Pinnacle Silver and Gold: Year in Review and Upcoming Catalysts

0:08 Hello everyone and thank you for joining us for this live event featuring Pinnacle Silver and Gold. We're joined today by their President and CEO, Mr. Robert Archer. Bob will be providing a brief presentation highlighting the transformational year for the company and why you should be keeping a close eye on Pinnacle in 2025. Following the presentation will be a live Q&A session. You can participate by asking your questions in the chat, which can be found in the bottom right corner of your screen. Also, please note that this event is being recorded and will be made available shortly after the call. With that said, Bob, the floor is yours.

0:41 Thanks very much, Kyle, and welcome everyone. Thanks for joining today. 2024 really was a bit of a transformational year for Pinnacle and 2025 looks to be more so as we complete on our agenda. And the reason for that is that we've effectively transitioned or are transitioning from a pure play exploration company into more of a developer and with a focus on near-term production. So in that regard, we have changed the name of the company and with a new fresh start, and we're looking to actually create a new America's focused silver and gold exploration and development company with projects currently in Canada, acquiring 1 in Mexico, and always looking out to other acquisition opportunities, perhaps even in Peru.

1:40 So with that, I'll just give an overview of the company and then we can move on to some Q&A. So as always, I encourage people to do their own due diligence and homework before making an investment. So just at a very high level We are focused right now on an acquisition of a high-grade gold-silver project with a 4km strike length in the heart of the Sierra Madre belt of Mexico. Our existing projects include the past-producing Argosy gold mine in the Red Lake area of Northwestern Ontario, which has significant depth potential if we're to reopen that.

2:26 And immediately adjacent to the Argosy mine is our North Birch project, which is earlier stage, but with an 8 kilometer long untested goal target. So all focused on that district scale, we're looking for something large and preferably high grade. So the business model that we're following right now is a proven business model. It's something I'm very familiar with as one of the co-founders of Great Panther back in 2004. And at the same time as we were starting Great Panther, Endeavor Silver was starting up, First Majestic I think started in 2003. But these are successful companies that all follow the same business model of acquiring a past producing mine, bringing it back into production quickly, and then building the company out of cashflow rather than relying on markets, which can be extremely volatile as we've seen over recent years, and currently not very supportive either for junior explorers for that matter, and obviously being dilutive to shareholders with the share prices being depressed.

3:39 Our focus is on high-grade underground mines, which tend to have a lower capex than open pit, they have a smaller footprint, they're easier and faster to permit, and high grades give you protection against metal price volatility. And as we say in the industry, grade is king. And that's again, something that we've always focused on in the past and pretty much throughout my career. We intend to fast track our new project to a small scale production initially, and if we can generate positive cash flow within a couple of years, that will allow us to continue conducting brownfields exploration on that project to expand the resource space for ultimately a larger operation.

4:30 And meanwhile, looking for other opportunities either in that district or elsewhere in Mexico or in other countries, perhaps like Peru, as I mentioned. So that's basically the fundamental business model. So just a couple of slides on the new acquisition called El Potrero in northwestern Durango State. As I mentioned, it's in the prolific Sierra Madre gold-silver trend. And this is one of the most prolific gold-silver producing regions in the world. And as most of you probably know, Mexico is the number 1 silver producer in the world. So you can see this is just a selection of some of the mines that are along that trend. And we're well positioned in the middle of that. And just zooming in a little bit, you can see that we're literally in the shadow of a headframe here, which another industry expression, but the best place to find a mine is in the shadow.

5:29 So If you're in a good area, it's well mineralized. We have 4 operating mines within a 35 kilometer radius. The Cienega mine just to the south is owned by Fresnillo, which is one of the largest mining companies in Mexico, Mexican company, and the largest silver producer in the world. Cienega is a 4,000 ton per day polymetallic operation underground. Tawahueto, owned by Luka Mining, is 1,000 tons per day, again also polymetallic, just to the north of us, and they're just starting up at that level. The Topia Mine was actually our first acquisition with Guanajuato, or sorry, with Great Panther, back in 2004, and that's currently owned by Guanajuato Silver and operating at about 250 tons per day.

