Categories: Precious Metals
Topics: General Precious Metals

Sterling Metals (TSX-V: SAG)(OTC: SAGGF) CEO Mathew Wilson on Proving-Up a New Silver District in Newfoundland, Canada, by Way of the Drill

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Sterling Metals Corp. — Mr. Mathew Wilson. Mat, it is great to have you on. How are you today?

Mathew Wilson: Gerardo, it's great to be here. I'm doing great. First time… I'm going to be honest with you… so I'm excited to chat about Sterling.

Gerardo Del Real: Listen, we chatted a bit off air and I explained to you my enthusiasm in helping to tell this story. And I mentioned that I really, really enjoy telling stories where there is an accomplished management team looking to develop a district-scale project. 

And in this case, obviously, you're looking at a potential district-scale silver district. And the team has a little bit of all of the right ingredients that I like to see with a story like this. Meaning not just great geologists and a great technical team but a lot of capital markets experience, right? 

And I think the shareholder base with Altius and Eric Sprott and some of the other institutions that you've been able to attract are there in large part because of that. So I want to talk about the district-scale potential, the world-class grades, and what comes next in the second half of this year. But before that, I would love for you to introduce yourself a bit and also just kind of give us a brief overview of the team.

Mathew Wilson: Absolutely. My name is Mathew Wilson, and my background started off the bounce of 2009 when the world had collapsed from the last financial crisis we were in. And I started my career with a fund called Pinetree Capital, which, if anyone has been following resources in the junior space for a while, then they probably came across them at some point. 

They had 500 positions when I joined and a portfolio of about C$200 million. I worked there as an analyst and a principal for about six years. Finance education by background, and we ended up having about a billion dollars of junior mining experience. 

Where that becomes relevant is the chairman of this company, Richard Patricio, was also at Pinetree as the Exec VP, and, essentially, we saw every deal that was out there; understood the different kinds of structures, the different kinds of assets. And when Pinetree fell apart, basically in 2015 because of the crash in resources, people from the firm basically went out and started running things on their own… and then getting together to help fund deals and put things together.

And one of the things that ended up being that was a company called Latin American Minerals, which was exploring for gold and trying to restart a gold mine in Paraguay. The company raised some money, didn't do a very good job with it, and then I took over in 2017 because I was an investor of it at the time. Richard was the chairman of it. And we ended up drilling a bunch of holes, raising some more money, getting the mine actually restarted. 

But at the end of the day, we were operating in Paraguay; couldn't quite find enough ore, and we sold the asset. And so this shareholder base has been together a long time. The management team has been working together a long time. And in March of 2020, when COVID struck, we tried to use our networking connections to try and find something really big but not in such an unsafe jurisdiction, or uncertain jurisdiction, let's say, as Paraguay, especially with the COVID travel restrictions that were out there.

And so in March of 2020, we started circling the globe looking for things. And in August, we came into touch with Altius Minerals. And Altius, for those that don't know, is a royalty company and a tremendous prospect generator. And the head of new business development there is a man named Mark Raguz who was a colleague of mine at Pinetree for three years and is a mining engineer and had told me about this silver asset that they had in their portfolio. 

And one of the more fun tie-ins to that is that this asset used to be the key asset to New Found Gold, who is one of the greater success stories over the last 10 years, really, with their gold discovery in Newfoundland. They were going to use this as their qualifying transaction when they were private; they were really excited about it. 

The head of New Found Gold at the time was Denis Laviolette who ended up being the replacement to Mark Raguz at Pinetree. And so he let this asset go when they drilled 20 meters of a hundred grams ‘because they drilled 20 meters of a hundred grams!’

Gerardo Del Real: And that's what you do when you drill 20 meters of a hundred grams, right; you focus!

Mathew Wilson: …especially when the deal to keep it was that Altius was going to get 50% of their sock. So basically he said, ‘Yeah, you can have this asset back no matter how good it is; it doesn't really matter because we drilled 20 meters of a hundred grams!’ But Denis knows it really well, and we’ve stayed in touch a lot since the Pinetree days — and so we've chatted about it. 

