Under the Spotlight – with David Hottman, CEO Orestone Mining

Rick Mills, Editor/Publisher, Ahead of the Herd:

Orestone (TSX.V:ORS)has been working on its Captain property north of Prince George in the Quesnel Trough. It’s gold-copper porphyry, seems to be heavy on the gold, you’re in an excellent environment for these porphyries and you’re planning an airborne survey, a Magneto Telluric (MT) survey.  Could you tell us about Captain and your work plans for this year?

David Hottman, CEO, Orestone Mining:

Yes, so basically the Captain project is a target that was developed just south of the Mount Milligan mine and it’s about 120 kilometers northeast of the Blackwater deposit. It’s a project we’ve been exploring for a number of years.

The main target does not get exposed at surface, it’s below the sand and gravel moraine left from the last Ice Age so geophysics and drilling are the primary exploration methods to be used.

We have drilled a series of holes chasing the target and in numerous of the holes we have encountered porphyry dikes that are well-mineralized, in some cases over 100 to 200 metres. As I’ve mentioned in the past, they’re gold-rich so it’s more of a gold porphyry than a copper porphyry.

The last geophysical survey that we did explains a lot. In our exploration process over the years, we did not know where the target is other than an IP anomaly and magnetics. Trying to figure it out from there is sometimes problematic, especially with a relatively limited budget. If we were a major and we would have $5-10 million a year to go chase something like this but that’s not the case.

So, in our previous exploration we have had drill holes where we see a lot of dikes, they’re well-mineralized, they’re porphyry material. An example is that in 2021 we encountered several dikes and then we did a step-out hole, we thought we were too far to the northwest, we stepped to the southeast almost a kilometer and it looks like we stepped over to the other side of it. In 2022 we did a Magneto Telluric study which uses the magnetic field of the earth to help discern where metals are in the ground because that will disrupt the magnetic field. And so, the Magneto Telluric study indicated that the target was right in between a series of our drill holes that we had drilled on the edge of it on several different sides and intersected diking, but we need to now drill right down the center.

It’s an area that is quite large, the target would have the capability of being over a kilometer and a half long by about 500 to 750 meters wide, that’s enough room for a very major porphyry deposit and being gold-rich means there’s a potential to find a huge gold deposit here in BC.

RM: If you did a Magneto Telluric in ’22, it says in a news release you’re doing one again?

DH: Yes, what we discovered in 2022, we did an area of 5 by 7 kilometers, and it was flown using a drone off a helicopter. What it indicated was that there is a north-south trend of three different anomalies or targets or centers, what we believe are porphyry centers.

The one to the north has been drilled around it and there’s not much mineralization so it’s of low interest to us. The center one is our primary target and then we see one starting to develop at the edge of the last survey to the south and the concept is that this year we’d like to go out and expand the aerial survey to the south to define the second target a little bit more from the geophysics point of view prior to drilling.

And then over this next winter we are going to put a couple of holes in the main target and a hole into the southern target down the center of them and see if we can make two significant discoveries at the same time.

RM: Right, these porphyries are difficult in the fact that there is such a halo of alteration, you go in, you do your surveys and your drilling and it’s a bit much to expect a center hit the first drill program. You really have to work at it to vector into those centers.

DH: That’s right and in this case, we have mineralization on three different sides and as I said that 2022 survey indicated that the target is right in the center of them. You never know how far to step out, a couple hundred meters can make a difference but you’re looking for a huge target, so we stepped out thinking that we were too far to the northwest of the target and stepped out almost a kilometer, so we stepped right over it. It’s an elongated target striking northeast to southwest and we stepped over the narrower dimension.

We stepped right over it so these targets can be difficult to find but when you find one then it’s a company maker. Snowline Gold (TSX.V:SGD) is a great example, and of course other big porphyries like Newmont’s Red Chris, they usually don’t outcrop at surface, and they usually grow much bigger from the first discovery.

RM: Right, now this is your primary asset, as we call it your flagship property. Could you just go over what you plan on doing on it this year?

DH: This year we have been fine tuning quotes on the extension of the airborne survey, that is conceptually going to happen over the summer months, and we’re fine tuning when the company will be in the region doing other work, so that we can piggyback on reducing our costs on the mobilization and demobilization of the equipment.

And then the best drilling time on this project is over the winter months when it’s frozen or in the late summer. We won’t have our data refined by late summer, so it’ll be a winter drilling program.

You’re from that region and you understand when the ground starts to freeze. In the fall it’s a bit wetter and then the ground starts to freeze, and it still gets kind of mucky if you’re running around in it, so the concept it to wait until it’s completely frozen and that’s usually in the late November time frame all the way through to the end of February.