6:24 And the San Geronimo mine is privately owned actually by the vendor of the El Pachorro project and that's operating at about 150 tons per day. So it's a very, very well mineralized area and the project is road accessible. There's a power line within 4 kilometers and so infrastructure is excellent. There are a few small scale mines on the property that are accessible by adits and these can be rehabilitated fairly easily. Ground conditions are good. And the vendor had outlined a historical resource it's not 43-101. So I would caution people in that regard, but at a grade of about 8 grams per ton and 186 grams per ton of silver for a gold equivalent grade of 10.2 grams or Silver equivalent grade of 869g.

7:22 So it's a very high-grade project and it has no previous drilling on the property, which means that it's wide open for resource development and ultimately leading into near-term production. And as I mentioned, there is a small plant there, it's rated at about 100 tons per day. It hasn't been operated for about 35 years, so it does need some upgrading, but you can see that the basic infrastructure is there and it's quite solid. We just need to replace some of the equipment and the electrical work pumps that sort of thing. So it's something that we feel that we can do in a relatively short time frame as we're permitting this.

8:07 And because it's an already disturbed site, we're not looking at brand new virgin territory here. So it should be much easier to permit than a new greenfield site. Just briefly turning to northern Ontario, we are located in the Birch Oochee Belt, which is the next Greenstone belt to the east of the Red Lake belt. It's about twice the size, but less explored than Red Lake, largely due to a lack of access. And our projects are very close to the Springpole deposit being developed by First Mining, which some of you may be familiar with. And Springpole is about 5 million ounces. So again, there's lots of gold in the district.

8:54 The Argosy Gold Mine is only 10 kilometers away, and it's actually the most significant past producer in the belt. And North Birch is immediately adjacent to that. And the Argosy mine closed in 1952. It was only opened in 1931, but when it closed, the gold price was only $35 an ounce, and this was still a fly-in operation at that time. So it was relatively high cost, but very good grade, 12.7 grams per ton. They produced just over 100,000 grams, sorry, 100,000 ounces of gold at that grade. And we own 100% of this subject to 2.5% NSR.

9:40 There've only been about 72 holes drilled historically on the property and nothing since 2004. But it's a project that I'm very familiar with because I was actually CEO of the company that did that drilling in 2004. And so I've liked the project ever since then. And I think it's got excellent potential to reopen and get it back going again. So just immediately adjacent to that, this is just a map of the magnetics covering the belt as the underlay and then the property

10:15 on the insert. And you can just see how the rocks are folded around. And the reason that's important is that we're following what's called an iron formation model. And the iron formation, as the name might suggest, is highly magnetic. And it shows up here on the magnetic maps as the bright reds and pinks. And you can see how they're folded around, which is important for structures that could host gold mineralization. So the target here is about 8 kilometers long, and it's modeled after the Musselwhite Mine just to the north of here, which I actually worked on in 1994, working on the pre-feasibility study for that mine.

11:02 And it went into production in 1997. And it's been producing ever since, with somewhere around 8 million ounces, past production and reserves. So it's a it's a great model, district scale target. And we're looking forward to getting back in there and doing some more work on that one as well. So just in summary, Pinnacle, with Pinnacle, we're creating a new company with a proven business model where we start with small scale production, expanding the resources and the production level, building the company out of cash flow rather than diluted financings.

11:37 And our management has a successful track record in doing this already. So we feel very confident with this approach. We're focused on silver and gold in the Americas right now with a focus on Mexico and potentially Peru and Canada. And so all of these are favorable mining jurisdictions with lots of potential for new discoveries. And again, the focus on high-grade underground mines with lower capex, better profit margins, and a buffer against metal price volatility, and importantly, a smaller footprint from an environmental standpoint, and so they're easier and faster to permit. So with that overview, I shall turn it back to Kyle, and I'll be happy to answer any questions.

12:27 Excellent. Thank you for the presentation there, Bob. For any individuals that are just coming in now, we are doing a Q&A session, so please feel free to submit your questions which in the chat in the bottom right corner of your screen.

