Transcript
Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:08 Hello everyone and welcome to GR Silver's live investment summit hosted by 6. I'm pleased to introduce chairman and CEO Eric Zoncher. Eric's going to review a presentation for us and after we'll be entering a live Q&A session. I'd like to remind everyone in the audience that you can ask questions using the Q&A tab found on the right hand side of your screen. And in the coming days, this video will be available on six.com as an on-demand recording. Eric, with that, though, I'd like to hand things over to you to get us started. Thanks very much, Cam. It's a pleasure to be here.
0:37 I am the chair and CEO of GR Silver. Originally, I was a geologist and then I became a mining analyst and did that for 34 years. And what was important to me as a mining analyst was to find stories, and I focused on exploration and development, that featured the 5 P's, if you will. So from my perspective, the 5 P's are place, project, people, price, and potential. So those were the important things to focus on and I hope you'll see that when I'm done here that we have those attributes in spades and it's something that you need to pay attention to. So our purpose, if you will, is to responsibly create value on behalf of our stakeholders by progressively increasing our precious metal resources and consequently the focus is, and I will be making forward-looking statements, is on our project, the Plumosis project, in Sinaloa State, Mexico. And as you can see here, we are located about 3 hours outside of Mazatlan. It's about 1 hour by highway to El Rosario and then 2 hours by road into the Plumosas project and we have an excellent situation in terms of infrastructure with a really great road network.
1:58 We have power direct to multiple sites within the project since there are 2 former producers there and also extremely important is people. Mining is in the DNA here in this district. El Rosario district was a producer for over 250 years and so mining is in the DNA of the local people. They are very much interested in the mining industry and there's mining that continues to go on at this point in time. Moving on to the project itself, the Plumosus project covers over 430 square kilometers in the area and we have 2 areas within the Plumosus project that we're focused on. One is San Marcial and 2 is the former Plumosus mine which was active from 1986 to 2001.
2:47 So with these 2 areas, both of them we have underground access. Plumosus itself has over 7.4 kilometers of underground development. At San Marcial it's all about a relatively new discovery that we are expanding. We're expanding to depth and we're expanding along the southeast extension from that deposit. At Plumosis it's all about demonstrating a higher grade. And so we know that the production grade at Plumosis in the past was 190 grams per tonne silver, not silver equivalent, silver, and Plumosis were getting areas where we thought in our block model that we had 3200 grams that were actually pulling drill results that are much, much better than that.
3:34 Things like 24 meters grading over 1,000 grams per ton including 0.6 meters of over 7,000 grams per ton. So there's an important sea change coming as people realize that the grade of plumosus is much higher. At San Marcial, that's an exciting project in that we are getting very exciting results at depth. So we reported results like 18 meters of 773 grams and you know within that 5.6 meters of 1792 grams getting excellent results at surface things like 15 meters of 547 grams and and we're seeing a similar geological setting that we see at San Marcial. We're seeing potential copies of that as we go further to the southeast. So we have active drill programs going on at both San Marcial and at Plumosis.
4:34 You're going to see regular results, regular news flow from those 2 areas and ultimately we're working towards seeing resource updates in the first quarter of 23. That should be very, very, very interesting and that's something to focus on. Next P is people. I think that we have an extremely strong management group and board on the management side. The founder, president and chief operating officer, Marcio Fonseca, did a fantastic job having the vision to create this land package out of 3 separate properties, bringing it all together, consolidating this district-scale project, as I said, over 430 square kilometers, working side by side with Trevor Wolf, our VP of Exploration and Corporate Development.
5:24 They are mentoring a fantastic team of young geologists in Mexico. And that group in Mexico, we have almost 150 employees in that area, almost all of which are the vast majority of which are coming from Sinaloa State and also from some of the local communities like El Rosario. So It's a very, very strong group of people that we're working with. It's a super synergistic operation. And on the board, very supportive board members, people like Laura Diaz, former Director General of Mines in Mexico. She's extremely knowledgeable of how the mining industry works in Mexico. And Jonathan Rubenstein, who was the former chair of MagSilver, and most of you know, will know the MagSilver story and what a great success that has been.
6:13 Moving on to price, In other words, the valuation, I think in the chart on the left you can see how the market cap of GR Silver is quite low relative to its Latin American peers, even though we have a high number of ounces in the count. And on the right, the enterprise value, so what is the market paying for our ounces? Well, right now, the market's paying 49 cents US for our measured and indicated ounces as compared to an average in the group of $1.90. So that's a 74% discount. Part of that relates to disappointment in the resource that we put out last year in August. And as we continue to drill and demonstrate that we know now where the high grade is, we demonstrate that some areas where the block model had 0 grade in it, demonstrating that there is in fact grade there, that we should see a nice lift in our grade. And so as we come to first 0.25 23, we expect to do 3 things. One is demonstrate that we can deliver on our promises, to demonstrate that we can increase the grade and therefore increase the number of ounces at Plumosis and increase the number of ounces at San Marcial through discovery.
7:28 And then finally that These ounces are in the realm of the economic and so we're excited to see that. We hope to see our valuation move right on that chart on the right hand side there. So great opportunity there. In terms of potential, The setting here on this large property is extremely important and the features that are important here are these large, northwest trending structures, these deep-seated faults that run parallel to the Sierra Madre Occidental. And these faults are the plumbing system for very, very nice epithermal systems, low-sulfidation epithermal systems, and you get veins and breches that go along parallel to these. We have over 75 kilometers of these major structures, And we've only begun to touch the surface and here you can see the area north of Plumosis has a number of showings and mines, past mines.
