Interview with Dr. Morgan Poliquin, President and CEO Almaden Minerals Limited (TSX: AMM; NYSE MKT: AAU): Owns Ixtaca Gold-Silver Deposit in Eastern Mexico, About Three and a Half Million Gold Equivalent Ounces
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 8/5/2016
Almaden Minerals Limited (TSX: AMM; NYSE MKT: AAU) is advancing its wholly owned Ixtaca Gold-Silver Deposit in eastern Mexico that the company discovered back in 2010. This is a gold and silver vein system with about three and a half million ounces of 43-101 compliant resource in gold equivalent. Recently they produced a PEA that focused on a mine plan for a higher grade portion of the deposit, about 1.6 million ounce gold equivalent open pit and a conventional mill. They expect the pre-feasibility study based on the PEA to be completed later this year. According to Morgan Poliquin, President and CEO of Almaden, they will make a production decision sometime next year. We learned from Dr. Poliquin that he completed his PhD in eastern Mexico and has a lot of proprietary knowledge on this area. The company has access to inexpensive drilling through its sister company, Almadex Minerals Limited (TSXV: AMZ), which owns its own drills and can take a project from early stage prospecting and target definition all the way through resource and engineering level drilling. They have no debt, a clean balance sheet and capital to push forward. Almaden’s excellent team has a track record of making new discoveries, and has found a number of deposits that have become mines.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-chief of Metals News interviewing Dr. Morgan Poliquin, president and CEO of Almaden Minerals. Could you tell me a bit about what differentiates your company and your properties from other gold and silver companies?
Dr. Morgan Poliquin: Sure Al, thanks for asking. Almaden just spun off Almadex Minerals last year and that's because Almaden is now focused on developing one of the discoveries we've made in a part of Mexico we call eastern Mexico, the eastern part of the country is half the country, but we focused in on several areas in eastern Mexico with a regional prospecting program that started in the early nineties. We found, in particular, an area east of Mexico City where there's a lot of geologic potential, but little in the way of historic exploration. We've made two discoveries, Caballo Blanco, which we've sold and is currently owned by Timmins Gold. Ixtaca is the second discovery. Almaden will develop Ixtaca towards a production decision.
Recently we've spun out all our exploration properties, royalties, drills and geophysical equipment into Almadex, which will now focus on making additional discoveries and doing regional exploration.
Dr. Allen Alper: That sounds excellent. Could you tell me a bit more about the properties, the resources et cetera?
Dr. Morgan Poliquin: Sure Al, Almaden discovered Ixtaca, put the first hole in in 2010. What we found there is a gold and silver vein system, a brand new discovery, first time as far as we're aware, the claims were never staked and no historic work or drilling or mining or anything like that, so brand new discovery. We have drilled about a hundred and fifty thousand meters there to define a 43-101 compliant resource in gold equivalent terms, it's all published on our website. But we have about three and a half million ounces in gold equivalent terms in the Measured and Indicated categories. Recently we produced a PEA that focused on a higher grade portion of that. In gold equivalent terms, because it's both gold and silver, one and a half million ounce open pit and a conventional mill to produce gold and silver ore. So we're working a pre-feasibility study on that, the basis of that PEA mine plan.
Dr. Allen Alper: That's great! When will that be completed?
Dr. Morgan Poliquin: We expect the pre-feasibility study to be completed later this year. From that we would initiate permitting in Mexico along with a feasibility study, leading towards project financing. From the discovery in 2010, the first hole announced August of 2010, to now, we've drilled, in a bad market, a hundred and sixty odd holes, twenty five meter grid space to drilling density and ninety seven percent measured and indicator resource in our current PEA. Now we are moving towards a production decision, hopefully sometime next year.
Dr. Allen Alper: That sounds fantastic. You and your team have done a great job in a very difficult time. That's excellent!
Dr. Morgan Poliquin: I appreciate that.
Dr. Allen Alper: I know you have a fantastic background and your dad does too. Could you tell me a little bit more about yourself, your dad, and the rest of your team?
Dr. Morgan Poliquin: Sure, My father is the founder of the company. He and I are both geological engineers. Since we're scientists, we bring a lot of science to the table in our exploration. We are prospectors in the sense that we are looking for brand new discoveries in new areas that have little in the way of past exploration. We think that's where we have the greatest leverage, where we can use our skills and the team we've put together. We not only do the early stage prospecting, which is my job technically, to identify prospective areas. I did a PhD on the eastern Mexico area so I have a lot of proprietary knowledge on the area that we're utilizing. Through Almadex we own our own drills, so we have quite a unique exploration group, from early stage prospecting and target definition to resource and engineering level drilling, all in house.
So, we're a completely integrated exploration team. Duane, our mentor, is very active chairman, who has guided us philosophically through this process. As prospectors, with early stage properties, too early to generate a lot of interest in the market, we found ways to finance this work through joint ventures and option agreements. We gradually developed our capital and built it up to be able to do our own drilling, which we think is the real way to make discoveries.
Dr. Allen Alper: That's great. The work you did for your PhD really paid off. Wasn't that one of the reasons you're exploring where you are and developing where you are?
