Transcript
Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:03 Okay, I'll say good morning, good afternoon, or good evening, depending on where in the world you're signing in from today. So at least several time zones on the list. I really appreciate you guys joining us. I've got me today Bob Archer, CEO of Pinnacle Silver and Gold to discuss recent news, and also a small preview for what's on for 2026 for the company. Bob, good to see you again. Hope you had a good break. Thanks, Romeo. Nice to be back and yeah, refreshed and recharged the batteries. So we're ready to hit the ground running again. Perfect, it's what the holidays are for and you've obviously hit the ground running pretty hard because we've got some news to walk through today. I
0:35 just want folks in the room to know how this is going to work. First I've got a couple of questions for Bob based on recent news, but as always this is an interactive event so if you do have questions feel free to ask using the chat button on the bottom right of the screen. This probably won't be the longest event in the world, so if you do have questions, try to get them in early to make sure that we see them. I'll pose them to Bob right away. I know there's quite a few of us in the room today, so do try and get your questions in just to make sure that I pose them. Only last piece of
1:00 very boring housekeeping before we get started as this is being recorded. We'll be able to replay probably at about 2.30, 3 p.m. Eastern time. It'll come right into your inbox, so you can expect it there and share it once you get it. Awesome, but let me get into the protein today. Bob, you just released a pretty comprehensive progress report on El Patrero. If first for the folks in the room, what would you say are the most significant achievements just from the first 10 months working the project? You know, in some respects, it's hard to pin it down to a specific event because so much of the work that we were doing has been ongoing. But I think in terms of what we've learned about the project in that 10 months is, you know, having taken over 1000 samples around 1100 I think on the property, you know, more than 800 underground
1:50 and just really getting a good sense for the size of the system, the intensity and the consistency of the grades that we're seeing. And so, you know, that really helps to sort of boost our confidence, I guess you could say, in terms of what we're actually looking at and being able to put a real plan together for this year and getting to the point that we're at right now, where we're putting the final touches on an underground drilling program to start delineation drilling of mineralized zones. So, you know, to be able to start that underground,
2:37 just after 10 months on the project is something that we're really pleased with. So I think that's really one of the key things. I appreciate that. I do want to get right into that underground delineation drilling. I know there's about 1,100 meters planned across 50 holes. For folks familiar with the project, what targets are you prioritizing and what timeline generally should people be thinking about for how you're working here?
3:03 That 1,100 meters is really just a phase 1, if you like, because we're targeting the 3 principal, actually 2 of the principal mines in phase 1. So the Pinos Cuates and the Dos de Mayo, which are 2 of the 3 historic mines along that 500 meter trend. And the reason for that is that we want to start with the areas that we have been sampling underground where we know that there's good mineralization. But we just, because the underground workings are somewhat limited, you know, if people think in terms of just being in a hallway or you're in a tunnel, and you can only sample what's on the walls and what's on the ceiling above you. So you don't know what lies beyond that and so in a lot of that area we simply don't know how wide the zone even is or what the grade distribution is going to be. So that's where we want to focus initially.
4:09 So we have a number of drill stations that we'll be setting up within those areas where you know we'll drill those 50 odd holes right into the guts of the mineralized zone so that we have a much better understanding of the size, the shape and the great distribution and that sort of thing. So, and then once we have that information, that will then allow us to start stepping out and,
4:34 you know, to see how, what the continuity is like of the mineralization. So that's how it's likely to
4:43 unfold. And in terms of timing, I was just there last week with a number of contractors, both for the underground development work that will have to be done to prepare the sites. We'll have to enlarge some of them and make sure that they're secure from a safety standpoint. So that work will likely start first week of February is what we're planning on right at the moment. And then, you know, it could take a month, maybe 6 weeks, something like that to get that work done. And then we would start with the drilling at that point. And the drilling itself probably shouldn't take all that long because the holes will be relatively short. I mean, we're only talking 20 to maybe 25 meters for each hole and a number of holes from each setup.
5:37 So it might have 4 or 6 holes or maybe more from a particular setup. So it's not like the drillers have to move the equipment. They just basically have to tilt the head, excuse me, to drill in different directions.
5:54 So it should go fairly quickly once we get going. Okay, great. I appreciate that extra context for sure. Now there's somebody in the chat who actually has the same question that I was going to ask next, so I will put you on the spot with this one because I know you mentioned discussions are progressing for an offtake agreement. Is it possible, are you able to share, if you aren't that's fine, but if you're able to share what stage those conversations are at and when you might have something to announce in that regard?
6:22 There are different stages with different companies, I guess. Some are a little more advanced than others, But they're fairly advanced. There's definitely interest there. We're in discussions with several major training companies as well as a few lesser known ones.
