Affinity Conf Call Transcript 1-31-2014
So this is obviously not a word for word transcript- There are words Bolded and some in parenthesis that I’m still working on the text. Call was hard to understand during some parts. I will try to update this doc with some corrections if I am able to. Anyone is welcome to use this as a reference, however if you want word for word- you must listen to the call. I think you will find that if you were to listen to the call, and read along in my document, you’d find 99.9% accuracy. Enjoy.
Corey: Hello shareholders in Affinity. This is Corey Sandberg, today is January 31st. I hope everybody is doing well, this is the second shareholder conference call being held for Affinity. So I want to thank you today for attending, for all those that have. For those that won’t be able to attend there will also be recording online shortly after our meeting. In today’s agenda what I would like to cover, we have a guest speaker with us today, who is David Heyl C.P.G. and qualified person who is a partner of the Corizona mining partners. David will be spending a little bit of time going over the technical side of Machacala as well as Cambalache, and we will be providing an update after David does his (inaudible) and we’ll go from there. David has been with us for the past three years, he is a qualified person as well as CPG, and has spent over 20 years in Latin America with an emphasis in Peru. So at this time what I would like to do, because David has a little bit of time with us before he actually leaves to go out to Machacala this afternoon. So, David, we’ll go ahead and start with you if you are there, and we can start with Machacala and go on to Cambalache.
David: Okay, good afternoon everybody, just real quick speaking from the technical side Machacala is a minimum of 100 year producer in the past all through the 1900s it was a producer on a small scale usually on the level of between 30 and 100 tons per day. Probably half of that century, (inaudible). The geology is basically a low sulfidation epi-thermal gold silver vein. Average grades are probably on the order of around 5 or 6 ounces of silver, and around 4 or 5g of gold. We have on the property about 15 veins identified. Average length of the veins traced underground is probably close to 400m on average in length maybe 500m, average width is probably close to 2m average width. So for narrow veins they are a nice width for narrow vein. They are not extremely narrow veins. The widest points in the veins reach over 10m wide, at the narrowest point we reached about 1/2m wide. There has been production over a vertical extent of roughly 200m vertically, there has been demonstration by drilling that the vein system goes below that level, at least another 100 meters below. There is no reason to suppose that the vein system dies at that depth it probably will continue to significant depth, the vein system. Whole next sentence I can’t understand something about Volcanics and sediment. The wall rock is confident and solid, we don’t have a wall rock problem like you do at many mining operations in Peru, with high sulfidation systems the rock around the sides of the veins needs lots of support. Basically there has been production on four of the veins, they are 40 drill holes into the property, and we are working on developing our resources at this point in time.
Corey: okay David that was a great overview, can you go into Cambalache and give us an overview of the technical aspects of Cambalache with attributes and why we think it’s a great project and its current status with production, and what we plan on doing for production going forward
David: Cambalache is located in the Department of Huancavelica it’s in the West Andes. It’s not too far from(inaudible) and the Julcani mine about 15 km as the crow flies. What you have there is mineralization not in a true classic vein, but it’s more what we would call a load system where there’s not one solid mass of vein mineralization, but it’s mixed in with rock, the country rock and such the mineralization. There’s 3 known load systems on the property, one which is currently in production. The Mine is currently in production, at a low rate of about 12 tons per day average, 10-15 tons per day for a range. It’s producing around 10% lead, and about 10 to 15 ounces silver per ton. Within the vein to load system there are actually three mineralized (inaudible) each one of them is over a meter wide. It has been on the (inaudible) structure developments by tunnel over 220m high vertically, and over 300m along stride from three principal levels. Currently in the highest most level they have good ore (inaudible) hopefully within a month we’ll be at a rate of 30 to 40 tons a day. Just to emphasize mineralization it is again what we consider low sulfidation, it is a relatively clean and very docile, metallurgically docile ore. There’s no real problems with it, it is relatively (inaudible) rock, there is no real major complications (Something about concentrate). It’s a lead silver ore, there are minor values in zync and copper, at this point we’re not going to try to make a zinc comp but maybe down the road will try to make a zinc comp. We’ll have to see if we can do that. But currently there are 25 personnel for the mine employed, we have three supervisors staffed on-site at this moment, and I am hoping to get up there maybe Tuesday.
