General Base Metals
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Aldebaran Resources (TSX-V: ALDE)(OTC: ADBRF) CEO John Black on Revving-Up the Drills at Flagship Altar Copper-Gold Project in Argentina’s Red-Hot San Juan Mineral Province
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest live from the 2022 Beaver Creek Precious Metal Summit. Joining me today is the CEO of Aldebaran Resources — Mr. John Black. John, how are you?
John Black: Good. Good to see you in person.
Gerardo Del Real: Great to see you in person. We're here in beautiful Beaver Creek. I want to talk about the Altar project. I want to talk about San Juan, which is red hot right now as a mining jurisdiction. But before we get into that, I’ve got to ask you about the conference. What's the sentiment like this year?
John Black: It's pretty energizing, really. It's nice to be back. It's nice to see people that you oftentimes haven't been in contact with in a long time. It feels like we're back to normal. In the backdrop, of course, we have the markets being a little bit rough. So a lot of the conversations are, do you have enough money? Are you ready to go forward? How are your projects set up? But it's got a buzz.
The long-term story for copper is really strong, and so it's good, healthy conversations. A lot of meetings. We're packed with meetings for the next couple of days.
Gerardo Del Real: It's a precious metals summit but you mentioned copper, right? You have a lot of copper, and you have a lot of gold. Can we talk a bit about the asset base?
John Black: Absolutely. It used to be a little bit hard to get into this conference if you were copper dominant but the importance of copper as an investment opportunity, I think, is obvious in the number of copper stories they're inviting to come into the story here.
So the project itself, we're really excited. We've recently reported all of the final holes from our last campaign. A lot of long runs of mineralization. The most recent hole was about 1,000 meters of 0.4% copper in a new zone. That's outside of the resource for the most part.
So the successful campaign and challenging conditions last year — challenging in the sense it was hard to get drill rigs, it was hard to get the meterage done — but we're in the process of planning our campaign for this upcoming field season. Keep in mind, we're in the southern hemisphere, so the field season starts next month. We'll go in and get the camp open in October, and we hope to be drilling by early October.
Gerardo Del Real: You mentioned the balance sheet. You've positioned the company and shareholders very, very well by executing on some pretty strategic financings here recently. Can you speak to some of those partners, and can you speak to what you think they see in Aldebaran?
John Black: Sure, just to start with, we're earning into this project from Sibanye-Stillwater so they're a strong partner for us moving forward. But what I think you're alluding to is that recently we announced that South32 has come in as a strategic investor with a 9.9% equity position in the company. And that provided the funding we needed for this field campaign.
And the endorsement, the technical endorsement, they had an option to invest in a lot of different copper projects. They're telegraphing; they really want copper in South America, and they've chosen our project to move forward. So it's both a technical endorsement, and it's the money we need to go forward.
It's important for our shareholders the way we did this because it's a strategic placement, which means an over-market pricing on it and no warrants. What we're trying to do is manage dilution. These challenging times when we're all beaten up price-wise, we need the cash to go forward, but you hate to dilute by blowing out a lot of cheap paper. This puts us in a good position.
Gerardo Del Real: Managing dilution is so critical because that's how you extract the most profit from the end game, right? The end game for you and your team has always been to monetize the assets. You've done it multiple times in South America. I believe over a half billion dollars a couple of different times, right, with an asset, or assets, frankly, that I think are inferior to the asset that you have now. Let's go back to the resource base. How many pounds of copper do you have there?
John Black: Well, keep in mind, right now we have about 1.4 billion tonnes at about 0.5% copper equivalent on this. Dominantly copper; a little bit of gold associated with it as well. So it's a large resource to already start. That's the starting point. The Radio Zone where we focused a lot of the drilling this last field campaign doesn't even have a resource yet. So we hope early next year we will put out the maiden resource on that center. We really have three centers of mineralization right now with only two of them reporting a resource to date.
And then, the important thing we got this year is that we received the results of a deep looking IP survey. It's new data. We've put a lot of work in the last few years to building up our geologic database, really understanding the system and where we're at. This final piece of the puzzle that came in, or final piece of data that came in, was this deep looking geophysical survey. It's one of the more remarkable correlations between a geophysical anomaly and known mineralization that I've seen. Oftentimes, geophysics produces an anomaly that gives us an idea where the deposit might be but it's not a one-to-one correlation.
This is quite remarkable, and we have the advantage of the large conductivity anomaly that we're defining. We have quite a few holes into it already that are well-mineralized but a big portion of the deposit that's completely untested. It's indicating the deposit wants to get much bigger than we've been able to report to date. And just by circumstances, we had a drill hole going right through the untested part of that anomaly that was cited for geologic reasons, not geophysical reasons.
We received the geophysical data as we were halfway down that hole. It was a great opportunity for us to get confirmation. That hole I mentioned with 1,000 meters of 0.4% is right through the heart of a large, predominantly untested geophysical feature. So we're very excited. A lot of the campaign will be drilling that out and seeing if all of that anomaly is mineralized.
Gerardo Del Real: You talk about the larger resource base but then you're talking about the geophysics and how that geological model is just coming along really, really well. I know privately, we've had conversations, and you've said this publicly as well, that the team is as excited with the data that you have to work with for this upcoming drill program as you have been in quite some time.
John Black: We absolutely are, and it's kind of interesting. A project like this evolves over time. When we first picked the project up, we knew there was a lot of mineralization on the project. What we really started to focus on was trying to find higher grade zones within that mineralization, which are there.
