Abacus Mining & Exploration (TSX-V: AME)(OTC: ABCFF) CEO Paul Anderson on Advancing Ajax Copper-Gold Project & Drilling at Willow

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Abacus Mining and Exploration, Mr. Paul Anderson. Paul, how are you today?

Paul Anderson: I am very well, Gerardo. How are you?

Gerardo Del Real: I am well, thank you for asking. It's great to have you back. The last time you and I chatted, we talked about Jersey Valley, which is of course the gold project that you're currently drilling at in Nevada. But we also promised to reconnect and talk about what's actually the primary metal in the Abacus portfolio, which of course is copper. You have two projects at very different stages. One, Ajax, which is a massive, massive project that was permit challenged, but now seems to be gaining some traction, and you have a 20% interest there. And then we have the Willow target, of course, in Nevada, a project I'm really excited to see drilled out. And so I thought we'd have a conversation about copper and I'd love for you to give our audience an overview of each project and why they're important.

Paul Anderson: Great. Well, thanks very much. Yes. It's nice, we talked a week or so ago about Jersey Valley, our gold project, we just started drilling. We essentially put that into the portfolio a year and a half ago or so, simply because the copper price was down. The copper market was down. It was harder to fund copper stories at the time. So we picked up Jersey Valley. We quite like it. We're just getting into drilling right now. So stay tuned for further word on that.

We have had some news come out last couple of weeks on our Ajax and our Willow properties. And they were in many ways just put out to remind people that we are a copper company. That is our main reason for existing. That is our major focus.

So I guess if we could go to Ajax first, That is our cornerstone asset. So as you mentioned, it's a large project. It's situated up in the Kamloops area of BC, south, central BC. Ajax is a former mine that was run by Teck in the late eighties as part of their Afton mine operation, right next door to the West. So New Gold has basically taken over the property to the West and reopened the mine and called it New Afton. I think they opened that in 2012 and they're producing copper and gold from that site. The Ajax project is the eastern portion of the old Teck holdings.

Abacus has been in there since about 2002 working the property. We did quite a number of drilling campaigns, defined a new resource underneath the old pits, made the project quite a bit larger. And in 2010, we brought in KGHM, the big Polish copper miner to take the project forward and put it into production. So KGHM has operated the project since that time. Abacus has a 20% carried interest. So we're carried right up through production. This means that KGHM basically funds our costs to get the project into production. So we don't have to go out and raise money on that project, which is nice. And as you mentioned, it's a large project. The contained metal in the proven and probable reserves are something in the order of about 2.7 billion pounds of copper, 2.6 million ounces of gold and 5.3 million ounces of silver.

So it's a large project, and this is one of these typical BC porphyries. They're large, they're fairly low grade, but they're long lived mines. They keep going, they keep chugging along. Ajax initially is looking at an 18 year mine life, average processing rate of 65,000 tonnes a day, and production would be something like 58,000 tonnes of copper and 125,000 ounces of gold per year, over that 18 years. So, it's a large project, a long life. As you mentioned, it's permit challenged at the moment. We did run into issues a couple of years ago where we looked for the environmental permit on the project, and we were denied by the provincial government. And it was denied on a number of reasons. Basically the thinking at the time was, the project was able to mitigate any of the environmental concerns that people had, but we lacked buy-in from first nations and some of the other community groups at the time. And that hurt the project, and it led to a denial of the permit at the time.

So since that time, our partner KGHM has basically worked away to try to get the project back on track, and talk to the stakeholders and try to find a way forward. And those discussions are ongoing. I can't get into specifics on exactly what they're doing, but the project is moving forward again, after a bit of a hiatus. And if we can find some way to get everybody happy and satisfied in terms of stakeholders, agreement of stakeholders, this is a project that will pay good paying jobs, taxes to the local and provincial and federal governments, long life asset. It's a project that is worth quite a bit, providing it can get permitted and move forward. So, that's our major cornerstone asset and just a brief introduction on that.

And I guess I should have actually mentioned as well when the last feasibility was done in 2016, they were using metal prices of about, I think it was $3.20 a pound US copper, $1,200 gold and $17 an ounce silver. And as you're aware, Gerardo prices are just a wee bit higher.

Gerardo Del Real: Just a wee bit is right. A couple of important points that I want to make sure we emphasize. The 20% ownership has a carry, as you mentioned, all the way through to production, at which point, monies spent by KGHM on Abacus's behalf will be repaid from the production, correct?

Paul Anderson: That's correct. That's correct. Yes. And we pay a portion of that, the money that would be coming to us back, to pay back KGHM, the rest is money that we can use for other purposes.

Gerardo Del Real: And again, correct me if I'm wrong, but my understanding is that KGHM finally has a field office in the community working with local stakeholders to move the project forward, right?

