Interview with Doug Ramshaw, President of gold developer, Minera Alamos Inc. (TSX-V:MAI) Minera Alamos is a gold development company that is aiming to become a gold producer in 2020. The company has a portfolio of Mexican gold assets, including the 100%-owned Santana open-pit, heap-leach development project in Sonora currently under construction (expected first gold production in Q1 2021). Minera Alamos' other project, the 100%-owned La Fortuna open pit gold project in Durango, appears to have a 'robust' PEA and is nearing the end of the permitting process. A construction decision on La Fortuna could be made in late 2020 or early 2021. Minera Alamos' team have together brought 3 mines into production over the last 12-years. The aim is to get Santana into production quickly, then finance La Fortuna out of cash flow. Ramshaw claims that Mexico as a jurisdiction and the nature of the projects will Minera Alamos to maintain a very low CAPEX across its 2 projects. Clever. Let's unpack this further... What are the numbers saying? Since bringing Santana and La Fortuna together in 2018, the company has raised some capital: C$5M at the start of 2019, a C$6 equity raise plus a royalty package at the end of 2019, and another raise in 2020. The total is around C$11M in equity over the last 15 months, plus the royalty package with Osisko Gold Royalties. This has allowed Ramshaw to avoid any warrants and options. Minera Alamos has c. C$14M cash right now, and is fully-funded to bring Santana through to production. The aim is to construct a 25,000-35,000oz gold mining operation for a CAPEX of C$10M. In year one, as Minera Alamos ramps up, the company will be looking at the "low-US$900/oz" region for AISC. Ramshaw expects the AISC to fall to the low $800s, or even the low $700s as the project is ramped up to 45,000-50,000oz per year. Very impressive economics. Santana should have a life-of-mine that stands at 6 to 7-years initially, but brownfields exploration upside could add to that. Ramshaw has no issue starting off work on a "modest asset," provided there is an eventual window towards a 1Moz - 1.5Moz resource. Ramshaw has recently been selling bus shares ar Prime Mining because he has a clear message to the market: Santana and La Fortuna are the focus. Los Reyes had too many expenses attached to it. What about La Fortuna? It's a higher-grade operation but is a similar kind of breccia pipe. Minera Alamos came out with a PEA in 2018 stating a 5-year mine life on a starter pit. It was based around a 3.5 to 4g open-pit with a 6:1 strip ratio. Roughly 50% of the gold is recovered by gravity, but the other 50% requires a milling operation, which is clearly different to Santana. Minera Alamos already owns a 2,000t per day mill. The PEA called for a 1,100t per day throughput, so this mill is very helpful. With the mill in place, the company is looking at a higher CAPEX than for Santana: US$26M, but it is sub-1-year payback at US$1,250/oz gold, and Minera Alamos can then look at exploration upside. Minera Alamos is "without a doubt" looking at M&A and is constantly looking for new acquisitions. The company calls itself an "asset number: 3" company, and Ramshaw is keen to solid this statement rather than it being purely aspirational. How much skin in the game does management have? Ramshaw says he has put his money where his mouth is, buying 3.3M shares out of the market in the last 1.5 years, which is 3.5 to 4 years of his salary into the stock. The rest of the management team appears to have done similar. Ramshaw is paid roughly US$120,000 per year, which is very reasonable.
