Categories: Mining Stocks
Topics: Copper Stocks

Intrepid Metals (TSX-V: INTR)(OTC: IMTCF) CEO Ken Engquist and Chairman Mark Morabito on Advancing the District-Scale Corral Copper Project Via the Drill Bit in Cochise County, AZ

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the chairman and the CEO, two different people, of Intrepid Metals Corp. (TSX-V: INTR)(OTCQB: IMTCF) — Mr. Mark Morabito and Mr. Ken Engquist. Gentlemen, an absolute pleasure to have you on. How are you all today?

Mark Morabito: Very well, Gerardo. 

Ken Engquist: Excellent, thank you.

Gerardo Del Real: Let's get right into it. I can't think of a better time — with the structural deficits in the copper space and with the nationalization of critical metals;  seemingly a global trend that's increasing — to have a fully funded drill program in action in America on an advanced target. 

I want to get to all of that. Yet, before we do so, I’d love to get a little bit of background from both of you gentlemen. And I’ll start with you, Mark, because you're the gentleman that was able to have this vision way before all of these tailwinds materialized. So can you tell us a bit about your background and how the heck you came to put together such an opportune asset at such an opportune time?

Mark Morabito: Gerardo, I started out as a corporate finance lawyer but I've been in this space for about 22 years, taking two companies to the NYSE from scratch in this area of the world where I've been for about 16 years.

I spent 12 years in Arizona as chairman of a company now called Gunnison Copper. And I was really there, as I always am, to get things off the ground, to get those initial hard financings done to build the political capital you need to get through permitting because permitting is as much a political exercise as a technical one.

I was with that company for 12 years. I left before production. They ran into some problems. Now, they have a new partner in Rio Tinto, and they're going to get those sorted out. But the real story there and why that's relevant is I was in Cochise County all of that time with that project, and we managed to get it permitted in two and a half years from start to finish. And that’s just record time.

At the time, we were the first new copper mine in the US in 10 years. And I don't think you're going to be able to do any better in terms of permitting time than that kind of a timeline. And that's one of the biggest risks in this business. 

What's basically bottom line is we've already demonstrated that in that county and in the state of Arizona, you can get your permit about as quickly as possible. So when you're looking at who might want to buy this project, it's basically anybody, any decent producer, that's looking for a copper project.

In terms of this particular project, the Corral Copper Project, all of us at my former company knew about this ground. We all knew about it, and so did half of the technical guys in the state, if not more. The problem wasn't that there hadn't been a lot of work done and a lot of potential. The problem was fragmented land ownership. It was a big pizza pie. Nobody controlled the whole thing. 

None of the majors who had been kicking around forever wanted to approach one owner or another owner because, as soon as you did that, the price would go up on everything. Besides that, these people were very difficult to deal with; some of them, not all of them. 

I'll give you an example. When I was at Excelsior, we decided to go into this area and stake around all of the property owners and tie up as much ground as we could through just staking. And we ended up being chased off the ground with semi-automatic weapons. 

Gerardo Del Real: In true Ringo-Holliday-Earp style, right, which are the names of the various zones at the Corral project.

Mark Morabito: That's right. They didn't want us there, and we had to get the law involved and eventually they took that ground. 

And when I left that company, instead of getting a gold watch, I took that ground with me and brought in some people, our president now, Ken Brophy, who is not with us today, to help convince those landowners to stop fighting each other — because they were and had been for a long time — and to cast their lot with us because I had already permitted a mine in the state, in the county, just down the road from where they are and that they would be better off just to take an equity position in our company and let us move the ball down the field. 

To make a long story short, that's what has happened. Everybody threw in. There are bits and pieces in the area that we have to tie up but we're in the process of doing that. We now control that project environment. All of that former work that had been done now belongs to us. 

The drill core had all been destroyed through feuding. And so, eventually, we had to go back and reconfirm that the drilling had been done. We had published those results before, and they're spectacular. We've now been able to get funding for the next round and secure that, and the drills are turning as we speak.

