The Minto copper, gold, silver mine in the Yukon has been operating since 2007, and around 500 million pounds of copper have been produced since, with underground mining starting in 2014.
The mine has seen a few owners in recent years. Capstone Mining completed its sale of Minto Explorations to London-listed Pembridge Resources and two New York-based private equity funds that provided the funding to restart operations.
Then in June last year, it was announced that Minto Explorations Ltd, with a newly appointed president and CEO, Chris Stewart, tasked with improving operations, would reverse into a Canadian shell and list on the TSX Venture Exchange under the new name of Minto Metals Corp (TSX-V:MNTO).
Stewart is now president and CEO of the now public Minto Metals, which also aims to list on Toronto's mainboard and ultimately in the US. Pembridge Resources retains around an 11% stake in the company.
Proactive recently caught up with Stewart and he explained more about the Minto mine and the company where he sees "a lot of value" still to be created.
Proactive: What sets the Minto mine apart from other copper mines in your opinion?
Chris Stewart: Minto Metals is a newly public company so there's a lot of value to be realized from that, in that we are a producer. Not many companies in the junior space going public are actually in production so that really sets us apart from a lot of other companies if people are looking to invest in the copper space.
And it is not just producing copper is it?
Correct. The main metal is copper, but we also have gold and silver by-products. Gold is the one of greater value. Silver doesn't really pay a lot, but for gold we'll do somewhere between - depending on grades -12,000 to 14,000 ounces a year. So that adds a nice little bit of revenue, especially with gold flirting around US$2,000 an ounce today.
There's a buzz around copper at the moment. What's your outlook for this strategic metal?
I am very bullish on copper. This is the first time that I've been involved with running a copper company. I have spent a lot of time in gold, nickel and a lot of other metals but I'm very excited about copper. I think the timing of bringing Minto public couldn't have been better. You've got a huge discrepancy between demand that's coming for copper with all the electrification and climate initiatives, and supply. It is not like at an industrial plant where you can add another assembly line and in six months you have doubled your production. It takes years to get a mine built and it's even harder to expand.
You are aiming to boost production and lower costs at the Minto mine this year. Can you outline how you are going to achieve this?
We spent 2021 basically rebuilding the operations and getting ourselves squared away. We had to invest in new mining equipment. So right-sizing the fleet for what we're trying to do at the mine. We are going to be doing 2,900 tonnes a day in the first quarter and looking to go to 3,000 tonnes in the second and then 3,250 tonnes for the remainder of the year. Our plan is to ramp up to 4,000 tonnes a day by the end of 2023. We've got a mill that's permitted to 4,200 tonnes a day so we've got lots of capacity yet.
We do have high fixed costs because we do run a camp. We have to fly people in and out to our operation. So it's simple math - if you can divide by a bigger denominator - your costs are going to come down. So that's really our focus - to get production up. Also, my contracting background always has me focused on the details and we're looking to reduce our operating costs. We've got a bunch of initiatives that we've started to implement and a bunch more that we're evaluating with the intent, assuming the economics make sense, to look at implementing over the next several years. I should mention that this is the first time (in 2022) that Minto - the company - has actually done the mining. We got rid of our underground contractor last year. It's the first time in the Minto mine's history, even going back to Capstone days, where the company is doing the actual mining so we're very excited about that.
Is there another example of how you are going to cut costs?
Yes, currently, we have a contractor that's crushing for us on surface and we are looking to construct our own facility and get it indoors. As you can imagine, trying to operate a crusher outside in minus 50 degrees in the Yukon in the middle of the winter is not the easiest thing so we want to get that inside a building. We are looking at investing in that over the next 12 to 18 months and the payback on that is about 18 months. It's about a four and a half million dollars-a-year saving, we believe, once we get it built and run it ourselves.
You have exploration plans this year to boost the resource. Can you outline briefly what they will entail?
We are very excited about our exploration. If you look at the history of Minto, when Capstone was drilling back in the early 2000’s I heard they had about an 80% success rate with their drill holes and they spent $25 million over five years (2008-2012) and took the resource from 20 million tonnes to 50 million tonnes. They stopped drilling in 2012 so essentially there hasn't been any exploration for the better part of a decade. We spent some money last year doing a bit of drilling (about $3.5 million). This year, we're going to spend $9 million on exploration and we're drilling targets developed from our Titan survey and the magnetic surveys, bringing all that together. We have a lot of high potential anomalies that we want to put holes into.
We're also dealing with Goldspot (TSX-V:SPOT). They are taking all the data that's been put together since the beginning of time on this property and putting that into a computer. They will run AI on it and machine-learning on it to give us some additional targets as well. And that's been used with great success at a number of other properties so we're again very excited about that. Our new vice-president (VP) of exploration, Dave Benson used that at the Lac Des Isle mine with Impala with great success so he's bringing that experience to bear on our company.
Do you have a timeline towards profitability?
We finished last year (in November and December) very strongly. We did 6.1 million pounds of copper in those two months and the financial results for FY2021 will be released at the end of March, and I would say it is going to be a much improved year over 2020. We see 2022 being even better than 2021. And we should be making around $40 million EBITDA this year. That is our current estimate.
What do you bring to the table as CEO?
I was recruited to come here. I guess I'm known in the industry as a bit of a turnaround specialist. I've cut my teeth on the contracting side for 14 years with Dynatec Mining, or DMC Mining as they are known today. I am not afraid to roll up my sleeves and get involved in the operations. I consider that to be one of my areas of expertise.
Kirkland Lake Gold is probably the biggest success story in my career. I joined that company back in April 2014 and we were three months away from bankruptcy at that time. And we got the Macassa mine turned around, got it cashflow positive the first quarter I was there and that company has made money ever since. We levered that success with Macassa, getting it squared away, to purchase St Andrew Goldfields and then we got the Newmarket Gold deal and then we had a change of CEO when Tony (Makuch) came in and the majority of the former CEO’s executive team was removed. Tony brought in his people and then they continued to build it with the Detour acquisition. I am very proud of the people at Kirkland Lake Gold, they really did a great job.
When I joined Kirkland Lake Gold it had a market cap of about $220 million and when I left it two and a half years later, it was almost $2 billion and then it grew to $15 billion. And then of course there was the deal with Agnico Eagle. So that's a real success story. At Minto last year, I spent a significant amount of my time at the mine site working with the operations team but we're now hitting our stride and I think people will be pretty happy with the results here at Minto Metals in 2022.
Contact the writer at giles@proactiveinvestors.com