Kiska Metals Corp. (TSX: V.KSK, Stock Forum)combines two international mineral exploration portfolios, renowned technical expertise, as well as financial acumen and capital market experience. Kiska was born of a merger between Rimfire Minerals and Geoinformatics last August and the multi-million ounce Whistler gold deposit in Anchorage, Alaska is the new company’s flagship property. The company also has access to several early stage exploration opportunities around the world through its large property portfolio and enjoys partnerships with some of the world’s largest and most successful producers.
Junior Mining Stock Report recently interviewed Kiska’s President and CEO, Jason Weber, who shared his thoughts on the company’s goals and strategies for the year ahead.
Q: What was your initial attraction to the natural resource business and how did you get your start in it?
Weber: I grew up in the Vancouver area. We could always see Mt. Baker in Washington state, a
dormant volcano, and I was always intrigued with it. This got me interested in earth science. When I went into university at UBC and I took a geology course and fell in love with it. I had a roommate who was a year ahead of me and just finishing his first year of geology and he ended up working in the Yukon Territory in a bush camp and after that I was sold when he came back telling stories about it. I knew this is what I had to do.
Q: How many years have you been in the mining industry?
Weber: Since 1993. I was with Rimfire Minerals effectively since its inception. Rimfire actually grew out of a consulting firm called Equity Engineering and the majority of us were geologists with the firm. We decided to take our own ideas to the public markets and Rimfire sort of grew out of Equity, so I left Equity to go over to Rimfire in 1999. We had Rimfire for almost exactly 10 years and then merged with Geoinformatics to form Kiska.
Q: Can you give us some background on that merger?
Weber: The merger really came about from our perspective, the Rimfire perspective, because of the main asset of Geoinformatics, which was the Whistler gold-copper porphyry deposit in Alaska. It’s a project that we had followed a little bit. In fact, one of our big shareholders was also someone who had been following it as an investor in Geoinformatics and got it on our radar screen. Then when the [financial market] downturn hit we were looking for M&A opportunities. We had a treasury that we felt was a great asset and that not a lot of other companies had. When we compared that with an asset like Whistler we felt there would be a good opportunity to get a merger or an acquisition done. Geoinformatics was in a situation where they had a great asset that they couldn’t move forward, so it was a great fit.
Q: Please tell us more about the company’s flagship Whistler Project.
Weber: As it stands right now it’s a five and three-quarter million ounce gold equivalent deposit. That’s defined by an indicated and inferred NI 43-101 Resource. Thirty million tons at 0.87 grams per ton gold and 0.24% copper, that’s the indicated resource. And then an inferred resource of 134 million tons at 0.64 grams per ton of gold and 0.2% copper. We looked at this and said: That.s a really interesting deposit. It probably doesn’t cut it as it stands. But realizing that it was constrained by a 35 degree pit shell, that we observed that if you remove that pit shell off you’d be adding tons and some high grade tons, and with the project’s excellent exploration upside, you could probably start looking at this thing from the perspective of it being economic. The other really intriguing part for us was the fact that this was a very large property, a 450 square kilometer property at the time, which had seen very little systematic exploration. Plenty of targets already exist, so we saw incredible opportunity to go out and do some more exploration and make new discoveries and build effectively a gold-copper porphyry district in this part of Alaska.
Q: Do you have any time table for getting into production?
Weber: No. Just to step back a little, one of the issues that Geoinformatics had when they were trying to move Whistler forward is that they got the project from Kennecott through a strategic exploration alliance that the two companies had. And in that alliance Kennecott had a back-in on the project; they could back in initially for 51 percent and take it to a 60 percent ownership. The problem wasn’t the back-in itself but the terms and timeline of that back-in. It was an uncomfortable situation from the market’s perspective because that back-in decision could have been delayed by Kennecott over a long period of time. During the merger process we sat down with Kennecott and renegotiated that back-in and got it down to a trigger program where we conduct 341 line kilometers of IP geophysics and we test that with 20 drill holes totaling about 7,000 meters of drilling. After that Kennecott has to make its decision as to whether it’s backing in or not. In the definition of that program, all the work is being done on outside targets other than the Whistler deposit. What Kennecott really needs to see is what other targets are out there, and what their potential is. Effectively, they don’t want to walk away from a big copper deposit that might be sitting underneath the gravels that cover a lot of the prospective area. So to bring it back to your question about production time lines, everything we’re doing now while we’re in this Kennecott trigger program phase is geared at outside exploration and nothing on upgrading resources to reserves, that sort of thing. So our time lines are still a fair ways out. We’re not convinced Whistler is the best thing on the property and we want to make sure we.re exploring some of these other targets that look very promising and we’ll move forward on the best target.
Q: What other projects does the company have in its property portfolio?
Weber: There are 35 other projects in the portfolio as it stands and those are spread between some more in Alaska and western North America. We’ve got a very large land position around the Pogo gold mine that Teck recently sold to Sumitomo. That’s an area that we’ve been involved with as Rimfire from the outset. We probably have the largest land position in that district through a partnership with Rubicon Minerals. We have a great suite of projects, a lot of them copper-gold porphyry projects throughout British Columbia. We have a project in Nevada and one in New Mexico and then a suite of projects in Mexico that are early stage copper porphyry projects in some very promising porphyry territory. The plan with our portfolio outside of the Whistler project is really to get as much value as we can out of those other projects by joint venturing them, selling them outright if necessary or anyway we can see to get value out of those. Largely that portfolio is either joint ventured or in the process of being joint ventured.
Q: Who are some of Kiska’s exploration partners?
