A Conversation with David O’Connor, Chief Geologist at AbraPlata Resources

NOTE: This interview was completed on Feb.21th, 2020 and was published for Junior Stock Review Premium subscribers on Feb.24th. Become a Premium subscriber now and save 40% by using the Promo Code PREMIUM by March 31st.

I first wrote about Aethon Minerals in the spring of 2019, when it was trading at roughly $0.125 per share (Or $0.033 per share of AbraPlata Resources post merger).

Aethon had just announced that they struck a deal with AbraPlata Resources, which would give them the exclusive right to perform technical due diligence over a 5-month period on AbraPlata’s Diablillos silver-gold project in Argentina.

Fast forward to September 4th, 2019, around the time of the announcement of the definitive agreement between the two companies, and I wrote a full article outlining the investment thesis.

Currently, AbraPlata is trading at $0.11, making it a triple for readers and myself. Even today, with a MCAP of close to $30M, I still believe that AbraPlata is undervalued, especially when you consider their latest drill results – this is a rich epithermal system.

Why is it still undervalued?

In my view, it’s solely based on Diablillos’ location – Argentina.

Jurisdictional Risk – Argentina

Jurisdictional risk should be a major part of any junior resource sector investor’s investment analysis.  Understanding the risks of a particular jurisdiction can be helpful in understanding why a certain company’s MCAP is discounted.

Jurisdictional risks can range from political instability, to a lack of rule of law or potentially any number of environmental concerns which today, seemingly, can become an issue or risk anywhere on the planet.

In my view, it’s ultimately the culture of the people who live in the country who dictate how the country conducts itself.

For example, the people of Ecuador have major ties to the rainforest and the environment in general.  Thus, I believe, they will always pose some sort of risk to mining.  Now, I’m not saying this is right or wrong, just that in terms of mining companies, you must realize that this social issue isn’t going away.

Cultures take hundreds of years to form and hundreds of years to change. Therefore, what you see is basically what you get.

In saying this, reading about a culture can only get you so far in terms of understanding it. In reality, I think that you need to live in a country for a period of time to really get a real feel for the culture and how it ticks.

With this said, today I’m sharing a conversation with David O’Connor. O’Connor is Chief Geologist with AbraPlata Resources (ABRA:TSXV) and has over 40 years of experience in mineral exploration.

Most importantly, O’Connor has called South America home for 27 years having first lived in Bolivia, then Chile and now, most recently, Argentina.

Let’s hear what O’Connor has to say about Chile, Argentina and of course, AbraPlata’s flagship project – Diablillos.

Enjoy!

Brian:  You have a lifetime of experience within the mining industry with over 40 years to date. I think it is safe to say that you have experienced every facet of mineral exploration and, of course, the nuances of exploring for mineral deposits beyond the confines of the country you were born in.

For context, can you give us a little bit about your background – education, where you got started in the mining industry, where you have lived, etc.?

David: I did my undergraduate degree at Cape Town University, then worked in the Messina copper mine in South Africa for a year before moving to Australia where I worked for several years with Western Mining Corporation. I took time off to complete my Master’s degree in Mineral Exploration at the Royal School of Mines in London, following which I returned to Western Mining, ending up in charge of exploration in South Australia, where we discovered the Olympic Dam deposit.

I then moved to Peko-Wallsend (Geopeko) where I became their chief geologist. Later, I moved to France, where I established a subsidiary of Nicron Resources, which was an Australian lead-zinc miner. We explored the old lead mines in France and Belgium for their zinc content. I then wrote a multi-client study called “Development Opportunities in Lesser Developed Countries” and decided to move to Bolivia, where the World Bank was assisting with privatisation of state mining projects.

In Bolivia, Ross Beaty (old friend from the School of Mines) and I established two junior exploration companies, the first being Da Capo and the second Altoro. With Da Capo we developed resources to the feasibility stage on two mining areas, the main one being Capacirca. We merged Da Capo with a mining company called Granges, to form Vista Gold. With Altoro we concentrated on a platinum-paladium project in Brazil, on the strength of which we merged with Solitario Resources.

I moved to Chile when things went ethnic in Bolivia and established Explorator Resources, with which we developed the El Espino IOCG resource to feasibility stage and sold it to a local copper miner called Pucobre.

I joined Aethon Minerals in 2018 and moved to Argentina a couple of months ago when Aethon merged with AbraPlata. I now live in Salta, which is conveniently close to the Diablillos silver-gold project.

Brian: I’m particularly interested in hearing more about your time in South America. Starting with Chile, in your opinion, why do most mining people continually rate it as the best place to do business in South America?

David: Chile is well endowed with mineral resources, with the porphyry copper deposits there supplying roughly a third of the world´s copper, together with substantial gold and other metals, more recently including lithium. Mining is very important to the Chilean economy and has become so because of the government´s policies, which have attracted the needed foreign investment to explore and develop the mines. The country is advanced regarding infrastructure and services, even though the exploration areas in the high Andes mountains can be challenging.

Brian: AbraPlata has a few JV ready projects in Chile, one of which has a great JV agreement with Rio Tinto.

Can you give us an outline of these projects and their potential?

