Categories: Precious Metals
Topics: General Precious Metals

CEO John-Mark Staude: Strong Execution of the Prospect Generator Model Has Riverside Resources (TSX-V: RRI) Perfectly Positioned as Market Heats Up

Gerardo Del Real: This is Gerardo Del Real, with Resource Stock Digest. Joining me today is president and CEO of Riverside Resources (TSX-V: RRI), Mr. John-Mark Staude. Mr. Staude holds a PhD in economic geology and has over 20 years of diverse mining and exploration experience in both precious and base metals. He earned a Masters of Science from Harvard University in 1989 and a PhD in Economic Geology from the University of Arizona in 1995. Mr. Staude has held positions with a number of major international mining companies, including Kennecott, BHP, and Teck. His technical and managerial experience spans more than 30 countries in diverse geologic environments. Riverside Resources is a well-funded prospect generator, with a very tight share structure, that has put together a portfolio of exciting gold and silver, copper projects.

John-Mark, thank you for joining me today. I could go on because of your background, but I think we'll get right to it.

John-Mark Staude: Thanks, Gerardo. Glad to be involved.

Gerardo Del Real: Well, listen. I provided a bit of a background there in the intro. Could you please share with us a bit more about your background and just how you got involved with Riverside Resources?

John-Mark Staude: Well, I'm really excited. I founded Riverside Resources in 2007. We brought it public in that year. Prior to that, I actually, as you noted, had done a PhD in mineral economics and economic geology studying resources in Mexico. What better way to apply one’s thesis, is to bring it forward as a public company. It's been exciting. With that knowledge, and with my network from BHP and Teck, we're able to develop quite a few partnerships with major companies. Really great to have had the experience and now be able to lead Riverside.

Gerardo Del Real: Excellent. Excellent. Now, let's talk about Riverside a bit. You follow the prospect generator model and you do it right. That's allowed you to maintain a very tight share structure. You also have some very impressive shareholders, that include Sprott, Kinross Gold, Euro Pacific, and Adrian Day Asset Management. Now, as important to me as the fact that management owns approximately 6% of outstanding shares, so you all have skin in the game. How have you been able to court such a respected group of shareholders?

John-Mark Staude: Well, I think the reason we have strong shareholders in ourselves, I've never sold a share of Riverside myself. I've always participated in all the financing and bought shares. I think what we see is the upside from knowing the geology, doing sound business deals, and thirdly, is being very careful of share structure. What we do is we appreciate being owners. I think our fellow shareholders see that we are very careful with the treasury. We put it forth ourselves doing our own exploration, sometimes drilling. Largely, finding OPM, other people's money, to leverage off of our ideas.

Gerardo Del Real: Excellent. Now, you mentioned OPM, other people's money. I also mentioned that you follow the prospect generator model. You've been able to put together a pretty impressive portfolio of projects. With your background, you have, of course, a large focus in Mexico. You've been very successful in generating partners to fund the project. So much so that Riverside has generated, I believe it's something like $2.50 in partner funded exploration for every $1 that Riverside has spent, despite a bear market that put a lot of companies out of business. How were you able to use that bear market, that it appears we're finally coming out of, to your advantage?

John-Mark Staude: We were really lucky. First off is we were able to get more great people. We're delighted to have a vice president, Ron Burk, who was formerly the vice president of exploration at Silver Standard, Centerra Gold. Having excellent people like that. Also, strong geologists in Mexico. Second is we were able to take advantage of the bear market to get better projects and new projects. The Cecilia Gold Project, The La Silla Project in Sinaloa. Other projects we were able to add to the portfolio were excellent. The third thing was we were able to strengthen our relationships with major companies. We kept our alliance with Antofagasta. We also do deals with Centerra Gold. During the down market, when other companies failed, we were able to prosper. We really took advantage of it. Now, as we're going out of the market, coming into a warmer, heating up into a better market, Riverside's perfectly positioned to take advantage of the upside.

Gerardo Del Real: Excellent. Now, for those that are new to the resource space or to the prospect generator model in general, could you please explain the benefits of the prospect generator model and just how Riverside has been able to implement it effectively coming out of this bear market and into this better resource market that we're in now?

John-Mark Staude: The first advantage is to keep your shares tight. I think the second is to gain the access of good people and good capital. The good people having major partners like Antofagasta and Centerra Gold, out on site with us. Bringing their expert geologists to partner with us in the field gives our team that added advantage. The other reason the prospect generator model is very good is it spreads the risk. We've been able to evaluate many, many properties. We've been able to work on many. We're able to drill many and yet, only keep the best ones. That type of ability to turn over projects has allowed us, as you mentioned, to have $2.50 dollars of partner spending for every $1 we have. That's what the prospect generator does. Gets many opportunities. Exposure to the upside. Limited downside.