Corey: David could you expand a little bit on what the plans are for the ore shipping, and production immediately, and how we’re going to grow that.
David: okay one of the many factors of why you are interested in this project is because it has good grades, which is, we feel key for any mining operation and overall much more important to any operation is that you have good grades. And then you add the other aspect to the project that beside social and environmental aspects are positive, is that the mine has not been very well supervised by its current management and owners, and it’s basically been kinda walking around on its own for the last two years. So we feel that very quickly, with on-site management we can turn this thing around and in be getting a productivity going from about a half a ton per man day up to 2 to 3 tons per man day in a fairly quick period of time. So with 25 people even getting up to 2 tons per man day we can get up to about 50 tons a day within probably 2 to 3 months if we are fortunate. That’s if we supply enough equipment and internal infrastructure in the operation to support that type of productivity level, but that’s relatively simple and not super expensive to do. What we are hoping to do is to bring this project online over this year, it’s its online right now, but we want to include this level of productivity and initially get up to 30 to 50 tons per day in the next few months, and then over the rest of the year steadily bring it up to about 120 tons per day. We will start first on the 555 level, and then will start working on the (inaudible) 515 level down below, and then eventually maybe about 5 to 6 months from now start trying to dig into the 455 level, which is the bottom-most level, and bring it into production, or at least open it up and start working on it. And so between all these opening more and more fronts, and getting more production, we should be a will to get up close to 120 tons per day by the end of the year. We’ll also bring online in about six months’ time from the time we get permitting done, it should take us about four months to get the permitting done, let’s say another 5 to 6 months after that we are planning on doing a (rough preconcentration gravity column concentration of the ores), so that we reduce our shipping cost to third-party (moles) who make concentrate, so we will be able to reduce the shipping cost by a third and our treatment costs at third-party plants by a third, really dropping dramatically our cost per ton significantly, probably dropping it at least 25% of our cost per ton by doing that, bringing in a gravity plant making a rough pre-concentrate to be shipped off.
Corey: okay that’s fantastic, lastly David, I was wondering if maybe you want to provide some insight and expand a little bit on the Corizona and Affinity overall strategy for how we are approaching a small to medium-size opportunities down there, what we’re focused on in becoming a producer, and what your general thoughts are there.
David: well I’ve been in the industry with majors in juniors and mining companies for over 30 years in the industry, there is a major gap between what has been explored on in the past and what is actually (inaudible), majors want major properties i.e. 3 billion+ to 10 billion+ size properties at a minimum to warrant their interest. The junior companies have always had to work the projects to make them acceptable to the majors, so anything that is smaller than $5 billion or $3 billion in size and value that has a potential resource that a geologist can see either in the ground just with his eyes or from available data, then those are often just left and they’re not even touched. There are numerous small past producers and current producing operations here in this country, that have significant resource value, of let’s say, a resource value and potential resource value of let’s say between $100 million and $2 billion. (inaudible) Machacala would be on the upper end of that area you could have $1, $2 maybe $3 billion of resource value that could be identified rather quickly. But something like a Cambalache may have $100 or $200 million maybe even more, a $500 million resource value if it’s potential holds up, as we explore and work on it. There are numerous small projects out there, and we are right now working on four of them. And in negotiation Corizona is working on negotiating on four different properties. But again the parameters, we don’t want anything that has less than the 50% internal rate of return. We do not want to look at a major property investment. We want to quickly turn around our investment, preferably less than a year a return on our investment, at most a couple years. It has to fit right you have to be careful, we cannot take undue risks in what we’re looking for, but there are numerous properties out there that can be acquired that can create good projects just like Cambalache, existing producers, there’s ready demand of buyers for concentrate. (inaudible) Once Machacala is put in production that will also, we will address producing delays on site, and that will again have a (inaudible). It’s very important it’s gotta have the economics to begin with, there are a lot of these projects out there, but we are looking at small producers basically from 100 to 500 tons per day.
