It is my pleasure to share an interview with Dr. Alan Carter, who is a Director, President, & CEO of Altamira Gold (TSXV:ALTA). Alan is also a Director of Anfield Gold, Peregrine Diamonds, and Cabral Gold. This is some of the first coverage of Altamira that I have encountered, but it will certainly not be the last. There are some great stories buried in here and I encourage you to read on.
Please note, I was not compensated to prepare and disseminate this material. This document contains forward-looking statements.
Altamira is focused on a 12 license areas in the prolific Juruena gold belt in Brazil. The company has 36.8 million shares outstanding, with 20.6 million warrants and 3.3 million options. There are 62.4 million shares on a fully-diluted basis. The market cap is approximately $6.6 million. The company has $2.9 million as of April, 2017 and no debt. You can find more on the company website.
Peter: Okay, we are live! Hello Dr. Alan Carter. Thank you for joining me.
Alan: Hi Peter. You’re welcome.
Peter: It is mid-summer here in Vancouver. How are things for Altamira right now, broadly speaking? Is it a busy time of year for you?
Alan: We stay busy throughout the year but it is particularly busy right now. We are currently drilling and trenching on our key project in Brazil and preparing to drill at another project.
Peter: Great. And you're based in Vancouver?
Alan: Yes, I am. I've lived here 17 years now. I lived in South America for 10 years and am fluent in Spanish and Portuguese.
Peter: That is interesting. It is not every Vancouver-based junior mining executive that is fluent in these languages. Particularly Portuguese is uncommon in my experience. Where did you learn Portuguese?
Alan: I learned it from spending a large amount of time there. I learned Spanish first, but picked it up when I started traveling to Brazil. I have spent an awful lot of time there and have made a lot of friends in Brazil. It’s been a great place to work and I am part of a strong team there. As a team, we've made four gold discoveries in the last 15 years in Brazil.
Peter: Wow. I will be keen to hear more about that group! Have you focused on other parts of the world as well?
Alan: We have mainly worked in Latin America. I have done quite a lot of work in places like Argentina, Bolivia, and Mexico, but 90% of my effort, at least, has gone into Brazil over the last 15 years.
Peter: Thanks, I am always encouraged by that degree of focus professionally. I am sure you picked up some great lessons working down there. Anything else about your experience that you might like to mention here at the outset?
Alan: Well, I've been involved in a few different companies in the past. I was a co-founder of Peregrine Metals with Eric Friedland. We founded a couple companies together. One was called Peregrine Metals, which optioned a copper property from Rio Tinto in Argentina. We established a large copper resource on that project close to the Chilean border. We sold that company to Stillwater Mining about six years ago for almost $500 million.
Peter: Thank you, Alan. Amazing to think that was just one of several companies that you started with Eric. I can’t even imagine all the other stories. And Stillwater has been acquired—that was major news. That is the first time I’ve seen a South African platinum miner acquiring an asset in the USA.
Alan: Yes, it was major news.
Peter: Looking at the cover page on the presentation deck I see a beautiful river winding across the jungle. It looks like Brazil.
Alan: That is the Rio Teles Pires, which is very close to our key project called Cajueiro. The river actually runs just along the south side of our Cajueiro project. It is a beautiful river.
Peter: Is it useful for logistical purposes regarding your mineral exploration?
Alan: Not terribly as road access to the Cajueiro project is very good. We have to cross the Rio Teles Pires to get to Cajueiro, but there is a small ferry that takes around ten minutes. We use some water in our drilling but access to water is generally not a problem for mineral exploration in Brazil.
Peter: It looks pretty sparsely populated in that photo. I don't see any towns in the picture at all, just some clearings for agriculture.
Alan: Yes, it is mainly farmland in the area. It is ranchland for cattle ranching, very much like Alberta. This photo was taken from a small plane and is very close to where we are and it looks like this throughout much of the state of Mato Grosso in central-western Brazil.
Peter: Wonderful, thank you.
Peter: Looking at the summary, the first point you have here is about the experienced management team. We have just talked about this a bit, let’s keep going.
Alan: Each of the four deposits that we discovered as a team and were speaking about before now have 43-101 compliant resources estimates. They have all had extensive drilling, but none of these projects had any drilling before we identified them as potential targets.
Peter: Really. Sorry, can you please say that again?
