Orex Minerals
(TSXV:REX)
(OTCQX:ORMNF)
CEO: Gary Cope
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INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Gary Cope, CEO for Orex Minerals. The company trades on the TSX Venture, ticker symbol REX, as well as on the OTCQX, ticker symbol, ORMNF. Thanks for joining us today Gary.
Gary Cope: Oh thanks for having me.
WSA: Certainly, anytime. So, starting off, please give us a history and overview of the company for some of our listeners that are new to the story.
Gary Cope: Okay, well Orex has been around at least since my involvement since 2003. It was a sister company to Orko Silver, which made the discovery in Durango, Mexico. It eventually built up a deposit at a project called Preciosa, we built up the project to 270 million ounces of silver and eventually sold it to Coeur Mining, who had won a bidding war with First Majestic. So, it was very successful, we sold it in 2011, and Orex is the next one. Our expertise has been in Mexico and in particular in Durango, and now we’ve made a significant discovery at our Sandra Escobar project in Durango. We also have a JV with Fresnillo at our Coneto project which is also in Durango. So, we’ve got a lot of success there, and it looks like we’re going to have more.
WSA: Great, so in terms of Durango, can you talk about some of the recent silver intercepts and some of the other key news there?
Gary Cope: So, we’ve been building on a very unique deposit at our Sandra Escobar project. In Mexico, most of the projects you’re looking at are vein projects in which you are trying to find three to four meter veins or wider that are running at least 200 gm silver.
What we’ve got at Sandra is a different beast. Instead of just veins, we have the vein lift, small vein lifts which run very high, a kilogram plus, but the big story which makes it unique is that there is silver in the host rock, in the well rock. And so, we’re getting intercepts instead of the three and four meter vein intercepts you normally get, we’re getting intercepts up to 60 meters with grades in excess of 100 meters on average, and because it’s right at surface it has become a very, very attractive target to all the silver producers, and most of them sign CAs with us, and has made multiple property visits. In the span of a year, which is how long we’ve been working on this project for, we’ve probably drilled 7,000 meters, and our first resource is going to come out and most people think it’s going to be in the neighborhood of 40 million ounces. So, an incredible rate of ounces to meters drilled, and we think it’s going to continue.
WSA: Well, great. And so, what are some of the key trends that you are focusing on right now in the sector, and how is the company positioned to capitalize?
Gary Cope: Well, we’re in a very good position to capitalize. We have not done a financing in two years. We don’t need to do a financing for at least another year. The reason for this is that we structured a spin-out company that came out of Orex. We had a Swedish asset that we thought we needed to spin-out because we weren’t getting full valuation for it, and our Mexican projects. And so we spun it out, and the deal we struck, we ended up bringing Agnico Eagle in as the operator on a joint venture on that project, and the money that they needed to give us which was US$10 million has all gone into the Orex side. No financing [has been] necessary, so we haven’t had much dilution.
The second thing is we’ve had the big success at Orko, we’re a team that’s recognized as a top-notch exploration team. We certainly know Mexico as well as anybody especially in the Durango area. And we’re structured to be taken out. This deposit is building extremely quickly, and we’re an obvious takeout target to a silver miner who looks at the project and sees basically that there is zero strip ratio and huge bulk open pit potential. And from our point of view we have not finished the story by any means. We’ve got multiple hills to explore that look the same as the one that we’re finding all the silver on, and the large land package. I think we’re extremely well positioned for this market, and we’re fortunate enough to be on a project that has huge potential.
WSA: And what are some of the other factors that you feel make Orex and your project unique from some of the other players in the sector?
Gary Cope: Well, I mean the obvious answer to that question is it’s simply the deposit itself. It’s a deposit, where we’ve got silver into the host rock in a packet that’s 30 to 40 meters thick. And it’s just unique. We get asked all the time, you know, compare this project to something else in Mexico, and it’s very, very hard to find anything. It’s just a rare event to have the silver permeated into the host rock in the way it does at Sandra. It’s very unique.
WSA: Good, and what are the key goals or milestones you are hoping to accomplish over the course of the next six to twelve months?
Gary Cope: Well, I think we’d like to build the deposits and hit the 100 million ounce mark on Sandra Escobar as well as Fresnillo, I’m sure we’d love to, on drilling hit the 100 million mark at Coneto. So, on the two projects we’d love to hit the 100 million mark. I think it’s certainly doable in the short-term at Sandra and depending how fast Fresnillo wants to drill Coneto it’s certainly doable there too. That’s one milestone.