Weber: From the Geoinformatics side they brought Kennecott to the table and in the last six months or so we’ve built a very strong relationship with Kennecott. We’ve also worked with Newmont a lot in the past; we’ve had five different business relationships with Newmont over the years. We’ve done three with Barrick, three with AngloGold Ashanti. We have two currently with Northgate Minerals and are on our second one with Inmet. We’re currently working with Xstrata as well. A lot of those relationships, on the Rimfire side, were due to our prospect generator business model. Our modus operandi was to come up with ideas for exploration which we would take to the major companies to bring them in as a partner on these projects in as early a stage as we could. It ranged anywhere from conceptual ideas to strategic alliances exploring districts to the more standard joint venturing of properties that we had acquired through staking. And as soon as we did some work and proved up our exploration thesis we’d try to bring in a major company. The idea is that we would always be looking for targets that the major companies would be interested in. So we’re looking for targets that are going to be big and long lived assets and that are going to be high value. We had hoped that one day the opportunities would start coming back to us from the major companies, and that’s exactly what we’re seeing. We’re talking with Kennecott about other projects; we’ve seen opportunities from other partners like Northgate with a project in Australia that we are partnered on.
Q: What are some of the strengths of your exploration team?
Weber: Definitely early stage exploration is our strength. A lot of that is just the boots on the ground focus that we have. When you take Geoinformatics, which is a company based on getting the most out of technology in targeting exploration, and you put it together with Rimfire.s boots on the ground approach with the best explorationists who can get the most out of an outcrop, it’s kind of a neat marriage. It makes for a very effective exploration team.
Q: How would you describe the company’s financial condition?
Weber: We just raised 6 million dollars Canadian. We’re looking at a budget of around 3 ½ million dollars to finish off the Kennecott trigger program. That program will start mid March and will take us through into April. Once we finish this trigger program and we give Kennecott a report on the program, they’ve got 90 days to make a decision on whether they’re going to back in or not. If they exercise that back-in right, they have to refund us two times all of our exploration expenditures, and that includes Geoinformatics exploration expenditure as well. So we’re anticipating at that point a check in the neighborhood of 25 to 30 million dollars. That would be a nice situation for us and would give us some capital to go out and the find the next project and move forward.
Q: Do you have an intermediate-term target range for the gold and copper prices?
Weber: I don’t have a specific target range dollar-wise but what I do feel is that gold is going to spike higher but then stay in a range. I look at it from the perspective of two things, and you can throw copper into this mix as well. We as a sector are not as effective at making discoveries as we were 20- 25 years ago. So that means gold and copper discoveries are getting rarer and more difficult to find. I think we see that in the situation with El Morro in South America with Barrick and Goldcorp fighting over that copper-gold porphyry deposit. These are two gold companies fighting over an asset that has a significant amount of copper in it and that’s not something you normally saw [in the past]. We think that’s because the big gold deposits are getting harder to find. The impact of that is that you.re not making gold discoveries as frequently as we used to, the supply isn’t out there. So I look at it from the standpoint that the rarity of these deposits is going to be a buoy on the price of gold. Then of course you take into account things like the U.S. dollar, etc. and I think that adds a significant amount of upside to it.
Copper is a similar story, we just don’t find copper deposits like we used to. We’ve seen in recent years troubles largely in infrastructure and capital expenditure issues with some of the big copper deposits that were slated to go online. Galore Creek is a good example of this. These projects aren’t happening, they’re not coming on line as quick as we need them to. And that’s obviously going to have a positive impact on the price of these commodities. And again, looking at it strictly from the perspective of where have the big new copper deposits been found recently that are in line to be developed, they’re just not out there.
Q: How much of an institutional following does Kiska have?
Weber: We have one institutional shareholder, Geologic Resource Partners, which owns approximately 40 percent of the company. And then there’s another five percent or so that’s owned among a few different institutions. The financing that we’re doing is primarily institutional and we.re bringing in some new institutional shareholders.
Q: Is there a sizable retail following for Kiska shares?
Weber: Yes and for us, because we’re a prospect generator, we had a following from people like Paul Van Eden when he was writing his newsletters. It was people who were interested in that prospect generator model. It’s a subset of the investment community that really likes that business model. For us that’s mostly an investor base predominantly in the U.S.
Q: What do you see as the future prospects for Kiska Metals?
Weber: Well I think the key for us is completing this trigger program for the Kennecott back-in. I think with that back-in there’s a bit of uncertainty there and the market obviously doesn’t like uncertainty. I look at it as a win-win. If we bring in Kennecott and they back-in on it, we get a nice big payment from them and they’re running with a project that they see as having the potential to be a very large copper gold producer and, importantly, they are funding all the exploration on it. I think that gives us great exposure on the upside to something very big in Alaska. If they choose not to back in, we have 100 percent of the project and that leaves us in a really interesting position. There are a lot of targets that need to be tested. The 15 drill holes we’re going to do with Kennecott here in the spring won’t test all the targets on the property. And that leaves us wide open and we have significant interest from the gold producers in this project, so I think it leaves us in a great position to build some value and see how the market reacts to that. I think we’re making some more discoveries when we move forward here through the spring. We made two new discoveries before Christmas in the five holes we drilled last year. That’s a pretty good success ratio and I’m looking forward to seeing the same this spring. [Visit the company’s web site at www.kiskametals.com for more information.]
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[Disclosure: This interview is not to be construed as a buy recommendation for Kiska Metals. It is intended solely for educational and research purposes and is part of an ongoing dialogue between the Junior Mining Stock Report newsletter and various junior mining and exploration firms that utilize unique and innovative approaches to metals mining and exploration. Investors should do their own due diligence before investing in any natural resource company. Neither Junior Mining Stock Report nor its affiliates received payment or compensation in any form for this interview, nor does the editor currently own shares in Kiska Metals.]