David: The Arcas mineral rights block, on which Rio Tinto has entered into an agreement, is located in the porphyry belt north of the mining city of Calama, which services the major porphyry copper-gold mines in the area. The Arcas block has outcropping porphyritic intrusions, together with the relevant anomalous geochemistry to host copper-gold deposits. However, exploration in the relatively remote area is more appropriate to a major company with the finances to handle it, which is why we joint ventured it to Rio Tinto.

Brian: There is great potential in AbraPlata’s Chilean projects, but the main attraction or pillar of the investment thesis in AbraPlata revolves around the Diablillos project, which is located in the Salta Province of Argentina.

Having now lived in Argentina for a few months, what would you say are some of the differences between living in Chile and living in Argentina?

Do you see there being a correlation between those differences and the mining investment attractiveness of each of the countries? Please explain.

David: As mentioned, I live in Salta, which is a delightful little city in Northern Argentina, convenient to the Diablillos project and well serviced with flights to Buenos Aires etc. Argentina has had its political challenges in the past, but the new president has stated his support for the mining industry, realising that attracting foreign investment is an important means for supporting the economy. In Argentina, each province has its own minerals policy, with certain provinces being more pro-mining than others. It is important to note that mines and mineral exploration in the pro-mining provinces has continued through several changes of federal government.

Brian: Unlike Chile, Argentina has a stigma for being one of the riskier jurisdictions to invest in within South America. To a certain extent, I can’t disagree, as politically there have been some major gaffs over the last 20 years.

However, in terms of mining law and regulation, Argentina is different than most of the other South American nations, because it’s governed at the provincial level.

With that said, Salta province has a good history and reputation as being a stable region for operating mining companies.

From lithium brine operations to other hard rock mining projects, there is a lot going on in Salta.

Can you give us more context as to what is going on in Salta right now? Are companies moving forward with their projects?

David: Salta province is particularly pro-mining and the provincial government recognises it as an important source of income for the province. As well as the historic borax mines and the more recently developing lithium mines, Salta hosts the major Taca Taca copper porphyry and the Lindero mine which is currently being constructed not far from Diablillos. We are in a mining friendly environment.

Brian: Having just gone through the process of getting drilling permits and the other work that goes into developing a mineral exploration project recently, how did you find the process?

David: Fortunately for us at Aethon, when we merged with Abraplata, that company was very well prepared regarding permits, community relations etc. And we were able to move immediately into drilling at Diablillos. I think AbraPlata is competently represented with its legal and administration team, who pay close attention to legal and community issues. Having recently met with the new Secretary for Mines and Energy for the province, who ensured us of his department´s continuing support, I feel confident that we will be able to proceed smoothly to develop and expand resources at Diablillos.

Brian: You have touched on a lot of positives, but there is always risk.

Where do you see the potential risk for exploring and developing a mineral project in Argentina?

David: Frankly, I think that there is undue concern about potential risks in the mining friendly provinces, but that is not the case in provinces, or parts of these provinces, where agriculture and tourism compete for space. In these mining will always be up against local community issues. An overall concern, if you insist on looking for one, is if the Federal government might consider raising taxes in the future. However, it seems that common sense will prevail and they will not kill the goose that will continue to lay bigger and bigger golden eggs.

Brian: Recently, AbraPlata released some great drill results, which were highlighted by some stellar intervals – 17.5 metres of 604 g/t silver and 7.0 metres of 20.6 g/t gold and 202 g/t silver.

Can you summarize the results and give us context as to how it fits in with the overall geological model of the Oculto deposit?

David: The Oculto deposit is a high sulphidation epithermal system which hosts silver and gold resources that were the basis for a robust PEA on an open pit project. However, a preliminary desktop study by RPA indicated that an underground mining scenario could potentially be attractive, because of substantially lower initial capital cost (no pre-stripping, smaller plant etc.), rapid payback time and better metallurgical recoveries due to a higher head grade. While this study remains preliminary at this stage, the main objective of the current drill program is to expand the deeper gold resource and then complete additional work which would enable us to release a new optimized PEA, planned on an underground mining scenario.

We decided to drill a bit deeper than previous campaigns and have intersected substantial copper sulphide mineralisation beneath the oxide gold and silver resources, with associated gold and silver with the copper in places, as announced this week.

Brian: Outside of the Oculto deposit, are there any other targets of interest? Please explain.

David: Outside of the Oculto silver-gold deposit in the shallower oxide zone, a new target is the underlying copper and precious metal Zone beneath it in the sulphide zone.We will keep chipping away at this with our current drilling program, as we drill to expand the overlying oxide gold resource. The breccia zones hosting sulphide mineralisation at Oculto are probably related to outcropping breccias in the Cerro Viejo and Cerro Blanco areas within the Diablillos project area, where they are related to outcropping porphyries. These are additional targets which I plan to explore in due course.

Brian: Thank you very much for your time and your views, it’s much appreciated!

Until next time,

Brian Leni P.Eng

Founder – Junior Stock Review Premium

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company and sector that is best suited for your personal investment criteria. I have NO business relationship with any of the companies discussed in this article. I do own shares in AbraPlata Resources.