CEO and Pres: Louis Lepry
Interviewer: Good day from Wall Street. This is Juan Costello, senior analyst at the Wall Street Reporter and joining us today is Louis Lepry, the CEO and President for Tintina Resources. The company trades on TSX Venture. Their ticker symbol is TAU, as well as on the OTCQX – ticker symbol TINTF. Thanks for joining us today, Louis.
Interviewee: My pleasure, Juan.
Interviewer: Great! Starting off, give us an update on the Sheep Creek property which you recently appointed a new project manager for.
Interviewee: That’s right. We were lucky enough to find a fellow that’s just perfectly positioned to take this emerging, growing high-grade copper project in central Montana right through all the steps required to actually ribbon cut the mine. Bob Jacko joined us a month ago and he’s already more than just hit the ground running, and we made a lot of other smaller outfits jealous by grabbing this guy. There’s just a few of them around; an individual with 30 years’ experience, underground experience, mine building experience, works well with the permitting agencies, all that sort of thing. He really does tick all the boxes and we’re tickled to have him.
Interviewer: Well, good. So give us a little bit more overview on the Sheep Creek property in central Montana – a copper-cobalt-silver project.
Interviewee: Tintina acquired the property in 2010. It’s been around quite a long time, about 30 years since discovery. The last 15 years, from ‘95 to 2010, the property lay dormant; the reason for that being it’s located on private ranchland where the ranchers own both surface and mineral rights. They had leased their mineral rights out in the ‘80s when the discovery was made by Cominco, but in ’95, when Cominco turned the property back (and there were lots of reasons for that: they were predominantly a zinc company, copper was at $0.80/lb, they had spent 15 years exploring with a small program, etc.) it just sat.
Anyways, the ranchers elected not to deal with any of the groups that came long behind them, and it wasn’t until our fellow, in 2010, came back to this area (he had worked for Cominco on this project) that headway was made. He’d done his master’s thesis field work at this project area. The key was that this geologist, Jerry Zieg, now our VP – Exploration, is a local boy. He grew up in White Sulphur Springs, only 17 miles from the project. The ranchers recognized him immediately and embraced him and we resuscitated the old leases and we got rolling again. It’s really – if a book is ever written – chapter 2 will be about Jerry Zieg and his unique contribution to this project.
The project itself is pretty exciting. It was really all teed up by the previous workers. We came into the project with a 100 drill-hole database and the core was preserved. We’ve drilled almost 100 holes since then (in the past year) and what we’re finding out is that there are at least six zones of high-grade copper mineralization. All look like underground mining candidates. All have byproduct cobalt and silver, tend to cluster along a two-mile strike length, and all require delineation drilling.
The discovery chapter of this property, at least for this first handful of zones, had been completed, was in the books before we arrived. So the 100 holes that we’ve drilled, or will be drilling by November, represent delineation holes, not exploration holes. We’ve been able to find copper on this property for a penny per pound in the ground, a phenomenal rate in our business, and these aren’t just any old pounds. This is not a low-grade porphyry situation with the big $2-, $3- or $4 billion capital cost hanging over its head. This is a situation where a company of Tintina’s size can envision getting this thing all the way to production. Capital cost estimates range from $2 – 300 million at this point in time. We’re a few years off from there but it is very much a doable project, still growing. We have three drill rigs on the property at the moment. We’re spending a million bucks a month and that’s quite a burn rate but again, when you’re finding copper for a penny a pound, you do that for as long as Mother Nature lets you. We do have $30 million in the bank that came from a large financing we did in February of ‘11 with our two largest shareholders. These are two funds based in New York, Electrum and Quantum. They currently hold a combined two-thirds of the company.
Interviewer: Well, great. I appreciate the overview and so talk to us about some of your other key projects which are in Alaska including Colorado Creek.
Interviewee: The Company got started in Alaska. Roughly four years ago we acquired an exploration portfolio of properties from NovaGold. NovaGold had early-stage exploration projects in their portfolio but they were dwarfed by the success they were having at Donlin Creek and Galore Creek. Those remain the two flagship assets for NovaGold. We took this exploration portfolio on and fast forward to today, three properties remain. All are large targets: two are copper-zinc projects, one is gold. We are currently looking for JV partners for two of these and we are contemplating an exploration drilling program for the third. The third is called Baird. All the work has been done to generate drill targets on this property. We feel we need to take that next step next year, the 2012 drill season, which in Alaska is pretty tight (roughly five months). During that window, we’ll drill the Baird property.
