When we last met last caught up with
Kuya Silver Corporation (
CSE.KUYA,
OTC: KUYAF,
Forum) and its CEO David Stein back in September 2020, the company had just completed Phase One results from its high-grade silver Bethania Project in central Peru. Fast-forward about a year and Stockhouse Media’s Dave Jackson was joined once again by Mr. Stein to get shareholders and investors completely up-to-date on this intriguing silver-lead-zinc project.
(Click image to play video)
TRANSCRIPT BELOW:
SH: David, you to have to look back now for our Stockhouse audience new to the Kuya story. Can you give us a bit of a background information on the company and specifically the Bethania silver project?
DS: We took Kuya public a little less than a year ago. And so, we're listed on the CSE now with the ticker symbol KUYA. Our flagship project, as you mentioned, is the Bethania silver mine in Peru. And really, we acquired that project when we were a private company, and held a right to buy 80% of it. After we went public last year we were able to buy a 100% interest in the project, so we own that mine outright now. It has produced silver in the past. The project was in production up until 2016, but always as a toll milling operation. So the previous operators were mining this high-grade ore and then trucking it to other mills in the area. So really our plan from day one has been to explore, because there's huge exploration potential in the mine, and then also to build a plant at site so that we can produce more silver at a lower cost.
SH: Well David, as you briefly mentioned, it was about a year ago when we were talking about your initial listing and the upcoming plans for the company. Can you provide us an update on what the Bethania (project) looks like right now?
DS: If we look at the last year, in August 2020, we got our EIA. So, just worth mentioning because that is a huge deal for the company. And then after we went public, we were able to buy a 100% instead of 80%. So that was another major accomplishment, very accretive acquisition for our shareholders to be able to buy that extra 20%. Then now if we go into 2021, despite the challenges with COVID, we were able to successfully complete a 5,000-meter drill program, which we reported on the results about a month ago. Also on the exploration side, we were also able to buy an artisanal mine called Carmelita which is very close to Bethania and provides potential beyond the initial Bethania property. So all of those things have happened in the last year and it's been a really great to move the company forward.
SH: Then let's discuss the phase one results from Bethania. Can you give us an overview of this maiden drill program from the project?
DS: We drilled 5,000 meters in the phase one program, and the drilling was largely concentrated in the main Bethania mine area which will be the initial focus of mining for next year. This drilling is intended to confirm historic mineralization and de-risk the target for production. So, when we look back now at the drill program, we really accomplished three things: #1 We were able to drill and continue the mineralization at depth below the mine workings - our best drill intersections in terms of grade and thickness were below the mine workings. #2 we were also able to find a lot of new veins that we didn't know about, as we were drilling those deeper holes, we were hitting other veins along the way, some of which we knew about and some of which we are brand new discoveries.
So, we've taken the vein system from 6 veins to up to about 20 veins that we know about now. And so that's giving us lots of new targets for the next round of drilling. #3 we were also able to drill some thicker zones as well. Because this mine had always been explored through tunneling along the veins the width was really limited to the size of those tunnels, which was less than two meters. So, we were finding zones with our drill, where it was more than two meters, three meters, and in one area up to six meters, almost six meters of true width. And that bodes very well for when we look at mining this in the future.
SH: Now, David, how did these latest drill results compared to the average silver grades in historical production, for example?
DS: When you look at high-grade vein systems, whether it's silver or any other metal, what you have is an average grade, and that average grade tends to be carried a lot by higher grade pockets or zones within the vein system - that could be two or three or even more times the average grade. Then you of course have lower grade that balances it all out. That's exactly what we got in our drill program. We got some spectacular high grai intersections and we got some lower, but still very economically interesting, intersections. So in my opinion it looked very much as we expected.
SH: Now, you've mentioned before David, that you believe the mine has been highly under-capitalized during its relatively short mining history. Can you discuss Kuya's plan for continued exploration that, you know, any upcoming expansion at the project?
DS: Yes, that is correct. And when we say under-capitalized, we can really think of it two ways. One is capital on equipment, like the mill, which there doesn't exist right now. And the other thing is exploration because that requires capital to, and really neither one of those things were done in the past. So the exploration has been very minimal. An so just by going and doing that 5,000-meter drill program, we've already done a great deal of exploration that's never been done before. So I would say on the exploration side, what we would be focusing on now, in terms of being better capitalized, is continue drilling at depth. And right now the veins are only about 150 meters from surface down to the lowest mine level.
