Keeping Costs Low to Continue Exploration

Q: With a proven track record of over 50 years of entrepreneurship, how would you define your current record in the Mexican mining sector?

A: My father is the founder of the company, and after having started working in Mexico in the 1970s, he saw great geological potential there. When Almaden went public in 1986, one of the first things he did was to get involved in Mexico, and when the legislation change happened in Mexico in 1992, we were one of the first juniors to begin operating in the country. We had immediate success, especially with the acquisition of the La Trinidad project in Sinaloa. We then made a new conceptual discovery, Caballo Blanco, in Veracruz. We have been working in eastern Mexico ever since, and we believe that we know more about this part of Mexico geologically than most. Mexico has considerable geological potential, and has always been extremely open for prospectors like us to explore these regions. We certainly see ourselves as pioneers, and we feel we have a great deal of potential to go further. The interesting thing about Mexico is that there are areas that are misunderstood geologically, and that represents an opportunity.

Q: What drove you to explore the Tuligtic Project and the Ixtaca Deposit, and how has the project developed?

A: This project began because we felt the area had potential for epithermal deposits. However, there is no gold on the surface, only clay alteration. If there is clay, there is no guarantee of gold but we saw vast arrays of clay throughout eastern Mexico. Therefore in 2010, we decided to take a chance and ultimately had the fortune of hitting 300m of strong gold and silver mineralization. Caballo  Blanco was our first discovery, and although we have now sold that project, our sister company owns a royalty on it and so we are still involved. It is unique because it is right beside a highway and a power plant in a very well-known area of Mexico. There are roughly 1 million ounces within a kilometer of the highway, which is a perfect example of Mexico’s potential. Again, Ixtaca is 20km by paved road from an industrial park, and it has solid grades despite the fact it is located in a developed part of the country.

Q: What stage is the Ixtaca project at, and what needs to be done to move it into a commercial stage?

A: Unfortunately, since we made the discovery metal prices have fallen by 40 percent but luckily our new mine plan shows that even at these prices, the deposit is still economically viable. We are always looking for new opportunities, and in a downturn opportunities can be found that would not otherwise exist. For example, we found a used mill in Alaska, the construction of which had taken an investment of US$250 million. We were able to buy it for US$6.5 million ,and despite the shipping costs to Mexico, this will dramatically reduce the capital required to build the mine. The next steps are to produce more advanced studies, which will enable us to procure the production financing. Later this year, we expect to finish the next step, which is the pre-feasibility study.

Q: How has the current industry trend of reduced investment impacted your business model and targets?

A: Of course it is a challenging time. Ours was a blind discovery, meaning that it was not exposed at surface level but as a developer that has made a discovery we have had to focus on reducing the project’s risk. This is a change to the exploration mentality because unfortunately we do not currently have the luxury to focus as heavily on exploration as we would like. However, Almaden has tried to increase innovation through reducing the cost of exploration. We own our own geophysical equipment and we have a drilling team that is 100 percent Mexican, so we drill inexpensively, and all of those things combined mean that we are able to do more than what would otherwise be possible.