Almadex Minerals (TSX-V: DEX) CEO Morgan Poliquin on Exploration Plans at the Davis Gold-Silver Project in Nevada & Almadex's Portfolio of 15 Royalties
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Almadex Minerals (TSX-V: DEX)(OTC: AAMMF), Mr. Morgan Poliquin. Morgan, how are you? It's been a bit since we chatted.
Morgan Poliquin: Absolutely. I'm doing really well, thank you. And yourself? I hope you and yours are all well.
Gerardo Del Real: I am well, healthy thankfully and busy as you can imagine. The last time you and I spoke was several months ago. It's a completely different precious metals market. Gold is flirting with $2,000. Silver's breached $25 and $26 and is sitting at $24.20. And Almadex Minerals looks like it's finally ready to get back to doing what it does best, which is exploring.
You had some news that I want to touch on in regards to a new gold project that you have in Nevada that I know you've been working on for quite some time.
Morgan Poliquin: Yes. It's one of the properties that we went back and had a look at in Nevada with some of the ideas we developed in Mexico, on exploration and what we've learned with looking at alteration zones. We actually did quite a big exploration program there and it resulted in staking these claims. That's some time ago now, but we've been assembling properties in areas we like. We have some claims here already, but there was an opportunity to expand the claim block and add the package of ground last year that we are speaking about here today. We've been obviously a planning an exploration program and thinking about exploring on this project, but of course it's been tough to do that recently. It's exciting, as things hopefully continue to open up, to plan to do that.
Gerardo Del Real: What are the next steps in regards to this specific project? Then I want to talk a bit about the other projects in the portfolio and the royalties, because I don't think very many people realize that you have over 15 NSR royalties on properties at various stages in Mexico, in the US and in Canada. I think that, frankly, if you took one or two of the projects that you have within the Almadex portfolio and you created a new standalone gold company with a flashy new presentation, you'd be trading at multiples of what Almadex trades with the 15 royalties and the many, many quality projects there.
Can you talk about the rest of the portfolio here in a second after we kind of go over what the next steps are at Davis?
Morgan Poliquin: Thank you very much for that, helping people understand what we're doing over here. At this Davis project in Nevada, there's lots of historic work. It's near the Paradise Peak deposit. I can't remember, in the news release it gives the exact distance [5 miles]. I can just visualize standing on the outcrop there and how far it was, but it's across the valley. This area did receive some exploration historically and those results we found very intriguing, very interesting and highlight some real potential for particularly vein-type higher grade potential at depth. That of course is what the focus was for the old timers in Nevada in the 19th century. Then later on in the 20th century, in the '70s, '80s, '90s and onwards, lower grade, open pit mining became the focus.
Our view is that a lot of the exploration was focused on lower grade, near-surface stuff for great reasons. But some of those exploration programs may not have been focused on deeper high-grade vein grades, which are obviously great too. We think that there's potential for veins at depth, which is what we think we know a lot about in-house here. We think we know a lot about how to explore for epithermal veins. We've found a few in our history. That's what we see in this alteration zone, this big property, a potential to explore deeper and targets that haven't been the focus of some of the recent exploration programs.
Gerardo Del Real: Well, let me just provide a bit of context. You mentioned some of the historic drilling. I know one of the better intercepts supposedly returned, I think it's 12.2 meters of 6.2 grams per tonne gold. And there was 21 grams per tonne of silver in there as well. Not insignificant. The fact that it hasn't seen much exploration at depth obviously bodes well for future exploration. Do we anticipate seeing a drill there later this year, Morgan?
Morgan Poliquin: That's what we'd like to do. As people may know – or may not know, it's worth reminding them I think – we have a number of drills and we have the capacity in-house to do our own diamond drilling at a far reduced rate. We've developed that capacity, over the decades, principally because the real hangup for exploration I've always seen is drilling. Drilling is very expensive to do. Drilling never goes as well as you like in terms of the amount of meters you drill a day and it costs a fortune or can. It can rip through an exploration budget. What people tend to do is to push off drilling as far as they can in the future.
