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Maurice Jackson:
Today we welcome, AbraPlata Resource Corp, which is focused on unlocking value in Argentina, trading on the TSX-V, symbol, ABRA, and on the OTCQB, symbol ABBRF. Joining us for our conversation is Willem Fuchter. He is the President and CEO of AbraPlata Resource Corp. Mr. Fuchter, welcome to the show, sir.
Willem Fuchter:
It’s good to be back. Thank you for having me on, Maurice.
Maurice Jackson:
Willem, let’s discuss the latest press release entitled, “AbraPlata Files Diablillos Silver-Gold Project PEA Report.” Let’s get into the details of the release. When did AbraPlata officially file its PEA with Sedar, and what can you share with us?
Willem Fuchter:
Yes, the report is titled, “Technical Report on the Diablillos Project, Salta Province, Argentina,” and is dated April 16, 2018. The report proposes an open-pit mining by contractor, using a conventional truck and shovel operation, in two pits. In the larger, a Oculta pit, as well as the much smaller Fantasma open cut. Processing is by a conventional silver plant, comprised of crushing, grinding, agitated back leach, and then, precipitation of the precious metals by the Merrill-Crowe process.
The project is expected to achieve an undiscounted pretax cash flow of some $630 million U.S., or an after tax cash flow of nearly $400 million, $391 million, to be exact. It’s also expected to achieve an after tax NPV at a discount rate of $7.5%, of $212 million, and it will achieve an after tax internal rate of return of some 30.2%. Payback will be in 3.1 years, and it will have a mining life of 8 years, after a pre-production period of 18 months. It’s expected to produce nearly 10 million ounces of silver equivalents a year, and it’ll require initial capital of some $293 million.
Maurice Jackson:
Willem, how do these numbers relate, using the same discount rate, but using current gold and silver prices?
Willem Fuchter:
Well, that’s a good question indeed. The economic data were based on using $20 an ounce for silver, and $,1300 an ounce for gold. At a $16 an ounce silver, the IRR will still be about 20%. It’ll be 20.3%, and NPV, at 7.5% discount rate, changes about $25 million for every $1 change in the silver price. For example, at $16 an ounce, NPV will be still, $110 million, compared to what we calculated using the $20 silver price of $212 million, and at $24 an ounce, the NPV will be close to $300 million.
Maurice Jackson:
Now that the PEA is complete, what is the timeline for a pre-feasibility study?
Willem Fuchter:
We hope to complete the pre-feasibility study, or PFS, by the end of the year, and our overall objective is to deliver a fully permitted, construction ready project, by the end of 2019. So, in 2019, we will move on from the PFS, and do the definitive study.
This will require that we do the following: first of all, we need to do the additional engineering work, to complete the pre-feasibility. We’re also continuing with the environmental studies, and starting the permitting applications. Finally, we’re going to do further drilling, as we see strong potential to increase resources from the property, and which will need to be considered in the pre-feasibility study.
Maurice Jackson:
Speaking of drilling, let’s discuss current activity going on right now. Talk to us about resource expansion, at the Oculto Deposit, and satellite occurrences. Are the drills turning there right now?
Willem Fuchter:
No. We hope to have them as turning round about late May early June, and we see three important locations where we can increase the resource. First, within the existing Oculto pit shell, there’s a lot of opportunity to increase mineralization, to turn mineralization in the current pit shell into a resource category.
Second, is to continue the drilling of some of the satellite deposits, like Fantasma, which surround the Oculto Deposit. Third, there’s the deep gold, zone, which lies below the pit, and which we hope to do some drilling on, and show that there is considerable potential to increase gold rich resources below the pit.
Maurice Jackson:
You know, we focused on the silver and gold at the Diablillos, but AbraPlata has three more projects in its portfolio, some of which host copper, and may have a significant influence on the share price in the future. Can you provide us with an update on these projects?
Willem Fuchter:
Absolutely. In addition to Diablillos, we’ve got two other porphyry projects. These are copper, gold and molybdenum projects, and these are Cerro Amarillo, which is located in west central Argentina, in the province of Mendoza, and Samenta, which lies about 120 kilometers northwest of the Diablillos.
Cerro Amarillo, the one in west central Argentina, shares a mining camp with the famous Chilean copper deposit called El Teniente. It lies in the same belt of volcanics, and is hosted by intrusives, which have the same age as El Teniente. El Teniente, as your listeners probably know, is a behemoth porphyry project, just across the border in Chile.