Alan: Yes, of course. None of the four gold discoveries that we have made in Brazil in the last 15 years had any drilling on them before we identified them. They were grass-roots discoveries.
Peter: Wow. That is a pretty strong track record. What stage are each of those four projects at now?
Alan: Tocantinzinho is owned by Eldorado and it is their key project in Brazil. Myself and a friend personally own a royalty on that. They have a feasibility study and they're close to a construction decision. They have just recently received their construction license for the project. It's a two-and-a-half million ounce gold resource now.
Coringa is now owned by a company called Anfield Gold, which bought Magellan Minerals. Magellan was the previous company that I worked with and co-founded. Coringa is a high-grade vein system and they are waiting for a permit to construct. They bought the plant and it is an advanced project.
Cajueiro is in Altamira and we've talked about it already. I am sure we will talk about it more as we go along here today, Peter.
And Cuju Cuju is a 1.5 million-ounce gold deposit that sits in a private company called Cabral Gold that we control.
Peter: I am impressed to hear about your use of private companies to hold and advance these projects. I think that speaks to your acumen as a business man. And to clarify, all four of these projects are not owned by Altamira.
Alan: No, they are not. Of those four, only one is owned by Altamira. That is Cajueiro, which we discussed earlier. However, it is important to know about all four of these projects to understand just how long we have worked in Brazil and what we've done as a team.
Peter: And to say it myself: four discoveries is a pretty substantial number.
Alan: Yes, it is. We have been lucky, but I like to think that it has not been blind luck. We've worked very hard. Brazil is one of those special areas that is under-explored for economic mineral deposits, globally. It is a very exciting place to work. There are a lot of areas that had small-scale placer workings going back over the past 30-40 years, particularly in the region where we're working. These small miners were sluicing gold from the gravel. As with any placer resource, that source of gold is finite but they never tracked the hard-rock source of that placer gold. Where did that gold come from? Obviously, it was eroded from some rock in the area and we have been pursuing that idea in several areas of Brazil.
Peter: OK. There are some similarities in the deposit type for these four discoveries that we discussed based on their relationship to placer gold mining as some sort of indicator.
Alan: Yes, they are similar in that way. All four deposits are hosted in ancient rocks of the Proterozoic era about 1.8 billion years ago. They are a little bit younger than some of the rocks in eastern Canada, but are similar. They are not unlike parts of southern Africa, West Africa, and Australia, which are all well-known gold-producing regions.
Peter: Can I please ask about the Witwatersrand?
Alan: Yes, the Witwatersrand is a bit different from the deposits we know in Brazil. The Witwatersrand is a huge sheet of conglomerate rock, which is called a paleoplacer. It was a gravel bed, essentially, and then was compacted into hard rock. We haven't seen that style of mineralization where we're working, but there's certainly potential for that type of thing.
Peter: Interesting. Paleoplacer is a new word to me, but I like to see that it has “placer” in it. I think I’ve got a few things to learn here still!
Alan: The Witwatersrand is unusual, globally. It has been studied extensively for good reason. There are a couple of deposits in other parts of Brazil that have similarities with it, but we haven't seen that style of mineralization where we are.
Alan: The interesting thing about this belt, which is called the Juruena Gold Belt, is that has historically produced 7-10 million ounces of placer gold. Thus far, only two hard-rock sources for that gold have been identified. One is owned by a company called Crusader Resources who have a 250,000-ounce deposit to the west of us at Cajueiro gold. We own Cajueiro and it has a resource of approximately 500,00 ounces at this point in time. We think it will grow significantly as we do more drilling there. I will explain why I think that's the case, but consider that only two hard-rock deposits been discovered so far. And we have one of them. I think that amounts to an amazing opportunity.
Peter: Yes, I would certainly agree. And that number you just said, 7-10 million ounces of placer gold, that is a substantial number. I had no idea so much mining was going on in this part of Brazil. That occurred over a 30-year period, right?
Alan: Yes, that is over a 25-30 year period.
Peter: Sounds like 200-300,000 ounces a year of production. That is stunning number from placer gold miners.
Alan: Keep in mind that includes production from a number of different areas.
Peter: Certainly, I would imagine so. Leaves me wondering what the typical production levels were for some of these operations over this time. I imagine they are mining under fairly tough conditions, as well. The social and environmental issues can be very complicated, too. I imagine that some people like to see you in the area because of the potential for bringing a modern mining approach to the area.
