Karmin Exploration Inc. (KAR)
Interview with:
William Fisher, CEO & Director
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
discovery and development of metal mines in Brazil.

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Karmin Exploration recently announced a new joint partnership with Votorantim - South America’s largest zinc integrated mining and smelting company

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Exploration-zinc, gold and copper

Karmin Exploration Inc.

6 Adelaide Street East, Suite 901
Toronto, Ontario  M5C 1H6
Phone: 416-367-0369

William Fisher
Chief Executive Officer & Director

Interview conducted by:
Lynn Fosse
Senior Editor

July 2004

Bill Fisher graduated in 1979 with honours in Geology from Kingston University, UK. His geological experience led him through residential posts in Africa, Australia and Canada, in both exploration and mining positions, with an enviable track record of mineral discovery and development. He discovered kimberlites in the Congo, and was the production geologist in mines in Angola and Guinea. He was responsible for the evaluation, installation and commissioning of a small gold mine in Queensland, Australia. From 1997 until 2001, Bill was Vice President, Exploration for Boliden Ltd, a major European mining and smelting company, where he was responsible for 35 projects in 9 countries, including mine exploration. He has served as a director of Expatriate Resources (TSX-Ventures) and North Atlantic Natural Resources (Stockholm Stock Exchange) and Aurelian Resources (TSX-Venture). Bill is also the President of Globestar Mining Corp., an emerging metals producer. Under his leadership, Karmin Exploration discovered the Aripuanã deposit.   Bill’s experience in development and productions is key to the success of Karmin Exploration.

Company Profile:
Karmin Exploration Inc. (KAR-TSXV) is a public company headquartered in Toronto, Ontario, Canada. Karmin is an exploration company focused on discovery and development of metal mines in Brazil, currently working on their Aripuanã polymetallic mining project in Mato Grosso, Brazil.

The Aripuanã project, located 20 kilometres from the town of Aripuanã, is the largest undeveloped zinc resource in Brazil and one of the largest in South America. The resources are from the Ambrex and Arex ore bodies, two of five massive sulphide deposits discovered along the 25 kilometre mineralized horizon. Karmin discovered the Ambrex deposit in 1995 around the same time that Anglo American discovered the smaller Arex deposit nearby. In 1999, Karmin formed a joint venture with Anglo American Brazil Ltd. to jointly explore the adjoining properties, where similar VMS discoveries have been made. The company recently announced Votorantim as their new joint partner in the Aripuanã project. Votorantim is South America’s largest zinc integrated mining and smelting company. Karmin holds 28.5% of Aripuanã, while joint-venture partner, Votorantim, is earning into a 70% position. Karmin is carried, at no project cost to them, to the completion of a bankable feasibility study.

CEOCFOinterviews: Mr. Fisher, will you tell us a little about your background at Karmin?

Mr. Fisher: “I was the founding CEO of Karmin in 1995. In the first year of the company’s existence, we discovered a project called Aripuanã in Brazil. Subsequent to that, I moved to Boliden Ltd., a big base metal company in Sweden, to run their exploration worldwide, controlling up to a US %50 million annual exploration program. I am now back looking after Karmin, where we just signed a deal with a large Brazilian company to explore and take the project through to production.”

CEOCFOinterviews: Why are you in Brazil and is there a large mining presence in the area?

Mr. Fisher: “Brazil is one of the best fiscal regimes for mining globally and it is under explored compared to some of the other South American countries. But we believe it is one of the most prospective places in the world at this time. Brazil is relatively unexplored as it covers around 50% of an area of South America.  It is a large country and much of the interior is remote, with poor infrastructure. Many of the mining districts have been run for up to a hundred years by large mining companies, both Brazilian and international. There has not been significant participation by junior explorers until the last five to ten years.  In fact Karmin was one of the earliest of the explorers to go to Brazil in the nineties.”

CEOCFOinterviews: Will you tell us about the property you have there?

Mr. Fisher: “We have the largest unexploited zinc deposit in Brazil, I think it is the second or third in South America. Aripuanã is in the province of Mato Grosso, in central Brazil. We have a new partner, Votorantim, who own the two zinc smelters in the country, and they are looking to develop this mine as a source for this smelter. Base metal mines make a concentrate that is sold to smelters and the smelters main market is the huge Brazilian automotive industry. The Aripuanã project is 24 million tons and it contains zinc, silver, gold and copper.”

CEOCFOinterviews: How do you find the other minerals like silver and gold while mining for zinc?

Mr. Fisher: “Gold and silver are valuable products at Aripuanã, which will be recovered by the smelter. A copper concentrate is produced which contains the gold and silver. We may produce gold bars and silver bars at the mine itself from the upper parts of the ore body. This is typical of these types of mines worldwide.”