RM: Yes, we go through what we call freeze-up, October into November can be a very muddy mess on those roads, the technical name for the mud is loon shit. It’s hard to work in, so the bush shuts down for a while in the fall, and then the reverse happens in the spring thaw when you shut down again. So, we’re used to having breaks in our bush work programs up here.

I see you’re doing a small raise, $600,000 and we’ll get into that in a minute. But this summer as I understand it, you’re going to your Francisca property?

DH: That’s correct, Francisca’s a new acquisition, we worked on it for almost a year, and we got a very good deal on the property. It’s located in Salta province, Argentina and the property is a gold target exposed to surface.

It would be an open-pit, heap leach-style recovery project at this point in our view of it. We have a bunch of historic work that’s been done on it back in the 1990s and then it was drilled in the early 2000s, just a few drill holes.

It’s a very exciting project for us; it’s an opportunity that we think represents a multi-million-ounce shot at an open-pit gold project. It does have significant silver; it’s not a main driver but it does have significant silver in it as well.

RM: So, you can earn up to 85% at the Francisca and it is gold and significant silver?

DH: That’s correct, primarily gold and silver. We have porphyry dikes that are exposed to surface and there is a big IP anomaly that indicates that there is a larger target a little bit deeper, but basically open pit, gold and silver.

Suffice to say that it represents a multimillion-oz opportunity. Our plans in the near term are to do a little bit more mapping and some resampling of the trenches that are on the project. We have summary data, and we did a check assay program recently and we had a lot of 4-6-gram material on the surface, and we’ve even planned where our first drill holes are going to be, but we really do need to do a little bit more confirmation before we start drilling that project.

RM: Francisca metallurgy is not likely to be a problem; heap leach oxide is very well known and time-tested.

DH: That’s correct, and we’ve been involved in 10 or 12 of those over the years, different team members in different countries. Senior Consulting Geologist Gary Nordin and I were some of the founders of Eldorado Gold coming out of the Bema group a number of years ago, and so we’ve worked in Chile and Mexico and Turkey.

The president of the company did a lot in Central America with Greenstone Resources, and they were involved in putting three or four mines into production there as well. So, we know what they look like, we haven’t done any metallurgy yet, but it is a very oxidized system, and, in the region, you have oxidation levels over at Taca Taca, which is a big multibillion-tonne copper-gold-molybdenum deposit, and the oxidation levels are down to 200-300 meters in that area.

So, what we’re looking at here, we don’t anticipate any difficulty in metallurgy, but obviously we’ve got to do the first drill program and then we will send samples for metallurgical testing.

RM: A couple hundred meters of oxidation, wouldn’t that be amazing.

DH: Yes, it’s an old region and there’s not much in the way of vegetation or soil cover, so it’s basically exposed rock with a few tufts of grass or bush every couple 100 meters kind of thing, so even though there’s not a huge amount of rainfall you get a good level of oxidation over millions of years.

RM: What’s it like working in northern Argentina?

DH: It’s a very good place to work. Argentina really depends on which province that you’re in, they all have quite autonomous governments compared to the federalism that we see in some countries.

Salta is one of the best if not the best province in Argentina to work in, there’s a good financial regime, good suppliers, permitting and government support and social interaction is very positive, so we’re excited to be working there. It’s an area of the world that we believe we can bring a mine into production, should we make a significant discovery.

RM: With other deposits or mines are in the area such as Taca Taca, the infrastructure is good, the workforce is available?

DH: Yes, we believe so, there’s not a huge population in the region. Taca Taca’s not in production yet but they’ve been making rumblings about development. What has taken up a lot of the workforce are a series of big lithium-producing projects, so you do have competition for workforce, but in any country if you’re posting high-paying jobs which mining is, if you build it, they will come.

RM:  Exactly. You’re raising money, $600,000 and it sounds to me like you’re going to be focusing on Francisca with most of that money?

DH: That’s correct. The first phase of exploration will be as I mentioned earlier; mapping, sampling and the trench resampling in preparation for drilling, permitting as well. We believe that we’ll be in a position to pull the trigger on a drill program in September/ October. The cost of that program is about 80,000 USD, so a little over 100,000 Canadian maybe 115,000 Canadian. So inexpensive to get a big target to the drill-ready phase and in a very short time frame as well.

RM: You had a significant lead order in this financing.

DH: Yes, Crescat Capital is an investment group that has been focused quite a bit on minerals and mineral exploration in the last number of years, and they have recognized the Francisca opportunity as something that they wanted to get involved with.

They invested up to the maximum that they could, which is just short of 400,000 Canadian dollars. When I say the maximum that they could that means before becoming a “control person.” So, with their shares and if they exercise their warrants they would be at a 19.5 or 19.9% position and not wanting to go over 20% because it does encumber their freedom as an investor.

