In-Depth with Pacific Empire Minerals CEO, Brad Peters

Trevor Hall: Welcome to Mining Stock Daily. This is Trevor Hall and today is Friday August 16th. Thank you so much for tuning in. We have an in-depth interview today with one of our sponsors, the CEO of Pacific Empire Minerals, Mr. Brad Peters. Brad takes us in-depth on why the company has decided to focus their strategy with the Pinnacle Reef Porphyry Project in central BC. They are mobilizing the reverse circulation drill from the Bulkley Initiative over into this other project. Listen as we go in depth with them about that. Trevor Hall: Before we get started, I want to give a special thanks to all of our sponsors including Pacific Empire Minerals. That includes Integra Resources, Western Copper and Gold, and Minera Alamos. Trevor Hall: Minera Alamos also had news out actually yesterday, which we were not able to put on yesterday's show. They put out their strategy for the Phase 2 of their drilling project at Santana, which is exciting news. You may look to get into their press release and more information about that if you've missed it. Trevor Hall: Joining me today on Mining Stock Daily and our Friday in-depth interview is the CEO of Pacific Empire Minerals named Brad Peters. Brad, thank you for joining us. And thank you for your support with Mining Stock Daily, I am glad we could have you on as a sponsor. Brad Peters: Our pleasure, thank you Trevor. Trevor Hall: We've got a number of things to cover. We had pretty big news from PEMC earlier this week. Seems like you announced that the company is going to refocus its attention onto the Pinnacle Porphyry Project in central British Columbia. This area includes both the NWT and Pinnacle Reef properties, which covers about over 14,000 hectares of land area. Brad, please give us an understanding of this change in strategy? Brad Peters: Yes. We did announce that we are shifting our focus to this this project area but this isn't a change in strategy for the company. Our strategy has always been to use reverse circulation drilling to advance our projects and we at Pacific Empire have relatively rigid criteria for continued drilling. Although we were seeing anomalous copper and molybdenum in the Bulkley area with drilling this year, the grade intervals that were returned from partner-funded drilling at the Pinnacle over the last five years was just something that could not be ignored by us after getting the project back. Brad Peters: In addition, the presence of gold on that property is very intriguing. Looking at the current gold market and results at the Bulkley, it was really a no-brainer when we decided that this was the best use of our funds. Trevor Hall: And the Pinnacle Reef has some recent exploration history. You guys staked it back in 2012, I believe. Can you walk us through the history of this project and some of the results from those exploration activities? Brad Peters: Absolutely. You're correct, we did stake the property. The Pinnacle Reef project was staked by us back in 2012. it was the first property that we put into the company, in fact. We selected the the target area based on regional scale geophysical interpretations that suggested this area is centered on a very large regional flexure. Since the area is very low-lying, there are swamps and very little work had ever taken place here. At the time, we made a deal with our partner Oz Minerals on the Pinnacle Reef. They were the first partner to come there in 2014. For us, this was really the perfect project. For them, one of their criteria is that if you're looking for a large near-surface copper gold porphyry system then the best place to look is really under 10 meters of cover, so this was ideally suited for Oz and they were the first partner we had. Brad Peters: Oz Minerals advanced the Pinnacle Reef project. They had it through 2014 and 2015. They were a fantastic partner here for us and really got things rolling on the property with the completion of three IP surveys over three areas that were probably separated by five kilometers each. All the results from these initial IP surveys showed us that there were chargeability anomalies at all three locations. Brad Peters: They selected two of those locations -- the Elbow and the Sooner -- for follow-up diamond drilling. The follow-up diamond drilling in 2015 was the first time anybody had ever drilled any diamond holes in this area. The first hole they drilled at the Elbow Zone returned 94 meters at 0.33 g/t Au, zero point three three grams gold. Brad Peters: Additional drilling in this area by the next partner, ML Gold, again intersected highly anomalous gold over intervals ranging from 50 to 100 meters. In many cases, these were right at surface. This was in 2015 with ML Gold when they began drilling. They also drilled the Sooner area. They put three holes in there, which is just to the west of Elbow. Two of the three holes returned copper intervals. They're ranging on the order of 100 to 230 meters, which is well in excess of our minimum threshold criteria. Those results were a big part of the reason why we are looking at the Pinnacle project as the immediate