Gold-Silver Resource in Argentina, But Can the Grade Hold? | Fredonia Mining CEO Interview

Antonio (0:00)

This video is sponsored by Terrahutton, who makes the invisible, investible. Today, I'm going to CEO BBQ, Golden Silver Exploration and Development in Argentina, together with Fredonia Mining. But if you're short on time, subscribe to our free newsletter, and once a week, we'll send you a five-minute summary of all interviews we put out, resourcetalks.com for a free weekly newsletter. Now, although this company has not paid us for the production of this video, you should still understand that we are not financial advisors, and this is not intended as financial advice. It is a broad, general and in-personal piece of information intended only for those who know and understand the risks of junior mining, of which there are many. Before moving on, read the company's official filings on Sitterplus.ca and do your own due diligence. Pause the screen and read all the disclaimers I've shown you because your capital is at risk. If this isn't clear, go to the last section of this video for a longer explanation of the risks and biases, and do not consume this content if you don't agree with everything said therein. Moving on, flagship project for Fredonia is called El Dorado Monsterat, like El Dorado and the plant, I would assume, or EDM for short. Then they own 100 percent of this is a golden silver project. Again, it's in the Diceado, Mesif of Argentina's Santa Cruz province, specifically located about 17 kilometers west of AngloGold Ashanti, Cerro Vanguardia mine. EDM is a low-sulfidation epithermal golden silver system of veins, breaches and broad lower-grade mineralized zones that Fredonia is hoping can be a bulk tonnage open pit mine eventually. The latest resource estimate on the project is from this summer, actually, and it shows about 2.8 million ounces of gold equivalent at 0.68 grams of gold, plus another about a million ounces of gold equivalent in furred at just under half a gram of gold equivalent, with the equivalents being calculated at $4,000 gold, $70 silver, and they're assuming 85% recovery for gold and 80 for silver assumptions, which of course, I hope we can talk about later on in the conversation. That resource was also used to do a PEA in August this year, $3,800 gold and $45 silver modeling, again, a conventional open pit mining and heap leaching.

12,000 TPD average production of about 146,000 ounces of gold equivalent annually, happening over 17-year mine life and roughly 183,000 ounces annually during the first five years. CAPEX there for all that operation to make it happen was estimated at $350 million US dollars. And a post-tax NPV5 at a 10% discount came up at about a billion and a half with a 65% IRR. This whole mine plan, by the way, is based on only two parts of the project, specifically the main veins and then La Heredura. So Montserrat West was actually excluded because of its higher strip ratio, but that's something that I'm hoping we can touch upon later on in the conversation. On the ground right now, Fredonia is in in-field drilling and trying to increase the resource confidence alongside exploration drilling on some of the untested veins, which is also something that I think will get an update on in the latter part of the conversation. For some of the numbers and more details, Fredonia is listed as FRED, so that's F-R-E-D on the TSX Venture Exchange in Canada, where the average daily volume over the last three months has been about 220,000 units. A 52-week high is $1.05 and a 52-week low is $0.31.

With 82.5 million shares outstanding and a $59.5 million market cap today, this is a 72-cent stock. There are close to 20 million warrants outstanding, four million options as well, so the dilutive securities, when you count them up together, they represent about 22% of the 106 million shares on a fully dilutive basis. Last time they raised capital was about two weeks ago, actually, very recently, in late September, raising $11.5 million Canadian dollars at 65 cents with no warrant.

How much money have they got left right now? How far is it gonna get them? When are they gonna have to go back to the market?

As well as the capex and all the other financial questions, that's something that I'll be asking later on in the conversation. But for this to actually become a conversation though, I will have to shut up already, and gentlemen, I'll give you the word here, but first of all, thank you for sitting down with me today.

Ali Mahdavi (4:16)

Antonio, thank you for having us.

Just by way of introduction, I'm Ali Mahdavi. I'm the chair of the company, and joining us as Estanislao Auriemma, who's our CEO. The Auriemma family are synonymous with mining in Argentina, and Ricardo Auriemma, who happens to also be Estanis's father, is, I'd say, he's one of the individuals who I've considered the backbone of mining in Argentina, with deep relationships going back decades, whether it's within the private sector or the government. As far as the intelligence and facts and figures and assets in the Argentine, we couldn't be associated with a better family from a capital markets perspective than the Auriemma family. But I'll let Estanis introduce himself as well, and then we can give you a little bit of a summary on what we've done, what we're working on, if that sounds good.