12:40 We have a few upon registration here. So the El Potrero acquisition represents a strategic shift from pure exploration to potential near-term production. What drove this decision and how do you see it transforming Pinnacle's growth trajectory over the next 12 to 24 months? So the, I guess, partly what triggered it was just the lackluster markets over the last few years. It's been very difficult to raise money for junior explorers. And so, being a pure play exploration company has been extremely challenging. We're not alone in that regard, obviously. But it does take me back to 2002, 2003.

13:28 We were in exactly the same position back then, when it was very, very difficult to raise money for pure play exploration.

13:37 That was when I came up with the idea for Great Panther and with this business model. It worked for us then and I think it can work for us now. With Great Panther, as I say, we bought the Topia mine as our first acquisition in early 2004. We had it back in production by middle of 2006. So it only took a little over 2 years. And during that same timeframe, we acquired the Wanawato mine and had that back in production in 2006 as well. So within a two-year period or just over 2 years, 2 and a half years, we were up and running with 2 operating mines and looking towards generating positive cash flow and building the company that way.

14:25 We ultimately did and took it to a $5 share price and a $600 million market cap. We look to basically to repeat that with Pinnacle. Bob, could you just do me a favor and hit that big red stop screen share button there?

14:45 Absolutely. Excellent. There we go. We have a question from the chat here from Ali Soltani. Hi, Bob. Great opportunity and presentation. Thank you. Please comment on scope of work on the specific targets for 2025 and financing needed for said work? Hi, Ali, good to hear from you. And thanks for the question. We're still in the early days of this, as you saw from one of the slides there, the plant needs a bit of work to get it up and running. The underground mines have to be rehabilitated. And as there's been no drilling at all on the property, we obviously need to do that in order to better define some of the areas that we'll be mining looking forward. So, you know, that we can operate, we can do all of that, essentially, in parallel, the drilling, the underground rehabilitation, and the plant refurbishment, as well as applying for permits, and that sort of thing. So it'll be kind of a multifaceted approach through 2025.

15:54 And so beyond the initial acquisition, which is somewhat guided or restricted by exchange policies and in terms of what we can do and what we can't do. We will be conducting another round of financing probably in the spring, and that will get us financed for drilling and for this other work that needs to be done. And we're also just on that in that regard, I mean, we're looking for strategic investors right now as well. We're in discussions with more than 1 group to help us do that. So, I think we're pretty well placed to move forward as soon as we get the initial acquisition under our belt.

16:43 Thank you. So following up on that question, there was a 4 kilometer strike length, if I remember correctly, at El Perro. What's your exploration thesis for the property and how do you plan to balance exploration with near-term production? So the property or the veins are what we call low sulfidation epithermal. And these can be laterally extensive, not always vertically extensive the way they are in Canada, for example.

17:20 But so, you know, there's very good chance that these, this vein system does extend, you know, the full 4 kilometres of the of the property. So those that would have to be properly mapped out and then targeted for drilling just to prove that. But the systems are also, you're not just looking at a single vein or maybe a couple of veins. These things can often be multi-vein type systems, you know, just kind of weaving in and out of each other and quite complex at times. And some of the best mineralization is actually where veins come together, are intersected and so you tend to get, you know, larger and richer ore bodies at those locations.

18:06 So structural mapping will be critical in the early days to try and get a better understanding of that. But If this is truly a system that's 4km or more in length, then it could have some real size to it. We're looking forward to better defining that. Thank you.

18:29 With gold at record highs, Can you walk us through the economics of restarting a 100 ton per day plant? What are your initial capital cost estimates and timeline for potential production? Yeah, so without any kind of a PEA or feasibility study or anything like that, I can't really speak to ultimate economics. But just from the high-level studies we've done to date, and one of our directors is a metallurgical engineer and has a history of building plants in Mexico and the vendor himself actually is a mining contractor. So, there's certainly some depth there to rely on.