focus. Brad Peters: Oz returned the property to us in 2015, when ML Gold came in and picked it up. They picked up the property and continued diamond drilling. They did more geophysics in 2016 and completed three diamond holes at the Elbow. Again, they foundd more gold to the south of the Oz Drilling area, which was also very close to surface -- just under cover. Brad Peters: Again, in 2017, ML Gold went back to an area to the north called Aplite Creek and they drilled a number of holes in that area as well with anomalous copper and gold but certainly not as interesting as the results we'd seen to the South Elbow and Sooner zones. Brad Peters: To summarize, we have now compiled all the IP chargeability surveys in the area and it's really clear to us that the original anomalies defined by Oz Minerals back in 2014 are not individual discrete anomalies. It's clear to us now that these anomalies make up a much larger area of anomalous chargeability and that's going to be our focus here going forward. Trevor Hall: I wanted to ask you about the decision you made as the CEO of this company. As a project generator working through a tough market, which it seems like we're just getting out of based on the precious metals prices. How difficult of a decision was it for you and your team to go to the board and say we were excited about working the Bulkley Initiative in the first half of the year and now we want to transition over to this new project. Can you walk us through how you made that decision and what the board may have thought about that? Brad Peters: Yes, absolutely. As preface, we are in a very fortunate position. If somebody asks us what we're looking for on a property then the answer should never be, "It depends." As I mentioned, we have very strict threshold criteria for drilling and we have to meet that in order to continue drilling. We know exactly what we're looking for in terms of parts-per-million copper and parts per billion gold over a hundred meters, say. In a sense, the decision is very easy. If you have those criteria and that structure in place prior to drilling within a narrowly-defined search space, then you know what you need to see to continue. It's actually a pretty simple decision. That's important for us because one of the most difficult decisions you can make as a CEO isn't to continue drilling -- it's to know when to stop! When do you stop the drill? When do you re-position the drill? When I presented that, the feedback was pretty simple. Everybody understood that this is what we're looking for and we weren't seeing it at the Bulkley in our first pass through our highest ranking targets. Brad Peters: Contrast that with what we have on the Pinnacle here over the last five years. The vast majority of holes had not just been met, but had been exceeded. Drill results were very significantly above our minimum threshold criteria. It was really an easy decision. I think the decision was easy because of the structures we have in place. Trevor Hall: And it probably is one of the fortunate outcomes of being a company that has multiple projects in their portfolio, right. Brad Peters: Exactly. If we're seeing precious metals move into more of a bull market while copper, unfortunately, continues to be suppressed through the trade talks, then we are able to be versatile. These are some of the strengths of the company. Brad Peters: There are certain aspects of the prospect generator model that we absolutely love. This is one of them -- flexibility. One of the criticisms I think we have with the generator business model: they don't drill. You lose the flexibility if you're not drilling. Of course, if you are going to drill as a generator then diamond drilling is just cost prohibitive on the level that we would like to do. That's a big thing for us. The ability to drill gives us those options and flexibility. Trevor Hall: I know you are very excited about the Pinnacle Reef property now, but I want to ask -- what can you tell investors about where this leaves you and the Bulkley copper-gold project? It was your main focus the first half of this year, but now that we know your attention has shifted. Can we expect more news flow out of Bulkley from this point moving forward? Brad Peters: Good question. We tested our highest ranking targets and we did not see what we were looking to see. There are targets, absolutely, that remain and we have all of our permits in place. I suspect what we will do is based on what we see from drilling at the Pinnacle project over the next several months. We will take the data from both projects and make a decision over the winter as to how to proceed. There are targets remaining at the Bulkley. I would suspect that we'll probably go back there to test one or two of them next year. I don't think we will do a full program there next year, although things could change as it depends on what we see from the from the laboratory here. I would suspect that there's probably two or three target areas that we'd like to have a look at and put a drill into -- I would call them secondary targets for next year. Trevor Hall: And where's the drill now? You are