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  • Yukon Premier Darrell Pasloski: Our Goal Is To Be The Number One Mining Location

    The Fraser Institute's 2015 Annual Survey of Mining Companies ranks Yukon first in mineral potential and ninth overall in global mining jurisdictions, points not lost on Yukon Premier Darrell Pasloski. Pasloski believes Yukon can improve on its survey ranking and says his government is making every effort to attract mining investment. That includes continued support for the Yukon Mining Alliance, a joint effort between companies and government to co-promote one another. In this interview with The Gold Report, Pasloski talks about some companies advancing their projects in one of the world's top mining jurisdictions.

    The Gold Report: The Yukon is ranked first in mineral potential and ninth overall in the recent ranking of global mining jurisdictions in the Fraser Institute's 2015 Annual Survey of Mining Companies. Is that good enough? What are some of your mining-related goals for the Yukon?

    Darrell Pasloski: You can't get better than number one when it comes to mineral potential but the ninth overall ranking to me says that there's still some work to be done. Our mineral endowment certainly is world class and the opportunities as a world-class jurisdiction for mining exploration and development will make us a future leader in the mining sector. There are more than 2,700 existing mineral occurrences in Yukon but these cover only about 12% of the land, so that leaves vast potential for current and future explorers.

    The first goal would be more streamlined permitting. The federal government currently holds our environmental assessment legislation and is making amendments to the Yukon Environmental and Socio-economic Assessment Act. Those amendments will ensure that our assessment process is consistent with those in other jurisdictions, which should allow us to remain competitive. Here in Yukon, we're working on the Mine Licensing Improvement Initiative. Improvement to this process will foster a more predictable and efficient regulatory environment.

    The second goal would be improved infrastructure. There has been more than 100 years of mining in the territory and some good foundational infrastructure has supported the sector for decades. Yukon already has about 5,000 kilometers of government-maintained roads, an international airport, many community airports, and access to two ice-free deepwater ports that are probably a couple of days sailing closer to market than other ports along the northwest coast. Last year we made significant capital investments in highway, bridge and airport upgrades. This year our capital budget marked another record capital investment in infrastructure. And we have begun to plan for development of new hydroelectric infrastructure that will provide enough energy capacity to take us well into the future. In fact, almost all of the electricity for communities now is from renewable energy sources.

    TGR: Where does mining rank in terms of economic impact in Yukon?

    DP: Historically, mining has accounted for about 20% of Yukon's GDP. Mining is the cornerstone of the Yukon economy. Things are great when the resource industry is strong, but we also feel the effects when the industry goes through cyclical downturns.

    TGR: Much of the Yukon is occupied by First Nations. How is the Yukon government helping mining companies and First Nations build trust and relationships?

    DP: The mining industry is the largest employer of First Nations people in Yukon. We have 14 First Nations in Yukon and almost half of the modern day land claims in Canada are here. Eleven First Nations already have land-claim and self-government agreements. Each of the First Nations that has land claims also has an economic development corporation. There's a tangible business-ready approach to identifying opportunities.

    One of the realities, though, is that because we've been modern treaty trailblazers we are also among the first to encounter the challenges of such uncharted territory. Our relationship with First Nations people is strong, but it's not always easy. Meanwhile, mining companies operating here have been progressive in developing First Nations relationships on their exploration and development projects. Each company has some type of cooperation agreement in place with affected First Nations. First Nation communities and businesses both benefit from these agreements and the opportunities that come from them.

    We also work with the Yukon First Nation Chamber of Commerce and Yukon First Nation Development Corporations. For example, we signed an agreement not long ago with Kluane First Nation to collect some geophysical data via airborne survey on a portion of the Kluane Ranges, part of its traditional territory.

    TGR: Please give us three reasons why mining companies should spend their limited exploration budgets in your territory versus perhaps Alaska or British Columbia?