Corey: okay David, thank you so much for attending I know you have to run and you have to go catch a flight to go to Machacala, but I want to thank you again for attending and given us an overview and I’m sure if there’s any questions from our shareholders please email them regarding the technical overview that David gave, please email them to AFYGconferencecall@affinitygold.com. David thank you I appreciate it very much.
David: you are more than welcome and I thank you again very much as well.
Corey: okay onto the next section. I would like to provide some updates regarding the last month, and then we’ll go over a few of the questions that I received in preparation for the call.
The primary updates this month, it’s been, just say first it’s been a relatively quiet month as you all know. It was somewhat intentional. We’ve been head down, keeping busy with focus on our audits, in preparation for completing those, so that’s been my primary focus in January, along with the transaction that were working on closing for Cambalache. So with regards to the status of Cambalache, that has- that directly correlates to our goal of becoming a producer. David gave you the technical overview and how were going to grow production from where it is today.
With regards to the transaction itself, everything has been put in place, the RyCor legal entity has been finalized, our funds have been put into escrow for the closing in Peru, everything has been set in place, and the actual final closing is very near. So, I would expect that February our shareholders, we will be able to announce to our shareholders regarding the transaction.
With regards to the finalization of the strategic advisory committee, just waiting on one last thing before we actually finalize that, and that’s the updated advisors stock option plan. So we are finalizing that and we will be able to move forward with finalizing the strategic advisory committee at that point, along with some potentially other appointments to the board.
With regards to the filings, like I said we were solely focused this month, or I should say primarily focused this month on getting everything in order for our audits and the comprehensive 10K. As of right now we are, I have an auditor coming out to the office late next week to begin the fieldwork for the US public company, we would expect that shortly thereafter, a few weeks after they will be in Peru, conducting their audits, field audits there as well for the legal entities in Peru, and so we are staying focused on that, that’s our primary focus, it’s absolutely key that we become current in our filings so that we are completely transparent and can be viewed as a completely legitimate, transparent company.
Moving on to some of the questions, that I received- actually one last thing that I wanted to mention if anyone had any concern with regard to the share structure, there has been absolutely no change in share structure since the last update, last conference call where we reviewed that.
With regards to some of the questions I received, some of the questions had to do with Cambalache, I think between that update just now and David those were answered, Machacala as well. Machacala will go into production and when that does happen, the tailings will be the first that begin to get processed.
With regards to, I have a question with regards to Hans Rasmussen being on our website…. That is the case, Hans is and has been a technical and business development advisor to Affinity for some time, so that is not really a change we just put that on there, there’s been a relationship there, as you know Hans was also the CEO of Columbia crest gold.
With regards to the status of our audits and our filings, as far as their time frame of filing, as of right now we are still targeting the 180 day time frame, if there is any change to that, obviously I will be letting people know, if there is any change to that timeline, it’ll be driven solely by the needs of the auditor and legal counsel based on what they need to finalize the audits and the comprehensive 10K, but as of right now we are targeting the 180 day time frame and that’s it.
So, again we will give an update on the next shareholder conference call as well regarding that, and I think that’s the last of the questions. So if you do have any additional questions or concerns from this meeting please by all means email them to Affinity Gold at the AFYGconferencecall@affinitygold.com email address, or you can also send them to my Affinity Gold email address which is firstname.lastname@example.org, and I would be more than happy to respond to you directly or we can also save it for the next conference call. So, again thank you very much for attending today’s call, and I look forward to hearing from you and being able to report more positive news going forward, and I think that even though the January was a quiet month, I think February our shareholders will be happy with, and you’ll start hearing more from the company and our accomplishments going forward. Thank you very much goodbye