Gerardo Del Real: Wonderful. You've done that well. Can you speak a bit, you touched on it a bit here just a second ago. Could you talk in a bit more detail about the current projects and the partners that you've been able to bring in?

John-Mark Staude: The current projects, we're very excited to have Centerra Gold working on our Glor Project. It's an open pit oxide heap leach style gold system next to the Chanate mine in Sonora, Mexico. Another partner, Antofagasta, a giant copper producer, choosing us as their strong strategic partner to work in Sonora, Mexico developing pore free copper targets where we've done drilling and now we're working on follow up exploration. We also have two spin out deals, one of them with Croesus, out of our Arizona assets, and another one with Silver Viper, out of our Clemente Project in Sonora. Those are four projects that we have partner funding on, but ourselves, we also are very excited by the Cecilia Gold Project. That's one that we'll have news in the coming quarter. Work we're doing in the fields ourselves. Very excited to have that, 100% owned as Riverside.

Gerardo Del Real: Excellent. Excellent. Now, Riverside, I mentioned in the introduction you provide multiple shots at goal across multiple commodity types, you have gold projects, silver projects, copper projects. Is that correct?

John-Mark Staude: That's right. We actually have a database. The database is 70,000 locations that I started compiling in the late 80's through the 90's. We have a giant database. We're able to go into many different commodities. We have those commodities and we're able to do other commodities. We focus on value. We focus on ownership. We focus on the upside. We're delighted to have the ability to expand into whatever commodities partners want to partner with us on.

Gerardo Del Real: Fantastic. Fantastic. What is the treasury and the market cap look like right now? I mentioned that you were very well funded and you have a very tight share structure, which you mentioned, as well. What does that look like right now?

John-Mark Staude: Yeah, we're very excited. The tight share structure, 45 million shares out is a great share structure to have after a decade. And a cash position, over 6 million dollars in the bank with no debt is a great way to be. With 6 million dollars Canadian in the bank, we feel we're really psyched and set for a strong upside in 2017.

Gerardo Del Real: Excellent. Now, I mentioned the tight share structure. Despite the fact that you have very few shares outstanding, I believe that over 50% of those shares are in strong hands. Is that correct?

John-Mark Staude: That's right. This recent financing that we had done, we'd not done our financing in six years, but we had such strong interest out of Europe, that we were able to add some strong European holders and continue to have the strong holding of Rick Rule and Sprott. We're delighted to have such a strong shareholder base that supports us and believes in the long term prospectivity and the value of holding shares in Riverside.

Gerardo Del Real: Excellent. Now, you mentioned possible news earlier here in the first quarter of this year. What catalysts can shareholders and people that are new to the Riverside story expect from the company in 2017?

John-Mark Staude: First off is the success at the Glor Project with Centerra Gold. Surface sampling, trenching, and soon to have drilling. A second catalyst is from the Cecilia Project, where we ourselves are out doing fieldwork. We'll have trenching and then drilling exploration there during 2017. A third catalyst is at our Penoles Project that has a resource and we look to expand that. We're very excited by the project of that. The fourth is the work with Antofagasta at the Thor Project provides us with four good catalysts, four programs going simultaneously. That's a great way for Riverside shareholders to have upside from many different opportunities.

Gerardo Del Real: Wonderful. You mentioned that database. I imagine that Riverside is still on the lookout for opportunities there if the right deal comes along?

John-Mark Staude: We are. We're generating new projects all the time. I'll be traveling to Mexico next week. We're out in the field with our team. We continually bring in new projects. We find partners with them. The database gives us this unique opportunity of having deep knowledge of many, many locations. As properties submitted or properties reviewed come up, we can pull upon historic work. That's the type of value. We're leveraging off all the historic work of material that otherwise people don't have, gives Riverside a way to grow the portfolio, grow the upside opportunity and limit the downside for Riverside shareholders.

Gerardo Del Real: Well, it sounds like it's going to be an exciting 2017 for Riverside Resources. Mr. Staude, I want to thank you for your time. Is there anything else that you'd like to add?

John-Mark Staude: We really appreciate shareholders. We're available. We have a website, which is www.rivres.com. Please call us, email us. We'd love to speak with you and love to get to know our shareholders or people that are interested in our investments. Please give us a call.

Gerardo Del Real: Excellent. Mr. Staude, thank you very much, once again.

John-Mark Staude: Gerardo, great to be on the show. Thank you.