Palamina Corp. (TSX-V: PA)(OTC: PLMNF) President Andrew Thomson on Milestone Phase-One Drilling at Flagship Usicayos Gold Project in Southeastern Peru

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president of Palamina Corp. — Mr. Andrew Thomson. Andrew, it has been a bit. We are overdue for a catch-up. First and foremost, how are you today, sir?

Andrew Thomson: I'm great. How are you doing, Gerardo?

Gerardo Del Real: I am well. Thank you so much for asking. You have been busy, busy, busy. I could go back to June… you completed a C$5 million private placement. I can tell you that the quality of the projects was acknowledged, obviously, by one Mr. Eric Sprott and GoldSpot, among others. 

Let's start there. And then, let's get to a milestone moment that's been years-in-the-making for us that I've been patiently watching, which is the turning of the drills here shortly. Let's talk the financing. Tell me a little bit about it.

Andrew Thomson: So we did a private placement, and Eric Sprott participated for 12%; GoldSpot, 3%. My wife and I put in C$200,000 so we maintained our interests with the key event coming forward being that we're going to start drilling on our flagship property, Usicayos. 

We did change the name. We had wanted to change the name, previously, but we had to wait until all of the applications went through. It was formerly known as Coasa. But the big thing here, the inflection point, really, is that we've got a diamond drill onsite and it's about to start turning. So we're really going to test the Veta Zone.

In terms of the financing itself, we paid all of C$12,000 in commission and a 6% broker award. So it should tell you that there was a very good appetite for it. We were oversubscribed. And I'm pretty excited, actually, because with GoldSpot, we're now taking all of our data and inputting it… while there isn't a lot of data, there is a lot of data on the Puno orogenic belt. 

We're really taking a bigger look at this whole area to try and better understand what's going on in terms of structure, etc. And I do feel that it's going to add a lot of value as we move forward. So I'm excited to work with them. For anybody that's not familiar with GoldSpot, they use algorithmic mapping. They take all of your data and input it into their system. And they sort of bill it as being kind of a Newmont backend. 

We actually do appreciate that and feel that no one else has done that here. So not unlike when we flew the belt — this is something we think will add real value as we move forward.

Gerardo Del Real: Well, I’ve got to believe the quality of the data leads to better outcomes, right?  I know that, obviously, they've been extremely successful; in particular, the one that really stands out is the success as it relates to New Found Gold, right?

Andrew Thomson: Yeah, I will say that it's an orogenic Devonian age project as is our Usicayos project. It's not the same belt but there are some relationships there that I think we'll be able to utilize. I mean, part of the attraction for them is that we're in the same age rock and the same type of system. 

In terms of moving forward, I think we'll be able to garner some of what they've understood from their system. They're obviously hitting some pretty decent holes.

Gerardo Del Real: That's an understatement! Let's get into what the drill program will consist of at Usicayos. I understand you had planned for 2,600 meters… 

Andrew Thomson: So we're going to try and get 3,000 meters done.

Gerardo Del Real: Excellent!

Andrew Thomson: We have until mid-November, and we think we can get that completed. Initially, we had planned on doing 12 holes. You need to be 50 meters from a stream in Peru, and there's a stream running through the main Veta area. 

We've reconfigured it so we'll be initially drilling from six pads to test — and we're actually going to drill deeper holes. And it has a bit to do with the orientation of the topography, etc. But we're pretty confident. 

There's eight different perceived mineralized structures at-surface, and some of them disappear underground. We really haven't done a lot of trenching. We've spent a small fortune on geochem. And obviously, we've flown it, so we have a good idea of where the structures are. So these holes, we perceive, they're also going to test structures that we think are just below surface.

It's actually pretty exciting. We hired a new geologist in-country… an ex-Rio Tinto guy named Nigel Chapman to assist because, obviously, Bill McGuinty, our lead VP, can't travel there. And he's doing it… he's onsite in the next week. For the first set of drill holes, he's going to watch how the core goes down the hill. 

And again, we've got a new setup in Juliaca where we can store up to, I think, probably about 50,000 meters of core. I actually haven't been there to see it. I'm going down at the beginning of September.

Gerardo Del Real: And let's be absolutely clear… you've done some really high-quality work with the field programs. You've sampled up to, I think, 620 grams per tonne gold, if I'm not mistaken, right? There was another channel sample up to 123 grams per tonne over one meter. This is exploration at its finest, right, Andrew?

Andrew Thomson: Well, these orogenic systems tend to be thin-vein/high-grade. And I'm fairly certain, based on the amount of sampling we've done, we're going to intercept some of those grades. 

But we're really looking for continuity, and we've spent a fair amount of time vein-counting and looking at these structures to figure out where there could be a deposit. We're not ruling out open-pit but the likelihood is that it will be an underground deposit. It just depends on what mother nature has provided. 

