One of the features in IKN77 last week was this Vena Resources (VEM.to) note, mainly featuring the words of company CEO Juan Vegarra. We reprint here. Enjoy of your day thank you.
Vena Resources (VEM.to): The CEO’s take on recent developments
Since the news (12) of the recent resource number from its Macusani uranium project, Vena Resources (VEM.to) has seen a revaluation and re-rating by the market. This is a good thing of course, so your author decided to run a mail past Vena’s CEO Juan Vegarra and ask if he’d like to write a section for The IKN Weekly on happenings at the company. This he’s kindly done and what follows are his words with no further comment from your author. Enjoy.
Thanks Otto for allowing us to expand on the Macusani press release. We are very excited to release our first numbers and most importantly we strongly believe there is significant upside to our continuous investment with Cameco. Our October 14th press release highlights several key points but I want to reiterate what I believe is the core of the release besides the actual resource numbers: Vena and Cameco’s drilling program has delineated a structural corridor paralleling the small, central gully striking northeast – southwest that is dominantly a higher grade, uniformly disseminated mineralization. The zone is open to the southwest and there is a marked increase in grade in this direction which will be a major focus of the next drilling campaign.
The intensely disseminated style of uranium mineralization discovered in the Lower zone at Tantamaco greatly enhances the prospectivity of the Quenamari volcanics to host economic uranium deposits. Tantamaco will serve as a model in our search for the large deposits that may be completely hidden or have only minimal exposure at surface.
When you ask me where we are going with this, I asked David Bent, our Vice President of Exploration, to give me his early thinking (and I emphasize “early”) on the intent of the next drill program which should begin in December - depending on government approvals for drilling permits. David indicated that the drill plan is primarily targeted at increasing the resources at Tantamaco by following the trend of higher grade, disseminated mineralization to the southwest of hole TA-079. He also highlighted that there are 10 widely spaced holes at Isivilla to follow up on the intersections in IS-06 and IS-04 which could result in a new NI 43-101 resource.
In addition, there were 48 holes totalling 6,200 meters drilled at Nuevo Corani/ Amaritza during the 2006/08 period with mixed results. The mineralization was dominantly fractured - filling within the upper A horizon which is eroded off on both sides of the northeast – southwest trending ridge. Although the size (and grade) potential appears to be limited, we are confident that a reportable resource could be drilled off fairly quickly.
And finally, from a more wildcat point of view, the Muñani sandstone-hosted mineralization could be very significant. Outcrop is very sparse in the area underlain by the sandstone. Although grades are overall quite low (400 ppm range), a couple of the small mineralized outcrops are very impressive with fine grained autunite disseminated throughout the rock. If we were to get a drill hit in the sandstones it could really develop into something large.
Obviously this is all early thinking but it gives you a sense of how excited we are of what we are seeing on the ground and what the potential may be not just in Tantamaco but in several of the other targets in Macusani and Muñani – which you have not heard us mention in a while.
It is clearly understood that we will need to look at the entire Macusani Plateau to justify a large milling operation, but if we are successful delineating somewhere north of 20 million pounds in reserves over the next few years, we are confident Peru will have its first Uranium mill constructed. Is 20 million pounds in reserves possible? That is Vena’s Uranium team main challenge without having to resort to any kind of M&A in the near term.
Readers should understand there are a number of challenges still ahead for the Company but the end goal is achievable, we have the technical team in place and great supporting partners allowing Vena to focus on four key areas for the next two years:
• Azulcocha Region – increase and upgrade resources and construct scalable mill • Macusani Uranium Region – increase and upgrade resources leading to feasibility study • Esquilache Region – Expand geological understanding of entire caldera, complete an expanded drill program and publish NI 43-101 and support Gold Fields in Amantina. • Pucara – Complete underground development to confirm and expand silver/lead/gold resources and permit/construct scalable mill
Going forward, you can expect Vena to continue to monetize its non-core assets via outright sales as well as more joint ventures and perhaps a couple of strategic corporate moves. We believe the expansive portfolio we accumulated during the first five years has enabled us to define which projects were the better targets to advance across several metals and districts in Peru - now we can focus on bringing a couple of our projects into cash flow which will enable us to fund additional exploration initiatives without diluting our shareholders much further.
Once again – thanks to you, to all IKN readers and to all Vena shareholders for supporting us while we survived the toughest recession we have faced in our lives. Although there is tons of work ahead of us, we believe we are poised for a strong come back.
