Tier One Silver (TSXV:TSLV ticker currently reserved) is a precious metals exploration company that was spun out from Auryn Resources on October 9, 2020. Tier One Silver is currently an unlisted reporting issuer that is in the final weeks before relisting. The company is focused on creating significant value for shareholders through the exploration and potential discovery of world-class silver, gold and copper deposits in southwest Peru. Tier One Silver’s main focus currently is the 100% owned Curibaya project, which consists of approximately 11,000 hectares and is located approximately 48 km north-northeast of the provincial capital, Tacna, accessible by road.
Curibaya is drill-ready will be drilled immediately after trading commences. Rock grab sampling at the Curibaya project has returned grades of up to 298,000 g/t silver and 934 g/t gold, with samples spread across a 4 x 5 km alteration system. In this interview CEO Peter Dembicki and Chairman Ivan Bebek provides an update on Tier One Silver’s progress, upcoming developments and overall investment value proposition.
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0:00 Introduction
1:23 Listing update
3:20 Curibaya drill permit in hand
7:15 C$13.45M financing
11:55 Implied valuation of Tier One Silver
21:03 Final thoughts
TRANSCRIPT:
Bill Powers: Welcome back to Mining Stock Education, I’m your host Bill Powers. And in today’s show, we’re going to be getting an update from Tier One Silver. And if you recall, this company is a result of the spin-out of the Peruvian silver focused asset Curibaya in Southern Peru, that Auryn held. Last fall when Auryn merged with Eastmain to form Fury Gold, Tier One was one of the spin-out companies and it’s been unlisted for several months. We were expecting a relisting in February, but it’s a little behind schedule.
So joining me today for an update, is Ivan Bebek the chair, as well as the new CEO, Peter Dembicki. Peter, welcome onto the show for the first time. And how about you give us the latest update in your conversation with the exchange. When should investors expect a listing and a re-trading of Tier One Silver?
Peter Dembicki: Thanks for having me Bill. Great to be on the show, I’ve heard a lot about it in the past. We are working daily with the exchange. It’s obviously, you’ve heard me say, and Ivan say, time and time again, on an ASAP basis, it truly is. There are details where we’re working through to get up and listed on the venture. The exchange is extremely backlogged and with the amount of issuers coming to market, so it’s painful to wait. And I know our shareholders have been extremely patient with us, given the delays and the initial expectations, but know that we will not commence any drilling on our property before we actually get listed. We want our shareholders to have every opportunity to have this company listed and up and running.
Bill: So is there a month timeframe? Not to pin you on it because I know it’s not ultimately your decision, but is there any more information you could tease out perhaps?
Peter: Sure. I mean, with our two hour meeting we had with the exchange even this morning, it really seems like we’re down to just small questions remaining, dealing with the lineups. The exchange will never give you a definitive answer until you have a date and everything ready to go. Given how fast we’re going to respond to our two remaining comments, we’re really hoping for beginning of May to commence trading.
Bill: And do you have a tentative ticker symbol or is that still undecided?
Peter: We do. We have a reserved symbol of T-S-L-V. Tier One Silver. So we’re really happy with that and we think it’s going to be a popular one.
Bill: And of course, the flagship is your Curibaya project, where you’ve seen some phenomenal surface silver grades, as well as the geophysics and everything you’ve been engaged in, has generated a lot of interest. Can you give us a status update? Your steps towards drilling this? Where are we at?
Peter: So we have our drill permit in hand, which is called an FTA in Peru, that was the biggest hurdle. And with Peru and exploration, you’re dealing with multi, different hurdles that you have to go through. And one of the biggest ones is, the many communities in Peru negotiating with, the government, with COVID, Peru is in an election year. So there was a lot in the air. And the fact that, they determined it would take 10 to 12 months for us to receive this permit and we got it in five, really speaks to the quality of our team on the ground in Peru, handling our negotiations and applications for us. So that is the biggest one.
The few smaller permits that we followed up with, with water and access, have all been granted, so we’re ready to go. We are ready to go and get drilling. The one thing that is stopping us from drilling today, obviously, we’re never going to drill without our company being listed, but also, there’s a rainy season where Curibaya is situated. And technically, we got to wait for that officially to be over, even though this year, there was slightly less rain than on history. So many different elements at play, so many different things we had to navigate throughout the process. But the bulk of it’s done, permits in hand, access is granted, drill contractors ready to go, everything is set up. So the next thing left, is for us to get listed. Let’s commence drilling, let’s get this thing going.
Ivan Bebek: Just to add there, Bill. First of all, getting listed is a lot more tedious than people think and Peter touched on how backlogged the exchange is. It’s important to know and we asked the question today, what’s the majority of the companies trying to get listed? And it happens to be mining companies and this is an extremely positive indication towards this resource market and where we’re headed. I know we’re one of the biggest by market cap, of coming to the market and although we were trading on the Toronto and New York Stock Exchange, when you isolate an asset out of a portfolio, it gets a bit more thorough scrutiny.