    DP: First, you mentioned earlier that the Fraser Institute identified Yukon as having the world's greatest geological potential. There is a remarkable endowment of significant gold, silver, lead, zinc, copper, nickel, iron, molybdenum, tungsten, and platinum group metals [PGMs] deposits. More than 2,700 mineral occurrences have been identified in roughly 12% of the landmass-Yukon is significantly underexplored. We have a long history of discoveries that continues to multiply with each exploration boom. As a result of the recent two-year exploration boom that started in 2010, more than 7.3 million ounces [7.3 Moz] gold in new discoveries were added to the previously existing deposits that totaled 23 Moz gold, 50 Moz silver and 10 Moz PGMs. That's significant.

    Second, Yukon has an experienced and supportive service-supply sector. The knowledge is here whether it's assay labs, airborne electromagnetic surveys, helicopters or drillers. The businesses that are required to support the mining industry are well established in Yukon and are here to make life easier for exploration companies.

    Third, this is a very mining friendly jurisdiction. Our government recognizes that the mining industry is a cornerstone of our economy. We realize that the benefits accrue directly to Yukoners and Yukon businesses, as well as to mining companies and their investors. Our government will continue to work on its mineral development strategy. Our goal is to rank first in all of the categories in the Fraser Institute survey.

    TGR: Some mining pundits believe that recent environmental legislation put in place by Canada's federal government makes it unusually difficult to permit a mine or develop new deposits on an already permitted property. What's your view?

    DP: More than a decade ago the federal government transferred management of the territory's land, water and resources to the territorial government. Along with that was the creation of the Yukon Environmental and Socio-economic Assessment Act here in the territory. We have our own made-in-Yukon approach to environmental assessments. Those assessments also have to factor in the social and economic benefits of each project. In the past eight years, seven mining permits have been issued within 18-30 months, which is either comparable or better than most First World jurisdictions. Investors also benefit from being in one of the most geopolitically safe mining jurisdictions in the world, with security of tenure that is second to none. Once a permit is granted, a company and its investors can move forward with little risk that the permit will be revoked. We in Yukon have grown our mineral sector over the past decade and we want to stay at the forefront of investment attraction.

    TGR: Tell us briefly about the Yukon Mining Alliance.

    DP: It's actually quite exciting. The Yukon Mining Alliance [YMA] is composed of Yukon's leading exploration and development companies, and those firms are focused on creating innovative capital attraction initiatives to promote Yukon as a top mineral investment jurisdiction, while at the same time promoting their companies and projects. The YMA initiatives include such things as going to international conferences and events with a mining investment focus. Senior Yukon government officials support these activities by going along and communicating to investors some of Yukon's key advantages. For instance, in September 2014 I went to the Denver Gold Forum with the Mining Alliance. A lot of companies are envious of the relationship that exists between the Yukon government and the mining industry here. It's a unique relationship. Not only are these company CEOs promoting their product, but essentially they're promoting Yukon as well.

    TGR: That's rare in Canada. What are some companies that are demonstrating success in the territory?

    DP: Capstone Mining Corp. (OTCPK:CSFFF) [CS:TSX] has existed for a number of years. The company is currently completing the work necessary to obtain its water license to begin stripping its newest open pit. Capstone is a real success story. One of the unique aspects of the Capstone project is that it's situated on land owned by the Selkirk First Nation. And because it's on First Nation land, 100% of the royalties accrue to the First Nation development corporation and the Selkirk First Nation citizens. That's a good example of how there can be a substantial direct benefit to First Nations as a result of the mining industry. Those are some companies that are quite exciting and that have projects that are moving along.

    TGR: What's one message that you want to get out to mining investors and the public about Yukon?

    DP: Most people recognize Yukon for the incredible beauty of its vast mountain ranges, Boreal forest, and spectacular lakes and rivers, but Yukon is equally beautiful below the ground. When it comes to mining, our potential is second to none. I'm excited about the opportunities out there for the mining industry. The growth and development of that industry will help bring prosperity to Yukon citizens and their communities, as well as to mining companies and their investors. By continuing to invest strategically in infrastructure and ensuring that our permitting and assessment processes are as efficient as possible, we will help position Yukon to be the best place in the world for mining.

