Investors might not be too happy with the gold price these days, but for Denarius Silver (DSLV-TSXv) Chairman and Interim CEO Serafino Iacono, they are just fine.
“You know something? I really do not mind gold at this price. This keeps everybody honest,” he says. “At least for my companies, my all-in—with the kitchen sink—sustainable cost, it’s $1,000 an ounce.”
Iacono is really talking about his flagship company, Gran Colombia Gold (GCM-TSX/TPRRF-OTC), which is producing 200,000 oz of gold a year in central Colombia from four different deposits.
Denarius Silver Executive Chairman Serafino Iacono
Over the last three years he has built up Gran Colombia, so it now has $90 million cash at the end of 2020, is generating over US$100 million a year in operating cash flow, and he’s paying down debt and paying a monthly dividend.
But that quote Iacono gave me? It defines him. He’s made his fortune looking at natural resource plays with opportunity in his eyes and using everyone else’s dissatisfaction with an asset to swoop in and buy it cheap and…well, do what he does. He fixes things. He is like a home renovator.
His biggest renovation job was Pacific Rubiales, a heavy oil play in Colombia that he took from 10,000 barrels of oil per day (bopd) to 300,000+ bopd in the 2000s.
“I’ve done a bunch of fixer uppers. I can tell you that with Pacific Rubiales, that growth we did was the same concession that everybody said that it couldn’t be done because of the guerillas, because of security, because their API wouldn’t flow, because, because, because…
“And when somebody tells me, “Because you cannot do it,” that makes it all so interesting for me to try to do it.
“Same thing that we did with Choco 10 in Venezuela years ago. We took a mine that (the previous owner) could not develop. And a year and a half later, I put it in operation, and it was producing 200,000 ounces a year.
That concession, I bought it for $700,000 after they had spent $50 million on it. Why? They had illegal miners invading the property. They didn’t know how to deal with it.”
“I picked up our company NGX Energy, a gas play in Colombia for not much more than $3 million market cap and we funded it and now we already have one discovery and a $150 million market cap, and more discoveries are coming and we’re going to keep growing the company.
“That’s what we do.”
It is a good thing that is what he does, because Iacono has a big project in Denarius Silver that needs some fixing—the Lomero-Poyatos mine in southern Spain. But if he can do it, it is a company maker for this junior explorer.
Lomero-Poyatos (LP) is a former producer, and is a VERY high grade polymetallic deposit in a known mining area—in fact one of the best mines in Europe is only a few kilometers away. On the surface, LP should be a cash cow for years and years.
But a combination of lawsuits and the wrong companies owning the Spanish asset at the wrong time in the metals cycle has meant this asset is not in production now. As we all say in this business, the geology has not gone anywhere.
“We have an open-pit of 20 million tons of four grams of gold in the first 200 meters, then it goes underground in very wide veins systems. And when I’m talking about wide, 10 to 20 meters in veins systems, but you have four grams of gold, one ounce of silver, 1% copper, 2% zinc and lead.
“We are going to get to work in there, getting liquidity everybody, paying everybody, and just fixing it up. It just needs somebody to do the mechanics; somebody not afraid to do it.”
So, why did good companies did not want to do it?
“Because big companies look at a lot of interesting projects in Spain. People just say, “Look, I don’t want to go through the problem of fixing the problem, where, like I say, this is what we do, Keith.”
There is lots to do. Iacono says operating a mine in Spain takes a lot of attention to detail, double and triple checking everything.
The Denarius team will do some confirmation drilling and expansion drilling and begin work on metallurgy. Iacono says the ore is not refractory (hard to separate out), but slightly different recovery processes will be needed for different parts of the poly-metallic asset.
Iacono says there is a lot of potential synergies with the nearby Matsa Mine, a US$1.1 billion polymetallic producer doing 5000 tons per day (tpd.) from three deposits. Matsa is a joint venture between global commodity trading giant Trafigura, and the government of Abu Dhabi’s company Mubadala.
Iacono would not tip his hand on details, just saying the synergies were obvious and large.
He has raised $40 million so far in Denarius’ young life—Iacono took over a shell called ESV Resources and renamed it in February and just a few days ago closed a $33.75 million raise at 45 cents. Gran Colombia contributed $10 million to the raise. Iacono and GCM have created several “baby-GCMs” like Denarius (see Aris/Caldas and Gold-X)
The “silver” part of the name comes from their Guia Antigua project in Colombia, which is really an extension of GCM’s nearby high-grade Segovia projects—except a much larger silver grade than GCM. He sees a near term producer here generating cash flow.
“We’re going to start a drilling program, $3-million drilling program to start developing the first three levels that exist in the mine, put some reserves and we’re going to go into early mining because we can take the material to our plant in Segovia, where the material can be processed over there, and we can generate cash flow.”
Guia Antigua, it sits 500 meters away from where we are exploring a brownfield area in our operation in Segovia, right next to a former mine called Vera, where we just hit six drill holes with two ounces of gold and half a kilo of silver per ton. This is the same thing in that concession, but it’s owned by Denarius and we’re talking about an average of seven to eight grams of gold with 300 grams of silver per ton.
But Iacono is in complete control of his destiny at Guia Antigua. It’s not the challenge, it’s not what can use his talents to the fullest. That is for The Big Prize—Lomero Poyatos. All the pieces are there—it just needs someone like Iacono to roll up their sleeves and do the fixin’.
DISCLOSURE–I AM LONG DENARIUS SILVER