Categories: Precious Metals
Topics: Gold Stocks

Kingsmen Resources (TSX-V: KNG)(OTC: KNGRF) CEO Scott Emerson on New High-Grade Leona Discovery and Upcoming Drill Catalysts at Flagship Las Coloradas Silver-Gold Project in Parral, Mexico

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Kingsmen Resources (TSX-V: KNG)(OTC: KNGRF), Mr. Scott Emerson. Scott, it was great to see you in New Orleans. It was great to catch up. It was great to get news last week that you have yet another discovery on your hands, this time at the new Leona Zone on Soledad II.

This is a new structure. You drilled 566 grams per tonne silver equivalent, 348 grams per tonne of that was just silver, and 0.42 grams per tonne gold over 2.52 meters, including 899 grams per tonne silver equivalent, 532 grams per tonne silver there, and 0.67 grams per tonne gold over 1.25 meters.

Happy shareholder here. Your market cap is sub-C$30 million right now. Half of that is backed by cash. You have two precious metals districts. And now it starts getting really exciting because you’re starting to step out and the mineralization continues. 

And we have assays coming up here soon that I think have the potential to be a game changer at the Saddle target. But first and foremost, how are you… and thoughts on the new Leona Zone?

Scott Emerson: Yes, it was good to see you in New Orleans, Gerardo. I’d say it was a very well-attended conference. There were a lot of speakers and obviously a lot of companies there. I’m a bit biased because what you just indicated was probably one of our best holes to date on Las Coloradas.

But more so for your listeners, we have three structures. We have the original structure, which is called Soledad, and then we have what’s called Soledad II. That’s where these numbers are from. 

And again, for your listeners, the old mine — because I always use the adage, the best place to find a mine is where there was once one — was on the Soledad structure. And that was around 300 meters in length and 150 meters deep.

We stepped out and went to the Soledad II structure, which had never been drilled before. We have now traced it over 100 meters. We drilled down to a depth of 156 meters. But what we’re seeing, and what you just indicated when you started this discussion, is that this is all shallow mineralization. So we’re hitting mineralization at 56 meters deep.

So again, we’re super excited. Lots of drilling to do, and lots of drilling ongoing. As you know, we are awaiting assays… and we’re thinking that 100 meters could potentially go to 200, 300, 400 meters. And that’s what we’re going to be doing over the course of the next six months or eight months. We’re going to be continuously drilling.

And something that was asked of me in New Orleans, Gerardo, was, “Oh, Scott, are you going to do a Phase I and a Phase II and a Phase III?” We don’t have our program laid out that way. Our program is laid out such that we’re going to hit all of those targets that we identified at Las Coloradas, and then we’re going to move to our second project, which I know we don’t talk a lot about, which is Almoloya.

But we’ll be doing that in the new year because right now everybody’s attention and focus is — as I say, the eye is on the prize — Las Coloradas.

Gerardo Del Real: Well, listen, Las Coloradas now is going to begin answering the questions. We knew it was past-producing. We knew the past grades, obviously, if they held up, would absolutely hold up in today’s silver environment, even with silver at $50/oz.

But I think the real question that speculators have, and that I still have, is whether or not we have meaningful scale and meaningful continuity. We’re starting to get the answer on the continuity side. 

The step-outs will materially improve our understanding of that. But the significant step-outs from the Saddle target, if we’re able to demonstrate mineralization there that’s potentially economic, then I think it’s a whole new ballgame and it becomes a game changer. When are we expecting results from Saddle?

Scott Emerson: I think we’ll begin to see those results within the next two and a half weeks. That’s kind of where the lab is at right now. So they’re going to be out this month, and there’ll be more.

So again, for the people who have been patient… and I think that’s the key word here because that’s really where the reward is… the people that are patient and are allowing us to do the work that we need to do to show that district size and scale on both our projects.

And I guess the benefit in terms of Kingsmen is the fact that we have the funding, we have the capital. We’re going to be at just a little over C$14 million here in the middle of November. And I say that because we have warrants that are due, and they’re coming in every day. And Gerardo, you are part of those warrants, but they’re being exercised every day. And that’s, again, increasing our capital.

And we’ll be in a really good position, and we won’t be looking to go back to the market anytime soon. And I think that was probably the number one question that I had in New Orleans, was just about capital and financing and what’s required.

But in Kingsmen’s case, we’re going to have a little over 35.5 million shares outstanding with C$14 million in cash. So we have a good three years of basically exploration to do here.

Gerardo Del Real: When do we start getting a peek? And you may be already doing this, but metallurgy is going to be important. We know it’s a past-producing district. We know that the old-timers were able to extract meaningful silver and byproduct credits from this district.

But obviously, now that you’re starting to prove that scale and you’re starting to prove the continuity, despite the fact that it’s early, me as a shareholder, I would love to see metallurgical tests that give more confidence that, if we do have the scale that I think we have here, that we’re going to be able to recover reasonable amounts. Are you looking into metallurgy?

Scott Emerson: We are looking into metallurgy, but how I’ll answer that right now is if you look at what GoGold is doing at their tailings facility — copper, lead, zinc, gold — if you look at what Los Gatos, which is First Majestic, is doing — silver, copper, lead, zinc, gold — we’re pretty confident that we’re seeing the same type of metallurgy as what they’re seeing since we’re in the same district and we know what was produced in the past.

And we know that GoGold’s tailings processing came in part from Las Coloradas and also the La Prieta Mine. There’s a mixture of tailings that were dropped there in that community of Parral itself, or just outside of Parral. So hopefully that answers your question, but yes, Gerardo, that’s going to be part of the equation, but not yet.

Gerardo Del Real: Excellent. Last question. How far into the drill program are you? Last time we chatted, I believe you were on hole 22, if I’m not mistaken. I know we’re waiting on a significant amount of assays, but my understanding is that you’ll continue to drill until mid-December.

Scott Emerson: That’s correct. And right now, we’re on hole 24, and I can tell you we’re 230 meters deep. This is going to be one of our deepest holes that we’ve drilled on the project. And that hole will be wrapped up here probably by Monday or Tuesday, based on the reports I’m receiving.

And as you’ve mentioned, we’re going to continue to drill right up until Christmas break, which is typically the first week of December. But then don’t forget, we still have to log all of that core and then cut and ship it. So there’ll be a lot of samples going into the lab before the end of the year.

Gerardo Del Real: Excellent. Scott, exciting times. I know we’re in the midst of tax-loss selling season. I know with the warrant exercise, you’ve kind of had a double whammy. And then you got the holy trinity of a pullback in the gold and the silver space.

I think clearly, we’re going to come out of tax-loss selling here in the next month or so. That’ll take care of itself. The warrants that are left are few and far between, and those expire here in the next two weeks. So that takes care of two out of three things.

And I’ve said it before, if gold stays at $4,000/oz or around this level and silver stays at $50/oz and never goes up another dollar, we’re going to be in good shape. I’m really excited for the rest of the assays. I’m excited that the drill bit keeps turning. And we’ll talk Almoloya as we get closer to that. But I think you’re getting zero credit for that… and I think that’s a mistake… but we’ll let time answer that question.

Scott, anything to add to that?

Scott Emerson: No, just thanks for having me on and let’s keep drilling. And I’ll close with this: Stay tuned because we know that the drill bit is what drives value. So that’s how I’m going to leave it.

Gerardo Del Real: Well said. Scott, thank you so much. Appreciate the time as always.

Scott Emerson: Thanks, Gerardo.

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