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Almadex Minerals (TSX-V: AMZ) CEO Morgan Poliquin After Latest Assay Results at El Cobre: “There's a Cohesiveness to These High-Grade Zones”

August 9, 2017

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me once again is President and CEO of Almadex Minerals (TSX-V: AMZ)(OTC: AXDDF), Dr. Morgan Poliquin. Morgan, how are you?

Morgan Poliquin: Excellent, thank you. And yourself? Thanks for having me on.

Gerardo Del Real: Doing excellent as well, thank you so much for asking. It's good to have you back on. The last time we spoke, it appeared that you were zeroing in on a very rich, high-grade part of the Norte Zone at your El Cobre project down in Veracruz, Mexico.

This latest news release, which was released I want to say on August the 3rd, kind of speaks to that. The headline reads, "Almadex cuts 103.85 meters of 1.33 g/t gold and 0.41% copper at the Norte Zone." Can we talk a bit about the results, Morgan?

Morgan Poliquin: Delighted to do so. Well look, we discovered the Norte Zone, this higher grade mineralization, initially in August of last year so it's a year into the program. We've drilled about 20 holes and counting now on the Norte Zone. And we believe it remains open, the mineralization. We think that we will be able to define a larger zone of mineralization and we're working on that.

But on the other hand, as you point out, there are high-grade zones within the broader, as yet undefined, zone of mineralization. And we feel we're starting to understand what controls those higher grade zones, which are important to define before you do any sort of formal resource calculation, which of course is what we're moving towards with this drilling. So understanding those high-grade zones is really important, their orientation and so on because you have to define that spatial distribution of high-grade before you do a resource. And the nice thing is, we continue to hit it where we think we are going to hit it. And I think, you know, that should be interpreted as very positively, that there's a cohesiveness to these high-grade zones.

Gerardo Del Real: Well obviously understanding the geometry and having good continuity is important, and it seems like you've got the tiger by the tail on that front. The last time we spoke, Morgan, we also talked a bit about the Raya Tembrillo zone. Can we get an update there? I know that there were some pretty heavy storms down in the Veracruz area. How are things coming along on that front?

Morgan Poliquin: Yeah. You know, we've been talking about getting ready to drill there and we've got a big hurricane that's about to hit and we've had some heavy, heavy rain for a month and a half that has delayed us moving the drill. It's a long trail we have up there. We're in an area of excellent infrastructure and access, but these small trails that we build for portable rigs, you know, are over some rugged terrain and it's been heavy rain. That being said, we've been happily occupied with one drill drilling what we call the Encinal zone. And that's where the drill has just finished that drilling at the Encinal zone. We'll report on that in due course, the results from that.

And we're going to be moving that drill up to the Raya Tembrillo zone within a matter of days here. Although there's a big hurricane, as I mentioned before, that may hit this area of the Gulf Coast in the next few days, I think they were saying Saturday. So we'll probably wait for that to pass before we move a drill up a trail.

Gerardo Del Real: That's probably a good idea, Morgan. So we can expect results from Encinal soon. The drill rig will be moved over to Raya Tembrillo and then I'm assuming that we can expect further results from the Norte Zone.

Morgan Poliquin: Absolutely. We've continued to drill there, following up the results that you've kindly asked me to elaborate upon. And we feel that the drilling we've done at that area will continue to help define these high-grade zones, while also enabling us to define where the mineralization might be going, and whether or not it can be much broader in scope than what we know today.

Gerardo Del Real: Excellent. As far as this high-grade zone, and the Norte Zone in general, can you talk a bit about the distribution between gold and copper. I know with the Ixtaca deposit, it's a polymetallic deposit that's pretty evenly distributed between gold and silver. Is that the case with the copper and gold grades here at El Norte?

Morgan Poliquin: In terms of dollars today, if you were to use $1,250 gold and $2.50 copper, just for round numbers sake, it would be weighted about 70% of the value towards gold. So it's similar in that it's a distribution between the two metals, but a little bit more heavily weighted to gold. Which can be a good thing, with porphyries, particularly this type of porphyry, where you expect reasonable gold recoveries into a copper concentrate.

