Tom Wallace: Ladies and gents, welcome to juniorinsider.com. This interview is coming to you from the 2017 Sprott Natural Resource Symposium in Vancouver. My guest today is Stephen Nano, CEO, President and Director of Mirasol Resources. Stephen is a founder of Mirasol and has over 25 years of experience in the mining industry throughout the Americas and Asia-Pacific region. Prior to founding Mirasol, he held senior technical and management roles within large and junior mining companies. He's regarded as one of the frontier explorers of the Santa Cruz Epithermal Province in Argentina, playing a leading role in gold and silver discoveries, that are now either in production or at advanced resource stage.

He has a Bachelor of Science with Honours in Geology, and is a Chartered Professional Geologist, and a Fellow of the Australian Institute of Mining and Metallurgy. Today he's going to be talking about the project generator business model, and how Mirasol is employing it to create value for shareholders. Get your pen and paper ready, because here is the interview.

Steve, thanks for joining me.

Stephen Nano: Tom, fantastic, thanks very much.

Tom Wallace: What are some of the large scale drivers for the exploration industry? Why should investors put money into exploration companies?

Stephen Nano: It's very hard to predict specific share market cycles, but we drive Mirasol forward on a very simple premise of supply and demand. I think the primary drivers there that really are a key to me. I believe we're starting to see it kick in now, simply a long term lack of investment and discovery. We've got major precious metal and copper miners that now for many years, well over a decade, have been depleting their reserves and resources but having very little success from exploration to replenish those resources.

So I think we've reached a stage in the market now where those companies have repaired their balance sheets, they have money that they're now flowing back into exploration because they need growth and they need to replenish their resources. And Mirasol's positioned itself with a large portfolio of really exciting projects. We feel like we're in front of the moving train here, and that demand is going to kick in here. And that's being measured by the calibre of the deals that we've been able to deliver and will be delivering over the next few months.

Tom Wallace: Yeah, for the benefit for those who aren't familiar with the model. What is a project generator?

Stephen Nano: Yeah, particularly in the North American sense, the companies that focus specifically in one end of the exploration cycle, I guess. What we do particularly as Mirasol is we use leading geoscience, high calibre people, and relatively limited amount of funding to find, secure, and then bring to large producers high calibre projects that have drill-ready targets on them. And so what we're doing there is rather than diluting the share structure of the company, raising lots of capital to drill all of these projects, we're going to large scale producers whose specialty is resource definition, development of mines, actual mining, to become a partner in those projects.

And they invest in those projects, and if successful will develop those projects. Mirasol through the deal structures that we deliver ends up with a 20 to 30% funded production equity position in the projects.

Tom Wallace: You're an Australian running a project generator in North America. Why are you in North America?

Stephen Nano: Look, a little bit of it is just where my career's taken me. I've spent the last majority of my career working in the Americas, North, Central and South America. But particularly a substantial part of that in Chile and Argentina, where Mirasol's focused. And I'll return there to develop Mirasol, to found and develop a company because of the incredible prospectivity of that part of the world. These are belts of mineralization where there are true world class mines, and by our measure, world class discoveries still to be made that Mirasol can participate in.

Tom Wallace: Do mining companies in Australia apply the project generator business model?

Stephen Nano: Not in the pure sense of a company like Mirasol. That's our business, that's what we specialise in, and that's how we drive our company forward, and I guess deliver success to our shareholders, is through those partnerships. Mirasol rarely drills its own projects, and it invariably partners with large companies to test our projects. So it's a fairly specific North American style model. I think there's definitely room for that model in Australia, it's certainly a symbiotic partnership between a junior and a major that works really well in this part of the world, and is to a large degree missing in Australia.

Tom Wallace: Yeah. Mirasol has a large portfolio of properties. Where are they and why are you focused there?

Stephen Nano: Yeah, look I guess I touched on that just a little. You know Mirasol was founded and has focused in two very specific areas in Southern Argentina and in Northern Chile. In Southern Argentina, it's a world class epithermal gold and silver province. There's four operating large scale multimillion ounce mines operated by large precious metal producers. A fifth in development, that will be in production early in 2018. Long history from myself and my career in that part of the world, being directly involved in a number of discoveries. One of them in particular is one of the large operating mines there now. And a very, very good fit for our exploration technologies and knowledge.