currently mobilizing. What kind of news flow can shareholders expect from the new Pinnacle project? Brad Peters: Well, it's "new" in a sense. We did join the two projects together -- the NWT and Pinnacle Reef. We linked them with some staking and then added some ground to the south. We've de-mobilized the drill from our Bulkley property and it's in storage in the Prince George area for the time being. The boys brought the drill back and picked up the stuff for our camp at the Pinnacle property. They're en-route there now. They'll have a preliminary camp in place shortly. What can we expect from PEMC in the near future? News that I'm looking forward to is we'll be flying a geophysical crew in for an IP survey here at the Pinnacle North project area. That will take place here over probably the next ten days to two weeks, something in that timeframe. This is an area where we we did a high-resolution airborne magnetic survey earlier this year and results looked interesting. We're looking to see here if this area of anomalous chargeability shown in previous surveys done by Oz Minerals and ML Gold at the Pinnacle extends further to the north or not. We are searching to see if the chargeability extends much further to the north, in fact. If we can come back here with positive results from the IP survey then I think that would be a very interesting situation for this property. It would open up a very large area to new explorationn -- prospective exploration in the sense that where we've done these IP surveys that have shown good results in drilling. What we are seeing is sulphide in bedrock, whether it's pyrite with gold or pyrite with copper. The chargeability signatures that we are seeing are not from sedimentary rocks, such argilites. The chargeability anomalies in this area are from sulphides in bedrock, which is exactly what we're looking for. I would think results from the IP survey would come out here probably in a couple weeks or something like that. Then, following that, we would announce that the drilling has begun. I would expect drilling to start up here in early- to mid-October, something like that. We are in an area that is favourable for drilling. Brad Peters: We are very fortunate at Pinnacle -- it's a great example of why we love some of these flat areas that have been logged. This is an ideal winter drill location. We have the ability to operate 12 months a year here, which is something we're looking forward to. If we can keep having news flow throughout the winter, then I think that would be important for us. We look forward to generating that news flow for our shareholders. Trevor Hall: And we'll be sure to report that here on Mining Stock Daily, as well. Let's move on to some overall market questions, if you don't mind. What are your thoughts on the overall copper market recently, given the downtrend in the price of the metal? Do you think it always seems to be due to these trade conflicts happening between the US and China? Brad Peters: I'll admit that I'm not an expert, but I do listen to a wide variety of opinions. It would be my opinion that the trade talks are, undoubtedly, are having an impact. I think there's also a component we're seeing more of now -- there is a slowdown in economic growth in Europe and some of the larger economies. Now, people are wondering if the slowdown is a result of trade talks? I'm not sure, but I look at copper in a sense that it's absolutely necessary going forward for a green economy. There may be a bit of a rubber band effect, if you will, with the price being suppressed. If trade talks were to get resolved or there are other changes politically, then copper prices could certainly be lifted. We're very bullish on copper going forward, but we have to keep in mind that not everything goes up in a straight line. Trevor Hall: How are you balancing the copper versus gold aspect of your business model right now? Brad Peters: That was basically the question we asked ourselves when we first started the company! We identified the two commodities that we wanted to focus on, which were copper and gold for the reasons that they tended to act as a bit of a counterbalance in certain conditions. When copper is under pressure, gold does well. And vice-versa. That leads into one of the reasons we've targeted British Columbia, too. There are many reasons for that, but one of them is because the porphyry deposits that we have in BC here have the potential to be gold-rich copper systems. We are seeking exposure to deposits that have both copper and gold as the primary commodities because we thought that would address that fundamental issue. If we have both commodities, then there is some protection and hedge depending on financial conditions and the overall market outlook. Trevor Hall: Thanks, Brad. I wanted to ask about when the company became a publicly traded entity, I believe it was a year and a half ago when a Pacific Empire finally hit the publicly traded markets -- March of 2018. I remember having a discussion with you in Vancouver during Roundup right before that happened. Things were optimistic then but we didn't really understand just how