I had the pleasure to attend the AME Roundup Conference for the first time this year and it was great. I live-tweeted most of the event and managed to get one interview at the Coreshack. That interview was with John Mirko, President and CEO of Rokmaster Resources Corp. (TSXV:RKR).
I didn’t know it at the time, but John received the E. A. Scholtz Medal for Excellence in Mine Development from the AME BC in 2008, and the Mining and Sustainability Award in 2009. It was a pleasure to talk with him and you can find a transcript of our conversation below.
Rokmaster is a junior resource company focused on two base metals projects in Kootenay region of BC. One is zinc-lead-silver, the other is copper-silver-gold. Our conversation focused on the zinc-lead project, known as the Duncan Lake Zinc. The project has a long history and Rokmaster acquired it from Jack and Bob Denny, a father-son team from a long-line of prospectors that includes Eric Denny, who won the Spud Huestis Award for Excellence in Mineral Exploration in BC from the AME in 1993, and Graeme Haines of Australia, a backer of Jack and Bob.
Rokmaster has 98M shares outstanding. It is tightly held with Directors, insiders, and close friends holding over 60M shares, which is over half the float. With shares trading at $0.05 recently, the company has a $5M market cap, approximately. You can find more about the company on their website here.
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PB: Hello Mr. Mirko! Nice to meet you, thanks for giving me an interview here at Roundup. You have a nice booth here in the coreshack. Please tell me about the company.
JM: Thanks, Peter. Call me John. We’ve got drill core from the Duncan Lake Zinc Project here today. It’s a new asset for Rokmaster purchased from the vendors due the potential for large world class zinc zones of mineralization in an area called the Kootenay Arc, near the Trail smelter owned by Teck.
JM: The prospectors acquired Duncan Lake by staking it. Cominco made the initial discovery at this project in the 1950’s and Teck had it since they took over Cominco. Teck paid the annual dues on the property for years, but didn’t do any work on it since 1997. Recently, Teck dropped a bunch of claims in the area, including these ones.
JM: Teck has kept a small 12 unit group of mineral claims 2km to the south dating back to 1951. It has a non-compliant, in house resource of about 4M tonnes of modest-grade lead-zinc grading approximately +6% combined. The work done on that resource was back in the 1950s and '60s and included over 13,000 meters of surface and underground diamond drilling as well as over 1,950 meters of underground drifting, cross cuts and raising. In 1989 they made the more recent discovery about 2KM to the north, which is much higher grade at over 10% lead-zinc. They haven't got a resource on it, but are speculating that it could be around 7M tonnes just from the little bit of drilling they have done.
JM: We think Teck’s exploration geology department will be interested in what we are going to do there. We aim to bring the area that their predecessor, Cominco, drilled from 1989-1997 back to the forefront.
JM: There are a dozen holes in the mineralized zone at our project and they are all good holes. We can move forward rapidly with a heavy-duty drill phase at surface and underground. We want to take what Cominco saw as a potential resource and move it into a compliant resource under the rules and regulations that we have today.
PB: And then we will have something to talk about!
JM: We feel that this is something we can permit into production. About 100KM to the North, my team helped permit and built a mine in 2008 called the MAX Molybdenum mine. It is an underground mine, 1,000 tonnes per day. We have a similar situation here with government regulators, First Nations, local communities and workers, and local environmentalists having exposure to the mining and exploration industry. We have mining experience in the area and the team will be familiar faces.
PB: How deep underground was that MAX Molybdenum mine?
JM: It was kilometers under a mountain. This one will be a couple hundred meters under the Duncan Peninsula and lake. We have lots of land we can work off, but the main zone dips under a lake. It is preserved, it's not exposed or eroded off.
PB: Is there any weathering or alteration there?
JM: Not in this particular area. This is all fresh material. It's at the north end of a 10KM metal loaded belt. We’re not sure why it's so much higher-grade on the north end. There is a lot of silicification in this zone, which is alteration that isn't seen as much in the area to the south.
PB: That’s a bit beyond me, but I look forward to learning more about what could be going on there. I do know that it’s a prolific region for mining.
JM: Historically, the Kootenay Arc has produced a half-dozen large lead-zinc mines. All the way down to the US border and, just a few miles across the border, Teck is operating one right now -- the Pend Oreille Mine.
PB: Any comment on the Trail Smelter?
JM: They have already done some test work on the zone just to the south of what we have and they like it. It makes a clean zinc concentrate, which means it doesn’t take up much room in the smelter and is purer sphalerite, as opposed to iron-rich. There's not much iron in the zinc mineralization. The lead is also a clean concentrate product, with a little bit of silver in it. It's all something that they are going to be interested in buying. It doesn’t interfere with their smelting of zinc ores from their Red Dog Mine or other supply, but actually enhances it.
