General Base Metals
Barksdale Resources (TSX-V: BRO)(OTC: BRKCF) CEO Rick Trotman on Upcoming Maiden Drill Program at Flagship Sunnyside Copper-Zinc-Lead-Silver Project, Arizona
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Barksdale Resources — Mr. Rick Trotman. Rick, it is great to have you on.
I was joking off-air that I've been looking forward to telling this story for several years, and we talked a bit off-air about why now is finally the right time for it. We'll get into it in just a bit. But first and foremost, how are you today?
Rick Trotman: I'm great. I'm really, really good and thanks for having me on the platform here.
Gerardo Del Real: Well, listen, let's get right into it. Let's talk a bit about your experience and then I want to talk about the assets. I want to talk about the fantastic shareholder base that I think is really critical here moving forward and why you've done well despite a somewhat quiet period as it relates to the flagship.
Then, let's talk catalysts because I think 2023 is going to be a transformational year for Barksdale and the team.
Rick Trotman: Fantastic. Let's jump in.
Gerardo Del Real: Well, tell me a bit about your background. We met once upon a time, I think in, gosh, I don't want to date ourselves here, Rick, but I want to say it was maybe like 2010, if I'm not mistaken. We were on a site visit for another company. So it's been quite some time… and it may have been a few years after that. But we've known each other professionally on and off for a little bit.
When we started talking about Barksdale, we talked about the great assets and how it was really a simple story for us to tell. And the best ones typically are. I think you're perfect to be, kind of, captain of the ship on this. Can you tell us a bit about your background?
Rick Trotman: Yeah, sure. I'm a geologist by background, so I have a master's degree in economic geology. And I spent a number of years working on various gold projects in Nevada as well as in northern Mexico in Sonora. Both of those projects ultimately became operating mines. One is the Mercedes project in Mexico and the other is the South Arturo project in Nevada. Anyway, I spent a number of years doing that.
I ended up moving to New York City and jumped into the world of equity research working for HSBC, kind of, covering all the major gold mining stocks. I was an associate there for an analyst. I was there long enough to meet my wife.
Then, I moved off to Denver, Colorado, and jumped into private equity for a mining-focused fund with a couple of billion dollars of assets under management and spent the next six years investing in the mining space. So put, I don't know, C$300 - C$400 million into the mining space over, I don't know, maybe two, three dozen names. A lot of exploration companies; a lot of gold companies, and a ton of money in molybdenum, ironically.
Then, ultimately, I got a bit tired of that and decided to come back to the corporate world. I made the jump into Barksdale. And the reason I made that jump, Gerardo, was that, when I looked at the Barksdale story back then, being a first-time CEO, I wanted to have something that kind of sold itself, that resonated with investors, that I could share with them one picture, one slide, and put up a deck, and they would understand it. I wouldn't have to be pitching some esoteric geologic concepts in some moose pasture out in the middle of nowhere.
Barksdale, the Sunnyside asset, the Barksdale story, it resonated with me. It was a simple concept, and that's the reason I jumped to it. I mean, obviously, it got way more complicated after that, and it's been five years since I came. But nevertheless, that's the short story on my background.
Gerardo Del Real: You mentioned the Sunnyside project. I want to talk Sunnyside in just a second. But I want to talk about that shareholder base I mentioned and what kind of shareholders Sunnyside and your experience, your background, and your network has attracted because there are some heavy hitters when it comes to some of the shareholders invested here.
Can you share a few of those names — both institutional and long-term — strong, supportive shareholders?
Rick Trotman: Yeah, definitely. Look, I want to say nearly 70% of our stock is held by the top 40 shareholders, more or less. So we're a very tight story; very closely held. A lot of these shareholders have been in the story for a number of years. They're very patient; they're very understanding of how the story is going to develop, how it was going to develop, and they continue to follow on in financings that we do.
So at the top of the list, we've got about 25% corporate ownership. These are the likes of Teck Resources, who is our largest corporate holder with just under 10%. Osisko Development Corp. is in there as well, as well as a company called Tusk, which is a private vehicle that is run by a fellow named Randy Reifel who's behind Chesapeake Gold and a couple of other big stories out there.
Then, on the institutional side, we have another strong holding there; over 20%. These are funds, mostly out of the US, but also Canada, that hold a good chunk of us. So US Global out of Texas has been a long-term supporter of the stock. Same thing, Crescat out of Denver; they're a newer name to the stock. But, still, I consider ‘new’ to be within the past two years, and I think that's when they started accumulating their stock. We've got Medalist Capital out of Toronto, Pathfinder out of Vancouver, Delbrook — a whole bunch of others.
Then, we have a big high net worth presence, as well, so the likes of Eric Sprott and a couple of other mining CEOs that have their markers down here. One has about 9.9% of the stock; others have between a quarter of a million and three-quarters of a million shares. They're best placed and they understand what this thing can do in the future.
Then finally, Gerardo, insiders have about 5%. I've bought about 1.4 million shares since coming on board, mostly through on market purchases and then one exercise of my options. So I'm committed to this. I have a lot of my net worth into the story and will continue to do so as we move it forward.
So a very tight shareholder register. Like I said before, 70% of the stock, roughly, in the hands of the top couple dozen shareholders.
Gerardo Del Real: Well, I'm not a geologist but you are… but I know this much: geology doesn't care about boundary lines or state lines or country lines. Geology is geology. So I want to talk Sunnyside. But it's hard to talk about Sunnyside without talking about Taylor and the system that hosts both Sunnyside and Taylor.
For those that may not be familiar, can you explain what the Taylor deposit is and why that's so critical to Sunnyside moving forward here?