bad things were going to get in the metals sector. Obviously, it's been tough for project generators and any junior mining entity. Do you do you see this trend breaking anytime soon? I know we're starting to see the producers and some of the mid-tier precious metal companies starting to move upward, but there's still some discussion about consolidation with the miners that could happen here sooner rather than later. A lot of the juniors were seeing some of them starting to move up a little bit in this cycle but the the prospect generators haven't seen that love yet. Do you see this trend breaking anytime soon and how do you compare to prepare Pacific Empire? Brad Peters: No, I don't see it really changing in the near-term. Certainly, the traditional generator business model is really designed to do best in very robust markets where they're able to get great deals on properties when everybody wants their properties and they can farm all of their properties out. We have positioned the company from its inception to be able to operate and withstand what we call the new normal. Brad Peters: If we can move forward and advance projects in a cost-effective way in these less-than-robust markets, then we should be very well positioned for markets that are robust. That's one of the issues with the generators, right now. Generally speaking, leverage in a deal is a function of drilling. It becomes very difficult to get the type of deals that we're looking for without drilling. Just looking at a few deals the other day, I saw news where a company was taking 100% of another prospect generator's project. It's always been our strategy to retain a maximum interest in the project for the maximum amount of time and you have to drill in order to do that. We love the prospect generator business model, but we asked ourselves if prospect generators could afford to drill at a low price -- how would this affect the prospect generator business model? For us, the answer changes it tremendously. For us, it's important that we are able to drill at a low cost because investors want to see a company have the maximum exposure to a project. If we option a property or have a partner take a property in a deal that leaves us with only the royalty, then it's understandable that the generators wouldn't get a lift in a market that's more active and robust. They can get left behind just because they don't have as much exposure to the project. Brad Peters: We believe that if we could achieve low-cost drilling then that would give us the ability to have the leverage to retain the maximum interest in a property following discovery. If we bring in a partner for a project where the market provides some amount of money for a couple diamond diamond rigs to go to work on the property following successful RC drilling by us on the project, then we're in a position to benefit from that. Being able to drill gives us flexibility and leverage. It's something that we've always felt is important to the generator business model. Brad Peters: At its core, we've always felt the generator business model is about turnover of projects. You have to recognize that it does take turnover. You have to go through projects and that's where you need multiple partners to advance different projects. In a slow market, you're not going to have five, six, seven, eight, or nine projects advancing simultaneously if those projects don't have drilling. To address that, we brought in our RC drill. Trevor Hall: It certainly seems to de-risk projects for those potential partners who might be coming in looking at some of your properties. It's a very important piece of machinery and maybe you'll move it up to management sometime soon! Brad, that's all the time we have. I do want to give you opportunity there's anything else we missed that you wanted to share with the listeners, please do so. I appreciate your time. Brad Peters: No, that's it. If I was to add one thing, it would be something I pointed out in our press release. When I was a young geologist, I remember how I used to go to the Society of Economic Geologists conferences. These are the uber-nerds of our business. These aren't the guys pitching you every year on their latest property. One of the comments I heard from a gentleman in a speech about his "top 10 keys for finding a mine" was the following: if you ever find visible gold in outcrop on a property, then be persistent. Interestingly enough, we did find visible gold in outcrop just to the east of this property back in 2007. That was Rory and I at the time. Then, we saw visible gold in drill core cuttings in 2015. We have seen gold across the property in all the creeks. For us, this is a high-level reason why we're continuing to look at this property. We continue to see gold here. Until we can prove it's not here, I think this is a property we need to focus on. Trevor Hall: Thank you so much. Brad, I appreciate your time. That is Brad Peters, he's CEO of Pacific Empire Minerals Corp. It trades on the TSX Venture Exchange under the symbol PEMC and on the OTC Markets in the US with the symbol PEMSF. Take care, Brad. Brad Peters: Thank you, Trevor.