₪ David Pescod's Late Edition February 4, 2008
AN INTERVIEW WITH BRAD COOKE
CHAIRMAN AND CEO WITH ENDEAVOUR SILVER
(As of January 28, 2008)
We are here with experienced mining man Brad Cooke, President and CEO with Endeavour Silver and a veteran of mining in Mexico. Brad Cooke was starting to tell us about a story he found very intriguing in the mining business at the recent mining show in Vancouver. Canplats Resources is the name and what we found a little different was how high the stock has moved compared to the low grade of the discovery.
David Pescod: Brad, can you tell us about the background of the play and why you find it intriguing?
Brad Cooke: Well first of all, Canplats is the most recent and I think most exciting new discovery in Mexico. It’s a goldrich, polymetallic discovery made by prospecting favourable geology on the desert floor south of the huge Penasquito deposit in Zacatecas now being developed by Goldcorp. This type of deposit is described as a breccia, marked by a strong iron-rich gossan.
My understanding is that the prospectors were driving along a dirt road which turned from gray to red so they went to the local village to ask where they were getting their road material from. What they saw was actually an outcropping gossan breccia being quarried for road fill. So they acquired the ground, took some soil and rock samples and got an immediate gold kick. They subsequently did geology and geophysics and drilling and announced the first drill results last November. Typically the first ten drill holes returned +1 gpt gold and in some cases almost 2 gpt gold from top to bottom over up to 200 m lengths plus low level lead/zinc grades in the order of a quarter percent to a half a percent each.
D.P: Now those come across to someone in the industry with just enough knowledge to be dangerous as definitely low grade.
B.C: One gram gold per ton is viable as long as you can heap leach it, and what they found appears to be the oxidized top of a breccia system that is starting in some ways to resemble parts of the massive Penasquito deposit.
D.P: Now the tonnage implications I understand are already looking impressive?
B.C: Yes, they’ve got more than one geological/geophysical target and the first one (the discovery) has some size potential to it – several hundred metres in each direction - so if you use Penasquito as a model, (it was also a very small outcrop in a topographic low on the desert floor measuring only about 100 by 200 metres), then the upside looks pretty attractive. These things typically aren’t just isolated single breccia bodies. They are typically related to a much larger intrusive system. So the one-plus gpt gold grade should be recoverable initially by heap leaching and the tonnage potential could be large; although this thing is still in the very, very earliest stages of development.
D.P: I understand there are other similar deposits in Mexico?
B.C: Yes, the original deposit of this type in Mexico is called Real de Angeles, it was a low grade open pit silverlead-zinc mine owned by Placer and it is located in the south part of Zacatecas. Penasquito is a newer discovery of Western Silver that grew large enough to prompt a take-over bid from Glamis two years ago. Glamis, meanwhile, almost doubled the size of the Penasquito discovery in the short 18 months that they had it – until they were taken over by Goldcorp.
Penasquito at this time is reporting north of 11 million ounces of contained gold, one billion ounces of contained silver and untold pounds of lead/zinc in total resources.
They still haven’t found the bottom of the system. So, it is looking like a massive open-pit mine. Goldcorp announced last year that they had increased the proposed development from 100,000 tonnes of ore per day to 140,000 tonnes, which puts it into the high end of large scale open pit mines. And if you look at the net recoverable value per ton, you can see why. Each metal on Penasquito on its own is extremely low grade.
We are talking quarter gram to half gram gold, and 20 to 30 grams silver and less than 1% combined lead/zinc, but collectively, those metals make a big open pit look extremely attractive.
D.P: One thing that is starting to show up is that Mexico is obviously a good place to be doing business. There are an awful lot of places in Africa, Asia and South America these days that are suddenly worrisome.
B.C: My own experience in Mexico these last five years has been very successful and very encouraging, so I have no problem working in Mexico. Historically, gold ore deposits in Mexico were thought to be small. Only in the last few years have new precious metal deposit models emerged in Mexico and of course Penasquito is the biggest so far.
D.P: If you were looking for your top three exploration plays other than your own in Endeavour Silver these days, what would they be?
B.C: I certainly like Canplats and I do own the stock.
D.P: And your other choices would be? (And we are looking for doubles here, Brad)
B.C: You put me on the spot! Well I have a silver sleeper for you and I have a gold mine production play as well. I like Duran Ventures for the sleeper. Duran has an option for 50% of a very exciting porphyry/copper play in Peru with a silver mineralized zone of significant grades and widths but uncertain nature. They don’t know if it is a vein or what but it is an attractive drill play. So I bought the stock for the silver play. In terms of a mine production play, there is a gold company that announced an acquisition in Australia late last year. It’s called ATW Ventures. It has moved up to the $1.00 range from a financing price at $0.60, but we are coming into a great gold market and any company acquiring gold assets that can grow, like ATW, I think makes a lot of sense. What they have acquired is a small gold resource left over from a small gold mine in the 1990’s that was never well explored. ATW thinks they can not only recommission the mine for production but also expand the resources by drilling. Then they can consolidate the district and become a significant gold player in that part of Australia.
D.P: One comment we got from experienced mining men at the convention that we found rather intriguing was with the billions spent on exploration over the last few years, suddenly the world has an awful lot of rather large significant ore bodies. He wonders if we haven’t found too much.
B.C: There have certainly been some major new discoveries in the base metals. Copper, lead, zinc and nickel – these are all subject to major new finds and the development cycle on those discoveries, depending on what country they are in, is typically five to ten years. There is still some time left in the base metal cycle, but it’s not as exciting as the precious metals, where there have not really been any major new discoveries. I think you can count on one hand the major new discoveries in gold and silver.
D.P: Now back to Canplats, let’s pretend you are an analyst. What would be your target?
B.C: I think if you give them a couple of years, double-digits are definitely doable.
D.P: Thank you Brad!
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