He took me through what they did; they spent about six to seven hundred grand on it in terms of IP surveys and a lot of surface work. And so there's a lot of familiarity in the teams that have been in place looking at this asset that led to the deal that we did with Altius when we gave them 20% of the company, at the time, which was just a shell at the time that I was running before we started launching this.

So the lead up to this to get such an asset, 100%-owned, in an amazing jurisdiction like Newfoundland with this size and grade potential is really because of that capital structure, the management team, and a lot of familiarity… and just the enjoyment of working together is how we ended up getting here.The management team, and even the extended management team, really plays into the story.

Gerardo Del Real: The analogs to the flagship are world-class analogs, right? And so I want to highlight that because I want to ask you about the market cap and I want to ask you about the share structure because I think that's really where the opportunity is. Where is your market cap and what does that share structure look like right now, Mat?

Mathew Wilson: Absolutely. So the market cap today… I think the stock is at C$0.35 - C$0.36… there's 70 million shares out so that's about a C$25 million market cap. We have C$7 million in cash after the last raise that we completed at the end of May… so we’re fully funded up; we're drilling right now. 

So we have 70 million shares out; it’s about 110 [million shares] fully diluted if all of the warrants come in. One of the good things to know is that all of the warrants are above the price that it is today. They’re all at C$0.40, C$0.45 and C$0.78 because the last time — other than the raise that we just completed — we've raised at C$0.30, C$0.52, C$0.57 and then at C$0.20. So we're in a good position right now; still a tight structure in terms of the people that own it, and we’re cashed up and drilling right now.

Gerardo Del Real: I mentioned the analogs being world-class silver districts. What are you doing to explore and prove that up? You have 12 kilometers of strike, right? And early, early drilling has hit some spectacular grades. What does the second half of this year look like, Mat?

Mathew Wilson: For sure. So it's important to go into the analogs. He's been one of the key people that's helped us shape the program — which is PhD Economic Geologist Steve Piercey — who works out of Memorial University in Newfoundland. Very well regarded guy throughout the industry. 

He was the one that gave us the Keno Hill analogy. And Keno Hill, for those who don't know, is a silver district in the Yukon that produced 300 million ounces over a hundred years from 1913 on. And it's the same kind of analog between Keno Hill as it is to the Coeur d'Alene district in Idaho, which has produced over a billion ounces of silver across a 40-mile long trend line. 

And so what gets fun in the analog is that there's this, as you said, 12-kilometer trend line on our project. And that 12-kilometer trend line — if you sort of play a little bit with the maps and you put it up against the western area of Keno Hill — that western area was nine deposits in that 12-kilometer line, and it produced 230 million ounces of silver between 1913 and the year 2000. So we're talking very, very significant amounts of silver-lead-zinc and, in our case, copper and antimony, which is pretty exciting.

So that trend line, which, actually, now, I believe, we've extended a little bit to about a 16-kilometer trend line of interest. The plan this year is essentially to extend on our success of last year. And what last year did… the story of this asset is pretty fun because we're in the Great Northern Peninsula of Newfoundland. And no one has really done any work up here in the past. This asset was only discovered at the end of 2016. And it's always good to have a fun story when you're talking about a new company — and this one sure has one.

And it was discovered by a man named Tony Kearney, who was a principal in the region. And he was out hunting with his son. And they're driving on these logging roads… just out for a joy ride in December… and he's able to find this outcrop, this blue rock, this oxidized copper that you can see. 

And so he goes out, chips it — and everyone kind of understands prospecting up there just with the success of Voisey’s Bay and stuff — he chips it and takes it down to the guys at Altius, which is about a three hour drive south. And that assays 500 grams silver and 2.5% copper. So, really good! That's a pretty exciting way to start things off. And that was how that started. And so all of the work until we got the asset, and even the first year that we had it, there was no drilling. Never drilled; there's no historical mining here over a hundred years. 

And most of the places where you'd find surface expressions like this… most of the silver deposits in the world that you'd find like this with that kind of size and grade potential — you'd have mining on it. You'd have adits, you'd have core. There's old shafts dated in 1850 because people saw those outcrops and then they started just mining it. In this case, no one's touched this. So our first drill program last year was a true exploration-first greenfields program — and it took us a while to get there. 

