Integra Resources Discusses Exploration Strategy at DeLamar & Florida Mountain Post-PEA

Trevor Hall Everybody welcome to Mining Stock Daily. This is Trevor Hall your host. And once again joined with a small group from the team of Integra Resources and Integra resources trades on the TSX Venture with the symbol ITR and also on the OTC markets in the U.S. with IRRZF. I will preface this conversation by saying Integra resources is a sponsor of Mining Stock Daily and I am a shareholder in the company so therefore fairly biased in the position of the company and also very happy with the latest movement in the share price. Joining me right now is the CFO of the company that's Andree St. Germain and also the V.P. of Corporate development Josh Serfass. Good to have you guys back on the show. Unfortunately you know George has been very busy George Salamis has been very busy last couple weeks with Beaver Creek and Denver Golden had to depart a little bit early but I'm glad you know two of the most important people on the team are also joining us So Andree. How's your time been the last couple weeks?

Andree St. Germain Oh it's been fantastic. Back to back conferences to Beaver Creek and Denver but so far feedback has been great. And like you said I mean there's been a good reaction to the PEA in the markets and our shareholders are quite happy at this moment.

Trevor Hall I actually haven't touched base with the company or had the company on the show since I was on site. I believe that was in March. May. Thank you Josh. That was in May and that was actually before the resource estimate where you were able to convert about 4 million ounces into the measured and indicated category. Josh give me a rundown of that process and kind of what lead up to the timeframe of coming out with the latest PEA.

Josh Serfass Sure yeah. Thanks Trevor and always good to be back on mining stock daily. It's my favorite morning podcast. Catch me up on the news each morning. Yes the resource was a huge coup for us. You know certainly we were looking to convert a large portion of the inferred resource from to measured and indicated just as you may recall we built the initial resource on about 250,000 meters of drilling that Kinross had performed during their tenure on site. So what we did is we went back and used their chip trays and lifted her chip boards. They did an incredible job at saving all of their data and we went back and identified oxidation levels and we went through and kind of twined some of those holes to confirm where we were marking oxidation levels throughout the deposits is how it stood and we're able to actually convert 90% of our resource to M&I which is a huge thing for us because as we move forward towards a pre-feas and feas post this PEA we won't have to do any of the infill drilling that is typically required at least on the current deposit as it sits and so we've estimated that'll save us about somewhere around $50 million dollars. So really any of the any of the money we raised for four drilling moving forward will be on growing the resource both around Delamar and Florida Mountain but also in some of these high highly prospective targets that we've added over the last couple months.

Trevor Hall I did want to ask you you went back and you did some fundraising because it sounds like there was some demand from shareholders to put more drills into the ground. Andree can you kind of give us walk us through what it was raising that equity. It happened pretty quickly which is what better than a lot of other companies that in a lot of other companies are struggling to raise money right now but talk about that process and where that money is being allocated right now.

Andree St. Germain Yes. Thank you so we you know at first we're planning to to raise equity on the back of the P.A. and we're just going down drilling a bit on site to to preserve the cash balance. But our current shareholders wanted us to keep drilling and add some rigs so really came about very quickly we had a strong demand from a current shareholder as the money was available and we decided it was the time to raise. We didn't want to wait for the PEA. And with that we're about where we're able to we're going to be adding one or two drag sorry rigs on site. This this year and we'll touch it a bit later on with the exploration but most likely War Eagle and Florida mountain on the short term and then more on DeLamar throughout the winter.

Trevor Hall As the person who kind of holds the key to the financial books of the company. How did you balance allocating the cash in what seemed like a very eager market for the project?

Andree St. Germain Well we in terms of this in this last financing I think it was really a key shareholders that that came in and we didn't have to cut anyone's order but we had to to limit it. I mean we could have probably raised more than than what we raised but we didn't. We were also I always keep dillution in mind so we did not want to over dilute the stock so we kept it to the minimum that we needed to to advance on the drilling.

Trevor Hall So and then a very short period of time after the resource estimate and you went straight into a PEA and the market obviously found it very you know is a really good economic numbers. A lot of people it's funny because I kind of feel like PEAs get a little bad rap and some people and people don't give it as much credit as it did. But with this case like the market really found it credible and obviously the share price started moving. Give us a little bit of a rundown Andree about those numbers and what investors are looking at now now.