6:46 And at the moment, everything's still on the table. I don't think we'll likely be signing a deal for some months yet, probably until after the drilling is done. But having said that, there is a possibility of at least coming to terms and whereby we could disclose
7:17 an interim or an indicative term sheet, I guess you could call it, of what the likely terms might be. And, you know, so it's possible we might be in a position to do that within next couple of months, perhaps.
7:34 But, you know, the key thing there is that it would indicate to the market that we would be fully funded for production at that point and that we wouldn't have to go back to the market to fund that. So I think
7:49 when we get to that point, we could very well see a re-rating of the stock at that point, you know, because people will or realize, you know, what the future looks like, I guess you could say. So, we're somewhat advanced in some of those discussions. Great, thanks, Hayth. That's a more thorough, robust answer than I was expecting, so I appreciate it very much. I want to get into the LIDAR survey for a bit, because I know it identified
8:16 64 edits, 6 shafts, 51 prospecting pits, but with most lying outside of that initial focus area. So my question to you is, what does this tell you about the property's potential beyond that dust to mayo structure?
8:32 Yeah, so I mean, because we haven't really done much in the way of detailed work on the rest of the project, we were only so far we've only concentrated on the northern 10% where the historic mines and the plant are. So Looking at the other 90% of the property, we can really only go on the regional geology maps at this point in time. But based on that, we can see structures and similar rock types, some alteration, those kinds of things that are indicative of similar epithermal-style mineralization, which could, if we find something there and can prove that up, then that would just add incremental tonnage to the Pacharo project and for the plant.
9:18 But aside from that, there's also a good size intrusive that underlies both of the blocks of the property
9:29 and it's exposed on the southwestern portion of the Petrura block. And there are some pits and adits that have been interpreted from the LiDAR in that intrusive. And that being the case, if there is mineralization within the intrusive body, then that would be a completely different style of mineralization than what we're looking at currently. And so
9:57 in that regard, yeah, we'd have to really get in there and just see what that might look like and what the potential might be. So we're already talking to a few candidates for adding another team
10:15 to what we have already in Mexico. And so hopefully they'll be starting early February as well and can get to work on those new areas. Okay, awesome. And yeah, I do wanna talk about that new crew actually for the follow-up on the targets. With that, are you looking at a completely different style of mineralization in some of these areas, or is it just extensions of the epithermal system that exists?
10:38 It's both, really. In some cases, it's a direct extension of what we're working on now. In other areas, it could be either a parallel or just similar mineralization. But it would only be a few kilometers away, so an easy trucking distance to the plant if we were to find something like that. But over that intrusive, that could potentially be a completely different type of mineralization altogether. Okay, I appreciate that very much. I'm about
11:09 to ask you a question I've asked you a number of times before, so I hope it doesn't bore you, Bob, but there's new people in the room. And I want to remind people of your model, which I think is interesting. It's to earn 50% upon production and move to 100%. So really, what I'm looking for is based on recent news, how close are you to that initial production milestone? And what are the big items that have to happen to get there?
11:30 Well, we continue to work forward with everything that we're doing now with the drilling to advance that and just building confidence, de-risking the project along the way. So it's all sort of ongoing. And similarly with the permitting, which is one thing that we don't have 100% control over. Everything else we're doing, we do control, so it's much easier to be able to pin that down. But on the permitting side, It's progressing well. We have a good positive dialogue with the various government ministries. So that is progressing well and I hope to be able to get various permits. There's not just 1 permit that's required, there are a number of them.
12:22 And so as we get those, we'll obviously announce them. But I think overall, It'll take, once we get to a certain point with all of that, it's likely to take close to a year
12:39 to order the equipment, to rebuild the plants, to rehabilitate the underground workings, extend the power line. All of that has to be done. So at this point where we sit here, January 26, I'm still tentatively looking at maybe the end of next year to be able to start production. And at that point, we would get to 50% and then a year later, we can go to 70 and a year after that, basically to 90 and 100. So that's, once we start production, it's just another 2 years to get to what we think will be 100%. I mean, it's basically 90% and the vendor has the option to convert that last 10% to a 2% royalty, which we think he will do at that point in time.
13:31 So it's effectively 100% after 2 years. Great, like I said, I just like to remind people of your model, I think it's neat. So last thing I want to zoom out before we get into some of the audience questions. I know there's a couple in the chat and 1 came over email, but I know beyond El Patrero, you mentioned evaluating projects for another potential acquisition in 2026. Seems to be shopping season in the mining industry. So my question is, what are you looking for and how is it going to complement the Potrero development? Well, at the moment, Our focus is still on Mexico.
