VRIC 2017 with Director Sven Olsson
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Good morning everyone. Thanks for joining. I just cut from the previous speech that it was about gold. This will be about zinc. Pasinex is a zinc producer, one of the very few zinc producers, and a very profitable one too. This morning, I had an interesting conversation at the booth over here at 918, and was asking me questions and we both agreed, okay, it wasn’t fun to be in the zinc space for 15 years, pretty much, because of, you know, just, kind of, felt declining zinc prices.
Two years ago, we were at 60 cents. Today, we are at $1.56, which is almost near a 10-year high in the zinc price. And, all of a sudden, there’s plenty of new zinc companies coming around. We are different because we have been doing this when nobody else was doing it. We were into the zinc since 2013. That’s when we’ve discovered this mine that you see here. It’s a very high-grade zinc mine in Turkey called the Pinargozu Mine. And we manage that and we operate that together with our Turkish partner on a 50-50 basis.
Just to give you an idea of where we have come to where we are today. We’ve discovered this deposit in 2013. Bootstrapped it literally, starting 2014 with very small scales production, to 60,000 ton per annum concentrate, direct shipping concentrate production last year. We haven’t released our Q4 numbers yet for last year, but what I can tell you is we had budgeted for this project $25 million in revenues. And we had budgeted on a basis of a $1.10 zinc price, a 50% margin. We are very confident to exceed that. So, here’s a money-making zinc mine, which is the backbone of our company Pasinex Resources.
Going forward, 2018. Obviously, the framework is even better for us. We are conservatively predicting the same amount of output, 60,000 tons. Obviously, we’ve upped the, like, say, our budgeted expected zinc price to $1.35 that we consider conservative. So, right now, at $1.55, every cent on top of what we have expected is additional profit, and it will lead to a spectacular margin of this project.
So, I think with that, I go into detail. Here we are. Disclaimer obviously. Since as late of December this last year, we are not a one-trick pony anymore. We have acquired a very interesting, though early-stage, exploration project in Nevada, which we will approach early this year with the first round of drilling. Historical drilling that we found that comes from a gold company that didn’t know what to do with it, looks very encouraging, high-grade, the same style of mineralization as we have in Turkey. That was important for us.
We are looking for high-grade, high-grade deposits. Grade is king for us. And the grade in Turkey, just to give that number, is over 30%, three zero, mostly in oxides, and 80% oxides, 20% of our product is sulfides. And both products are direct shipping, also the sulfides. The sulfides are 45% and above directly from the mine. No processing involved. That’s why we could pull this off. We did not need to go through, let’s say, a major project financing to build a plant. So, it’s very simple. It’s very profitable. And as I said, it’s the backbone of our company and allows us to expand on the same philosophy CRD, carbonate replacement-type deposits. And we have a very interesting theory of what we are seeing here in Nevada.
Share structure is as you see. Management and directors hold, still a lot of stock, about 45%. Why is that? Comes back to my initial statement, it wasn’t fun to be in zinc. We were the only supporters for a long time. And so, we funded this company pretty much also by ourselves, and we’d never did any, so far, any brokered financing.
The cash is from the third-quarter. Looks a little thin. Since then, we have received a $645,000 dividend from the JV… Yes, from the JV, so fourth-quarter numbers are going to look very different. And we are aiming, as you will see, towards a way bigger dividend in 2018, for 2017. And actually, our overall goal is to have a quarterly cash dividend from the project ongoing and that’s what our target is for this year.
This is our management team. Steve Williams is the CEO. My name is Sven Olsson. I’m down there. I’m a co-founder of this company in 2012, along with Steve. And yeah, Steve is an entrepreneur. He’s fully committed to this. He is in Turkey right now looking after the business. One name to mention here as well is John Barry. John Barry sits here in the audience. If you have any geological questions, please ask them to John. He is, I would say… He doesn’t like to hear that, but in my mind, he is one of the very few, world-renowned experts in zinc deposits, has been working in zinc for decades, actually. And I can tell you, before we went to buy that Nevada asset, we have reviewed pretty much, well, all known zinc deposits that were on the market and sometimes, in different companies and we didn’t go for them, but we had them on the table. Okay, so, that’s the team.
We are, as I said, a growing, pure-play zinced company. I think that speaks for itself. I talked about the numbers, but what I’d like you to… Well, we believe obviously, that Pinargozu is a company making asset for us. The grades are just spectacular, over 30% zinc in the oxides, 48% zinc in sulfides. There’s no other project that we know with those types of grades. And that’s also the reason why we are where we are today.
I’ll skip the little bit on Turkey. This is the numbers here for 2017 third-quarter. We believe we are in the zinc district, and our mine that we’ve developed is just one of many more to come. This year, which is really important for you to know, is the first year that we could afford to have a $3.4 million budget for exploration in place in Turkey. That’s almost three times as much as we ever did in the past. One-third of that budget is going into the mine itself and to expand the mine two-thirds. And that’s really exciting is going into regional exploration. Notably, into our project, into our target that is right beside Pinargozu.
And our understanding of the controls of the zinc, which is basically controlled by faults, has grown exponentially with the production. So, we know where to look for new sources. I’m running out of time that’s why I’m quickly skipping a couple of slides. This is the deposit, about 350 meters by 200 meters wide. It’s only the beginning of our mine. On the top, there is the oxide portion. On the lower end, there are the sulfides. It’s on the side of the mountain, so it’s very easy mining.
This is our production profile from historically and what we are planning for 2018. This is the conceptual model of CRD deposits. The model is from Peter Megaw, who’s been to site two times. As I said, we want original exploration, but now one last comment to Nevada. We have acquired Nevada. It’s a big footprint, and we are following this CRD model where we believe there’s oxide portion on the surface. We know it’s high-grade from previous drilling, juicy intercepts. And what we are really aiming to find is the sulfide feeder zone, similar to Arizona Mining. Thank you very much. Come to our booth and talk to us, please.