Andree St. Germain Yes I think we it definitely has been very exciting few weeks for us. We're extremely pleased with the result with that from the PEA. It's does you know we're first PEAso a STARTING POINT we'll build from there. But I think on its own this this could be a mine. You know we're looking at high high return so after tax IRR of 43 percent that's using $1350 gold and $16.90 silver. If we look at the NPV just under $500 million Canadian after tax NPV in U.S. dollars that's around $360 million we're looking at a dual processing scenario where we have a twenty seven thousand tons per day heap leach and a 2000 tons per day mill average production annual production of 124,000 ounces of gold equivalent. And that includes about 103,00 ounces of gold and about 17 million ounces of silver. It's a strong production profile over a 10 year mine life. You know first quartile cash costs we're looking at all in sustaining cost of $620 or so if you look at it on a silver net of silver byproducts or $742 per ounce on a co-product basis but something that I really like about this project is the low preproduction capex of $161-million dollar US and that includes about $30 million or so in in mobile equipment. So you know in a nutshell an extremely high return long life asset low preproduction capex and a meaningful production profile. One thing I would like to highlight here though is that really that the current PEA only includes oxides and transitional from Florida and DeLemar deposits as well. And those will be processed on the heap leach pad and on oxidized from Florida will be processed  through the mill. So we have excluded from this PEA all of the UN-oxidized resource from DeLemar which is almost half of our current resource so that's probably going to be subject to a steady for next year how we can actually process the un oxidize from from DeLemar and that really has the potential to significantly increase our annual production.

Trevor Hall Would that potentially also increase your role in sustaining cost?

Andree St. Germain We're looking at the mill actually cash costs of the mill are actually lower than the heap leach. You have, especially at DeLamar you have a good silver component. Higher recovery at the meal. So if you especially if you look at it on a net of silver byproduct I don't believe it will increase the value in sustaining cost.

Trevor Hall I think one of my biggest takeaways and Josh you and I have chatted about this in the last couple of weeks is really that the exploration potential with areas of the project that literally have maybe they have a drill on there now but have not come out with results yet. But what that means is you know there's very good potential for this project to be much bigger than what's in the PEA year. Now. Give us a give us a quick rundown of those areas of the project that have potential for exploration and drilling and kind of what Max Baker the geologist onsite is what his theory is with with those areas.

Josh Serfass Yeah he's a George Salamis- ism you know going into a two year study post PEA is like watching paint dry. So for us it's very important to continue the exploration and certainly Max is our V.P.Ex a bit of an epithermal guru is incredibly excited to get some more drilling going we've taken a lot of his budget for metallurgical testing and so he's really excited that we're gonna have a big exploration budget for him coming up over the next the next year. And in terms of the low hanging fruit on the project with the margins and the the ease of heap leaching that Florida mountain, we'll do a lot of drilling to the north and south along the mineralized trend of Florida mountain. There's not a lot of drilling this back there's almost no drilling to the north and south of the existing resource at Florida mountain and a lot of that is because you know historically there was production drilling was the focus there and they were just kind of looking for mill feed. So not much was done to step out there so any oxide transitional deposits we can find around for a mountain we'll just add to the heap leach and just add to the economics and in doing that we'll also be able to test some of the the high grade mineralization at depth so Florida mountain historically was mined by the old timer's they were getting about an ounce ton material on high grade veins you know sort of in the granodirite in the stem as we say of the mushroom of an epithermal system. So we'll be able to get in there and pierce some of those veins and understand what the high grade component could potentially be there and whether or not that would work going well through our mill because you know currently the melt the at the in the piece is pressing one gram per ton material and it'd be great to increase that and really talk economics. You know after that the next target for us that will see the balance of the year news flow come from is War Eagle. And so War Eagle it was drilled historically by Sudbury contact which was a subsidiary of Agnio Eagle gotten incredibly high grades it's about six kilometres east of Florida Mountain as the crow flies 10 kilometers by driving. They were getting some just you know 20 grams over over 10 meter types intercepts. So we'll go in there with a drill we'll try to put about a few thousand meters of drilling up there before the snow flies and just really start to delineate a high grade component nearby Florida Mountain deposit. And then next year and some of the areas that get Max most excited is an area that we call Black Sheep and Black Sheep is essentially a series of epic thermal centers kind of northwest of the current project is a it's an area of land that we added to over the last year and a half a doubling essentially doubling our land package to about 30000 acres. And this is where you know from a early stage greenfield exploration target it's highly prospective so you get these. You get these silica centers at surface. We've identified the pit you know the paleo surface and we know that essentially around 200 to 300 meters we get that productive zone where you get high grade mineralization. So we've done soil sampling through their IP. And Max is now working on some targets that we'll get to next year. But it's really exciting stuff. And when you get out there and you see Max get all excited and it's you know it's it's it's something else. So you've been out there. Trevor right. It's a really interesting to see Max you know pretty pretty reserved Australian geologist with a heck of a background in epithet animals get that excited over something.