The importance of that is that you have better grades to get started on. Also, if you have sufficient grades, you can consider bulk underground mining on those, and that's really the direction we thought it would go. There's still work to go in that direction but the new change with the additional data, the better understanding we have, the deposit just wants to get really big as well at more of an average grade.
So we're now seeing it opening up in that direction, and we'll probably pursue that. That's attractive to the major companies. They like to put their hands on large, large resources, and we're easily moving this into that category.
Gerardo Del Real: The other thing that's attractive to majors is the San Juan region and Argentina. I remember once upon a time when Argentina was kind of not the best mining jurisdiction. San Juan is on fire right now. Can you speak to that and what it's like over there?
John Black: It's been interesting. I've been working for 30 years in the Cordillera, and Argentina has always been an attractive place to go geologically. Great food.
Gerardo Del Real: And great wine!
John Black: Great wine! It's a fun place that way. It's a relatively safe place for the most part to work but it's been a difficult place for us to work more legally and taxation-wise and fighting inflation that's oftentimes much. We worry about 10% possibly in North America. They've dealt with 50% for forever. It's been one of those countries that draws you in but you're a little nervous about major investments.
They're really changing their tune on this right now. They realize that to get out of the financial complications they have right now, they need to attract foreign investment. Mining is an avenue for them to attract new foreign investment. They've always had agriculture, but now mining and to a lesser degree gas in the south shale oil opportunities. They're realizing that if they change their physical policy on this, they can attract that mining investment.
I think the best way to demonstrate that… it's not just something they're saying… but it's actually something that's resulting in big investments that have happened in our space just in the last little bit. We've seen BHP come in for 5% of Filo for US$100 million. South32 with us. Rio Tinto just announced a technological agreement to work with McEwen Mining, which is just up the road with us. Rio Tinto also purchased large lithium assets in the north. Fortescue is talking about a green hydrogen project in the south that's potentially billions of dollars of investment.
So when we see these large international companies who are generally risk-averse on this coming in — that's a very good sign. Argentina for a long time has been an area where it's more likely to be Chinese companies or companies working a bit more on the margin or government to government. Now, we're seeing the major companies come in and endorse this. So that's music to our ears.
Gerardo Del Real: Those endorsements tend to last for decades, right? And I think that's critical when we're talking about having a big copper-gold project that's copper dominant, that's growing, that has all these new targets, that has an aggressive drill program coming up. I’ve got to believe that you're getting phone calls from several, several majors that are keeping an eye out.
John Black: In our business model, what happens if a major company is doing their homework, they should be monitoring any project that is of that size. They're finding it hard to make the discoveries themselves, and they more than anyone can see the shortage of copper coming up.
They know they need new projects, and they know they need them in areas that they have a good chance to be able to develop them. That's what’s attractive to us. It's logical to assume we have quite a few companies pestering us. Typical pattern is that we go under a confidentiality agreement, and they're allowed to monitor us.
What we're seeing at this point in the market, which is encouraging, is that we're seeing the South32s, the BHPs, the Rio Tintos take these equity placements. As for reasons we discussed, it's advantageous to us right now to minimize dilution. The trick is to do those agreements so that they are helping us but we're not compromised with them on it.
It provides them a little bit of an inside advantage to it but we need to keep the attention up for other competitors down the road. So we put a lot of time into how we structure an agreement like that to make sure that we still have our business model in play to go forward.
Gerardo Del Real: What comes next?
John Black: Next comes… guys go in next week to see how the snow levels are and what the road cutting is going to be like to get in. We'll get in in October. We need to expand the camp a little bit, prepare it a little bit better. Ideally, we'll be drilling by November; results out towards the end of the year.
That new resource update for the Radio Zone, a decision will be made on that by the end of the year. That would be out in Q1 or Q2 of next year; probably Q2 of next year. So off to the races, try to keep the rigs going, get good drillers, and be able to announce some pretty exciting results next year.
Gerardo Del Real: Where's the market cap right now?
John Black: Market cap right now is we're about C$90 to C$100 million, in that range.
Gerardo Del Real: The last couple of assets that you were able to sell, what did those sell for?
John Black: Haquira, the main success we've had to date, that sold for C$650 million in 2010 with parity of the US and Canadian dollars, so that's US$650 million, actually, at that time. Another way to take a look at that is it was about US$0.04 per pound in the ground. And when you look at a basket of all the major copper assets that have been purchased by major companies from companies like ourselves, that's typically about what they sell for.
About 1% of the intrinsic true value depends on the pricing of copper at the time. To put Altar in perspective, we're less than a penny a pound right now and growing. So just having the project valued at what a likely sale price for an asset like this is is a multiple for people coming up. And as we continue to grow the size, that brings even more potentially. The trick is having enough cash to do that, and that's where the agreements like South32 come in and are pretty important for us.
Gerardo Del Real: I think 2023 is setting up to be a pivotal year for the company, a game changing year. I can't wait to see what the drill bit turns up. Anything else to add to that, John?
John Black: No, just that it's a great time to have your hands on a copper asset like this. I know the markets are a little rough. Everybody's a little bit beaten up, and everybody's kind of waiting for that moment when things will take.
It's the same way in the major markets for all of us. You know it's a great opportunity to come in right now, but you want to see it lift off. And my only caution is, in my experience — with the amount of white hair I have, I've been around a few cycles on this — we often see these things, and they often take off much faster than we anticipate. So it's wise to put some chips on the table in the right place right now.
Gerardo Del Real: Well said, John.
John Black: Great.
Gerardo Del Real: Thank you so much.
John Black: Okay, thanks.Click here to see more from Aldebaran Resources