Banding Together for ExplorationMon, 10/22/2018 - 14:45
Q: Orex Minerals has three projects in Mexico. How are these progressing?
A: We are about to initiate an exploration program on the San Luis del Cordero project. Paperwork with the government has taken a little longer than we expected and the process could be smoother. But we are looking forward to exploring the project as a polymetallic skarn deposit.
Regarding the other two projects that Orex has, there were some delays this year with financing and joint venture changes in both. The Sandra Escobar, a JV with Canasil Resources, will be carried out in conjunction with Pan American Silver, as it has claims in the same mining district. We will explore the property together. The expenditures to be reached include a US$5 million by Pan American Silver and US$1 million by the Orex-Canasil JV. The former will hold 51 percentage and the latter a 49 percent share. On Sandra Escobar, we discovered a new silver deposit in 2016, but with metallurgical challenges in extracting the silver from the rock. We expect the expertise of Pan American Silver in the field of metallurgy to be a key asset for the project moving forward. Once we consolidate the mineral concessions we aim to explore the whole mining camp as a single exploration project with more diamond drilling.
Q: If you were to design a successful methodology for discovering high-quality deposits, what would it be?
A: I think it would be to form a good technical and financial team to tackle projects. It should include scientists, engineers, financial experts and a very strong local staff working both on the technical and legal sides of the explored jurisdiction. As for discovery methodologies, this depends on the mineralogical style. Often a geophysical approach works well for sulfide mineralogy, while in other locations structural control is the key to vectoring toward the heart of an ore deposit.
Q: What is the raison d’etre of the Belcarra Group and what is the role that Orex plays in the organization?
A: The Belcarra Group is a collection of experienced technical and financial people who team up to run mining companies. Our objective is to find good projects with an avenue to raise and add value through discovery. Orex Minerals has been successful in many projects, such as the Barsele gold deposit in Sweden, which was originally in Orex and later spun-out into a separate company called Barsele Minerals Corp and joint ventured with Agnico Eagle Mines. In Mexico, we have JVs with Pan American Silver and Fresnillo, both very well respected and large operators. So, for the Belcarra Group, Orex serves as a platform in Mexico to advance projects.
Q: How can exploration companies overcome the inconsistency of revenue streams and decrease the risks of investment in exploration?
A: As exploration companies do not produce on a regular basis, we cannot count on a revenue stream, but on financing to raise money. Usually, equity-based financing is the best option. When financing projects, the markets have ups and downs depending on world affairs and international metal prices. I think that the best way to ameliorate those fluctuations is to have solid relationships with financial investment houses and major mining companies. For example, we have close relationships with big institutional investors such as US Global, Sprott Asset Management and the Contrarian fund, just to mention a few.
Q: In your experience, which financial scheme suits Mexican mining exploration best and why?
A: I think that private placements and equity positions are the best options, while loans are probably the worst as they require a further revenue stream for their support. A financial involvement directly with the company relies on the success of the company as the economic driver of decisions. A junior mining company with too many loans outstanding is leaving itself at risk, so I would stay away from these and work more with equity financing.