Alan: I think that’s fair to say, Peter. We have been very well received in the area and we see a lot of potential there.
Alan: We own 12 areas there outright. That is 100% ownership of 12 areas. We got into this part of the world early and were able to acquire these areas, most of which have not been even previously for the hard-rock source of the placer gold that was mined.
Peter: Looking at the slide, I see that you have a massive land package across these 12 areas.
Alan: Yes, we have over 200,000 hectares. That amount of land is a huge area and obviously you can't be everywhere at once. You have to have some focus and you have to keep prioritizing where you want to be. We were very excited when we were putting this package together and are even more excited to be drilling on part of it now.
Peter: To orient myself here a little bit, I hear that you have a large land package in an area with prolific historic gold production from placer miners and a lack of modern exploration to find the sources of this placer gold. That’s a good start.
Peter: Let me briefly ask if you see any problems with the placer miners there.
Alan: We have had no problems with the artisanal miners. There are very few of those guys left. Most of the areas we acquired do not have artisanal miners anymore. As I mentioned, these placer deposits are finite and many have been exhausted. There are a couple of areas that have a small number of miners who may still be working there, but they do not have any legal rights to do so.
Alan: We actually find the placer miners very helpful because they are prospectors, and continue to look for new areas which is very useful for us. I'm not ashamed to say that constantly follow some of these guys. It's certainly not the only method we use, but these miners don’t waste their time on areas where there is no gold.
Peter: And they know how to navigate the bush. An advance field team! You said there's not many of them left – is that because the area has been kind of mined-out or is there something else going on?
Alan: The streams have generally been mined out. The miners have removed most of the placer gold in the gravels of the streams.
Alan: As you can appreciate, it doesn’t take a lot of capital to start washing gold from a stream. You and I could go up there with $500 in our pocket and build a sluice box and start washing gold from the streams, however, mining a hard rock deposit is a completely different proposition. We would need millions of dollars to do that. These miners don't have access to that sort of capital. It's very different.
Peter: That's how you build a billion-dollar mining company, though?
Alan: You have to find a big deposit and prove that it’s economic.
Peter: A question for you about these four discoveries that you've made. Do you have any broad comment around the amount of money that was spent in the early days for each of these discoveries? You mention $500 to start washing the streams and it has me wondering about the amount spent on the exploration and development work done.
Alan: I certainly know that figure at Cujo Cujo, which is held in a private company: We spent about $22 million on that.
Alan: There has probably been more than that spent at Coringa up to this point. There may have been upwards of $40 million spent on Coringa thus far, but that includes acquiring a processing plant. They've recently completed a feasibility study that was very encouraging.
Peter: Right, that is Anfield’s project. They are taking it very seriously. It was amazing to hear what Ross Beaty had to say about it at the Sprott Symposium earlier this week.
Alan: And Tocantinzinho has probably had more spent on it than Coringa now. I don't know the exact number because most of the expenditures have been made by Eldorado. I would guess that it's somewhere between $50-$100 million that has been spent on Tocantinzinho.
Peter: Thanks Alan. And what about the early days prior to the definition of the resource?
Alan: Good question, Peter. You're looking at $2-$5 million for these things, generally. Keep in mind, Peter, that spending that amount does not guarantee success. I've drilled a lot of projects where we did not discover anything. That is just the nature of what we do. It's a very high-risk business, but I don’t believe it is like going to Las Vegas and playing a slot machine. Gambling at a casino is random, unless you're a PhD mathematician. In the same way, we try to stack the odds in our favor using the most appropriate methods of mineral exploration and we have had some success.
Peter: As a mathematician myself, it is amazing to hear the stories of statisticians who beat the casinos. A very dangerous thing to do, but something that seems to capture the imagination of many people. That amount of $2-5M seems like a reasonable amount to start with for some initial work. I suspect that you can determine if there is nothing there to a high degree of confidence with that much budget. And I would imagine that this budget goes all the further in Brazil as it is would seem to be a relatively low-cost area for exploration, generally.
Alan: Yes, this is farmland. It is fairly easy to get around here and we work all year round. There are no big cities where we are, but there are some significant small ones. The nearest is a town called Alta Floresta, which has over 100,000 people. There is an airport with daily flights on TRIP, which is one of the biggest airlines in Brazil. It's an accessible area once you're in Brazil.
