Precipitate Gold: Preparing to Drill Pueblo Grande in Dominican Republic

Trevor Hall [00:00:07] Trevor Hall here with Mining Stock Daily from the Association for Mineral Exploration Roundup Conference in Vancouver, British Columbia, sitting with me now is the president and CEO of Precipitate Gold. That's Mr. Jeff Wilson. Jeff, nice to have you back on Mining Stock Daily.

Jeff Wilson [00:00:22] Yeah, it's a pleasure. Thanks for having me.

Trevor Hall [00:00:23] I think last time you and I chatted was last summer. I believe.

Jeff Wilson [00:00:27] That's correct.

Trevor Hall [00:00:28] Land position in the Dominican Republic was kind of just came on board. I think the company was very brand new, but there's lot's happened in the last few months specifically. Got some targets and got some drills.

Jeff Wilson [00:00:40] Yes. That was a little bit of an unexpected development in the last couple of weeks here. But, yeah, no, you know, we sort of closed the acquisition on this asset in January of 2019. And so the first half of that year, we were doing a lot of exploration work, a lot of review of old data generating some of our own data as we kind of got into the late summer and into the fall. That was when we started to outline some drill targets from the work that we had done and got our drill permits and then raised the money necessary. And so coming into 2020 here, we've sort of got all of our ducks in a row. We've done a lot of good science. We've set ourselves up here to commence drilling. And I'm hoping that inside of the next few weeks here, we've got the drills turning on some of these targets.

Trevor Hall [00:01:24] So for people who are listening, who maybe are unfamiliar with the project, with Puebo Grande, it's, location wise it's a very special land package. Right? But give us a description of where it is and why it's very, has good potential here.

Jeff Wilson [00:01:40] Sure. So the Dominican Republic hosts one of the largest gold mining operations in the world, and that's a joint ownership between Barrick and Newmont. Barrick is the operator. You know, depending on what study you rely upon, it's about the fifth-largest mining operation in the world. They've got over 20 million ounces of gold there, plus copper plus silver. And this project has been operating for several years at a pretty phenomenal rate and a low cost. One of my directors had spent about 10 years, as you know, sort of prospecting and exploring in the Dominican Republic and had a familiarity with this area and had a familiarity with some of the surrounding target areas that prior operators had perhaps tested, but maybe not tested properly in his opinion. And so we were able to go out about a year, year and a half ago and target the owner of this land package and put together a deal whereby we were able to acquire 100 percent of this ground that essentially surrounds Barrick's Pueblo Viaho on three sides. We're right up against her claim boundary on three sides. There is some prior work. This is not a, you know, a brand new greenfields exploration play. There are some some areas here within the property package that have been successfully drilled in the past. But what we see here is a sort of a new thesis on a target immediately west of the mining pits that Barrick's operating, that we feel as if have very similar characteristics to what Barrick is mining in terms of a high salvidation epithermal system, but that those targets have not really been adequately tested by prior operators. And there in lies, in our opinion, the opportunity to do something new in a project area that's obviously very, very well-endowed with mineralization.

Trevor Hall [00:03:24] Well, let's chat about that. Let's chat about that target here in just a quick minute, and I have the historical drill results here. I mean, we're talking twenty-three point four meters at four-point seven six grams per ton gold, twenty-three grams per ton over another ten and a half meters at two-point nine six grams per ton gold and one hundred four-point nine grams per ton silver. I mean, these were significant historical drill holes. Is that very similar to what was drilled at Pueblo Viho back in the day?

Jeff Wilson [00:03:52] Yeah, that would be in line there. They're mining, I think their head great at Bears Pelosi, who is in the range of about two and a half grams. So.

Trevor Hall [00:03:59] Right. You're right. It's right in there.

Jeff Wilson [00:04:00] Yep. So those numbers you're quoting are very much in line with that. And so that would be the kind of mineralization that we would be targeting. Again, that stuff also is intersected virtually at surface. Most of that mineralization starts within 20 meters of surface, again, shallow near-surface high-grade mineralization that would be amenable to open-pit mining. And that's what we're looking for in in the target area to the west of the pits, an area we call the Lithic Cap Zone. Again, we would be looking for similar kinds of grades and weeds there.

Trevor Hall [00:04:32] So what's the potential key target you're going after here pretty soon? What's the name of that target?

