Roads, Power Lines and a Permitted Mill: Phoenix Metals' Brownfield Advantage

0:15Nicholas Campbell: Phoenix Metal says it's revitalizing BC's boundary region. The company is targeting gold, copper, brownfield exploration focused on both underground and open pit targets between Greenwood and Grand Forks. Backers include Chris Loader, president of Cisco Development, and Jeff Stibbard, founder and executive chair of JDS Energy and Mining. CEO is Nick Campbell, formerly CEO of Mayfair Gold. Nick has also had stints at Artemis Gold and Silvercrest Metals. Nick, welcome to MindSign Daily. Thanks for having me. Let's talk about history with this project, Nick. Chris Loder is chair. Jeff Stibbard is a board member.

1:00Nicholas Campbell: Explain how Phoenix Metals assets came across their radar. Sure. So Phoenix has been, I mean, this is a district. It's a copper gold mining district. It's been there's been mining operations for 130 years, but most of the major operations shut down around 50 years ago. And so there's a there's a pretty significant open pit. There was an operation there from 1956 to 1979. They took about 27 million tons out, grading 0.9 % copper or 1.14 grand per ton gold. And then there wasn't a whole lot of activity here. There was a few little companies that came around. They tried to do a small restart. There was a few underground operations.

1:39But really, there wasn't a lot of significant mining activity over the course of 50 years. And so Chris Lauder, who grew up in Grand Forks, and Grand Forks is in Central British Columbia, He started looking at this about 20 years ago when he was working with Anglo Gold Ashanti, and he was a senior geologist there. And so he started looking around there, and then he got involved with the Asisco Group. So Chris is the president of Asisco Gold, and he has also worked with Asisco Royalties. And so they actually looked at this as a potential opportunity for there to be some land consolidation, put together, support a company that could bring an asset back into production.

2:18that didn't really come together and he and he sort of took a few steps back from the project jeff stibbard started looking at this asset around the same time about really about 10 years ago and jeff took a slightly different approach he he started working with chief clarence louis chief clarence louis is the chief of the asoius indian band and so jeff actually reached out to chris lauder because there became an opportunity to acquire all basically all the major assets in the Greenwood Precious Metal Project by buying a company out of receivership. And so Jeff reached out to Chris. Jeff and Chris and both Chief Clarence Lee all came together to create this company, which has a really very unique background because you've got the JDS Energy and Mining that gives you the mine building expertise.

3:07You've got Chris Loader, who has a very strong geological background, and he's got his team that he's put together to move forward on the asset. And then you've got the social and permitting support associated with the Chief Clarence Louis and the Asoyos Indian Band. So this is a unique company that's been created in partnership with the Asoyos Indian Band with First Nations support. We're located in British Columbia. You need to have First Nations support in order to get your permitting. You need your First Nations support in order to have the social license to move forward. So that all came together really in the last couple of years.

3:43So a company called Golden Dawn, CanX, they went into receivership and we acquired these assets out of receivership, added a few additional properties to consolidate the district. And we went public a couple, about a month ago, and we've raised$46 million. We're sitting with$50 million in the bank and a very strong group of backers to take us as a public company forward.

4:12Nicholas Campbell: Nick, could you talk about the most recent company that had a kick at the assets that you've acquired there? What do you diagnose in terms of what was the issue in terms of them advancing the project? So the big issue with the district was a lack of consolidation. It was a lot of fractured ownership, a lot of small companies, and we would describe them as more lifestyle companies. So companies that would go and drill a hole here, hit some high grade, raise some capital, and then spend a couple of years spending that capital and then issue themselves options and then go back and redrill a hole to get some interest in the market.

4:51But not a lot of serious exploration work was being done on this. so when chris was looking at this property in a couple of decades ago the comment was this needs to be consolidated you can't you can't go and acquire and acquire the district because you have to end up having there you know four or five different companies that have a piece here and a piece there so one company in particular did start to do that consolidation uh they got together with a company called golden dawn and that was a company called canix it was run by um chris anderson and and so unfortunately that company ran into some issues they ended up going into receivership and and there's there was likely some mismanagement associated with that and that's really what created the opportunity because they they did do that consolidation that was required to make this district a go but unfortunately they didn't they didn't manage the company properly and they ended up going into receivership so that created the opportunity for us we moved in we've consolidated a, we have over 12 ,000 hectares in the property, in the land.