    TGR: Thank you for taking some time to talk with The Gold Report. It is much appreciated.

    This interview was conducted by Brian Sylvester of The Gold Report and can be read in its entirety here.

    First elected as leader of the Yukon party on May 28, 2011, Darrell Pasloski was sworn in as Premier on June 11, 2011. He was elected to the Yukon Legislative Assembly in October of 2011 in Whitehorse's electoral district of Mountainview. In addition to his duties as Premier, he also serves as Minister responsible for the Executive Council Office and as Minister of Finance. Prior to entering politics, Premier Pasloski worked as a pharmacist and business owner, was an active member of Yukon's business community and had a long record of volunteer service.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    Bottom of Form

    DISCLOSURE:
    1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report and The Life Sciences Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Darrell Pasloski: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (NYSE:I) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
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    May 26 3:12 PM | Link | Comment!
  • 'Lean And Mean' Is The Secret To Junior Mining Equity Success: Thibaut Lepouttre

    Thibaut Lepouttre, editor of Belgium-based Caesars Report, says the gold price is range bound and if you want to be in gold equities you have to find "lean and mean" precious metals producers that are generating cash flow or have a clear path to cash flow at $1,200 per ounce gold. Lepouttre tells investors to look for projects with economic studies demonstrating high internal rates of return, as those projects are more likely to attract financing and command a market premium. In this interview with The Gold Report, Lepouttre talks at length about some of his favorites inside and outside the gold space.

    The Gold Report: In January, you told The Gold Report that the price of gold is driven by market panic and inflation, neither of which looks imminent. If investors can't expect higher gold prices in the near term, why should they be in this space?

    Thibaut Lepouttre: I've never been a goldbug but I see gold as a form of asset diversification. There's nothing wrong with having some exposure to precious metals in a portfolio, both in the physical form and in the form of precious metals mining equities. Mining companies are much like any other company. You should find the ones that have free cash flow or have set their sights on positive cash flow, even when the gold price is range bound. It's up to investors to make sure that they know what they own and understand the financial situation of those companies.

    TGR: How are you playing this space?

    TL: I want reliable, low-cost precious metals producers and some companies with development-ready projects. I try to identify companies with projects that are viable at the current gold price and that should be able to get financing because their projects' internal rates of return [IRR] are still acceptable at $1,200/ounce [$1,200/oz] gold or lower. I avoid companies with projects with high capital costs because the markets want companies that are small, lean and mean. I'm not investing in companies that need gold at $1,500/oz or $2,000/oz to make a project work.

    TGR: You're based in Belgium. Greece recently made a $224 million [$224M] payment to the International Monetary Fund [IMF]. Essentially, that's an interest payment on its European "credit card," but the country is still negotiating with the IMF, the European Central Bank and the European Commission on its next bailout. How do you expect these negotiations to unfold?

    TL: It was really the European Union's [EU] credit card that was used to make the payment because Greece asked all its public services to wire cash to Athens as an emergency measure. The big question is where will Greece get the money for its next payment? The treasury in Athens is running on fumes. Greece has to repay about €6-7 billion [€6-7B] over the next two months. It's a tricky situation, but Greece is probably in the driver's seat because the EU clearly does not want Greece to leave the Eurozone [for now].

    But would Greece be willing to leave the euro and go back to the drachma? It would in a heartbeat. That would once again give Athens a sovereign currency. The drachma would be weak but that would boost exports and attract more tourists, especially from Russia. European leaders are trying to make it sound as if Greece has to stay, but Greece doesn't have to do anything. If Greece leaves the Eurozone, it would be an important catalyst for gold because that would increase uncertainty in the markets.

    TGR: Which countries in the Eurozone are closely watching these negotiations with Greece?