In November last year, this humble corner of cyberspace ran an interview with Juan Vegarra, CEO of Vena Resources (VEM.to) (find it on this link here). At the time the stock price was down at 19c but Vegarra was keen to point out tht VEM.to wasn't about to turn its back on plans and go into hibernation.
So last week I had the chance to catch up with Vegarra and get the lowdown on developments at VEM.to. This interview was first seen by subscribers to The IKN Weekly last Sunday and it's now availble on the internetwebpipes for all to see. Enjoy.
IKN: Hello Juan thanks for taking the time to talk again.
Juan Vegarra: Interesting times for sure. Looks like we survived the global financial meltdown, but I am still a little worried about the US dollar and the credit markets – should be promising for the metals, especially gold. I know you may not agree, but we can have the finance debate on a different occasion or platform.
IKN: So what has been happening since we last spoke, apart from the quiet doubling of your share price (which is good)?
JV: There is no way you are going to get me to gloat on the current stock price. Remember we were at $1.91 not too long ago (although it feels like forever ago). I know our value is closely tied to zinc and uranium as those are the metals the market recognizes us for, but for the last 12 months we have been enhancing our precious metals portfolio as part of our mandate to maintain a diversified portfolio. We have two exciting projects – Pucara and Esquilache which are both gold/silver plays as well as the investment in the coal business that has kept a much smaller and focused team very busy lately.
IKN: Let's take things piece by piece, as Vena has a lot of irons in the fire. Of course you have to find a balance between what you can say in public and what you can't, but we'd like to know as much as possible about the current state of play in the following:
1: The uranium projects and the JV with Cameco
JV: Cameco, like everyone else in this industry, also has to manage the bottom line, so we went back to investing $2.5 million this year as originally agreed when we created Minergia, our joint exploration company in Peru. They have abandoned some JVs around the world but have kept the Vena deal going. That alone is a clear signal without me having to continue to emphasize we have a strong relationship which is getting stronger every year. After drilling over 12,000 meters last year at Macusani we have been doing a lot of “what if and what’s next” in Macusani. We knew we needed a strong manager and well experienced uranium geologist that can “live” in Puno and not in Lima. We hired an outstanding professional in David Bent. He ran a JV with Cameco in Canada before and we think David can do very well for us in Macusani. While we prepare the next drilling phase for Macusani we wanted to drill test Lagunillas. We knew the surface info was not as exciting as Macusani, but regardless it was worth doing 2,000 to 2,500 meters to test those targets. So what should you expect? A targeted drill campaign for Macusani for the next 18 to 24 months so we can get a better picture of possible resources with the goal of meeting Cameco’s uranium pound threshold.
2: Azulcocha, and plans now that zinc has rebounded a bit(along with the latest gold discovery there)
JV: If you base Azulcocha solely on zinc, as long as Zinc stays below 75c/lb I am not too keen to invest the dollars that are needed to build the mill and begin operations. The risk/reward is just not there when there are better opportunities in other parts of the business. BUT, if you fully understand the latest press release regarding finding gold on the sandstones then the picture changes dramatically for us. We are going to do some metallurgical tests to see if the gold in the sandstones is recoverable. If we get positive metallurgical results then we have a great future ahead for Azulcocha. I will tell you what we will do but remember it is all speculation right now. The first step will be to drill from surface to expand the lateral extends of the mineralization. So far we know dissemination exists near surface for more than 250 meters along strike. The second step will be to drill from the working level -40. This operating level already extends one kilometer underground, so we can fan up and down to test mineralization at depth. The third step will be to test other nearby targets where we have seen sandstones. “El Mono” is a hill right across the Azulcocha mine that we now know reported several gold anomalies in sandstones in previous exploration programs years ago. And finally, we will review core from the Azulcocha West program and see if we see similar occurrences. In summary, if the metallurgical tests are positive then spending money to delineate a 43-101 gold resource as part of the operating mine would be a no brainer. So expect us to discuss metallurgical tests before discussing the sandstone potential again.
