Orestone Mining (TSX-V: ORS) CEO David Hottman on Bringing Past Successes to Captain Copper-Gold Property in BC & Resguardo Copper Project in Chile
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the chairman and CEO of Orestone Mining (TSX-V: ORS)(OTC: ORESF), Mr. David Hottman. David, how are you today?
David Hottman: Very good, Gerardo. Thank you for having me on.
Gerardo Del Real: Thank you for the opportunity. It's always a pleasure to be able to highlight a company that checks the multiple boxes that I have when I'm doing due diligence on a company. I want to get into all of those. Obviously that's going to include the share structure, the management team, the commodity exposure, and a multitude of things.
So let's start though, before we get there, I want to talk a bit about your background and your extensive history of success. And then we'll get into why you decided to come back with Orestone and get the truth machine back out there and try to make the next big discovery. But can we talk a bit first about your background?
David Hottman: Yes. I started in this industry primarily as a broker, but that was 35 years ago. In the industry itself, on this side of the fence, I started with Bema Gold Corporation. It no longer exists. The same team has now formed B2Gold. Then along with one of the founders of Bema, or three of the founders of Bema, we started a company called Eldorado Gold. Eldorado Gold still trades on the New York today. And then after that, just around the turn of the century, I started a company called Nevada Pacific Gold with some partners. And that ended up being sold to US Gold, which is now McEwen Mining. And now we're back in it. I'm trying to replicate those successes by finding a big gold and copper porphyry.
Gerardo Del Real: You have a history of this. You mentioned Eldorado Gold, and looking over the management team, it seems like you've kind of put the band together, right? You have Bruce Winfield. You have Mark Brown. Can we talk a bit about the team in place? Because this isn't your first go round looking to make a big discovery or big discoveries. If I'm not mistaken, Bruce Winfield and the team, you guys developed five gold deposits, if my memory serves me right.
David Hottman: Over the years quite a few and made numerous discoveries. At Eldorado was myself, basically. I raised the money. Gary Nordin was a founder of both Bema and Eldorado. He's a geologist that has had extensive success at locating economic deposits. We've, with Gary, have been involved in the early days on what have turned out to be 40 to 50 million ounces of gold.
Additionally, on the Eldorado team was Mark Brown. He was our Controller. The four of us have worked together in the past. Bruce Winfield was our Exploration Manager for a time. So the four of us have worked together on and off for the last 20 or 25 years.
In addition to that, on our board of directors, Patrick Daniels started out as a junior engineer at Bema Gold when we were there and when we put our first mine into production, a very small mine up in Idaho, and then Patrick went on to work at Caterpillar and worked with us down in Chile as well in Bema.
And then on our advisory board, Julia Aspillaga was Bema's country manager and brought several of the target properties into the Bema organization down in Chile, what has turned out to be 30 million ounces in Chile.
Several of the other members of the board of directors have corporate and financial background. James Anderson has raised a lot of money for juniors and restructured companies as an investment banker and broker. This is the first time we've worked together on a company, but I've known Jim for over 30 years. And John Kanderka is a good, solid corporate person. He's been involved in starting and building and selling numerous companies over the years.
Gerardo Del Real: You mentioned being able to monetize the properties. Your team isn't just great at discovering these projects, but you mentioned obviously Nevada Pacific Gold, which was acquired by what is now McEwen Mining. Wasn't Bema acquired by Kinross?
David Hottman: Yes it was. I think that was about a $3 billion deal.
Gerardo Del Real: B, not M.
David Hottman: Exactly. Well you know, by the time we're done with our careers, it'll probably be a T. It'll be trillion. The way that the governments are debasing our currencies around the world, we'll be talking in trillions soon. Million dollars for a loaf of bread.
Gerardo Del Real: Correct.
David Hottman: So yes, being able to monetize assets or basically get recognition of their value and then have a liquidity event is the business that we're in.
Gerardo Del Real: So I have to ask you, David. You've dealt in the billions before, right, when you're monetizing these assets. Orestone, and here's the opportunity, you have a market cap, if I'm not mistaken, fully diluted, I think it's sub-$5 million Canadian. Is that correct?
David Hottman: That's correct, yes.
Gerardo Del Real: So why get the band together, per se, once again and come back and take on the two projects that you're currently looking to develop? And then let's talk about those, one in Canada and one in Chile. Why come back now?
David Hottman: Well, it's because the opportunity is presented. With the seven, eight years of bad market conditions as far as investor interest and thriving metal prices, we find ourselves in a scenario where there are a lot of targets available that have had a lot of work done on them in the past, but people aren't able to raise money and go out and drill them.
True wealth is created at the drill bit. You're just exploiting the wealth when you put a mine into production. And so creating the wealth, we're focused on acquiring projects at a reasonable price. Very little money goes into exploration other than to confirm previous work. Then the bulk of the funds we want to go into the the drill bit or the drilling, which is where you create the wealth. A lot of people will get a big property of a thousand square miles or a hundred square miles and try and develop targets, and then refine the targets, and finally getting around to drilling. What we're trying to do is pick the bullseyes out of that and spend as much money as we can trying to create wealth.
Gerardo Del Real: Let's talk about the focus of your efforts right now, the Captain property in British Columbia and the Resguardo project in Chile. I want to start with the Captain property, because you had some recent results. Can you give me a brief overview of the property, the recent drilling there, and what the plan is moving forward?
