Red Eagle Mining Corporation
(TSX.V:RD)
(OTCQX:RDEMF)
CEO: Ian Slater
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WSR: Good day from Wall Street, this is Juan Costello, Senior Analyst at the Wall Street Reporter. And joining us today is Ian Slater the CEO for Red Eagle Mining Corporation. The company trades on the TSX venture; their Ticker Symbol is RD as well as on the OTCQX ticker symbol is RDEMF. Thanks for joining us today there Ian.
Ian Slater: Thanks for having me.
WSR: Great, now starting off give us a brief history and overview of the company there for some of our listeners that are new to your story.
Ian Slater: We acquired a project in Columbia in the end of 2010; IPOed in 2011 and have been drilling ever since. The reason we acquired the project was it was one of the largest producing mines in Columbia during the Spanish Empire, 400 years ago. So back then they got about a third – believe it or not, a third of their gold from grave robbing and a third from high grade underground mines like Frontino, Marmato and Buritica; the same ones that are still there today. And the final third came from the type of project we have at Santa Rosa where they were sluicing the hillsides.
The ground all around our project is full of high grades gold veinlets. So when they were sluicing the hillsides off just using gravity and water, it rains a lot there, we estimate they mined 30 million tons 400 years ago. With the troubles in Columbia until this decade, there was been no modern exploration on the property, it was one of the last remaining big colonial mines in the world that hadn’t had modern exploration.
WSR: And so yeah in terms of Santa Rosa, talk about some of the recent intercepts there and a little bit more overview of the project?
Ian Slater: We have drilled 23,000 meters to date. We just finished our oxide drill program where we drilled the weathered portion in the top 50 to 70 meters on 50 meters centres. And prior to that, we drilled down to 250 meters with almost every drill hole intercepting gold. The best results we had were in the summer at around 170 meters depth, 4 drill holes over 500 meters of strike length intercepted 5 to 7 meters of 30 to 40 grams gold per tonne. World class grades, similar to the type of grades that Ventana was pulling before they were bought by AUX.
We have just commenced another 17,000 meter program so we will have 40,000 meters all together by March. This drilling is to extend those high grade intercepts at strike and to extend from 250 meters to 500 meters at depth. So we are really doing a two-pronged approach, one is to continue drilling and the other one is to go full speed ahead with permitting a mine for the pit we have drilled to date. We are going to have a resource out by the end of the year and a PEA in the first quarter next year, which is already well underway. They are both being done by Mine Development Associates from Reno. Then we are going to spend 2013 on permitting and feasibility. The plan is as soon as we are permitted to commence construction in 2014 and then production in 2015.
WSR: Certainly and in regards to Columbia, can you give us a little bit of overview on the Pavo Real property.
WSR: We have been focusing recently on Santa Rosa just given our drill results and success to date. Pavo Real is a great project over a huge area, but it is just earlier stage. There aresedimentary hosted gold veins and breccias. There are a few gold porphyry targets because we are right at the bottom of the Mid Cauca Gold Belt with the closest project being AngloGold’s La Colosa. To the northeast of the project there is also a 15 kilometer long Copper Silver/Gold skarn district. What we call Mina Vieja, is an historic copper mine from the 1970s that was worked for a few years before it got shut down with the troubles. They were producing a concentrate and shipping it to the coast. They were mining 2% copper so it’s exciting down there but it’s still early days compared to Santa Rosa.
Juan Costello: Certainly and what were some of the highlights of the recent financing there?
WSR: We raised $25 million at the IPO in 2011 and spent it drilling. For the current financing, we started this summer talking to some private equity firms and we had them down to the site over the summer while they were doing there due diligence. Everyone loved the project. The financing actually went very smoothly, the project speaks for itself once investors see the scale of the system and the drilling success we have had to date. We actually had more interest in the equity subscriptions than we accepted. We chose to go with Liberty Mutual out of Boston who have proven to be a great partner and who also purchased a royalty which allowed us to limit dilution to existing shareholders. We wanted to raise the full $20 million which is our work program for next year to get us through feasibility and permitting. The royalty was a great solution where we were able to limit dilution and get to the $20 million. Half of that royalty we can buy it back after we are in production. It was a perfect solution.
