Greg Johnson, president and CEO of Metallic Minerals, speaks with Maurice Jackson of Proven and Probable about why he believes the company has all the "key ingredients for success" at its project in the Keno Hill Silver District.
Keno Hill
Maurice Jackson: Joining us today is Greg Johnson, the president, CEO, and a director of Metallic Minerals Corp. (MMG:TSX.V; MMNGF:OTC), which is known for High Grade Silver in Canada's Yukon Territory.
In our last interview with Metallic Minerals we introduced the unique value proposition the company presents to the market, which we highly encourage you to revisit (here). Mr. Johnson, as a reminder for our audience before we delve into the recent company developments, please share with us who is Metallic Minerals and what is the investment opportunity that you provide?
Greg Johnson: Metallic Minerals is a leading silver focused exploration company focused in the Keno Hill Silver District, in Canada's Yukon Territory; one of the world's highest-grade producing regions with over 300 million ounces of historical production and current M&I resources.
Our business strategy has been to identify district-scale, brownfield properties adjacent to operating mines and infrastructure, where we see the upside for discovery of large deposits that can create significant new value.
Maurice Jackson: What has Metallic Minerals accomplished in the last 2.5 years in the Keno Hill Silver District?
Greg Johnson: Over the past 2.5 years Metallic has been able to consolidate the second largest land position in the high-grade Keno Hill Silver District, adjacent to Alexco Resources' operations, and has developed five large-scale advanced-stage targets at drill testing along with 10 priority multi-kilometer-scale early-stage targets.
Recent major discoveries in the district, totaling over 60 million ounces (Moz) of high-grade silver at Bermingham and Flame & Moth, highlight the exploration potential for new near surface deposits. Despite over a century of smaller scale mining and exploration history, the surface has barely been scratched at Keno Hill.
We feel that based on the past shallow depth of production, large and high-grade recent discoveries and prospective geology the Keno Hill Silver District shows the potential for a Coeur d'Alene scale system hosting +1 billion ounces of silver.
Because of these elements and the district scale, strategic land position owned by the company we believe that Metallic Minerals provides excellent leverage and exposure to rising silver prices and to the potential for major new discoveries, which can create tremendous value for shareholders. And as the district grows and this potential becomes more recognized and demonstrated, we'd expect to see larger players coming in to take a serious look.
By focusing on these elements, we feel we are able to greatly minimize exploration risk and maximize blue sky upside potential.
Maurice Jackson: Mr. Johnson, the historical Keno Hill Silver District is the perfect neighborhood to confirm the company's thesis. Your neighbor Alexco has recently provided a feasibility update on its plans to restart production in the district. Can you walk us through some of the key points from that?
Greg Johnson: Alexco has recently tabled a feasibility update that shows that the shallow, high-grade deposits in the district provide exceptional economics with low capital costs and high margins.The study showed Keno Hill has the highest silver and silver equivalent reserve grade in the silver industry with excellent recoveries and a simple conventional process from the existing mill facility.
Alexco's updated study shows that the Keno Hill operation, in addition to being top in silver grade, would be in the top 15 silver producers in size at 4-5 million ounces per year and lots of room for expansion with new discoveries.
Maurice Jackson: Metallic Minerals just issued a major press release that looks very promising for shareholders. That news is focused on the East Keno Hill Silver District. Before we go into that in detail can you map out the geography and level of development in the different parts of the district and where Metallic is focused?
Greg Johnson: I would first note the sheer scale of the Keno Silver Project and number of target areas at over 35 km long. We have spent a lot of time since the original acquisition on target refinement and zeroing in on precise areas on which to prioritize to focus.
The exploration work has been extraordinarily methodical as we move from broader tools as magnetics/geophysics to then ground truthing via mapping, soil sampling and trenching before setting up drills to begin to confirm the presence of mineralized structures. From there we start to vector along those structures to the higher-grade zones that can lead to new discoveries.
Maurice Jackson: With that overview let's dive into the East Keno Hill Silver District; it sounds like you have identified some very large mineralized areas. Walk us through the results from your recent work in the East Keno area and what you knew about this area, what were the company's expectations, and what did we find out?
Greg Johnson: The April 23 news release is the first in a series that will be rolled out over the ensuing weeks. It covers the results from the East Keno target area, the least explored part of the 35-km-long Keno Hill Silver District, and one the largest areas of Metallic's landholdings in the district.
On the East Keno target area, we have all the key ingredients for success with the right geologic setting, identification of the key structural corridors and now surface mineralization with elevated silver in soils and rocks that show the surface expression of these areas are 1 to 3 km in size indicating potential for discovery of very significant mineral systems.
It's fair to say we are very excited to have identified eight separate multi-kilometer target areas showing Keno-style mineralization, in an area of the district that is virtually untested.
Maurice Jackson: Put this into to some type of perspective for us, how would this compare in relation to the surface expression of the 50 million-ounce Bermingham deposit on the West side of the district?
