Transparent Strategy Results in Confident, Loyal Investors
STORY INLINE POST
Q: What is the chief reason why Sonoro Gold brought you back into the mining world John?
A: I have been overseeing the finance and development of mines globally since the 1980s and looking back there have always been five essential components to successful mining ventures. When I took a hard look at Sonoro, it was evident that it had all five. To begin with Sonoro already had a diversified and success-driven management and operations team with extensive expertise. That team was committed to what I consider the second component, that is, a potentially viable gold deposit; supported by a recently updated PEA And I anticipate the economics may improve as we work to advance the project. The third component is the share structure. The same talented management are major shareholders so they are motivated: Insiders hold over 26 percent of 143.47 million Issued and Outstanding shares. Sonoro also has a very loyal and sophisticated retail shareholder base across Canada, US, Germany and Switzerland. The fourth component is the Company itself which has developed a clear Business Plan and Execution Strategy to build a gold exploration and development company with as minimal shareholder dilution possible. The final component is the company’s ability to successfully secure equity funding which is evident in the millions of dollars we have raised to date.
Q: Why do you believe in these components and how is the company putting them into practice?
A: In my decades of experience with developing mining projects, it is evident, in my opinion, that the odds of success rise significantly if the company already has a resource with potential economic viability, such has been the case for Sonoro. As outlined in our updated PEA, the proposed project has a pre-tax NPV(5) estimated at USD $84.4 million with an IRR of 74.9 percent and an after-tax NPV(5) estimated at US$53.5 million with an IRR of 45.6 percent. Payback period of 2.2 years. SRK Consulting is currently updating the resource to include the most recent drilling, which contained multiple higher-grade intercepts and demonstrated the expansion of several known mineralized zones. It should be very interesting to see how things will change in the near term.
Q: What would you say has been the most significant recent challenge that the company has overcome recently?
A: The main challenge we have overcome recently has been shared with so many other junior exploration companies. Most of us in the sector have been forced to navigate very turbulent global markets with limited cash and nervous investor sentiment. That being said, having seen this before in our collective experience we are now at a point where we are working towards several key de-risking milestones. Our MIA environmental permitting approval process continues and we anticipate soon announcing an updated 43-101 resource estimation.
Q: Your share price has been relatively stable as compared to some of the others in the sector over the past year, what do you attribute this to?
A: I believe that there are two principal reasons. The first is our valuation, as our PEA indicated we have an estimated after- tax NPV(5) of US$53.5 million and yet our market capitalization is only around US$12 million. I believe this makes our shares a bargain and evidently many of our shareholders feel the same way. As we advance the project, we anticipate this should change and our share price start to reflect the intrinsic value of our Company and the Cerro Caliche project. The second reason is that we aim to be transparent and highly communicative with our stakeholders. We try to ensure our shareholders receive an accurate, consistent flow of information so they are aware of our development plans and understand the opportunity being a shareholder brings. We are very engaged with a large group of retail investors and use methods including Reddit AMA (Ask Me Anything) to engage with anyone who wants to learn more about what we are doing and why. As a result, a growing number of investors are aware of our strategy and the steps we are taking to turn Cerro Caliche into an operational mine. Our investor base and other stakeholders are loyal and confident in our future success as a result.
Q: What is the most important role that your experienced team plays in driving the company’s success and reputation?
A: We cover the spectrums from discovery to operations. For example, Mel Herdrick, our Vice President of Exploration, has been involved in discovering a half dozen major gold and copper deposits in northern Mexico and the Southwestern US. These include a 2-million-ounce gold deposit called the Los Planes and the La Colorada, which is now being mined by Argonaut Gold. Our Vice President of Operations, Jorge Diaz, has been developing and operating mines in Northern Mexico since the 1980s. One of the better-known mines is Alamos Gold's foundational Mulatos mine. The Mulatos mine has already produced more than 2 million ounces of gold. Our combined success is as a result of many years of proven results so it’s a great team to be a part of.
Q: How can investors, especially from Mexico, capitalize on the Cerro Caliche project and what are you doing to attract them?
A: As I mentioned earlier, I believe Sonoro shares are an exceptional value at this time. Quite often, in my experience, the actual development phase is characteristically a time when shares like ours trade sideways as there are few pivotal events that can be game changing. To many sophisticated investors, however, it is an ideal time to invest because the project is in the permitting phase and the path to a higher valuation, that is potentially going into production, is higher. We are currently working to secure the project financing required to actually build our planned mine. I am very committed to transitioning Sonoro from mine developer to gold producer, so this transition phase is sometimes seen as a good opportunity for investors. On top of this is the project’s potential for growth. We have only drilled a third of the known gold zones, so we have confidence that there is good potential for upward revaluation just from going into production with what we have now as well as to continue with the potential for more growth. I mentioned Mel Herdrick, who has half a dozen major gold and copper deposits over his notable career, he believes that we are just getting started. Our strategy remains constant: get into production to create cash flow so that we can organically fund further exploration & drilling campaigns to expand the company while minimizing dilution. This is intended to maximize the benefit to our shareholders.
Q: How is the company reaping the benefits of having a comprehensive business plan and an execution strategy that generates revenue within 24 months?
A: By having a strong business plan, we reduce the amount of money and time needed to begin gold production. Investors understand this and having a smaller first phase means less money is required, which in turn minimizes share dilution. Once in production, we later use the cash flow to grow organically. It is a very difficult market for any company that needs to raise money, so the closer we are to beginning to generate our own cash flow, the more valuable we should become. In addition, the principal benefit of having the back-up of a strong financial group (lenders and investors) is the ability to continue to raise money as we progress. It has been a very difficult market and we really stand out as a company that can finance its activities.
Q: What fundamentals make a company a success and how intrinsically is it related to the message you want to convey?
A: As I stated in the beginning, we have a strong management and technical team with a potentially economically viable project supported by a filed PEA, located in a mining friendly jurisdiction surrounded by excellent infrastructure and high-skilled workforce. The key message has three components. First, Sonoro is led by a team that has the required skills to transform the company into a successful producer. Second, as the PEA indicates, Cerro Caliche is a potentially viable project that we are committed to put into production. Third, we have completed multiple drilling campaigns and work programs at Cerro Caliche and are now in the permitting phase, working to secure financing. I believe our progress toward becoming a gold producer may only accelerate from here.