Last week I had the opportunity to interview the president and CEO of Kintavar Exploration, Kiril Mugerman. We talked about the Copper market, his plans for Kintavar Exploration, their recent financing, and the blue sky potential behind Kintavar Exploration.
On The Next Bull Market Move we have a brand new guest, Kiril Mugerman. How are you today, Kiril?
I'm doing great. Thank you very much. How are you?
I'm great, thank you. Okay, let's go through some of your background. You're the CEO of Kintavar Exploration which is based in Quebec. So how did you enter the resource space, and how did you come across this project in Quebec?
So I'm a geologist by background. I graduated from a university, then I worked as a geologist for Goldfields as part of their global exploration team. Worked in Africa, Central Asia, South America. In 2011 I came back to Montreal where I studied and where I lived, and I moved to the mining analyst space, so I started getting exposure to the capital markets.
2011 as you remember was a great year. Gold hit 1800. I stayed in that space until late 2014 and I specialized really in industrial minerals. So one of the industrial minerals I focused on is rare earth elements, but as well, graphite, lithium, vanadium, potash; pretty much all that stuff. And then in 2014 I joined Geomega Resources as business development. Geomega Resources ticker is GMA on the venture.
So a year after that, I took over as president CEO Geomega, so that's late 2015. And I was running it and really putting focus on the technology in Geomega. So I was basically restructuring the company, and one of the ways of restructuring the company, I took out all the exploration assets that were within Geomega, and I created a new company called Kintavar Exploration. And I remained president CEO of both Geomega and Kintavar since then. So that we are talking about early 2017, so a year and a half ago.
As part of doing this spin out obviously there were lots of assets to look at. And what we did is we did start looking at several assets in gold and different metals in Quebec; our focus is in Quebec. One of them that we looked at is what today we call the Mitchi property. At the time, it was owned by prospectors; several groups of prospectors.
And what they did, they followed up on historical work by Noranda from 1971 and they tried to follow up a little bit on that as well. They were looking at the different anomalies in the area which included gold, rare earths, niobium, copper. And the reason it's so diversified, the property, is because it's a very large property, it's over 20,000 hectares.
And the southern portion of it is in an alkaline igneous territory, which is why you have all those rare earth niobiums present there. And that's because there is an IOCG component to that southern portion of the property. We haven't been working a lot on that sector. We mostly focused on the northern sector, northeastern let's say, which is the sedimentary basin.
Within that sedimentary basin, Noranda was the first one to discover mineralized marbles. And as you know, in the mining space when you look at mineralized marbles with some copper and silver, first thing you think is, "Oh, it must be a skarn deposit." And that's exactly how Noranda approached it in 1971.
They did a little bit of shallow drilling using all the portable drill rigs. At the time, you couldn't access the area. And they drilled shallow holes for maximum 30 meters. And they got pretty good mineralization, let's say 30 meters, close to .5%, .4% copper.
And then they walked away from it. I mean first of all, in the '70s, you couldn't do much with copper at grades of .5, porphyry's were just starting at the time. And then on top of that, the access was hard. And they said, "Look, a skarn deposit has to be high grade. It's not a low grade project." So they walked away and they gave a bad name to the project.
The way we looked at it, and we are big believers in thinking outside of the box. That's been my technical training in geology since day one at Goldfields. You have to look at things differently and come up with good models. So we focused on trenching the area last year, and that's where we came across visually, from a geological point of view, we understood very fast we are not looking at a skarn deposit.
What we are looking at is a stratiform copper deposit, because the mineralization is primary within the sedimentary unit. And that primary mineralization is folded, but it's present over kilometers and kilometers, and that is the sedimentary basin that is folded and now is fully covered by our claims. So that's how we came across it. I guess that was a long answer to your question.
No, that's fantastic. It's good to hear a background story about how you came across these assets. So recently you raised over 10.2 million and you've started drilling on the Mitchi project. Can you tell us anything about that? Any updates on that?
Yep. So we raised $10.2 million. Half of the financing came from Quebec institutions. There were a couple private equity groups that got involved, lots of high net worth individuals that were looking for high quality assets got involved.
So that's how we raised the money. In total, since the company started a year and a half ago, we raised now over $13.5 million. One of the reasons that a lot of people invested in our project was because of the easy access, the infrastructure, that comes with it.
If you look on slide six in our presentation, when you zoom into the project, you've got two yellow houses. What those houses are are outfitters, that today provide opportunities for people to come fishing and hunting during the year, different seasons during the year. But those houses are basically large camps. The one in the north has 150 people capacity.
So when was the last time a project was being explored, and right on the spot they already have a 150 people capacity camp? On top of that, that camp brought high voltage power line in 2013. So I already have a high voltage power line on site, which is really great. That camp is on the exploration property, so our infrastructure is very good.
I understand also the residents are a part of the company as well. They're active investors within the company?
