After a strong year in 2016, the mining sector has seen renewed interest for the long-awaited recovery. Analysts expect the prospects to continue to improve, albeit with some volatility. Companies that had the foresight to use the mining sector’s downturn to capitalize for long-term opportunities are now best positioned to lead.
Recently, Equities.com spoke with Trent D’Ambrosio, CEO of Inception Mining (IMII), to learn more about how the junior miner has been able to leverage a number of factors—acquisition of value projects, cost-efficient operations, modern technologies and an emphasis on a green footprint. What’s more, the company is already generating revenue, which is rare in its space. In the following Q&A, D’Ambrosio discuss a wide array of topics, including current operations, the company’s unique business model and strong sense of social responsibility. D’Ambrosio and Inception Mining will be at the upcoming PDAC 2017.
EQ: Inception Mining is a bit unusual in terms of the small-cap mining sector. Unlike most young miners, your company has real top line numbers. How have you achieved that and how does that set you apart from most others in this space?
D’Ambrosio: We are unique in this space in that we are a fully producing gold company. We do have significant revenue as well as free-cash flow for organic growth. That’s quite unique in the space. In addition to our production property of Clavo Rico, we also have a promising development property. Our production property has produced for several years and the current operating scenario is five-plus years, so we feel very fortunate to be in that position.
EQ: As you mentioned, the Clavo Rico mine in Honduras is currently in production, and you also have the UP & Burlington in Idaho that is nearing production. The company recently completed a capital raise to accelerate your expansion. How will this impact your ability execute on your strategy going forward?
D’Ambrosio: We are currently expanding the operations at the Clavo Rico Mine. We became involved in the management of the project in 2014, and made a full acquisition in 2015. During that time, we’ve matured the operations and focused on a consistent production model month-in and month-out. Now, expansion is underway. We just added a significantly expanded crushing circuit to the operation at Clavo Rico mine where previously our average was 300 tons per day. With our new crushing equipment and circuit can perform at that rate per hour. So, we’re looking at an expansion of something in the neighborhood of 700 tons per day of material processed and placed on our leach pads. This is very exciting and a key component of our plans. With the majority of operational redundancies in place from an equipment standpoint, a maiden resource report under the project is progressing. We have an experienced, efficient staff and our operating model is functioning quite well. We have positioned ourselves with plenty of material to mine as we move into the first step of expansion, so 2017 looks very promising.
Inception Mining’s Clavo Rico Mine in Honduras
EQ: That speaks to the strength of your approach and how effective it can be. Can you tell us more about Inception’s strategy of leveraging modern technology and techniques to increase efficiencies on your properties?
D’Ambrosio: Fortunately, or unfortunately, we started in 2012 and 2013 when capital resources were not as readily available in the mining sector as they had been in previous years. We had to adapt, learn to do things slightly different with a very limited budget and operate very conservatively. We have always been forced to look at doing things and operating differently to make the most of what was at hand. Our development facility in Idaho, for instance, is a fully outsource model. The operations consist of contract mining, contract milling and contract hauling, which keeps our capex budget minimal. We can turn the switch on and operate, or we could turn the switch off depending on price and seasonality and other industry influences.
At our production facility in Honduras, we’ve just implemented, as I mentioned, a state of the art crushing circuit to become more efficient. We’ve been fortunate to be able to take advantage of some of these difficulties in the mining space and utilize it to our advantage. Because of our decisions to move forward efficiently during a challenging time, we’re now very well positioned for the upcoming business cycle.
EQ: Looking at Honduras and your Clavo Rico mine, what are the benefits and risk of operating in Honduras? How do you balance the two?
D’Ambrosio: Gold mining interest in Honduras developed in the early 1500s, with Spanish explorers. However, considering the long history, it may be one of the least prospected countries in Central America. With a mining law revision in 1999 the country is demonstrating a desire to expand its resource economy and has become conducive mining environment. We have embraced and supported that action by taking the initiative and demonstrating environmentally friendly practices. As a result, we are developing a productive atmosphere and working relationship with the regulatory bodies in the country. The industry in Honduras is similar to how a mining town at the turn of the century was in the U.S. or Canada. Where the mine is developed around the town or the town develops around the mine.