By having our own in-house drilling and being able to drill for cheaper – as we've demonstrated over the years – than with commercial rates, we're able to get drilling upfront. So we can test targets really quickly and be flexible and not be romancing something for too long. Really test it and kill it if it's not there and find where the focus should be.
To me, exploration is the exact opposite. It's about finding where things aren't quickly, so you can focus on where things are on a project or regionally. That's what we'd like to do. Obviously we're going through COVID-19, we're just reviewing when and how and all those things in Nevada. But we're looking forward to doing that in the future. First we'll review all the data here as we're doing and plan to get on the ground before drilling. But that's the idea.
Gerardo Del Real: No one has put together, not in the resource space, the type of land position that you have in eastern Mexico, or the quality of projects. Let's talk about the royalty portfolio, which again, if this was a separate company, I think you're trading in dollars not cents, which speaks to the value here.
You have 15 royalties and the most significant, the most advanced one anyhow, is the 2% NSR on the Ixtaca project, which many of us including myself believe will be permitted here in the next several months. I know that COVID kind of delayed the process there as well, but we're hoping that gets back on track. There's reasons to believe it will, or it has I should say.
Can you speak to that specific royalty and the rest of the royalty portfolio? Because it is incredibly significant, especially when you consider the valuations that royalty companies are commanding right now for quality royalties in a portfolio.
Morgan Poliquin: That's exactly right. It all comes from our capacity to find and move along and develop new projects from scratch. Almadex, while it's the spinout exploration company out of our group, it's really the business model that's resulted in all these royalties. We like to think that we generate them through discovery. Of course in 2010, our consolidated group put the first hole, the discovery hole into the Ixtaca deposit. Since that time there's been obviously a lot of work. A feasibility study was produced in 2018 and then permits were submitted and that project is in the permitting phase right now. Obviously, we have a 2% NSR. The NSR, that was kind of created within our group through the spinout process of creating a new exploration company, Almadex. It retained an interest in a number of the projects that, if you like, were discovered in the group.
It's a process that we hope to continue. We hope that through our exploration efforts we can make another discovery. Obviously, that's the plan for the company is to keep working until we generate new projects of interest and potential discoveries. This company is focused on exploration and it will, as we've done in the past, generate royalties, hopefully through transactions. We're not buying royalties, we're finding them if you like.
So we have a 2% NSR on the Ixtaca deposit and we have a royalty on the El Cobre project in Veracruz which is, I would call it advanced exploration. We're pre-resource. There's no economic studies there, but it's a big exploration project. Azucar Minerals controls that. There's an equity partner there in Newcrest, the big copper-gold producer. There's a great portfolio of stuff there. We'd love people to better understand what we're doing.
Gerardo Del Real: A lot of upside. Market cap, sub-$20 million Canadian. Share structure, as clean as it gets. I believe, as of the latest reporting period you had just over 55 million shares outstanding. I believe there were just over 5.2 million options at a strike price higher than today's share price by the way. I don't believe you have any warrants outstanding with Almadex either.
What's the cash position look like, Morgan?
Morgan Poliquin: At the end of last quarter we were right at $4.6 million in the bank. We haven't been focused on exploration the last little while. We've had partners exploring, we've optioned properties, we've also had our drills working for other companies. We've had a low burn the last little while. As I say, we plan to get back to some of our knitting as it were and start drilling and exploring as that becomes possible in this environment.
Gerardo Del Real: Looking forward to having you back on when we get some more details on the next stage there. Thanks again, Morgan. Anything else that you'd like to add before I let you go?
Morgan Poliquin: I just really appreciate being back on the air. I'm probably a little rusty, as we all, talking about what we're doing. But Almadex has, as you put it, a great portfolio of exploration projects that we're really excited about getting back moving forward. Thank you for the opportunity.
Gerardo Del Real: Thank you, Morgan.