Rick Trotman: Yeah, Taylor is a world-class asset that sits immediately next door to us. It's a carbonate-hosted deposit, and to my knowledge, the largest in the world. But it's basically a polymetallic zinc, lead, silver, copper deposit that a company called South32, which is a major diversified mining company based out of Australia, is pushing towards development.
By pushing towards development, I mean that, before the end of Q2 of this year, they're supposed to make a construction decision. So they've been actively spending on this project for a number of years; essentially since 2018 when they bought it for C$2.1 billion in cash. They’ve put several hundred million into it. And they have a US$1.7 billion capital estimate for the construction of this mine. It'll be a very large producer of lead, zinc, and silver. I think it's a top-ten undeveloped silver asset in the world, as well as a top-ten undeveloped lead-zinc asset in the world. So it's a monster.
Gerardo, this deposit, as you said, it does not understand where property boundaries are drawn at the surface. This thing extends onto our ground. We have a piece of it. We've been permitting for a number of years to figure out exactly how much of this monster is on our ground.
We're almost at the end of that permitting process and should begin drilling here in the next couple of months. So only time will tell how much of this monster we have on our side and what the quality is. But starting with the knowledge that a world-class asset ends at the property boundary is a hell of a spot, I would have to say.
Gerardo Del Real: I want to make sure for context that everybody understands that Sunnyside, there are some holes from the '80s that already give you an indication of the grades that you're going to encounter. Now, we don't know the scale yet; we don't know how big the system is.
Like you said, you don't know how much of it is on your side but we know that the few sniffs historically that Asarco had from the '80s were pretty significant hits. I'm talking 17 meters of 17.2% zinc and lead with 1.3% copper, 337 grams per tonne silver. There was a 38-meter hit of 15% zinc and lead with 0.2% copper and 229 grams per tonne silver.
So how big the system is… that's the million-dollar question that the drill bit is going to answer. How fertile that system is? I think we have a pretty damn good indication that it's pretty dang fertile, right? Am I accurate in that assessment? That's my technical assessment, by the way!
Rick Trotman: Yeah, look, our view is that, as you get closer to the heat source to this whole project, you're going to see better continuity of grades and you're going to see the potential for high-grade mineralization.
If these intercepts are pointing us towards what high-grade looks like, I think we could have a lot of it. So that's the goal at the end of the road, Gerardo, is to drill more intercepts like this and put together a trend of mineralization that looks like it's really high grade.
To give you context, those grades you were talking about are at least double what the grades are in the resource next door, which averages about 8% combined lead-zinc and 80 grams per tonne silver. So our goal is to find those high grades and show how much of them we have on our side of the fence.
Gerardo Del Real: I want to touch on it one more time. What was Taylor bought for?
Rick Trotman: C$2.1 billion.
Gerardo Del Real: And what's the Barksdale market cap today?
Rick Trotman: Oh, I think today we're trading in the C$50 million range.
Gerardo Del Real: Again, we don't know how big the system is but you have a lot of runway between where you're at and where Taylor is, right?
Rick Trotman: Exactly, yeah. And Taylor is not even the only name of the game here. We've got the potential for another scarn system on our property, an extension of a new discovery called Peak that's on the Taylor Hermosa project.
Just to the south of the Taylor deposit, South32 is encountering some significant intercepts of a copper-dominant system, kind of 7% copper, 4% copper over some pretty juicy widths. Again, that system is right on the edge of our property boundary.
So we're not a one trick phony. We have multiple targets on the same property and multiple avenues to create high grade... or sorry, not ‘create’… I think the better word is to ‘find’ high-grade resources, all next to a project that is ultimately going to go into production, touch wood.
Gerardo Del Real: You have multiple projects in the portfolio. For the sake of this conversation, I want to just focus on the flagship, which, of course, is Sunnyside. And the reason I want to do that is you've waited years to get to this point, Rick, where you're finally going to be able to test how much of the system you have.
When do you anticipate seeing a drill bit turning? I know that you just hit a major milestone here recently that was pivotal. I, for one, cannot wait to see what Mother Nature left on your side of this boundary line. When is that going to start happening?
Rick Trotman: Yeah, the Forest Service is supposed to be done with their process. It's either going to be the end of April or the end of May. Give a couple of weeks between the end of their process and when we can put a drill on the ground. So I would say that's going to be, kind of, end of May or end of June — one of the two.
The reason for the gap there is they have a 30-day extension that they have under their belt as far as this permitting process is concerned. So we should know here soon whether or not they're going to use that extension. But nevertheless, Gerardo, it's coming up and it's coming up quick.
Gerardo Del Real: Fully-funded drill program, I imagine?
Rick Trotman: Yeah, so look, once we turn the drills on, we're not going to turn them off. So from that standpoint, we're not fully funded but we do have about C$6 million on the balance sheet right now, which is more than enough to get going to get the drills turning, and get some of these big intercepts.
So we have no funding pressure as of yet and we'll fund when it makes sense, hopefully, a couple of months down the road when we have some big massive sulfide hits.
Gerardo Del Real: You said you're not turning the drill bits off. That doesn't sound like a CEO that's preparing for some dusters. Rick, I'm excited for you and the team. I'm excited to help tell the story. I'm really looking forward to what I think is going to be a breakout year in the copper and gold space and a breakout year for Barksdale.
It was great having you on. I appreciate the update. Looking forward to having you back. Anything you want to add to that?
Rick Trotman: No, look, I think we’ve covered it. It's going to get exciting from here. We have a little bit of a wait. Then, hopefully, we have the drills turning and a lot of success that we can deliver back to our shareholders.
Gerardo Del Real: Position accordingly, everybody. Rick, a pleasure, as always. Thank you, sir.
Rick Trotman: Thank you, Gerardo.
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