Check out my interview with a company you may not have heard about. Yet.
Elim Mining Incorporated is a private mineral resource company with headquarters in Reno, Nevada and Phoenix, Arizona. Our company was incorporated under the laws of the province of British Columbia in April 2019 and is managed by mining executives with each having over 20 years of experience in mine operations and business. We are engaged in the identification, acquisition, exploration, development and sustainable production of precious and base metal properties in well-known geographic regions with low geopolitical risk. The company seeks assets with significant potential for proven and probable mineral reserves. Elim’s main asset is located in Pinal County, Arizona, the Copper state of the USA. https://elimmining.com/contact-us
P: Hello I'm Peter Bell and I'm here with John Antwi and Alison Dwoskin from Elim Mining. Hello John.
J: Hello Peter. How are you doing today?
P: Very well. Nice to talk to you on a Zoom call here. We're going to record this and put this up on my YouTube channel. Alison, thanks for organizing.
A: No problem.
P: You guys are in Arizona with a private company? What's the origin story on this?
J: Very interesting story here, Peter. It's a project that was presented to me when we had effectively sold Klondex’s mine to Hecla. We did our due diligence on it in Arizona and saw good value. The state and the agencies involved were looking for a credible mining company to pick it up. The former CEO of Klondex was involved and is now our current chairman. We organized a team and decided to take on this one. It's a great project and a good opportunity. We love Arizona, it is copper country.
P: What a place to be right? After a success like that, the world was your oyster to some degree. You could have gone anywhere. Why Arizona?
J: Sometimes you see opportunities that only come by once in a while. When something shows up, you want to take advantage of it. We had looked at a number of projects right after closing. We were looking at certain projects in Nevada. One of which came close as we're comparing our project to that, and we still passed on that one because of logistical reasons. This one makes a lot more sense to us because of timing towards production and the ability to deliver on certain expectations with respect to the permits. While delivering all the technical work, we saw this one as the opportunity that would be the most value to shareholders. I am originally from Ghana and so are the other projects. However, this one really is important in the sense that there's everything that goes with it. You have the community, the state, and agency support. This checks all the boxes for us.
P: Shoutout to Paul Huet, the associate that you mentioned who was there at Klondex with you. He is a well-known name in junior mining circles. All kinds of good stuff that he's involved in. I didn't know he was involved in 1911, $AUMB with their project in Manitoba. I love the ticker for that one A U M B, gold & Manitoba. Simple!
J: Yes, he was. I think he stepped off that board since we spoke.
P: Okay good. He's got his hands full with Karora now? I can't keep up. There's too much going on. I can't keep track of everything so I don't even try. I stay focused on the opportunity that I see. Ghana is an interesting jurisdiction to me but it’s pretty far away, and I don't have a lot of experience in Africa. I've been to Arizona and I've been to the Northern Vertex mine back in 2017 when they were first starting up. It is really interesting to go to the Oatman district and see the gold history there. It made a big impression on me. There was a wrinkle to that story that really stuck with me; their phase one production plans were entirely on patented claims! That was a surprise to me. They fit their pit on there, the heap leach, the laydown yard, and everything fit on patented, private ground? That was impressive. And that's something you have with the Cactus mine in Elim Mining!
J: Yes, that is true Peter. If you have that opportunity, people do try to fit all their facilities onto patented claims there because the permit process with respect to the patented claims is quite streamlined. You're dealing with the state and the county. There are mine inspectors, but it’s a streamlined process versus other areas. This is a big part of the opportunity for us. All our claims, all the land, all the potential targets -- all the opportunities that are in our future here are on private land.
P: And you have the size! That's an unusual thing here. Sometimes these private blocks come up, but they are small. I was impressed that Northern Vertex was able to get a few years of an open pit and a heap leach on their patented block, but I think you are on another order of magnitude larger than them.
J: We certainly have something big. In fact, what we are looking to put out in an upcoming resource is quite significant in terms of size for a junior. With the land claims we have now, we're looking at somewhere between six to eight billion pounds in the district that we hold.
