Thanks @Allan for the introduction to this new business line for Advance Gold. Exciting stuff! What next?
Peter Bell: Hello, I'm Peter Bell and I'm here with Mr. Allan Barry Laboucan of Advance Gold. Do I have the name of the company right, Allan?
Allan Barry Laboucan: You do, sir.
Peter Bell: Thank you. I get confused. There's a lot going on. And now you have a lithium play! Congratulations.
Allan Barry Laboucan: We're looking for some white gold, you could say.
Peter Bell: I remember hearing about this years ago -- the salars in Mexico. I read the news release that you have out today and it seems legit.
Allan Barry Laboucan: I'm pretty pretty excited. When I was running Alset Minerals, I was involved with this series of salars in central Mexico. At the time, funding was difficult and the group that came along who wanted to fund the company wanted me out and somebody else to run it. I passed the torch and unfortunately for Alset, the group that took it over decided that they didn't want to do any work on the projects. Fast forward a couple of years and they gave 13 of these salars in Mexico back to the vendor. Recently lithium has been getting hot, so I contacted the vendor. He said that he has 13 salons available and he loves working with me so let's do a deal. The deal terms we announced today are partly informed by my past experiences in diamonds. One of the first diamond mine in canada was found by Chuck Fipke and his partner, who each kept a 10% interest. That kept them very motivated as partners, so I wanted to do something similar. What we did is we acquire a 90% interest where they have a 10% interest carried through the production. If it gets into commercial production then they'll become a 10% participating partner. They get 5 million shares. I get to buy the test plant that they built with their own money and I also acquired the proprietary rights to a method of extraction.
Peter Bell: I love the deal structure. I was reading that and I thought you guys are aligned.
Allan Barry Laboucan: I wanted a partner. The key reason I wanted these guys as a partner is because Sr. Jose Parker, who's part of the vending company, ran the Geological Survey in Mexico for 30 years. One of his jobs while running the survey was to bring investment from outside the country and one of the things they did was an analysis of all the lithium deposits throughout Mexico. These ones in central Mexico seem to have the best grades and the best prospects for mining. The other key person in the vending company is a guy named Gilberto Zapata. Gilberto is very well connected with the local government people, state government people, all the way up into the federal level. Having a smart geo and a smart businessman involved with a carried interest into production is, I think, a no-brainer. I wanted them to be motivated partners.
Peter Bell: And there's another name, too. Dr Roberto Perez Garibay. It sounds like he's an inventor.
Allan Barry Laboucan: He's a brilliant guy. He runs the one of the most prestigious research labs in the country in at the university of Saltillo. When I was running Alset, he came to me and said I think I have a method that will very cheaply get the lithium out of the property. I said let me come to your university! It's only about three hours from where I live in Zacatecas, Mexico. We went up there and I was blown away by all the research equipment that they had, Peter. For example, they had three brand new electron microprobes. I don't even see that in Canadian labs. Part of the reason why they are funded like that is one of the major mining companies had some problems with their gold and silver recovery and he solved the problem for them. He solved the problem for them, then that helped them get all this research money and all this great equipment. I went up to meet with them and I was just blown away by the lab. I said, why don't we do a study to assess the ability to separate the lithium. It is contained in small size fractions, so it is amenable to heavy mineral separation. And it's in the non-magnetic fraction, so what he proved at the lab level was the ability to use heavy mineral separation and magnetic separation to create a high-grade concentrate. Then, he ran leaching work on it as well. In six hours, they were getting like 85% recovery of pure lithium. At that point there are no impurities. You're left with the lithium. I thought this was great, but the group who took over Alset didn't do anything with the project.
Peter Bell: Why would you! Why would you do met testing, Allan, when you don't have a resource? That's one of my favorite things I've heard people say. No, they say, you have to drill off a resource first. I say hold on -- back it up. What are we doing here? Are we generating news flow that is meaningful to the market or what? I'm glad to see you going directly into this pilot plant test work and it's neat to hear that background. I didn't know about the history with the laboratory and Dr. Garibay here.
