Transcript
Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:04 Hey, good morning or good afternoon, depending on where in the world you're signing in from. I know there's at least a couple of time zones, so I certainly appreciate everybody's participation today. I've got with me Bob Archer, CEO of Pinnacle Silver and Gold for a quick update in the company's most recent press release, updating the market on the El Potrero Project in Mexico. How are you today, Bob? I'm doing well, thanks, Romeo. Hope you're doing well too. Yeah, no, appreciate it. So here's how today's gonna work. I've got some questions for Bob that we're gonna go through, and then we'll throw it to the live audience for any questions you have. It's a short event today, so if you do have questions, try to get them in early so you can squeeze them into the
0:35 conversation. But there's a chat button on the bottom right of your screen, and that's where you can ask questions at any point during today's event. If we don't get to your question just for time or it doesn't quite fit with today's conversation, I'll still make sure that the Pinnacle team gets access to that question, along with your email or phone number, depending on what you entered into our system, and make sure that they get back to you as soon as possible. The only other piece of housekeeping I'll get to today is that today's event is being recorded. It will be available for replay in the early afternoon Eastern time, so probably late morning Pacific time. It'll come right in your inbox for those of you in the room. At that point, you can feel free to share it on. That'll also be on Six's YouTube channel and eventually on
1:11 participating websites. So Bob, if you don't mind, I'm gonna get right into the protein. I know your press release, the one we're covering today, not the one about the ticker change, which is still relevant, but the project update covered a lot of ground, from geological discoveries to plant assessments to permitting. So what I wanted to ask is, what do you see as the most significant development or breakthrough that came out of your most recent site visit and assessment work? You know it's maybe partly because I'm a geologist myself but I think what came out of that visit was really the most significant thing to come out of the visit was a better geological understanding of what seems to be controlling the mineralization on the property.
1:54 You know, the other aspects, we did take in a couple of consultants, 1 to do a plant assessment and 1 to look at the site from a permitting perspective. And those things were advanced and we had some great discussions, but in terms of the significance for the development of the project itself, what we discovered was the importance of what's called a dike, quartz-filled porphyry dike, that is displayed not only on surface, but it's observed underground as well. And some of the underground workings that are there were entirely within the dike. And that's not really the main host for mineralization.
2:40 And so what that means, in practical terms, is that much of the underground workings were not actually in the mineralization. And so that leaves extensions of the vein structure completely open. And we found the one contact of the vein was exposed in some places underground, but the other contact wasn't. And so we still don't really have a full appreciation for the width of the vein structure. In some places we're estimating it's about 10 meters or maybe even a little bit more, which is pretty significant. So we're not talking narrow vein, half a meter type of things. And so that was significant in a number of different ways because it sort of increases the upside, if you like, and
3:33 as to what we think we might be dealing with here. But it also changed the approach from an exploration and development standpoint, because we started to think more seriously about moving towards underground drilling faster than we might have otherwise in order to explore the extensions of that vein in the underground workings. So I think that was probably the most significant breakthrough, if you like, in terms of our thinking
4:04 from the visit, but it was a great visit all around. No, no, really appreciate that. I always like to hear just the hits and highlights from your perspective, so I think that's helpful. I know the press release mentioned you're planning both underground and surface drilling programs. So what's the estimated timeline and capital requirement to move from current sampling all the way through to production and really what's the plan to finance it? Yeah, so I guess from that standpoint, we are looking at rehabilitating the plants and the drilling and so on. So we're putting all of that together. Now we're just waiting for, you know, sort of a formal assessment and cost analysis of the of the plant rebuild. And you know, one of the most significant things to come out of the visits from that standpoint was that the plant site, because it was in production before, so it is a disturbed site.
5:01 And the plant itself, the foundation is solid, the infrastructure, the framework, all of that is solid and intact. So we don't need to start from scratch in terms of a complete rebuild or a complete build if you were building it new. And so that's super important because then we can just go in and look at replacing the individual
5:27 components, the mechanical equipment like crushers and a ball mill and compressors and things like that. So that'll really help to keep the costs down.
