General Precious Metals
Anacortes Mining (TSX-V: XYZ)(OTCQB: XYZFF) CEO Jim Currie on Release of Positive First-Pass PEA on High-Grade Tres Cruces Gold Project, Peru
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Anacortes Mining — Mr. Jim Currie. Jim, great to have you back on. It's been a good couple of weeks.
Jim Currie: Thanks, Gerardo.
Gerardo Del Real: How are you?
Jim Currie: Yeah, thanks very much. I'm well, thanks. How are you today?
Gerardo Del Real: Excellent… thank you for asking. I mentioned that it's been a good couple of weeks. The stock has done well given the macro backdrop for precious metals, which we talked a bit off air, and I mentioned to you that I think we're in for a heck of a 2022!
You're a newly-listed company but this asset — the Tres Cruces Project — is absolutely already delivering with the results from this morning's PEA. I would love for you to provide some context. And then, I have a few questions for you.
Jim Currie: Sure, no problem. Yeah, this is a project that has a very high-grade oxide cap on it. And this is what the PEA is based on… is heap leaching of this oxide cap. We're going to produce at about an average of 68,000 ounces a year annually for seven years. Initial capital cost will be about US$125 million, and our NPV after-tax at a 5% discount rate is going to be US$165.9 million.
It's a very robust project. Our all-in sustaining costs are going to be about US$786 per ounce. It definitely falls in the lower portion of cost-per-ounce for properties that are being developed right now. So, yeah, we're very excited about it!
Gerardo Del Real: Well, I'm no mathematician but I know the difference between US$786 and where gold currently is, which is right at that US$2,000 level. Sounds like a very, very profitable project. The after-tax IRR is 33%. I should note, I believe that's using US$1,700 gold. Is that correct?
Jim Currie: That's correct. I mean, we wanted to be a bit conservative. We floated our pits at US$1,500. We did the gold price at US$1,700. But yeah, you start looking at the sensitivity and, gosh, at current prices — this thing's a barnburner!
Gerardo Del Real: This does not include any portion of the sulfide gold resource, right? That's another 1.8 million ounces. It's not inconsequential. You and I spoke a few weeks ago, and you said you believe there's the potential for five, seven, maybe even 10 million gold ounces on this project. Walk me through how you unlock that kind of upside.
Jim Currie: Well, you know, Barrick, when they were drilling this thing off, they were really only looking for oxides to supplement the feed at their Lagunas Norte oxide operation, which is 10 kilometers away. So they ended a lot of their holes in mineralization. Once they got through the oxides, comfortably through the oxides, and they hit the sulfides — they just turned these holes off.
Some of these holes… they were spectacular holes that ended in mineralization; sulfide mineralization. The hole that I like to point to is RTC255, which was 228 meters of 2.95 grams per tonne. For your American listeners, that's 750 feet. And just to put it into perspective, the discovery hole at Barrick's Goldstrike deposit was only 600 feet. So, I mean, it speaks to a really, really intense and productive system.
Gerardo Del Real: Looking forward to a busy, busy 2022. You've told me privately… and you've said it publicly as well, so I don't think I'm overstepping here… but you've told me privately that you believe this will be ‘The Gold Exploration Story!’ It also looks like it already is off to a great head start as far as being a very profitable mining company. Jim, anything to add to that?
Jim Currie: No, I just ask everybody to stay tuned. All we're doing is executing on what we promised when we started this thing off in October of last year. This is a project that hasn't really seen the light of day for 17 or 18 years, and we were lucky to be able to acquire it.
We're really excited by the results of the PEA but we're even more excited by the prospect of the drilling that we're going to be doing starting in April. So, yeah, I just ask you and your listeners to stay tuned because I believe the best is yet to come. And, yes, I do believe we are going to be ‘The Gold Exploration Story of 2022!’
Gerardo Del Real: Well, listen, it's already undervalued as is. You have a current market cap of just under C$70 million. The US$165.9 million net present value after tax… that's in US dollars and that's using US$1,700 gold… let's just round up and say C$200 million. Quite a disconnect between the C$70 million and the C$200 million. And that doesn't factor in the 1.8 million ounce sulfide resource or the exploration upside. So… should be an exciting one… especially if gold keeps behaving!
Jim Currie: I think so! Yeah, we're really excited about it and we're looking forward to what's ahead of us.
Gerardo Del Real: Wonderful! Looking forward to having you back, Jim. Thank you for your time.
Jim Currie: Thanks, Gerardo. Always a pleasure speaking with you.