Atlas Mining Company (ALMI)
Interview with: William Jacobson, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their Dragon Mine in Juab County, Utah, the only known commercial source of halloysite clay outside of New Zealand.

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Already producing revenues from timber and mining contracting Atlas Mining is now preparing to bring their high-value halloysite clay to the marketplace



Natural Resources
Mining-Halloysite
(ALMI-OTC)

Atlas Mining Company

PO Box 968
Osburn, ID 83849
Phone: 208-556-1181



William Jacobson
President and CEO

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
June 2004

BIO:
William T. Jacobson has been president and CEO of Atlas Mining Company since August of 1997. He has worked directly in the mining industry for over 15 years. Prior to that Mr. Jacobson spent 15 years in the banking industry. He graduated with a BS. in Business Administration from the University of Idaho in 1971 and is a member of the Northwest Mining Association.

Company Profile:
Atlas Mining Company (OTC: ALMI), originally established in 1924, is a diversified natural resource company with its primary focus on the development of the Dragon Mine in Juab County, Utah, the only known commercial source of halloysite clay outside of New Zealand. The unique purity and quality of the Dragon mine halloysite is unmatched anywhere in the world and has spawned considerable research into new and exciting applications for this product. Halloysite is a high-value clay that sells for more than $400 per ton. Its fine particle size enables halloysite to be used extensively as a suspension agent in glaze preparations. The purity of the clay and the low iron and titania content result in ceramic ware with exceptional whiteness and translucency. Therefore, halloysite clay is typically used in the manufacture of porcelain, bone china and fine china. A small but increasing amount is also used for high-tech ceramic applications. Other potential applications identified by ALMI include uses in filters, inkjets, and as an ingredient in special paints applied to ships that prevent barnacles from growing on the ships' hulls.

Atlas Mining Company has announced that it has engaged in discussions with several nano-technology companies. The unique tubular halloysite is a primary nano-ceramic material. The unique size and shape of the Dragon Mine halloysite makes it very interesting from the point of being fillers in coatings and composite materials. The microtubules are capable of being functionalized by a number of means including being plated by an electrolysis process with metals from iron to copper and nickel giving them a range of very interesting properties, including being fillers in RAM materials. Additionally, they can be used as molecular sieves, catalysts in hydrocarbon cracking, fillers in polymers and other similar materials. Companies that make ceramic cracking catalysts and molecular sieve materials will make excellent customers for the company. The Company has supplied additional product for distribution and further testing in the paint and fertilizer industry. The company and its advisors are also in discussions with several Asian biotech companies regarding the ingestible benefits of the halloysite time-release microtubules.

Through contacts with the Montana State University (MSU) TechLink Center, Atlas has learned that the halloysite clay found at the Dragon Mine may soon have a greater number of uses and potential markets than was originally expected. In a patented process developed by the Naval Research Laboratory, Washington D.C., scientists have created a new method of controlled release using microtubules made from halloysite clay. These microtubules, cylindrical in shape and with a hollow core, can be used in a wide variety of products. In the case of the US Navy, researchers utilized microtubules to add anti-barnacle agents to paints used on the hulls of Navy ships. The microtubules are filled with the anti-fouling agent, which is slowly released over time. Several U.S. companies are currently looking at microtubules for applications ranging from agricultural chemicals to paints to household products. Although these microtubules can be produced synthetically, researchers have determined that, due to its unique microstructure, halloysite clay may be the preferred source. Halloysite clay is naturally derived, nontoxic and biodegradable.

Moving beyond its historical focus on precious metals, Atlas operates an underground mining contracting business and also holds mining and timber interests in Northern Idaho, controlling approximately 1,000 acres in northern Idaho, and harvests the timber on this property to generate additional revenues. Atlas Fausett Contracting (AFC), a division of Atlas, is a leading mining contracting company in the Idaho silver belt. AFC was the main contractor at the Mayflower Mine, a Brimstone Gold Corp. project, outside of Whitehall, Montana, and for the Holden Mine closure, a U.S. Government and U.R.S. Corporation project on Lake Chelan, Washington. AFC operates under a permit from the Mine Safety and Health Administration and also possesses a permit to handle explosives from the Bureau of Alcohol, Tobacco and Firearms. AFC pursues projects in civil construction utilizing its expertise in ground stabilization techniques, such as grouting, shotcrete, and rock bolting. AFC has provided tunnel construction expertise for hydroelectric work. AFC also works with government agencies and other mining companies to complete mine closures and alleviate potential hazards from abandoned mines. Since AFC focuses on underground mining activities, there is very little surface disturbance, which is the main environmental concern faced by mining companies whose activities are centered on surface mining.