And for the benefit of everybody who’s a shareholder or potentially wanting to be a shareholder, Curibaya’s new, and most of the joy has to come out during, while we’ve been private. So, it requires a bit more education and scrutiny and the exchange has done a phenomenal job of working through it. And I think, to Peter’s comment, the first week of May, we’re going to try and twist that into April as much as we can and do whatever’s needed to do that. I know the technical team has worked all through their Easter weekend to make sure every bit of detail that was requested was met. So we are pushing 14 hours a day, as needed, as Peter said, be lightening fast in the response.
And on the corporate side, Peter has been, as much as he talks about how exciting it is to get with drilling, with what we have, he’s been really championing this process and making sure, where all T’s and I’s are crossed as fast and as quickly as possible. So, I wish we were trading a month ago. We missed a lot of people on our financing, in terms of how amazing this opportunity has become.
But lastly I’ll point out, whether you own shares and are anxiously waiting to see some value in your account as I certainly am, because I own a lot of shares or you’ve missed it and you’ve heard how great the opportunity is, we’re weeks away now, not months. And we’re through the thick of it. So we’re in the final T crossing, I dotting, and can’t wait to be trading soon. And even more importantly, to be drilling, as Peter pointed out.
Bill: Ivan, you came from the financial side of the business before you became an executive. You recruited Peter to be the CEO and Peter, you also came from the financial side being a broker. So the two of you teamed up and you did a financing. Talk to us about what you raised and what type of investor did you bring into the stock?
Ivan: All right, Peter, and then I’ll turn it to you. Our biggest strength is our shareholders and anyone who’s tried to get into a funding or any banker that’s pitched us the funding, has done a pretty specific response of how we finance our companies from the Auryn side and previous to Tier One. Peter brought in a lot of new investors and we competed over who was going to get what in the book, because we had so much interest on both sides.
So from my side, I am thoroughly pleased with the new investors. I think we’ve done a great job, a combined effort. And I think, something that you touched on, bringing Peter in from the financial side, we’ve strengthened our ability to finance considerably. And Peter’s definitely demonstrated that. And I think that it’s really nice to have a strong market finance team when you have such a big swing explorationally, that could be such a game changer for a share price and really go create, not just a world-class discovery, but a world-class return in investments. But that’s it for me, Peter. How’d it go for you on the financing?
Peter: Yeah. Coming from the capital market side at Canaccord and the retail side, I’ve had my years, where I found a deal that I thought would go exceedingly well and you’re grinding away at this to raise a few hundred grand and some come along and they really sell themselves. So very complimentary of Ivan to pump my tires on how well I’ve done, but really, this was a project that really sold itself and it was based on a few things.
One, Ivan’s history, having two very successful exits in good markets and bad. Two, our technical team, Michael Henrichsen, David Smithson, and these are former Newmont guys. They’re applying what they used in the majors, to an exploration company. So we’ve taken the shackles off them, they’re nimble, they’re allowed to do what they want to do. And to have the project that we have, is such an easy sell. And I’ll even go further and say, the data that we had in Curibaya, when we raised that money, was amazing. What we know on it now, is phenomenal.
And I think, if we knew what we knew then, what we know now, the financing would have been well North of what we did. So it all came in line. I joined the company at such a unique time as a reporting issuer, non-listed and it was, just really felt like I was the last one on board of a rocket ship taking off and I was the last piece of the puzzle to come onboard. And now, we’re all ready to go, we’re firing, we’re capitalized. Ivan would come into the office and say, “We’re going to take less.” And I’d be like, “No, no, we’ve got to take more.”
And we had this ongoing battle and we found a common ground at the end of the day, but we were really fortunate enough with the quality of people that came into the financing, that we could afford to be picky. And these investors that came in to support Tier One, they want to see what we have. They’re not investing in this to exit on day one that it’s listed. They really believed in the project, they see the potential that it has as a world-class discovery, and they want to see how it turns out, as do we.
Ivan: And they got to wait a few more months with the restrictions because that’s a four month old for Canadians and six months for Americans, but well said, Peter. I think, worth the wait is the most important word in the exploration business, Bill as you’re well aware. And this project, it’s described to us by many third-parties, as a lottery ticket worth having in the portfolio. And I’ve done this for 20 years and I haven’t seen something with as much robust grade on top of such a big target beneath the surface.
And we’re not trying to just make a discovery, we’re trying to make history here, with one of the world’s largest silver discoveries. And it might have a lot more behind that, but early days, great opportunity. I don’t mean to push anxiety on all of you waiting for it to trade and to have access to it. But I will say, that you’ll get some time, but before we turn the drills, it’s going to take a long time to tell people that Curibaya is not a major discovery and that’s the biggest compliment you can give to a world-class swing, exploration wise.