P: To come out of the gate with that is amazing! As a new issue and as a private company to be talking about that is a great start.
J: We will come out with a phased approach. My estimation is that it would be probably up to two billion pounds initially as a starter and then we'll be looking at the other options as we go.
P: Why go public with it? Why not go for a quick flip privately? It's a tight copper market and it's a strategic asset. You had the foresight to pick it up in 2019 and here we are in 2021 with things getting hot.
J: We had indicated to our shareholders that at the appropriate time when the market is conducive and when we are properly set up, we will give them some liquidity or the option to have liquidity so that's essentially what we're trying to do here. However, it is one of the decisions that will be made as we're still looking at all those options as we advance the project. Yes, we are looking to go public at some time and our estimation is towards the middle of the year but the market is going to determine that and our key shareholders will play a key role as well.
P: There are a few ways to generate liquidity, John. There's potential for a project-level transaction with an asset like this.
J: I have done a lot of those in my career. I love deals and there is really no restraint on me with respect to making a case for it. If it is the right thing to do, we're going to present that to the board and to the shareholders.
P: Good. That's important to hear from you as President and a member of the Board. I'd love to talk to you about some of those prior deals you mentioned, but there's lots of stuff to talk about with Elim for now. The technical team that you put together for Elim is impressive. The legacy assets are noteworthy, too. Let me read something from the website on the Cactus page, “... for mining operations, ASARCO had built a core shack crushing facilities, a flotation mill, a 300-acre tailings disposal facility, returning water impoundment, and a 500-acre waste dump, commissioned a rail spur, a mill, power lines, and roads.” There's a whole bunch of more information in there with underground mine developments, too. What is the current status of various plant property and equipment as it might be reflected on the balance sheet?
J: There are certain items that are currently on the balance sheet and others that are not. For instance, the rail access to the site is beneficial but it’s not there. On the other hand, the core shed is on the books. We inherited that shack and it is still intact. There is a shaft, which we have benefited from, and it is still intact. What is essentially on our balance sheet is the mineral property itself. All these other mine infrastructures haven't made it to the balance sheet yet.
P: Do they physically exist at the site?
J: They do.
P: Do you have a sense of usability?
J: The core shack is being used. We have not taken advantage of the shaft yet because we are thinking more about an open-pit mining scenario. The rails would benefit us to ship out concentrate if we had a floatation mill, but we're not thinking of a floatation mill now. We are thinking about SX-EW. Some of these things could be useful eventually but, for now, it’s really all about the core shed we are using.
P: And the one that really interests me is the crushing facilities. What's the status of those right now?
J: Those are not there anymore. Some of them were completely decommissioned and there's nothing there.
A: John, please can you tell Peter more about the core shack? It’s given us a boost to build that resource base?
J: Yes, the core shack was built over three decades ago and is still intact. We went in there and realized that it all was very organized. You could find core if you needed it. We have the opportunity to re-assay it, or re-log it first and then re-assay the core. There are pulps for us, too. We have taken advantage of all that for an upcoming resource. That's the benefit of some of these old miners doing the work right the first time. That's how I started off; by reviewing it and bringing the right team to do the work. It's more of a visionary thing to see the potential and get to where we're at now. When you see the property, there is a stockpile at the old mill. At first, that was called waste. So, nobody really cared about it. I started asking questions about it -- when was that place mined? What's the cutoff grade that was used? We saw that there is value hiding there. Instead of throwing it away, we will go and drill it. When we started drilling it, we took some grab samples that showed very good grades and that is how we have started off here. We are the team that can go in there when things don't look as valuable. Other people walk away from those projects, but we take it on and add value.
P: It's a tough thing to do! But there’s so much opportunity out there. There are stories out there in the market from juniors who talk about mining a waste pit and sometimes those opportunities are real.
J: Right. It’s a great story, but it doesn’t always work. You have to check.
P: Do you have assistance and do we have a sense of how much work you've done. You mentioned doing a few grabs and seeing some copper oxide minerals. Do we have a sense of how much you know confirmatory work you guys have done on the old waste piles?