So there is many many hundreds of meters below that that is prospective for extending the veins and we also have the strike length potential. So, we believe that the veins will keep going off to the east. And in fact, we've got another zone. That's about 500 meters away from the mine to the east called the Hilltop zone that we made some discoveries on earlier on in the year. We expect that the whole thing will connect up and will be one big mining area. So those are what I call low-hanging fruit. It's relatively easy to get the idea of where we should be drilling along strike and at depth. We're going to do more of that. And then at the same time on the expansion, the capex to bring Bethania into production is going to be very modest. So, we want to do that quickly here to get it into production. And the real key is going to be building that mill at site. And once we do that, we can produce our own concentrate. We can control the whole process from production right through to the sale of concentrate. And that is a much more profitable operation then toll milling.
SH: Now, David you've frequently mentioned that Kuya is running on a ‘dual track model’, something I found quite unique for a junior company. Could you please describe this for our listeners and what they can expect in the near-term future from the company?
DS: Yeah. The dual track is really meant to emphasize the fact that we are different than the vast majority of the juniors out there that are really focused exclusively on exploration. We have great exploration prospects and we are delivering on those. However, we also see ourselves as a near-term producer, and I think that's very different because we've got the development track as well. And so on that development track over the next year, we are looking to complete all the pre-construction activities. So finished detailed engineering, permits, final permits etc. Then get into construction both with the underground mine development and the mill at surface, and then ultimately into production. All of those things should happen fairly quickly here. And that's really what makes Kuya unique over other similar companies.
SH: Now we've seen the price of silver on a bit of a roller coaster ride so far in 2021. David, if you could look into your proverbial mining crystal ball where do you see the price heading in the near-term future? And, you know, how does that affect Kuya Silver as you prepare for production in 2022?
DS: I follow the silver price very closely and one thing I would say about our project is that we have the potential here, by building the Bethania expansion project, and getting it into production, to add a lot of value for shareholders and we don't really need the silver price to do anything. So we're not just a play on the price of silver, but really on the development of the Bethania. So I think that's really exciting. And as an investor myself, I'd rather take a chance on that , than necessarily the silver price going up.
Nevertheless let's talk about the silver price. Look, sentiment. The silver price actually has been consolidating since earlier this year. The price actually hasn’t gone down that much from its highs in percentage terms. However, just the lack of movement has really sucked the wind out of the junior mining sector. And, and so there is a general apathy frustration with the silver junior stocks, like ourselves right now. And so again, I think we can develop our way out of that through moving Bethania forward because building a mine and becoming a profitable mining company creates a huge amount of value for shareholders. However, I am bullish on silver. I think the fundamentals are really strong for silver in the medium term to longer term here. So it's just a matter of time before we get through this consolidation phase, and we see the silver price moving back higher again. If I were to say 2022 when we're in production, the silver price will be higher than it is today. Okay.
SH: Now, David, the company has recently announced several changes and additions to the management team. What can investors and shareholders glean from this?
DS: I think they can glean that we are growing and Kuya is becoming a much more serious player in the junior mining space. We've been able to add to our management team ,as well as grow from within. So I've been very pleased with the with the ability to build a strong management team here. I think this is by and large, the team that will be taking the Bethania forward into production over the next year or so. It's been a very exciting time and I think the management team has been a real part of the story.
SH: Well, simply put David, what separates Kuya Silver from the competition, especially in the region and what makes your business model unique?
DS: I think one thing that is unique amongst other silver juniors is the fact that we do have the near-term production potential from the Bethania, and as a company that can explore and then build a very profitable new mine at the same time. That is a very exciting story that frankly, most companies that are focusing only on exploration, they're not going to have that production story. And then even amongst junior or near-term silver producers, we are very blessed because we've got a really spectacular silver dominated project. So even though we do have byproducts, as most other mines in Peru and in Mexico do, we'll be producing mostly silver. So that makes the Bethania mine really special as well as the high grades and the exploration potential. So I think we've got the combination of a really great asset itself, combined with the near-term production story, makes us unique.
SH: Well, thanks again for rejoining us today at Stockhouse, David, if there's anything that I've overlooked, please feel free to elaborate.
DS: Sure. One thing I think is worth mentioning Dave is we focused the interview on Bethania, and rightly so, that is our flagship asset. But we do have now have the Silver Kings project in Northern Ontario, which we see as the next Bethania. Potentially it's another high-grade silver vein system, different byproducts being cobalt, instead of you lead, zinc gold and copper. The project is still narrow high grade silver veins that can be produced near surface as well that can be produced very cheaply we think in terms of CapEx. So we're very excited about the entry into that region. It is an earlier stage project than Bethania, but we see this as potentially our second mine in several years. So I would encourage people to also take a look at that and follow up on us as we develop that project as well.
SH:
Great stuff. Thanks again for joining us at Stockhouse, David.
DS: My pleasure.
To learn more about the Company, visit kuyasilver.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.