19:16 But a high level estimate of getting the plant back up and running is probably somewhere in the, say 1 and a half to maybe 2 million range at the upside. So not a huge amount of money. And in terms of timeframe, because the site has already been disturbed, permitting should be easier than if it was, you know, a brand new area, but ultimately that will still depend on the government to a large degree. But we're sort of planning for somewhere around a two-year time frame to get the permits in place, refurbish the plant and rehabilitate the mine. So that's the sort of general time frame that we're looking at. You know, at a cost of, if you include the mine rehabilitation, probably looking at about $3 million,

20:10 something like that. So again, you know, not, we're not talking tens of millions or hundreds of millions or anything of that nature. Yeah, that makes sense. Now with your experience, we start in the Topia mine with Great Panther. What are the key lessons from that success that you plan to apply here? You know, Topia was a great start for us. And it was some of the lessons we learned there, I guess, is how much we could rely on the local community for for labor and supplies and other things. And, you know, going back in there recently, in fact, just a couple of weeks ago, it was quite rewarding to walk through the streets of Topia and see that the town has actually tripled in size since my first visit in there in 2003.

21:04 And it's a bustling little town now, the mines are operating, a lot of mining contractors, suppliers, and so on. And all of that really is because of the mine restart. So, you know, Topia is the largest town close to El Potrero. And even though it's, you know, it's 15 kilometers away, straight line distance, but, you know, going around, it's about 29 kilometers by road, but it still takes 2 hours. So, this is a relatively rugged country and gravel roads, but nonetheless, the communities close to the project are smaller than Topia, but nonetheless, there's also Sienega down the road as well, that's where Fresnillo is operating.

21:53 So, we have access to a lot of those areas for skilled labor, people that are very familiar with mining. And a lot of that is really just working with the local communities. You know, that's hugely important in an area like that. And something that, you know, we certainly, we intend to do. And, you know, at the moment, we're working with all Mexican geological contractors and so on, and really trying to bring in the communities on an as needed basis. So I think that's probably the single biggest factor.

22:42 Thank you for that. There's a follow-up question in the chat here. Is access to the Potrero property such that startup with custom milling at one of the neighboring plants may be an option to generate funds for the revamp of the mill. That's something that we haven't had any discussions with anyone yet, but I wouldn't rule it out. Certainly, the first step in that regard would be just a bulk sample, for example, that Topia, as I say, is only 2 hours away. Siena is probably about the same distance in a different direction.

23:28 But we would obviously have to have discussions with Guanajuato Silver and Fresnillo as to whether they have the capacity or the desire to process anything. And the other things in metallurgy of course, those are flotation plants and the one that we have at the moment, when it was in operation it was Vat Leach and Merrill Crow and you know we'll want to do some metallurgical testing of our own to see if that's the way that we want to go when we rebuild the plant, or if we want to switch over to flotation ourselves and produce a concentrate. So there's still work to be done in that regard.

24:14 I wouldn't rule it out, but we haven't had any discussions along those lines yet. Thank you. Upon registration, there's a question here. The staged earning structure at El Torero is quite unique. With the first 50% interest tied to production, How does this structure help manage risk and capital requirements compared to traditional option agreements? Well, with a traditional option agreement, and this is something that we see a lot in our industry. You know, they're typically spread out over a number of years, you know, maybe 3 years to even 5 years. And they're often structured as all or nothing type agreements whereby you have to, you know, make payments to the vendor, cash issuances, sorry, share issuances, and work expenditures on the project, and ultimately take that through to completion at the end of that 3 or 5 year period.

25:17 And only then once you've satisfied all of those obligations do you actually earn 100%. So, the risk on those types of agreements is really quite high. And because we all know in this business that the odds are stacked against you right from the beginning. You know, the risk is high that you're even going to find something that's worth pursuing. And, and so If you don't find what you're looking for within that initial period, then essentially you walk away with nothing. You spend a lot of money, a lot of time, and it's back to the drawing board with another project. Whereas a project like this, because we've structured it to earn 50% as soon as we put it into production, then all we have to do is that initial work of readying it for production and then we'll earn our 50% at that point. And so that would then entitle us to 50% of the revenues and the cash flows going forward.

