Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of American Pacific Mining Corp. (USGD:CSE;USGDF:OTCPK) and the president of American Pacific Mining, Warwick Smith and Eric Saderholm, respectively. Gentlemen, how are you doing this morning?
Warwick Smith: Good. Thanks very much for having us.
Gerardo Del Real: Now, Eric, a brief introduction on your background. I know that you're a venture capitalist, I know that you've specialized in corporate finance and development for publicly traded companies. I would love if you could share just a tad bit more about your background and some of the companies you've been involved with.
Warwick Smith: I'd be happy to do so. I got involved in corporate finance, mostly on the mining side for most of my career. I got started in about 1999, had the good pleasure of working with Simon Ridgway's group for about 10 years. I got a chance to see some success with Fortuna Silver Mines, started with Fortuna Silver when it was a shell, it was about a $4 million dollar market cap at that time, and I think it has over a billion dollar valuation now. We saw some nice success there.
Had similar success in a company called Northland Resources, although that was shorter lived. It was an enjoyable time and it did very well. From there I helped found a company called Riverside Resources run by John-Mark Staude now. He's doing a great job and really banging away in Mexico. And then teamed up with Eric in 2010 on a company called Western Pacific. We worked together there until about 2014, at which point I took a little bit of time off and Eric went back to Newmont, having great success with Newmont. We had always talked about teaming up again and we were lucky enough to be put in touch together by NOVO to see the Tuscarora asset and decided it was time to team back up. So here we are and took American Pacific Public in March of this year.
Gerardo Del Real: Eric, it was mentioned that you were with Newmont and I understand that you were there for a total of 15 years I think and two different stints. Is that accurate?
Eric Saderholm: That's correct. I started there in 1994 and then left for the junior market to go work with Rob McEwen at US Gold in 2006. I went on my own in 2008 and then Warwick and I teamed up in 2010. I went back to Newmont in 2016 and became the Manager for Exploration for the Western U.S. I enjoyed it a lot, but I had an agenda when I went and I think we accomplished it. When Warwick and I had this opportunity—I think we make a good team—I jumped ship and came back to work with Warwick.
Gerardo Del Real: Eric, you being the Carlin Trend Exploration Manager and Regional Geologist is important for the flagship. Let's talk about the flagship, which, of course, you just mentioned. It's the Tuscarora Project. It's a high-grade gold prospect. It's located between two major gold trends in Nevada. Can you tell me a bit more about the project?
Eric Saderholm: It's unique in the fact that it's an epithermal high-level system. So it's a vein system, coarse gold, high grade. But the age of the mineralization is 39 million, which makes it about the same age as the Carlin mineralization. So it's unique in that fashion. About that time, 39 million to 42 million years ago, is when probably 300 million ounces of gold was pumped into the crust. And I don't think anyone knows exactly why, but the Cortez Trend, the Carlin Trend, and the Tuscarora area all got mineralized about the same time. So a tremendous influx of metal and that sets it apart from the smaller deposits around. It has potential to have a much bigger budget; it's just a matter of exploring it well and staying funded and drilling and exploring.
Gerardo Del Real: That's important, and another important point I understand is that the project has been drilled before by both NOVO and Newcrest. Is that accurate?
Eric Saderholm: Yes. It has been drilled by Newcrest and NOVO. In 1998, Newcrest decided to explore down into the gravel cover to try to find the high-grade Navajo vein. They were successful. They eventually walked away from the project as they became more focused on Australia and that's exactly what happened to NOVO 18 years later. Quinton Hennigh, who did the drilling for Newcrest, came back and drilled some holes, had some success. And then the Australian projects that NOVO currently have, have taken their resources away from Nevada.
Gerardo Del Real: Were you able to access some of the data?
Eric Saderholm: Yes, we have data from a lot of different companies. We have Newcrest data, we have Terraco. There's a bunch of companies that had the project. The good and the bad of it is between Newcrest and NOVO, people owned it, companies owned it, Golden Predator, a few others. But they didn't do anything with it. They didn't drill. Had they drilled, it could be much more advanced right now. It's been sitting here ready for us to go with, since it is our main property. Other people have property here or property there, this thing just sort of sat on the back shelf for whatever reason. When I look at it—I'm looking at maps right now as I'm sitting here in my truck—it's wide open in a lot of areas. The gravel cover is generally anywhere between 0 and 250 feet thick, on top of these veins is a blessing in disguise, because had this kind of vein material been exposed at the surface it would have been mined a long time ago.
