Explorers, Gold, Mexico, News & Features
Cream Minerals steps up drilling, updated 43-101 imminent
By Resource Intelligence · April 20, 2012 · 10:40 am · Leave a Comment
www.creamminerals.com • 1.888.267.1400
Michael O’Connor
PRESIDENT & CEO
Whoever in the business says money isn’t everything has not met Michael O’Connor. The CEO of Cream Minerals Ltd (TSX-V: CMA) would be the first to acknowledge that money is, in fact, what changed the company’s fortune. In 2008 and 2009 Cream was insolvent, had little cash and was $1.88 million in debt. In 2010 it fought off a hostile takeover bid from Endeavour Silver, and then closed a $6-million financing. That Cream managed to pay off all the debt and ended up with $5.45 million in the bank in 2011 speaks well of Cream’s dedicated and competent management. With the money, the company financed a 20,000-meter drill program at its flagship Nuevo Milenio silver-gold project in Mexico. In one year, Cream accomplished 85% more drilling than when it acquired the property in 2000. Mr. O’Connor shares why he only sees more upside from here onwards.
(Note about updates: Cream released the following update since this interview: The independent mineral resource estimate for Nuevo Milenio continues to be advanced. Challenges encountered in providing data to the consultant in a timely manner have impacted progress on the mineral resource estimate. Given the large amount of data involved including over 32,000 metres of drilling, a significant volume of surface samples, trench samples, underground channel samples as well as properly identified location coordinates for all but the drilling data combined with reviews and fact checks were significantly more time consuming than anticipated. The Company anticipates the release of the mineral resource by May month end 2012.)
Resource Intelligence: Could you describe Cream’s flagship Nuevo Milenio project and its prospects?
Michael O’Connor: The 100% owned 2,560 ha Nuevo Milenio is a silver-gold project located in Nayarit State, Mexico. It contains a NI 43-101 Inferred Mineral Resource of 54.6 million ounces silver equivalent with average grades of 251 g/t silver and 1.66 g/t gold. It is a low sulphidation epithermal system with silver and gold in quartz veins. There are three distinct zones of mineralization trending SE/NW which are open to the SE, NW and down dip. Access to infrastructure is excellent. Tepic the capital of Nayarit State is only 27 km by road and an airport, water, power and railway are all within 14 km of the property.
RI: Could you discuss the project’s economic potential?
MOC: We believe Nuevo Milenio’s economic potential is significant and will grow dramatically. After completing a 20,292 metre drill program in 2011 a revised 43-101 is pending which we believe will increase the resource and upgrade a significant portion of the inferred resource to indicated. We plan additional drilling in 2012 to grow the resource. The close proximity to quality infrastructure should reduce the investment required to achieve production.
RI: What about the metallurgy?
MOC: The metallurgical work so far has produced very good results. Employing a gravity flotation circuit with cyanidation of the flotation tailings produces recoveries that are approximately 90% to 92% for both silver and gold.
RI: What are the unique characteristics of Nuevo Milenio?
MOC: Nuevo Milenio is almost a pure silver resource, there is no lead, zinc, etc. It is supported by a 54.6 million ounce silver equivalent inferred mineral resource with average grades that are significantly higher than comparable silver exploration companies in Mexico. It has both underground and open pit potential with several deposits in a 600 ha area. Within this area there is substantial blue sky potential. Quality infrastructure is all within 27 km. So far testing indicates the metallurgy is very good. Combined these make Nuevo Milenio very unique.
RI: 2010 marked a turnaround for Cream following a rough 2009. A bought deal put you in a better position financially, you eliminated debt and were left with $5.45 million in the bank. How far did $5.45 million take you?
MOC: We conducted 20,292 meters of drilling, 2/3s in-fill and 1/3 exploration. This is almost twice the drilling done prior to 2011. The in-fill drilling demonstrated good continuity of structure. In addition the drill program identified good mineralization in new zones which represent very good exploration targets going forward. A revised NI 43-101 is pending in Q1 2012.
RI: At what stage is the project now?
MOC: Nuevo Milenio is moving from an early stage project to a much more advanced stage. This transition will be completed with the new resource estimate which will upgrade a significant portion of the inferred resource to indicated and we hope add additional inferred resources.
RI: What are your priorities this year?
MOC: The priorities are to complete the new 43-101 in Q1 2012 and conduct a 20,000 meter drill program focused on exploration drilling.
RI: Your stock chart shows a spike in price around the second quarter of 2011. What got investors excited and what developments do you see in the short term that would get the market excited again?
MOC: The hostile takeover bid highlighted Cream to the investment community and combined with silver climbing to US$49.50 attracted many new investors to Cream. The catalysts that we think will excite investors going forward will be good news flow as we publish the remaining assays from the 2011 drill program, the publication of the new 43-101 resource estimate and initiating another drill program focused on increasing the resource.
RI: Where do you see the company in three to five years?
MOC: Within three years I think a Feasibility Study will have been completed and in five to six years I think production is a strong possibility.
RI: Is there anything else you think investors should know?
MOC: I believe they should focus on six factors. One is the quality of the resource. Two is the potential for growth. Three, Cream is undervalued relative to the value of silver in the ground per share. Four, Cream is undervalued relative to comparable silver exploration companies in Mexico. Five, within the 600 ha’s currently being explored there is significant blue sky potential. Six, the remaining 1,950 ha’s have yet to be explored in a meaningful way. Taken together Cream is a unique opportunity for precious metals investors offering both value and growth.
Investor Highlights
- 54.5 million oz silver eq Inferred Resource
- Revised NI 43-101
- Resource Estimate Q1 2012
- Trades at discount to
- peer group