Allan Barry Laboucan: Another beautiful part of these projects is that you can see them from Google Earth.
Peter Bell: Right! I remember that. That's one thing that stuck with me from years ago, Allan. I remember in Vancouver when you showed it to me used Peter look years ago.
Allan Barry Laboucan: Yes, I showed you it on my phone. That's right, I remember too. It's amazing you can see it on Google Earth. The mineralization starts right at surface. And another thing that's not well understood is that when I ran Alset we only did testing down to 5 metres. We're now planning to do a 10m drilling, probably with augers. I don't have all the details lined up yet, but we plan to do a 10 metre evaluation. With the size that you can see at surface, just going down 10 meters can establish at phenomenal resource that would have decades of material to be processed.
Peter Bell: When I hear about lithium salars, I think about this stuff I don't really understand with the convection of the water to bring the salts up and evaporation at surface. Then, pumping water into the system to keep it moving. I've stayed away from all that because I just don't understand it and haven't studied it enough. But this is more like a free dig scenario where you're dealing with some pay dirt at surface.
Allan Barry Laboucan: Exactly. And the test plant that Dr. Robert Perez Garibay designed is different, too. Think of it like small silos. First you do the heavy mineral separation and the mag separation, then you've got your concentrate. You put the concentrate in these little silos and leech it out. That leeching is the big difference. The concentrates we make will be similar to the grades that you look at in the Chilean and Argentina salars, but instead of spending two years to use the sun to leach out your lithium you can do it in a matter of six hours in these silos. And they're modularized! If you want to do bigger bulk samples, you build another silo.
Peter Bell: And maybe you can get into pressure leaching, too. That may accelerate some of these chemical reactions that are happening.
Allan Barry Laboucan: There are other things that we might be able to use to concentrate it even more efficiently. But just at the lab level, we are able to be able to create a high-grade concentrate from from heavy mineral and mag separation and then leach it in a matter of hours -- it almost proves up the economics. Now, we'll start doing the testing at the pilot plant level to work towards a goal of proving up the economics. Ideally, what I think is going to happen here, this is speculation based on lab work done by an expert in mineral extraction, is that we could be the lowest cost producer of lithium on the planet.
Peter Bell: Whoever gets that title is probably going to be using new technology, right? When you come in with a new technology, that's when you're able to set a new record. And not just cost, but the speed! The potential to have the control on the speed and not to be subject to environmental factors with the evaporation that we really don't have a lot of control over.
Allan Barry Laboucan: It's transformational in the similar sense of 40 years ago when you couldn't get that no-see-um gold out of the dirt in Nevada until they figured out heap leaching. That made it so that you're looking at dollars per tonne of cost. If you have $30 or $40 or $50 bucks worth of gold, no-see-um gold, and you've got that low-cost production then it's now a money-making machine.
Peter Bell: And the scale of those things, Allan. Think about the scale of those oxide gold operations, too?
Allan Barry Laboucan: Yes, and we have potential for scale here, too. How quickly can we build pilot plants and how big can we make them? There's so much potential pay dirt here. We've cut decades worth of dirt that we could be processing.
Peter Bell: And the pilot plant is built?
Allan Barry Laboucan: Yes, the pilot plant is built. We have the mag separator, too. It's sitting outside my house waiting to be delivered today. I'm thinking that within a couple months we'll start having economic numbers from the test plant.
Peter Bell: What do you think about permitting timelines and all that on the bulk sampling at side?
