Outcrop Silver & Gold (TSX-V: OCG)(OTC: OCGSF) CEO Joe Hebert on Advancing the Flagship High-Grade Santa Ana Gold-Silver Project in Tolima, Colombia

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Outcrop Silver & Gold — Mr. Joe Hebert. Joe, welcome to the program. Nice to have you on. How are you, sir?

Joe Hebert: I'm very well, thank you, and it's a privilege to be here with you.

Gerardo Del Real: I think your timing is phenomenal. We spoke a bit off air. I think we're in for a heck of a run in the precious metals space. You have yourself one of the most exciting exploration projects in Colombia — the Santa Ana project. And I want to talk about the silver-gold vein system, which stretches for over 60 kilometers. 

But before we get into that, I would love for you to share your background a bit and a bit about the team that you've managed to put in place.

Joe Hebert: I've had 31 years in almost all aspects of economic geology. I've been involved in probably six discovery mine cycles, fortunately. And we've been able to put together a great team in Colombia over the last few years. Good, strong VP of exploration with experience in the vein systems like Santa Ana. A strong country manager and all of the support we need to do good social license and fast permitting and continuous programs.

Gerardo Del Real: You have Ian Slater as executive chairman, which, of course, he brings, I think, over a decade of experience in Colombia. And then, you mentioned your country manager. And I want to touch on that and your VP of exploration because I think those are critical positions, especially when you're working in South America where community relations are so important and it's so important to get it right. 

Once you do get it right, things get a lot easier to move forward as it relates to exploration and permits and concessions and, eventually, possibly building a mine. But we both know that if you do it incorrectly, it's pretty consequential, right?

Joe Hebert: Yeah, we can demonstrate our ability to do good social license and good ESG by the fact that, within two months of the transaction closing on Santa Ana, we had a couple of drill rigs turning. We've managed to incorporate a large part of the community in both social benefit programs and, importantly, to the residents of Falan — our nearby community. We have about 80% of our workforce directly from that area, and everyone is Colombian.

Gerardo Del Real: Let's talk about the Santa Ana project. It's 100%-owned. It's over 36,000 hectares. I mentioned the fact that you have over 60 kilometers of silver-gold veins. And look, you've drilled quite a bit on this project and have had some spectacular intercepts. 

Tell me about the Santa Ana project, and then let's talk about what the rest of the year looks like because you have some milestones coming up that are going to be pretty important as it relates to the rerating of the stock, which, I believe, obviously, in a perfect world, rerates to the upside, right?

Joe Hebert: Right, sure. Well, Santa Ana really is a high-quality, high-grade discovery; probably one of the highest-grade silver discoveries, certainly in Colombia, and probably a good part of Latin America. It's in a very low-risk jurisdiction of Colombia where projects do move forward with both permitting and permitting for the mine stage. And we'll be moving the discovery to the next stage by publishing a robust maiden compliant resource in 2022.

Gerardo Del Real: Tell me about the approach to drilling this year. I mentioned that you've drilled quite a bit. I mentioned that you've hit some phenomenal intercepts. You mentioned in your presentation that the weighted average rate of 110 of 183 drill holes is 1,380 grams per tonne silver equivalent. That's phenomenal! And so tell me a bit about the approach to drilling this year.

Joe Hebert: Well, all our mineralization that we're planning to bring into the resource category before the end of the year, we've got a good handle on those because we've got an internal block modeling, we've got internal grade contouring. We know what we need in the way of drill density for the resource stage. We'll have one drill rig dedicated entirely to the resource stage in density-type drilling, and then we'll have two rigs continuing pure exploration.

The exploration targets in front of us are all well-advanced. We have a great advantage at Santa Ana in that everything outcrops so we are able to basically get on top of a vein system, trench it, sample it, and usually come up with an individual drill target of silver ore in kilograms; trench that, step that off and drill it. 

So it's a nice ‘put your hands on it, step off and drill it’ type of situation. So it's a very high success rate on discovery. And again, the chutes that we discovered that we hope to bring into the resource are fairly well-behaved, good grade continuity, and good prediction of great projection from drilling.

