All the excitement around Evrim Resources (TSXV:EVM) led me to drop in on Mr. Paddy Nicol, President & CEO for a brief meeting this week during a whirlwind trip to Vancouver. Read on for transcript of conversation and watch for video excerpts on twitter!

Peter Bell: Hello, I'm Peter Bell and I'm here with Paddy Nicol of Evrim Resources.

Paddy Nicol: Hello. How are you doing Peter?

Peter Bell: Very good, thank you. Now, Cuale. This is the one everyone's talking about. You've had some significant news here in the start of April.

Paddy Nicol: Yes. As you know, we put out an announcement in late November that we received title for the project. It's a new project for us and certainly a new project for the market.

We knew early on that there was something special about the project. We originally staked it for some polymetallic veins in the southern area, but after spending some time at it we quickly discovered there was a really nice looking high sulphidation target. Initial exploration took place in the fall and once we got title, we really started to hit it hard.

Results from the first round of trenching came back in January and they were promising. Those first results didn’t have the same grade as we reported this past week, but they certainly got us intrigued about the area. We went back with a follow-up trenching program and you've seen the new results. Trench #1, the big one, had 358 meters at 1.28 grams gold. A fantastic result that we're extremely excited with.

Peter Bell: Okay. New project and working our way through results from the first work program.

Paddy Nicol: And we have additional results coming still. I think that every prospect generator goes through a history of projects and partners but, once in a while, they come across a project and think, "this is pretty special – we're probably going to keep this for a while and take a shot to drill it on our own." That is a bit of a departure from the traditional model itself, but I think you have to do that at every point in a prospect generator's life.

Peter Bell: And there will be time to option it off in the future if you want. Surface trenching is not particularly expensive work, so it’s not a costly pivot in your strategy.

Paddy Nicol: The first round of work up to this stage has cost us about $300,000. The next round of work will be a little bit more expensive if we get to the drill stage, which I'm sure we will. We're looking at probably a 3,000-meter program and that is going to cost somewhere between $750,000-$1,000,000. Exciting days ahead.

Peter Bell: Undertaking that next expense yourself – is that feasible for the company at this point?

Paddy Nicol: It is, absolutely. In March, we went through an accelerated warrant provision and raised $3 million. In conjunction with what we had before, which was $2.5 million, we're sitting at about $5.4 million today. We are well-funded to do the work that we have in front of us, which includes our own generative or exploration programs and the $7-8 million of partner-funded work that we are executing. This work at Cuale will be an additional add-on to all the things that we're doing.

When you look at a prospect generator, you always look for how many partnerships they have and all the exploration expenses that their partners have been doing. On top of that, people always like to see what royalties might be created. We might have that in our project with First Majestic at Ermitaño West, which is a rapidly developing story. They announced a resource of 40.8 million ounces of silver equivalent a couple weeks ago and we now have discovery on top of that. With that, we have all three bases covered.

Peter Bell: And it is your own success at Cuale that has really drawn a lot of attention to you here now.

Paddy Nicol: The nice thing about that project is that we own it 100%. You can attribute all the value of it to Evrim at this stage, which is nice.

Peter Bell: Did you obtain it through an auction in Mexico?

Paddy Nicol: No, we staked this ground. In fact, we staked it under the Callinan Royalties Alliance back in 2012. We had a strategic alliance with them where they funded the program in exchange for certain royalties on any project that came out of that alliance. They get a 1.5% precious metal royalty and a 1% base metal royalty.

Cuale was one of two projects that came out of that program. It took us a few years to get title but did so after we carved out a piece of the ground and gave it back to the government. We gave back 108 hectares of a 97 square kilometer project. Thankfully, Cuale was on the land we kept. Again, the land at Cuale was staked ground that someone else paid for us to acquire and the royalty associated with that is now payable to Altius Minerals, since Altius took over Callinan. It was all based on good, generative science.

Peter Bell: A who’s who of Canadian mining industry from First Majestic through Altius. Good for you.

Paddy Nicol: Thank you very much, Peter. It's an exciting time. We have two programs with Antofogasta this year in BC. We have the Sarape deal with Couer in Sonora. We also have the two joint ventures with First Majestic I mentioned. We have a junior partner, Harvest Gold, doing work at Cerro Cascaron and a big strategic gold alliance with Newmont to top it all off! Busy, busy year ahead.