I think the second one is we’d love to see a bidding war start on Sandra at some point in time. We’re probably too early yet. There’s resource to be put out here later this month, and a metallurgy report will be coming also probably towards the end of October. And I think once those are out, another milestone would be to see how fast the majors get interested and how aggressive they get.
WSA: Sure, and perhaps you can walk us through your background experience, Gary, and talk about some of the key management team there?
Gary Cope: Sure, in my 20s I was a stockbroker, and specialized in getting my clients into mining deals. My little brother was a geologist. So I am a closet geologist, I guess you could say, and I got very interested in mining deals and had some knowledge on how to value them and things like that. And I ended up doing a deal with my clients on a private side financing, and it got into trouble, I ended up having to take over the company to save my client’s money, and from there I’ve never come back. I was the President and CEO of Eaglecrest, which was a very interesting deposit and project in Bolivia, that Barrick got very interested in. And then I became President of Orko, which of course was a big success, we sold it for $370 million to Coeur. And then I’ve rolled it into Orex.
I think the secret of our team is our strength of our team and just to talk a little more about the team, we’ve got Art Freeze who has got 40 plus years of experience, from ex-Cominco, ex-Goldcorp as a geologist. I’ve got Ben Whiting, who has another 40 years experience, ex-Professor at Queen’s University in the Geology Department and Engineering. We’ve got two younger geologists in Dale Brittliffe and Robert van Egmond, who are running our projects and have 20 to 30 years experience. So, just in our head office in Vancouver there’s four very, very experienced geologists, and then we have a very strong Mexican team and unit as well.
I put our team in the elite group of probably four or five different exploration companies as we’re right up there as far as one of the top teams. I’m very proud of that, and think that’s a big, big part of our success.
WSA: Great, so as far as our investors and the financial community are concerned, what are some of your key drivers there that you wish perhaps they better understood about you guys?
Gary Cope: Well, I think on the Mexican side, certainly is the one thing that’s always the hardest I think to get across to the potential investors, is the true potential and the likelihood of success on a project. Once you have an initial resource and then people start to come and look, they start to see the potential for size. And I think we’re coming up on Sandra Escobar right to that stage when we put out this first resource, and then people start to understand, “well wait a second, they have got similar geology here and they’ve got similar geology there, and they’re starting to hit silver on different parts of the property, this thing could be really big.” So, I think that’s the biggest challenge on our Mexican operations.
And also on the Coneto project, we haven’t put out much news on Coneto because Fresnillo you know, in the slowdown sort of shutdown a lot of their grassroots exploration. Now they’ve come back. I think it’s a wonderful project, but people have forgotten about Coneto and it’s going to be reawakened here in the next few weeks as they start drilling again, but in Mexico those are our two challenges.
In Sweden, the big challenge is we’ve got this wonderful multimillion ounce deposit building and getting bigger, and bigger, and just because Agnico doesn’t put out regular news we can only put out a news release about once a month. So, a lot of people don’t realize yet how great that project is. And it’s going to be a mine. It’s going to be Agnico’s next big mine, there’s no question. That’s our biggest challenge, to get that across to potential shareholders as well.
WSA: Well, certainly, and so once again, joining us today is Gary Cope, the CEO for Orex Minerals. The company trades as mentioned on the TSX Venture, ticker symbol REX as well as on the OTCQX, ticker symbol is ORMNF, and currently trading at about $0.69 a share. Market cap is about US$81 million. Before we conclude here, Gary, to recap of some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Gary Cope: Well, I think the main point is based on the results that have been released to-date and based on the resource that’s coming out here in the next couple of weeks. I think investors will see that Sandra Escobar is one of the top takeout projects that you’re going to be able to see in Mexico. It’s an obvious takeout to a miner because of the low strip ratio, because of the open pit, because of the grade, because of the ability to build this thing much larger. And I think you’re going to see that’s the biggest point for potential investors is to see a rate of return. Plus given the history of our group, which has always been that model we’ve been able to deliver on, that model of being able to take a project to a certain point and then selling it to a major for a big premium. So I think we’re a group to be bet on. I think Sandra Escobar is a project to be bid on. And then you throw the Coneto project in there with Fresnillo, the world’s largest silver miner, and I think you’ve got a company that’s undervalued.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress, and we’d like to thank you for taking the time and joining us today Gary, and update our investor audience on Orex, it was great having you on.
Gary Cope: No, it’s my pleasure, Juan, and thank you for having me.