3. The coal business you're putting together. How will it work, on the supply side and the demand side?
JV: There are two sides to this business; bituminous coal from Oyón in the Andes of Lima and anthracite coal in northern Peru. The anthracite business is the most interesting to me. We have completed a review of several coal projects in the Alto Chicama area in northern Peru and now have a solid understanding of the market inefficiencies so we can maximize our earnings. We have a clear idea of market dynamics (supply/demand, key Peruvian and international buyers, key properties, competition, market inefficiencies especially on the logistics end). The next step is for us to set up a coal classification facility in northern Peru which should generate significant cash flow for Vena in the short term. Coal classification can lead to washing coal which will increase our margin even more. We will not be releasing more numbers especially of a financial nature until we begin operations. You know this is standard venture capital work managing a start-up business. It would be nice to have some barriers to entry so we avoid people cloning our strategy as they did when we announced the uranium finds several years ago. So you need to be patient for a few more months with me on this subject.
4. What’s the latest on the Pucara gold project? Does the JV have a timeline to production there as yet?
JV: We received a very detailed report from Consorcio Minero Horizonte. It suggested we should drill further down to increase tonnage. We have reviewed the entire report and there is a good working relationship with CMH but no final deal has been signed as we are still working on several other fronts that may lead to a stronger (or no) relationship.
5. And finally, what about my personal favourite asset of Vena's, Esquilache? It seems to have been put on the back burner so any reason for that?
JV: Esquilache is also my favorite exploration project in our portfolio. It is very strategic to the future of Vena so there is more being done on this project that there is space in this interview. This project requires 5,000 to 10,000 meters of drilling NOW which is estimated to cost between US$1.5m and US$2m to start with, so I am “monetizing” other assets to raise enough funds to drill Esquilache without dilution at these low share price levels.
IKN: Final question: In last week's IKN Weekly I mentioned VEM as an example of a company that might benefit from the loosening in credit markets and the subsequent hunt by larger miners for cheap assets. Has VEM seen any evidence to suggest that is true recently? Is being asset rich (and relatively cash poor) becoming a positive as I imagine?
JV: I can only state what we are seeing as I’m not sure what is happening to other explorers in Peru. The answer is Yes, you are correct. We are seeing strong interest in reviewing our assets. Vena is asset rich and cash poor in comparison to previous years. We have signed several confidentiality agreements with third parties that may lead to something or nothing. The advantage we have is that we have accumulated plenty of assets over the last seven years in Peru that could be classified as non-core for now, like recoverable VAT or equipment that we can sell today without affecting short term deliverables, plus funds from our partners, so I am not going to a negotiating table with weak hands.
IKN: Thanks for your time, Juan. Any last words?
JV: I find the time to read IKN every day. I know you are very supportive of the company and I thank you for it. Peru is booming in comparison to the rest of the world. I know your comments regarding the Peruvian economy, but in comparison to the US where I live Peru’s economy looks strong. I think it is the first time the country is facing a global economic crisis with sufficient financial resources that should provide a cushion for Peru that it never had before. I see the performance of the Lima Stock Exchange as very beneficial to Vena. We (and other BVL juniors) are trading at five to six times more volume than we do in Toronto. The political climate is changing as elections are nearing, so the next 12 months should be even more interesting for all of us doing business in Peru.
Let's be straight here; I'm a fan of the company, ok? I like the company attitude, it looks after Peruvian locals, I've done an interview with CEO Juan Vegarra here on site (here's the link). I've visited their properties (unpaid, I hasten to add). There's even a non-revenue generating banner up there at the top as my little show of solidarity for the company.
I like VEM.to because the people there have always been straight as a die. I like it because it has some very good looking projects and prospects on its books. I like it because it hasn't tried to run and hide from this economic downturn and has got on with the job of exploring and trying to add value to its assets; exactly what a junior miner is supposed to do.
So with all that said you'll forgive me if I paste out the VEM.to press release from today. The company has got honest-to-goodness positive news to tell the world and i'm happy to help disseminate it just that little bit more. DYODD, and by way of disclosure I do not personally own at this time but I know people that do. Here's the PR:
TORONTO, ONTARIO--(Marketwire - March 2, 2009) - Vena Resources Inc. ("Vena" or the "Company") (TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce that after an extensive 18 month effort the Government of Peru has approved an environmental impact assessment (EIA) for the Azulcocha polymetallic mine.
Juan Vegarra, Chairman and CEO of Vena Resources commented: "This is a tremendously important milestone for the Company. Vena has invested close to US$20 million in the development of the Azulcocha mine and has delineated a NI 43-101 compliant underground resource of close to 200 million pounds of Zinc thus far. The orebody is open in multiple directions and the infrastructure buildup, completed over the last 18 months, includes a modern three MvA electrical substation, onsite lab, mining infrastructure capable of supporting over 350 employees and a scalable floatation mill capable of processing up to 1,400 tpd.
