After lengthy due diligence, I recently added VG to my FOCUSED PORTFOLIO. As part of my process I reached out to the company's management team and scheduled a Zoom-Call with the man at the top, legendary prospector and company builder Simon Ridgway.
For those not acquainted with Simon's successes, here are the Cliff Notes: Simon Ridgway co-founded/Chairman Fortuna Silver Mines Inc. ($1.5 billon Market Cap.) Founder/Chairman Radius Gold (which has a J/V with Pan American Silver Corp. $10 Billion Market Cap.) CEO Volcanic Gold (SilverCorp Metals $2 billion Market Cap. strategic investor holds 19.9% of stock), he's credited with the original discovery of Escobal Mine which current has over +350 million oz's silver and is on trend with Volcanic's upcoming drill targets and he has also found multiple gold/silver deposit.
For a little history on Simon's incredibly successful multi-decade career have a listen to RESOURCE INSIDER PODCAST interview done in 2018: "An Interview with Simon Ridgway - Focused on Discovering World-Class Precious Metal Deposits" https://www.youtube.com/watch?v=CyOp7vEIX98 by Jamie Keech (He's an excellent go-to guy for accredited investors looking for Private Placement in sector.
On Jan 19th 2021, I sat down via Zoom with Simon and discussed Volcanic Gold for 1 hour and 23 mins. I had numerous questions about the company and projects, I was also searching for any red-flags that my prior due diligence might of failed to uncover. I strongly suggest talking with management, lots can be learned that is not printed in a presentation or 43-101 report.
Firstly, no red-flags. Secondly, since our conversation I have added to my position in VG.
I'll assume you have looked over my prior Due Diligence Report on Volcanic Gold and are familiar with the extremely high-grade gold and silver already discovered during the prior very limited drilling more then a decade ago. During our chat Simon screen shared a lot of detailed geophysical mapping, structural mapping and historical drill info which I do not have obviously but I will do my best to describe. The conversation below is from my notes, so be aware I am paraphrasing.
A conversation in process.......
Doc: What's the drilling cost?
Simon: $200/meter, all-in including assays and Geo's but we think the cost will come down a bit due to the volume of drilling we will be doing.
Doc: With over $13 million in the treasury you could drill over 50000-60000 meters without going back to the market again.
Simon: We can do a lot, that's why we raised the money. I wanted enough in the treasury to define a resource. If we have something, which I think we do, without having to go back to the market, "Drill it or Kill it.". We want to advance quickly without worrying about the broad market, that's enough money to know for sure if we have something that's world class and define it, put a resource on it.
Doc: What's the plan then if you are successful?
Simon: Sell it. My passion is in exploration and discovery, drill it, make it as big as we can then sell it for top dollar. There's a pathway in place for Volcanic to own 100% of the projects with our JV partner.
Doc: I was going to ask about that. Having 100% of the project would make the company easier to sell down the road.
Simon: Radius would contribute it's 40% and take equity down the line then with 100% ownership Volcanic would be sold. We have The Lundin's down the road with Bluestone, Pan American Silver (Ross Beaty) with Escobal, Silvercorp Metals owns 19.9% of Volcanic & Fortuna Silver....all looking for assets, that's starting point for potential buyers...
Doc: What's the timeline to begin drilling?
Simon: We expect our drill permits for Holly in the next 2 weeks about and to be drilling by mid Feb.
Doc: How many meters are you planning at Holly?
Simon: 5000 meters, give or take to start, then a lot more depending on results. Currently, we have been doing some rock sampling, results are at the lab and should be out to the market shortly. The Pino veins, look here, we found some big sub-crop (he shows a photo of a Mac-Truck size boulder that's pale white from alteration half buried in the ground). With the size of that, it hasn't moved much, it's about 1000 meters down slope from hole #5 which returned 3.6m @ 22 g/t Au & 697 g/t Ag) and on trend 1500-1600 from the channels samples up the Pino Veins (Channel Samples: 1 m @ 110 g/t Au, 3520 g/t Ag 1.05 m @ 33 g/t Au, 1429 g/t Ag 1.05 m @ 39 g/t Au, 1223 g/t Ag 1 m @ 1 g/t Au, 56 g/t) and on trend about 1900 meters from the Pino Grab Samples: 11 g/t Au, 401 g/t Ag 79 g/t Au, 7092 g/t Ag 34 g/t Au, 1030 g/t Ag 112 g/t Au, 5600 g/t Ag.
Doc: Those are impressive grades.
(Simon explains the thesis. He backs it up by showing me a few of the subsurface geophysical maps which shows a wide and long red coloured anomaly that underpins most of the known strike length of the Pino Veins and extends down slope, from end to end that's about 2000 meters. )
Simon: There's only been 1 drill hole put into the Pino and they got 3.6m @ 22g/t Au & 697 g/t Ag and that wasn't even at the productive depth.
Doc: Productive Depth? The Boiling Zone?
