Mining Americas: The Path to a Fivefold Increase in Gold Production

0:05Music

0:19Trevor Hall: Continuing coverage here at the Precious Metals Summit in Zurich and connecting with one of our partners, Mining Americas. They do trade on the TSX with MAI and on the OTCQX with MAIFF. The company published a lengthy and thorough news release just last night, actually, just discussing a lot of the projects within the portfolio. So we're going to walk through as much as we can intricately with these projects with Vice President of Corporate Development and Capital Markets, good friend of the people, Mr. David Stewart. David, good to see you. Good morning. Trevor, thanks. Great to be back on the show.

0:59Look, I think the rebranding is officially complete because there was no Freudian slip of Monero Alamos.

1:05Trevor Hall: I did. I tried really hard and I think I succeeded, but the interview has just begun. There's still time to screw it up. All right, let's walk through this, you know, thoroughly this press release. Give us a 30 ,000 foot view. I mean, this was an all-encompassing kind of here's where the company's at right now, and then you dig into each project. But what was it, you know, give us kind of why it was important to give that general feel. That was really loud. To give that general overview of where the company is as we're about to close the year. Yeah, if you look at our company, like, look, we put out the pan mine Q3 production results last month, and we're going to put out our quarterly results on Monday.

1:50But in between those things, look, most people are not necessarily investing in our company because of PAN. They're investing in our company because of the growth and the growth projects being Copperstone in Arizona, Gold Rock in Nevada, Cerro Dora, Mexico. And also, episode two, Santana Strikes Back. Oh! Santana is back on the docket. So, look, we thought it was important to separately talk about our progress, our construction updates, and our growth projects. because for the most part, that's what people find interesting. And instead of burying that update within a large quarterly release, we thought it was fortuitous to talk about it separately and to kind of flesh out all the details on our portfolio because, look, we're very busy.

2:31The technical team is flat out on all these things. We have a lot of technical catalysts coming up and we've made a lot of good progress so far. I don't think it's a stretch to say that we probably have the most catalyst-packed story in the entire gold space in the next 24 months.

2:46Trevor Hall: Oh, wow. I think you can make that case. That's quite the statement, David. It is. And you can defend it because we're 5X-ing our production within the next 24 to 27 months. I just don't see anyone else being able to do that in the time frame that we're able to do. All right. Well, let's talk about Santana because this project was left for dead. In fact, I can't believe we're talking about it. I thought it would be sold to somebody else. But this is you're reinvigorating Santana. You talked about investigating options to potentially begin re-leaching the existing heap leach. So potential cash flow here pretty quickly, right?

3:20Trevor Hall: So why bring this back now? Yeah, so there's a few things going on at Santana. And the main reason why it was quote-unquote dead in the water was it was built on a fairly small permitted area with the hopes that permit amendments would come in the future and you'd be able to expand not only the mining area but also the leach pad area. Those permits through the AMLO administration did not come through. but now as we've seen most notably through Cerro de Oro but also a lot of other projects in Mexico that permits are starting to flow and permit amendments are also happening. We saw Camino Rojo get their permit amendments with Orola last year.

3:54We saw Cerro de Oro get its permits just in August of this year and so we're starting to see them and so that's encouraging. We also recently received new water rights for Santana so that's good and then the next step would be which we're actively working on would be amended mining area permits so we can expend the leach pad area there. All that is to say, look, progress is good at the site. Also doing what I like to call heat bleach fracking, basically re-injecting cyanide solution in certain areas of leach pad to get more full coverage on columns and more complete saturation to get free ounces.

4:29At this point, they're already there. They're free. So that would be a bonus as well. So early indications there, but we're looking forward to some ounces in 2027 on that.

4:40Trevor Hall: What about adding ounces to that heat leak? So adding ounces would come through again. We would need the amended permit to expand the leach pad area there. And that would be a restart decision. Which, look, whether or not we restart it or whether we sell it, it's going to be worth a lot more with a permit. And so that's what everything is going towards in Santana. And again, I think there could be various parties interested in buying it. It's near-term restart development in Mexico, where you can actually permit things now. It's not as big as some people might be interested in making a bet-the-farm transaction to buy a 100 ,000-ounce-a-year producer in Mexico.

5:18So it's not that. But it could be very incrementally positive for a lot of counterparties out there. So look, again, it's either worth a lot more to us as a sale to help fund the existing and the further growth in our existing portfolio. Or we redevelop it at a certain time frame. But either of those is going to be worth a lot more with permits in hand.

5:38Trevor Hall: You have more optionality with Santana now than you did a couple weeks ago when nobody cared about it. Exactly. And that's why it's back on the docket. We've also done some, and we're still completing it, but we've done some encouraging metallurgical test work on the sulfides at depth in Santana, where there's an oxide cap and then there's a transition zone and then at depth you get it to sulfide. And people think sulfide's a dirty word, but sulfides also sometimes leach. and so kind of proving ourselves that you can still leach the sulfides without adding a sulfide plant could be very interesting as well.

