Soho Resources Audio Interview Transcript with Ralph Shearing, President and CEO

Harry: Hello, I’m Harry Norman and welcome to another Proactive interview. Today is the 19th of April 2011 and I’m talking with Ralph Shearing, President, CEO, corporate secretary and director of Soho Resources. Listed on the TSX Venture Exchange: Mining Sector. Stock ticker SOH, share price 10 cents Canadian, market cap 14.52 million dollars Canadian. Web address: www.sohoresources.ca. Ralph, thank you very much for joining us for this interview. 

Ralph: Harry, I appreciate the opportunity to tell our story. 

Harry: Just give investors a brief introduction to Soho Resources and the company’s business strategy. 

Ralph: Soho Resources is a junior exploration company exploring for precious metals and base metals in Mexico. We are listed on the TSX Venture Exchange under the symbol SOH. Our business strategy is to explore projects towards production decision, taking them right through pre-feasibility, feasibility and possibly into production. 

We are also open to joint venture situations if the terms of the joint ventures would be attractive to the shareholders. 

We have two projects that we’re exploring in Mexico, one is advanced stage, the other is a brand new silver project we’re bringing to the market.

Harry: What is the current state of resources and reserves at Soho Resources Tahuehueto project in Durango State, Mexico?

Ralph: On our main project Tahuehueto we have 12.2 million tonnes that we have outlined by spending around 20 million dollars. We have 665 thousand ounces of contained gold.  If you include the silver and equate that to gold equivalent, including the gold and silver only, we have just over a million ounces of gold equivalent. If you add in the base metals you will just about double that resource so we have a lot of value in the base metals as well. 

Harry: The preliminary economic assessment for the Tahuehueto project, published in October 2010, was described as ‘strong’. Please would you talk investors through the salient points of this preliminary economic assessment Ralph?

Ralph: Certainly, the preliminary economic assessment was prepared by Snowdon Mining Consultants, they are world renowned and a very reputable engineering group. The preliminary economics outlined a potential partial open pit mine and an underground mine. The economics were quite robust with a Net Present Value of 110 million dollars discounted at 5%, Internal rate of return was 31% with a 27 month payback. That was using 3 year rolling average prices as of August of last year. Using current metal prices, we did a run on the economics on February 16th, and came up with 56% internal rate of return and 300 million dollar net present value discounted at 5%, 18 month payback with 480 million net cash flow. It’s a very robust project, we’re quite happy with the way it’s coming together and we’re pushing it forward. 

Harry: What steps are you taking to improve the economics of Tahuehueto as a mining project, and how do you see the timescale to production at Tahuehueto Ralph?

Ralph: Well to improve the economics we have a number of ways to attempt to do that. One is the metallurgy, we’re working on metallurgy, trying a few different things to try and improve the already quite good recoveries. The recoveries that we’ve had so far are built into the economic study so those numbers have come up fine but we believe there’s room for improvement. 

We are hopeful that we can pull in a second open pit mining area called Cinco de Mayo. If we’re able to do that we will be very much improving the economics. What we have to do is some stability engineering work on some cliffs to make sure they are stable as they are above the area we’re intending to open pit mine. So if this study is positive we can do much, much better with the economics.

The final way would be to discover more ore which is a very good possibility in both the existing structures that we have drilled which contain our current resource as well as many other unexplored structures that are well mineralised. One of those unexplored structures could develop into a similar resource as that which we have outlined to date.

So we’re hopeful that we can continue on the project, possibly double or triple the resource going forward and continue to move this resource we have now towards production. 

Harry: The Tahuehueto project covers 9000 hectares, what exploration potential is there on this license beyond the immediate considerations of moving the current project to feasibility and mining?

Ralph: Well there is an excellent upside exploration potential on the whole project. In the small area that we’re working on, maybe 200 hectares in area, we have many structures. We have drilled off on one and a half of the structures that contain our resources. There’s about 7 other structures that we know of that are mineralised on the surface. We need to explore those and we are quite confident that any one of those could return similar resources to what we have already outlined on the two main structures that we’ve explored so far.

If you go outside of that 2 to 300 hectare areas we have 9000 hectares that control the bulk of a mineralised district. I would say we own probably 90% of the ground within that district. Our only competitor is Peñoles, a large Mexican mining company. So the upside of the whole district is good and we want to eventually get to it, but right now we are concentrating on the internal area. 

Harry: What can you tell investors about Soho Resources Jocuixtita silver project, which is in Sinaloa State Mexico, and what work is being done on this project?

Ralph: Well the Jocuixtita project is a young unexplored project which we brought into the company last year. It’s a very well mineralised project, primarily in silver. It contains a bit of gold and good silver grades and good base metal grades in lead and zinc. What attracts us to the project is the principle structure which appears to be over 3km long, and up on the North-western part of that structure there’s two zones that we have sampled and performed a small amount of exploration on. They are very well mineralised, up to 10 metres wide carrying potentially half a gram to a gram and a half of gold, silver results are 81-867 grams per tonne silver, and combined lead zinc from 5-25% in the underground samples that we’ve taken so far.

But we’re now embarking on an exploration programme, it’s underway. We have a drill lined up to get onto that project in the first week of May. We will be drilling it primarily in those two zones that are separated by 700 metres. We’re expecting to hit good mineralisation so long as the mineralisation we see on surface and underground continues to depth. If we are successful then we’ll continue to drill and to connect up those zones and continue to explore along the larger 3km long structure and various mineralized cross structures. 

So we are quite excited about this project, we believe we’ll be able to deliver a new silver project in the company to our investors. 

Harry: Soho Resources raised 3 million US dollars in February, where does this leave the company’s financial situation going forward Ralph?

Ralph: That raise was a small raise to get us going back on the projects and get us marketing again which we are successfully doing. We will need to raise more money, we are planning on raising more money within the next two months that will continue to add the cash we need to work through the pre-feasibility at Tahuehueto and to expand the preliminary exploration programme should we get the results we expect at Jocuixtita. So we would envision a very active year, we plan on moving Tahuehueto through the pre-feasibility stage, into feasibility by the end of the year, then working on the full feasiblity study early next year, subject to us securing the necessary cash to do the work. 

Harry: What can investors expect from Soho Resources over the next 12 to 18 months Ralph? 

Ralph: Well Soho is going to have a very active time over the next 12 to 18 months. We are initiating an infill drilling programme on Tahuehueto to increase the confidence of our inferred resource up to measured and indicated to support pre-feasibility studies. We are underway in mapping and sampling at Jocuixtita and we are anticipating a drill programme starting in the first week of May. Based on the success of that programme we are expecting to go into a continual drill programme throughout the rest of the year and into next year. Back to Tahuehueto we are hoping to deliver a pre-feasibility study towards the end of this year, early 2012, working towards a full feasibility study in early 2012 and the production decision late 2012. 

In addition to that we’re working on a strong marketing campaign which is underway in the United States as well as Canada and Europe. We are seeking a listing on the OTCQX Exchange in the United States to allow better access for US shareholders and US investors to buy Soho stock.