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Interview with Steve Zuker, President & CEO of Pucara Resources; Multi-Million-Ounce Gold Targets in Peru

on 5/14/2019
Pucara Resources is a privately held Canadian grassroots gold explorer and project generator company focused on Peru. At PDAC 2019, we learned from Steve Zuker, President & CEO of Pucara Resources, that they are primarily focused on the underexplored Ayacucho area of South-Central Peru, where they have 14 projects, of which 3 are ventured to tier-one mining companies. Two other properties are multi-million-ounce, gold-type targets that Pucara is advancing to drill stage, with the goal to make discoveries and bring in partners. Near term plans include getting drill permits and conducting exploration drilling on all five major properties. According to Mr. Zuker, Pucara plans to go public in Toronto on the TSX, and they have some pretty significant shareholders, like Resource Capital Funds, Sandstorm Gold Ltd, and Alamos Gold Inc.

Pucara Resources

Allen Alper Jr: This is Allen Alper Jr., President of Metals News, here at PDAC 2019, interviewing Steve Zuker, President & CEO of Pucara Resource Corp. Good morning, Steve could you tell us at Metals News and our readers/investors a little bit about your background?

Steve Zuker: Good morning Allen. My name is Steve Zuker, I'm an economic geologist and exploration geochemist. I was educated in southern California at Cal Poly Pomona (B.Sc. Earth Science) and completed my Master's degree in Geology at the Colorado School of Mines in 1986. Ever since then, I have continued to do grassroots mineral exploration throughout the Americas and parts of Asia (Mongolia and Myanmar). Now I am running a private company called Pucara Resources in Peru.

Allen Alper Jr: Tell us a little bit more about Pucara Resources.

Steve Zuker: Basically our philosophy is to bring prosperity to our investors, our communities and our employees. We're going to do that by making discoveries. We're focused in Peru, looking for gold deposits. That's our primary focus. That's what's fueling us and we're getting closer every day to a discovery.

Allen Alper Jr: Tell us a little bit more about what areas and what you're exploring for.

Steve Zuker: We are concentrated in south-central Peru, in the region called Ayacucho. Ayacucho's pretty unique in the sense that it was the last stronghold of the Shining Path, Maoist guerrillas and wasn’t really safe to explore until the late 90’s into the 2000’s. Exploration was going strong from the 80’s and 90’s in northern Peru in the Cajamarca region and the giant Yanacocha Gold Mine of Newmont and Buenaventura was discovered as well as several copper deposits in southern Peru, safer areas for exploration, during those times.

In the Ayacucho region, we have the same belt of volcanic rocks as in northern and southern Peru. This area has received very little exploration and is what we call an “immature exploration province, ripe for discovery”.

Now that the Shining Path has been eliminated, Ayacucho is much safer, as is most of Peru, and is ripe for a major gold discovery. So we have focused on the Ayacucho region for gold deposits.

Allen Alper Jr: Could you talk about your Management Team?

Steve Zuker: We have an experienced Management Team. I have more than 30 years’ experience. David Awram, on the Board from Sandstorm, has been involved with royalties and exploration companies throughout his career. Lynda Bloom is a geochemist and consultant. She has run a few junior exploration companies here in Canada and Peru, and brings an industrial perspective to what we're doing. Gord Fretwell is a securities lawyer in Vancouver, and is involved with several junior explorers as well. Arístides Chavez is our Peruvian General Manager and economic geologist. He has made some discoveries with our prior company, Esperanza Resources, and has 25 years of experience.

Also, we have an advisory board that's notable, that we’ve been building up and they’ve been supporting us over the years. David Lowell is involved. He's a pretty well-known discoverer of copper deposits in the world. Keith Laskowski has been exploring all over the world and he's currently with Sandstorm Gold Ltd. Ken Balleweg, is our Technical Advisor, having discovered and worked at the Mulatos Gold Mine in Mexico, where he brought it from a gold prospect, while working at Placer Dome, to a discovery while at Alamos Gold. Those guys went from a grassroots play to producing over three million ounces of gold and still having two to three million ounces of gold reserves, making Alamos Gold a Tier 1 mining company. That's what we're expecting to do with our Lourdes and Pacaska projects.