Jeff Wilson [00:04:38] We call it the Lithic Cap Zone. It's the Loma Quava is kind of the sort of the local name for the hill that we're sort of drilling off of. So, yeah, this is an area that is very similar in sort of its geological makeup to what Pueblo Viho once was, you know, before they started. You know, that's sort of the cap came off of it and the mining operation commenced. So what we perceive to potentially be there is sort of a hidden underneath this lithic cap, which is sort of this impermeable rock where, you know, the genesis of any mineralization that would there would be there would have sort of pooled up against this impermeable layer, if you will, that has been removed from the top of Pueblo Viaho, but on our ground, the potential for that mineralization should still be there. So you've got to drill beneath this, lithic cap zone, but once you get it through that, you know, there's the potential. What we see here are a number of magnetic lows from the geophysical surveying that indicate to us, you know, magnetite destruction, which is commonly associated with high sulfidation, epithermal type deposits. So we see the right kinds of earmarks from a geophysical and geochemical standpoint as well as the geology, lots of sort of silica at surface. That, again, speaks to in sort of the types of system that would be hosting a high sulfidation, epithermal system.

Trevor Hall [00:05:59] Well, let me ask you about the drilling strategy, because it's a risky business to just go after one target like that. Right? So is that what you plan on doing just go big right at first, or will you try other areas in the land package as well?

Jeff Wilson [00:06:15] Yeah.

Trevor Hall [00:06:16] At the same time?

Jeff Wilson [00:06:17] With the same program. Yeah. I mean we're sort of testing. Well what we've done is we've outlined within that lithic cap zone or in that area we've outlined about eight drill targets or zones. Now we could drill multiple holes in each of those targets. But we've then prioritized those such that for us the nearer surface to shallower targets, you know, less drilling, less meters. We see it as the most cost-effective route to go. So there are some quite significant deeper anomalies that would be drilling, you know, somewhere in the 700 meter to 1000 meter range. I think for us, low hanging fruit here is to test some of these shallow targets. If we get a proof of concept that the kinds of anomalies that we're seeing near-surface are mineralized. That would certainly give us great justification to then say, OK, we're going to put a thousand-meter hole or an 800-meter hole and test some of these deeper targets that look quite significantly bigger. To your point about sort of, you know, multiple areas to test, I think one of the things that, you know, from a marketing standpoint, you sort of focus the shareholder and the investor attention on sort of the number one priority, and that is this Lithic cap zone and know, not appear to be too distracted. But I can say that while we're drilling and setting up to drill this area, it's about, maybe 300 meters in diameter. We are also sampling a number of other areas within the property package and other zones where we see, again, you know, the right kind of geology just hasn't had sort of the right kinds of systematic work. So we're always mindful that, you know, this is high risk. This is early-stage exploration. This is discovery type drilling. And, you know, you can't just be a one-trick pony. So there are other areas within the property package that we're sort of trying to bring to drill stages as we're drilling our primary target.

Trevor Hall [00:08:10] Well, you certainly weren't a one-trick pony a couple of weeks ago when you surprised us with the news release about buying a drill. But it's an interesting story. You know, I mean, I don't know if the market was expecting something like that. You went out and bought it. You have a partner to do that.

Jeff Wilson [00:08:27] Yeah. And it certainly wasn't part of the initial strategy. This was, you know, well, like often happens in junior exploration, the unexpected does happen. And so the unexpected for us in this instance was the drills and the drill contractors that we had planned on using had run into financial difficulties and found themselves in receivership. So, you know, we were faced with a couple of options. One is, OK, they're out of business. Let's go engage someone else who's in-country and has equipment in-country. We quickly found out that those other options were going to be drills that were too big for what we really need. And that would cause mobilization problems and, you know, just too big and too costly, or certainly much more costly than what we had anticipated. The other option of sort of, OK, that's not going to work. Let's bring somebody else in from out of country, some drills from Mexico or something. Again, a little bit of a logistical nightmare. A lot of hang-ups at customs and importing gear and equipment and things like that and not available to go as quickly as we wanted. So sort of the third option was, well, you know, let's get in touch with the receivers of this stuff and find out what they want for it. And we were able to acquire what amounts to basically five drill rigs at pennies on the dollar. A lot of consumables and additional equipment. But perhaps more importantly, the people who had been operating these rigs, in fact, had been operating these rigs in some of our programs in the past in the Dominican Republic. We're also available. So that was the real clincher for me is, you know, it's one thing to run around and pick up drills as a junior exploration company, you know, that can be a recipe for disaster, you know, a lot of unexpected costs and things go wrong. But when you've got the right guys for hands-on running the programs, essentially the same guys that we would have had anyway, we're fairly confident we're gonna bring our per meter drill costs way down and give ourselves the opportunity in the future to be able to access drill rigs anytime we want. And as you mentioned, we did it in partnership with a company called Gold Quest Mining who are also explorers in the Dominican Republic. So we'll split the cost of acquisition with them and sort of maintenance with them. The other advantage for us is in the foreseeable future, as it sits right now, Gold Quest doesn't have any intentions to drill. So this stuff will be 50 percent of the cost and potentially, you know, all of the access for us, which is a great situation.