5:53We've got five significant targets that we're going to be exploring on. We've got$50 million in the bank. We're the first company to ever do an extensive systematic exploration program on the district ever. And I think that's, what's going to put us in a position to do well and to move forward and to really prove up some significant resources in this area.

6:14Nicholas Campbell: Do you have everything that you need to have a consolidated to put this through? Yes, we do. Now, you raised, you know, for your latest news release, that was late July, you've raised$46 million. You're planning 55 ,285 meters. You say within your deck that you want to advance towards a PEA. You also have a 2025 MRE to build upon. Help us out, Nick. Talk about what you can build upon what you need to fix? Because I imagine there's kind of a mix of exploration and resource definition that you're doing here. Well, the first set really is more about resource, trying to prove ups and deposits, right?

7:01We do have two established underground resources. There is a potential restart that we are looking at. But the big picture here is that this is a huge copper gold district that's never really been explored for bulk tonnage targets. We have two underground mines. But the drill program that we're doing right now is really meant to define open, pitable, near surface, bulk ton of targets. And in our, we've done, you know, the reason why I'm here, the reason why I joined the company is because I think there's potential for there to be a billion tons of very good grade copper gold mineralization at a strip ratio of less than three to one.

7:37And in the context of the current market, that is going to be, that would be a incredibly valuable asset. And so we have 145 holes that are planned. Most of those holes are focused on the Phoenix target area. There's actually two primary target areas that we're focused on. One is the Lexington mine. There's 170 holes that have been drilled into Lexington. We have a lot of information about that. And we've targeted about 150 to 200 million tons of potential open pinnable material. and we think it can range anywhere from 0.3 to 0.5 gram per ton gold and 0.25 to 0.5 % copper. If you look at other significant copper gold assets out there, that grade range holds up really incredibly well to what you're seeing in the market that have been acquired or that are in production today.

8:27But the big target is Phoenix. Phoenix is a historic, that's where the historic pit was. It's a copper gold scarring system. We're looking for the extension of the historic pit and the last and the historic pit was running 0.9 % copper 1.14 grapherton gold the area that we're drilling off there on the extension of the historic pit is a 1.5 kilometer long 750 meter wide area it's a big target and then associated with that big target is a different zone as you go south and west you you trend into this shear zone there's a lot more tension there's a lot more upgrading of the resources and there's a lot more veining that's associated with this zone.

9:07There's a golden soil anomaly that has outlined over a three and a half kilometer strike over a 500 meter width. There's historic trenching in the north of that that returned five meters at half an ounce gold, two meters at an ounce gold. And then there's some historic shafts that were drilled in the, that were developed in the 1920s in the southeastern part of the G80 Golden Crown Zone, they were focused on a very high-grade vein system called the King vein. And there was some drilling that was done by Merritt Mining in the 2000 knots that returned three and a half meters of 429 gram per tonne gold, 2.6 meters of 196 gram per tonne gold.

9:51So very high-grade, pretty good wits. Now, what you don't see in those historic results is There's also these veins and veinlets, a stock work system that you can't target with an underground mine, but you can with a potential open pit. So we're going to be drilling off that target area. And that is a huge target. It's potential that you could mine out that entire, both the South Scarn and the JD Golden Crown with one single pit. Now, we need to do the work to show what the potential is. We have most of our drilling is focused on that JD Golden Crown area. There's over 100 holes that are targeting that area.

10:29That's where I think the big resource expansion is going to be. That's where I see most of the resources developing over the course of the next one to two years. So what we're doing right now, we've got one rig turning on site. We're looking at adding another four rigs imminently or in the next couple of weeks. And we'll be able to put out very regular news flow on the expansion potential of this asset. And that should start sometime in late September.

10:58Nicholas Campbell: looking towards a PA or is that do you have there's so the PEA is related to the research so there's and so we we bought this asset and we bought it because of the potential of the district and when I say a district a district to me is something that can support is an area that supports multiple commercial deposits but we bought a 200 ton per day permitted mill that has a permitted tailing storage facility that has a permitted underground mine at the Lexington mine. And if you didn't have First Nation support to move forward on it, we wouldn't be looking at restarting the operation. If we didn't have the permits in place for the underground mine and for the tailing storage facility and for the mill, we wouldn't be looking at a restart.