We drilled 8,400 meters. And it took us until about the last 2,000 [meters] to get a sense of what was going on. And that was when we started drilling half-meter, one-meter of these quartz veins within the 10 to 20 meter halo showing grades that are in the veins that are double what the reserve grades are of some of the best silver mines in the world.

So we have this good little area here that we're starting with — which is only about 2% of our property. The idea this year is to take the C$7 million that we’ve raised; we have one rig going; we're going to drill to try and understand a little bit more about this zone; understand the geology, the faults, the way that it interacts with the contact of the Argillite; the way that the folds and structures shape and mis-shape the way that the vein structures are going; understand that a little bit more and show that we can repeat our success from last year and hopefully grow on the success from last year a little bit. And then do it again and again and again.

And this model, the deposit model here, or that district model is a lot like a string of pearls. So it lays out across 16 kilometers, and each pearl represents a deposit. And if you're looking at Keno Hill, each deposit was sometimes only 250,000 tonnes. So you're looking for a little bit of — not a needle in a haystack — but you're looking for this really dense area of mineralization that carries a thousand-plus grams silver. And the best way to find that is to trace good mineralization you're hitting right now and then just continue to follow that until that opens up into these pods. 

The key is to find that mineralization on surface… drill it to show that you can understand the direction it's going… and then, drill enough to find that pod… and then, show that you have this string of pearls over and over.

And so it's kind of like that three-step process. Find it on surface, prospect it, drill it to understand the direction and the orientation of the veining… and then, figure out where that veining goes to figure out where that pod is. And so we've basically done the surface and the veining in the top of the first pearl, so to speak. We're hoping that we can get going on that part three there… and then, just rinse, wash, and repeat for all of the other pearls that are along the trend line.

Gerardo Del Real: You're cashed up; you have great shareholders; you have an accomplished team; you have a district-scale opportunity. How is the infrastructure?

Mathew Wilson: I don't want to speak hyperbole here… I think I'm actually speaking in reality. If I was to envision a place that was suitable to build a mine, this would probably be it. It’s just a little cold but you can access it all year-round. It's just cold to go to sometimes in the winter — but it's great. 

Like I said, it was discovered by chance on a logging road. You can drive right to the project. It's 30 minutes from an airport; 20 minutes from a town; 45 minutes from where our core shack is. There's power nearby… there's water nearby… but not too much that there's an issue. 

There's only 2,500 people within about a hundred kilometer radius of this… so there's no issue. The community is incredibly supportive. And so you've got power; you've got water; you've got access by road; you've got an airport close by, and the ocean is 25 kilometers away if you need to get anything on a boat.

So overall, it's a pretty great place to be. And also, everyone is just extremely nice and supportive around you… a very important thing given where we could be in the world elsewhere.

Gerardo Del Real: Look, let's be very frank, Mat, we've had a soft metals market here over the past couple of months. I'm a firm believer that we end the year on much stronger footing. And I think 2023 is going to be an absolute blockbuster for the precious metals — which have held in there but they've lagged a bit. 

I think the bottom line is there's not a lot of pure district-scale silver plays with solid structures and very accomplished teams. I'm excited to start seeing some of the assays from this year's drilling. And I suspect you and I are going to be having a lot of conversations. A lot to like, Mat. Anything to add to that?

Mathew Wilson: No… I sure hope we have a lot of conversations… this was a lot of fun! I think that once we get these assays going — the news starts to go! There's always this lag between when you raise money and you start drilling and when the assays come back. But once we get those first assays out in clusters, it's just going to be news flow after news flow — and it should get really exciting pretty fast. 

And I'm excited to hopefully develop this. I think that this is a special asset. And it's in Canada. It has a strategic purpose to it with its exposure to the base metals and silver. So this could be a really fun ride to be on as we push forward.

Gerardo Del Real: Well, we love being early to successful stories. I suspect we will be chatting quite often. Thank you so much for your time today.

Mathew Wilson: Thanks a lot… it was great to be on. I look forward to chatting again soon.

Gerardo Del Real: Alright, chat soon. Thanks, Mat.