5:40 And so that's, until we get a formal proposal, we won't know really what we're dealing with in terms of cost, but from a high level estimate at the moment, we're sort of thinking in the 2 to $3 million range, US, to rebuild the plant. And so That's kind of what we're working with at the moment. And I think it's quite possible that once we get that formal proposal and we have a much better idea of what it's going to cost and the timelines and so on, we may be able to start talking to people about potential offtake agreements, an advance loan against that and that would help to to pay for the pay for the rebuild of the plant.
6:28 Great and speaking of the plant I'd love you could just provide just for folks who might not understand the difference, what the expected CapEx is for that rehabilitation versus building new just so people understand the rationalization. And also what production rates you're targeting in year 1. Obviously it's a target, but what are the production rates you'd be targeting right off the bat?
6:49 Yeah, so what we've been told by the consultants is that because we have to replace the, you know, some of those major components like the crushers and the ball nose and so on, that, you know, now is the time to decide what size we want the plant to be. So we had been told that it was previously running at about 100 tons a day,
7:12 that's sort of ballpark. But if we're gonna be putting in new equipment, then we can sort of choose that level ourselves based on what we think we can do. So that's where the geological side of it really comes into play because as we commence with the drilling program, we'll get a much better sense of what we might be able to develop in terms of resources, and then that in turn feeds into the plant. So for now, we're more or less working with that 100 ton a day scenario, and then we can adjust that going forward depending on what we find you know with the drilling. But we'll do a kind of a sensitivity analysis on that and say okay what you know what would it cost if we wanted to go to, say, 150 tons a day or 200 tons a day with slightly larger equipment?
8:08 And then what kind of resources we would need to establish that and so on. So for now we're kind of targeting or working with that that hundred ton a day scenario. And, you know, based on what we, again, what we've been told from the old production records and previous sampling, which has more or less been confirmed by our own sampling is that we're probably looking at about 10 to 12 grams per ton, gold equivalent in terms of head grade. So if we can maintain that, that would be great.
8:42 The other thing to keep in mind too is that we'll have to do, again, sort of a cost-benefit analysis. The higher the grade, the better your margins, but sometimes there can be
8:57 a huge cost saving by going with a larger tonnage. So you would take some of the lower grade material from underground as well. So you lower the cutoff, which brings down the average grade. So we might end up producing a head grade of maybe 6 to 8 grams per ton instead of 10 to 12. But what that does then is significantly increases the tonnage. So you can go with maybe A23, even 400 ton per day plant and get your unit costs down quite significantly. These are all the sorts of things that we'll be going through
9:37 as we go forward, and looking at the capital costs of doing that, of course, as well. That makes sense. I know you mentioned that you took a permitting consultant to site. I know there's already some questions in the chat about permitting, so we'll get to those in a second, but just curious, what was the outcome of that visit?
9:54 Probably the most significant thing really for now is just a confirmation that because this is a disturbed site because it was in production before,
10:06 that will reduce the amount of work baseline studies that need to be done. You know, we're not just going into a new pristine area, you know, We'll be looking at forestry permits and all this kind of stuff, cutting down new trees. This is a disturbed site and the entire plant area, where the camp was, the offices,
10:31 all that sort of thing, tailings facility. And there was even an old airstrip there, which obviously was disturbed as well. So, and then the roads leading up to the mine portals themselves. So, you know, having that is going to make a big difference in terms of the permanent applications. So, we had some good discussions over what the consultant thought we would need right off the bat in terms of basic data. So we've already started to pull all that together in terms of maps and surveys. We have a surveyor on site right now taking topographic surveys and all the measurements
11:10 that need to be done for all these maps and so on. So I think that was the biggest thing that came out of it, but also talking about the process that we'll need for permanent applications because at this point in time, Pinnacle, or at least the Mexican subsidiary, is a new company in Mexico and this is a new project for us, just having accorded in late February. So the authorities don't know who we are, they don't know about the project and so I'm actually going back to Mexico this coming week
11:49 to meet with the government authorities and along with our environmental consultants and our environmental lawyer and just to introduce ourselves, introduce the project, tell them a little bit about what we want to do, and get us on their radar screen basically, and get their thoughts on what they think we're going to need in terms of the baseline studies and data, because we want this to be a smooth process.