Gerardo Del Real: That's fascinating.
Warwick Smith: It's worth mentioning, I think what got Eric and I so excited about this project was Newcrest and NOVO's drilling. When they drilled it they hit spectacular grades. Newcrest had a meter and a half of 180 grams per tonne gold. NOVO went in, they drilled a meter and a half of 142 grams per tonne gold, 3 meters of 75 grams per tonne. Just spectacular grades that really caught our eye. We've gone in and just finished up 10,000 feet of drilling ourselves. And we put up the first few results. We're just finding that these grades are off the charts for what you typically seeing in Nevada right now. We're thrilled with what we're getting and that was really what caught our eye on this project.
Gerardo Del Real: I love that you answered the question that I was about to ask, because I was going to reference those 2016 results and the historic 1998 results. The grades are absolutely spectacular, let me just read some off. You read a couple. 1.5 meters of 180 grams per tonne back in 1998. 1.5 meters of 30 grams per tonne back in 1998. 3.1 meters of 74.18 grams per tonne in 2016. And 1.5 meters, as you mentioned, of 143.5 grams per tonne gold. That's absolutely spectacular.
What's the approach? You mentioned drilling, you mentioned that we've had some assays, the first assays that were released. You had 3 meters of 9.39 grams per tonne of gold, including 1.5 meters of 16 grams per tonne gold. So obviously the grades can be spectacular. Are you finding enough of it thus far? Is the continuity what you hoped for up until now?
Eric Saderholm: Well, any type of vein system that's this rich, a lot of the times it's almost like a string of pearls.
You wind up with a little bit of grade—2, 3 or 4 grams. And then it will blow into a real high-grade thing. I'll be honest, a couple holes were disappointing. But other holes that were kind of more exploration, where we drilled into places that had not been drilled before by NOVO or Newcrest, have hit really good grades. As it currently sits, I'm real pleased with the Navajo vein. What I'm more pleased about though, after looking at the data, is that we have 12 vein sets that all move into the gravel. They're all covered by generally pretty shallow gravel. And none of those have been tested except for the Navajo.
So, with those 12 remaining it's going to take some work, absolutely. But we can refine it, we're going to do some geophysics that's very, very detailed and see if we can't pick out the silica and clay which defines these structures. And then we think we can march across the district, which is very wide. We tripled the land package that NOVO had because when we started looking at the projection of all these veins we realized that it was too limited. We needed to make it bigger or we were going to have neighbors and then we'd have to deal with them later. So we just staked it all up, so we have a really handsome land package here that is just screaming to get after and explore on.
Warwick Smith: Let me just expand on that. One of the points we really want to get across to the market is this. We're thrilled with what we're seeing in Navajo and we think there's going to be X number of ounces on Navajo. We have a number in mind that we're shooting to get to. But, Navajo is 1/15th of the size of our project and we're going to project that there's another 11 vein sets that run across the project. We're going to release those maps as we go along here before this interview comes out. It will list all the things that will come through it. For example, Newcrest drilled a couple of holes on one of the other veins called East Pediment, they drilled them blind. They were able to hit 3 meters at 26 grams out there.
So, you start looking at all these other vein sets, you can see this is how this project gets big, and that's what's really starting to become the excitement for us. It's not just a Navajo vein where we're getting these great grades, but the global picture of the whole project.
Gerardo Del Real: You mention the large land package and you mention gravel. Are a lot of these targets blind targets?
Eric Saderholm: For the most part these targets are. They're blind underneath the gravel, but what's nice is that you can go up on the hill and then project these veins out. And the old timers, this was mined mainly in 1870 and 1905, so some of the techniques of mining were just visual. You just went, went and went. And if you hit some of these cross faults—which actually enhance the mineralization values, but they also do cut it off and bend the vein a bit—when they lost them, they just went to another vein.