Allan Barry Laboucan: The beauty of Mexico is that it's almost like those privately-held land projects in Nevada. For bulk sampling, we don't need a mining license. What we need is the local community, Ejidos, to give us permission. In some places, the land is privately owned as well and we have to work out a deal. I did these when I was running Alset. In fact, they did a lot of community outreach, Peter. At one of the salars, the local community had some garbage problems and we cleaned it all up. We set up the system where the garbage trucks were going out there to keep it clean. Another community didn't have water because they didn't have a water pump. This was going on for like three years when they couldn't get the funding from the federal government. It cost us about $7,500 USD and we got them a new water plant. They've had water ever since. These salars are in close proximity and they're small communities that are interlinked. They have a grapevine of information that is very quick. I have a good reputation down here for community outreach, creating jobs, and we'll be talking to the Ejidos and the key people to organize the approval to do bulk sampling. We'll get on it as soon as possible. I think that within a couple months, we'll be generating data on the statistics of heavy mineral separation, mag separation, and leaching. In the meantime, I intend to do some drilling too -- probably 100 metre line spacing with holes 10 metre deep. For those who want to calculate the resources, they can do it themselves -- we'll give them all the data. And I think we can get all of that done in the time when I'm working on getting the approval to do the bulk sampling. We'll be able to get a lot of grade data out there.
Peter Bell: I like auger drilling! That's high impact information that you get fast. I don't know if you can get grade stuff out of the pilot plant yet, but that may reduce the amount of reliance you have on the assay labs as and avoid potential delays.
Allan Barry Laboucan: Remember, Peter, that where I am in Zacatecas, Mexico is a mining hot spot. We have Canadian labs right here in the town of Zacatecas. One of the big bottlenecks in the labs in Canada is doing the assay preparation work. What get all the preparation done down here in Mexico, then send it up to their lab in Canada and get results more quickly. I can get results back in three or four weeks. What we'll do with the drilling is get the baseline numbers, then run that material through the processing lab to show how we can upgrade it and leach it out quickly. It's pretty exciting.
Peter Bell: And then you get product from the pilot plant that you can send around to potential buyers for testing. Hey Tesla, have a look at this. The product qualification process with these industrial minerals buyers is brutal. It can be a long gauntlet.
Allan Barry Laboucan: We're left with a pure lithium product because we're leaching out everything out. We're left with lithium. I think this is going to prove to be exactly what they're looking for and we can show it to them quickly. My ultimate goal is to do everything I possibly can here in Mexico. I would like to find some Mexican partners that will help us to move things ahead aggressively to make a product that is "made in Mexico".
Peter Bell: OK! Texas isn't far away and people seem to be moving there. With Tesla moving there, who knows?
Allan Barry Laboucan: I moved down here to Zacatecas because of these salars. One of my mentors is a guy named André Gaumond, who ran Virginia Gold. I asked André about his personal milestones and he said, "Allan, the biggest thing was when I was able to go to a project we found, then go to the mine and see hundreds of jobs." It didn't really have a lot to do with the money he made for the shareholders. For him, it was all about creating jobs and Zacatecas, Mexico is an extremely great place to be mining. My goals are in line with André's. I want to create hundreds and hundreds of jobs and I think that these salars can do that. That's the big picture goal.
Peter Bell: Capstone gold with Mina Cozamin is just north of Zacatecas -- is that a relevant location?
Allan Barry Laboucan: Well, that's close to the city. I can drive to it. There's another mine that is right behind the mall here in Zacatecas City. I was over in Fresnillo, which is about 40 minutes from where I live, and when you drive into town you can see the Mag Silver mine that's going to make them the second lowest cost producer of silver on the planet. Drive anywhere and you see mines all over the place, Peter.
Peter Bell: I remember you showed me these salars on Google Earth and I'm trying to see them again now. Are they by the cities?
Allan Barry Laboucan: Some of them are close to Fresnillo. All of them have a community around them because, historically, they produced salt for the mines out of these things hundreds of years ago. That's an indicator of where to look for mines is where there are communities. I'm not a rocket scientist -- I like things to be simple.
Peter Bell: The town of La Salada is north, that looks interesting.
Allan Barry Laboucan: Yes, and that's the community where they didn't have water for three years until we got them a water pump. Since then, they've had water. And the community doesn't forget that kind of stuff, Peter.
Peter Bell: Well done. And you mentioned private land -- do they have patented claims?