CEOCFOinterviews: Mr. Jacobson, you have been with Atlas for a while; what was your vision when you joined Atlas and how has that played out over the years?

Mr. Jacobson: “It was funny because I have been on the board of directors of Atlas Mining Company since about the mid eighties. Our company really didn’t do anything; it was a very small company, which owned property up in northern Idaho. Once a year the directors would get together, and because I was the secretary treasurer, I did a report on what we were doing, which was virtually nothing. Every year we would sit around and talk about the good old days and how great things were, I kept saying “guys, let’s do something. This is a great company, let’s do something with it.” We had approximately 1,700 shareholders that really deserved more than owning one of those ‘also ran’ type of companies. After about four or five years of telling this to the directors, they said, ‘Ok put a plan together’. I put a plan together of the things we wanted to do, I set some goals, presented it to the director and they said, ‘Ok, we like the plan, now you get to run it’, and they made me president. That was about the end of 1997 when that happened.”

CEOCFOinterviews: So what was your plan?

Mr. Jacobson: “Our plan was to revitalize the company, make it grow, give our shareholders some value and we looked at doing it in various ways. First, we became a fully reporting company with the SEC to conform to the changes they were making at that time. Then because we were a mining company with a lot of mining background, we thought that we would utilize some of that expertise and we started our own contracting company. We started mining for other mining companies that needed extra help. We had a crew of very experienced men and we hired ourselves out to these other mining companies. That ended up being a bread-and-butter revenue source for us. We only creat anywhere from 250 to 500 thousand a year in revenue but it helps pay for the lights and some other things. Right now we are working for a gold mining company up in Republic, Washington and we have about a dozen guys working there on a contract basis. We knock down in the area of 50 to 60 thousand dollars a month in revenue.

The other thing we did because we are in north Idaho is decided to try to do something with all this beautiful timber that we have here. We owned at the time, about 450 acres of very nice land in north Idaho, and we are now controlling about a thousand acres of property. Most of this property has timber on it as well as mineral potential. Right now, we are exploiting the timber potential. It is a renewable resource and we have been trying to create in the neighborhood of around 100 thousand dollars a year in net revenue for the company from that source. Those are the two things we have done to make ourselves a viable company and to prove to the world that we are a mining company and we know how to mine.

Our main goal was to put a property into production. For several years we looked at the gold, silver, copper, lead, zinc type of properties. Our timing was wrong because the metal prices at the time were not very good and we found that it is difficult to find a hard rock underground mine, which is our expertise, that we can develop and get into a production mode with a small amount of money. We knew because we were a small mining company we couldn’t go out and spend millions and millions of dollars on trying to develop a mining project. We looked for mining projects that were good and viable projects, which we could get into economically and that were environmentally sound. I had a friend in Spokane Washington that I knew for a number of years and he too is in the mining business, and he said, “Bill, you need to look at this clay property that I have down in Utah,” and I said “No, we are underground hard rock miners, we are not going to mine a clay mine”. He kept bugging me about it for about a year and finally I said that I would send my geologist down.  I sent my geologist down to the mountains of Utah in the winter, because that is the best time to send a geologist some place because they have to work harder to stay warm. He looked at the property, came back with some samples and some information on the property, and we did some checking. It was a nice little property. I found out that the property has a special type of halloysite clay, and the only other place it is mined to any extent in the world is New Zealand.”

CEOCFOinterviews: What is halloysite clay?

Mr. Jacobson: “Halloysite clay is similar to a kaolin clay, but it is the “Cadillac” of the industry. It is a clay, which was originally used for fine China and porcelain. Your mother’s fine China that came from England was probably made from halloysite clay; it has a translucent, very beautiful. Halloysite is high-value white clay and there is not a lot of produced worldwide; the sources are limited. There are halloysite properties scattered around the world, but New Zealand has command of the market in halloysite clay. We found that after looking at the clay and talking to some potential buyers, that we could probably sell 10,000 tons of it per year here in the United States and probably more. If I can sell it for 450 to 600 dollars a ton, then that is 4.5 million to 6 million dollars a year in our revenue stream for our company. We mine it and make a profit at it.