A prefeasibility study was completed in June 2005 on the tailings with robust economics resulting in an NPV of US$37.2 million and an IRR of 157% using US$0.50 per pound Zn and US$0.60 per pound Mn and this NPV does not include possible gold credits. A scoping study completed by MineFill Services from Vancouver in January 2007 provided positive economics for the entire project and we're pleased that Glencore continues to invest in the exploration of Azulcocha West where 32 holes (7,056 metres) have been drilled thus far with expenditures of US$2.4 million to date."
With the approval of the EIA, Vena can now continue to explore from underground and surface locations for additional tonnage. The EIA is a requirement for proceeding to mill construction and mining operations. Perhaps the most important aspect of this milestone is the local community commitment the Company has received to develop this project as soon as possible.
Azulcocha Highlights - Current Mine Resources NI 43-101 Compliant
Underground Mine Resource Confirmed so far (NI 43-101, R. Henckle and Assoc., 2008) -------------------------------------------------------------- Indicated Resource Tonnes Zinc % -------------------------------------------------------------- 865,132 @ 5% cut-off 10.0 --------------------------------------------------------------
Tailings Reserves Pre-feasibility Study (NI 43-101, M. Lytle and R. May 2005) -------------------------------------------------------------- Probable Reserves Tonnes Zinc % Mn % Au gpt -------------------------------------------------------------- Calculated 908,400 3.27 10.04 1.13 --------------------------------------------------------------
General Overview of the Azulcocha Property
The Azulcocha Project is a polymetallic zinc deposit located on the Central Andes Peru where the major silver-lead-zinc-copper producer mines reside including: Raura, Uchucchacua, Izcaycruz, Atacocha, Milpo, Cerro de Pasco, Colquijirca-San Gregorio, Huaron, Casapalca, Morococha-Toromocho, San Cristobal-Carahuacra, Azulcocha and Yauricocha.
Azulcocha Mine
The Azulcocha deposit is set in Pucara Group (Condorsinga Formation limestone) of the upper Triassic to lower Jurassic age, marine and continental sediments of Mesozoic and Cenozoic age. The zinc ore deposit is controlled by the regional N45W trending Cochas - Gran Bretaa fault which builds an E - W sygmoidal overthrust structure. The Azulcocha deposit is not well defined yet and is still open for more exploration. The 2006 to 2008 exploration programs consisted of both surface and underground core drilling in addition cross cut workings in order to define the remaining resource for the Azulcocha mine.
Metallurgical Information
17,440 tonnes of ore from underground mine was processed in a pilot mill, which obtained concentrate of 54% of zinc with 89% recovery.
Infrastructure
- Electricity Supply - The property has a Sub Station of 3 MvA which is connected to the National interconnected System.
- Water supply - Abundant water resources are available from surface ponds and small lakes.
- Transportation facilities - The Azulcocha - Pachacayo 40 kms non asphalt road is connected to the central railroad and the central highway which is 225 kilometers to the port of Callao, and 45 kilometers to the Smelting and Refinery of La Oroya. The Azulcocha Project is also accessible by airplane from Lima to Jauja - 60 kilometers from the mine site.
Social Issues
Vena has a well defined social impact policy that is formalized through written agreements with the local communities of Tomas and Shicuy to undertake exploration and production programs. This collaboration is maintained through programs of social support related to medical services, electricity and agriculture improvements.
Exploration Potential
The Azulcocha deposit is not well defined yet, it is still open in multiple directions, for additional exploration to increase and define resources along the eastern and western extension of the Azulcocha mine as well as in the projection below the -40 underground level.
Azulcocha West is a Joint Venture with Glencore, which is undergoing an exploration and evaluation program with a total investment of US$2.75 million.
Azulcocha has historically been known as a zinc mine, however several drill holes discovered gold, lead and manganese zones. Vena plans to investigate these new targets as well as obtain final permits for full production at Azulcocha.
The exploration and development program is being supervised by Gervacio Rodriguez P.Geo., Vena's Qualified Person as defined by NI 43-101.
Vena Resources at the PDAC
Vena Resources is pleased to extend an invitation to all interested parties to visit Vena's management at booth #3023 at the 2009 PDAC International Investors Exchange. The PDAC is being held at the Metro Toronto Convention Centre, South Building - Level 800, from Sunday, March 1st to Wednesday, March 4th.
