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Nayarit Gold has an excellent property position in Mexico,
with high-grade gold, and the potential to not
just be a major gold deposit, but a major gold camp
Metals
Mining-Gold
(NYG-TSXV & OTC: BB)
Nayarit Gold Inc.
Suite 1420, 220 Bay Street
Toronto, ON Canada M5J 2W4
Phone: 647-477-6264
Michael A. Dehn
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
February 23, 2006
BIO:
Michael A. Dehn
Oakville, ON - President, CEO and Director
Mr. Dehn, a former senior geologist for Goldcorp Inc., has been active in the mining
industry involved in exploring for precious metals, base metals, diamonds and industrial
minerals, as well as financings, marketing and project management, since 1994. He
graduated from the University of Waterloo with a BSc. in Earth Science in 1993, and has
worked extensively with new regional exploration technologies including remote sensing,
computer modeling, geophysics and geochemistry. Currently he is an officer and/or
director of other publicly listed companies, and occasionally consults on projects within
the Red Lake Gold Camp.
Company Profile:
Nayarit Gold Inc focuses on building a successful resource company and maximizing
shareholder value through aggressive exploration, combining rapid examination and
comprehensive evaluation of high quality gold properties in prolific mining districts in
Mexico.
Nayarit Gold Inc.
is a newly formed junior mineral exploration company.
Management’s
strategy is to build Nayarit Gold into a profitable resource company and maximize
shareholder value through successful exploration by means of cost-effective examination
and early drill testing of high quality precious metal properties in prolific mining
districts in Mexico.
Exploration
success through quality management and early drill testing of the best targets
Nayarit
Gold’s management team consists of highly experienced mining and financial
professionals. The company utilizes cost-effective exploration by acquiring quality,
drill-ready properties in prolific mining districts and applying the best available
exploration technologies to prioritise targets. The highest priority targets are tested
early by drilling with only the best being advanced.
Focusing
on Mexico. Nayarit Gold is exploring for gold and silver within the proven precious
metal producing districts of Mexico. As new opportunities arise, wherever they may be,
Nayarit Gold is well positioned to act on them.
CEOCFO: Mr. Dehn, what attracted you to the company?
Mr. Dehn: “I was actually sought out for this project. I
spent the last ten years at Goldcorp Inc. (GG: NYSE & G: TSX), in Toronto, working
with Robert McEwen, their former chairman, and the team there, and put together the
regional exploration properties in the Red Lake Mine in Ontario, Canada and manage the
joint ventures. Once the merger with Wheaton River had joined Goldcorp and Wheaton River
into a new organization, it became quite a large and totally different company to work
for. I was looking for new opportunities and I probably looked at about 50 different
opportunities when Nayarit Gold came along. I had not even heard of the company at the
time, but they brought the property to the table to show me what they wanted me to run. It
was difficult for me to say no. It was an interesting project at an early stage, with such
excellent results at an early stage of exploration.”
CEOCFO: Will you tell us more about Nayarit?
Mr. Dehn: “Nayarit is a small company on the TSX venture
exchange. It has fully issued outstanding shares of about 25,000 million shares with
nine million in warrants and four million in stock options. Fully diluted, we are
about forty million shares. We are trading close to forty cents per share now. Our volume
has picked up over the last three months. We are trading at approximately forty to fifty
thousand shares per day so we have some liquidity. We are exploring in Nayarit State, Mexico
on the prolific gold trend of the Sierre Madre Occidental metallogenic province where most
of the high-grade gold deposits in Mexico exist. Nayarit picked up the projects called La
Estrella and Orion that Lac Minerals USA Inc., had worked on in the 1990s.
When Lac was purchased by Barrick Gold Coropration (NYSE: ABX and TSX: ABX), Lac was all
but shut down in Mexico, but Barrick continued the Lac operations, especially in the Americas,
but not Mexico.”
CEOCFO: Why is it the time to be back there?
Mr. Dehn: “The gold price. Gold is at a 25-year high. It
is still going to be pushing higher and I strongly believe gold is going to be pushing
$800.00 in the next two years. If the U.S. dollar goes the way it should go, considering
the U.S. economy is still booming, but the deficit and debt are growing so rapidly, I can
see the U.S. dollar going down, which will let the gold go free flying up against foreign
currencies. We will see gold in the $800.00 range depending upon how quickly the U.S.
dollar falls against the Yen, and the Euro. You can see how the Canadian dollar has
performed quite recently and how strong it has become against the U.S. dollar.”
CEOCFO: Part of
your strategy is cost-effective examination; how is that done?
Mr. Dehn: “What we have done is pick up a project that
has had some previous work; drilling, underground development, that had been sitting
dormant for a decade. We validated that drilling with a different drilling technique; we
completed a core drilling program and the core holes let you take out the rock and examine
it, the mineralization and structure, as it exists below surface. Our property now, is in
excess of 11,000 hectors and we have been prospecting aggressively for the last four
months since I have been with the company. We have come up with some new showings; some
underground workings that were unknown on the property prior to this prospecting and we
are not ready to just jump in with the drill right away. We are going to do more
three-dimensional modeling and interpretation and make sure that the mineralization we do
see on the surface and our drill holes, can be explained in the geometry that may not be
obvious looking at the rocks. A bit of three-dimensional modeling should save us hundreds
of thousands of dollars and a lot of time.”
CEOCFO: Why is
your company unique?
Mr. Dehn: “The reason we are doing things better and
more progressive than most people, is that we are a team of experienced geologists here,
three on management and one that helps us out on the side. We have all worked with big
companies. We have seen what works for big companies and what does not. We are not stuck
in a mold where we have to do the same procedures every time we come to a property. We
will examine a property and take as much data as we can. We actually spend quite a bit of
our time doing compilation of historical data and that is how we came up with our latest
discovery on the property. We met with Mexican government officials and they pointed us in
a direction that we had not even considering looking, and found out that there is a set of
underground workings on the property that have been totally filled in, and came up with
some great gold results!”