We sent clay samples to different potential buyers and distributors. A distributor from Japan did some electron microscopic analysis of the clay. He got back to us and told us that he looked at our clay under the microscope and the New Zealand clay under the microscope. The New Zealand clay is square and blocky while our clay is long and tubular and hollow, and he said that we had some very unique qualities to our clay. I started getting impressed. He made a commitment that he would buy our clay on a regular monthly basis in the amount of about five hundred tons a month once we got into production.   Bottom line is we found a property that we could get into that fit our parameters.   It is economical to get into and we can make money at it, and it is environmentally sound.”

CEOCFOinterviews: Where are you now in that process?

Mr. Jacobson: “Right now we are in the process of getting our halloysite mine into production and have ordered processing equipment. We have all of the underground mining equipment we need except for one or two pieces of equipment that we will be picking up at the time we need it, and we are mobilizing men and equipment to the mine site as we speak. We will be starting production and the development work over the next 30-45 days. We have the people committed on buying and we have the ability to mine it and we have the processing plant to process it. All of these things have to be put into place, which we are working on as we speak. I am very exciting and I think this is going to be a fine year for our company as a result.”

CEOCFOinterviews: Financially, do you have all you need in-place to get all the parts together and go in?

Mr. Jacobson: “Yes, as a small company we do work from our back pocket quite a bit. We have some money that we raised from an SB2 offering last year. We have some financing commitments on our equipment and some other funding commitments, and we think that once we start our production that the sales will ensure that we can continue going. With these commitments, we think we will be fine.”

CEOCFOinterviews: Will you tell us about the nanotechnology?

Mr. Jacobson: “That is the most fun part of this whole thing. When we first looked at this clay, we were looking at the established existing customers for halloysite clay. The Japanese gentleman told us that the clay was unique, and we did some research and found out that the Montana State University through a technology link with the U.S. government, was trying to sell a technology called microtubular technology. They introduced me to Dr Ron Price who was the scientist who invented this technology that was patented by the U.S. government. We sent him samples of our clay and he came back and said “wow! I have been making these microtubules synthetically and it is very expensive to make them and your clay works, it is the only natural product that we have found that will work substantially on the microtubules process.” A microtubules is a microscopic element and it is tubular, what they do is suck the air out of it and then they inject these tubes with whatever type of material they want to. In the case of the U.S navy, they are looking for a paint that will keep the barnacles off their ships, and they are taking these microtubules, sucking the air out, inject the tubes with an anti-fungicide, which would kill barnacles and then they mix it with their paint. As the paint wears out the anti-barnacle agent comes out and that keeps the barnacles off the ship. Speaking of nano-technology, because of the fact that the size of some of our halloysite is one micron or smaller, we have opened some doors up with some other nano ceramic type of people that are interested in using it. We are very interested in this market and we think it is going to be a high-value market, and we think that our clay is going to fit very will into this market.”

CEOCFOinterviews: Will you tell us about the ingestible benefits of halloysite?

Mr. Jacobson: “It fits in with the microtubular technology. Halloysite clay is a nontoxic clay. Every time you chew on a Tums or take some Pepto-Bismol, the majority of what you are eating is clay. Because of the microtubules of our clay, we have the ability to inject these microtubules with certain kinds of agents, whether they are vitamins, medicines or whatever, so as you ingest them and they break down in your system similar to time-released type of a system. We have just gotten into the ingestible stuff; we know that this is a long road because it has to do with government regulations. We have found that the natural vitamin industry has a lot of interest in our product, as well as people looking for different types of topical applications. For example, if you have a wound that you do not want to have to keep reopening to put new medicine on. If you are able to inject some of your antibiotics into the clay, put it into your medicine and apply it to your wound, you may not have to redress that wound because you have that medicine releasing into your system over a longer time period. Dr. Price said to me, ‘I’m the kind of guy that likes to save a dollar, and my wife has an expensive perfume, and I got the idea if I inject my wife’s perfume into the clay it may last longer. So he takes his wife’s perfume to work, and puts the clay into the vacuum chamber, sucks the air out, and injects some of his wife’s perfume into the clay. He then rubs the clay on his jacket and the smell of his wife’s perfume stayed on his jacket for three or four days. As the clay broke down, the perfume smell came back out. Things like that are being looked at as well as household applications. Ever notice when you take your towels out of the dryer the fresh smell of the fabric softener sheet, and then a month later when you take that towel out of the closet, it doesn’t have that same smell?  Using our clay, you could make the smell of your fresh towels stay longer in the closet.”