Allan Barry Laboucan: The private landowners have the surface rights and then the mineral rights belong to us. One of the communities that I worked with really closely could the first place for this and it's called Saldivar. That could be the first salar that we start bulk sampling on because I have a really good relationship with the surface rights owner. I'm a big guy on community outreach. I don't know if you remember but when I was in diamonds, I went into a couple communities that were the hardest places to get permits from and we never had problems getting permits because I did the community outreach. My whole philosophy about community outreach is to engage, to include, and to respect. Whether I'm in Canada or Mexico, that's what I do. That means going out and talk to them at the early stages, have them involved, and respect the community. I don't need to be taught those things, I'm one of the guys that helped people in the mining business come to the realization that the old method of pushing your weight around doesn't work anymore in Canada. You've got to go out and engage, be respectful, and include the locals. That will never change with me, Peter. I pride myself on that stuff.
Peter Bell: Well, it's good business. It really hurts to see stuff in Saskatchewan recently where people are talking about how provincial permits don't give social license. Yikes! I thought we knew that, but I guess not.
Allan Barry Laboucan: They don't and that means it's crucial for the mining companies to get out and see the people. The reason that they're doing that, Peter, is because they're not being respected and they're not being included.
Peter Bell: They're not being not being listened to!
Allan Barry Laboucan: They're not being listened to, either. If somebody came to your community and said we're going to build a mall there...
Peter Bell: When I invest in stocks and management don't listen to us, then they come back and say "whoops, we made a mistake" it's tough. We saw this coming and we tried to tell you, but what happened? It's the same way with small investors who feel like they're not getting listened to.
Allan Barry Laboucan: Out there in Canada, it's no different Mexico.
Peter Bell: Well, I'd say it's a lot more serious. Money is one thing -- it's one thing for us to get jerked around on some money -- but it's another thing when they're coming to where you live and talking about building a mine. That can be a great thing, but it is high-risk too.
Allan Barry Laboucan: There's so many old school miners out there who still think that they they can push their weight around and tell people to take it or leave it. But that doesn't work. It's not going to work in Canada and it's not going to work in Mexico, or Chile, or Crgentina, or Timbuktu. It's about respect for people.
Peter Bell: And if you're not then Advance Gold is going to come along and eat your lunch! So, what's up with Africa?
Allan Barry Laboucan: I think this lithium is transformational. It could lead us to near-term production and I think that will help us in all our efforts on the precious metal side of the company so we can have something that generates cash flow, then we can swing for the fences with the precious metals.
Peter Bell: And even the technology side with the lithium -- if that technology does prove out and people recognize and realize that this works then this is a whole new source of material for lithium globally. That intellectual property is a big deal. It could be like heap leach for Carlin gold.
Allan Barry Laboucan: Anybody who wants to use that technology here in Mexico will have to come through Advance Gold.
Peter Bell: Globally, too! I wonder if there's other deposits like this elsewhere?
Allan Barry Laboucan: Peter, you never want to reinvent the wheel. If one company knows how to do it, then you're usually best off to go to that company. Yes, there are similar salars throughout the world. I did an analysis using Google Earth on all the ones that I could find and there there are several of them where our technology could be used. It's a first come, first served kind of thing. The first to come will be our stuff, but maybe we can do joint ventures down the road where we solve problems for others. That's just icing on the cake.
Peter Bell: It's all to play for at that point, Allan. I'm surprised! I didn't expect this one, but I like it. Well done.
Allan Barry Laboucan: I'm glad because you're a shareholder and I like to make our shareholders happy. That's another thing André Gaumond always said to me. He said, "Do a good job for your shareholders and they'll always stick with you." We've had a good group that stuck with us. It's one of the reasons that we only have 53 million shares out and I own a big chunk of it. Our chairman owns a big chunk of it, so we're aligned with the shareholders. We've got our friends and family into it. If you counted everything, it's probably over 50% of the company that only has 53 million shares out. We eat our own cooking.
Peter Bell: There are some questions on CEO.ca coming in. Somebody says, when do you expect a PEA? I think it's probably pretty hard to answer that question here. I guess this could potentially be a 43-101 and you could go down that normal pathway, but one of the things about bulk sampling is that you can accelerate the production timelines. If it's low capex and low opex, then we don't need to go there.