Greg Johnson: Each of these East Keno targets is as large as or larger than the surface expression of Bermingham in the Western Keno district, one of the world's best silver deposits. The identification of these large-scale targets in the East Keno district validates our brownfields exploration thesis for the potential of the less explored parts of the district and is a major fundamental development.
Maurice Jackson: In summary, Metallic Minerals first set of assays were a knock out of the ballpark, confirming the company's working thesis that the less explored parts of this amazing district have lots of potential for new discoveries. What is Metallic Minerals doing now?
Greg Johnson: We are in the process of completing the modelling work on the 3D geology, airborne geophysical and remote sensing data and integrating that into our evolving understanding of the structural and geologic controls that allow for large deposits to form in this prolific district.
We will be releasing additional comprehensive updates on five additional advanced target areas that cover the Central (Keno Summit) and Western (Galena Hill) parts of the district. These targets on Metallic Minerals' holding are on some of the most productive trends in the Keno Hill district including the Bermingham, Flame & Moth and Keno Hil mine trends, which are some of the largest deposits discovered to date.
Maurice Jackson: At Proven and Probable, we interview some of the most trusted names in the natural resource space. One of the statements that I am always reminded of offline and online is that price does not always match the thesis. Mr. Johnson, Metallic Minerals for all intents and purposes is selling at a significant discount. What would you like to say to current and prospective shareholders?
Greg Johnson: The precious metals market is getting very oversold at these levels and particularly the high-quality exploration stage companies like Metallic Minerals. Many of these companies have recently hit their 52-week lows despite gold and silver being well above their lows of last fall.
This presents a strong value buying opportunity for astute investors.
Maurice Jackson: And for the record, and it should be no secret, we love to buy low and sell high, therefore, we plan to be active buyers of Metallic Minerals at these prices.
Mr. Johnson, the current state of the metals markets is on many investor's minds right now; can you provide your perspective on where we are in the current metal price cycle?
Greg Johnson: As we have discussed previously, one of the most important factors for investors to consider when looking at investments into the precious metals and commodity space are where you are in the metal price cycle.
The Incrementum Group out of Europe has recently updated some of its fundamentals charts, and starting with the really long term they show that right now is one of the lowest relative prices for commodities versus general market equities like the S&P 500 of any time in the past 50 years!
On a more recent term, this same group, along with the folks at Sprott, have recently produced some compelling charts that show that the precious metals sector has moved from the peak in the metal price cycle back in 2011–12 to forming the trough of this cycle over the past couple of years. This indicates that we appear to be starting into the next major upleg for gold and silver and supports that the current valuations are very low right now.
Maurice Jackson: Mr. Johnson, how does the capital structure look for Metallic Minerals?
Greg Johnson: Metallic Minerals is tightly structured, with significant ownership by the board and management. We now have four institutional investors and will be building on that.
We currently have 66 million shares outstanding and nearly $2.5 million in cash plus callable warrants. We are speaking with the holders of those warrants and would expect to see those start coming in.
Maurice Jackson: Metallic Minerals is part of the Metallic Group of Companies; please introduce us them and what makes the group stand out.
Greg Johnson: With the Metallic Group of Companies we are bringing new exploration thinking to three of the industry's highest-grade districts in silver, platinum and palladium, and copper.In unitizing these previously fragmented districts, we can apply new large-scale models that we believe could result in breakthrough discoveries in these areas that have proven they can produce mines.
By acquiring these district scale, brownfield land packages adjacent to already operating mines during the low period of the metal price cycle, we have created deep, fundamental strategic value in the land holdings for shareholders, and look to add to that value through new discoveries. Existing mine and access infrastructure should allow for reduced capital and operating costs, along with rapid development times compared to remote greenfields projects.
Our dedicated management teams have track records of successful exploration and development and allow us to share administrative resources to keep our costs low.
We started the group with Metallic Minerals in the high-grade Keno Hill Silver District in 2016, then saw the opportunity with Group Ten Metals Inc. (PGE:TSX.V; PGEZF:OTC) in 2017 to consolidate the famous high-grade Stillwater platinum and palladium district in Montana, and at the beginning of this year launched Granite Creek Copper Ltd. (GCX.V:TSXV) in the high-grade Carmacks copper district.
We believe that each of these companies represents a unique, deep value investment opportunity in silver, platinum and palladium, and copper.
Maurice Jackson: It was great having you join us again and I really look forward to having you back with your upcoming results at Keno Hill. For someone listening that wants to get more information on Metallic Minerals the website address is www.metallic-minerals.com. And as a reminder Metallic Minerals trades on the TSX-V: MMG and on the OTCQB: MMNGF. For direct inquiries please contact Chris Ackerman at 604-629-7800 ext. 1 and he may also be reached at info@metallic-minerals.com.
And last but not least please visit our website provenandprobable.com, where we deliver mining insights and bullion sales.
Greg Johnson of Metallic Minerals, thank you for joining us today on Proven and Probable, and I really look forward to having you back again in the future with your upcoming results at Keno Hill.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
Disclosure:
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Metallic Minerals. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Metallic Minerals is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
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