Peter Bell: And you can handle everything?

Paddy Nicol: Yes, I think so. As you know, we do a lot of the work for our joint venture partners. Of the seven JVs we have, we do all the work on behalf of the partner for five of them. First Majestic do their own work on two projects, but everybody else allows us to do the work on their behalf. With the next round of work we're planning, we will have to bring in some people to help with the Cuale program and things like that because we certainly don't want to sacrifice all the good work we do for our partners. Putting up good budgets, good ideas, and doing good work is paramount to us and we have to make sure we focus on performing well for them as well.

Peter Bell: It's important to earn that management fee for expenses incurred in the JV.

Paddy Nicol: Yes. The cash payments, management fees, and things like that all help keep the burn rate a bit lower for us.

Peter Bell: How about these warrants that were accelerated – were they a couple years old?

Paddy Nicol: We did a financing back in 2015 was right in the depths of the market and the financing terms were pretty dear at that time. We did a five-year-term on the warrants, but they had an accelerator.

Once we got above 36 cents for 20 trading days, we called that in. Of the amount that was issued, 98% of the warrants were exercised. That brought the cash I mentioned earlier. Today there are still some 50 cent warrants out there, about 7 million of those, and some stock options.

Peter Bell: Good potential source of funding with those 50 cent warrants! May keep you away from the market for a while.

Paddy Nicol: Our budget this year is about $2 million and $1-1.2 million of that is for generative work – our own exploration work and business development. We also have an $800,000 G&A budget approximately. The funding we've got should last us a while. A lot of things depend on what happens at Cuale, but it's a good situation to be in.

Peter Bell: And how about the speed of your program there?

Paddy Nicol: It's a good question, Peter. This round of work was completed a few weeks ago and we are gearing up for the next round of work, which will include more trenching, geophysics, mapping, and sampling. There's a larger part to this high-sulphidation system than just La Gloria and we're excited by what else could be there.

We expect to get that going sometime in mid-May and then get drilling as soon as possible. We have to get permits, which may take us to sometime mid- to late-June before we are drilling. We have to take a few steps before we get to the next round of work, but we're not going to just wait for drilling. We've got lots to do in the meantime.

For instance, we'd like to go back and get some orientation on the mineralization. We don't quite have a handle on the control of it yet. Keep in mind that this isn't a vein system. The mineralization is broadly disseminated throughout the silica and we still have to get a handle on the strike and things like that.

We'll go back, do that, and then do geophysics. I believe we budgeted for eight lines of geophysics, but only got two done so far. That was a bit frustrating, but at the same time it meant we got good results because there was so much silica in the ground that it was tough to get a charge through it! Despite the fact we didn't get production from the charge, we still got great results. We'll look at doing some different types of geophysics for the next go around.

Peter Bell: Has anybody ever drilled there in the past?

Paddy Nicol: No. This has never been explored. That's the unique thing about it – you don't often find projects like this. Hardly ever in Mexico anymore. The analogues are so strong with other high-sulphidation systems in Mexico. We like to use three analogues, mainly. One is El Sauzal, which was sold to Glamis for $320 million. You may know that El Sauzal was found a gentleman named Alain Charest in the early 1990s who was also part of the discovery team at La India, which was sold to Agnico Eagle for $240 million. Alain works with us as our VP of Exploration in Mexico.

Peter Bell: Oh, really?

Paddy Nicol: You won't see him going up and down the hills anymore, but he is one of the best guys you could possibly find for community-based relationships. He is instrumental in working with the community and the ejido. He's great at that and we're very fortunate to have a guy like him on our team. El Sauzal is one analogue for Cuale. Mulatos is another one, they're nearing 5 million ounces now and are owned by Alamos Gold. If Cuale proves to be what we hope it is, then we hope it will start to look more like some of those deposits.

Peter Bell: Exciting times. Thanks very much, Paddy!

Paddy Nicol: Thanks Peter.


This document contains statements that are forward looking statements and are subject to various risks and uncertainties concerning the specific factors disclosed under the heading “Risk Factors” and elsewhere in the Company’s periodic filings with Canadian securities regulators. Such information contained herein represents management’s best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statement.

Peter Bell was not compensated to prepare and distribute this material.