the interview...
A brief Question & Answer interview with Dunham Craig, President & CEO of Geologix Explorations Inc. (GIX.T):
Q: Our last Q&A was near the end of 2012. At that time we discussed your forthcoming Prefeasibility study (“PFS”) that had been delayed, but was expected to complete in the first Quarter of this year. So, as we near the end of January, can you comment on the status of the PFS?
A: The PFS process remains on-track. As you and I discussed in our last Q&A, toward the completion of the initial PFS a new processing method was suggested as a means of optimizing the mine process. Although we were 90% of the way along the existing PFS (using the original process method), we deemed the new idea worthy of evaluation as a possible means of optimising the eventual mine plan, and improving the project’s capital costs, operating costs, and production profile.
In recent months we’ve been awaiting results from various metallurgical studies aimed at evidencing the effectiveness of the new process. We expect to be in receipt of final metallurgical results very soon, and those results will provide the basis for finalizing the PFS using the new method.
Q: Can you give us your current timeline or expectation on completion of the ending PFS?
A: I’m comfortable that we will meet our expected timeline in having the PFS completed and disclosed by the end of Q1 2013. That said, I’m hopeful we can have something sooner.
Q: Following completion of the PFS, what’s the next stage for Geologix and the Tepal Project?
A: Completion of the PFS is a critical catalyst for Geologix and Tepal, as it initiates multiple important processes for us. 1) Completing the PFS allows us to submit our permitting applications to the Mexican government. Because of the experience and competence of our team, we have already completed a number of other studies required to initiate the process and the PFS offers the final component to submit our application; 2) we expect to commence work on remaining facets necessary to move the Tepal from PFS stage to bankable feasibility stage (“BFS”). Due to the quality of work we’ve done at both the PA (Preliminary Assessment) stage and PFS, we expect the transition to BFS to be quite smooth; and 3) with the PFS’s detailed mine plan study, we’ll be positioned to explore and hopefully advance various possible project finance options with potential interested parties.
Q: You mentioned project financing. Obviously, in these markets access to capital is a big hurdle for any company, but that seems to be magnified for companies like yours with advanced stage projects requiring sizeable capital investments. How is Geologix managing that issue?
A: Where access to capital is challenging and project capital cost over-runs are becoming far too common, the biggest hurdle for us is evidencing (through the PFS) that the capital and sustaining costs at the Tepal Project are manageable, and that access to project finance capital is attainable under terms that make sense for the Company and its existing shareholders. Because we’ve believed in the merits of the Tepal project for some time, we have been exploring various means of project finance avenues for quite some time. Due to the current state of capital markets, we’re actively exploring and evaluating multiple means of financing the project with as little equity as possible. We believe that in this market the right kind of strategic alignment with a group who can facilitate assisting with project financing, will not only provide access to important capital, but will also provide valuable validation for the merits of the project.
Q: As it relates to project financing, what are some of the things you’re considering?
A: Obviously we haven’t committed to any one avenue at this point, but the types of possibilities that are out there for us to evaluate include, off-takes, streaming deals, royalties, commercial bank syndicates, etc… During the process of evaluating the options for getting this project financed and built, I’ve been quite encouraged by the amount of options that are available and the growing appetite and interest in this project and how it’s advancing.
Q: Earlier this month it was announced that Jeff Wilson, your former Vice President Corporate Communications, has taken a position as President & CEO of another issuer. Jeff had been with Geologix for nearly five years. Some investors have expressed some concern over his departure. I have spoken with Jeff myself and understand the situation, but perhaps you can comment?
A: As you know, Jeff has been an integral part of our management team since joining Geologix some years ago. As the head of our IR department, he has represented the Company well for many years. It was difficult to see Jeff move on, but I’m pleased to see that his time at Geologix has provided him the skills and experiences to advance his career. I know it was a difficult decision for him to make, because he believes so strongly in what we’re doing here at Geologix, and with Tepal. But in the end, the opportunity to move into a more senior management role was the next logical step in his career path, so we wish him well. Jeff will continue to assist the Company in an advisory role that will allow Geologix to continue to benefit from his 20 years of experience in his field.
Q: What’s your current cash position?
A: We’re at just under $4.0 million.
Q: Finally, aside from what we’ve already discussed, is there anything else you’d like to relay to our readers?
A: I’ll answer this similar to the way I answered last time, in spite of difficult markets, and concern about the PFS and project financing, it’s important for people to remember we have 100% ownership of this asset, and have delineated over 4.0 million ounces gold equivalent in the Measured and Indicated categories (which is over 1.8 million ounces of gold and 813.0 million pounds of copper). There are no underlying work commitments or onerous outstanding options payments. This, combined with our existing cash position puts us in a position to advance the current resource toward production. It’s our view that in the current market environment we’re simply not getting recognized for the value in the asset. However, we’re confident that the completion of the forthcoming PFS will provide important guidance on the project’s potential.
Thank you Dunham.