    TL: The southern countries are really following the negotiations closely because if Greece exits, there's no reason for these countries to stay in the Eurozone; it's much easier for them to go their own way. It's the idea of a unified European Union that is causing the governments in the western and northern countries in the Eurozone to make sure that a solution is found because they would lose face if the EU failed.

    TGR: There is a critical IMF meeting in about a month. Could that be pivotal for gold?

    TL: You're alluding to the IMF meeting that will decide the compilation of the Special Drawing Rights [SDR] basket. The Chinese have requested that its currency be included in the SDR basket, which currently consists of the Japanese yen, U.S. dollar, euro and British pound. Gold could also potentially be included in the basket but I don't think the yuan nor gold will be included, at least not yet. It will be interesting to hear the Chinese arguments. China has not updated its gold reserves in a long time. It wouldn't surprise me to see China update its official gold reserves just before that meeting. If China chooses to disclose its gold reserves, it will show that China is serious about getting the yuan included in the SDR basket. It might be the main factor that the IMF considers.

    TGR: What range do you expect gold to trade in through the end of this year?

    TL: It depends whether Greece collapses or not. We're still in the same range where we saw strong support at $1,175-1,180/oz, but we also saw strong resistance at $1,220-1,225/oz. The range is definitely narrowing. Once we break out of that range, either in a positive or negative way, we will see a big move in the gold price.

    TGR: Which elements of junior developers are you most focused on with gold around $1,200/oz and financing still at a premium?

    TL: Investors should try to focus on high-margin projects with low capital and operating costs because the financing environment remains difficult. Mining projects with high IRR numbers will attract the necessary financing to move ahead and will always command a premium over other assets. The second priority is low geopolitical risk. I'm avoiding high-risk countries like the Democratic Republic of the Congo and South Africa.

    TGR: Do the essentials change for the smaller companies like the explorers?

    TL: It's a good time to be an exploration company with cash because diamond-drilling costs are the cheapest they have been in almost a decade. The all-in cost for diamond drilling is less than $100/meter [$100/m] in North America. The cost was $250-270/m four years ago. On the negative side, the explorers operating in remote areas will have a tougher time because it will cost them three or four times as much to drill the same hole.

    TGR: What are some companies you're following in that space?

    TL: The first one is Dynacor Gold Mines Inc. (OTC:DNGDF) [DNG:TSX]. It operates a 250 ton per day [250 tpd] mill in Huanca, Peru. It recently announced that it has the permits to increase capacity to 300 tpd. It also received a permit to build a new plant in Chala, Peru. Dynacor also has an exploration project called Tumipampa. I hope that Dynacor monetizes that asset in the next 18-24 months because Dynacor should not develop Tumipampa alone.

    TGR: Finally, what are some junior mining stories that you're following outside of the precious metals space?

    TL: Let's start with copper. I recently visited Nevada Copper Corp.'s (OTC:NEVDF) [NCU:TSX] Pumpkin Hollow copper project in Nevada, where the company has completed its production shaft for the underground portion of the deposit. It is now working toward an integrated feasibility study, which would see the company combine its open-pit and underground mine plans into one big plan. The results should be published by the end of May. Pumpkin Hollow is one of the last huge copper resources in North America. It contains about 5 billion pounds [5 Blb] copper, and more copper is found every day. Nevada is mining friendly. The nearby Anaconda copper mine produced almost 2 Blb copper over 30 years beginning in 1952. Nevada Copper is going to attract some senior producers.

    TGR: Nevada Copper was courting suitors five years ago. What is the stumbling block?

    TL: It finished the initial feasibility study three years ago and decided to start construction on its own and keep the underground deposit for itself, while potentially seeking a partner to develop the open pit. The plan changed when some potential partners demanded an integrated feasibility study. We could see a completely new mine plan where both zones are mined simultaneously but it will cost more than $1B to get the open pit into production. These aren't decisions you make overnight.

    TGR: How do you maintain your optimism in this space?