Bill Gee is an economic geologist and advisor. He has been involved with several juniors at a senior level. In the background, we have other advisors and consultants that are utilized as needed. I am alone, based in a virtual office in Colorado with our principal office in Lima, Peru, where we have three geologists on staff.

Allen Alper Jr: Tell us a bit about your capital structure and how you're privately held?

Steve Zuker: Yes. We are a private British Columbia Corporation. We now have 34 million shares outstanding, have issued options and warrants for a fully diluted share structure of just over 43 million shares. Our last fund raising was in October 2017 at 40 cents. Our current price is yet to be determined, because we're private and we don't trade shares.

We have some pretty significant shareholders. Resource Capital Funds, a private equity group out of Denver, Colorado, they own approximately 21% of Pucara. Our Management and advisors own about 17%. Sandstorm Gold and Alamos Gold each own about 7% of Pucara. The rest of the investors are what I call savvy investors that understand the exploration business and are very supportive. These investors have looked at Pucara and like what we're doing.

We have about C$2 million in the bank right now and no debt. We plan to go public in Toronto Stock Exchange, so we've been doing everything to act like a public company, keeping everything transparent.

Allen Alper Jr: So what about inside investment?

Steve Zuker: The insiders are the Management and Advisors, who have about 17%.

Allen Alper Jr: So what is exciting to you about Peru?

Steve Zuker: Peru is well-endowed with mineral resources and has a long mining history, which is very important in Latin America. From what I've seen, when investments have come into Peru, investors have been able to get their money out and put projects into production. The “Rule of law” works very well in Peru. It's the sixth largest producer of gold in the world, which is pretty significant. I think Peru is a great jurisdiction to invest in. It stands out throughout Latin America, really.

I was introduced to Peru when I first took a consulting job in Peru in about 1995, to work on the Antamina project when it was being privatized by the Peruvian government. Antamina has turned out to be a world class copper and zinc mine. At that time Rio Algom and Inmet Mining bid $2 billion dollars and won the bid. Since then, Antamina ownership has changed hands a few times, current owners are: Teck, BHP Billiton, Glencore, and Mitsubishi. It's a pretty significant mining operation and important to Peru.

Allen Alper Jr: So do you have any specific projects or properties that you're looking at right now?

Steve Zuker: Yes, we have 14 projects and three of them are ventured to tier one mining companies. We have an option agreement with IAMGOLD Peru SA and two option agreements with Equinox Gold/Solaris Copper. Those three projects are going forward with our partners and we are working with them. Two other properties in our portfolio of 14, called Lourdes and Pacaska, are high sulfidation gold targets. These are multi-million ounce gold targets that we're advancing to drill stage. We hope to make an early discovery on those and then bring in partners to take it onto production.

We are grassroots explorers, with five exciting properties that we and our partners are advancing to get drilled later this year, pending permitting issues. We have a portfolio of properties that rivals major mining companies!

Allen Alper Jr: That's very exciting.

Steve Zuker: I think we stand out amongst our peers because we've been able to keep our team together. We've been private for six years, and this is year seven. We may be going public soon. It just depends on the market. The conditions have been pretty tough to go public and so, we've been fortunate to have a shareholder base that's kept us funded.

Allen Alper Jr: So what's required for the TSX V?

Steve Zuker: There are three ways to get on to the TSX. One is through the reverse takeover (RTO) of a shell and merge with that. Another way is through a capital pool company (CPC). That would be a company that's looking for a qualifying transaction and we could be that QT. The third way would be an IPO. On any of those transactions, we need to have a two year audit completed. That is a pretty significant effort and we completed that audit last fall.

Allen Alper Jr: Excellent!