Bill: So if I try to figure out your valuation, because you’re not traded, so the market isn’t telling me the valuation. So if you raised money at a dollar Canadian per share, you did not give a warrant, so you’re not going to bring in warrant flippers into the stock, as you’ve mentioned. That would imply a valuation of Canadian $125 million market cap. Peter, you’ve put people into Ivan’s company in Auryn, as a stockbroker. How would you explain that and how do you explain the valuation, implied valuation, I should say?
Peter: Sure. And as most people that came into our financing, were aware, we are a spin-out of Auryn resources and every Auryn shareholder got one share for every one share of Auryn that they received. So right away, we started with 112 million shares though. So it wasn’t as if we went out and issued a 125 million shares, just in Tier One. Now to me, that’s a benefit because we know the quality of the shareholders that Ivan had at Auryn, Newmont, Goldcorp, the funds that he has involved, the high net worth individuals that have very close relationships with Ivan and Sean.
So yes, on a fully diluted basis, 125 million shares out, may seem top heavy from certain investor standpoint, given the stage of where we’re at, however, given the quality of who those shareholders are made up of and the quantity of which they hold, I don’t lose a wink of sleep over something like that. Everybody that came to Tier One to invest in it, knew the valuation when they wrote those checks. And it’s the quality of the project and the quality of team, that lets us really get excited about this and not worry too much about valuations and where it’s going to trade.
Ivan: Yeah. Bill, I would add there, that I actually think it was cheap. We were being offered money quite a bit higher than where we took it. And I don’t say cheap without the compliments that it could be risky and it can not be there. Right? We all know there’s a substantial amount of risk in the exploration business, the odds are against us, one in a thousand, et cetera. I’ve been there, through the discovery of 5 million ounces at Keegan in our first company, that Shawn and I created and watched the company go from $.50 to $9 and watched investors benefit from that.
I also got to see what a hundred drill holes in the middle of the bear market, when production clips are looming and explorations becoming way more challenging, can occur, where we sold Cayden into Agnico Eagle at about, $3.60 per share and if you held the Agnico shares, it went to $7 per share, another year later. Right? In terms of Tier One, a lot of people identified the value in Auryn to be with Sombrero, in the last couple years, because we’d been through Committee Bay a couple of times, and it is my favorite gold project in the world and you’ll hear more about that when we go drill it this summer.
But in terms of where Tier One ranked and where it is, Sombrero took center stage, big footprint, a lot of potential economic, copper and gold on surface, some historical drill holes that validate the third dimension. But when it came to Tier One and Curibaya, this was the classic story, Bill, of where a geologist says, “Hey, partner, this is it. You got to go get this.” At an early stage, where you had to be a true optimist and explorationist, to really dive in and believe.
And ever since that first comment by Dave Smithson came out, it’s gotten better. And Michael Henrichsen, his partner, our chief geologists and Dave, their partners forever, they both debated back and forth. Mike did what he’s supposed to do as a technical partner with Dave and he challenged it and said, “What about this? What about that?” And we put this one through the ringer and every time it got questioned, the answers came back better than what would have satisfied the question.
So when we come down to market cap and you look at $125 million valuation, we can drill a lot of different things here. We can drill, 10 to 20 meters of kilo silver. We can drill 10 to 20 meters of 300 kilo silver because it’s on the surface and a kilo of gold, to go with that, we could drill 10 to 20 meters of 200 gram silver.
There’s no assurances, no guarantees, but those fantasies exist in the feeder structures that are about 200 feet to 300 meters vertically. When you get down to the emanating, disseminated, plus 45 millivolt target, looking at that and the market hasn’t seen this yet, but there’s some, 100 to 200 meter sections of looks like, in changeability, sulfide bearing veins that we’re thinking sulfide would be silver or gold. If we hit 100, 160 meters of a kilo or 100 gram silver, I mean, but it could be a kilo, it could be two kilos silver. We’re now talking Aurelian type of numbers. If you remember back to Aurelian, the gold discovery in Ecuador, the coolest-
Bill: It was your first big win, if I remember your story? Right, Ivan?
Ivan: … that was one of mine. I sold it way too early. And Aurelian was on it’s last straws, $.20 a share. They basically, were on their last few dollars to go find it and they started drilling 100 to 200 meters of 20 gram gold plus, and stock went to $45 a share. So when I look at the market we’re in today, this market is way better than the market Aurelian experienced. The stage of the bull market that we’re going into is one that has something that wasn’t prevalent before, which is a major production cliff, and it has a scarcity of discoveries of consequence. So that will give us a tremendous amount more, of a premium and we all know silver is the number one performing equity.