And then Northern Chile. Truly world class terrains. Truly giant copper mines and tens of millions of ounce scale large gold mines. So the kind of place where a company like Mirasol can be involved in the discovery of company maker, the kind of thing that returns real value and real wealth creation for its shareholders.

Tom Wallace: Yeah, can you let us know a couple of the highlights from some of those properties?

Stephen Nano: Yeah. Always a hard thing to do, right? It's picking from the portfolio, but we have two very strong joint ventures at the moment. One with Yamana Gold, that's now entering its third year. They're drilling for large scale oxide, bulk minable, high sulphidation epithermal deposits. And that's a very specific thing. But in the belt of rocks that we're in, there's been two multimillion ounce discoveries made there in the last two years or so. One called Salares Norte, which was discovered by goldfields. It sits about 50 kilometres to the south of where Yamana is drilling for us.

And another one further to the south, in the same belt of rocks called Alturas, discovered by Barrick. And that's a nearly seven million ounce deposit. So really exciting stuff with what Yamana's drilling. We're seeing all of the right rocks, and some really nice interceptions from last season's drilling that suggests we're on the path to finding a significant oxide gold deposit there.

We also have a brand new, and I think really exciting, joint venture with Oceana Gold in Argentina, on a project called La Curva. And that one's again large scale district, lots of gold and silver at surface, but also very big supporting geophysical anomalies that are associated with those targets. And there we're drilling for high grade gold and silver in low sulphidation deposits. So they're two of the highlights here, but a very, very strong portfolio.

If I mention perhaps a couple of others, we've recently put some news releases out on some very prospective copper projects in Chile, that we have a strong interest from a number of large copper producers. And recently also announced a brand new discovery in Argentina where we're getting bonanza grade gold and silver numbers at surface in a new prospect called Aurora, in our Nico project.

So a really exciting time for us, actually, and lots of news flow and interest from high calibre projects coming through the pipeline.

Tom Wallace: Yeah, how do you structure your joint venture deals, and how do they deliver value to shareholders?

Stephen Nano: Yeah. Look, I guess we're really proud of the deals that we deliver up, they're industry leading deals. I think it's a measure of the quality of the projects that we're taking to our partners, that we're able to structure and deliver these kind of deals. They typically have three stages in them. So the first stage would be an exploration spend to 51% and a series of cash payments. That those in the two examples that I mentioned, the Yamana and the Oceana deal, that's the in ground investment for those projects is seven and ten million US dollars, to be spent to 51%, and somewhere between one and a half and two million US dollars in staged cash payments to us as well.

The second stage of the deal is it moves to deliveries then. And those deliverables for that second stage usually take us to around a 65% position in the project, 60, 65. And that requires a delivery of a preliminary economic assessment with a resource. In both of those cases a plus million ounce, if the resource is required to earn into that stage.

And then the final stage takes us to around about a 70, 75% earning position for our partner, leaving Mirasol at that 30 to 25% position. They need to deliver a bankable feasibility study, a decision to mine, and at our option, we can require our partners to fund our retained project position, so our 30, 25% to production. So the value creation path there for our shareholders is obviously, if we're making a discovery we're announcing encouraging drill results that's going to impact our share price. But also what we have here is quite a sizeable position in what both of our partners there are targeting multimillion ounce deposits, so Mirasol and shareholders will end up with a substantial position of a multimillion ounce resource. So strong value creation there for shareholders.

Tom Wallace: One of the keys to running a successful project generator is keeping the dilution to an absolute minimum. Now you guys have been doing this since 2005, and you've been able to do that. Can you tell me how you've used the project generator business model to manage the share structure, and create value for shareholders?

Stephen Nano: Look again, I think this is a discriminator for Mirasol. As you've said, we've been listed now for quite a number of years and have currently 49 million shares out, so a very tight share structure. Of course that's important to our shareholders, because every share that you own then has real value attached to it if there's a discovery. How have we been able to do that? Well, it's the joint venture model and the success that we've had. So obviously, when you announce a deal with a strong partner the market can respond to that. The exploration results that come and flow from that the market will respond to that. It allows at a higher share price, your cost of capital's less, your dilution is less.

