We interviewed Edward kelly, CEO of Inca One Resources.
Corporate Summary
Inca One Resources is a Canadian resource company focused on acquiring and advancing properties in the South American country of Peru. Peru, which was home to the Inca Empire, is currently the largest gold producer in South America, hosting mines which produced up to 26 million ounces of gold.
A highly mineral-rich country, Peru is the largest producer of silver and 2nd largest producer of copper worldwide as of 2009. Inca One is advancing its principal Corizona asset and has an option to acquire 100%.
We interviewed Ed Kelly, CEO of Inca One Resources:
- You recently acquired an exciting project in Peru, can you tell us more about the reasons to acquire the Corizona Project?
- The Corizona Project was very attractive as it has a history of very high-grade gold production, with excellent infrastructure in place (running water, electricity and on site office), lots of resource potential and most importantly immediate authorization to extract up to 350 tpd from the mine site for milling. Our internal models suggested a very low capital expenditure to get into a positive cash flow, which meant the project, was financeable in this current environment while keeping an attractive share structure in the company.
- As the project is authorized to produce up to 350 tpd of ore, production could commence rather quickly. What’s your anticipated timeline from this moment on?
- Currently we are preparing the mine site to begin extracting about 40 tpd from the site. Our goal once stabilized is to ramp up to 80 tpd which, in our opinion is a realistic goal by the end of 2013. We are currently reviewing our options to process the ore, which could mean toll milling, leasing or purchasing our own mill to produce a gold concentrate.
- The fixed price tag for the project is a cash payment of $1.95M. Will you be able to pay the final amount out of internally generated cash flow?
- That would be our objective absolutely. Our internal model suggests a very robust and cash rich project.
- There are eight known veins, but only two of them have been partially mined. What could be the resource potential of the Corizona Project?
- This is much too early to speculate however we have traced multiple stacked veins 800 metres vertical over the width of the 1.2Km project. It appears that they are averaging about 1m thick while the grade remains surprisingly consistent.
- Are you looking to acquire more near-term production assets in Peru?
- Right now our focus is making Corizona a success for shareholders. We feel very strongly that focusing on positive cash flow will be the most benefit to our shareholders so that needs to be executed. Stay focused.
- Peru wants to formalize the entire mining sector by April 2014. Can you tell us something more about the formalization process and what the consequences are for Inca One?
- The formalization law that was passed was a real eye opener for us. It has created a very compelling business model for us to get into the small-scale mining business as it opened up projects that are authorized to produce gold, right now. Now waiting for permits to drill or produce, and that is a very strong argument to getting into the business.
For much more detail on this, there is a great article by Northern Miner that is available here:
http://bit.ly/15Uig2F
- When do you expect the drill license for the Las Huaquillas project, and will you drill it this year?
- We don’t want to give timelines on things that are generally out of our control. Our social team has had a major milestone in submitting a DIA (EIS), and we’ll respond accordingly when comments or approvals have been granted. Once they are approved, we would commence the permitting for water and land access rights, which could still take time. We are very excited about the prospects of drilling Las Haquillas but we are also taking a very realistic stance on when we can start drilling and it could still be over a year. We have no cash obligations on the project until we receive the permits, so it isn’t heavy on our monthly cash flow. There is a lot of gold there, patience will be rewarded.
- You’ve just closed a C$1M financing. What’s your current cash position and will this be enough to get you to the cash flow positive stadium at Corizona?
- The company has just under $1M in the bank and yes, this is more than plenty to get Corizona into a positive cash flow situation even using the low end of our internal financial models. Because of the infrastructure in place, it will be less than $150,000 to start bulk sampling, and shipping the ore to a mill.
- Where do you see Inca One in 3-5 years from now?
- Our objective is to build an earnings positive company in both the short and long term. Create a structure and company for investors where they don’t have to be concerned about being diluted every 6 months. Lets get back to the basics of building a profitable company with objectives, timelines, budgets and accountability.
Now is the time, while assets are half the price they used to be to execute on this model for shareholders. We will deliver.
- Why should investors invest in Inca One?
- Objective of being a non-dilutive earnings positive company
- Internal model suggests Corizona to be in positive cash flow state within 6 months
- Peru’s formalization law is an excellent opportunity to consolidate near term cash flowing assets and build on cash flow model
- Las Haquillas remains to be drilled in the future giving high degree leverage to a large potential high-grade gold deposit. (Historical resources of 444,000 ounces of 2.09 g/t Gold)
Disclosure: Inca One Resources Corp. is a sponsoring company. Please see our disclaimer for current positions.