    TL: You always need to make sure that you understand the markets. I strongly believe that should gold go back to $1,000/oz, it will not stay there. It is going to be one of those V-shaped corrections as we saw in 2007-2008, and then it will move back up again. China and Russia are still buying gold and they will buy even more if the gold price goes as low as $900/oz. But I wouldn't be unhappy if gold were to stay at near current prices.

    TGR: Thank you for your insights, Thibaut.

    This interview was conducted by Brian Sylvester of The Gold Report and can be read in its entirety here.

    Thibaut Lepouttre is the editor of the Caesars Report, a newsletter and mining portal based in Belgium that covers several junior mining companies with a special focus on precious metals and base metals. Lepouttre has a Bachelor of Law degree and two economics masters degrees that have forged his analytical approach to the mining sector. Considered a number cruncher, Lepouttre focuses on the valuations of companies and is consistently on the lookout for the next undervalued mining company.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    Bottom of Form

    DISCLOSURE:
    1] Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report and The Life Sciences Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
    2] The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3] Thibaut Lepouttre: I own, or my family owns, shares of the following companies mentioned in this interview: Nevada Copper Corp. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Nevada Copper Corp. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4] Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5] The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6] From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (NYSE:I) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    May 21 3:32 PM | Link | Comment!
  • Why Ricardo Carrión And Alberto Arispe Are Optimistic About Mining In Peru

    Despite headlines about deadly protests and the collapse of funding for juniors, Ricardo Carrión and Alberto Arispe of Kallpa Securities in Lima remain steadfastly optimistic about the future of mining in Peru. In this interview with The Gold Report, Arispe and Carrión highlight the mining-friendly government, the new production from many sources and point to several juicy projects that lack only the means to further unlock Peru's mineral riches.

    The Gold Report: Canadian and Australian miners have realized a 25-30% premium due to the strong U.S. dollar. How has the U.S. dollar affected Peruvian miners?

    Ricardo Carrión: Peruvian miners have realized a similar benefit due to currency exchange. This factor has resulted in lower costs for the Peruvian industry. In addition, miners have also benefited from lower prices in oil. But the question is has this cost reduction offset lower metal prices, and the answer is no. Lots of companies are still struggling with current market conditions.

    TGR: How has the mining industry fared since President Ollanta Humala was elected in 2011?

    Alberto Arispe: Humala ran in 2011 on a radical, antimarket platform. Presidential elections in Peru use the runoff system, so in order to win a majority in the second round of voting, he had to moderate his tone and make alliances with more moderate parties.

    He then raised royalties and taxes on the mining industry. These were modest increases, however, made after much consultation with the industry. Given how radical Humala seemed at first, the industry was relieved. Since 2013, Humala's administration has become openly market friendly and has worked to solve the problems faced by, for instance, Newmont Mining Corp. [NMC:TSX; NEM:NYSE] over its Conga project.

    TGR: The Peruvian government is more mining friendly, but what about the Peruvian people? Last month, several protestors were wounded and one was killed in the dispute over Southern Copper Corp.'s [SCCO:NYSE] Tia Maria mine.

    AA: This is not a national problem. It is a more localized problem fomented by some NGOs, radicals and some politicians. Two or three big projects are having local difficulties, but many big projects are moving quickly to production without these difficulties. HudBay Minerals Inc.'s [HBM:TSX; HBM:NYSE] $1.8 billion [$1.8B] Constancia mine is almost finished. Next door, Las Bambas, a $5.2B project that MMG Ltd. [1208:HKSE] bought from Xstrata Plc [XTA:LSE], should be producing in 2016. Freeport-McMorRan Copper & Gold Inc.'s [FCX:NYSE] Cerro Verde copper mine is basically doubling its capacity. Peru's copper production will soon double from what it was in 2014.

    TGR: President Humala is not eligible to run again in 2016. Is this a cause for concern?

    AA: It's too early to worry about that. Let's see what the polls are saying at the start of next year. Right now, the leading candidates are very market friendly.

    The main worries that Peruvian mining faces are lower gold, silver and copper prices and the collapse of financing for projects owned by juniors.