8:27 You can see one here called La Colorado where third party and a postage stamp concession
8:32 within ours is mining underground gold, not silver, but rather gold in a high grade. So there's a lot of potential on the property. We're very excited about what's going on here and we hope that you are as excited as we are. Thanks very much. Thank you, Eric. We'll be entering into the live Q&A portion of today's session. Now, I'd like to remind everyone in the audience that if you have any questions, you can submit them using the Q&A tab on the right-hand side of your screen. To get started, Eric, Sam has a question. Would you be able to share your views on expected cash flows of the company? More specifically, would the company be able to pay its short-term liabilities, amongst other Mexico mining concession taxes of Canadian being $13 million, and the ordinary course of business expenses. Given the share price of 12 cents Canadian being fairly low already, do you foresee further dilution in the near future?
9:28 Great question. We are at the stage where we're going to be delivering resource updates. So the next stage after that we'll be talking about preliminary economic assessment if justified by the resources that we bring out in the first quarter. So a PEA, you're talking about something that takes several months. We're probably looking at something that might be an integrated operation between Plumosus and Saint-Martial. There is no way that we are going to go to production without going through the technical reports that are required in order to do a good job. That's speculative. And so how far are we from cash flow and what might be the magnitude of that cash flow? It's way too early to say. These are advanced exploration projects. We have great underground access, which helps shorten timelines as do the fact that we have permits and the HEDO agreements with the communities around us. That's all great because it does reduce timeline, it reduces risk, and it reduces capex.
10:30 But we're not going to shortcut this. Okay, so in terms of the mining tax concession arrears, for example, that's something that can be addressed. As I mentioned, we have Laura Diaz on our board, a former director general of mines in Mexico, and she knows intimately how the system works in Mexico. So we're very confident that we're going to be able to deal with that. As for dilution, you're absolutely right. When you're
10:56 trading at 12 cents, that's not something you want to do a lot of dilution at that level. We have to recognize and we've seen this movie before that this has been one of the worst markets in 40 years and I've tracked it for almost every day of those 40 years. And that's an opportunity for those people that have got cash to look for high value companies. Again, companies that have the right projects, people, place and price. The opportunity is there for those people. No, fair enough, Eric. Another question, can you speak to the investors in the room about what upcoming catalysts you're looking forward to? Absolutely. As I mentioned, we have ongoing drill programs, both Plymouth and Saint-Martial.
11:46 And so we're going to be and we have been putting out regular updates, regular news releases perhaps for every 4 to 6 weeks and so we bring out these news, these results, assay results from drilling in a batch basis, putting these things into context, not hole by hole.
12:04 And so you can expect a news release every 4 to 6 weeks or so updating on the drilling. But ultimately, the most important catalyst is the resource update that we have planned in the first quarter. And that will be important from the perspective of valuation for the company moving forward. Alright, moving forward, what do you consider to be the greatest challenges facing GRSilver in the next 6 and 12 months? Yeah, as I mentioned, this has been one of the worst markets in 40 years. You know, normally we can expect a Santa Claus rally in December into January that might, I think on average, they run around 8.6% gain in that time period. And we've seen, we saw a decline of almost 9% during that time period.
12:53 In the period from December to May, we've seen now a decline that's well over 30% and I'm talking about here the TSX Venture composite as sort of a proxy for the juniors out there. So it has been ugly. So what's the greatest risk? The greatest risk is of the Treasury as we talked about and we're good for a few months in the Treasury but we do as an exploration company have to tap the market and that is the challenge going forward in the next few months is what happens with
13:23 the market and what's our context. All right. Tom wants to know how long your current Treasury is going to last without any additional funds? Yeah, I mean a lot of that depends on how aggressively you drill and we are trying to be aggressive. We have several thousand meters to drill but we're drilling very inexpensively. We've got great crews trained up there on the drilling side. So you know I'm not going to say it's X months. It is, we have several months of drilling ahead of us. We intend to stop towards the end of October, beginning of November, cut off the database going into the first quarter of next year for our resource update.
14:04 Absolutely, thank you Eric. Another question, how does GRSilver participate in the surrounding community? Yeah, I view it as a very symbiotic relationship. Yes, of course we provide jobs and training, we provide health and safety, We have ambulance on site and 2 nurses. Our strict COVID protocols, in other words, you can't get on site without having tested negative. And for example, temperature taken before every meal. So you walk up to the monitor and see if you're running a fever. If you are, you're in quarantine. So that sort of attitude has demonstrated to the people that work with us that we care, that their health is important, the training that they're receiving, all those things are very, very positive.
14:56 Participation in the forestry program, reforestation and assistance in firefighting, all those things are important. But we also benefit from them. This is, like I said, a symbiotic relationship. We help each other. I mentioned that people have been in the mining industry for generations. It's in their DNA. And so we learn from them, we learn from the individuals about the area and it's extremely important we help each other. Oh fair enough. Listen, Eric, that looks like all the questions we received for today. So with that we'll begin wrapping up. I'd like to remind everyone that Today's presentation is going to be available as an on-demand recording in the coming days. And of course, if you'd
15:34 like to follow up with GR Silver, their information is in the handouts tab on the right-hand side of your screen. It's a copy of this presentation that you've seen today. Eric, I'd like to pass things back to you for some final words before we properly wrap up the day Bill. Great we touched on it, this has been one of the worst markets in 40 years but there in lies the opportunity. Those people that can should be looking at companies that have what we call about the 5 Ps right, these are world class projects in a place that's more than acceptable with people that know what they're doing at a price, and of course everything's priced rather attractively right now, with the potential to grow. And I believe that GR Silver has those attributes, and I hope you'll consider that as we go forward here. All right Eric, well I want to thank you again for coming on today and I want to thank everyone who also attended. With that though we'll be wrapping up for the day and I hope everyone has a good one. Cheers. Thanks very much.