11:44If the mill wasn't on-site, we wouldn't be looking at a restart. But we have all those things on-site. We also have the relationship with JDS Energy and Mining. They're shareholders of the company. Jeff Stivert is the director of the company. And Carly Church is our COO. She's worked with JDS Energy and Mining for nine years, and she worked with New Gold prior to that. So we have the team in place. We have the technical bench strength to look at a restart. And we don't have a PEA completed on that. We need to complete a PEA. But from the math that we've done, from the work that we've done, we think we can probably restart the underground for around$12 million Canadian.

12:22Canadian. And it's not a big mine, but it's a pretty decent resource. It's about six ground gold, 1 % copper. It's a really clean con. It was produced in 2008. It also produced in the 1970s, like 25 % copper concentrate grade with about an ounce of gold and a couple ounces of silver. Really attractive, really valuable concentrate grade, pretty good recoveries. So we can get that all put together and potentially put that into production for around$12 million. We haven't included that in our budget because we're looking at an external, non-dilutive source of capital for that. So we're looking at a potential debt deal or an offtake agreement that will allow us to put that back into production.

13:06And back of the envelope, we think this will generate somewhere between$3 to$4 million a year in free cash flow. So that's something that's important for the community. It's important for the Associates Indian Band for us to get some production and get some operations going to create some jobs in the region. But it also gives me some dilution management. So it allows me to generate some free cash flow. It allows us to invest in the environmental baseline work that we need to do to permit the bigger mine. It allows us to pay for overhead and G &A. And it also gives us some capital that we can put back into the ground and use to expand and explore the resource base.

13:46Nicholas Campbell: Now, you mentioned you're permitted for the 200 ton per day mill and fully bonded tailing facilities. Are there any other permits you need to secure? Well, it's on care and maintenance right now. So, and we haven't made it. And part of what we're doing is we need to do the work to decide if we want to, if that we want to actually move ahead with the restart. I think we probably will make that decision, but we need to complete a PEA so we can talk to the market about what the costs and the economics of that restart look like. and we need to make a construction decision. And part of that is also securing a debt financing package.

14:22So there's a dewatering permit that we need in order to start dewatering the mine. So we're working on that. That'll be part of the process of looking at a restart, but we'd like to get underground, take a look at the underground workings, see how much rehab and development work we need to do to make that safe and to make that ready for commercial operations. And we'll likely make a decision sometime in the next six to 12 months to start up operations.

14:50Nicholas Campbell: Nick, what's the weather like up there? And in terms of being able to work, are you able, because you said you had the one drill and you're going to be adding more drills, but are you able to work your round up there? Yeah, so one of the things that really stands out or really stood up for me when I went to site the first time is just it has the best access and infrastructure of any project that I've ever been a part of. And I've been able to be a part of some pretty great projects. You know, Artemis is in British Columbia. It's a long drive on a forest road to get to the Blackwater project. I worked at Las Chiscos in Mexico.

15:28That had pretty good access and infrastructure. But this is the best I've ever seen. So there's multiple power lines across the site. There's a natural gas pipeline that goes through the site. There's a rail connection at Ground Forks that's 20 minutes down the highway. But you're nestled up in the hills. You can't see the proposed mining operations. You can't see that from the highway. You can't see it from Grand Forks. You can't see it from the town of Greenwood. But you're nestled up right against the U.S. border. So you're immediately north of the border with Washington State in the U.S. It doesn't get that cold there.

16:03So most companies in Canada, you have to shut down operations in the wintertime Just because you have to be careful for people and safety, you know, operating in a minus 25, minus 30 degree weather is problematic. So in our area, the average temperature is somewhere between minus 5 to minus 10. It might get to minus 25 for a couple of days a year, but most of the time it's going to be in that sort of 5 to 10 range. You can work all year round on this asset. You also don't, we're not going to be building a camp on site. It doesn't make sense for us to. People are going to be living in Grand Forks.

