General Precious Metals
Anacortes Mining (TSX-V: XYZ)(OTCPINK: XYZFF) CEO Jim Currie on Drilling Out the Multi-Million Ounce High-Grade Tres Cruces Gold Project in Peru
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Anacortes Mining — Mr. Jim Currie. Jim, it's a pleasure having you on. How are you today, sir?
Jim Currie: I'm well, thanks, Gerardo. Thanks for having me.
Gerardo Del Real: Listen, I will be very honest. I am not a huge fan of the Zoom calls so I try my best to avoid as many as possible. However, when you reached out, and then we chatted a bit, we went back and forth, and you told me that you were onto what you believe will be the exploration story of 2022, I said, well, that sounds like a Zoom meeting worth taking!
I'm glad that we were able to do that. I'm glad we were able to talk about the Tres Cruces Project and why you believe Anacortes is going to be the story of 2022 in the gold space. Listen, the bottom line is you already have an asset that is high-grade. You have nearly 2.5 million ounces in the Indicated category grading 1.65 grams per tonne gold. You have a high-grade leachable gold starter asset within that, and you believe the meat on the bone is really going to be the exploration upside.
There's a lot there to like. Let me start by allowing you to provide a brief intro to yourself because you have, obviously, over 40 years of experience… seen a lot of cycles. Can you tell people a bit about yourself and your background, Jim?
Jim Currie: Sure. Yeah, no problem. I'm a mining engineer, and as you correctly pointed out, I've been in the business for over 40 years. I've built and operated mines all over the world in a number of different countries.
Over most of the past 20 years, I've been in the mid-tier sector working, variously, for First Quantum Minerals; worked for them in Mauritania. I was the VP Ops at Miramar Mining, which we sold to Newmont for US$1.5 billion. New Gold, I was the founding VP Ops and ultimately COO there. Pretivm, built the Brucejack Project for them. And then most recently, I was at Equinox where I was the COO. So yes, I've got a lot of experience and I tend to attract a pretty good team around me.
Gerardo Del Real: Excellent! Let's speak to that team a bit. You mentioned the history of serial success, which is what you're looking to apply to Tres Cruces, the project here for Anacortes, the flagship. Can you talk a bit about the team that you've been able to put together?
Jim Currie: Yes. When you put these teams together — and especially when you're in a foreign country — you need a couple of things. The first thing you need is a good country manager, and we have that, and the fellow's name is Steve Botts. Steve's an American national who's lived in Peru for many, many years; used to work at Antamina where he headed up their permitting and social and community end of things. And more recently was with Tahoe Peru before they got taken over by Pan American. So that's certainly one leg on the stool… you’ve got to have a good country manager.
Second thing is you need a good metallurgist. And we just recently hired a guy named Mike Samuels who I've known for many, many years. One of the best gold metallurgists on the planet.
And then, the third leg of the stool is you’ve got to have good exploration guys. And so, to start, we've retained an American explorationist who worked at Antamina for a number of years — a fellow named Eric Lipten. And Eric is going to lead our exploration efforts. Plus, we've got guys who have actually worked on the Tres Cruces property before they joined us. So I think we've got a pretty good team there.
Gerardo Del Real: Let's talk about the Tres Cruces property. It is one of the highest grade oxide deposits, globally, at 1.37 grams per tonne gold. I mentioned that 630,000 ounces of high-grade leachable gold are within that 2.474 million ounce resource. There's also another 100,000-plus ounces in the Inferred category.
And you mentioned the exploration upside is really what gets you excited about it. Tell me a bit about the project. And then, let's talk about how we're going to unlock that exploration upside here in 2022 because I suspect that's where the market will really, really start paying attention to the story.
Jim Currie: Sure. Well, this is a project that Barrick had under option for a number of years. And I think they were looking at it as additional feedstock for their Lagunas Norte project that they had, which is only 10 kilometers away. And most of the holes were only drilled to about 200 meters.
And they did drill off this oxide resource, which, as you point out, is the 630,000 ounces. That didn't really move to radar very much for Barrick because they were mining about a million ounces a year at Lagunas Norte. So they just kept it under option. They had a cheap option price of US$250,000 per year. So when Barrick decided to sell the project after they'd run out of their oxide resources, they decided to turn the option back to the company called New Oroperu Resources. And then, we were able to acquire the project. So it worked very well for us.
What we really liked, though, is when we saw some of these deeper drill holes, we saw many holes that ended in mineralization, and good grade mineralization. So for example, hole number RTC-255, that was 250 meters of 2.95 grams per tonne. That's a world-class hole, and the bottom of that hole ended in very high-grade mineralization.
There's another hole there that ended up with 66 meters of 4 grams per tonne. So we see the sulfides in this as being the real exploration potential. And we truly believe there's over 10 million ounces there. It's just a big, big zone. And when you have these long intercepts of continually mineralized core and reverse circulation cuttings — you really know you’ve got a tiger by the tail!
Gerardo Del Real: You mentioned that hole RTC-255. And let me repeat that for everyone in case they didn't catch it. You assayed 228 meters of 2.95 grams per tonne gold. It ended in mineralization. And I think it's important to point out that it was from 37 meters, if I'm not mistaken, correct?