    TGR: Will the dearth of financing lead to an increase in mergers and acquisitions?

    RC: I already mentioned the Las Bambas takeover. It is rumored that Southern Peru Copper will make a move on Anglo American Plc's [AAUK:NASDAQ] large Quellaveco project. But this is only a rumor that was later denied by Southern Peru Copper.

    Among the juniors, Indico Resources Ltd. [IDI:TSX.V] just got into an agreement for 70% of its Ocaña copper project to a private concern, Aruntani S.A.C., for $18.6 million [$18.6M]. This is an interesting deal, which we have valued at about $0.10 per pound [$0.10/lb] of copper, which is high given current market conditions.

    TGR: Has this new regulatory regime resulted in many companies processing artisanal ore on a tolling basis?

    RC: Toll mining is growing everywhere in the world, not just in Peru. Mining companies are seeking lower risk, and processing ore presents lower risks than exploration and mining. Here in Peru, we have five or six TSX Venture-listed companies in tolling. Dynacor Gold Mines Inc. (OTC:DNGDF) [DNG:TSX] has been doing this for a while, and it has been doing pretty well. The company has a market cap of $77M and processes in the range of 250-350 tons per day [250-350 tpd]. Dynacor has one plant at Huanca and another on the way at Chala.

    TGR: How much bigger will its operations be after Chala goes online?

    RC: Dynacor is seeking to achieve 1,000 tpd and will become a very important player.

    TGR: Dynacor also has a copper-gold exploration project, Tumipampa.

    RC: When a tolling company reaches 1,000 tpd, it needs to secure a consistent supply of ore. This is Dynacor's plan for Tumipampa.

    TGR: What are the margins for toll miners in Peru?

    RC: It depends on where you are in Peru and what the grade is. Also, in order to keep the ore coming, toll miners must be fair with small miners. The industry standard is about 40-50% now, but that will probably fall over time to 35-40%.

    TGR: And what is the other Peruvian zinc play you like?

    RC: Sierra Metals Inc. (OTC:DBEXF) [SMT:TSX] has Yauricocha in Peru, an extremely nice asset generating good cash flow. The company has two very good prospects in Mexico. Sierra has been flying under the radar because of liquidity problems, but I'm pretty sure the company will solve those problems. It published Mexico silver assays over 300 g/t in December, but few investors noticed that. It's hard to buy Sierra Metal shares, but it has good properties and also pays a divided.

    TGR: Despite the current financing problems for juniors, are you optimistic about their prospects in Peru for the rest of the decade?

    RC: Absolutely. We are near the end of a cycle. I believe we will see a real recovery in the market starting in 2016.

    TGR: Ricardo and Alberto, thank you for your time and your insights.

    This interview was conducted by Kevin Michael Grace of The Gold Report and can be read in its entirety here.

    Ricardo Carrión is the managing director for capital markets and corporate finance for Kallpa Securities in Lima, Peru. He served as a senior analyst of Banco de Credito in the areas of corporate banking, corporate finance and capital markets and was an adviser to Lima's Stock Exchange. Carrión holds a bachelor's degree in business administration from Universidad de Lima with specialization in finance and capital markets.

    Alberto Arispe is CEO of Kallpa Securities SAB, a Peruvian brokerage and boutique investment house. Previously, he was a vice president of emerging markets institutional equity sales at Fox-Pitt Kelton. Arispe has more than 18 years of experience in capital markets. He has a Master of Business Administration from the Stern School of Business at New York University and a bachelor's degree in economics from the Universidad Catolica del Peru. He is a professor of finance at Universidad de Lima.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    Bottom of Form

    DISCLOSURE:
    1] Kevin Michael Grace conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report and The Life Sciences Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
    2] The following companies mentioned in the interview are sponsors of Streetwise Reports: Bear Creek Mining Corp. Streetwise Reports does not accept stock in exchange for its services.
    3] Ricardo Carrión: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Sierra Metals Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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