There's a lot of assumptions there, because concentrate needs to be sold to a smelter. But happily we're on the coast and we see the sorts of minerals, chalcopyrite and bornite are the names, which are copper minerals without arsenic and other things that can affect the value of the concentrate. It's very clean, straightforward porphyry minerals.

We see the gold reporting with those copper minerals, so we feel that we have a really neat deposit in that respect. Sometimes you have molybdenum. We feel that there may be a bit of silver here, but really it's a copper-gold deposit, which is, we think, a special thing.

Gerardo Del Real: Excellent, excellent. And another development that I wanted to ask you about. You discovered the Caballo Blanco deposit, which at one point was a part of the land package that now includes El Cobre. I joked that it's literally a baseball throw away from the El Cobre project.

Agnico Eagle recently bought into, I believe, 9.95% of the company that now owns that deposit and is in the process of having that permitted. Any thoughts there? I know this is a part of Mexico that hasn't seen a lot of investment outside of the Poliquins, frankly, as far as exploration and development goes. Any thoughts there on Agnico Eagle moving into the area?

Morgan Poliquin: Yeah, well we think it's a really positive development. We think companies like Agnico have probably been watching Caballo Blanco for some time. It went through a challenging, I think more cosmetic than anything, period of time. There was an attempt to, by a previous operator and partner of ours, to permit the project. We felt that was probably done not at the greatest time. Because the background to Veracruz is that the state is in huge debt, and recently the former governor has been arrested and is in exile. And there's all manner of things that have gone on in the state of Veracruz that have been very challenging for that area politically.

So I think the timing was wrong for the previous operators to submit the permits. But the long and the short of it is, what I'm getting at is, that the permits weren't approved at that time, and I think that cast a bit of some doubt over the project, which shouldn't have been there technically, or in my view socially.

There's strong support, we think, for these projects. So it's great to see Agnico. They're a very thorough group, as far as I know them, in terms of their due diligence and so on. They're known for that, being a very cautious group. And so I feel that that's a very good signal for the project.

Gerardo Del Real: Excellent and that's important for Almadex, because I know that the focus is on El Cobre and rightfully so. You're developing a pretty important, I think, royalty portfolio. I believe there's an NSR on Caballo Blanco as well as Ixtaca. Is that correct, Morgan?

Morgan Poliquin: That's exactly right. And we think that Caballo Blanco is, just to speak to that again, it's a heap leach. It's not a huge resource, it's a little below a million ounces but it's, a significant heap leach resource that's easily accessible, good infrastructure, and low capital to get into production. A very straightforward project. And we feel that the support of Agnico to the current owners could result in ... I know that they're planning to permit the project here shortly.Things can happen rapidly there.

And it's excellent for our project and for what we pioneered in this part of Mexico, eastern Mexico, where a number of our projects are located. We've defined a new area with our prospecting. New areas are excellent for prospectors in terms of, you know, you don't have a lot of competition, particularly if you're the pioneer.

But you're also pioneering in other respects. People are more comfortable in areas where there's existing mines. But our view is that Veracruz and Puebla, two states where we are working in this area, are very industrial, developed areas. Ports, factories, massive new investments, and they're very open to development, good development projects that are sensible, which all of these projects we're defining, we think are. So it'll be a very interesting few years, that could be very good on the one hand for El Cobre but on the other hand, for our royalty portfolio.

Gerardo Del Real: Excellent. Well I know as we speak gold is at $1,273, copper hit $2.94 earlier in the day, so I think, you know, hopefully there's better days ahead. And I can't think of a better time to have a prospective copper-gold project as exciting as El Cobre. So I look forward to having you back on, Morgan, as we get further assays in.

Morgan Poliquin: I really appreciate it. We love being on your show, and it is going to be a very interesting time, and appreciate all your readers' and listeners' interest.

Gerardo Del Real: Excellent. Thank you so much, Morgan.

Morgan Poliquin: Thank you. 

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