Astur Gold Corp V.AST announced March 19 the appointment of Patrick Moore as an independent director. The creator of the term “sensible environmentalist,” Moore holds a doctorate in ecology from the University of BC, was the cofounder of Greenpeace and served nine years as President of Greenpeace Canada and seven years as a director of Greenpeace International.
Astur Gold is developing its 100%-owned Salave Gold Project in Asturias, northern Spain. One of the largest undeveloped gold deposits in Western Europe, it contains, according to a February 2010 43-101 resource estimate, 17.9 million tonnes grading 2.92 grams per tonne gold for 1.68 million ounces gold measured and indicated and 3.8 million tonnes grading 2.8 g/t for 338,000 ounces inferred. Astur Gold received approval for an underground mine from the Commission for Environmental Affairs of the Principality of Asturias in November 2012 and is completing additional requirements for the processing plant and tailings licenses with expected completion in the first half of 2013.
President/CEO Cary Pinkowski spoke to Kevin Michael Grace March 19, and Patrick Moore spoke to him March 27.
RW: What do you bring to Astur Gold?
Patrick Moore: A considerable knowledge of the environmental and social issues associated with mining. Most recently, I worked for a few years with Newmont Mining T.NMC in Indonesia, Ghana, Nevada and Peru. I was exposed to a wide variety of situations and issues around the provision of social programs in communities and environmental issues.
The environmental aspects of mining are fairly well-established in terms of reducing impacts on water supplies, reclamation of disturbed lands and putting the place back into a decent condition from a biodiversity point of view. That’s primarily a technical issue.
But the social issues aren’t only technical but also political and emotional. When you get a program that works on the social side, it’s very gratifying because communities appreciate having their wealth increased. But there are always jealousies and rivalries that existed before you even came, which then can be exacerbated depending on which political party is in power and all those kinds of things.
My PhD thesis 40 some years ago was on the environmental impact on a large openpit copper mine on northern Vancouver Island, Island Copper, which was eventually owned by BHP. My thesis triggered the passage of the Land Use Act in British Columbia, which was the first time a mining company was required to submit a reclamation plan before mining commenced. Since then, I’ve been closely involved with people in the mining industry. I’ve been a keynote speaker at the PDAC conference twice, in 1997 and 2007.
One thing I can say for sure is that in the 40-odd years I’ve been involved there’s been a tremendous improvement in the social responsibility and environmental performance of the mining industry, especially Canadian.
RW: Despite the advances in environmental and community sensitivities demonstrated by the mining industry over the last few decades, there is a reflexive notion propagated by NGOs and a lot of environmentalists that mining is bad per se. How do you deal with that sentiment?
PM: My old colleagues, when they really want to put me down as a traitor, say that I’m “in favour of mining,” as if that’s a slur. I’m say, you guys must at least ride bikes, and I know you have cellphones and computers, and I’m pretty sure you go in planes to places like Cancun for the International Climate Change meetings. Do they really think we don’t need metal? Whenever I’m interviewed, I ask them to ask Greenpeace where the best mine is and why they like it. You won’t get any response from Greenpeace because they’re basically against any mine anywhere. I say that is preposterous.
RW: What is the significance of your appointment to the board of a junior?
PM: Cary Pinkowski wants to do everything as perfectly as he can from an environmental point of view. He has decided to use a flotation process that doesn’t require cyanide, and he’s decided to go underground even though if he built an openpit mine they could afford to take lower grades, and their resource would be considerably larger.
I define sustainable mining as mining that does not cause longterm negative environmental impact. The social side is you leave the community wealthier than it was: in healthcare, education, training, infrastructure, etc—Patrick Moore
I define sustainable mining as mining that does not cause longterm negative environmental impact. The social side is you leave the community wealthier than it was: in healthcare, education, training, infrastructure, etc. You can build community centres, schools and clinics. It would appear that there is 70% to 80% support for the [Salave] project in the nearby communities. I’m looking forward to seeing this mine into operation and seeing some of the cashflow improving the nearby community, Tapia.
RW: Tell me about bringing Patrick Moore on to the board.
Cary Pinkowski: I was very impressed with his practicable approach to environmental sustainability as it applies to mining. It is very important for somebody on your team to provide guidance on environmental and social issues. Patrick is a world leader in the environmental field and we are first with bringing somebody of his expertise on a resource board.