You can look at Pan American Silver, and a lot of the other silver companies, First Majestic. Look at any silver story you’ve heard of, look at how the market’s performing the last six months and tell me what’s performed better, gold stocks, silver stocks, copper stocks? Silver still wins, and it gets the best valuation. So, what we stumbled upon to here, is not normal. It’s never been drilled before, which that risk goes way up when you say that. However, the evidence pointing towards the discovery, is as good as it gets. It’s as good as it gets, anywhere in the world right now, for a high grade world-class silver discovery. And it might sit on top of a big porphyry deposit too, which would be worth more than the biggest precious metal deposit. But that’s another conversation.
I’m saying is that, it’s going to be 6 to 12 months, really to figure out what’s there. And we’re going to persevere, we’re going to be very patient with the drilling. What’s a fair market cap? Speculation is all up for debate, as why I’ve just made my case of why it should be worth more. But at the same time, I think that from an investing standpoint, we picked the middle of the road, we could have gone higher, we could have gone lower. And it wasn’t the price that mattered to us, it was the shareholders who we added to the registry and who was buying the funding that mattered.
So when Peter and I went into the financing discussion, two financial backgrounds and said, “Who do we put?” And I wanted less, he wanted more, Peter was right to take a bit more, to give us at least 12 months and two drill programs, versus just the first drill program. We don’t want to carry that much risk into our share price, it would create a vulnerability. We also have enough money that if Curibaya really fell on its face, we could pivot to one of our other assets in the portfolio.
Second point was, I told Peter in the response, and he fully agreed for intelligent reasons, “I’m not as worried about how much, I’m worried about who buys it.” And I thank you all, that participated. I thank everyone that supported us, to get to this point and it’s as good as it could possibly get. I don’t think there’s any more we could get from Curibaya, to give us more confidence at this stage, besides the drill hole. And it’s hard to talk about it too much because I don’t sleep at night because I worry about how big and how great this thing could be.
On the flip side of it, I think Peter’s first major achievement, besides the lock that he brought in, of getting drill permits on time, or even earlier than we thought and driving things forward for the financing and the listing. I think his first major milestone for Peter, or where I’m going to send him, a good, cold Canadian beer, is going to be when we get listed. And the day that happens, there’ll be a lot of cheers going on and although, it’s not going to make anybody money, you’re going to see it in your portfolio, come to life.
And the adventure we’re all going to go on as shareholders is going to be worth it. And again, thank you for your patience everyone, with COVID, with the exchange, with us, we’re trying to be politely patient, as we’re waiting to get listing. We’re scratching pretty hard and fighting tooth and nail to do that, sooner than later. When we get listed, it’s going to feel a lot better but when we start drilling in May, that’s something that we don’t necessarily need to put off. It’s going to be an outstanding program to follow for 6 to 12 months, to see if we’ve got it. And buckle up and look forward to the ride, it’s going to be a fun one, it’s closer than you think. And we’re pumped, if that’s not clear in this interview.
Bill: And Peter, one thing before you go, I understand you’re a champion rower? So what can you take from your rowing career, to your new career here, as the CEO of Tier One Silver?
Peter: Yeah, it seems like a lifetime ago, probably 40 pounds ago and about 10 years ago. So many skills. I mean, it was a big reason why I found myself at Canaccord getting hired, is because it’s a job that requires discipline. It requires you completing tasks and being repetitive and never giving up until the goals are achieved or the milestones are achieved. The biggest thing with rowing it’s just the perseverance. It’s been going through extremely tough times, mentally and physically, going to the bottom of the well, many times to find out who you really are. So yeah, as I told Ivan, I don’t have to come to work, I don’t have to do this, I get to it. It’s really enjoyable and it’s a lot of fun.
Bill: Ivan, any final thoughts?
Ivan: Yeah. On Peter’s response there, the part that resonates with me real heavily, is the bottom of well. We’ve been at Auryn for five years, and this is a five-year opportunity in the making. This is not overnight, this was not six months ago, it took us four years to put the land position together. And we did it for reasons that paid dividends so far, better than we thought it would. Right?
And at this stage here now, we’re in the very mature stage, the most exciting stage of a company to be in. And that’s to drill the inaugural holes on the back of such a big, comprehensive adventure, which did have a lot of risks and challenges and bear markets in the background. So I think from that point, Bill, we’re looking at the most rewarding, we’re looking at the golden medal at the finish line here. We entered the race.
I’m going to use a rowing analogy, as a team. We’re all pulling hard, we’re all pulling as hard as we possibly can. We see the finish line, we see we’re able to do it. And we’re just going to hope that the perseverance and the work ethic works off. Now, if we don’t make it on the first run, we’re going to keep going, we’re not quitters. We go until we deliver for shareholders and people become wealthy. And that’s something that everyone can look forward to, is that continued work ethic, until we get it right. But no, I think our odds are good and I think we’re up for a great one here.
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