Paul Anderson: Well, they actually ended up closing the office after the permit was denied. They're based basically in Toronto and in Sudbury on this continent, at least. So they decided it made sense to consolidate offices, but it left us without a local presence in the community, which wasn't a great thing from our standpoint. So they have reopened the office again last year, and they've hired a new person to oversee the project. And from what I can tell, it seems to be moving forward. Fingers crossed, and we get somewhere there this time. I think that our partners are maybe looking at different ways of doing things than they have in the past, and we certainly applaud them for that. So we're hopeful that project's going to move forward.

Gerardo Del Real: Well, that's encouraging. Abacus is one of my favorite junior copper speculations, and frankly, a large part of that is you have a market cap of approximately $10 million. You're drilling a gold project. You're carried through to production with a 20% ownership interest in a massive, massive copper gold project that as you mentioned, has 2.7 billion pounds of copper, 2.6 million ounces of gold and 5.3 million ounces of silver. And on top of that, you also have Willow, which is another exciting copper project, earlier stage, obviously, but very prospective and in an established copper camp in Nevada. Can we talk about Willow a bit, and everyone knows, everyone that's followed me for a while, knows I'm biased. I'm a shareholder in Abacus I've been to Willow and it's a project I really like, and I'm excited to see drilled out finally.

Paul Anderson: Yes, absolutely. I mean, you came and visited the project with myself and Mike McInnis, our chair, early on when we had just picked the project up, and we certainly had a chance to walk over the project and get a sense of how large the alteration zone was there. That was one of the things that attracted us to the property. So Willow is basically about a little more than an hour out of the airport in Reno, driving on good paved roads. Getting out to the property, you get onto secondary roads, and then there are old drill roads that lead across the property that are in remarkably good shape, considering they're 40 years old. You could, fairly carefully, but you could take a car through there as opposed to a pickup truck. So the access is really quite excellent. It's just outside of Yerington, the town of Yerington, which is a historic copper producer. Actually a present copper producer at the moment, but it's had a lot of activities through the years. And there's water, there's power, there's rail lines, that sort of thing, nearby.

So it's really a well-situated project, really good access. So the camp in itself is known for having these porphyry deposits. So the porphyry coppers, in this case, it's copper and moly, as opposed to copper and gold like we have for Ajax. But these are very similar types of deposits, so they're large. They take a little bit of time to find sometimes, but if you can get into one, these again are worth a lot of money. The Yerington mine, starting in, I think it was 1953, produced up until the 1970s and they were the major producer in the camp. And there's four other porphyries that are known in the camp, one of which has been mined a little bit at surface in the past. And people have speculated that there could be a fifth porphyry in the camp.

They have actually looked on what's now our Willow property in the past, in the 1970s, Anaconda and Conoco and some of those companies that were very active at that time in the copper space. So we've had a lot of that data to look at, when we picked the property up, in terms of drilling. There's little bits and pieces of drill core kicking around from 40 years ago, which is great for a lot of those drill holes. It's nice to have that exist after 40 years. Usually that sort of stuff disappears. So we picked the property up and we went looking for the proposed fifth porphyry in the camp. And what we did was the usual geological, geophysical surveys, that sort of thing. And then a couple of years ago, we did a very short drilling program, proof of concept, more than anything.

We had a bit of trouble with the drilling contractor, where they got stuck in a couple of the holes. So we didn't get down quite as deep as we wanted to. But the program was still successful in identifying a certain type of intrusive, which is known in the area. So this intrusive is associated with all of the other four, known porphyries in the camp. You have to have that intrusive. It's basically the heat engine and the metal source for the deposit. So you have to have an intrusive, to have a porphyry in the camp. The flip side of that is that there's no known instance of that porphyry existing somewhere in the camp, that isn't associated with a porphyry. So we just got on to the edge of the porphyry in our drilling. We've hit the right granite. We haven't hit the center of the deposit yet, but we're pretty sure it's there.

Now, this thing has a footprint of about two kilometers by two kilometers, and it's buried. It's underneath the later cover rock so there's some later rock on top that is unmineralized, and we're down 150, 200 meters in places to where we're looking right now. So, as you can imagine, you're trying to see through the rock and see what's there. And the first drilling we did was just on the edge, we think, of what could be a deposit in there. So the drilling we did a couple years ago, even though we hit some copper mineralization it certainly didn't look like the center of a porphyry system, but you could tell that we're pretty close.

You can look at the geology in the holes, the geochemistry, some of the different values of the geochemistry, and you can see, we're pretty close. So we've got an idea of where we should be looking next. So we think we should be a little bit north and maybe a little bit west as well, of where we were drilling last time, but still within that big two by two kilometer anomaly. So, it's hard to hit it the first time. And we didn't quite hit it the first time, but we think we're pretty close. So, looking at the copper price, it looks like you can actually get some work done on copper projects these days. So we put out a release a couple of days ago, and in the last couple of months, we'd asked a consultant to have a look at all the work that had been done there.