CEOCFOinterviews: How does the partnership arrangements work?

Mr. Fisher: “Many of these projects started with a discovery. We discovered Aripuanã at the same time another company discovered an adjacent deposit, both deposits are now unitized into a single group. We then made a deal with a major company. A junior company such as ours would be unable or unwilling to put a mine like this into production because it would cost million dollars to do. We needed to find a major company who has the financial ability to do so and in exchange, we are carried at no cost to Karmin through the exploration phase and right through to the completed feasibility studies. Until mining, we do not need to spend a penny; our major partner does all the work and studies on his task.

In this deposit, there is a deeply weathered cap of about 140-150 feet, where the copper and zinc was leached away and the precious metals are retained and we own 100% of that. We will be exploring for this gold and silver.   There is already a 50,000 ounce gold resource on the property, which is going to be the beginning of our exploration program. We will be exploring for gold and silver on the surface, while our partners are spending the big money on developing the underground mine for polymetallic deposits.”

CEOCFOinterviews: What happens now that they have decided to develop this zinc deposit; what is the timetable?

Mr. Fisher: “We were in Brazil last month talking to both the executives and the technical group that are going to be doing the exploration. Shortly I will be announcing the exploration program that Votorantim will be carrying out and a timetable on how the results of that program will come to market. We will be establishing a news flow for the company, which has been absent for a while because there has been little recent exploration. In the meantime, we will be taking on some very experienced geologists to look at the gold from our site. What you will see from the company are regular reports on exploration and development from our partners and also from our own exploration programs. In the meantime, now that the company is back in play, we will be seeking other opportunities and you should see some news coming out on some various other properties that we will be making arrangements to start exploration. Karmin has had a long history of exploration success and we want to build on that.”

CEOCFOinterviews: How do you know when an exploration property is good?

Mr. Fisher: “Research and a lot of exploration has been done by other companies, national and provincial governments. I have been working in and out of Brazil for about ten years, so I have kept Karmin up to speed on the projects and the areas of Brazil that are very interesting. A lot of the exploration is to select projects that will work well for Karmin. Obviously, as a small exploration company, we do not want to buy a huge project for a billion dollars. We want to go and find something with high potential for a sizeable mine and be very aggressive in exploration.  We will make the most efficient use of the money for our junior company’s shareholders.”

CEOCFOinterviews: The prices for the various metals change over time; how does that affect what you do?

Mr. Fisher: “We are at a fortunate position now, in that the combined metal prices are at a ten year high. The gold prices moved from $260.00 dollars an ounce and now it is just over $400.00 and it has just topped that price again this morning. The silver price is moving in a higher range; it is quite volatile but much higher than it has been for several years. The zinc prices have risen 50% in the last year, so it is a real boom time in terms of prices. In the base metals sector, the Chinese industrials have a voracious appetite for base metals and there is no end in sight as the stockpiles in the London Metal Exchange are falling very fast in all metals. We think there is a sustained period of this level of prices, maybe a little higher and unlikely to be much lower. As money comes into the sector, the sector becomes very profitable. Right now there is a shortage of mines, particularly base metal mines, coming onto production. This is good for the mineral exploration company because basic supply and demand shows you that demand is growing and supply is not. You cannot put a mine into production in one year; it takes several years. The exploration business is a very good place to be right now.”

CEOCFOinterviews: Why should potential investors look at you as opposed to many of the other similar companies out there, and what should they know that they may not be able to gather when they look at the material?

Mr. Fisher: “If one looks at the stock trading, the company has been very dormant and this has been so because this deal with Votorantim has been coming for some time and finally it has happened. The stock has been very quiet so we should start seeing some action in the stock. It has been as the company is starting to move and develop. This should be a change, so we are starting at twelve cents Canadian and it is a low level to begin. Other companies that have been more active have higher valuation. In terms of what else people should look for is the potential to grow and look at other properties. We have a long experience in Brazil and elsewhere we are in a position to get some interesting properties going forward. I cannot talk about that right now but we hope that people will be pleased when they see what our plans are and how we bring them to the market.”

CEOCFOinterviews: What are the challenges you face in this project and how are you ready?

Mr. Fisher: “We do not have to invest while our partners develop this mine; that is the bottom line. I think the challenge we have here is to add to the largest undeveloped zinc resource in South America and try to build the company. Not just on that one project, but build a company that would be easy for the investor to understand and yet has the potential for great upside value, both on the production and the exploration side. I am looking forward to building a coherent and attractive exploration portfolio to compliment the mine development.”


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