Corporate Update: Tristar Gold
Trevor Hall Everybody welcome to Mining Stock Daily. This is Trevor Hall, reporting from the final day at the Denver Gold Forum and one of the last interviews I am conducting over the last couple of well, week and a half, over Beaver Creek and Denver Gold Forum is with Nick Appleyard. He is the President and CEO of TriStar Gold. TriStar trades on the TSX Venture with the symbol TSG. He's just informed me that they do not have an OTC ticker symbol yet but that is definitely in the works here shortly. Nick, nice to join you. How has the Denver Gold Forum been treating you thus far?
Nick Appleyard It's been really good so far. It's been a really good conference for us. Yeah thanks for having me.
Trevor Hall No, thank you for joining us. Give us a little bit of information about the project and operating in Brazil. I'm sure there's a number of listeners who may be unfamiliar with TriStar.
Nick Appleyard Okay, yeah so, we have one project very clear focused on Castelo de Sonhos which means Castle of Dreams, in central Brazil. It's paleoplacer, and I think the key on this project is simplicity. It's a simple project that's been growing from 280,000 ounces to now 2 million total ounces over the last two and a half years. We've now got a PEA with great economics and we've just had Royal Gold coming in by 1.5% royalty for $8 million U.S. So we've funded through feasibility. So it's a really simple story, it's really good.
Trevor Hall Tell us about the expansion and kind of how, what you had to do to undergo the going from 200,000 to 2 million ounces.
Nick Appleyard Yeah what we really had to do was understand the deposit. It is a paleoplacer. So once we understood that, once we understood that it's just an alluvial fan it became a really simple story of just drilling. Our first drill program we stepped up 400 meters a time, so five holes. We showed ourselves, convinced ourselves there’s two kilometers of strike, the mineralization, that we hit every single hole. So then it was a matter of getting support for some really good institutions like U.S. Global, Gold 2000 and obviously they funded us to do that infill drilling and grow that resource.
Trevor Hall And you did come out with your PEA recently. It shows 1.1 million ounces of gold produced at a base case of $1250, so very reasonable numbers. Now that we're basically looking at $1500 gold right now, we'll see if that remains. A 51% IRR, that's pre-tax but one thing I wanted to ask you was the $184 million initial CapEx. As you continue to move forward, do you see opportunities to even lower that CapEx even more.
Nick Appleyard I don't think you'll probably lower it. I think as you grow the project, it may you know, the project will probably get a little bit bigger so that will probably go up a little bit but not much. I think that is for a project that's going to be producing close to 150,000 ounces a year for a long time, it's not a high CapEx and part of the reason for that is infrastructure runs right by the projects. We have highway, we have power. I mean we have an expiration camp that already runs on grid power. So we're really really lucky in that sense.
Trevor Hall And you're all in sustaining costs. I mean, you're just looking at $687 per ounce. I mean, obviously really good margins no matter where you look.
Nick Appleyard Absolutely. It's just, it's it's a stellar project and it comes back to that simplicity. Simple metallurgy, 98% recovery, no sulfides, no clay, no arsenic, environmentally very very clean. And shallow open pits, 100m deep pits, 6km long. That's really what we're looking at.
Trevor Hall Another--we're just kind of stepping foot into a bull market in the precious metal sector. I want you to take a step back and give me a rundown of how you manage TriStar through what was a really tough bear market in the precious metals. What was your strategy to at least get you here and maintain as a company.
Nick Appleyard That's a really good question. Our strategy was keeping our head down and doing really really good quality work. And that allowed us to attract those quality funds who are run by really good technical people so they could recognize what we were doing. So that's really the key to what we did. We got we put our heads down. Internally we sort of joked but it was very serious as well that every time a budget issue came up, we knew that a drill hole was $14,000 and if someone said, "Go to this conference.." or "We've got to do this marketing..." or go and do this whatever. We would put that into drill holes and go do we want to do that or do want to drill another hole. And every single time it was drill another hole. So, that's really it. Focus. Continue to move and do quality work to help attract these quality investors who got us through.
Trevor Hall And you did bring $8 million dollars through an agreement with Royal Gold. Can you please give us kind of a description of that agreement and everything that entails.
Nick Appleyard Absolutely. That is again, it's a really nice validation we're ecstatically happy to have some of the quality of Royal Gold coming in. And again that goes back to our key of doing quality work and that it attracts quality people. They have acquired a 1.5% NSR on the whole property for $8 million U.S. They've also required the $8 million is used. To complete a prefeasibility study so we've embarked on that now. We started drilling last week. And that will be completed by the end of next year.
Trevor Hall So a number of infill drilling to further define the resource.
Nick Appleyard Yes. 20,000m of infill RC drilling which should be completed round February-March next year.
Trevor Hall And what's the timeline for the PFS.
Nick Appleyard If we complete drilling in February or March, I think we'll be announcing updated resources with high confidence levels mid-year and then the PFS is Q4 next year.
Trevor Hall So a little over a year from now.
Nick Appleyard Absolutely. Yeah, these things aren't too quick.
Trevor Hall And do you think on top of that $8 million that Royal Gold has granted you to get you to PFS stage and complete that, what other money do you have in the treasury right now?
That's effectively what we have right now. That that's all of the money we have is earmarked onto this PFS right now.
Trevor Hall Do you foresee any money leftover up to the PFS stage a year from now or do you think will you have to go back to the markets to raise?
Nick Appleyard We see we have quite a few warrants out there which will come into the money fairly soon hopefully. And yeah, we will see ourselves go into the market as opportunities come over the next twelve months.
Trevor Hall One last question just about operating in Brazil. I know there was elections I believe as last year and a lot of the people who invest in resources were kind of a little on the totter of you know if it was a good thing or a bad thing. But can you give us an update as a CEO of an exploration development company operating in Brazil what your stance is?
Nick Appleyard Yeah. With the new president is definitely very pro-business, pro-development. And I think he is very pro-responsible development, and this is the issue we see a lot with Brazil--the burning of the Amazon. There's a lot of irresponsible development which is bad for Brazil, it's bad for the world. So I think he is really trying to push responsible development and which is what we're trying to bring to them. And we are seeing a greater level of responsiveness from the permitting from the agencies that run mining within Brazil because of his input.
Trevor Hall For shareholders or people interested in the company, over the next well the remainder of the year, what are some things you're going to be putting out there that might be catalysts for the company and its share price?
Nick Appleyard As you hinted at earlier, we are in the process of going for an OTC listing. I think that will be quite important for us because that allows U.S. people to buy shares a lot easier. We will be obviously putting drill results out as they come, the logical results as they come and any state--any advances in permitting. But really, it's the anticipation building for the new resource and the feasibility study.
Trevor Hall Thanks Nick, I appreciate your time and safe travels to you know wherever you're heading next.
Nick Appleyard Home to Arizona then off to Brazil very shortly.
Trevor Hall It sounds like you have an Arizona accent. (Laughter) That's Nick Appleyard. He is the president and CEO of TriStar Gold which is traded on the TSX Venture with the symbol TSG.