Peter: Right. Well, I am glad to hear that the CEO of Altamira actually speaks Portuguese! Any comment on the investor base that you see as being interested in this area of the world?
Alan: Brazil is a major gold producer in its own right. There are some very large companies that are active there. Kinross is a large Canadian gold company that owns the Paracatu Mine. It is their second-largest mine globally and is the largest gold mine in Brazil. It has over 20 million ounces of resources and reserves on it now. They are currently producing about 500,000 ounces a year at an average grade of less than 0.4 grams per ton. Anglo Gold have two or three mines in Brazil. They're very active too.
Peter: Just to clarify – Paracatu is the largest gold mine in Brazil?
Alan: Yes, that’s right Peter.
Alan: There are a number of other producers in Brazil, as well. Yamana owns several large gold mines in Brazil and recently spun-out Brio Gold, which is also very active. There are a number of major international gold companies working there and several medium-sized companies.
Alan: And more companies entering the country. A few months ago, Lucas Lundin established a company called Trek Gold, which bought the old Luna Gold asset at Aurizona in the north. And Ross Beaty acquired the Coringa property in Brazil with the takeover of our previous company by Anfield Gold.
Alan: And Brazil is a major producer of other commodities, too. It has an established mining industry and is a globally significant producer of iron ore, copper, and alumina.
Peter: Thank you, Alan, I was not aware of all that.
Peter: The iron ore one is particularly interesting to me. I’ve been at the Sprott symposium this week, but I haven’t heard much talk about iron ore. I know there are some contrarian-types looking around there, but they are not being very loud about it quite yet.
Alan: Well, there certainly are good opportunities in iron ore in Brazil right now.
Peter: Good to hear that. Is the political climate generally supportive of mining?
Alan: Yes, it is.
Peter: Great, thanks. Back to the Summary slide here. The third point is about Cajueiro. Am I pronouncing that correctly?
Alan: Yes, you are. It means cashew tree, by the way.
Peter: Okay, thank you. You have some numbers on the size of the resource at Cajueiro and have a trial mining permit in place. Interesting.
Alan: The Cajueiro project is our key asset right now. It is the one where we're currently drilling and trenching. It is the one we're most excited about. There is an existing resource on it and we expect that we can expand that resource. We think it could be a lot larger, potentially by an order of magnitude.
Peter: The slide mentions “untested gold-in-soil anomalies” and that would certainly suggest the potential to expand the resource or establish new deposits. Great.
Alan: Again, we've had pretty good success following the placer miners. We start at the places where they have mined the gold from the streams and then attempt to track the source of that gold using soil samples. We have some very large soil anomalies that we have not drilled yet.
Peter: Great. The placer miners may have removed the gold from the gravel, but not the soils. I imagine that gives you a great way to expand your search around the area of their mining activity. Brilliant.
Alan: It's a good guide. Generally, the soils are not economic in their own right. The gravels have been extensively washed and sorted by water action and that is where the placer miners make their money, but there is a limited amount of gravel that they can take mine.
Peter: That’s right – a limited amount of gravel but a whole bunch of soil right nearby.
Alan: Generally, the hard rock gold deposit is sitting underneath soil cover and is not exposed. However, the hard rock deposit does release gold into the soils through the process of erosion and that gold gets washed into the drainage and ends up in the gravel. That process is a continued process and subject to water action. As such, we've found soil sampling to be a very useful exploration tool.
Peter: And it seems like it's a pretty flat area, which would help constrain some of the processes you are talking about here. Do you have a sense for how much movement there could be for the gold moving from the soils to the gravels?
Alan: It hasn't been a lot of movement, generally a few hundred meters. Sometimes the gold may have been moved further down the stream, even up to a few kilometers, but it is often highly localized. It is not as if the gold has been washed tens of kilometers down the streams.
Peter: As a geologist, you seem to have a lot of different data points to help figure out what's going on here even before you start drilling.
Alan: Yes, we do.
Peter: And it says, "Trial mining permit in place." Please can we talk about that a little bit?
Alan: Yes, of course. We have a permit to do some trial mining at Cajueiro. That is just one of the options that we're considering there.
Alan: First things first, we'd like to find out how much gold we have on the project. We have the potential to go into production relatively quickly, but we want to determine if there is potential here for a much larger type of operation.