Simon: Yes. Down slope we are at a lower elevation in relation to the water table so we won't have to drill as deep as on top to hit it. The productive zone, where you get the highest grades and widths, they are around 200-300 meters below the paleo water table, on average 300 meters wide in vertical depth, but can be 800-1000 meters or more meters wide vertically like Escobal which we are on trend with on the Jocotan Fault, there it's over 800 meters wide vertically, plus Holly is on trend with Cerro Blanco's shear/splay (Bluestone's multi-million oz high grade Gold/Silver deposit)
(At this point I do a little mental math: 2000 meters of strike x 300 meters average vertical width of a boiling zone x about 150 meters wide anomaly = 90 million meters cubed x a density factor of 2.5 tons per meter cubed = 225 million tons of prospective rock. Now of course, it all wouldn't have precious metals in it, but if 2% did, that's 4'500'000 tons at 9g/t Au equiv. (gold and silver) = 1.3 million oz's just on that Pino Veins....see below for the visual.)
Doc: That's very interesting.
Simon: Plus we also want to drill the Jocotan Fault (150 meter wide mega crustal shear in yellow above) itself where there's broad mineralization at surface 40 meters of 2g/t & 7g/t silver and the Pena Veins 14.2m @ 4.1 g/t Au & 151 g/t Silver....and some other structures....we have a lot of compelling targets. There's only been 14 holes total drilled on The Holly back in 2003 and a lot of them missed the structures-- I don't know what the guys who had it before were doing...(See 43-101 to find out what JV company drilled it)
Doc: What's the plan for Banderas?
Simon: We filed our drill permit for it after Holly, so we are going to do a bit more geophysics before drilling it, refine targeting, it'll be quick, then drill about 5000 meters give or take to start, targeting the Boiling Zone which prior drilling didn't get to. Best hole prior was at the lowest elevation to the Paleo water table, closer to the zone but not the zone. None of the holes were drilled below the upper limit of Hg/Sb anomalies in surface rock found later, that a good pathfinder, we think the mineralized structures converge at depth, much like Escobal, narrow weak veins up top, high-grade wide veins below once you get into productive zone. Basically all the prior drilling was too high in the system. (Note the elevation on the drill table and azimuth.)
Doc: Great Thanks, that all makes logical and scientific sense, so basically the drilling was all too high in the system and because its Guatemala there hasn't been much erosion because of no glaciation so most of the system is intact?
Doc: What about the Zapote target where they are 5-10 meter wide exposed veins at surface, it's never been drilled?
Simon: We plan to drill that too but we need to do a bit of work first, it's got some cover. It's a huge target zone, 3.5 km... I'm actually after this heading out to buy some XRF guns to use on the projects, they work great detecting the silver, and the gold is associated with the silver, hand held, speeds things up.
Doc: So is this your Swan Song, Volcanic Gold?
Simon: Yeah, well, I love discovery, it's what I'm passionate about. I've held this property for years and never let it go because it has great potential to become a world class deposit. Thankfully for us the prior drillers when it was JV'd screwed up a lot. Now is the time to know what's there, "Drill it or Kill it." Plus the total option is for 240'000 km2, who knows what else we'll find later.
Doc: How's the political environment in country, any concerns?
Simon: Escobal has always had it's problems but Blue Stone is progressing, capital is coming in, and we have excellent relationship with the communities we are in.
Doc: I guess there's potential political risk everywhere, in someways operating in the US now is risky, look at what happened with Northern Dynasty..... The share price seems stuck at $0.50, any idea whose selling?
Simon: I'd guess the folks from the first PP. They have a 100% uplift in a short amount of time, some weren't happy with the second raise which I explained, brought in Silvercorp more and ensures we can drill the hell out of our projects without going to the market and we have enough to put a resource on it with the money we have. More than enough to prove it.
Doc: That's good to know, I agree, just focus on the exploration. If successful the share price will be many multiples higher than current, share structure is tight and with 55% of the market cap. in cash and an aggressive drill program on some excellent targets. I think it's cheap.
Simon: Me too.
Doc: Thank you Simon, I really appreciate your time and the detailed walk- through of the projects, is their anything we discuss that you don't want me to share publicly?
Simon: No, I read your due diligence report, it was really good, I'm probably going to steal some of it when we start marketing the company more. That's something we plan to do more of now. we are going to do more of that. Get some more detailed maps up on the site, and we have some news soon as well from the sampling program, drill permits coming....
Doc: Thank you again. You have been very generous with your time and resources.
Simon: My pleasure Doc.
It's not often a man who has turned a few million into billions of shareholder value will be so generous with his time. Always invest in the team first then the project. My money's on Simon and his team. And this is a great project. We covered a lot more but these are the take home points.
https://youtu.be/8jWOuYxE39k (go to 18 min mark, a bit of history on project area)
PS: Now go and do your homework, double check, make sure you know what it is and what it's not before you invest in any company.