12:19 We don't want to just go in and collect a bunch of stuff based on what we think we need and then sort of throw it at them and then have them take several months to review it and then come back and say, well, we need this, this, and this. So it is a bit of an iterative process. So if we can get all that straight up front, then I think it'll go much more smoothly. So that's why I'm going back to Mexico next week. Great, and I appreciate that. Now I wanna talk about the resource generally. I know the historic resource shows 45,561
12:48 tons at high grades, but you noted the property hasn't been systematically explored with modern methods. So based on your geological understanding so far, what's your view on the potential to expand the resource base?
13:01 Well, I think the potential really is open-ended at this point in time, because that historic resource was really just based on some old data from underground, where they had put together some blocks based on underground sampling and some of the production records from the 1980s.
13:22 And there's been almost nothing done since. So, you know, we've mapped the structure and the veins out for about 1.6 kilometers on surface so far. And, you know, we know it does extend at least to the north.
13:39 And the underground workings themselves occupy a strike length of about 500 metres. And as I was mentioning a minute ago, you know, part of those underground workings were actually in the adjacent dike rock and not even in the vein. And so, you know, we still have to drill the vein and explore that. So I think There's a lot of potential here to really expand on that. But I'm hesitant to put any actual numbers on it at this point in time.
14:10 But there's certainly significant potential to increase that historic resource quite significantly. Great. Now there's some questions in the chat I wanted to jump into real quick just because there's quite a few and I'm hoping to speed through some of them. David Tussle and S. McLeod both basically asked how much cash on hand you have right now and how much really is needed for the next 6 months period. Yeah, so we've got, I guess, a couple hundred thousand at the moment. So we're gonna need more money for drilling, which has always been the case. And when we launched this project and the company back at the end of February, the exchange put a cap on how much money we could raise at the time because we were under 5 cents. And so now that we're over that, we can do a more substantive financing, but we will have to finance to fund the drilling and some of the permitting work going forward.
15:07 And then going forward, looking out 12, 18 months, that's gonna depend a lot on what the plant assessment comes back with, how much we think we might need to raise. We're gonna have to get a sense of the permitting before we can get into the reconstruction of the plant. We're gonna need to permit that obviously and so we'll need to get a sense of timing from the government authorities as to what we might be looking at there. And then of course, there's the actual procurement process from vendors and all that sort of thing. So building a camp. So it's a bit of a bit of a process. And we're just at the very beginning of all of that. That's the exciting beginning. Somebody in the chat asked, they know El Patro was a past producer. I think you touched on this, but they just wanna know what was extracted. Like what was that past production look like?
15:57 You know, that's a good question. I wish I knew. Unfortunately, there are no old records from those days. You know, it was privately owned and the last time it operated was in 1990. So it was 35 years ago, the old production records have been lost. And so we really don't know you know how much was was produced and all we have in terms of data really are some small maps and sections from underground indicating that those old locks were you know in that range of 10 grams per ton gold equivalents. So that's about all we have to go on at this point. I appreciate that. Sometimes, you know, you get the information you get. David in the chat asks, what's your grade expectations for potentially 30 meters in width? Would this be an open pit or just underground?
