Q: What factors have helped you to outperform some of your peers?

DR: There are two factors behind our performance. One, we are on the cusp of transitioning from developer to a producer this year. Many of our peers will remain developers for some years to come. The other factor is that we did what we said we would. We delivered on every goal, sometimes even ahead of schedule. By getting the basics right, we created the credibility needed to build gold mines.

In terms of overcoming hurdles, the permitting process in 2019 did not take any longer than it would have in a non-election year. The only difference was during the few months when the government changed and new bureaucrats were assigned to service the mining industry, which slowed things down a bit. The permitting process works very well in Mexico. We agree with the requirement to possess the social license before the process even starts. The government knows that system is conducive to investments.

Q: How has your relationship with the community around Santana evolved over the last year?

DR: The community had never been involved with mining projects in the past. We have taken the time to collaborate and educate communities on our project’s phases. There will be land disturbances and we do not want to create surprises. We want to build a long-term relationship. Our permit agreement states that we need to hire about 95 percent of local workers where possible. Collaborating with Mexico and its communities was always the goal. We are proud that this target was easy to achieve.

FA: The community is used to going elsewhere to find work. Our mining project creates jobs, which creates long-term perspectives. The salaries are good, and the community will now have formal work and associated benefits. Community leaders are asking us to start as soon as possible because it will attract young people back. Our relationship with them is excellent.

Q: Can you tell us about the development of Santana?

DR: Once we are up and running, the business model is to deploy cash flow from the operation into exploration.  A mining contractor will operate the entire mine. We did purchase a crushing system and in time we will likely do the crushing where required in-house and further reduce operating costs.

FA: Contractors are not obliged to hire local personnel. They know what they need to do and how to stay within budget. We are optimistic they will finish on time. There will be two main contractors, one for infrastructure and the other for the mine. We will have to decide who does what very soon, but it is a tough decision.

Q: Your crushing system comes from Mako Mining and Marlin. Why did you choose them for your Santana project?

DR: We were aware that they were getting out of an operation in Mexico to focus on Nicaragua. They had moved the entire crushing circuit back to the US for storage. We were able take advantage of the situation, which is part of the company’s strategy. We were able to pick it up for C$1.2 million. The deal was finalized in early 2020. Our goal is always to keep operational and capital costs down.

For these costs, we are talking about an AISC in the low the US$900s per ounce during startup, where production is slightly more modest. As we scale up Santana, with 45,000 to 50,000 ounces per year, we will see the AISC drop to around US$800 or the high US$700s. There is not a lot of sustaining capital with heap leach operations, so this is great. It is key to have a sustainable business model that still works at US$1,200 gold. In the end, we hope for better figures but it is better to under-promise and then over-deliver. The business model allows us not to have to rush or rely on ever-higher gold prices. Nonetheless, we can get to production quite soon and will be able to take advantage of current prices.

The main resource is hosted in just one or two breccia pipes. We have identified six to eight of them on the property and will drill test a lot of them this year. Santana could grow to 80,000 or even 100,000 ounces a year from three separate pipes. There is upside exploration potential. We will see the results soon but we have already identified a path upward. It was originally seen as the engine to get cash flow and take debt on a second project, so this is a positive contributor. The initial mine life is between 8 to 10 years, which means it has a great deal of potential. The area has not been properly explored, so in due course there could be more mining in the area. If it spawns more projects from other companies, the entire area can become self-sufficient.

Q: How will you further finance La Fortuna?

DR: It is such an attractive project that we have received offers of debt on rather favorable terms. We are a few months of due diligence away from finalizing these terms. The debt would be around US$20 million. The equity component is Santana’s cash flow. A combination of those two means we can largely fund Fortuna without additional equity raising. Getting to 100,000 ounces a year is achievable. 2021 will be the first full year of production, which will start by the end of 2020 or very early in 2021.

Q: How do you measure success?

DR: Successful execution is measured in different ways. Happiness for everyone on site and bringing industry to the local community can be seen as success. If we tick our internal boxes, it will be a multilayered type of success. Slow and steady wins the race. If we manage to get up to 200,000 ounces a year with our cost structure, the company could be worth a great deal more. A billion-dollar company is not unthinkable. Leagold and Equinox are good examples to look to in terms of building an operation from the ground up. As a team, there is a sense of fun and adventure, looking toward the future. We love operating in Mexico and are excited to build more mines after we complete our current projects.