Had they been able to mine and continue to mine and find these veins moving out of the gravel, they would have mined them all out. But what they did is they hit the gravel, they had some confusion, they got befuddled. They went somewhere else to mine and left those, for the most part, unmined out in the valley. But it's not like it's really deep, and it's not wet either, that's the good thing about our drilling, it shows the water table much lower than we thought. It's about 500 feet deep, so the majority of the mineralization that we're hitting is above the water table, making very easy to mine, and very easy to capitalize and get in and get going on. If it was wet, it would be a lot more of a pain to permit and actually get in and de-water and mine it.
Gerardo Del Real: Looking ahead, that's an excellent point because we've seen companies nearby that they have excellent assays and excellent grade, and then they get to that water table and that can be tough really quick.
Eric Saderholm: Warwick and I were talking just before we got on here about the projects remaining in Nevada. It's still a great place to be, it's a great place to permit, the infrastructure is there, your mining group is there, your expertise is there. But just about every property I can think of—and I can think of a lot of them, that was my last job was to do exactly that—has some sort of encumbrance or some sort of challenge. Either too wet, it's silica encapsulated, it's too deep, it's in a wilderness study area, or some other thing.
This one really doesn't, it's just a matter of finding the tonnages and the grades. The grades are there, it's the tonnage. If you can find that, this thing is going to be pretty easy to get going, because it's just sitting out on BLM (Bureau of Land Management) ground. It's going to be pretty easy to get going, if it's an underground mine or even an open pit, which I think it has potential of being. It already has a small open pit that was mined in the 1980s, so it's proven that that can be a possible mining style.
But this is a good place to be, just because of the fact that it's open ground and it's going to be pretty easy to get going. You're not going to be buying land from anybody and all the surrounding people who own the ranches are very open to leasing. So, if your mineralization projects onto their ground, I don't think there will be any issue with an honest lease to get in and explore their property.
Gerardo Del Real: Excellent. How's the share structure?
Warwick Smith: We've got 32 million shares out and about $2 million dollars in cash, at the moment. So we just finished 10,000 feet of drilling. As I said, there's $2 million in cash left, so we've got a good-sized treasury, and we've got 32 million shares. As I said, the company just went public in March. So we're fairly new at this moment.
Gerardo Del Real: What's the plan moving forward?
Warwick Smith: The plan for us is to finish getting these holes out that we've drilled. We've put out 5 of the 16 holes that we're going to announce, there's still 11 to follow. We'll get those out, we'll start building out a 3-D model, which we've already started to do with the historical information that we have. We'll add in the holes as we get them coming in. And then at least for July and August, Eric and I will be spending a bit of time on the road and getting out telling investors about the company. And then come September we'll be back out drilling, and getting after that East Pediment a little bit, which is one of the other vein systems. And then evaluating where we're going to drill on the other known veins that we want to get after.
Gerardo Del Real: Well, you've got a ton of experience, you got a great share structure, you're obviously in the right jurisdiction in Nevada. Thus far the grades have been spectacular, so I'm looking forward at seeing the tonnage add up, and obviously the follow up to this drilling program. Is there anything else that either of you would like to add?
Warwick Smith: I suppose the only thing I would say is that we've been lucky enough to have some good board members join the team. Ken Cunningham has been a fantastic director for us, he ran Miranda Gold for years. We've got Ralph Rushton and Joness Lang who are sitting advisors as well, so you know we're in good hands. We're really happy with the team we have and the guys that we can rely upon as we move this forward. So we're really excited, really looking forward to releasing the rest of the results, and then getting back out with a drill and moving this project forward.
Gerardo Del Real: Eric, anything on your end that you'd like to add?
Eric Saderholm: Warwick pretty much covered it. I think we're pretty much excited to have this asset in front of us, and now it's a matter of treating it kindly and treating it with proper respect, and getting out and exploring it and finding more gold.
Gerardo Del Real: Spoken like a true geologist. Gentlemen, thank you so much for your time. I appreciate it.
Warwick Smith: We appreciate it, thank you so much.
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. He brings his extensive experience to the public through Outsider Club, Resource Stock Digest, Junior Mining Monthly, and Junior Mining Trader.
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1) Warwick Smith and Eric Saderholm: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: American Pacific Mining. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: American Pacific Mining.
2) Gerardo Del Real: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. My company currently has a financial relationship with the following companies mentioned in this article: American Pacific Mining is an advertiser on Resource Stock Digest.
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