Silver Investing News (SIN) recently had the chance to speak with Sean Hurd, head of corporate communications at Golden Arrow Resources (TSXV:GRG), about the company’s flagship Chinchillas silver project, located in Argentina.
In the interview below, Hurd discusses the company’s plans for the project, as well as President and CEO Joseph Grosso‘s long-running involvement in the country; he also gives his take on what silver prices will do in the longer term.
SIN: To begin, could you give me a quick overview of what Golden Arrow is all about?
Sean Hurd: Golden Arrow has been exploring in Argentina for precious metals for a number of years as part of the Grosso Group. The Grosso Group has been in Argentina since 1993, so Mr. Grosso is approaching his third decade of involvement in the country.
The main focus of Golden Arrow at the moment is our brand-new Chinchillas silver discovery. It’s in Northern Argentina and was made just a few months ago — we announced a 43-101 resource of over 100 million ounces of silver equivalent. That has quickly propelled it to our flagship property.
SIN: You also recently tripled the size of that project. What are your short- and long-term plans for it?
SH: With Chinchillas, it started out that we acquired the property through an option agreement to earn 100 percent. When we first picked up the project — the initial claim before enlarging it — we had expected perhaps 35 or 40 million ounces. We’ve moved it forward, and it’s turned into over 100 million ounces of silver equivalent. The medium-term goal, with the tripling of the project size, is to begin exploring for similar targets within that claim block, which obviously is now significantly increased.
If the Chinchillas discovery remains at its current size, it would be one of the smallest discoveries within the Bolivian tin-silver belt, which exists into Northern Argentina and contains some very notable discoveries — San Cristobal being one of them, and Potosi, which has been in production for hundreds of years. So we’re recognizing in this market that there’s a very clear potential for movement and growth on two fronts. One, in and around the Chinchillas discovery, which we’ll continue to explore and advance beyond its current 100 million ounces of silver equivalent, moving it to something significantly larger within the confines of the new claims we’ve now been granted.
Second, we’re in a unique position in a couple of ways. One is our relationship and our history with Argentina through Mr. Grosso, who’s going on 30 years’ involvement. The other is that we have a very strong treasury. We’re sitting with $10 million in the bank, and looking at the network that we have and the opportunities within the region, we believe that we can increase on the developing regional play for silver projects within that Bolivian tin-silver belt. We’ve been putting a lot of effort into identifying new properties in an environment where we have sufficient capital to move forward; I know that a lot of companies are quite challenged on the exploration side due to the lack of capital in the equity markets. So Chinchillas is just a really solid springboard and very much a pleasant surprise in terms of size. We think we can grow it and develop a regional plan, and we want to be at the forefront of that.
SIN: You mentioned that your CEO has been in Argentina for a long while. Do you know what attracted him there, what’s drawn the company there?
SH: Mr. Grosso is Italian by descent. He previously developed a very successful clothing manufacturing operation, but being from Vancouver, he was always involved as an investor in mining, or in some capacity very aware of the exploration side. By population, Argentina is about 40 percent Italian heritage, so his wife and himself both have sisters and many other relatives in Buenos Aires. He sold his business and signed a non-compete agreement and was basically about to retire in ‘92, ‘93, when he paid a visit to his family in Argentina. That was when Argentina was opening up for foreign investment — prior to 1993, there was no foreign investment in the mining sector allowed. Coincidentally, his sister’s next-door neighbor was Dr. Vicente Mendez, who was in charge of all the exploration for the government. Mr. Grosso saw that Chile had a tremendous amount of exploration activity, and yet historically Argentina had nothing, although they shared thousands of kilometers of borders.
He realized the opportunity in the mining sector in Argentina and formed a company within the next few weeks after meeting Dr. Mendez — it was the seventh foreign company operating for exploration in Argentina. That led him to assemble a land package that subsequently turned into the Guacamayo gold mine; he’s had a very long, rich history in the country; he was Mining Man of the Year in Argentina in 2007. Due to his efforts we have a great network of contacts throughout Argentina.
SIN: What are the advantages/disadvantages of working in Argentina? It sounds like things are going quite well for Golden Arrow.
SH: I think the advantage of Argentina is the opportunity. If you look at the land mass and the rate of discoveries that have happened over the last 15 years in that country, it’s quite impressive. And if you look at Chile, the contribution mining has made to Chile’s economy is undeniable. The history in Argentina has not been mining, it’s been agriculture, it has been wine, so that presents a tremendous opportunity.
The challenge in Argentina is learning how to operate there — it’s really about your track record and how you’re perceived by the government and by the locals. The advantage we’ve got is that as a management group we’re entering our third decade of involvement down there and we’re seen in the country as a company that’s stuck it out through thick and thin. That’s recognized through our relationships with the people in the local mining offices, the governors in the provinces, the head of the mining department, the minister of mines — we’ve got very strong relationships in Argentina from working with all of these people, and it’s proved to be a really big advantage; we’re very comfortable working in the country.
SIN: Silver prices aren’t doing so well right now, but where do you see them going in the longer term?
SH: The silver-gold ratio I think right now is sitting at about 65 to 1. If you take people like Eric Sprott, he thinks that the ratio should be something like 20 to 1, and that’s a huge, huge movement in silver. I can’t predict it, but my personal belief is that we’re trading at the bottom of the range, which might be true of many commodities. I think it’s important as a mining company, or an exploration company, that you’re targeting ounces that can be produced at these levels. As I said, I think we’re at the bottom of the silver range, and going forward in the years to come, the price of silver might surprise some people.
SIN: So do you see yourself in a good position compared to your competitors?
SH: Golden Arrow’s becoming a unique story. It’s quite remarkable — in less than 12 months we’ve taken an exploration project to a resource calculation. The high-grade core of the project is sitting right on the surface, the rock is not very hard, so I don’t imagine that we’re going to have to blast, and our metallurgy came in very, very good, up to 98.7-percent silver recovery. All of these things in our mind point to a low capex, and we’ll be working towards doing the economics and a PEA of the project as we advance it. I think that we’re in a very good situation. The deposit just makes sense for the times, it’s a very solid project.
The way to appreciate how strong the deposit is, we feel, is to try to pull it apart, try to find the hole — what’s wrong with it? I think we can answer every question, it’s a very solid deposit. There’s potential for growth and we’ve got the capital to grow.
SIN: Is there anything else you’d like to add?
SH: One of the key things about operating in Argentina that we’re very proud of is that over the years we’ve put more and more emphasis on the socioeconomic side of things. We want to make sure that when we’re involved in a region there are three winners: the local community, the local government and our shareholders.
It’s really important to engage the local stakeholders from the beginning, involve them and be very transparent. If you want to have successful exploration and development in Argentina — and it’s not just Argentina, I think this is across the mining sector — all stakeholders need to be involved and consulted at every stage. That’s something that we’ve done and are very focused on, and it’s really paid back in terms of the ease in which we’ve been able to work and the fact that we’ve maintained a presence there for so long without encountering any difficulties.
Argentina is going to be our focus for a long time to come. This silver belt has been producing for hundreds and hundreds of years, and it’s only recently that this part of the belt has been utilized on the Argentina side. I think you’ll hear more about it in the coming years. Hopefully most of that news will come from us.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclaimer: Interviews conducted by the Investing News Network are edited for clarity. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported. The opinions expressed in these interviews do not reflect the opinions of INN and do not constitute investment advice. All readers are encouraged to perform their own due diligence.