PB: And these other sources for the smelter -- are they mid-life or nearing the end of mine life there?
JM: The big ones are nearing their end. It seems Teck hasn’t got around to conducting a lot of work in the local zinc belt since taking over from Cominco. We hope to help liven things up in the area.
PB: And timing?
JM: We just got this deal approved and closed day before yesterday. The news went out yesterday morning!
PB: Wow, good timing for Roundup 2017.
JM: We have a new Chairman of the Board, Mike Cowin from Australia with much relevant experience. Mike is well connected with international mine production financial community and they like Duncan because of the size potential.
PB: Any comment on the history of the company prior to this new project?
JM: We bombed-out on a large Peruvian deal during the 2012 to 1015 resource market collapse. Since then we've managed to sell our interest in the Peru project and to convert our debt to shares in friendly hands.
PB: Any comment on capital value of the company before/after?
JM: Current market cap is around $5M. There was $1.5M in equity swapped for the debt, which is mostly with myself and friends of mine who are prepared to work with a group of mine builders out of Australia -- not promoters.
JM: We paid for Duncan Lake with shares, only. We have no work commitments and no cash-payments. We've made our first share payment and we own it 100%. The next payments are only due if we find resources and put them into a technical resource category. We have a minimum amount of tonnage and minimum amount of grade as performance targets after which the vendors are paid more. So, both the company and vendors share in any win.
PB: Any comment on number of shares there?
JM: Well, it might look like a lot, being in the millions. But you have to remember that we were trading at 2.5-cents, now we're at a nickel. Handing out 12M shares for 7M tonnes of what looks like very good grade in a good location is not a bad deal.
PB: Total shares out?
JM: Fully diluted is 115.5M including, options, future property purchase warrants and the debt conversion. Again, those shares are tightly held. The amount of shares we already have in friendly hands is around 60M excluding the options and warrants.
PB: Great. I expect that you have a pretty strong group of people behind you, given your history in the area.
JM: We have a relationship that works, to a good degree, with the local residents and First Nations , who have valid environmental and social concerns. Of course, the Provincial Ministries located in the City of Nelson are also fairly environmentally conscious.
PB: With the history of mining in the area, I would think there would be a lot of support for exploration.
JM: When you have a public meeting there, roughly half the people are for it and half are against it. That's just the way it's going to be in the area. We just do our best to cross the finish line and prove them wrong. We've done that before -- my team has had three operations in this area of the West Kootenays and we haven't embarrassed anybody yet in terms of safety or environmental impacts.
PB: Good.
JM: We're going to try and do it again. Just continue moving forward and drill it. Cominco recommended the next stage of drilling of more than 17,000M at our Duncan Lake property, right at the same time zinc went down to $0.25 in 1999.
PB: Tough timing!
JM: Cominco’s new Red Dog mine in Alaska was going full-blast and the Sullivan Mine at Kimberley was still in production, when Teck took them over. The Duncan Lake property was in a relatively advanced stage, but the request for 17,000M more drilling was not approved then or after the takeover. They told their exploration team to put it on the back burner and nothing has happened to Duncan Lake since then. That's the newly discovered area we have acquired. The old area that they called the Duncan Mine is what they last worked on in the 1960s and it is about 2 km to the south.
PB: Is that old mine site part of your claim?
JM: No. We hope to join with Teck on those claims so that we have more surface in the area to work off of. It's only 12 units and a unit is about 25 hectares. They are legacy claims -- the only ones left from the old days.
JM: You probably noticed that Jack and Bob's father and grandfather won an award as a famous prospector in British Columbia. He lived in that area his whole life and that's how these guys are doing the same thing.
PB: Right -- that's Eric Denny.
JM: Eric was an icon in the area. Fantastic prospector.
PB: I can't even imagine the history in the area.
JM: If you get a chance, travel up there to the Kootenays!
PB: And then go off the beaten path and poke around some of these old mine sites for a real adventure.
JM: Take a look at the old Kimberley Sullivan Mine. It produced over $60B at today's metal prices. You want to know how to build a province? One mine. That's a legacy. The other ones to the south, the Blue Bell and Pend Oreille Mine etc. added up to much more than 60M tonnes themselves.
PB: Is the whole area pretty staked out?
JM: Yes, but we actually added a few more claims only a couple days ago as it took longer than we expected to get approval from the Toronto Stock Exchange. Things are getting better, but it seems they still have the same number of people working as they did a few years ago.
PB: They're not ready!
JM: They're likely getting buried, but working hard.
PB: Well, thanks very much for introducing me to the company, John. A lot of history here and some interesting geology, too. I look forward to learning more about it.
JM: You’re welcome, Peter.
