There's a lot of metaphors you could use, but the more irons in the fire, the better. So the sooner we get back to generating new ideas, the better it will be I believe. I'm what's-over-the-next-hill kind of person so, yeah, let's see how the year progresses, but we'd really like to do that.
Gerardo Del Real: The market cap for Almadex stands at $16 million Canadian today. It's tiny given the portfolio. You also own your own drills. I believe the cash position stands at what, Morgan, where are we at there?
Morgan Poliquin: The cash position of Almadex is somewhere in the $5 million Canadian range. Can't give you an exact figure, but somewhere in that range.
Gerardo Del Real: So give or take, just over 30% of the market cap is backed by cash, and you own your own drills, and you own your own properties, and you have a bunch of royalties on a bunch of other properties. A lot of value there for speculators in the space that are looking for discovery, royalty, cash-flowing royalties, a lot to look at. I encourage everybody to take a peek.
Morgan, anything else you'd like to add to that?
Morgan Poliquin: I think that's an excellent summary that you've allowed me to give and opportunity. Thank you very much, Gerardo.
Gerardo Del Real: No, thank you so much. And hopefully the next time we chat we're chatting discovery programs, right?
Morgan Poliquin: Well, that would be nice. I look forward to it.
Gerardo Del Real: Thanks again, Morgan.
Morgan Poliquin: Take care. Bye.Click here to see more from Almadex Minerals