Yeah, no absolutely. From my experience as a mining analyst, I look at hundreds of companies that came and presented to me, and the different approaches to building a company. You'll see on slide three I've got the three pillar approach, and it's structure, project, people.
So I started that company with a very tight share structure. Since then, we've diversified that a little bit, but today you basically have the local shareholders that own approximately 25% of the company. I'd say this is roughly 40 individuals, but the majority of it is sitting within 10 individuals; very high net worth entrepreneurs in the area from the logging industry who were behind the big movement of trying to bring mining and exploration to that region.
Because it's not a region that is known for mining exploration. It's mostly a forestry region. But forestry is going down. The tariffs that the U.S. is putting on Canada for soft lumber is not helping. So there is a big decline in forestry labor. And a lot of the children from that area, they don't study to remain in that industry anymore. They go to Val-d'Or and they start working in the mines.
So it was a big initiative by a lot of those local entrepreneurs to start doing their own prospecting and exploration. And that's how we got to know them and that's when we did the transaction, we bought the property from all those local guys at cost value. We basically bought the property, we amalgamated the entire property for $1.5 million in paper of Kintavar at the time. And plus, on top of that, this group of investors participated for over $2 million in the three financings of Kintavar. So it's a very solid group.
Let's move onto the copper market in general. What are your views on the copper market now? Do you think we've seen the lows in the price and we're back in a bull market for copper?
Well, for sure 2016 let's say, was the bottom of the copper market. I can't fully explain the lows of 2014. But for certain, 2015, 2016, 2017, we've seen a huge change in the dynamics of the copper market because of the electrification. You can't build an electric vehicle without copper. You can't build it without a battery, but you can't build it without copper either.
Yes we have copper today, but at the same time, copper is such an old commodity that a lot of the mines that have been operating and producing are getting depleted. And don't get me wrong, when a mine gets depleted and the geologists, I've seen it, they don't disappear the next year. They just go and start producing from lower grade material and slowly, slowly, reducing the mine production. So that's what we see. The demand for copper increases. It gets diversified into new applications. So the demand grows while the mines are not being replaced by new mines.
So what plans do you have for the rest of the year for Kintavar Exploration?
So Sherlock has been the discovery drill hole from January of this year that gave us a drill hole of 120 meters at .34% copper and three grams per ton silver from surface. So the entire marble unit is mineralized. But what happens is you hit the same marble unit several times because it's all folded and refolded, even underground.
So the way we work right now, now with the financing and to answer one of your previous questions, we started the drilling program first this summer on the Sherlock area, a bit of an infill drilling to better understand the structure and to start targeting the extensions of the mineralization on Sherlock and the Sherlock corridor.
Then in the meantime, I had a team that was really focusing on trenching as much as possible in the Nasigon area. And why do we do those trenches? It's because it's a folded system and you want to follow it. And instead of just following it using IP, which can sometimes gives you misleading information, or not necessarily misleading, it gives you an anomaly but nothing is there.
So when you start first with trenching on surface, because it is on surface, if you see the mineralization on the surface, then we come and we do a lot of drilling underneath, and plus we have all the structural information from surface, which is great.
The trenching was done during June and early July on Nasigon. Now during the month of July we are focusing on drilling Nasigon. In August we are going to start trenching in Hispana and later in August, you'll start seeing the drilling results of Sherlock start to come out. Channel sample results should start coming out any minute now from both Sherlock and Nasigon.
The initial results on the Hispana work will probably start coming out in early August as well. So there's going to be a continuous stream of results coming out over the next two months.
We have also picked up two projects which could potentially be other stratiform copper projects. And one of the projects even has the cobalt component. And you probably know that cobalt is important in the lithium ion battery industry.
And the reason there is a good chance that cobalt might be present is because if you look at the DRC stratiform copper projects, some of them are producing cobalt together with copper. Other stratiform projects are producing copper and silver. So it completely makes sense that some of the basins here in Quebec might have had some cobalt in there.
So the preliminary work that we've done on that, we've identified that there is a copper and cobalt component on one of those properties. So this is something to keep an eye on, because we will send our geologists in the future to visit those properties, to start looking for anomalies in mineralized outcrops. And if they do have cobalt, this is going to be a great discovery of copper cobalt, stratiform copper in Quebec. But this is for later. Let's say this is the blue sky potential.
That sounds fantastic. And finally, where can people reach out if they want to get in contact with you or find out more about your company?
Sure. So the best way by my email. So firstname.lastname@example.org. Fairly easy to reach. People should as well sign up to our distribution on our website. Soon we will start posting some pictures from the field, some videos that we'll be producing from what's been going on on-site this summer. And obviously if people want to learn more, definitely start following up and we'll be providing more information about the deposit and the discovery over the coming months.
Great. Thank you very much for your time, Kiril.
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