14:03 We would consider other jurisdictions. Peru, I guess, would be second on the list. But right now, the main focus is Mexico. We have a number of projects that we're looking at there. And again, precious metals, the 2 top projects we're looking at, 1 is silver dominant, 1 is gold dominant. And advanced enough that similarly to Petraro, we could move them towards production fairly quickly. So, a very similar model, but the idea being that they would be
14:45 larger, the next one would be larger than Potrero and then get that going and then we hopefully acquire another one beyond that and just kind of build the company that way. So we're trying to stick with that main core of our business model of fast-tracking towards production as much as we possibly can. You know, we're not just out there looking for, you know, greenfields type projects, grassroots type stuff that requires a lot of drilling and that sort of thing. I mean, that's just not part of the business model. So that's not really of much interest for us. Great. No, it's good to get in your head for that. I was curious during shopping season what people are looking for. So I think it's fun. Now- A lot of competition out there for sure.
15:35 That's one of the challenges. I remember going back to 2010, 2011 when we were in a similar situation and silver was in those days, it was $40 an ounce, which was high at the time. But trying to negotiate deals with silver at that price in those days was challenging, to say the least. It's funny how the price goes up of projects. So yeah, so just have to keep all that in mind, do what we can, but just trying to work through my network and try to build from there. No, it makes sense. I know a couple of years ago, PDAC was very depressing. Now everybody's treating it like a shopping mall.
16:20 So the vibes have changed a lot over the course of 2 years. Now I do have one question from online before I get into the questions in the chat. Somebody wrote in early, just ask what's the current funding situation for Pinnacle? So right now we're just working on the second tranche of the financing that we announced before Christmas. We did close off the first tranche December 19th, I believe it was. And then we've announced that The second one, the target date for closing is January 30th. So, and the total that we're aiming to raise is 2.5 million. So it's progressing well, and we're looking towards that January 30th close. And that 2.5 million would basically fund drilling that we're about to embark on and potentially even into any surface drilling that we would start beyond the underground drilling.
17:15 So it should be fun times ahead over the next couple of quarters and lots of great results to come up from that. Great. Barry asked right at the top of the hour, he's got an interesting question just looking at your shareholder strategy. Are you looking to get more institutional support right now or is that something you're looking at in the future? Well, we will be. It's a bit of a gradual thing usually where you move from retail to institutional. A lot of the funds can't invest in companies under a certain market cap. So they just, or else there's a liquidity issue or something like that. So they have their own internal rules that will dictate who they can invest in and who they can't. So it's not even our choice necessarily.
18:03 And we just have to build the company to a certain size. But in between straight retail and institutional, you've got family offices, you have the ultra high net worth investors who are able to write bigger checks and so on. So right now that's the primary focus and we can get some of the smaller funds that are maybe not tied down by their own regulations and get those involved. But yeah, it's a bit of a gradual process as we grow the company. I appreciate that. It's good. I think shareholder strategy is important for people to get their heads around, so I appreciate it. There's 1 back on the project, Wesley asked a while ago, Is local talent solid near the project or need to bring in Canadians?
18:49 Is the first question and the second is are there any Mexican nationals expected on your board or management team? So to answer the first part, we're 100% Mexican in country, you know, that's from from Carlos who is our project manager and you know, I mean he like myself has 45 years in the business. Carlos worked for me previously at Great Panther. He was our general manager at the Guanajuato mine. We worked together for 7 years. And he knows his stuff and he's looking after everything on site. And we also have Jorge Ortega, who was our exploration manager at Guanajuato as well. And he's fulfilling that same role now.
19:36 And all the other guys are Mexican. And we're hiring locals when we need casual labor. We're based out of, or we staged out of Topia, which is the mining town. It's only a 30 kilometer drive. And we can get contractors, equipment, supplies, skilled labor, most of the things that we need, you know, we can source in Tokyo. So local talent very much, yes. And in terms of Mexicans on the board or management team, Well, I guess, you know, I mean, Carlos and Jorge in a sense are the management team, but they're in, you know, moving up to Canada.
20:26 It's not really necessary at this point in time. You know, we, one of our other board members, Dave Solari, who's a metallurgical engineer, is working closely with me on metallurgical testing, which is a key thing that's ongoing right now. And he's building 3 other plants in Mexico right now. So, you know, he certainly has the ability to oversee everything and work with Carlos and myself and, you know, back up and running again. So, you know, we have a relatively small team, but with just the one project, that's all we need at the moment. And we'll build out the team as needed if we take on another larger project. So we'll see how it goes.
21:13 Awesome. Well, Bob, Everyone who's in the room, thank you so much for joining us today. As always, thanks for letting me grill you. Good to get to the details. Appreciate it very much. And good to see you back in January. Obviously a lot of work ahead this year. It looks like all good news. So looking forward to chatting again soon. You bet. Me too, Romain. Thanks a lot. Cheers, everyone. Have a great day.