26:22 And out of that, we can continue to develop the project as well as make any future payments. And then with the next payment, that buys us another 20% to take us to 70. And then the other one after that takes us to 90%. And so at each stage along the way, we're increasing our ownership, increasing our interest and participation and cash flow, and using that money to, as I say, to ultimately acquire the project and build it out, as well as give us opportunities for other acquisitions. Thanks, Bob. Now, you touched on this next question briefly, but I'll read it how it was submitted. Looking at your cash position after the recent financing, how do you plan to fund both the initial El Potrero payments and any work at your Red Lake assets without excessive dilution?

27:23 Well we don't intend to do any work at Red Lake until probably the spring, spring summer of next year. So the initial financing that we're doing right now is really geared towards the acquisition and that's also restricted somewhat by the stock exchange and the fundamental acquisition. We've kept the structure of the deal such that there's just a single payment up front, $50,000, and then the rest of the money goes towards the project itself. We'll have to pay some back taxes owing on the property, but aside from that, everything else will go into the ground. And it really tried to hit the ground running and kick off the work at site.

28:13 And as we do that, we'll be watching for another window, another opportunity to finance in the spring and typically sort of the February to April time frame is or can be quite favourable in that regard. So if there's an opportunity to finance again at that time, then we'll just have to see what the market is like, what the market will bear. And if we can raise a sufficient amount of money to really advance El Patrero while getting back in and working in Red Lake again, then that would be ideal. Now, during your presentation, you mentioned evaluating other opportunities in Mexico and you mentioned Peru quite a bit. What specific criteria are you using to build your project portfolio?

29:06 Very much the same as what we're doing now with Alpaturo. If we can find something that's either in early stages or perhaps a small scale privately owned that can be advanced. Because a lot of privately owned mines have not really been explored. They've often never been drilled to an extent. And the owners are very cashflow oriented. And so they just build the mine, put it into production and then just start to generate cashflow. And that's just the way they operate. So they never really get the full benefit of the potential of the project.

29:51 So, that's something that we can do as a public company with access to the capital markets, take advantage of those types of situations and really build them out. So that's where the growth comes from. But it's all backstopped by cash flow. So that's ultimately the thesis, the business model going forward. And, you know, with Great Panther, we had started to move into Peru as well in 2017 just before I stepped down and you know there are some great opportunities, some great mines there as well. You know Peru is the third largest silver producer in the world after Mexico and China, but it has the largest silver reserves of any country in the world.

30:43 They're not necessarily primary silver mines the way they are in Mexico, but often polymetallic, but they can be quite rich and very profitable as well. So I think Peru is a great mining country and there are certainly opportunities there because they've gone through a bit of political upheaval in recent years and there are definitely opportunities there. I've been working in Peru on and off since 2010, so I'm quite familiar with that as an area to work in, good network and so on. So I'm very open to doing some work down there. Excellent. We have one final question before we wrap things up here nicely.

31:30 If you came in halfway through, just to let you know that this is being recorded and you can watch the replay shortly after here. But for final closing remarks here, Bob, what do you see as the 2 to 3 most significant potential catalyst for Pinnacle in the first half of 2025? The first half, well, I'd say just the TSX approval of the acquisition would be the most important one right off the bat and hoping to have that somewhere around the end of January. And of course we won't get approval until everything's been filed, the 43-101 technical report, all the legal, a definitive agreement, title opinion, financing's done. So the approval is based on all of that getting completed, so that would be the first one. And then beyond that, we'll have several months where we're just doing the basic work at El Potro and moving the project forward.

32:41 So there should be news coming out through all of that. And then if we're able to refinance in the spring, there's always a possibility of getting drilling before the end of the first half. That would be ideal. And I say that both for Mexico and in Ontario. So that would be terrific to get drilling on those fairly quickly. And we've already started to look at other projects. What's next? We're not just sitting back on this one project and saying, oh, let's wait and see what happens. We're already starting to look for other opportunities and that's in part where potential strategic investors come in as well.

33:32 So I can't say that it will necessarily happen in the first 6 months but there's always the possibility that another opportunity will come along within the near term. Excellent. Thank you for the great presentation and the thorough Q&A and for everyone that submitted questions here. Bob, enjoy your holidays. Thank you so much for this and we'll be speaking to you