16:48 Oh, no, it'll be strictly underground. And it's not to be clear, it's not 30 meters in width, this is 30 meters along strike. You know, so that's, that's, you know, what's been exposed. And that's just what's been exposed underground on 1 level that we've sampled. So, we really don't know what's beyond that. And from what we've seen in one of the other veins or one of the other mines, the vein width could be in excess of 10 meters in places, but the entire vein is typically not mineralized to the extent that it would be mined. The grades would be lower, below cut-off probably. So that's where I was suggesting that we might want to average it down a little bit in order to increase the tonnage.
17:38 But these vein deposits typically have what we call ore chutes or in Mexico they call them clavos. And these are typically in that maybe 30 to 50 metre length. And in terms of vertical extent, which we don't know yet, they can be a few hundred metres within these types of deposits, these epithermal deposits. You know, they don't extend for, you know, hundreds or kilometers, hundreds of meters or kilometers to depth the way they do in Canada. You know, it's a very different type of mineralization type of deposit. But that's basically what we're dealing with, but it'll definitely underground. Perfect, no, thank you. I got 2 questions on permitting. So they're similar, but I'll try and separate them by type.
18:30 So Esmacloud notes that Durango is an excellent silver jurisdiction, but curious on your take on Mexico's federal permitting process, and I'm curious if you see any, quote-unquote, government issues in the future for Pentecost. I guess no matter where you are in the world, there's always a potential for government issues. But no, I appreciate the question. And at the moment, we're starting at the state level because we know Durango is a good mining jurisdiction. And so that's where I'm going next week is to Durango City. And we will meet with the state representatives of SEMERNAT, which is the Federal Environmental Jurisdiction. So, you know, I wanna get a better sense from them as to what we're going to require and establish a good relationship with them because, you know, we have to go through that process, you know, you start at the state level, but we'll also want to provide evidence that there's support at the municipal level as well, which we're pretty confident we'll get that because the Topia district is a mining district and we're surrounded by 4 operating mines.
19:47 So I think we're pretty confident at the municipal level and even at the state level, but they still have to work within federal jurisdictions. So that's where it gets a little bit blurry perhaps in terms of what they're going to require. But I think the fact that it is underground, it's not open pit, and it has a smaller footprint, it's already a disturbed site. So all of these things are working in our favor. And so that's the way we're going to be approaching it. And just trying to convince the authorities that we really don't need to go get into a massive environmental study and years long permitting process. That this should hopefully be fairly straightforward.
20:35 Great. Some of the chat notes that unions in Durango have a strong presence at mine sites, and they're curious if you're going to be meeting with them or have any plans to meet with union groups on your trip to the region. No, certainly not at this 0.1 of the things that we were always very proud of within Great Panther, when we brought the Topia mine back on stream in 2006 and operated it through until they sold it in 2021, I believe, to Great Panther Silver. So during that entire time, the Topey mine was never unionized and neither was the Wanawato mine. So within Great Panther, as long as I was CEO for 13 years, none of our operations were unionized. We always treated our employees well, we paid them well, and there was never any reason for them to get unionized.
21:31 And with a small operation like Potrero, we don't see that that's gonna be an issue there either. So, you know, that would be our approach to stay non-unionized and just treat our people well. Awesome, I appreciate that. I know we are towards the end of the timeframe, Gabe folks for the beginning of this webinar. So one thing I did want to ask you, Bob, what are you most excited about for the second half of this year? And what should investors be on the lookout for? Well, to be honest, Just the overall timing, the market really seems to be picking up now and with gold and silver still being strong, the market sentiment has improved dramatically. So I think our timing in terms of launching the Alcatrural project and the great results that we're getting to date is going to dovetail with that timing and market sentiment. So, I'm confident that we can build on that and this should develop into a very nice initial project for us.
22:38 Awesome. Well, Bob, thanks so much for joining me for giving some context on the most recent release. Thanks everybody who asked questions in the chat. And if you think of the perfect question to ask right after the event ends, as I often do, please still feel free to shoot it in. I'll make sure that the Pinnacle team gets it. But Bob, thanks again. This was great.