Juan Vegarra is the CEO of Vena Resources (VEM.to). As well as being a site sponsor, regular readers know that VEM.to is a junior mining company I’ve liked for a long time (long before the company started advertising here, in fact). So when given the chance to get this exclusive interview with Juan Vegarra over the weekend I jumped at it; this fascinating look at the world from the eyes of a junior mining CEO in the midst of the sector downturn is the result. Enjoy.
Otto Rock: Hello, Mr. Vegarra, thanks for agreeing to do this interview with IncaKolaNews.
Juan Vegarra: My pleasure, you know I have been reading your comments for several months and find your site one of the most instructive out there – keep up the great work.I hope you and your readers realize that there may be some issues that I may not be able to expand completely due to the legal restrictions, but I will be as transparent as possible.
Otto:Straight down to business: It’s been a rough time for junior resource stocks recently. How is Vena coping with the circumstances?
JV: Recently we put out a press release explaining how we are allocating our resources with some detail.Bottom line the financial meltdown has created a huge financial problem for ALL companies not just the mining sector.I look at my personal retirement account and this quarter was just nasty even though it is pretty well diversified.In particular with regards to Vena, the current situation has forced me to reassess some investments, delay others and look at my core team and had to let go of some great people whose projects made no sense continuing to invest until the market recovers again.Specifically;
1) Any kind of exploration in all those early stage projects (24 of them) will be put off indefinitely.
2) We are focused on getting the Azulcocha mine fully permitted (EIA and construction permits) AND increasing its resources by drilling underground and along Azulcocha West.The question about when we build the mill is still being debated, but frankly as long as Zinc stays at historically low levels makes no sense to spend millions to barely break even by milling high-grade ore.Like any business person, I would prefer to invest those precious dollars in projects where we can still see a nice return.
3) One of such projects is what we are doing with Sudamericana de Carbon (SDC).We haven’t announced much recently as we have been reviewing several projects that we want to purchase.More than 12 projects have been reviewed and we know which ones we want to purchase, so now it is a matter of the team closing some of those deals under favorable terms.We will of course have to drill some of these projects to comply with the exchange to confirm resources.Some of these projects are owned by small producers so we should be able to mine some anthracite and sell it to the local market.In fact we already have a well known steel manufacturer in Peru as a key client; we plan to expand our sales to this customer.
4) The Uranium exploration projects are being funded by Cameco.We still have another $5 million dedicated to drilling in the short term to delineate a significant resource. Finally…
5) The projects in Puno – Pucara (gold/copper) and Esquilache (gold/copper/silver) will be explored and exploited with as few incremental funds as possible.
Otto: Vena has plenty of different projects in the pipeline, but significantly they are all in Peru. Can you tell us why VEM only operates in Peru and what advantages that gives you?
JV: I am Peruvian by birth.Yes – I left Peru at a very early age to study in America, but my love for the country is perhaps stronger now than when I was growing up.Sounds strange but as an adult I have come to realize how precious its people and natural resources are.America has been great to me, but there is something about the magnetism of Peru that makes me to want to come back frequently.
From the business perspective, Peru is a rich mining country and still heavily under-explored. I know enough business and political people as well as friends and family that support my efforts, so why would I venture to a different country with mining laws that are not as clear and lack the richness Peru has?.Besides there is no match for Peruvian food anywhere!The business model we use at Vena Resources is to have a highly diversified portfolio of assets across all regions of Peru.If I wanted to invest in another country I would most likely work with a local mining expert and create another junior company.The chances of finding a large deposit in Peru over other countries are simply better by focusing in Peru given the large number of world class deposits already there.
Given the strong focus on Peru and understanding the financial market there well made me work with the Lima exchange people to create a junior sector in the BVL.So after months of efforts, Vena become the first Junior company listed in Lima – perhaps the best corporate decision I have made as the dual-listing allows Peruvian investors to invest in an exploration company focus on running Peruvian mining projects for the benefit of Peruvians (via employment, social responsibility etc).Today more than 35% of all outstanding shares are owned by Peruvian investors and growing every day.
Otto: What about disadvantages of Peru exposure? What are the things that make life more difficult for companies operating there, be that on a macro or company scale?