16:45So living in a town is a massive advantage. It's much nicer to live in town than it is to live on an operating site. So it's something, the biggest issue for getting rigs on site right now isn't really rig availability. It's crews. You need drill crews to run those rigs. and they're going to like working in our area. It's also something you can work all year round. The drill companies are going to like that because we're not going to have to shut down operations in the wintertime. That helps with their working capital management. So it's a really desirable location. You don't get extreme weather swings.

17:22It's something that you can operate year round, and it's a nice place to drive to.

17:27Nicholas Campbell: Do you have information on the metallurgy and the types of rocks that you're working on? There are some, you know, you say that this is a historical spot and there also has been the past studies that people have done on there. Yeah, so there's two pretty decent, there's some decent data we have on the operation that was done by Merit Mining. So Merit Mining actually started up, the reason why we have a 200-tumber day mill is because of Merit Mining. So they built a 200-tumber day mill. they spent about $20 or$30 million building a$15 million mill and that's a good way to go bankrupt so then that's what happened they did process about 54 ,000 tons of development grade material and that's where we get the metallurgical recoveries that we're looking at it's around 90 % recovery for copper around 75 % to 85 % recovery for gold and it creates a clean con there's no nasties there, there's no arsenic, there's no antimony you know i know people love antimony but uh you know for the most part antimony ends up being a deleterious element when you're trying to sell concentrate unless you can create a viable product uh so it's a clean con it's a very desirable con there was also a mill that was built in the 1970s and they also produced a concentrate and they sold it to sumatomo and so and and we have the the metallurgical characteristics on that as well that was a copper gold concentrate as well again over 25 % copper concentrate.

18:51So that's the percentage that you're getting into copper con. And you're getting around sort of 85 % to 95 % recovery for copper. So it has pretty good metallurgical characteristics. Sumitomo used to buy the concentrate from this district. They're still interested in buying the concentrate from this district. And we're going to have to do some more work, especially in the JD Golden Crown area. So the cells current, that's a sulfide. That's a copper sulfide. The Lexington project, that's a massive chocolate pirate. It's primarily a sulfide deposit. JD Golden Crown is more of an oxidized area. So we're definitely going to have to do some more MET test work on that area.

19:29But for Lexington and for cells current, the MET characteristics look really solid.

19:34Nicholas Campbell: So Nick, lastly, looking at the milestones ahead, it looks like there's just going to be a lot of draw results that are just going to be coming out as you kind of envision this large open pitable project. Yeah, it's mostly going to be drill-related news flow, which I mean, I love stories like this. I love being a part of a brownfield district. It's a completely different beast than when you're looking at greenfield exploration. uh we we have a lot of data that's driving the systematic approach to the drill program that we're doing right now there's 170 holes that have already been drilled into the lexington target that's where we're drilling right now we've got 12 holes planned in there so that's where you're going to see the first results and and and we're looking for your you should expect to see and i don't have any assays we haven't even uh we haven't even shipped off our first uh course to the lab yet.

20:24But while we're drilling these bulk tonnage targets, we're also expecting to hit some pretty high-grade structures. So you've got, at Lexington, you've got an established 2026 43-101 compliant indicated resource of 424 ,000 tons that's grading, you know, six gram gold, 1 % copper. That's pretty good grade. But we're also drill testing the near-surface mineralization. So we're expecting, We're hoping to hit some broad zones of mineralization that show the potential for bulk tonnage, but we're also going to be able to reinforce that there's high grade within that district. And the same thing at JD Golden Crown and Sales Current.

21:05We're drilling for bulk tonnage targets, but we could also hit some really high grade structures. So there's potential for underground here, high-grade underground, plus big bulk tonnage, hundreds of millions of tons of potential resources, up to a billion tons or more, depending on how successful we are. And that puts together a pretty interesting exploration story. So we're drilling. We have one rig right now. We've got four rigs coming on site. We're working on the final touches of a new contract with an exploration company, a drill company, to bring another four rigs on site, let's say, in September.

21:42And then we're going to have consistent drill-related news flow. And as soon as we start getting results out to the market, you should see an additional result or two coming out every month for the next two years. Nick Campbell, thanks for speaking with Mining Stock Daily. Thanks for having me.