David Hottman: Yes. In a nutshell, it's a district-size play that has 9 magnetic targets on it. Those targets range in size from 3 by 400 meters to up to 1 by 3 kilometers in length, and basically a whole series of targets. We've proven the concept that there is mineralization, copper and gold mineralization in some of these magnetic anomalies. We're currently permitting another 27 drill holes, which will bring our total to well over 40 drill holes permitted.
At this point in the market cycle, there are a lot of targets, but there's too many targets for us to drill. So we'll be seeking a joint venture and we're starting to contact major mining companies for that purpose right now. It's 100% owned. There are no royalties on the property. There are no payments on the property. And the property is in good standing with, so to speak, our assessment and whatnot for three or four years.
Gerardo Del Real: Excellent. And you have Mt. Milligan like 30 kilometers to the north, if I'm not mistaken. Right, David?
David Hottman: That's correct. Mt. Milligan, which was about a three-quarter billion tonne ore body of low-grade copper and gold, has been in production for over a decade now, or about a decade, and it probably has another 20 or 30 years left. I mean, maybe it has 40 years left. I'm not really up on it. And then 120 kilometers or 70, 80 miles to the southwest of us, the Blackwater deposit contains about 10 million ounces of gold. So we're in elephant country on that project.
Gerardo Del Real: You mentioned elephant country. Let's talk about the Resguardo project. It stands out to me for two reasons. One, the size of the prize could be significant. And B, the second reason is that you can test this relatively inexpensively. Can we talk about Resguardo, the work that's been done there, and the work you anticipate on completing in 2020?
David Hottman: Okay. The Resguardo project was mined earlier in the century, 1 to 7% oxide copper on an open pit basis and some extensive underground tunneling. And what drew us to the area was that there's an IP anomaly, induced polarization, which indicates that there are metals in the ground that are holding an electric charge when you put electricity to them. So basically you've got outcropping copper mineralization on surface.
Our mapping has confirmed that we have numerous structures going through the area, significant regional structures where some of that previous mining was done, a large IP anomaly. And where you have these big structures in close proximity to this IP anomaly, you have a lot of alteration and copper mineralization at surface. So our target here is a large manto, which is more of a vein that's more on its side, more bedded in sediments, or a porphyry. And both can be quite large, half a billion, billion tonnes if you're lucky.
And we are in elephant country. There are four deposits within a hundred kilometers that are from one to four billion tonnes in size. Several of them are in operation. And so what our target is, as I say, a large porphyry that is primarily copper, but we do have up to a half a gram of gold in those previous mining operations. So the prize is extremely large.
Gerardo Del Real: I couldn't help you emphasizing in the latest news release the importance of the fluid leakage to surface. Can you explain for the average non-geologist why that's so important?
David Hottman: Yes. If you just have, so to speak, solid ground or rock, it takes an awful lot, a lot of time and pressure for solutions to get pushed through solid rock, although it does happen. So in this particular case, these fault structures allow the fluids to be able to move much more easily. So it makes our exploration a lot easier when you can actually find the surface expressions and not just rely on the drill bit to take samples. So the solutions leaking to surface or being pushed to surface in these structures, we believe that they're coming off of this large IP anomaly.
That actually reminds me of something else. In the surface and underground workings, the type of ore body, or the type of ore they were mining, were breccias, skarns, and mantos. All of those take a big system with a lot of fluids moving around, a lot of heat, and a lot of pressure. And so where did all of this come from? We believe it's this large IP anomaly with the fluids leaking to surface right around it.
Gerardo Del Real: Well said. Well said, David. What's the next step at Resguardo?
David Hottman: We're preparing to do a drill program. We want to test it relatively cheaply with 3 to 6 drill holes. We'll use reverse circulation, because we're still in, so to speak, the prospecting or exploration phase. So we'll be able to do a drill program for $150 to $300,000 US. And if we drill into a big one, maybe the tip of the iceberg could be worth a billion dollars or two, or something like that.
Gerardo Del Real: It's a lot of runway between $5 million and a billion. I understand that at Resguardo you have an option, a five-year option, to purchase 100%. Correct?
David Hottman: Yes, that's correct. And it's a relatively easy option. It's just cash payments. And there's only a 2,000-meter drill commitment over the life of the contract. And so the next payment is in August of this year, and it's $220,000 US. We'll be getting drill results before we have that payment requirement.
Gerardo Del Real: Excellent. Well, you have the team. You obviously have a minuscule market cap, making it obviously a bigger opportunity. You have a track record of success. Two projects, one you're looking for a JV partner on. You're talking to the big companies. And the second, that'll be drill tested later this year. David, is there anything else that you'd like to add?
David Hottman: No. That really covers it. It's the philosophical approach.
Oh, yes. There is one more thing. We are looking at several other projects or targets that we'd like to acquire. On our Resguardo property, there is a second target that has started to paint up or be recognized in our geophysics. So we'll need to do a little bit more geophysics on that before we can drill it. So we've got a lot of targets on both of these projects.
Gerardo Del Real: Excellent. David, thank you for your time. I get the feeling we're going to be chatting often. A lot to look forward to in 2020. Thank you again.
David Hottman: All right. Thank you. Have a great day.
Gerardo Del Real: You as well.
David Hottman: Okay. Bye bye.