Gerardo Del Real: Ken, let's get into why you're in the picture now, and then let's get into what that picture looks like.

Ken Engquist: Yes, my background is in large project development — primarily, early on in my career, the first two-thirds of my career, with major mining companies like Rio Tinto. I worked for them for quite a while on a lot of their major projects like Oyu Tolgoi; I worked at Kennecott, Utah Copper, and Resolution Copper down in Arizona, and various others with them, before jumping into the junior space. 

I was actually brought into the junior space by one of our directors, Matt Lennox-King, about 10 years ago. I had told myself I was going to give it five years but have stayed on for quite a bit longer because it's exciting. The junior space… I don't love that name… it's more that we're developers. We're developing the next round of mines for the big guys.

Gerardo Del Real: Yeah.

Ken Engquist: And that's what we do. That's our job. We come in, we raise money, we spend a lot of money, and we derisk these projects to a point where the market is ready to take them over and where the majors are ready to take them on and put them on their books. And that's what we intend to do with Corral. 

The Corral story is strongly validated by a news release we put out in mid-January. We have Rio Tinto flanking us to the east, and we staked a big land position to the east border. And we have Ivanhoe Electric to the west. Since then, we've had a ton of interest, as Mark was indicating, from lots of different groups — producers and developers alike — and we're pretty excited about it. 

All of this has been launched strongly on the land acquisition and consolidation that Mark and Ken Brophy did in the first 18 months of the company. Mark brought me on as a board member a little over a year and a half ago, and then I took over as full-time CEO in September and couldn't be happier. 

Rarely do you have the strong team and the excellent resource, or assets, in the developer space. And I believe we have both here right now. It's pretty exciting with the things we're seeing on the ground. The first phase of drilling we did last summer drew a lot of the attention we're seeing and with the ground staking war we have going on. 

We’ve driven that to our next drill program, Phase-2, which we started just a few weeks ago. We're already on our third hole, and we're seeing much of the same thing coming out of the ground. We have assays being done right now, and we expect to have some great news coming out really soon.

Gerardo Del Real: And let me give some context. Much of the same is music to my ears and should be music to everyone's ears. Let me explain what ‘some of that same’ could look like.

In that Phase-1 program, you hit 112.95 meters of 1.5% copper, 0.53 grams per tonne gold, 8.22 g/t silver, just as a kicker, which works out to about a 1.66% copper equivalent. This isn't from 500 meters, folks. This is from 68 meters to 181 meters. There was another intercept of 63 meters of 2.57% copper with 0.91 g/t gold. I could go on and on.

There was another one of 193.15 meters of 0.68% copper and 0.33 g/t gold. The potential here for near surface tonnage and grade on permitted land in the Good Ole USA is a pretty unique opportunity with a pretty unique proposition. 

What comes next? You mentioned that you've already commenced that initial 5,000 meter, or, I should say, the follow-up drill program here. You're three holes in. I would ask you how the rocks are looking. You're going to tell me it looks great like you just told me. You're seeing more of the same. 

At the end of the day, it doesn't matter until we get the assays. But how are you coordinating with the labs… what do the turnaround times look like… and is there the potential to expand on the drill program if you get similar success as you did in the Phase-1 program?

Ken Engquist: We've negotiated with the labs. We negotiated hard with the labs both on cost but primarily on turnaround time. And that's important to us, especially in these first few holes; we want to show that we have a lot of confidence in this asset, and we want to show the investors and future shareholders the strength of that confidence by putting out good results really soon. 

The first couple of holes, I can tell you, are pretty spectacular. I don't know what the grades are, but as far as the mineralization goes, we're seeing much of the same length of intervals and proximity to surface as well. 

This asset that we have, like you mentioned, Holliday, Earp, and Ringo — and we're drilling in Ringo right now — Ringo is very analogous to the historic Copper Queen Mine in Bisbee, Arizona, that Phelps Dodge ran (now Freeport). And that was 53 million tonnes. 