But Mirasol's also had real discovery success. In fact, we sold one of our discoveries to one of our joint venture partners for 60 million US dollars. That money has sustained our exploration effort and also underpinned what we've been able to do during the recent years of the downturn, is not raise funds, not dilute our share structure. And explore aggressively at a time when our partners had no funding. So it's allowed us to build this really impressive project portfolio in a counter-cyclical way, to position ourselves to be there with a big hand of projects, and now that the market is improving.

Tom Wallace: Yeah. How much cash have you guys got in the bank at the moment?

Stephen Nano: We currently have about 22 million Canadian sitting in the bank. And at current spend rates, that's about a four year runway. But another advantage of this joint venture model is that we're receiving option payments from our joint venture partners. So last financial year that was about a million dollars worth of payments. If our current deals were to stay in place for another 12 months, that could be double that for the coming year, so nearly two million dollars.

Tom Wallace: When do you next envisage that you'll need to finance? In four years? Or a bit before then?

Stephen Nano: It could be even be a longer period. It really depends on what we decide to do as a management team and a board, how we manage our burn rate. But also how successful our deals and our projects are. 'Cause obviously those payments, or option payments, are substantial and they do offset our cost of operation.

Tom Wallace: What are some of the skills, past experiences, and past successes that the management team and the board have, that they can bring to the table?

Stephen Nano: A really powerful group of people, both at the board and at the management level. Our board is made up of ... has real breadth and depth to it of experience. So strong geoscience capacity at the board level. A very, very strong financial capacity knowledge, particularly from individuals that have been in this industry for over 30 years, and specialising and raising funds in this industry. And also very, very strong in corporate governance from successful people, people that have been ... held CEO board positions for a number of junior and mid-tier companies that have been very successful. So very capable board.

And also the management team. Again, people that have been involved in multiple discoveries in their careers. People that have contributed to managing structure in high calibre deals with other companies. So a very capable team of people. And when you look at a company, Mirasol's in a wonderful place. Great share structure, great projects, lots of money in the bank, but it's about the people. And the people really make a company, and I think we have a very, very strong diverse team of people.

Tom Wallace: What are some of the catalysts that investors can expect from Mirasol in the next 12 months?

Stephen Nano: A lot, a number of. Yamana and Oceana in both of our joint ventures will initiate drilling in the Southern Hemisphere spring, so September, October period. Those programmes have planned approximately 6,000 metres cumulative in both projects, so about 3,000 in each programme through to December, and drilling as I've said some pretty encouraging targets there.

I think our partners have scheduled approximately two and a half to three million dollars worth of spend in those projects, that will go to the ground by then. Obviously further news flow from the deals, we've got a strong mandate from Mirasol board to advance and secure further joint ventures on our projects. A really important thing obviously for our shareholders, right? Because that brings in the drill rigs. And to have that discovery, to have that value creation event, you need a drill rig turning. So anticipating a flow of deals and the exploration drilling that will be associated and structured into those deals.

And also the exploration on our pipeline projects, like Nico, where we have a brand new discovery of a very high grade system, it's never been sampled before our work. So lots of information, lots of flow, and lots of six to twelve month catalysts there for our shareholders to follow.

Tom Wallace: Is there anything else you'd like to let shareholders know about Mirasol before we close?

Stephen Nano: I guess the best way to find out about Mirasol and to follow the company is through our website and our news releases. We've literally just launched a new website in the last few days. There's a lot of information there about the project generator model, and also about our projects, our joint ventures. And we'll be building that website out continuously now with the new projects that we're bringing forward. So there'll be a real ... It will be a live website, I guess. It will have constant new information being uploaded to it. So the best thing to do, if people are interested, would be to please come and visit the website, mirasolresources.com. And sign up to follow the story.

Tom Wallace: No worries. What exchange do you trade on, and what's the ticker symbol?

Stephen Nano: We're on the TSXV, so on the venture exchange here. And the trading symbol is MRZ.

Tom Wallace: No worries. Steve, thanks for joining.

Stephen Nano: Thank you so much Tom. Appreciate your time.

Tom Wallace: Ladies and gents, you can find all the links for today's interview in the description box below. I highly encourage you all to head over to mirasolresources.com as they've got excellent information on the project generator business model. Be sure to head over to juniorinsider.com, and sign up to become an insider so you don't miss any of the insider only information I send out.

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Cheers,

Tom Wallace