Dr. Morgan Poliquin: Yes, we felt that we had identified something very interesting in eastern Mexico that was very poorly understood, but had great geological potential. So one of the things that was quite helpful, in defining the broad area, was the research I did for my PhD, it was half a prospecting program, half a research program. We took rock samples, focused on economic potential over the eastern side of the country, on a continental scale. We started to understand, with the more scientific measurements we were taking of age determinations and geo-chemistry that there are certain belts of rocks that are not permissive and certain belts of rocks that are permissive for ore deposits and of course you want to focus on the latter.
It provided a great deal of important information to benefit our prospecting combined with getting out there in the field, which is the number one thing. You can't find mines from a computer screen. That really has paid off.
Dr. Allen Alper: That's great! Could you tell me a little bit about your finances and your capital structure?
Dr. Morgan Poliquin: Currently Almaden Minerals has about eight million to eight and a half million dollars Canadian. That money will be utilized for developing Ixtaca. We have about eighty one million shares out and that's from 1986. We've kept our capital structure very tight. In Almadex we have about six million in working capital and we have about forty-four million in shares out. Neither of the companies have debt or liabilities of that nature. We have a clean balance sheet and the capital to push our projects and plans forward.
Dr. Allen Alper: That's excellent! You mentioned working with partners, early on, providing capital and so on. Are they still in the picture?
Dr. Morgan Poliquin: No. We have a few joint ventures, but none of them are particularly significant. In Almadex we're focused on a copper gold porphyry system we identified and we're drilling that ourselves, so expect more news to emerge from that. At Almaden we are developing the Ixtaca deposit ourselves. So there are no partners currently involved with significant projects.
Although in the past we certainly have moved various properties forward in our portfolio. At Almadex we have twenty two projects roughly, we've moved projects forward in partnership. We did recently sell a gold project in which we retained a royalty to McEwen Mining. It's located adjacent to their operating mine in Mexico. We are certainly deal makers and expect to do more of that as the market improves, but we feel the best way to move projects forward rapidly is with our in-house drilling.
Dr. Allen Alper: That's great! By the way we've done several articles on McEwen Mining and we're currently doing one on Timmins. What are the primary reasons our readers/investors should invest in your company?
Dr. Morgan Poliquin: In terms of Almaden, we have a new discovery at Ixtaca, which our recent PEA has demonstrated can be a robust mine. It would cost US$100 million to develop, produce about 1.4 million gold equivalent ounces over 13 years, and generate an after tax rate of return of 30% assuming $1150 gold and $16 silver prices. It’s also in a very good jurisdiction, and projects like these are rare. There’s room to grow the mine plan at more robust commodity prices and we still have very good exploration upside, which we are now getting back to look at.
In terms of Almadex, obviously exploration is fairly high risk, but we've been able to show a great deal of perseverance and continuity. I think, in terms of our capital structure, we've been able to keep our share count very low for many, many years so minimizing dilution. We're large shareholders in the company ourselves.
We have staying power and the ability to preserve our company in good shape, despite the vagaries of the market, which have been very difficult the last few years. We also have the proven ability to find real deposits, which is pretty rare we think. We have found a number of deposits that have become mines and we have quite a track record of making new discoveries.
We have the ability to expose our shareholders to our successful exploration and development of projects, while keeping our capital structure very tight. We're aggressive with our exploration, but prudent, and we think that will result in additional discoveries.
Dr. Allen Alper: That's excellent. I think you, your dad and your team have done an excellent job exploring and discovering gold in eastern Mexico. And you've done it in a very business-like manner. Very well done!
Dr. Morgan Poliquin: Thank you very much for that, I appreciate it.
Dr. Allen Alper: Now is there anything else you'd like to mention?
Dr. Morgan Poliquin: The next eighteen months are going to be very exciting for us because Almadex is currently drilling in the El Cobre porphyry gold copper system that we've waited years to drill. At the same time Almaden, our sister company, is moving towards a production decision. We think the end of this year into the middle of 2017 are going to be very exciting times for the company. We hope a lot of the things we've been working on will come to fruition in many ways. I look forward to reporting on those.
Dr. Allen Alper: That sounds great. Could you tell me a little bit about how it is operating in eastern Mexico?
Dr. Morgan Poliquin: Mexico is in NAFTA and it's changing rapidly. The last twenty years have been very good. At Ixtaca we're about twenty kilometers away from a large industrial park, where Kimberly-Clarke has a very large facility. We're about an hour and a half drive away from the largest Volkswagen plant outside of Germany.
This is a developed part of Mexico, eastern Mexico, but at the same time it's geologically very permissive. From our point of view it's a very safe place to work. We don't have significant security issues. There's a workforce that's very familiar with development given the industrial investment there. We believe it's a great place to be making an investment. We think that Mexico is emerging as a significant industrial and manufacturing power and will be an integral part of North America. Mexico has fabulous geology and opportunities for mineral development. We're quite pleased to be there and look forward to being there for many years to come.
Dr. Allen Alper: Okay, that sounds great.
http://www.almadenminerals.com/
Phone: +1 604 689 7644 |
email: info@almadenminerals.com
Fax: +1 604 689 7645
Suite 310-1385 West 8th Avenue,
Vancouver, BC, Canada, V6H 3V9
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