Juan Costello: Good. And so what are some of the trends that you are seeing right now in your sector and is it positioned as the company that capitalize on them?
WSR: Well, you know in my mind is there are a few trends, one is it’s going to be extremely difficult over the next couple of years to finance exploration, pure grassroots explorations. It’s going to befar easier to fund and there is lots of money on the sidelines to fund development projects, something that investors can see the cash flow light at the end of the tunnel. So that’s one huge difference. And the other is a change in where the money is going to come from, there is a lot of money that wants to be invested in the mining sector but its going to come more through the private equity route in the future I believe versus historically mining funds and hedge funds, so those are probably the two main things I would think looking at it from a financing perspective.
Juan Costello: And what would you say makes Red Eagle unique from some of the other players that are in a sector?
WSR: In Columbia, if you take out the ones that you can’t participate directly in so AngloGold’s Gramalote and La Colosa and you take out the California district which AUX has bought up, if you look at the rest of them, Red Eagle is going to be one of the first in production. So I think that’s the advantage we have is we are in a part of Columbia that has a mining history, it doesn’t have social or environmental issues and it has a scale that can be built. We are not moving towns or spending hundreds of millions or even billions of dollars developing a big gold/copper porphyry.
Juan Costello: Certainly, and so perhaps you can walk us through your background and experience there, Ian and talk a little bit about the management team there?
Ian Slater: Well, my background is actually I am an accountant, I was a partner in Arthur Andersen, I ran their mining business in former Soviet Union in the 90s but I was born in England and raised in Canada. I went an ex-patriot to Russia after I got my Charted Accountancy. That’s where I learned the business and then when Andersen fell apart I moved back home to Vancouver and was Managing Partner of Ernst & Young’s Canadian Mining Practice and then 4 years ago I decided to go out on my own and build a group myself.
Now we have 3 companies that we have built: Red Eagle which we are speaking about in Columbia and Black Eagle which is a private metallurgical coal project in Alberta and Slater Mining which is, actually, a relatively similar gold project in Kazakhstan. We’ve put together a very experienced team, my business partners are Tim Petterson, a mining engineer and ex-head mining analyst globally at HSBC and Bob Bell, a mining engineer who was one of the founding partners of MinProc and he ran mines, built mines and completed feasibility studies of the type of mine that we are planning on building in Columbia. Boyd Payne, the ex-CEO of Teck Coal is President of Black Eagle, our coal company. Rob Pease, the CEO of Sabina and ex-founder and CEO of Terrane is a director of Red Eagle. We are putting together a great team of experienced guys.
WSR: And what are some of the goals and milestones there that you and the team are hoping to accomplish over the next year?
Ian Slater: In Colombia, we are targeting to have a feasibility study and permits by the end of 2013, so we can start construction. And at the same time we are going to drill out a bigger resource and look for more of this high grade mineralization that we have seen at depth.
WSR: And as far as investors and the financial community are concerned, Ian do you believe that the company, story in your message and upside are completely understood and appreciated by investors and if not what you wish they better understood about the company?
Ian Slater: No, not yet actually I think that’s what the issue is, we don’t yet have analyst coverage and it is extremely undervalued as it is a relatively new and unknown company. The analysts we have been building relationships with plan on covering Red Eagle after the initial resource comes out next month which will unlock some value. If you look at say Galway which was just purchased for $250 million, we are going to have a similar resource to them by the end of the year, we are still drilling at depth,we are permitting a mine and we have a market cap of 10%.
WSR: Very good point and so once again joining us today is Ian Slater, the Chief Executive Officer for Red Eagle Mining Corporation which trades on the TSX venture, ticker symbol is RD as well as on the OTCQX, ticker symbol is RDEMF, currently trading in $0.55 a share. And before we include here Ian to briefly recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Ian Slater: We have got a great slate of news coming out, 17,000 metres of drilling, the initial resource, the PEA and we are still I think off of the radar of a lot of mainstream investors. And we are fully financed to get through feasibility and we are going to build one of the first modern gold mines in Columbia.
WSR: Well, we currently look forward to continuing to track your company’s growth and report on the upcoming progress and we would like to thank you for taking a time to join us today, Ian and update our investors on Red Eagle.
Ian Slater: Thank you.