Jim Currie: Yeah, there's a rhyolite cap on top of this, and it's a pre-mineral rhyolite cap. So some of it is actually mineralized but the rest of it is just a thin skim of bare mineralization there. And then, you get right into the gold at the bottom of the rhyolite cap.
And the cool thing about this property is there's actually a lot of the property that's covered by thicker zones of this rhyolite and then, on top of that, post-mineral andesite rock. And so the surface has really just been barely scratched on this project.
Gerardo Del Real: Two and a half million gold ounces. There's a silver component that hasn't been included in previous resource estimates, if I'm not mistaken. Obviously, you believe that there's enough here now to be able to start looking at working economic studies into this. I know there’s a PEA that you already have some inputs for and that you're working on. Obviously, you're going to be drilling this thing out all of 2022.
What's the share structure look like because, if I'm not mistaken, I believe you have roughly C$13 million or so in cash and equivalents. And I believe your market cap is just a tad bit underneath C$60 million the last time that I looked.
So if you never discover another ounce of gold, just with the two and a half million ounces that are there now, you can make a pretty compelling case that you're undervalued relative to your peers and relative to the low CapEx to put this thing into production, which you, of course, have a history of being able to do.
But then, when you throw out that exploration upside — and you mentioned that you believe there could be up to 10 million ounces of gold, easily, on this property — that's the runway, right? Walk me through the share structure a little bit, Jim.
Jim Currie: So we've got 42.3 million shares out there. Management owns about 11% of the company; Pan American Silver owns 11% of the company; institutional owns about 40% of the company. So it's tight but there's still enough liquidity out there that there's, obviously, opportunity for people to buy into the stock. But we believe that as we deliver on our execution plan, the share price has nowhere to go but up and for good reason.
On the economic side, we're looking at a PEA which will produce 80,000 ounces per year. It's because of its high-grade and high recovery. We don't have the final numbers yet but it's inconceivable that the all-in sustaining cost per ounce is going to be over a thousand bucks per ounce. And it'll probably be less than that.
But just simple math… if you look at a gold sales price of US$1,700 an ounce and all-in sustaining costs of US$1,000 an ounce, that's US$56 million a year in cash flow before taxes. That will well fund us to really unlock the deep potential on this and look at other projects because our desire here is to build another mid-tier gold producer ultimately producing 200,000 to 300,000 ounces a year.
So the cash flow from the oxide project at Tres Cruces is really going to set us up well to unlock the deep value of this thing and proceed with other activities.
Gerardo Del Real: You mentioned the PEA. When is that anticipated?
Jim Currie: We're well along with it right now. My guys are in Tucson meeting with the engineering team. We're hoping to have this out of the gate by the end of February and, at the very latest, the first week of March.
Gerardo Del Real: You also just submitted your FTA application to commence drilling on Tres Cruces. You actually did that this morning. You are well-funded. You have what looks like to me a very, very clear vision to getting this two and a half million gold ounce resource closer to the 10 million ounce resource than the two and a half that exists now.
How do you plan on doing that, Jim?
Jim Currie: Well, we're going to drill the hell out of it! So this first drill program is going to be a combination of deep drilling and then also some infill drilling and metallurgical drilling for our upcoming feasibility study, which we'll launch on the back of our PEA that's coming out here in a few weeks.
With this FTA process, we're able to fast-track a permit for our exploration drilling. The Phase-2 drilling, which will be done later this year, will be more about drilling more deep holes and exploring other areas of the property that have not been explored to-date.
So that takes a little bit longer to do because the Peruvian permitting system is very comprehensive. And for a Latin American country, I’ve got to say, they're very scientific about how they go about things. They don't allow you to take shortcuts, and I actually like that. So the next program takes a little bit longer to permit but it'll be a much bigger program.
Gerardo Del Real: We have the PEA to look forward to. We have the drilling to look forward to. You have an excellent share structure. You're well-financed. You're in one of the world's most prolific mining belts. You mentioned being kilometers from Lagunas Norte; that's 14 million ounces of gold there. I could continue there. How is the infrastructure for Tres Cruces?
Jim Currie: Yeah, the infrastructure is very good. We've got a power line that goes through the area. We've got a paved road that comes from the port city of Trujillo 20 kilometers away. Trujillo is a major supply center in northern Peru. We've got a very well-trained workforce. You not only have the Lagunas Norte operation — which used to be run by Barrick and the people were trained very well — but Pan American has two operations in the near vicinity. They've got their La Arena and their Shahuindo; both gold mines.
So very well-trained workforce in the area. Lots of the operators up there like the Caterpillar dealer and others are well-established in the area. So you really couldn't ask for better infrastructure.
Gerardo Del Real: Jim, 2022 sounds like an exciting one for the company. I am looking forward to following the story. I'm looking forward to having you back on. Thank you so much for the introduction to our audience. I think it's going to be one of the most exciting stories of 2022. Anything to add to that?
Jim Currie: This is going to be the gold story of the year, pal. I truly believe this. And I'll leave your listeners with this; hole 255, that's 228 meters; in imperial units that's 752 [feet]. The discovery hole at Barrick's Goldstrike deposit was only 600 feet, and they discovered 44 million ounces at Goldstrike.
So we're looking forward to really big things coming up here in 2022.
Gerardo Del Real: I am looking forward to it, Jim. Thanks again for your time, sir.
Jim Currie: Okay, thank you, Gerardo. Take care.