At our operations in, Honduras, we have attempted to partner with the local community. The majority of all the encouraging residents of the city engage with our operation or work at our facility and we further provide some services to the city. For example, we just built a technical school in the local city and we’re working with the local governments to relocate an orphanage that was in a precarious position. It’s about being bigger than just us. We proactively take environmental restoration seriously. We have expansive re-vegetation and re-forestation projects on site. We have our own growing facility to make sure that we are stewards of the environment in the best possible fashion.
EQ: So, in many ways, you’re not only pursuing your own corporate goals, but you’re also focused on creating a leaving a positive footprint and making an impact to the local area?
D’Ambrosio: Yes, that’s correct. We have 100-plus employees on site at our mine in Honduras. It sits 55 miles southwest of Tegucigalpa, the capital city. As I’ve said, this has been an operating mine in one way, shape or form for a long time; the areas have been mined for 500-plus years, so it’s a very integral part of the community. Mining is a way of life there and we’re trying to make sure we participate in the most friendly and adequate fashion for the surrounding communities.
EQ: Now, in terms of Inception, your tagline is: “Diverse, Agile, Efficient.” Those are three traits that don’t necessarily come to mind when investors think about the mining sector. How is Inception able to achieve these things – being diverse, being agile, being efficient – and how do you leverage those traits for success?
D’Ambrosio: It is and are of focus for company leadership. The diversity comes from having multiple projects in multiple geographically dispersed areas of the world, and in different stages of development. For instance, we have a production facility in Central America in Honduras. We have a development project in the United States (Idaho). With respect to exploration we are aware of opportunities in the market place or we have the ability to grow aggressively in Honduras. We will stay focused on our core operations while pursuing strategic plans with respect to diversity or projects.
Being agile, we’ve tried to model more after manufacturing versus chasing the spot price of gold. For instance, in Idaho, where it is a fully outsource model, we do not have extensive capital expense there from an equipment and an employee standpoint. We don’t have to do source equipment or hire employees. We can make deposits, turn the facility on and turn it off when necessary. In Honduras, we’re scalable from where we are today with an aggressive strategy to reach a higher production targets as we continue to grow. We will try meet these performance objectives currently in an organic fashion until we need to raise additional capital dollars.
When we talk about efficiencies, we focus on being very lean and getting the best utilization of capital dollars we have. Our U.S. staff is very, very thin. We outsource the majority of our work in the US. A quarter of our workforce is part-time, so we try to maintain efficiencies from that perspective. We source multiple vendors so they may remain competitive. It’s critical that we don’t get trapped in any way, shape or form. That’s the result of when there were so few capital dollars flowing into mining during 2012 and 2013, when we were first bringing a project online in Idaho during that period of time.
EQ: Is there anything else that you’d like to update on your Honduran resources?
D’Ambrosio: Absolutely and we previously announced the company has e initiated an NI 43-101-compliant resource evaluation on our Clavo Rico mine. We do have significant data and we have been compiling a maiden resource report. The company has recently completed crucial steps in completing the report and I anticipate that the report will be ready for release at the end of the second quarter.
EQ: As you said, there are a lot of things to keep an eye on in 2017 with Inception Mining. It does sound like a very exciting year for the company. You’ve done a great job highlighting what our readers need to understand and watch for here. Is there anything we haven’t touched on?
D’Ambrosio: One is with our production facility; it is just in its infancy. Even though this facility has produced for 500 years, the resource has not been utilized to its full potential. We are taking steps that will mature the project to become a significant producer.
EQ: Lastly, in terms of your background, how does your professional experience help Inception Mining articulate its message to the investment community?
D’Ambrosio: My background was primarily in financial services with various leadership roles. I was on the other side of the equation, performing diligence and evaluating investments and different projects for the investment community, either placing my own assets or advising entities that were banking investments. So, that provided me with some definite advantages when evaluating projects. Additionally, I have been exposed to mining the majority of my career I am pleased that the team stayed focused on building and growing against the backdrop of a struggling industry during 2012-2013. We have goals and are planning a steady execution of them; we look forward to the future growth of mining in Honduras.
EQ: Wonderful. Thank you for your time.
D’Ambrosio: Great. Thanks so much and I look forward to speaking again soon.
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