It’s about doing things differently. I think it’s not good enough for mining companies to say they’re good at corporate social responsibility; they have to actually roll up their sleeves and do it. I want to take a leadership role and make Astur known as the number-one company on the planet in dealing with communities, not just with Salave but with future projects as well.
RW: There was an interview at the Gold Report in February with Henk Krasenberg, founder of the European Gold Centre, and he mentioned that your switch from cyanide to gold concentrate had greatly improved your position regarding the permitting of Salave. He added that you still had an additional 30 environmental points to comply with. Can you elaborate on that?
CP: It’s actually 49 points. Some are as small as setting up a weather station. Most are to do with water, and a lot of it is about freshwater discharge. This is wellwater/drinking-quality water. The government prefers that we put the fresh water discharge directly into the ocean with a submarine pipe. Economically, it wouldn’t have a big effect on our project, but would add some time onto the permitting process.
RW: Why did you make the switch to concentrate?
CP: [Director and Interim COO] Mike Surratt felt that Salave was economically better off by building a very simple flotation plant. We voluntarily dropped cyanide in December 2012.
RW: What’s your permitting timeline?
CP: We’ll be submitting an amendment to the government in May. The government has told us that it will take approximately three months to come back to us. We’re looking for a positive DIA [Declaration of Impact Assessment] in the fall. Upon receiving our positive DIA, we can actually start construction within weeks.
RW: So there is a possibility you can begin construction by the last quarter of 2013?
CP: Yes we could be in a position to commence construction on the decline.
RW: How much cash does your company have? What’s your burn rate?
CP: We just closed a private placement yesterday, and we’ve got $2.3 million. We’ve mandated Rand Bank of South Africa for a $10-million debt facility that should close at the end of April.
RW: Are you planning more exploration to increase the size of your resource?
CP: Yes, we’ve applied for 3,000 metres of drilling, and that’s in the system right now. We plan on drilling over some of the high-grade portion which will help us out with some of the underground mine design and also to stepout some of the lower high-grade blocks. The very last hole is 40 metres of 34 grams over two zones between 250 and 300 metres, but there’s only about four or five drill holes in there. We don’t truly know how big some of these high-grade blocks are, and we’d like to go down there and test them.
I want to take a leadership role and make Astur known as the number-one company on the planet in dealing with communities, not just with Salave but with future projects as well—Cary Pinkowski
RW: When can we expect a bankable feasibility study?
CP: The first quarter of 2014.
RW: How will the switch from cyanide to concentrate affect your bottom line?
CP: It means a lot lower CAPEX. I believe the markets will be looking for higher-grade and lower-CAPEX projects. For us, just doing a simple 1,300-tonne a day flotation plant with no autoclave, no CIL, makes it very palatable for debt-finance companies. We’re speaking to five or six smelters right now, and we also have the possibility of toll autoclaving.
RW: I know you can’t speak to a specific number, but can you give me a ballpark CAPEX?
CP: We feel our CAPEX should come in around $90 million to $100 million.
RW: So pretty modest?
CP: Yes, that’s the advantage with underground versus open pit. There is almost always a strip ratio with open pit mines, and every project is different. As an example if you’re looking at a 5,000 ton a day operation, on a 5-1 strip you’re really moving 30,000 tonnes a day. That is a lot of rock to move.
One thing we can be assured of, especially in the EU, is that energy prices will increase, so if you have the option, a high-grade smaller operation wins hands down.
RW: How are you looking at financing the CAPEX?
CP: Approximately 30% to 40% equity and the balance debt.
RW: Any indication of when you’ll need to go back to the market?
CP: We will be fine through to next year, and that includes commencement of construction of the decline. We want to build out the decline at the same time as our flotation plant.
RW: So you think you’re over the hump of your permitting difficulties in Spain?
CP: I wouldn’t call them difficulties. We received a positive environmental impact assessment in 19 months. We’re 90% there. In the United States, the average permitting time is five or six years.
RW: I mentioned Astur in my gold column last month and noted that Spain’s unemployment rate is expected to reach 27% this year. That being the case, what is the attitude of the people of Asturias with regard to your project and the employment possibilities therein?
CP: I personally have seen how unemployment affects families. Seeing the young people having to move away. The youth unemployment number…
RW: …50% or more.
CP: It’s 60% or 70% or whatever number you want to put it at. There is a NGO presence against every industrial project in Europe, and these NGOs used to be quite strong. But by blocking industry they are also indirectly blocking social, education and healthcare programs.