Fred Davidson, president and CEO of IMPACT Silver, discusses what’s next for the silver price and for his company in this PDAC interview.
The Investing News Network caught up with Fred Davidson, president and CEO of IMPACT Silver (TSXV:IPT), at the 2018 Prospectors & Developers Association of Canada (PDAC) conference in Toronto.
Davidson said silver is much stronger than it was, but acknowledged that there’s “a bit of weakness in the pricing of silver.” His company also produces lead and zinc, and “with the strengthening in the lead and the zinc [prices], we’re going to put back our zinc circuit back into production again.”
Over the last couple of years, IMPACT has delayed exploration to “preserve capital,” but the company “did a raise about a year and a half ago and [is] now dedicating that back to the exploration side.”
The company plans to follow up on exploration at the Santa Teresa gold-copper target, which is to the east above the “famous gold mine of Taxco,” as well at a third target to the south. Davidson added that IMPACT is looking to extend a “high-grade deposit” called San Ramon, and will “probably roll a dice a bit on a couple of greenfields [assets], kick them out of the soccer pitch if you will.”
Davidson said investors should choose IMPACT Silver because “90 to 95 percent of [the company’s] product is silver. We don’t use silver equivalents.” He added, “we have probably one of the most interesting exploration properties in Mexico.”
Watch the interview above for more insight from Davidson, or read the transcript below. You can also click here to view our PDAC 2018 playlist on YouTube.
INN: Tell me about some of the company’s operations in Mexico.
FD: Well, the company has been operating in Mexico about 11 years now. We took a mine that was actually going down into receivership. We’ve rebuilt the reserves on it. But more than that, we’ve been operating successfully now for 11 years. We’re the primary producer of silver. But more than that, what makes it a dynamic project is that we’ve got about 353 square kilometers of property in one of the oldest mining districts in Mexico. Cortez actually hid out here when he got in trouble with the governor of New Spain so that’s how old a mining district is. The ground is exceptional. The people and the local community have always mined. In fact, there’s an old church there, and rather than the statue of the Madonna, it’s a statue of a miner. So we’ve got grandfathers, fathers, and sons working underground. And by the way, daughters now too.
INN: One of the things that’s important about companies is the management team, and you have extensive experience and an extensive career in mining. Can you talk a little bit about your role?
FD: I’ve been mining now for 40 years. My background is actually in economics. I’m a chartered accountant as well. But after 40 years of breaking rocks, I guess I have to call myself in the mining business. We built probably four mines over that time. This one is probably one of the most exciting because of the quality of the ground conditions, the quality of the ore, and the quality of the exploration potential.
INN: Tell me a little bit about silver. So that’s the primary commodity mined? Silver has been underperforming gold. Can you talk a little bit about what the outlook is?
FD: Yes, it has been. Silver is much stronger than it was. But certainly, there’s a bit of weakness in the pricing of silver. We produce silver. We have two other products, lead, and zinc. Much smaller, insignificant. But what makes this interesting is the property itself. Historically, was actually a gold producer. The Aztecs actually produced their gold from this area. We very recently opened up a whole new part of our exploration program, exploring strictly for silver or rather gold and copper which we’re now finding in an area we call Santa Teresa. It’d be interesting to see where that goes.
INN: There’s a much brighter outlook this year for lead and zinc, for example. Do you want to talk about that and copper as well?
FD: Yes. It’s interesting. The base metals are coming back. We select what we mine, and that is there are several mines in the area that we take from. And if silver is hot and this would be a high price, we’ll mine the silver. We base it on the value of the rock in front of us. Right now, with the strengthening in the lead and the zinc, we’re going to put back our zinc circuit back into production again. We have a high-grade zinc deposit on the property. And then we have a second mill. Right now, we’re upgrading the current mill to 700 tons a day. We have a second mill that we’ll probably with any success on the exploration for the copper and gold, we’ll be processing 200 tons a day there, when and if we have it coming to the mill.
INN: Right. And so I just wanted to mention a little bit about the company as well. In 2017, IMPACT was named to the 2017 TSX Venture 50. Can you talk a little bit about why the company earned that distinction?
FD: Well, there are some good news and bad news with that one. What we had at the beginning of the year was a very depressed price, in part because the stock was being thinly traded and we had a heavy selling from a couple of shareholders who decided to basically get up silver. So they drove the price down and the market recognized it was badly underpriced and bought it back up again. And there was some excitement too at that time with metals in general. And I think they saw that there was a lot of leverage to a pure silver play like we are. We saw some heavy buying and took it up a matter of almost times ten in a matter of about four or five months. So it was fairly dramatic.
INN: In terms of 2018 and the plans and the goals for the company, can you just talk a little bit about what is ahead for the company?
FD: It’s going to be a very interesting year. We delayed our exploration over the last couple of years to preserve capital. We did a raise about a year and a half ago and we’re now dedicating that back to the exploration side. We’re going to follow up the gold-copper target for obvious reasons called Santa Teresa. The highest grade there was 115 grams a ton. So it’s fairly attractive, not just from raw chips and samples. We’ve got two other high priority targets. One out in the east, just above Taxco, the famous gold mine of Taxco. We’ve got another one to the south. Plus, we’re looking at extending a very high-grade deposit. We have called San Ramon and we’re going to be extensively drilling that. Very aggressive drilling program this year. We’re going up the tonnage throughput to about 700 tons a day. We’re going to probably roll a dice a bit on a couple of green fields, kick them out of the soccer pitch if you will.
INN: Get it going again.
FD: Yes, get it going again. Get some news out there. We’re ready to do it. We’ve got the targets. We’ve got over 4,500 old mines on this property. It’s that big of property. And we’ve probably explored 10 percent of them.
INN: Lots to do.
FD: Lots to do and lots of time to do it in.
INN: Here’s my last question — why should investors choose IMPACT Silver?
FD: If you’re a believer in silver, we’re probably the most highly leveraged there is on the exchange. 90 to 95 percent of our product is silver. We don’t use silver equivalents. It’s actual silver. Two, we have probably one of the most interesting exploration properties in Mexico. And certainly, one of the biggest and we have a history there that’s not just one or two discoveries. I’d say there are over 4,500 old workings where people over the last 500, 600 years have been mining there. And when they leave a kilo in the floor, it gives you an idea of what they were taking. So respectively, very high quality. We’re in production, we’re well established, and got a great management team down there.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.