Alan: We think there is potential for several million ounces here. If we are correct, then that could make this one of the biggest gold deposits in Brazil. It's already the biggest gold deposit known in this belt, but there are a lot of areas here that we've not tested yet. I think you’ll appreciate that when we start to go through some of the maps we have of the area.
Peter: I am chomping at the bit to get in to those maps, Alan. Elephant country!
Alan: Yes, it really is.
Peter: The strategic considerations around small-scale production versus exploration are very interesting. I would imagine that your team has good access to capital based on your prior success. It is good to have the trial mining in play, whether to generate cash flow or start the permitting process or demonstrate metallurgy. What do you see the purpose of trial mining for Altamira?
Alan: Well, it is all the things you just mentioned and more, Peter. One thing I point to is bulk sampling. For some deposit types, you need to do bulk sampling to get an idea for the potential size and grade. Prospecting and drilling can provide a lot of information, but bulk sampling is essential for some deposits with high grade veins.
Alan: We are not planning on doing trial mining at Cajueiro yet as we are still in the process of expanding the resource, but you're right – we have been successful raising money. Earlier this year, we raised $2.9 million and we are putting that money to work. We are pretty frugal. This is shareholders' money and we’re very careful with it because it is a precious commodity. We don't have cash flow right now, but we think that we're onto a very compelling opportunity here. Keep in mind, this is just one of our 12 project areas. Cajueiro is the most advanced of our 12 areas right now, but we have reason to believe the others are highly prospective as well.
Peter: Are all of these 12 areas contiguous, or are they somewhat distributed around the region?
Alan: No, they are all in different parts of the belt. I don't think there's a single area that we own that didn't have some sort of historic placer gold production.
Peter: Wow. A totally random question for you: is there any potential to do something with the trial mining permits that includes the artisanal miners in some way? I don’t know if they want to join the world of legal mining activities, or not.
Alan: There could be. I was involved in the private company that owned these assets before it went public. We did do some small-scale placer mining there. We have done that in the past and it paid our costs, which was nice, but that was about it. Furthermore, it takes all your effort to run a small operation. It diverts your effort, your focus, and your energies away from the bigger picture. which is our firm belief that there's a multimillion-ounce gold deposit here.
Peter: That strategy is probably more appropriate for a private company than a public one. It is good to hear that you're open to the idea and have actually done it before! Thanks very much for all that information – that is not in the presentation deck!
Peter: I am looking at the share count for Altamira here and it is quite low with 36.8 million shares out.
Alan: Yes, and the market cap is currently around $6 million. If you look at comparable companies, then I think you'll see we have an attractive valuation on a per-ounce basis. There is a lot of potential upside for us here. And as I said earlier, we have quite a lot of news coming with all the trenching and drilling that we're doing now.
Peter: Great, thanks for helping me put it all into context here. The slower we go, the better. How far back does the corporate vehicle currently known Altamira go?
Alan: It goes quite a long way back. This company was previously known as Equitas and it went through several incarnations. It was focused on nickel in Newfoundland for a time, then on copper projects in B.C. – all with different management teams. I've only been involved in this company for about a year or so. Like a lot of companies in our business, it has been through a few iterations. I'm not aware that the company ever controlled or owned a defined resource before. I believe it was doing early-stage exploration, which entails greater risk. Now, we have a significant gold deposit at Cajueiro and believe it could be much and of course we hope the other 11 areas we have that are at earlier stages of exploration.
Peter: What was the timeline on that resource, the half-million ounces at Cajueiro?
Alan: The timeframe to define the resource was probably about 18 months. Then, there was a hiatus and just like everybody else in our industry, we tried to survive. The last 5-6 years have been very tough. We did not do much work on the project, apart from some small placer mining. As we discussed, we were a private company at that time. This was before the merger with the company that became Altamira. I believe it was about 18 months to drill the initial holes and establish the resource estimate.
Peter: And that discovery and resource definition occurred when the asset was in a private company right?
Alan: That's correct.
Peter: What an interesting detail. I have not encountered that before. I have encountered public companies that made discoveries during the bear market. That is tough, but I suspect that trying to advance a discovery in a private company would be even more difficult! Depends who you know, I guess.
Alan: That is a fair comment. When you're raising money privately, the key issue is that your investors obviously don't have a quick exit.
Peter: Right. Was this company meant to be a private at that time? You didn’t try to go public, did you?
