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Corporation demonstrated their success by identifying over 250
million ounces of silver in the past decade
Esperanza Silver Corporation
570 Granville Street Suite 300
Vancouver, BC Canada V6C 3P1
CEO and Director
Interview conducted by:
Lynn Fosse, Senior Editor
October 20, 2005
CEO and Director
Mr. Pincus has over 25 years of industry experience. Most recently, he was the Vice
President of Sunshine Mining Company where he oversaw the development of the 155 million
ounce (measured and indicated resource) Pirquitas silver deposit. Previously Mr. Pincus
was the Executive Vice President of the mining consultancy Pincock, Allen and Holt, Inc.
Prior experience includes time with FMC Gold (now Meridian Gold) and Atlas Corporation
where he was involved in the successful exploration and acquisition of various precious
metal projects. He graduated from the University of Colorado with a B.A. in geology in
1975 and the Colorado School of Mines with a M.Sc. in geology and a M.Sc. in mineral
economics in 1981 and 1986 respectively.
CEOCFOinterviews: Mr. Pincus, what was your vision when you
joined the company, and how has that transpired?
Mr. Pincus: The vision is to be a sliver exploration
company, very much the prospect generator type company focusing on our areas of expertise,
which are silver and exploration. The way that the vision has evolved is that we have a
number of very good projects that are advancing forward. Ironically, we seem to be
discovering more gold than silver. Through serendipities, we seem to be getting away a
little bit on silver.
CEOCFO: Do these skills
and expertise in silver translate easily to the gold?
Mr. Pincus: Oh absolutely. I joke and say that we are
looking for silver but if we stumble onto a gold mine, we will not look the other way.
They occur together often, so it is not unusual that we find gold. It is a pleasant turn
CEOCFO: Where are most
of your projects located?
Mr. Pincus: Our main project is in Mexico. We are doing
a round of drilling on it. This was one that we were drilling silver, and we came up with
some good gold values and had to reevaluate the whole prospect and now we recognize it as
a potential large gold situation.
CEOCFO: Where else are
Mr. Pincus: We have a prospecting program (with Silver
Standard in Peru). Essentially they are helping fund our prospecting activities and
anything that is found is owned 50/50 and under certain conditions they can increase their
ownership by spending more money.
CEOCFO: How do you
decide what projects you want to take on?
Mr. Pincus: Esperanza project was our original and
qualifying property when we were first listed on the Toronto Stock Exchange. We picked it
up for what was a silver anomaly. It also had many qualities that were necessary for a
qualifying project. That is why we acquired that one. We focused in Mexico and Peru
because both countries are the two top silver producing countries in the world; they have
been historically and they are today.
CEOCFO: You have other
projects in other places as well!
Mr. Pincus: We do have one project in Bolivia that is
on a wait and see basis. The two big projects are the one in Mexico and what has come out
of the joint venture with Silver Standard. We just recently acquired a property with San
Luis. It is early but we are into a high grade. By high grade, I am talking about samples
up to 78 grams of gold and 1,855 grams of silver. That is as high grade as it comes.
CEOCFO: Are there new
technologies of which you are able to take advantage?
Mr. Pincus: We spend a lot of time and effort
interpreting satellite imagery, managing large databases of information, which include
everything from geologic maps, structural interpretation, mineral occurring maps,
sediment, geochemistry, and using modern software we are able to visualize this far better
than we were ever able to do. Ultimately, the purpose of that is to focus on the areas
where we want a geologist to get into the field. That is how discoveries are made. They
are not made from the desk or the modern GIS software system. We want to figure out the
best way to put our geologists so they can bang rocks in the field.
CEOCFO: Tell us what you
need to do with the local community and the importance of getting that area taken care of.
Mr. Pincus: It is absolutely critical! If you do not
have the community on your side, your life is going to be hell. There are enough examples
of where it has gone wrong to make everyone a believer. It starts from the very first time
that exploration geologists get to the field. We have to build that relationship with the
community right from day one. The specifics of the agreement of the community of TETLAMA,
the one that owns the land at Esperanza, we signed a long-term agreement for the
exploration phase. We have paid them a certain rent, which is a reasonable amount. We also
have agreed that based on necessity, we will be hiring people to work on the project,
generally as labor. As the project advances more, the possibility of training is there,
but at this point, it is too premature. We have agreed that when we get to the
exploitation phase, we would have to renegotiate the agreement. We have a good
relationship with them, we rent space in the community, and we hire local people and make
sure that they are able to participate in the benefits as well.
CEOCFO: What is ahead
for the Esperanza?
Mr. Pincus: By early november we hope to be drilling
the Esperanza project. We are updating our permits and getting the community agreement as
part of that. We have been doing a lot of surface geochemistry and geologic mapping and we
are ready to drill. We are now contracting drill rigs. We have laid out the plans for the
drilling, so it is a matter of getting the permits, and application will be in very
shortly. I think it depends on what the drill results are but what we have been seeing is
highly encouraging. Our target now is a million ounce plus deposit but that is just the
target, I have to drill it. We will be starting that soon. That is clearly something to
pay attention to. The high-grade project in Mexico is called San Luis. We will be doing
more systematic sampling and with a prelude to drilling by early 2006 if the results are
right. Three to four years down the line, I would like to have sold off our gold property.
We do not want to develop it ourselves but as I can sell a million ounce resource for a
very large sum of money. I would like to continue with our generative activities and I
would like to see the projects like San Luis advancing towards resource definition.
CEOCFO: Why should
investors be interested?
Mr. Pincus: Resource stocks have been a fairly steady
market the past few years, but it has not taken off the way I think it can. Metal prices
are high and they seem to be staying high for the foreseeable future. There have not been
many large discoveries; everyone is waiting for the next Pierina or Argentina gold or
whatever it may be. The market is primed for that. There has been one stock that has been
quite successful called Bear Creek Mining. Two good geologists have worked hard; they
finally have gotten some very good drill holes, and their stock has exploded. I think that
is as much a reflection that the market is ready for success as it is the merits of the
project in this particular case. I think the market is ready. In our specific case, I
think that we have demonstrated that Esperanza is a legitimate million-ounce target. The
only way to prove that is to drill it and I think that if we get some good drill results,
I would hope that we would get a positive response to the market.
CEOCFO: Do you have the
funding necessary for the development?
Mr. Pincus: We now have money in the bank but as part
of this upcoming drill program and other activities, we will have to raise more funds and
we will be looking to do that in late September. We have contributions from joint venture
partners, particularly the project in Peru where Silver Standard is helping to fund. We
are looking for a similar type of agreement with another company in Mexico that has a
reasonable chance of coming to fruition and that will help fund more prospecting activity
in New Mexico. It is a combination of joint venture partners and going to market.
CEOCFO: In closing, what
should potential investors know about the company that does not jump off the page?
Mr. Pincus: I think it is the quality of the personnel
involved, the management of the company and the geologic team. Our Board of Directors and
advisors are all well-known, top-notch people who have a history of success and the
quality of our properties. We have good, solid properties. Much like with the Bear Creek
experience, experience will tell over time.
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