It started out with very identical mineralization, the same host rock, which we call the Abrigo Limestone. And it started out at 53 million tonnes at 6%. And then, they got into the porphyry system and mined it for another 60-plus years.

Gerardo Del Real: Holy smokes.

Ken Engquist: We put out some news about a month or so ago about the porphyry potential, which we see as significant porphyry potential. We've identified a lot of targets. 

We haven't drilled into it yet but we’re very excited about the potential for that because the rocks we're seeing on surface — and the sort of mineralization and outcropping we're seeing in the breccias — is very analogous to and very similar to what you would see in a porphyry system.

Gerardo Del Real: Excellent. As far as drilling, I'm assuming you have year-round access, given the infrastructure, which is excellent, given the location, right?

Ken Engquist: Yes, and it's year-round drilling down there. One of the great strategies right out of the gate that Mark employed was making sure that any assets we have in our portfolio were not in encumbered land. So nothing sits in National Forest, State Forest or anything like that. 

Our land is private land and BLM and Arizona state land. I'll give you an example. For permitting, we didn't need permits for a large part of our drill planning for this program and for the last one. The permits that we did need, we were able to get in four days. So it's pretty spectacular. 

We’ve scoped out a program similar in size to what we did last year. And we've scoped out even more. We've scoped out over 17,000 meters, and that includes a lot of exploration targets that we don't have in the early-stage part of this phase. We want to get in there. We want to get some good results. We want to get out some good news and continue to show everybody what the potential is of this asset.

Gerardo Del Real: Where's the market cap at Mark, roughly?

Mark Morabito: It's about C$27M. It's horribly undervalued relative to what we have. But I've never, in any company I've ever been involved in, spent less money telling a story than I have in this one. And it's very out of character for anyone who knows me. 

But we wanted to wait until we hit this inflection point where we're going beyond the confirmation drilling that we had to do because we didn't have that drill core anymore and then moving into the next phase. Well, that's what's happening right now. 

We're now concentrating on getting the story out, and I think there's a lot of upside there because this is an untold story. The infrastructure, the interstate nearby, the secondary roads, the lack of competition with agriculture, the, obviously, friendly environment for mining; hence the permit for Gunnison in two and a half years

You just don't get a better combination. And the Trump factor, controversial as it is for some people, the fact of the matter is, for us, it just couldn't be better.

Gerardo Del Real: Yeah.

Mark Morabito: The US has prioritized copper and has prioritized getting mining projects fast-tracked. And the amount of interest we have in this project — that is expressed through CAs and site visits and a few attempts to steal the company early, which we rebuffed — is just basically off the charts compared to anything else I've ever seen. 

The last time I had this level of interest in a project, I had raised over C$400 million, and I had 15 analysts covering the stock. And right now, I'm seeing the same level of interest for majors because they have a mandate to go out there and secure these copper projects. 

So this drill program is going to be the inflection point for us. That's where we're going to move beyond the historical work into the expansion mode, demonstrating the legs that this thing has, the permitting issues off the table, the infrastructure issues off the table. And so all you have left is what the drill bit proves up, and now is the time to get the story out. And that's what we're doing.

Gerardo Del Real: Listen, I think your timing is perfect. I'm looking forward to helping tell the story. I'm looking forward to having you all back on and looking forward to having Ken also back on, the other Ken, and getting into the guts of the results once those start trickling in, which sounds like the turnaround time is going to be pretty expedited. Anything else to add, gentlemen?

Ken Engquist: On the turnaround time, I really didn't give you a number there. Normal times are four to six weeks is what we're being told by the labs but we've expedited it to get turnarounds in one to two weeks. And we should be having the first set of numbers coming back next week.

Gerardo Del Real: Beautiful.

Mark Morabito: We're looking at constant news flow for the next 12 weeks.

Gerardo Del Real: It sounds like we're going to be chatting quite often. Gentlemen, thank you for your time. I appreciate it.

Mark Morabito: Glad to be here, Gerardo.

Ken Engquist: Thanks, Gerardo. 

Gerardo Del Real: Cheers.