J: Yes, we have done so on the stockpile. What we're calling stockpile was previously called waste, as mentioned. We've initially drilled it to an inferred category and we put out a PEA on that in March of last year. We did some more technical work on the recoveries. That work is currently advancing, so that's very exciting. We've done some more infill drilling and took it from 700-foot spacing to 400 feet, which will be part of the work we'll be putting out this year. Then, we'll take it to 200-foot spacing for the stockpile. The Cactus deposits, which are the main deposits, are the bigger prize. We've done additional drilling beyond what was done in the past. I am excited when I say this because almost every hole we drilled hit the intercepts that we expected. Our expectations of where we're going to find oxide or the chalcocite or the chalcopyrite were exceeded. When we went to the northern side, we saw more oxide material than we expected. It's all good news and that is why we are very optimistic about bringing this project into production in the next two to three years.
P: You mentioned the PEA on the stockpile and then the larger prize in situ. There's a couple of ways to win there. This is very true about the circuit and other stuff, too. You mentioned chalcocite -- is there a high-grade starter pit. Is there a contract mining toll milling low CAPEX pathway for you guys? Or is it about you bringing one of these behemoths back into production?
J: We’re actually looking at a low-cost capital option now. We had a few options that we looked at with the chalcocite material, which is potentially leachable. We looked at the option of shipping the material somewhere but that didn't make too much sense because you're having to deal with the community at the other site. Peter, we're looking at an SX-EW plant, which would be installed at a facility for capital between $50 and $70 million as a worst-case scenario. This low-cost option would be used for the leachable ore to generate the copper cathode. If you're looking at startup capital like that, it's reasonable. It is not a $300-400 million startup.
P: And the permitting advantages of being on private land patented claims, too? You’re in a great place in Arizona north of Tucson where people understand mining. There’s already a big hole in the ground there, too. That's an advantageous position to be in all around. I love SX-EW and I think that's really under-used; there are not enough juniors out there talking about that.
J: Yes, I agree. And that is why that stockpile was sitting there. At the time, it was a technology that people were not familiar with. Now that we have the stockpile sitting there and have shown that the economics of the stockpile pays for the SX-EW plant, it’s amazing. That's the economics we put out last year, but if you look at the NPV with today's copper price then you see it is like $140 million. It's screaming to be taken advantage of.
P: Beautiful! And straight to the cathode, too? No smelters. No TC/RC charges. Thank you, goodbye TCRC!
J: Straight to cathode.
P: I think that's the future of mining: smaller, higher grade mines that have different flowsheets and production specs. I think Arizona is a tier-one jurisdiction, globally. Especially the patented claims!
J: Yes, it is exciting.
P: What's the constraint? Is there a bottleneck for you guys right now in terms of pacing or are you kind of at top performance?
J: We don't have a bottleneck that is really preventing us right now. Initially, it was the money -- can we raise the money to get these things going? We have two strong backers now with Tempo Capital and RCF who have significant equity in the company. Then we have other shareholders -- some high net worth individuals and some even strategics that are talking to us. The only thing that is really standing in our way is ourselves.
P: It becomes a team effort. It's one thing for you to find the asset and have the vision and lay the foundation to get things going. The angel investors may come in and you can break ground on that stuff for the deal side yourself, but as soon as you’re working on the ground it is a cast and crew of thousands that are required to make it work. The team grows so fast and this is one of the challenges of bull markets; finding good people becomes really hard.
J: That is very critical to me. I always laugh when I say to people that I try to find people that are smarter than me because there are a ton of them.
P: Is there anybody from ASARCO who knew this thing back in the ‘70s?
J: Yes! I was lucky enough to be able to find somebody.
J: Robert Cummings was involved with this work as a geologist from the onset. I spoke to our VP Exploration and he recommended Robert Cummings, then I made that connection and spoke to Robert. I asked if he was willing to engage with us and he said yes. We'll actually be showing a bit of that on our website shortly as we've interviewed quite a number of people in the community that used to work at the site. We are looking to engage with them again. It is very exciting to get the community because it is a sign you are in the right place.