Gerardo Del Real: So you have the infrastructure, you have the community relations, you clearly have the grade. You have over 30,000 meters that have already been drilled. You have a resource update coming up. And you're simultaneously doing exploration drilling, which, of course, provides that blue sky potential into what I think is going to be a really robust precious metals market. 

If I play devil's advocate — and it's something that you actually addressed really well which is why I bring it up — but there's Slide 25 in your corporate presentation where you mention, ‘Outcrop is exploring and drilling the veins that Silvercorp is mining.’

And I thought that was a well put together slide, because, if I was going to play devil's advocate, I would mention the narrowness, the apparent narrowness, of the veins. You also have Slide 27 that I encourage everyone to look at where you actually believe that those narrow veins provide an advantage. 

Can you speak to the width, the true width, of the veins and how they compare to companies and projects that have market caps in the half a billion to a billion dollars, right?

Joe Hebert: It's a narrow vein system but it's an extremely high-grade narrow vein system, which really makes all of the difference because with that grade, you have a lot of flexibility. 

So if you look at our weighted average grade across all mineralization drilled to-date, you're in that 1,400 grams silver equivalent per tonne range. We would probably employ, in a future mining scenario, exactly what Silvercorp is doing in the Ying Mine with a bias towards a selective mining method called ‘resue.’ That's also what SilverCrest is employing in the Las Chispas Mine. 

So it's not so much a matter of the width of the veins as it is of the grade of the veins. And so in our internal guidance for the property, you look at that 1,400 grams of silver per tonne across the board, we think we'll still be able to maintain, on a resource basis, between 550 up to 750 grams silver equivalent per tonne. So even diluted to, say, a 2.2-meter stope width, which is what Zijin is using on the Buriticá Project in Colombia, we will still maintain some pretty incredible grades.

Gerardo Del Real: A lot to look forward to with Santa Ana but you also have other projects in your portfolio. And before I let you go, I'd love just a brief overview of those projects because it also provides multiple shots-on-goal moving forward, right?

Joe Hebert: Yeah, we have two other very high-grade vein systems that we're advancing. Those may be scout drilled by us or joint ventured. The one that would move furthest the quickest would be Argelia. It's notable there because we have 4-meter veins that run up to 22.5 grams gold and 10X that silver. 

We also have another project that’s a little bit difficult to bring forward in that area so we're sort of bringing that forward slowly. And importantly, we also have our Oribella project, which immediately adjoins to the Agnico-Newmont joint venture at Anza.

And then, we have our Antares project, which is a direct analog and immediately adjacent to B2Gold's / AngloGold Ashanti's Gramalote Mine. 

So really well-positioned. What we intend to do is focus where we can bring the most value the quickest, which is Santa Ana. And then look for partners. The most logical short-term venture partners we’d expect to be Antares and Oribella and then scout drilling programs on Argelia.

Gerardo Del Real: You just announced a C$5 million financing that was quickly upsized to C$6 million. It appears there's strong interest there. You have some cornerstone shareholders in Sprott Asset Management and Eric Sprott, among others. I love management teams that have skin-in-the-game. My understanding is that Outcrop management owns just over 25% of outstanding shares. Is that accurate?

Joe Hebert: Yeah, that's still accurate and not without a little bit of wincing in order to do it because I've participated in every placement we've put together in recent memory.

Gerardo Del Real: I love to hear it. Joe, I'm looking forward to having you back on. Obviously, looking forward to assays. Again, I think your timing is excellent. Is there anything else that you'd like to add?

Joe Hebert: I don't think so… except that we're just a good team of ore finders; we know what we're doing; we have the experience in Colombia. It's basically a last frontier, and we have a high-grade, robust silver-gold discovery that we're bringing to the next stage this year. So I think there's just a lot of excitement in terms of upcoming news to the market.

Gerardo Del Real: Looking forward to having you back on for that upcoming news. Thank you again for your time, sir.

Joe Hebert: Thank you.