CEOCFO: So. the
expertise, knowledge and background of the management team is what is really working for
you!
Mr. Dehn: “That really helps, and I would add that the
opportunities of working with Goldcorp and working with Rob McEwen, to do exploration
outside of the box, even the Goldcorp Challenge. In addition, there were techniques,
technology and opportunities at Goldcorp that other companies seemed scared to try. I had
an annual budget in excess of $7 million just for regional exploration, ands outside
projects. You pretty much test every geophysical technique, and every geochemical
technique. You see which ones work in different situations and which ones work in every
situation. We are going on our own experiences; but we were not stuck in a box and saying
“we had to do this geochem survey”. You had he opportunity to work with some of
the most brilliant out of the box thinkers and cutting edge tools. We were able to do
different techniques and technology, and at the time, we had the budget that allowed us to
learn what worked. Through Goldcorp, I had a great experience and a great team to work
with and learn from. That experience we were able to transfer to a small junior
company.”
CEOCFO: How
important is your relationship with the government?
Mr. Dehn: “It is a new relationship. The Mexican
government has always been a very technical and good exploration group and mining group
but they are not quite as well “advertised” as the Geological Survey of Canada,
and as the Ontario Geological Survey. The Geological Survey of Canada are known as some of
the best when it comes to gold deposits. The same is true for Richard J. Goldfarb at the
US Geological Survey. There are just some people there that everyone knows in the
industry, but when it comes to Mexico, Mexico is still such an unknown to many and it is
on our doorstep. General geological knowledge is more well know fort Peru, Chile and Brazil
than it is for Mexico. This is not that the data has not been collected, but that it has
not been widely available. In some ways it is by fluke finding the right person at the
right meeting that gets you on the right track and introduces you to all the other people
and information that help you.”
CEOCFO: Will you
tell us more about the properties and the process?
Mr. Dehn: “The properties are two hours south of Mazatlan
and three hours north of Puerta Viarta by car. We have excellent infrastructure on the
properties. There are high-powered lines going through the property and rails through the
property and we are close to the pacific highway. It is a fifteen-minute drive from a
center of 30,000 people. There are several small communities on the property, and thirty
to forty families per community. We retain most of our workforce from these communities.
It is an excellent agricultural area. People that are living in these communities are
eager to work and they are a pleasure to work with. On the properties, we are looking at
three styles of mineralization. The current focus is high-grade gold and mineralized
zones. A second style of mineralization on the property is bulk tonnage low-grade
mineralization. We have some wide intersections of mineralization that are lower grade.
This target is not our main focus right now, but as the gold price creeps up, it is much
simpler to find these types of deposits than it is for the high-grade narrow structure and
as our understanding of the property increases we will focus on the mineralization that we
think will give the best return to our investors. We may put more focus on this in the
second half of the year. Our third style of mineralization and our second focus on the
property is high-grade silver mineralization with minor gold credits. This is something we
will spend more time on in the coming months.”
CEOCFO: What is
the financial picture at Nayarit?
Mr. Dehn: “We are sitting with just under $400 thousand
cash right now. We have about $400 thousand worth of warrants that we expect to be
exercised in the next few months. We will be doing a financing so that we can do some
drilling later in the quarter. It probably will not be a large financing but enough to
make sure we can follow-up on the results from the underground workings, and our
previous drilling on the property, and then maybe do some step-out onto a few of our other
high potential targets. We are not strapped for cash and we can operate efficiently. We
are a small group; we have an office here in Toronto and an office in Mexico and eleven or
twelve employees at any one time. We are lean.”
CEOCFO: Are you
100% owner of your properties?
Mr. Dehn: “We are 100% owner of all of our
properties.. One of our properties has a 3½% royalty; but on 98% of our property, we own
100% with no royalties.”
CEOCFO: Is that
by design?
Mr. Dehn: “We do not expect ourselves to be the big
producer; we want to get this deposit up to the point where we can get a major such as
Goldcorp / Teck-Cominco / Penoles interested to take us on because we are explorers. There
is not an engineer among us; what we think we can do is explore more effectively and
quicker than a major can. Ideally, we look at ourselves as being an extension of an
exploration team for any major company. What we will do is get those properties to the
point where every major mining company and every gold investor will want to buy us and our
shareholders will do very well when a major comes knocking on our door. We do not have the
expectations to put the property into production ourselves. We have already had majors on
the property, and at an early stage, it is quite surprising that they showed the interest
that they have. We are already working on developing the relationships with these majors
to let them now where we are and how things are advancing. It is much easier to market to
a major company where they understand the geology; and not just the assay results where
you market to a retail investor. Majors are much more interested in the gold resource,
whereas when you are marketing retail investors in junior companies, they are all about
capital gains.”
CEOCFO: Why
should potential investors be interested?
Mr. Dehn: “You are looking at a junior exploration
company that has a very strong management team on the technical side. On the finance side,
we have an excellent board that has raised hundreds of millions of dollars. There is a
solid management team and board to go along with the properties. The properties sell
themselves. There is high-grade gold; it is a very large land package; we have only looked
at less than 1% of the property and the potential here is to be not just a major gold
deposit but a major gold camp in Mexico.”
CEOCFO: In closing, what is the timeframe?
Mr. Dehn: “We expect to be one of the more aggressive
companies and what we will try to do is compress the timeframes of exploration. What most
companies will do in four years, we will try to do in less than eighteen months.”
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