Trevor Hall [00:10:51] So is the drill going now or is there so the prep work before things get going?

Jeff Wilson [00:10:55] Not going yet. You're still a little bit of prep work. We've, after we made the acquisition there are a couple of bits and pieces that we need to sort of import in or purchase. So we're kind of putting together the final pieces of getting one fully operational drill ready to go. My expectation on that is two to four weeks, something like that. So again, for the market, I think that you know, we've seen the market behaving like it's anticipating the commencement of drilling sort of imminently. And there seems some movement in the share price and trading volume. You know, I think now the reality is maybe with this news release on the drill purchase, people are recognizing, OK, it's going to take a little bit longer to get going. But I think the cost benefits for us far outweigh the little added time to get it done.

Trevor Hall [00:11:41] And results potentially mid-March, if not sooner?

Jeff Wilson [00:11:45] I would say potentially probably late March to early April. I think realistically. Now, where this project is located. A great ad advantage to this is its logistics and access are great. So if, you know, the first hole or two looks like something we want to rush to the lab, it's not a particularly difficult process for us to do that. So we might be able to expedite some of the assay time.

Trevor Hall [00:12:07] I have to ask you about the share price and the share movement. Its had a pretty good run here in the last couple of months. And you don't quite see that when, you know, a pure exploration play doesn't even have doesn't have a drill going yet. In your mind, what's behind this?

Jeff Wilson [00:12:29] I think it's a couple of factors. I mean, there's no question that the market seems to really like the potential of this project given where it's located. And there seems to be a certain appreciation for the upside potential. And so and that's kind of, I think, been born out a little bit here through some of the steps that we took towards the end of last year with getting the targets delineated, getting the permits, getting the money raised. I think that set the market up a little bit to say, OK, you know, this is on the verge of go time here. But, you know, admittedly, you know, the volume and the in the way that the share price moved through December was was a little bit surprising to me as well. You know, typically that would be considered tax loss selling season. And a lot of these things get depressed. We bucked the trend and really moved quite nicely. And again, I think that part of that also is, as the story was unfolding with respect to, OK, these guys are going to go drilling. You know, we've we're lucky enough to have a pretty strong shareholder base. And so I think a lot of our existing shareholders weren't particularly interested in selling. And so, you know, we had some days where, you know, somebody decided they wanted 100 or two hundred thousand shares. You know, they were pushing the price higher. And so, yeah, I mean, it's been nice. The price is settled in a little bit here over the course of the last, say, week or so. But still a really nice appreciation from the financing we closed just a month and a half, two months ago. I closed early November and that was a 13 cent unit. So the share price has appreciated since then. Those warrants are actually in the money now and we're only a couple of months out from closing that financing.

Trevor Hall [00:14:13] Do you see the potential to have to raise again this year down the road?

Jeff Wilson [00:14:17] Yeah. I mean, I think that you know, anytime you see your share price appreciate like we have and you see the opportunity to perhaps take some money at prices that help to mitigate dilution, you sort of have to think about it. Refinanced enough, certainly well enough to complete this drill program. And I guess in a perfect world, we go out, we drill these targets, we get some encouraging numbers and perhaps be able to raise more money at higher prices and maintain or continue to drill campaign. So I think a lot of what the balance of this year looks like will come from the results of this initial phase of drilling.

Trevor Hall [00:14:56] Jeff, great to catch up with you. I'm really looking forward to seeing what happens here. Pueblo Grande in the next couple of weeks, months. And congratulations on doing a really good job of getting a good amount of eyes on this project, because I think it's it has potential to be quite the story of 2020. We've seen a lot of them already.

Jeff Wilson [00:15:18] Mm hmm. Yeah. No, I appreciate that. And thanks for the opportunity to sort of discuss it with you. Yeah, I'm really looking forward to perhaps come back and talk to you again once we get off the back end of this.

Trevor Hall [00:15:28] Absolutely. Good luck. We'd love to have you. That's Jeff Wilson of Precipitate Gold. Precipitates trades on the TSX Venture with the symbol PRG.