Alan: No, we planned for it to be a private company.
Peter: Wonderful. I can just imagine having such committed shareholders. We discussed before that $2-5 million was a typical amount for exploration expenditures for these types of discoveries. I assume the financials of that private company are not public information. I wonder how the calendar timing of your discovery at Cajuiero compared to the others, such as Cuju Cuju. A topic for another day!
Alan: I wrote some pretty big checks for the company when it was private and I am not the only one.
Peter: Good for you. I would expect no less from the man who privately owns a royalty on the largest gold deposit in Brazil. That is Tocantinzinho or TZ, right?
Alan: Yes, that’s right.
Peter: What an interesting story. Great to get some subtle details about it all from you. To repeat, you made the discovery at Cajueiro in this private company over a period of 18 months of drilling in a resource definition program that was done approximately five years ago.
Alan: Yes, that’s fair.
Peter: So, how much have people heard about all of this?
Alan: Well, it was a private company.
Peter: Yes, it was.
Alan: Not many people knew about it, to be perfectly honest. We kept our shareholders appraised of news, but we weren't doing any marketing to the general public or the capital markets.
Peter: And were these 12 project areas you have accumulated in Altamira all staked by this private company?
Alan: Most of them were accumulated when we were still a private company. It didn’t all happen at once -- they were accumulated over time. You may recall that we did mine gold when this company was private and we did cover our costs. We permitted that placer mining legally, so we have recent experience permitting a mine in Brazil there. We have much more experience working with the Brazilian authorities on our other projects, as well.
Alan: It was only last year that we decided to merge our private company, which was called Alta Floresta Gold, with Equitas, which was the forerunner of Altamira. That gave us a going-public transaction and here we are.
Peter: That transition from private to public is really important, in my opinion. That is something to watch in markets. There can be a lot of wealth created in the transition from a private company to a public one.
Peter: Let’s move on to the last point on the first slide here. We are at the 30-minute mark now. Drilling in progress at Cajueiro.
Alan: Sure, thanks Peter.
Alan: We anticipate drilling several thousand meters at Cajueiro. As we wait for preliminary results from the first few holes at Cajueiro, we plan to move the rig to another project called Creporizinho. We've never drilled there before the sampling and the surface exploration, but the work we've done so far at Creporizinho has been very compelling. We found some very high-grade numbers on surface. For example, over 1,000 grams of gold in grab samples on the surface at Creporizinho. That is 30 ounces a ton.
Alan: There are a lot of samples running which run 0.5-3.0 ounces of gold per tonne. They're not all that rich, but it is encouraging because it has never been drilled before. We'd like to get a few holes completed at Cajueiro, move the rig to Creporizinho, start drilling there, receive and interpret the preliminary results from Cajueiro, and then go back to Cajueiro.
Peter: Interesting to hear you are planning to move the rig around. You did say the area was accessible. With so many targets, I think it is appropriate for you to move around as much as possible to test different things, but it can be a tough strategic consideration whether to focus on one target or test several. And just to repeat it, you said: “grab samples with 1,000 grams per ton gold”, right?
Alan: Yes, we have some samples like that. They are obviously not the average grade, but we do have samples above 1,000 grams a tonne, which is above 33 ounces of gold per ton in some of the samples.
Peter: That's not from the gravel, is it?
Alan: No, these are from hard rock exposures at Creporizinho. We plan to drill-test this area after first drilling at Cajueiro. We found those high-grade samples in trenches and exposed rocks.
Peter: You mentioned trenching earlier, is this the same trenching campaign?
Alan: No, when I mentioned trenching earlier I was referring to trenching at Cajueiro. We have done limited work at Creporizinho but have benefited from the placer miners’ activity there.
Alan: Creporizinho is early stage, much earlier than Cajueiro. There has never been any drilling done at Creporizinho yet. It hasn't seen any significant work yet at all and that is tremendously exciting. When you step onto a project that has no drill holes, you always have the potential to make a discovery. With these high-grade numbers on surface, you really have no idea what you could find. I've been involved with projects where you know you've made a new discovery within the first one or two holes. So – I don't know. We'll see what happens.
Peter: Great. And what does it look like at surface there? Where are these showings? We talked about the soils, but I suspect the placer miners also leave some significant scarring in the earth. There could be some nice exposed rock in their past workings.