Obviously, Crucero on our flank provides some insight, as does Ollachea, which is 60 meters to the west. And then there's Rinconada to the east, which is probably a 15 million ounce deposit. So there's just different ways of looking at it. But until you put the drill into the ground — you really don't know. So this could be the start of something quite interesting. 

I guess our best channel was 3 meters of 30 grams. You really need 6 meters of 6 grams for underground. So we have seen areas to the west that definitely support that. We're just getting started… is really what it amounts to.

Gerardo Del Real: Far from a one-trick pony, you've put together how many district-scale gold projects in Peru now, Andrew?

Andrew Thomson: Well, we have the one that we sold to Winshear. And that one, they filed their DIA since we last talked. So they're getting ready to drill as well. And the key there is that — not unlike Usicayos — they've got two kilometers of strike. 

The thing that I'm most impressed with is the size of these mineralized systems. They're fairly large. And again, the top 40 meters has been ground-truthed by informals, and there's a lot of visible gold and high grade. And on a drill basis, most of what's been drilled in the belt has either gone into production or has a million ounces. 

So again… it's taken us a long time. There's more political risk and less geologic risk. Now we're going to put a drill hole in the ground to figure it out.

Gerardo Del Real: Before I let you go, I have to ask you about the political risk. How are things in Peru? You've done a really good job of trying to get ahead of the community relations even before the instability. But how do you see things?

Andrew Thomson: Well, again, we had to rename the project, and the community asked us to wait for the resolution from government. I can say that the new elected government is very left-leaning, and all of this has been a bit of a mess. 

In the last year, they had three presidents. And then, the most recent president really has never governed anything. So there's going to be more of the same. But for the companies that are established in Peru, their exploration, I don't think there's going to be a big impact. 

And I actually think we may stand out a little bit if gold turns around and goes much higher… because, again, Mexico is a good example of a country that's nationalized… but a lot of the juniors are doing exceedingly well in the marketplace versus the production deals.

So I do think that when you look at Chile and some of the things that are going on with copper in terms of royalties, I think you're going to see some of that with the new government. But quite frankly, I won't be surprised if Castillo, who's the new guy that's come in, Pedro Castillo, the new president… if he takes his time and if there aren't serious problems because he simply, in terms of just even electing his cabinet and putting people in place, he's had issues. It's still a real mess. 

But again, at these copper prices and gold prices and silver prices — I don't think it's going to change that much for the juniors that are active there.

Gerardo Del Real: And I understand the drills will be turning within the next few days. That's the expectation?

Andrew Thomson: Yeah, they sent the wrong size rods! So we've got a number of them that are moving up the hill, so to speak, and we've got, I think, 11 horses moving stuff up and down. 

We're having a little bit of growing pains. But at the end of the day, we're just waiting for some rods to come in to be able to get going. I'm told that it will be no less than five days in terms of getting moved to site and up the hill. So that's really what we're waiting on. 

But other than that, there's no issues with community. Everybody's happy. We're employing quite a few people because it's a man-portable program where there's at least 50 people walking up and down the hill every day. 

So there's a lot of activity, and we're fully set up now in Juliaca in terms of having the core facility. And it's only 800 meters from the Certimin Lab where they do the prep work. The good news is there's lots of drills available, and I think our turnaround time on assays is going to be less than 10 days.

Gerardo Del Real: Well, that's exciting! I'm glad to hear it. Thank you for that update. Anything else you'd like to add, Andrew?

Andrew Thomson: Well, I think everybody should know we have 18.6% equity in Winshear, and we are in the middle of an arbitration on their orogenic SMP gold deposit. A third-party that is part of the arbitration came out with a $124.7 million number as damages. 

Again, that property was expropriated but within that, we think the decision, at least, will be within the first quarter of 2023. So it's not that far off, and I do think there is an underlying value to that company that people aren't appreciating. And I think if you look at the news release that talks about that, the interest is rolling at the same time. 

For me, it provides a little bit of a backing, if you want, because it's very well-funded… they’ve never announced the amount… but I do think there's some upside there.

Gerardo Del Real: And just to be clear, the market cap of Palamina today stands at… 

Andrew Thomson: We're just above C$20 million. We got as high as, I think, C$24 million. But it's C$20 million give or take.

Gerardo Del Real: And just over a quarter of that is backed by cash?

Andrew Thomson: Yep, I would say.

Gerardo Del Real: Good.

Andrew Thomson: And we have the equity as well in Winshear. But more or less, it adds up to about C$5 million.

Gerardo Del Real: Excellent! Andrew, great update. Look forward to the drill program. Look forward to the assays. Thank you for your time. I appreciate it!

Andrew Thomson: Okay, great! Thanks, Gerardo.

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