JV: Like any other developing country you find the same issues – corruption, bureaucracy, lack of knowledge of what exploration is all about amongst the indigenous communities.But, the actual investment environment is pro-mining and there is plenty of intellectual capital at a much lower cost that is highly efficient and professional than most countries.So yes you can write pages about what is wrong with this country, but the risks are significantly offset by the potential rewards.So the “Peru” factor is just another element you must take into consideration when analyzing your investment risk/reward profile.
Your readers may not know this, but Vena was created by 7 experienced engineers with MBAs and we reviewed this industry as a business case before even investing a single dollar.Standard MBA work leads us to create a vision for Vena that is very different from 95% of all exploration companies and the “Peru” factor was actually a positive factor from our research.As an example -- It is much easier to explore for Uranium in Peru than it is in the US.
Otto: If I’m not mistaken, your main projects are the Azulcocha zinc/lead/silver mine that is close to commissioning, the uranium projects in the South of Peru, a recently acquired coal project based in the North of the country and two polymetallic projects in the Puno region. Four very different projects. Can you give us an update on all of those projects, starting with Azulcocha where I believe you’re waiting on a final government permit to get production started?
JV: Allow me to expand a bit on what I said above – Azulcocha already has a measured resource capable of feeding a 500 tpd mill for 5 years.The orebody is open along strike and at depth, and significant funds are being invested by Glencore on the exploration project we call Azulcocha West, just 6 kilometers west of the mine.The internal scoping study we completed over 2 years ago, gave us the green light to purchase a mill and put the project in production.Two issues have caused us to re-evaluate our thinking here.First the significant decline in the price of Zinc (from US$2/lb to under US$0.50/lb in 12 months) makes the project economic by only milling high-grade ore (>15%) so we have decided to expand the resource underground.We are currently reviewing historical data as well as what we know from our drill programs with the goal of defining a new drill program to expand the high grade resources – couple those resources to whatever we may find on Azulcocha West and we can see better economics for building the mill.All the equipment and infrastructure investments have been completed, so it is a matter of getting permits and completing another drill program to expand resources before proceeding to the final stage and “expecting” zinc metal prices to recover in the short term.
Otto: What about the coal project?
JV: Very soon I will be able to share more details what we have been working on, but I gave you the general idea just now.We are about to purchase a group of concessions that have enough anthracite to feed the local market for at least 7 years.These resources are of course non 43-101 compliant, so we will need to do some drill work to comply with the TSX requirements, but the coal seams are so obvious that are currently being mined by small coal miners and it is very possible for us to scale-up the operation thus creating a nice cash flow stream to allow SDC to grow organically.
Otto: The VEM uranium project?
JV: This is perhaps the most significant exploration project for us currently.Its development is fully funded by Cameco so we expect to delineate millions of pounds of U308 over the next two years.The current drill program has significantly exceeded our expectation.We originally thought we might get a resource somewhere around 0.2% and it is closer to 0.4% on average.So our goal is to delineate several high-tonnage, low-grade systems that will feed a central mill somewhere in Puno.I would suggest you read about Cameco’s Inkai deposit in Asia to understand the economics of low-grade/high tonnage systems.
Otto: The polymetals projects at Pucará and Esquilache?
JV: Think of Pucara as a high-grade/low tonnage gold/copper system.Cheap mining costs make this project relatively economic even with these metals prices. Our development approach resembles what we did at Azulcocha.We will drift along the major veins, transporting rock to a nearby mill and making enough money to help us subsidize and perhaps make some money while developing the project.We cannot afford, under current market conditions, to invest heavily on this project as we have larger targets (e.g. Esquilache) but if we can find a way for Pucara to grow organically – why not?Very simple management decision that most other juniors would never take given their business model.
Esquilache is perhaps the most exciting exploration project we have. It is so much easier to explore right next to an old mine.Decades ago – geologists had no clue about Stockworks – Esquilache appears to have several Stockworks and some very significant vein structures.We are awaiting permits to drill this project.There are seven significant mineralized zones, we will drill the Mamacocha zone first and grow from there.
Otto: Can you tell us a little bit more about yourself, Mr. Vegarra? I understand that your background isn’t in the mining sector as such.
JV: I am an Electrical Engineer with an MBA and tons of advance management courses.I worked for Microsoft Corporation in the 1990s leading several teams of engineers in some of the most competitive fights against larger companies at the time.Although I am not a geologist or mining engineer, I know what makes engineers tick and know how to grow operations from the idea stage to significant contribution to the corporate P&L. Ask yourself how many Fortune 500 companies in the US are run by “experts in their field”- very few.