Trevor Hall So drill results potential to be seen later this year for War Eagle, Black Sheep. probably no activity until next year.

Josh Serfass Yeah that's right. Yeah Flordia Moutnain, War Eagle and then DeLemar will drill through the winter kind of some of the areas near near the existing resource where there has just been minimal minimal drilling historically.

Trevor Hall So obviously drilling for more ounces in the months to come. Now you've released the PEA. What is the path forward other than the exploration and resource expansion?

Andree St. Germain Going forward you know we want to basically advance along with exploration we want to keep advancing the project forwards a pre- Feasibility study or a feasibility study. We still need to decide which one of the two but I think we you know we don't want to sit on this project for 10 years we want to advance it aggressively and so you can expect from us probably a feasibility study in the next set in the next two years or so.

Trevor Hall Okay. Is there enough money in the bank to progress into a feasibility study or will you have to go back to the market to raise?

Andree St. Germain I mean we we have about 60 million in cash at this point right now we have a final payment due to Kinross in early November. So I mean we have enough cash to take us into the new year probably in Q1 of next year. But now if we want to be aggressive both on the development and the exploration side at some point well we'll have to go back I think to the market. But you know we'll be opportunistic and wait for the right moment the right moment to do so.

Trevor Hall So obviously I would pose this question to George if you were here but how far do you derisk this project knowing with all the exploration potential you have on the outside to maybe get to that acquisition stage with another company who's interested.

Andree St. Germain Well look that's a that's a very good question. I think the mindset is that we we're advancing this project forwards you know with the idea that we can build it ourself. Like I said it's a low preproduction Capex. You know if if at some point I think we're probably in a well really good position to do risk it at least until we we get a feasibility study and are farther advanced in the permitting process. But you know we'll see we'll see what have we'll see what happens. But I think we  the team at Integra we've proven with their first the first company Integra Gold that we can we were ready to build this project before Eldorado jumped in. So you know will this project will be a mine in my mind. There's no question about it. Who builds it  I don't know but it's gonna be us or someone else but it's definitely going to be one of the next mines in Idaho in my views.

Trevor Hall Josh one last question for you based on the share price movement in the stock. There's been a lot of activity in the last three weeks. Give us a breakdown on volumes and really what's kind of been the backbone of the increases especially when we see a lot of the other juniors just kind of consolidate right now with the gold price.

Josh Serfass Sure. You know I think when we raised money a few weeks ago we did it sort of as a surprise to the market. People knew that we were going to have to raise post Beaver Creek post Denver and we kind of came out ahead of that. And I think when we did that it kind of removed a lot of the pressure that we had seen on the stock from people knowing that at some point soon we were gonna have to raise. And so once that pressure was gone the stock quickly moved up from about you know we did the financing at .86 I think within two weeks where 1.10 and now today we're trading in the high  1.30s we're seeing some nice consolidation in that dollar 1.20 to a 1.30 range. So you know I think it's it's the PEA is starting to be digested people are back at their desks and we're starting to see we're starting to see some of that share appreciation just based on the economics here. Because if you look at our NPV versus our market cap there's a lot of value still left in Integra.

Trevor Hall Thanks guys. Really appreciate it. Best of luck to you for the remainder of the year. Look forward to seeing a lot of those drill results and increase mineral expansion. That is Andree St. Germain with and Josh Serfass with Integra Resources which trades on the TSX Venture with the symbol ITR. And also on the OTCQX market in the US with the symbol IRRZF.