Alan: Yes, things like that are in play here. In this case, there some workings on a hill where the artisanal miners actually tracked the gravels and found a structure. They only mined the very top of the structure, but they did expose it. That has helped.
Alan: We also have some really good soil anomalies there. There are a lot of pieces of information that suggest the area is prospective.
Peter: Even the soil anomalies came through, isn’t that just great.
Alan: Yes, it is quite a good combination with the small-scale workings, the soil anomalies, and the rock samples on surface. It speaks to the fact that Brazil is an under-explored area, geologically. We plan to put the first-ever drill holes into this project.
Peter: Are these samples representative in some sense, or are they biased by the selection of the geologists in the field?
Alan: We generally try to get representative samples. We don't want to waste our time chasing something that couldn't be a significant deposit.
Peter: Sometimes investors seem to lose sight of that. I wonder what other games people play with rock samples?
Alan: Well, some people will keep going back to the same area and collecting similar samples over time. That is not what we're about. We're a serious group that has made four gold discoveries in Brazil previously. Creporizinho could turn out to be another one.
Peter: Those bonanza grades, are they normal compared to the other four discoveries you've made?
Alan: It's unusual.
Peter: Yes, it would seem to be.
Alan: Those kind of numbers are pretty unusual. Another thing to note is that the mineralized zone there appears to pretty good widths, as well. Grades and widths are two key features that a good mineral exploration target needs. This structure we see at Creporizinho looks to be several meters wide. We are very excited to get to work there.
Peter: Wow.
Peter: Do you have some sense of the orientation of structure already?
Alan: Yes, it appears that the structures are east-west trending but it’s still early days.
Peter: I wonder if the structure will bear similarities to your other discoveries. It is probably too early at this point, but it will be interesting to see what happens there. And I assume there is quartz present?
Alan: Yes, there is a lot of quartz veining there.
Peter: Do we have a sense for the timeline there at Creporizinho?
Alan: Over the last few weeks, we've had our geologists in there collecting additional surface samples. Their objective has been to determine where we are going to drill at Creporizinho. We will report the results of this surface sampling over the next few weeks. We also plan to start drilling around the same time frame.
Peter: Can I ask about your team on the ground?
Alan: Yes, our team is managed by an individual called Sergio Aquino. I've known Sergio for about 15 years. He is a geologist. He is Brazilian and is based in a town called Itaituba that is quite close to our projects. Sergio is the President of the Small Miners Association of Para state, which is the state to the north of us. Sergio was also one of the founders of a mining company called Serabi Gold, which is listed in London and has two gold mines in Brazil. Sergio was instrumental in putting their first mine into production. We're very fortunate to have him as our country manager.
Peter: Putting a mine into production is no small feat.
Alan: He is a very knowledgeable guy who is well connected in this part of the world.
Peter: And he has exploration experience, as well?
Alan: Yes, he has extensive exploration experience. He actually sold his own private company to Eurasian Minerals, which was a company called Dourave Mining. They were doing exploration work and were able to sell the company.
Peter: Well, I am a big fan of Eurasian Minerals. I believe they've rebranded as EMX Royalties recently. They have a booth at the Sprott symposium this week and they have an asset handbook that they share with people. It describes all the different projects they have and it is just awe-inspiring. That is another one of the real companies, as far as I can tell. What a great connection to Mr. Sergio Aquino!
Peter: You don't own your own drills at this point.
Alan: No, drilling isn't our business. We do, however, work with reputable drilling companies.
Peter: Do you have a sense of the costs for drilling at this point that you're willing and able to talk about?
Alan: I believe we're paying less than US $100 a meter, but there are additional costs like staff costs, analyses, fuel, etc. We drill mainly HQ holes, which are the larger holes.
Peter: And did you say 10,000 meters planned?
Alan: No, we would like to drill 5,000 meters but we will see how we get on.
Peter: I suspect you can drill some pretty shallow holes at Creporizinho – who knows what you'll get!
Alan: That’s right. We don't have to drill deep there. These deposits come up to surface, but are obscured by soil cover.
Peter: Is the soil around 10-15 meters deep there?
Alan: Yes, that is about right. It varies, as this is a fertile area and some places have significant soil development.
Peter: How about the geological history here? Has there been a massive amount of erosion to expose this stuff at surface?