6:10Trevor Hall: Okay, anything more we need to know about Santana before we move on to Copperstone? That's enough to whet the appetite on Santana. Okay, a lot of people are going to be perking their ears up. All right, let's talk about Copperstone. Things continue to move along. What does this final quarter of the year look like and what needs to be accomplished before you get into Q1? Construction activities are still starting to ramp up. It's still, I would say, it's still in the early days of construction, but some positive indications there. So on the equipment side and the process plant, that milling circuit, the grinding circuit that we already had that shipped down from Quebec earlier this year, so that's now been tested and cleared for installation back in the process plant.

6:51So that's good. I guess the most incrementally positive thing in terms of construction updates for that project now is that we've mobilized the underground contractor. and look like i've been around underground mining for a long time you look enough at enough underground mining projects where most underground mining projects fail is where they don't get underground development early enough and they get behind on underground development the mill works and they get that wrapped up but then you're waiting on the mine or you get into the mine and you have geotech problems or you're waiting on the mine and you don't have enough active stopes in development and so for us it's a priority to get underground early start the rehab and just start test mining.

7:31And maybe we'll get into underground development in Q4, Q1, and then we'll slow things down in Q2 as we get ready for the mill. And so we can kind of be pretty agile with respect to how fast and how much we develop from underground. But our priority is, look, we've known enough underground projects that get behind on development, so our priority is to get ahead on it. You can never be too early with getting underground.

7:56Trevor Hall: That requires personnel and underground miners. How does the staff look like right now? What do you need to fill? So as a contractor, we've worked mostly through Kevin Smaller EVP operations with Small to Mine Development. They're a mining contractor, prolific underground mining contractor in Nevada and surrounding states. And so they provided a competitive bid and so they were selected as the underground mine contractor of choice. We'll start at Copperstone for the first couple of years with a contractor. And so that's generally going to work pretty well for us. We have a lot of experience with small mine development.

8:28They've done good work for us at other projects in the past. And so we're pretty excited to get them underground and starting. We've actually started to mine. There's a couple of pictures in the press release. You can see active development rounds being mined. So that's very positive.

8:43Trevor Hall: Mid-2027, mid-next year, are you still thinking first gold? Yeah, mid-2027. I mean, I think it's safe to say second half of 2027. We can say that now. yeah like there's a lot of things going on I think that the critical components the critical path would be the mill the process plant yeah so getting that going right now there so they finished the phase one of the of the kind of demolition phase to retrofit the mill for the existing flow sheet so getting ready for the foundations and the concrete works that eventually will host the new pedestals for the new ball mill but yeah the the process plants are the critical path there.

9:24Trevor Hall: You've cut your teeth in underground mining but now you sit in the management office. How important is it for man if a management is going to operate an underground mine how important is it to have that knowledge and relationship from the C-suite office and have that insight of what operations look like underground. I got to think that's you can leverage a lot of experience and probably mitigate a lot of you know risk that way well I'd say the most important things experience so having done it before and not necessarily this the C-suite like Darren and I aren't building the mines but we have Darren Connigan and we have Kevin small and Kevin small in particular is our underground mining expert he's built and worked at something like 17 underground mines in his career and so very experienced with respect to underground, not just operation, but also startups.

10:18And so definitely benefiting from his wealth of expertise there.

10:21Trevor Hall: Okay. Let's talk about Nevada. Pan obviously continues to provide the cash flow, but Goldrock is not far behind it. It's set to start construction this quarter, is that correct? Yeah, it's a bit stealthy. Like we've basically already started early works. We've placed orders for liner, for ponds and pads. We've started and almost basically completed the road upgrades from PAN to Goldrock. We started the early works in terms of the site clearing for Goldrock. So again, it's already permitted, it's fully bonded, it's 11 kilometers away from PAN, so we're going to start working on that. The other catalyst that we're working on for Goldrock is an updated resource estimate.

11:01And so the last resource was done in 2021 by Fiore and then inherited by Calibre, and then Equinox. And so it's had a few owners since then. And a paradigm shift in gold price. The last time the resource was done was, I think,$1 ,400 gold. So we're sitting here almost triple that. And look, it's not like Cerro Doro, like a massively disseminated gold system whereby the cutoff grade is very elastic. This one, it is a structurally controlled deposit. And so you do have distinct boundaries between ore and waste. but I'd say, yeah, we're looking forward to getting a resource estimate out on Gold Rock so that we can start investing more money in that and I wouldn't be surprised to see a formal construction decision on that also in the fourth quarter with major work starting in over the winter as much as we can.

11:53Trevor Hall: We'll see how the Super El Nino goes in Nevada in the West but at least full-scale development starting at the latest in the spring. Okay. Transformational fourth quarter. How about Cerro de Oro? What's the latest there? So we did get the permit at the end of August. I think we announced it September 3rd. Yeah, we chatted about that. Yeah, I mean, it was an overnight success, four years in the making. But look, Mexico's a great place for permits now. It's a very supportive administration. And so the two main catalysts, now with the permit in hand, that we're comfortable setting for 2027 would be an updated resource in the first half and then a PFS in the second half.