P: Amazing. He was the senior geologist at the Sacaton mine from ‘72 through ‘81, which is amazing. What a get! And what about some of the other people? I see Mark Palmer from Tempo Capital -- great to have some institutional investor representation on the board. You guys avoid making too many mistakes out of the gate here.
J: That is correct. We do have Tempo with Mark Palmer. The RCF representative on the board is Thomas Boehlert. You mentioned Paul Huet when we started the call. And you mentioned Elaine Ellingham before the call as well. It's a very good team.
J: Then, on the management side, I have Ian McMullan, who's the COO. I've known Ian from Newmont. He is a great guy who’s done both open pit and underground mining. He's currently running the operations. My VP Exploration is Douglas Bowden, he has +40 years in the industry and has done quite a number of things. He's the guy running the drilling program and looking out for other opportunities in the district. It’s a very good team. You've met Alison, she's on the call with us now, and she takes care of all the investor relations. We do have Travis Snider who is engaged on the sustainability side of things. He's well known in Arizona for permits and he used to work at Phelps Dodge and other places. We are very happy to have him. We have a big team covering the bases. Some of them are not full-time, but these people I mentioned to you are all full-time. Our CFO Rodney Prokop has been in Arizona for the past 20 years and he joined the company in December.
P: Phelps Dodge for 16 years, too. The technical aspects are clearly very strong. There are tailwinds coming from a few directions here for you. As a private company, you're not subject to the same level of scrutiny as a public one. And you're also not investable, either. It's kind of a moot point, but I wonder about the control and oversight. The team is pretty serious, corporate governance wise, but you're private. Is there anything that you’ve been doing to increase transparency? The celebrity investors you have gives some assurances, but I wonder what level of involvement in oversight or access they have to the financials and such?
J: We're a private company but we have the mindset of going public. All of us are coming from public companies where we have to deal with the market regularly and we have tried to do everything as if we are public. Our records, our policies, governance, compensation, and everything is very consistent with what you would expect for any public company. No skeletons in the closet here.
P: I don't even know how to articulate the question, but there are some horror stories in the private side of the junior mining business where people had good projects and things looked like they were going in the right direction but then something bad comes out. I always wonder what went wrong in those cases? Where did it go wrong and could it have been saved? In some cases, I don't think it could have been saved. In some cases, I wonder if it was meant to be a real mining company? But it looks pretty clear to me that you guys are on a different track. You're on the right track to make a big win. Some of these projects can become billion-dollar projects pretty quickly.
J: Oh yeah! Count us in.
P: Finding costs? I wonder what the copper finding costs might be here for all the people out there trying to see if you'll be leading the pack in exploration. And I like to hear about SX-EW, too. That can be great for the capital intensity and stuff. The analysts are going to like this story when they get their teeth into it.
J: We talk about these things regularly. In fact, we do have a meeting with the board coming up tomorrow and we'll be talking about capital intensity for our project. We just always want to benchmark. It’s important for people to understand that putting in money into Elim brings benefits because we are approaching this in a phased way and we're starting with low intensity, in terms of the capital. It's under $100 million to start the project, which can drive further benefits. We always want to make that case. And besides the capital aspect, we're also looking at C1 costs on an operating basis, which are also very compelling.
P: John, your finding costs could be surprisingly low too. If you start hitting chalcocite then you can add high-grade pounds of copper quickly. Watch out! Very bullish. Nice to meet you.
J: I'm very glad to chat with you, Peter. I look forward to talking again.
P: Maybe we can get into some more technical stuff with you as things progress. Thank you for putting the technical report for the PEA on the website. There's a lot of information in there to dig into. I love the pictures of the backhoe digging up the dirt and putting it in the barrels, John! That's your sampling work at the old pile -- you're not filling bags, your filling barrels! I love it.
A: Thank you, Peter. This has been a treat.
J: Stay tuned! There's more information coming up in the next couple of months into April. A ton of stuff that we'll be releasing from our end
P: John Antwi, Alison Dwoskin, Elim Mining -- thank you very much. Goodbye.