Alan: Yes, absolutely. These areas have been eroding for 100’s of millions of years.
Peter: Right -- two-billion-year-old rock will do that. Is there any indication the deposit has been upended or reoriented in any confusing ways?
Alan: Not to our knowledge.
Peter: Okay. And do you have sense if there are multiple mineralizing events?
Alan: We don't have a sense of that yet.
Peter: That is fair. And were the prior discoveries epithermal type deposits or formed deeper down?
Alan: These types of deposits generally formed deep down in the earth's crust, several kilometers below the surface.
Peter: These orogenic processes. It’s not a greenstone belt, is it?
Alan: No, it's not greenstone related. Some are related to intrusive rocks and others are related to volcanics. We don’t believe all of the 12 areas that we own would necessarily host the same types of deposits.
Peter: Is there potential for disseminated mineralization around high-grade veins?
Alan: Yes, that is possible here.
Peter: And what about the base metals as you move out along the system?
Alan: They could be there. We haven't seen any evidence of base metal mineralization where we are. It has all been gold, with a little bit of silver, where we are looking, but there is potential for it.
Peter: Great, thanks. And I gather that you are a geologist?
Alan: Yes, I am. I have a PhD in gold geochemistry. I'm a geologist and geochemist.
Peter: What can you tell me about your time studying geochemistry, such as your PhD topic?
Alan: Sure. Think about a piece of white quartz on the beach. This is, generally, the type of rock that hosts the gold deposits we're talking about in Brazil. The gold is disseminated in quartz and the quartz is generally formed in cracks through the rock. This all happens as a result of hot fluid passing through those cracks in the rock and depositing that quartz, sometimes with gold.
Alan: If you take a very thin slice of that quartz and start looking at it under the microscope, then you'll see tiny bubbles that were trapped in that quartz at the time of formation. We call them fluid inclusions. They are essentially bubbles. You could pick up most any piece of quartz on the beach here in Vancouver, slice it up, put it through a microscope, and you'd see these bubbles, which in our case in Brazil are $1.8 billion years old.
Alan: These bubbles are comprised of water and some sort of gas, generally CO2. There might be some methane or nitgrogen in there. By studying those bubbles, you can find out a lot about the fluid that deposited the gold.
Alan: That was my PhD topic. I studied a gold mine in Zimbabwe – quite a big underground gold mine. They mined down to a maximum depth of about 1.8 kilometers. I was trying to work out how this gold deposit had formed and where it had formed. What was the temperature of the fluid and the pressures at the time? What was the pH of the fluid? What other things were dissolved in solution? How was the gold traveling in the fluid, chemically speaking of course?
Peter: What fun! I can just imagine all the things you could learn with access to a cross section of the mine over the 1.8 kilometers of vertical extent. How interesting.
Alan: It was a fantastic opportunity.
Peter: I've been listening to the recordings Andrew Jackson made for Sprott Global years ago, called “Geology 101”. I’ve listened to them several times and always learn something new. I really appreciate what the scientists bring to this business.
Alan: I like to think there's a place for some science in this industry.
Peter: Me too! We get a bad rap for the promotional aspects of the business, but this helps bring it back to the facts. There may be a science to speculation and risk, but it’s nothing like chemistry and physics. Do you think you have you seen major changes in the industry over your career so far?
Alan: Yes, I have. Absolutely. There are a whole bunch of new methods and approaches that we can bring to bear on to exploration problems now. And the list of techniques is always growing. Remote sensing technology jumps out at me, in particular. It wasn’t generally used 50 years ago. Geochemistry has been around for a long time as a tool, but it continues to progress. And there have been huge advances in geophysical approaches, too.
Peter: Can you imagine using drones for soil sampling?
Alan: That’s pretty far out there, but the drone technology is already having an impact. It allows you to get to remote areas much more quickly and get an early indication of things. You can do a lot with drones.
Peter: Indeed. I look forward to hearing more about all this. In particular, I wonder about the potential for geophysics at your projects. So much more to discuss, but we are at the 45-minute mark here. Let's finish and leave some water in the well.
Peter: I believe we made it through the first slide in your deck here today. Believe it or not, I consider that a success. I kept you talking and you provided all kinds of important information. I don't think many of the people out there are aware of all this and it is my pleasure to help make it public.
Alan: Thanks very much, Peter. Goodbye.
This interview was recorded on July 28, 2017.
