Transcription of Finance News Network Interview with Orinoco Gold Limited (ASX:OGX) Managing Director, Mark PapendieckJoel Spreadborough: Hello I’m Joel Spreadborough from the Finance News Network and joining me today from Orinoco Gold Limited
(ASX:OGX) is Managing Director, Mark Papendieck. Mark thanks for your time.
Mark Papendieck: Thanks for having me.
Joel Spreadborough: Following shareholder backing Orinoco Resources and Strickland Resources
(ASX:STK) have just created Orinoco Gold.
What prompted the deal?
Mark Papendieck: OK, Orinoco was a privately held company for the last 12 months that myself and two Brazilian geologists founded. So Curral de Pedra is our key project, which we’ll talk about in a tick and it’s a project that we advanced as far as we could privately to a ready stage. So the deal with Strickland Resources which is as you say, now renamed Orinoco Gold, was really all about getting Orinoco Resources listed as quickly as possible.
So we now, the management of Orinoco Resources are now the management of Orinoco Gold. John Hannaford who was previously the chairman of Strickland Resources remains the chairman of Orinoco Gold. But for all intents and purposes, Orinoco Gold is now a company which has a single project focus which is Curral de Pedra, which is our high grade gold project in Brazil.
Joel Spreadborough: Could you detail for us how the Company is now structured and the experience you have on the team?
Mark Papendieck: As a result, or post October 25 when the shareholder approval took place, Orinoco now has 62 million shares on issue and the team is a really critical part, of course, of who we are. Marcelo De Carvalho is our country manager and exploration manager and he comes to us out of Yamana Gold (NYSE:AUY), a $15 billion Canadian listed company where he was responsible for generating new projects for them for the last five/six years.
Dr Klaus Petersen is a geologist who spent the last 25 years - he’s a Brazilian geologist - spent the last 25 years in Brazil. He understands the gold projects and the gold deposits in this State very, very well having spent a lot of time studying the Anglos Serra Grande mine. And myself, Klaus and I have actually worked together for the last six years in Brazil. I was previously one of the cofounders and the MD of Centaurus Resources, which is now Centaurus Metals Limited
(ASX:CTM).
Joel Spreadborough: So the newly formed Orinoco Gold Company has decided to focus in Brazil. What attracted you to working in South America?
Mark Papendieck: Yeah as I said, we’ve got a background in Brazil so I’ve personally been working in Brazil with another listed company, which Klaus and I started as cofounders a couple of - six or seven years ago now. So Brazil is somewhere that I’ve spent most of my, in fact all of my previous six years in and again, my other two key execs are both Brazilians as well. And we like Brazil because the sovereign risk is very low there, political risk is very low and I think when you combine those two factors with the fact that it’s just such a prospective country. It’s actually larger than Australia, it’s 10 per cent larger than Australia is and it’s much less explored than Australia is too.
So the project that we have, our Curral de Pedra is actually one that we’ve discovered, so to speak, from a bunch of old workings. The Portuguese back in colonial times actually mined some of the soft rock there, the oxide zones. So the point is that in Brazil, you’re actually still finding deposits by tripping over them as opposed to the undercover exploration, that’s probably predominant in Australia now. So sovereign risk, political risk, plus the fact that the prospectivity is so high in Brazil.
Joel Spreadborough: Your flagship is the Curral de Pedra project. What is it prospective for, and why do you think the market has reacted so positively to the combination of your team and this project?
Mark Papendieck: Look Curral de Pedra is probably a unique project in that, as I said before, it’s actually got some old workings on it. When I say some old workings - very extensive old workings and old being, you know, 300 years old from the Portuguese times there. So the Portuguese, we believe, pulled out the oxide zone or some of the soft rock. We also believe from the work that we’ve done so far, we’ve actually proved they’ve left a whole lot of gold behind. So it’s particularly high grade gold, which means that each drill hole that we put in the ground that continues the down-dip extent or the along strike extent, actually adds or has the potential to add, significant ounces to the economic potential of the project.
At the moment we’re in the middle of a 6,000 metre diamond drilling campaign. We reported to the market this morning that we’ve actually intercepted in our deepest hole to date, which is only 154 metres deep. We actually intercepted the structure that hosts this gold, it’s very structurally controlled and there’s visible gold in the drill core. So I think the combination of the fact that this is a project that has a very high grade, as proven by the visible gold that we’ve seen in the drill core and the channel sample results from the underground workings - you know quite extensive underground workings there. I think that’s got the market excited and they can see the size extent of this thing too.
In the region we operate in Yamana have some large mines, Anglo Gold Limited
(ASX:AGG) have a very large mine in the region. They’re all on these same structures that we’re exploring on, so regionally we know that these structures do host very large goldmines. And I think the market is starting to see from our exploration results to date, including the drilling, that we potentially have something that’s sitting on a very similar structure to those very large goldmines.
Joel Spreadborough: You seem to have rapidly produced some pretty encouraging results. How have you achieved this?
Mark Papendieck: There’re probably two key things that have led us to being able to have such advanced and rapid news flow to the market. And I think firstly, it’s because we actually did hold this asset privately for a while. So we actually did a whole lot of work on it which enabled us to, after shelved approval of the backdoor listing of Orinoco, it actually enabled us to get stuck into exploration drilling straight away. So the fact that we’d actually done a whole lot of work privately, we’re actually bringing an advanced project to market, not a greenfields exploration play. This is a very advanced, almost resource definition type play. So I think that’s the first thing.
The second thing is that we actually have a great team of Brazilian geologists, some of which I’ve worked with before, some of which Klaus has worked with before. So again, we’ve hit the ground running, we have a network in country in Brazil. Our partner in the project – what we actually own is 70 per cent stake in the Curral de Pedro project, our 30 per cent partner is actually the Managing Director of Servatech which is the second largest drill company in Brazil.
So for example, relationships like that allow us to get access very quickly to drill rigs and drill crews. But as I’ve said, essentially the key thing there I think is that we actually do have a very large network of people from laboratories for assays, to geologists, to drill companies that allow us to actually hit the ground very, very quickly.
Joel Spreadborough: Finally Mark, we’ll turn briefly to your financials. Shareholders have only recently ratified the partnership to create Orinoco Gold. What’s your current cash position and what is your exploration budget over the coming year?
Mark Papendieck: Yeah currently when we completed the deal at the end of October, we had about $4.7 million in cash which is enough to fund us for the next two years of exploration that we have planned. Currently the exploration program that we have underway at the moment is budgeted at about $1.5 million. And as I said, that’s including 6,000 metres of diamond drilling and quite an extensive regional exploration program as well.
But the key thing really is that the money we have in the bank right now is enough to see us meet additional project payments, that we must make to retain the project we currently have, in addition to drilling- not only this campaign, but we’ve actually got another 6,000 metres of diamond drilling planned for early next year as well. So, $4.7 million is sufficient to fund us for the remainder of - at least for the remainder of 2013.
Joel Spreadborough: Mark Papendieck, thank you for the introduction to Orinoco Gold.
Mark Papendieck: Thanks for having me.
Ends