Colorado Creek is a gold property located in central Alaska along strike from Donlin Creek, and has a lot of geologic similarities to Donlin Creek. For those who are unaware of Donlin, it’s probably the largest un-mined gold resource in the world – over 40 million ounces…. so our Colorado Creek has a great address. We’ve completed two seasons of exploration work ourselves, including drilling, but it’s time to find a partner to take it to the next level.
Interviewer: Well, good. Talk a little bit about some of the trends right now in this sector and how well positioned you believe Tintina is to capitalize on them.
Interviewee: One thing we haven’t touched on, Juan, is what kind of value do we place on ‘scarcity’. What we’re finding is that there are, in any given year, perhaps 500 active junior gold outfits around the world and maybe 20 or so get taken out. Less than 5%. On the copper side, there maybe 30 juniors of which 10 – 12 get acquired in a given year, a much higher percentage. We feel pretty good on the copper supply side of the equation where we are more comfortable. The demand side always takes care of itself. The high-grade nature of Sheep Creek, with its + 2.5% copper grades, truly makes it stand out. We use a cutoff grade, for example, of 1.5% copper, which is three times the average mined grade of copper around the world. If you can’t make it up to Montana, you’ll have to get a visa and go to the Congo to see grades like those displayed at Sheep Creek.
Interviewer: And anything else you feel makes the company unique from some of the other players in the sector?
Interviewee: We have two stories in one here. We have a piece of ground which we believe is a district, which by the way, covers approximately 13,000 acres; we have no neighbors. One of the zones has over 70 drill holes defining it. We’re taking that zone to production by itself, doing a Preliminary Economic Assessment, or PEA, that will be out in December. It looks like it will come in as a 3,000 tonnes per day underground operation at less than $300 million. That zone should mine at a very reasonable cash cost of production. At the very same time we have two drill rigs in the district continuing to delineate additional zones, one at a time. We’re finishing up the third zone right this week and the goal that we set for the Company, to get to a billion pounds of copper in resource by the end of this year – it looks like we will achieve that.
Interviewer: Well put, Louis. So perhaps you can walk us through your background and experience and talk a little bit about the management team.
Interviewee: We’ll start with our founder and executive chairman who also happens to be the CEO of NovaGold, Rick Van Nieuwenhuyse. It turns out Rick and I were both in graduate school together years ago in geology, and both of us have been able to stay in the business through the many cycles. Rick has been a little more successful than me, but I’m hanging in there. I’ve gone from big companies to small and put in nine years with Freeport-McMoRan, in the 1980’s. I recently finished up a seven-year stint at Newcrest, represented Newcrest in the Americas. Last year I was CEO at a startup called Silver Predator. It’s now part of the Predator Group of companies. In the mid- to late- 90’s I was president of Metallica Resources. Metallica has now merged into NewGold but the assets that we put in place while I was there are turning out to be the core assets of NewGold today.
Interviewer: And so what are some of the other goals and milestones that you and the team are hoping to accomplish over the course of the next year?
Interviewee: We have results coming in October, November, and December: new resources to add to the current resource, results of the PEA, metallurgical test results, and additional drill results will all flow between now and Christmas. In 2012 we have an aggressive schedule laid out including an exploration decline.
Interviewer: As far as the way that the company operates within the sector, would you consider any sort of joint ventures or strategic alliances?
Interviewee: You can’t be in this business without having your M&A hat on at all times. We definitely are starting to get on the radar screen of some of the larger copper players, even this early. However, we again want to stress that we can get to the finish line ourselves, which is a strong point. We are lucky to be dealing with such a high grade copper body. Mother Nature has given us a great head start.
Interviewer: Certainly. So once again joining us today is Louis Lepry, the CEO of Tintina Resources. The company trades on the TSX Venture. Ticker symbol is TAU as well as on the OTCQX – ticker symbol TINTF. Currently trading at $0.60 a share, the market cap is approximately $85 million….Before we conclude, Louis, recap some of your key points here, why do you believe that investors should consider the company as a good investment opportunity?
Interviewee: Well, I did not mention our market cap at $85M or so. Netting out the $30M cash leaves an asset value of $55M. We’ll get to a billion pounds of copper in the ground by Christmas. I really did not stress enough the benefits of being on private ranchland; we lease both surface and mineral rights from the ranchers. This will allow for a much more streamlined permitting process. We will be dealing solely with Montana state level regulators. We are not encroaching on any federal land and that’s a huge distinguishing characteristic from other companies that are facing a more arduous permitting regime. Montana’s a great mining state so we feel that we’re well positioned for a straightforward permitting exercise.
Interviewer: Well we certainly do look forward to continuing to track the company’s growth and report on your upcoming progress and I’d like to thank you for taking the time to join us today, Louis, and updating our investors on Tintina.
Interviewee: Thanks, Juan.