And I won't mention his name because it's just an internal report he made for us. But his opinion was that the work was done to a very high quality, which we pretty much knew already. And he agreed that it had all the hallmarks of a porphyry system, that we were just on the edge of it. We weren't quite there, but it certainly looked like it needed more work. And he's recommended a couple of drill sites we could try this next go round. So we are planning to do some drilling in the area, probably in Q2 this year. I'd like to let the ground dry out a little more, once we get in there. So that's the plan for Willow. So we're quite pleased.

The other thing, I suppose I should mention in the camp, we're right next door to a deposit called Ann Mason, that used to be owned by Mason Resources. Mason was taken over in 2018 by Hudbay, so quite a large company. Mason Resources has something in the order of, I think it's 1.4 billion tonnes of mineralization at 0.32% copper with some moly credits as well. So it's quite a large deposit. It's not going into production yet because it's under later rocks, but Hudbay's been in there looking at the last couple of years, and making plans to try to get it into production.

The other thing that's happening in the camp, and this is a little bit further south east of Willow is a property called Pumpkin Hollow, which is owned by Nevada Copper. They have gone in on an underground situation and they also have a couple of proposed open pits in the area as well. And it's a little higher grade. It's what they call a skarn deposit. So it's associated with porphyries and intrusives that come up. It's just a slightly different system. And that tends to have, as opposed to just copper, it has all sorts of different things in it, copper and gold and a whole bunch of different things, magnetite. And so they've got into production over the last couple of years, it's in and out of production for various reasons, but they're back into production and producing there. So it's a pretty interesting little camp. It's pretty active.

We've done a rough estimate of the copper that's contained in the camp, and this is a best guess of past production and current resources that people have reported. And we come up with something like 32 billion pounds of copper at Yerington. So, by anybody's estimation, that's a pretty significant copper camp. So I think I've mentioned pretty much everything on Willow, Gerardo, but you may find something I've missed.

Gerardo Del Real: No, no. I think you did a fantastic job of providing an overview for people in the audience that just aren't familiar with the project. I mean, the bottom line again is, for a market cap of $10 million, to control 20% of the copper and the gold that you control at Ajax, and then to have Jersey Valley being drilled as we speak, and then to have drilling coming up in Q2 of this year at Willow, that's a lot of shots on goal for a company with a market cap of $10 million. I will add, and you and I have had private discussions in the past, that there are others that believe, geologists that believe, that there's some pretty compelling gold targets on the property at Willow as well. Did you want to speak to that at all? Or we want to keep it copper for the time being and see if we can't get that discovery there first.

Paul Anderson: Well, I think we'll keep it at copper for the moment. There has been some exploration for gold in the past, up on the northern portion of the claims. Anaconda, I believe, did a bunch of drilling up there, 30, 40 years ago. The thing is that there is a small vein up there, but it's quite deep. And the drilling shows that it doesn't go very far. We were quite excited about it when we first got in there. And that was before we found some of the old reports and some of the old descriptions of the drilling. So, really, if you look around the camp, it really is a copper and moly camp. The only place you get significant precious metals is in things like the skarns like Nevada Copper's Pumpkin Hollow deposit. So, we're basically still just focused on the copper and the moly.

Gerardo Del Real: Well, I think your timing is excellent. Again, obviously copper at $4.20 absolutely helps it. The infrastructure is top notch at Willow. The access is incredible. It's a mining community. It's a huge camp, and I am excited to see what drilling unearths here in the next quarter. You expect that in Q2?

Paul Anderson: Yeah. Sometime in Q2. We're just laying out the drilling program right now and trying to think of budgets and that sort of thing. And of course, we're not going to do anything until it dries out a bit. It's certainly easier to drill in the spring when things dry out a little bit.

Gerardo Del Real: Well, it sounds like it's going to be a busy couple of months, a busy rest of the year. I'm looking forward to having you back as soon as we get assays from Jersey Valley and a little bit more clarity as to the drill program at Willow. Thank you so much, Paul. I appreciate you coming on. Anything else you'd like to add?

Paul Anderson: No, I think that's about it. Your comments about the market cap, everybody thinks they're undervalued, and we agree with that. I'm no different, but I think if you were to look at the Willow property alone or the Jersey Valley property alone and the potential that's there, either one of those properties probably justifies our present market cap and we haven't added in Ajax yet. So, people say they're undervalued, but it's based on a reasonable shot on one property. We've got three separate properties that potentially will add value to the share price. And we certainly hope it will.

Gerardo Del Real: I'm looking forward to it. Thanks again, Paul.

Paul Anderson: Thanks very much and happy to talk anytime, Gerardo.

Gerardo Del Real: All right, look forward to having you back. You stay safe out there.

Paul Anderson: Thanks. You too.


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