12:34Trevor Hall: And the reason that we can do a PFS and not necessarily an updated PEA is remember a PFS needs reserves and you need indicated, not inferred. All of the 800 ,000 ounces of Cerro D 'Or right now are inferred. But one of the main impediments in the last resource estimate to having indicated versus inferred ounces was there were these old Naranda drill holes from the 90s. and their locations were not surveyed. And so we had the holes, we had the results, and they were in the database, but they didn't have precise collar locations such that in a normal disseminated door body like that, you would have indicated it based on the drill spacing, but because of the imprecision of those collars, you couldn't have that.

13:20But now we've actually gone back and located a critical mass of those Naranda drill holes such that we're confident that even if we didn't drill another drill hole, you can now convert a lot of the inferred to indicated because you have more precise survey data on those holes.

13:35Trevor Hall: Okay, very good. Which would enable us again to get from inferred to indicated. The other major update is going to be, well the gold price assumption is not going to be $1 ,600 or$1 ,700 like it was in the past resource, it's going to be$3 ,000,$3 ,500, somewhere closer to spot or long-term consensus. And so especially for an ore body like Cerradora, where it's a massively disseminated ore body it's a very elastic grade tonnage cut off here and so if we if we increase the metal price you lower your cutoff grade yes there might be a slight decrease in grade but to an overall huge increase in contained ounces yeah so you continue to commit building three mines and then we are we're gonna add the potential restart to Santana there with a little bit of an asterisk well that sounds like a pretty sure thing if I may editorialize myself but you continue to do this without dilution is that still the plan yeah I think look I mean there's scenarios in which everything is fully funded on a spreadsheet and there's scenarios that we've all been in mining long enough to know that not everything goes right and so you have to have scenarios you have to have like a what's the doomsday scenario what if gold goes below 4 ,000 bucks whatever goes to 3 ,500 bucks what if capital is harder what if supply chains harder like what if what if and if you compound all the what if maybe there's a shortfall of about 20 to 30 million bucks.

15:00Again, for a company of our size with our cash flow, not a huge deal. And I think, look, it comes up all the time. And I'd say we just wrapped up 60 to 70 meetings in Colorado across the two conferences. We were in Stockholm. We've been in Zurich. We are in Zurich again. We probably had 100 plus investor meetings over the past two months. And I'd say that probably comes up most often. People are like, okay, how much more money do you need? Do you need more money? How are you going to get it? People's greatest fear is that we go back to the market for equity.

15:32Trevor Hall: Do you think you're being valued on that? You think there's, I mean, you're still like half a billion dollar market cap less than Canadian, right? And you have all these growth projects within the pipeline. And that's a fast pipeline. I mean, the next six months are going to be very defining. It's very aggressive. You're absolutely right. But do you think the valuation is not only a reflection of maybe the sentiment in the gold market, but maybe is a wait and show me that you can do this the way you say you're going to do it? Yeah, because again, we have a lot of catalysts coming up in the next year.

16:07And I just think we have to regularly update the market on our progress at Copperstone, on all these other projects. And look, I don't have a crystal ball in saying like, oh, in Q2 of 2027, that's when we get the step change re-rate from a 0.3 multiple to a 0.5 multiple to a point. I don't know exactly what month, what quarter it's going to be. But I think the main re-rating catalyst is going to be getting close to production at Copperstone, getting close to production at Goldrock, and And people having visibility on us actually crossing the finish lines on those two assets. That's the major step change in our growth and in our cash flow and certainly in the market.

16:46Yeah, okay. And so, sorry, to touch on the financing thing again. I mean, yeah, I think that's people's probably greatest concern at this point. I think people probably underappreciate the amount of options that we have in terms of increasing debt or adding subordinated debt to the balance sheet we already have. getting creative on financing structures, selling non-core assets like Santana. I think people probably, they just default to, oh, you're going to do an equity race. Well, I think we have so many options. And we have time. We have a lot of time. We have$36 million on the balance sheet now.

17:23We have$30 million of excess capacity on the revolver, which we can draw down. And so there's definitely, and there's ongoing cash flow from the pan mine. And so all of this stuff is helping us in terms of time and in terms of bridging that potential gap. I think, again, on a spreadsheet and based on our budgets and plans, we are fully funded. But if we stress test everything in the worst possible scenario, there's a lot of different options that we have that we don't have to go to the market for equity.

17:51Trevor Hall: Okay, very good. We'll probably touch base again here in the next couple of weeks before we wrap up the year. And then 2027 is really teed up. So there's going to be a lot of updates here for a couple of months of the new year. Mining Americas does trade on the TSX with MAI and on the OTCQX with MAIFF. They've been a longtime supporter of the podcast, and I've also been a longtime shareholder of the company. And I didn't screw it up. I still call it Mining Americas. Rebrand complete. Yes, it is done. All right, everybody, we've got more coming from the Precious Metal Summit here in Zurich. Stay tuned.

18:25Trevor Hall: The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.