Steve Zuker: It's just a time consuming process that the TSX is going to want. And that's the biggest hurdle. Next, we also need an NI 43-101 report on a property of merit, of which we have two, Lourdes and Pacaska. We have completed two reports on our two most advanced properties, Lourdes and Pacaska. Those are the two projects that we would like to drill. We are getting ready to be public and if a favorable window opens for us to raise capital, we will jump in. If a CPC group wants to do a QT, we have the 43-101 and audit. We have an audit if we're going to do our IPO. We've done the bulk of the work, we're not done by any means, but the audit takes three to six months and having NI 43-101 property reports sitting on the shelf right now is helpful.

We have met and spoke to the shareholders, and they have said, "Steve, it doesn't make sense right now. Why don't we keep getting this thing funded?”. We’ve been fortunate enough that we've progressed our projects, brought in partners, having made three deals last year. So we've improved the assets and conditions of the Company, picked up more properties, thus increasing the value of the Company and increasing our chances of a discovery.

We are watching the markets and getting to ready to pull the trigger. We want to drill this year, and we're working on obtaining our drill permits, so we'd like to get the first holes in with the money we have in the bank and then go to the market for more capital, either privately or publicly.

Steve Zuker: I'm fluent in Spanish and Pucara’s team is all Peruvian, most of them are bilingual, speaking Spanish and Quechua, the language of the Inca, commonly spoken throughout the mountainous regions of Peru. Only a couple people on our staff speak English, so my time in Peru has really helped my Spanish and the team tolerates my Spanish.

Allen Alper Jr: What else would you like to add?

Steve Zuker: We have 14 projects, and we think we're on the verge of discovery on at least one of them. Five of them are advancing pretty rapidly towards drill status and we're not the only ones, who have that opinion, that think we have a discovery. You only make a discovery by drilling and we are working together, with our partners, to drill these 5 projects. Please keep your eyes peeled for news and the activities of Pucara Resources.

Steve Zuker: With Equinox Gold/Solaris Copper, they can earn 75% on two projects over a step wise annual basis, by expenditures in the ground. On the Capricho Copper Project, a US$20 million spend over seven years. We have a similar kind of deal on the Paco Orco Copper Zinc Project, a little less money, a spend of US$4 million over the first three years, and $11.5 million over the next four years, making a payment of $500,000 and then they earn their 75% of the project.

The agreement with IAMGOLD Peru, SA is a bit different. That money goes into the ground as well. They have to spend $4 million in the first four years, and payments of $500,000 as well. And then over the next two years, produce a PFS, with a gold equivalent resource of one million ounces and a payment of $2 an ounce, to earn 70% of the project. So there are some thresholds and incentives for IAMGOLD Peru to get going that are favorable for both of us.

Most of the money goes into the ground. We can't make a discovery without drilling.

Allen Alper Jr: Right.

Steve Zuker: We don't have enough money to drill all these properties. I would have to be a major company to be pushing forward with a $10 million budget per year. We're working on a budget of about $1 million a year. But that's why I bring in partners. We're always looking for strategic partners.

Allen Alper Jr: Sounds great!

Steve Zuker: Those three projects are a different priority for us. The other two projects, Lourdes and Pacaska, we want to drill ourselves. We don't want to sell them off, yet. Our investors and our communities can benefit the most if we make the discovery, while we still control 100% of the projects. We're kind of a hybrid-prospect generator. We're not following just one model of selling or drilling projects, we're taking advantage of the market conditions and doing what is best for Pucara.

Steve Zuker: On those two deals, 75% going to Solaris Copper and 70% going to IAMGOLD Peru, and we retain a 25% and 30% interest in the projects, and we don't have to fund ongoing activities, but we'll be diluted. If we're diluted to 10%, that'll convert to a 1% NSR royalty.

We have made deals with Sandstorm Gold, where they purchased royalties on seven of our projects and that has helped fund us. It was a helpful vehicle to us moving forward.

Allen Alper Jr: Is there anything else you'd like to add?

Steve Zuker: Just to say thank you for interviewing Pucara Resources for Metals News. We appreciate it.

Allen Alper Jr: It has been very interesting. I’m very impressed with what you are doing! We’ll publish your press releases as they come out so our readers/investors can follow your progress.

Steve Zuker, CEO and President
T: +1-303-900-2150

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