So, a big vote of support from them and we agreed to set a maximum for the financing at $600,000 to reduce dilution and keep the share structure as tight as possible. We’ll only have about 77 million shares outstanding. Share structure is extremely important to me, we would like to see Orestone at numerous dollars a share in the next year or two, not merely 10 cents, 20 cents.

RM: There’s a plan to raise money before we get on Francisca to drill it.

DH: In the fall, once we have all the data from this first program, we will probably do a small raise but it’ll most likely be $300,000 to $500,000 and we believe that’s going to be at higher prices just based on the surface data that we’re seeing. And that will ensure that the drill program goes off without a hitch and even if we have some cost overruns.

RM: That would give us two drill programs wouldn’t it, because you’re planning on drilling Captain next winter?

DH: It will. But we want to focus on Francisca first because it is near-term substantial upside. As I say it’s exposed at surface, there’s a lot of oxidation in the area and if you start drilling 100 or 200-meter-long drill holes of mineralization, or you’ve indicated that there’s a good deposit there then that’s going to be a substantial driver of the market cap and the share price of the company.

RM: It’s hard to hard argue with how hot gold and silver are in the market right now.

DH: Yes it’s a pretty exciting time, I’ve been a student of gold since early ‘85 and seen a lot of cycles and I would say that we are closer to an inter cycle top than a bottom right now, but there’s so much going on in the world geopolitically and the amount of money that has been produced or created in the last five years since covid, and actually even since 2008 when we had the financial crisis, the nominal debt in the world tripled between then and 2020 and now it’s doubled or tripled again.

Gold and silver are the right place to be, and I like to say that gold is the right place to be until there’s a new paradigm concerning what money is. I mean we use money in our everyday lives to buy food, pay rent or put gas in your car and until there’s a new way to think about money I think gold and silver are the right place to be in terms of a portion of your investment portfolio because left up to the politicians, well let’s just say they’ve destroyed the value of the currency that we use every day.

RM: I believe we’re going to have a global monetary reset and with the turmoil in the world I believe that gold and silver are the last safe haven standing and historically the share price of junior resource companies has been the greatest leverage to rising gold and silver prices.

With the environment we’re currently in, I believe that after its consolidation gold prices are going to rise.

DH: That’s right and that’s always been the case. This market cycle is no different than others, the price of the metals rise, and the majors move, then the intermediates and then the juniors during the cycle. You can never predict; I would have said that the prices of juniors and the access to capital should be five or 10 times what it currently is but in every cycle the timing’s a little bit different.

Right now, there’s just a dribble coming through the dam, but when the floodgates open there’ll be a massive amount of money. I remember Doug Casey once saying, “It will be like Hoover Dam going through a garden hose.”  

There are good times to come, we’re just getting started in this metal cycle and what excites me is that Orestone has projects that can deliver substantial deposits, not just running around writing press releases and taking a couple of samples. We have projects that can deliver long intercepts of really good grades of gold and silver.

RM: Okay great, is there is there anything else you want to add to this?

DH:  I would say that management is aligned with the shareholders in that we are all significant shareholders, don’t really take much salary, don’t really accrue anything, that will change over the course of time as the company becomes larger and more successful but we have very low overhead, we’ve got projects that we have been putting together and into the portfolio for quite some time.

Shareholders are getting the best projects, lowest risk profile, lowest cost exposure, with most of the money going into the ground so that we can make discoveries because wealth is created at the end of the drill bit.

Based on our experience, Gary, one of my partners, was one of the founders of Bema as well and I was working there at the time and we put a 100,000-ounce project into production at 20,000 oz a year and that was the first real recognition that Bema had, and from that they were able to make the acquisition in Chile, which we drilled off I think altogether what was 8 million ounces in two side-by-side deposits, they were both lobes of a gold porphyry.

And  then in Eldorado we had a 200,000 oz deposit in Mexico, we put it in production at 20,000 oz a year and both of those companies did just fine so even if we don’t find a multimillion-ounce deposit at Francisca there is an opportunity that it is going to be a gram or 2 grams a tonne and it could throw off a lot of cash. Even at 30-40,000 oz a year, hell a million-ounce deposit these days gross value is $3 billion.

RM: The holy grail of any junior resource company is to snag a deposit like this and put it into production.

DH: Yes, we’ve been involved in building several companies, “mighty oaks from little acorns grow.”

RM: That’s great David, thank you.

DH: Thanks Rick.

Richard (Rick) Mills
aheadoftheherd.com

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Richard owns shares of Orestone Mining Corp. (TSX.V:ORS). ORS is a paid advertiser on his site aheadoftheherd.com

This article is issued on behalf of ORS