The key for start-ups like Vena is to have strong entrepreneurial skills, surround yourself with people that know a lot more than you on their core competencies and ask for advice.The rest is standard corporate management of human and financial resources.I feel strongly that my blended technical/business skills are better suited in times of crisis to navigate thru these tricky times.
Otto: Would you say that Vena Resources is lacking in deep mining knowledge compared to other junior mining companies?
JV: I have heard that criticism before. I personally don’t have a mining related degree, but my management team and the corporate board is heavily loaded with technical talent, so the key question to ask – can the Vena team pull it off?We have already shown that we can finance the company in very difficult times, we have already shown that we can work with partners 100 times larger than us in a win-win structure that is very protective of our shareholders.Finally you can compare the Vena chart to any other Zinc/Uranium producer/explorer and will see that even under those scenarios the stock price has declined less than most percentage wise.I am not trying to excuse myself or the performance of the stock price, simply pointing out comparables so people reading your site can make a proper evaluation of my team’s (and obviously my) performance.
Otto: Times might be tough for the industry right now but if we look forward, how do you see things shaping up? Is mining going to suffer through 2009 or is there reason to be optimistic about the next 12 months or so?
JV: Let me put my MBA hat to answer this question as I believe global macro-economic events will have more of an influence than anything a miner can do.The US FED is printing/borrowing money like no other time in history as it intends to battle a global recession caused by the financially leveraged world we lived until recently.This deleveraging will continue to cause pain to all industries as hedge funds liquidate positions and pension funds are stuck with non-liquid investments in their portfolios, thus forcing them to liquidate equity positions pushing stock prices to incredible low levels to comply with redemptions or cash calls.So it may take all of 2009 to clean up the global mess.
But as we all learned in business school there is always a bull-market somewhere.The question is – how is this global recession going to play in the metals market? Frankly I see the surge in the US dollar against other currencies to be the result of a temporary “flight to safety” more than anything else. The huge infusion of US dollars has at some point to lead to a devaluation of the US currency to the benefit first of precious metals and then to base metals.China has not stopped growing; yes its growth is slowing but it is still quite significant, and as metal prices force operators to shut down or reduced exploration investment to preserve cash or to mill high-grade ore that can only lead to lower supply and higher prices eventually across all metals.We all know how these cycles work, the question is – how long is it going to last?
Given my believe that precious metals will recover first; we are focusing on Pucara and Esquilache (mainly gold/silver).As base metals recover we will be ready with a fully permitted Azulcocha.Finally – energy needs will not slow down and the “drill-baby-drill” mantra will take years to significantly upset the supply/demand curves on the energy side, so Coal and Uranium will go back up in time (I hope) as we complete our resource delineation programs in both metals over the next two years.
Otto: I noticed an intriguing appointment to your board of directors this year. Could you tell us more about the Romaña-Letts family and why investors that may not know so much about the local Peruvian mining scene should be interested the recent link-up between Vena and that family?
JV: By now it should be clear to your readers what I learned from Bill Gates at Microsoft – “surround yourself with people whose core competency adds value to the enterprise” Roberto and his family are part of the Volcan group, perhaps the largest zinc/silver producer in Peru, and their contacts and knowledge of the Peruvian industry is a great asset for me.Roberto is young and aggressive so I expect to pick his brain and use him as a sounding board as to how Vena’s corporate moves may be perceived by the very tight network of Peruvian miners.
Otto: Of all the assets and projects on board at Vena, which one are you most excited about personally?
JV: Esquilache is by far the most intriguing asset from the exploration perspective.Every junior looks for a world class deposit, and Esquilache appears to have that potential.From the cash flow perspective I think the work we are doing with SDC on the coal side has the most potential in the short term.At the end, the most significant assets are the 30+ geologists that continue to find and advance interesting projects for all of us.
Otto: Thanks again for doing this interview, Mr. Vegarra. Do you have any parting words for readers?
JV: I thank you for letting me share some thoughts. It is hard to put a simple corporate strategy press release, so this format is more conducive to interaction allowing me to emote on how I truly feel about the future of Vena.We are facing some very difficult times, but we are not going to hide in a corner watching the world implode around us.God gave us brains to think strategically, and if it means that we must defer our investments and grow at a slower pace – so be it, but we plan to be around to fight another day. Thank you.