CEOCFOinterviews: What challenges do you face getting  production started and how are you prepared for the bumps in the road?

Mr. Jacobson: “It is funny because no matter what, there are going to be problems. Last year we were able to go onto the property in the beginning of March, because the whether was so good. This year we had our last snowstorm about the beginning of April. It has been a frustration for us. We know that the mining methods that we are going to use have not been used on this property before. The type of deposit that it is, it will not withstand being left open for a long time and we are going to have to be very careful to make sure that we get in and back out again and make sure that we can keep up the integrity of the underground workings we are doing a new processing system that is not tried and proven over the years, although we have utilized this system at least two maybe three times by processing bulk samples through it and we feel comfortable that it will work, we will still have some learning to do. The manufacturer is very supportive and they are very willing to work with us to make sure that the processing system does work for us. We know that every buyer has a different demand and request on the size and the brightness and the moisture content. These are all things we will have to address as we move along. We might have a catalytic converter manufacturer that wants some products and his request is different from a fertilizer manufacturer or an insecticide manufacturer that doesn’t care if there is a little iron in it. We might have a ceramic insulator company that wants the purest stuff. We have to be careful to supply the right product to the right people.”

CEOCFOinterviews: How do you know how this will work out?

Mr. Jacobson: “We are a hard rock underground mining company. We have not had that much experience in the industrial mineral area, so I went to Macon Georgia and I met an industrial minerals distributor. We spent a lot of time together, I learned a lot from him, and he will be helping us sell product. He is the one who has established many relationships for us with existing types of users. The distributor in Japan does the same thing. We have the ability through these distributors to market the product very easily. These people have indicated to us that they think they will be able to sell 8-10 thousand tons the first year. Then you look at the newer technologies, the nano and microtubular stuff. We have done most of this on our own because of the fact that these are all new technologies that we may make direct sales on. Those would be the fun ones to do because then we would not be competing with anybody but will be opening up a whole new world of uses and we think those would be the ones we would like to target in the future.”

CEOCFOinterviews: This all sounds so very promising; I am surprised that people are not banging on your door to be included.

Mr. Jacobson: “Nothing is a sure thing in the mining business. Mining, up until just recently, because the metal prices have been so good lately, has not been a good investment. That is one reason why we looked for the very unique types of situations like this clay situation. We have had some inquiries from people about our company and inquiries about joint venture relationships, and I am sure that we will probably have some conversations in the future. However, we are a publicly traded company and we have been around since 1924. We have over 1,700 shareholders and these people deserve to have the best they can out of this situation. I am not going to sell the company down the road to somebody today, when I know tomorrow it will mean a lot more to our shareholders.”

CEOCFOinterviews: Is there anything that potential investors should know that they might not realize when they first look at the company?

Mr. Jacobson: “When you first look at the company you are going to notice that our financial statement is not that strong because we are a small company and we do not put the dollar values of our potential in our financial statement. We have a minimum deposit of 300 thousand tons of halloysite clay, and probably more. It has a minimum retail value of $450.00 dollars a ton and we expect it will probably be at least $600.00 or better by the time we get into some of these newer technologies. We look at the value of 300 thousand tons at $450.00 dollar a ton minimum price, and that is a 135 million dollar value. If you take that into consideration, with the amount of stock we have outstanding right now, we have a potential of about three-dollars-a-share revenue stream based just in that one property. Then you look at the fact that we have a twenty-cent stock on the market today and we have a lot of upside potential.”

CEOCFOinterviews: So in closing, what should readers remember about Atlas Mining?

Mr. Jacobson: “Even though Atlas Mining is a small company, we are looking at getting our halloysite clay property into production this year, but we are not going to stop with just that, we are going to move forward and take on other properties and projects. We will continue to grow.”

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