General Precious Metals
Almaden Minerals (TSX: AMM) Chairman Duane Poliquin on Resumption of Exploration at the Ixtaca Gold-Silver Project in Mexico
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Chairman of Almaden Minerals (TSX: AMM)(NYSE: AAU), Mr. Duane Poliquin. Duane, how are you, sir? It's been a bit since we chatted.
Duane Poliquin: That's right. I'm well, thank you, I'm very well. Nice to talk to you again.
Gerardo Del Real: It's great to catch up. It's been a couple of busy weeks for Almaden. I know it's been a busy year, but the perception from the market was that while the permit decision and review stalled, that there wasn't much going on. Then of course, we had some really important news recently that I discussed with Doug McDonald, the VP of Corporate Development, where SEMARNAT now has the ball in their court, per se. We're hoping, obviously, that the review of the permit has picked back up and that sometime in October we get a favorable decision there.
You had some news today that made my heart smile, because I've been to the property. You announced exploration plans at the Ixtaca property. For people not familiar with the property, can you provide a bit of context as to how the discovery was made? Because you know from private conversations that I believe there's several discoveries left to be made.
Duane Poliquin: Right. The whole discovery was a really good bit of sleuthing by Morgan Poliquin. The discovery outcrop, it was from alteration and a whole bunch of good geological sleuthing. The outcrop of the Ixtaca deposit is not much bigger than your dining room table and found on the side of a creek. The reason this is still there, Gerardo, and not have tunnels through it, et cetera, is because Popocatepetl, a volcano to the west, spits out ash all the time and there's a layer of ash draped over everything.
Once in a while on the side of a creek bed or something, you'll see a bit of it. The whole property is generally covered with ash. There's bits and pieces sticking out here and there that you got to find. We made the Ixtaca discovery, as Doug described in his talk. Then when the market got bad there for gold and precious metals in, what was it, 2011 or so, we had to make a decision because money was limited.
We decided to focus on the main deposit and bring it along to feasibility study and so on so that it could be a mine. We knew there was enough there to demonstrate a feasible mining operation. So the exploration fell by the wayside. There's lots of exciting targets left on the property. Some of them will be covered targets by the ashes I mentioned, and some here and there, like to the west, we found this Tano Zone. We got some pretty good initial drill intercepts out there. We think there's lots of targets left and some very exciting ones, really.
Gerardo Del Real: Again, let me be clear, I've said for a long time that I believe Almaden is a clear takeout target. I think the equal exposure to silver and gold is going to be attractive to a lot of potential suitors. I do believe that the permitting delay probably inspired and motivated potential suitors to sit back and watch.
Now with what I believe is an imminent decision and exploration ramping back up, average annual production of what's already there if you never discover another ounce of gold or silver, you would average, I believe, over 7 million ounces of silver per year and 108,500 ounces of gold over the first 6 years. The after-tax IRR is 42%. The after-tax NPV is $310 million US using a 5% discount rate. Again, that's using base case prices of $1,275 gold and $17 an ounce silver. We're a long ways from that right now.
Can you explain to me what the exploration process is going to look like and where the focus will be here in the next several weeks and months?
Duane Poliquin: First off, we're going to have to dust off all the data that we had gathered before we decided to focus on developing the Ixtaca deposit itself. We've got little bits of geochem that are sneaking out from under that ash cover and a few little outcrops here and there, and some huge alteration zones, one in particular to the southeast of the Ixtaca deposit. First, we'll gather up all the old information, review it and prioritize targets. Then we'll get started on field work of actually boots on the ground, banging on rocks and taking samples and trying to expand those, and maybe some geophysics and then refine the targets and get back to drilling.
Gerardo Del Real: It's exciting to me, Duane, because I know that boots on the ground exploration is what the Poliquins, Morgan, yourself and the team there does best. That's your knitting. You've been very clear in the past that the discovery was great, developing the project to a feasibility study level is excellent. But at the end of the day, I know that what's near and dear to the Poliquin's family heart is exploration. Is that accurate?
Duane Poliquin: Yeah, spot on. It is exciting finding things. This project, the land area that we have in the claim block is large enough to have a district. In previous or other camps, it would be several companies within that land block, different claim holdings smaller than what we have. Yeah, it's very exciting to have the whole thing and to get out and start looking around in there, because like you mentioned earlier, the districts aren't usually just one deposit.
Gerardo Del Real: I know this is a project the community largely supports, especially the immediate community. There's a water reservoir that the construction of would provide consistent and permanent long-term water for the residents. I also know that the employment stimulus is significant for the local community. Can you give us a bit of a background as to the relations there and where things stand now?
Duane Poliquin: Yeah, the local communities in the impact area are very friendly to us. We started out and we hired people and employed people and treated them with respect and trained them. We trained up drillers to a high skill level and they were just excellent workers. So we hired a bunch to do work like that and we have had community relations. We have a permanent booth in the town where anybody can come in and ask questions and get demonstrated what we're going to do. We've taken more than 500 people on tours of mines, actual mines. We have very good relations with a number of mining companies who kindly let us come and see active operations and let the people come there and look at it and understand it and visit with people in the town and see what it's like living next to a mine or working at a mine and so on. So they got very comfortable with the whole idea. That level of trust has built and we have very good support in the village, both villages.
Gerardo Del Real: Duane, I suspect some of those mining companies that were kind enough to let you tour their properties have likely toured yours and maybe looking to write a check sooner rather than later in this precious metals environment. I know you're not one to speculate, so I will do the speculating for you. Is there anything else that you'd like to say?
Duane Poliquin: One of the targets to me is quite exciting. Who knows till you get the drill in them, which is going to be the premier one, but this is a intermediate sulfidation system. One of the characteristics of them is a high content of silver and they also go to considerably more depths than low sulfidation system. Without going too technical on you, the stockwork zone, we have an almost perfectly preserved system. Near surface, you get sinters and where maybe hot springs, where it reached the surface and silicified twigs and everything and you get a funny silicic texture. Then below that you get the stockwork zone, which we have, which is the main Ixtaca deposit.
But the feeder zone to that, Gerardo, that can be the main event and that's where you might expect bonanza grades and everything. We have some sniffs of that. We have one hole down below the feasibility study envelope. It was 28 meters of 5.6 grams per tonne gold and the silver was a bit low in that it was 20 grams per tonne. But the next one might be a lot more. Those things, that could still be the main event, but we got to go drill it and see.
Gerardo Del Real: Just to be clear, that potential main event at depth underneath the pit hasn't been tested in any significant way. Correct?
Duane Poliquin: That's correct. There's a hole I had quoted you. There's a few holes, but there's lots of depth potential yet to go.
Gerardo Del Real: You own your own drills still?
Duane Poliquin: Almadex owns the drills, but Almadex and Almaden are pretty good friends.
Gerardo Del Real: Well said. Duane, I'm excited for the rest of the year. Let's see if Almaden makes it without a suitor wanting to write a check. I hope it does, frankly, because I think there's a lot more to discover. But at the end of the day, I know that you and Morgan and the team always have shareholder interests at heart. We'll see how that plays out. But yeah, good place to be in versus 6 months ago. Right?
Duane Poliquin: Absolutely. Yeah, we do want to get the best for our shareholders, no matter which way that evolves being. We've had some very loyal shareholders, and we really want to see them profit from this.
Gerardo Del Real: Exciting times, Duane. Thank you so much.
Duane Poliquin: Okay. Thanks, Gerardo.