Allan Barry Laboucan: I'm not a big fan of the PEA.
Peter Bell: Plus or minus 50 percent is goofy.
Allan Barry Laboucan: Exactly. You can't rely on the PEA, anyways. Secondly, you spend a bunch of money doing it. Thirdly, they do it because they think that's going to help them get bought out but the company that's going to buy you out doesn't need your PEA! They're doing it internally with their own software and their own people and they trust their own numbers.
Peter Bell: And their numbers aren't plus or minus fifty percent. They are plus or minus twenty, thank you very much.
Allan Barry Laboucan: If they're cutting a check, you can be sure that their statistics are better than any junior can put out there. My resource calculation will be, "well, here it is on Google Earth, here's the drilling we did, here's the data, and here's the density. You run your own numbers." It's easy math and, in the meantime, we'll do bulk sampling to prove up the economics and start producing it ourselves.
Peter Bell: And generating those headline news items! You are in the business of generating headline news. Your business is not generating 43-101 reports. And what's the percentage recovery -- is it too early for that kind of stuff yet?
Allan Barry Laboucan: Like I said earlier, when you do heavy mineral separation and mag separation you cut out 80% of your material and you've got a 20% high-grade concentrate that you put through leaching. It takes about six hours to get over 85% recovery.
Peter Bell: Amazing. Looking forward to seeing more of that testing. That's a really encouraging start. And is this brines or clays?
Allan Barry Laboucan: It's a combination of fine dirt and clay. One thing I'd like to do is drill a few deep holes for particular reasons. I want to do 10 metre drilling on a grid that covers the whole thing on a resource-wide spacing so that somebody who wants to run the resource numbers can run it themselves, but I also want to do one hole to get down to bedrock. Some prior geophysics suggests that these things could go down to a thousand meters.
Peter Bell: It's possible! There's two and a half kilometers of sand and shales before you get down to bedrock in southern Saskatchewan. I had no idea about that.
Allan Barry Laboucan: The geophysics suggests that it goes deep. And often what you're going to see in any deposit is zonation of grade, so I want to see what happens if you go down 500 meters -- does it blow out to bonanza grades? I'm just looking at the meat and potatoes at surface down to 10 metres, but who knows what's below that. I want to find out. I would envision 100 metre spacing down to 10 meters, then one hole to shoot for bedrock and understand how deep it is and also test the zonation of grade.
Peter Bell: And this is not a classic brine play?
Allan Barry Laboucan: No, this is dirt and clay where you use heavy mineral separation, mag separation, and then leaching.
Peter Bell: The clays might be a little difficult to deal with in terms of the screening, but not impossible.
Allan Barry Laboucan: When I was working in diamonds, there was a company that had a similar type of issue and they were able to to get a concentrate with water under not much pressure. Who knows!
Peter Bell: You will find out fairly quick with the bulk sampling stuff. The fact that we're not trying to drill off some mega resource helps. Focus on what matters here.
Allan Barry Laboucan: No, it's all about moving dirt through the test plants to see what the economics look like and hopefully show the world that we're on to something here, that we can be one of the lowest cost producers on the planet.
Peter Bell: Imagine putting it through a trommel from a placer mining operation.
Allan Barry Laboucan: There are other things that may work, too. When I was running Alset, I had a guy do a valuation of putting the dirt out on a pad and letting it dry before you do all that other stuff. We're gonna get all the wrinkles out of the best method to get that out of there for the least cost and the purest product as we can come up with. That's what the test plan is all about.
Peter Bell: Well done. Thank you, Allen!
Allan Barry Laboucan: Thank you, Peter. Thank you for your time. I'm gonna have lots to talk about and we'll do this again I hope soon.
Peter Bell: Appreciate you. I'll get this recording up on ceo and I'll have up it on youtube as well. I'll generate a transcript there at some point for the for the crowd. I see lots of chatter back and forth, and I look forward to seeing more there.
Allan Barry Laboucan: Thank you. I'm happy to be able to introduce it to your audience, Peter. Thank you.
Peter Bell: You're welcome! Goodbye.