In terms of current reserves, as well as past production, it hosts at least 170 billion, one seven zero, billion pounds of copper. So it truly is a behemoth. And so, Cerro Amarillo project, like El Teniente, is not a single porphyry. Rather, it’s a cluster of porphyries, and on our property, we’ve got at least five porphyry intrusions, four of which have got copper mineralization mapped at surface.
All five of them have got good geochem expression, and on two of them, we’ve been able to do a conventional IP, and the IP has indicated that there’s chargeable material, underlying mapped copper mineralization at surface. So this is ready for drilling. However, it lies in a 168-square kilometer property, and these porphyry projects are large projects.
What we hope to do is interest a major mining company to come in, and help assist, with the further development of those large copper, gold, moly porphyry projects.
Maurice Jackson:
Willem, we’ve talked about the latent material in the ground. Talk to us about the relationship that management and the technical team’s expertise have, for the task at hand, and their ability to secure permits.
Willem Fuchter:
Well, most of the executive management is actually resident in Argentina, and that certainly helps with the relationships that we have, both with provincial authorities, as we well as the federal government officials. But I think, most importantly, is the fact that our chairman, Hernán Zaballa, is one of the prominent mining lawyers in Argentina. He’s been on the board of such companies, well, all the boards, that is, of such companies as Barrick, Pan-American Silver, Peñoles, from Mexico.
As well, he’s done work for most of the junior explorers that have been working in Argentina over the last 20 years. As a mining lawyer, he’s obviously well-connected with the various authorities in the mining provinces, and Salta is one of those, as well as with the mining authorities in the federal system. So, that certainly makes it a lot easier, to have those kind of relationships, as we move forward in further developing the Diablillos project.
Maurice Jackson:
In closing, Mr. Fuchter, what is the next short term goal for AbraPlata, when should we expect results, and what determines success?
Willem Fuchter:
Well, I think, as you asked, a little earlier on, we hope that the drill will be turning in late May, early June, and since some of these targets are high grade gold targets, I think we can expect to see some pretty exciting results in June, July, of this year. In terms of what results we can expect, as I mentioned to you, we’re going to be drilling some of these gold rich zones.
Perhaps what your listeners might remember from our previous conversations is the fact that this metal summation of gold rich, at the bottom of a deposit, moving to gold, silver, in the bulk of the project, and then, silver, gold. And right at the top of the deposit, it seems be silver only.
Most of the targets that we are going to be drilling now are some of the deeper gold rich targets, and I think that what you might be seeing is that we might be moving this project from a silver project with a strong PEA, indicating robust economics, to a gold rich deposit, with a silver cap.
So we’re really excited with the future possibilities that we might be seeing for this project.
Maurice Jackson:
Mr. Fuchter, if we don’t achieve the results that we’re looking for, what’s Plan B?
Willem Fuchter:
Well, first of all, I think that we can expect the results that we’re looking for, because there’s already one or two drill holes that have intercepted some of these gold rich stones, and they indicate really high grades of up to 17 grams per ton gold, over 10 meters. So I’m not too concerned about not being able to meet expectations.
Nevertheless, the PEA, in its own right, which is based upon the current information, indicates really robust economics, as we’ve been talking about a little bit earlier in the interview. And secondly, we’re already talking to some mid-year silver producers, to see if they can assist with the construction and operating phases of a project, within the next two years.
Maurice Jackson:
Last question, sir. What did I forget to ask?
Willem Fuchter:
Well, our goal is completing the pre-feasibility study, and in order to accomplish that, we’re going to need capital. So we have just opened up a private placement financing, and we’re offering units, at 20 cents, with each unit comprising a share and a full warrant, exercisable at 30 cents, for three years.
Maurice Jackson:
And Mr. Fuchter, for someone listening that wants to get more information regarding AbraPlata Resource Corp., please share the contact details.
Willem Fuchter:
Please look at our website, which is at www.abraplata.com.
Maurice Jackson:
And for our listeners that want to get more information regarding the financing opportunities with AbraPlata Resource Corp., your point of contact is Robert Bruggeman. His phone number is 416-884-3556. That number, again, is 416-884-3556, or you e-mail him at: rob@abraplata.com. That’s rob@abraplata.com.
And last, but not least, please visit our website, www.provenandprobable.com, where we interview the most respected names in the natural resource space. You may reach us at contact@proveandprobable.com.
As a reminder, AbraPlata Resource Corp. is a sponsor of Proven and Probable, and that we are proud shareholders of AbraPlata, for the virtues conveyed in today’s message.
Willem Fuchter, of AbraPlata Resource Corp. Thank you for joining us today, on Proven and Probable.
Abraplata Resource is a sponsor is a sponsor of Proven and Probable and that we are proud shareholders of Abraplata Resources for the virtues conveyed in today’s message.
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