Interview conducted by: Lynn Fosse, Senior Editor,
CEOCFOinterviews.com, Published October 29, 2010
CEOCFO:
Mr. Findley, what is the focus at Rio Cristal today?
Mr. Findley:
We are a Canadian junior exploration company and our main project is the
Bongará zinc project in the Amazonas region of northern Peru. We have two
other projects, a gold project and a copper project, both south of Lima,
Peru, but these are smaller and newer projects for us.
CEOCFO:
What do you like about zinc?
Mr. Findley:
Long-term zinc has a good future considering the economic growth going on in
the Far East, India and China and other countries like Brazil. Also, there
has been almost no development of new zinc mines around the world for
several years. Eventually the price of zinc is going to increase and
investors in zinc will be rewarded.
CEOCFO:
Did you seek out zinc specifically or was it opportunistic?
Mr. Findley:
Both. Chuck Preble, our chairman, and I were involved with Peru Copper,
which was a very successful junior Canadian exploration company here in Peru
that developed the Toromocho copper project. The company was formed to
develop one project, and that is what we did with Bongará. We found the
project first and then formed the company to develop it. It is in the heart
of a developing zinc district and we have eighteen thousand hectares. There
are two other companies up there, including Votorantim, which is a huge
Brazilian conglomerate and South America’s largest zinc producer. They are
spending tens of millions of dollars just on our southern border. It is a
zinc district and it will be developed as we move forward.
We formed the company in 2007, our share
price reached .64 cents, we delivered outstanding drill results on the
Bongará project and yet when the world financial market collapsed, our share
price went to a penny and a half. So we had to change the mission of the
company. Despite our limited resources, we were able to acquire gold and
copper project options because the market loves gold and copper. These are
projects that we believe in and they will generate some good news for us.
Meanwhile our main project is the zinc project.
CEOCFO:
What is happening on the ground today?
Mr. Findley:
Due to the lack of funding and despite great results in 2008, we were unable
to do any drilling in 2009 and this year. However, we listed our shares here
in Lima on July 5th and there has been a lot of interest in the
company. We completed a private placement for $3.2 million here in Peru
which is going to allow us to go back into the zinc project and start
drilling again.
CEOCFO:
Why do you like Peru as far as mining?
Mr. Findley: Peru is a fantastic country
for mining. I was CFO at Southern Peru Copper, the largest company in Peru
and have been a big fan of the country since then. There are many
opportunities in mining and other industries as well. Agriculture happens to
be booming right now, but mining in particular has always been a strong
industry. The country has a long history of mining and ranks very high up in
the world rankings of gold, silver, zinc, and copper.
CEOCFO:
Are you working with any Peruvians on the staff?
Mr. Findley:
I am the only American in the company; everybody else is Peruvian. We tend
to outsource most of our work. For example, with drilling there are a number
of local companies doing contract drilling here and we will use their
services..
CEOCFO:
If Peru is so mining-savvy why would you need list on the Lima Exchange?
Mr. Findley:
The problem is we were getting very little traction in Canada. After the
world financial crisis, everybody jumped out of high-risk stocks and
exploration companies were at risk. Therefore, there was no funding
available. We managed to do two small financings in the past 18 months but
investor interest was limited. Without any options to raise funding in
Canada, we looked at Peru and the investors here. A number of high net-worth
individuals and many the brokerage funds remember Peru Copper, which is a
company that we took public at $1.40 and sold for over $8 a share, or $800
million total. In August we raised $3.2 million locally.
CEOCFO:
Do investors like Peru?
Mr. Findley:
Yes, I think that investors, both international and Peruvian, like investing
in Peru. There seem to be new funds arriving from North American and Europe
all the time as well as new Peruvian funds being established.
CEOCFO:
This seems to be an advantage for you.
Mr. Findley:
It really helped us. We are seeing very good volumes trading here in Lima.
Our share price July 5th was $0.05, it is now up to $0.17 now.
Those are not big numbers and I believe we still have a great deal of upside
potential.
CEOCFO:
Are you still looking at other properties?
Mr. Findley:
We are, but very selectively. We have a small organization and the last
thing I want to do is spread ourselves too thin. I want to stay very focused
on the projects we have so that we use the money that we raised wisely and
generate some good results.
CEOCFO:
Do you own the properties 100%; what is your philosophy?
Mr. Findley:
The standard here in Peru is that mining concessions are acquired from the
government for fees. The local communities usually own the surface rights to
land, so that makes community relations exceptionally important. Fortunately
we have very good relations with the communities where we operate and we
have agreements with them to go in and do exploration etc. What they get out
of it is first of all work, which is critical in rural Peru and secondly
they get royalties when production starts and benefit that way.
CEOCFO:
Why should potential investors pick Rio Cristal out of the crowd?
Mr. Findley:
First, we have some terrific properties. We have a world-class zinc project
in Amazonas, and we have two other projects that are very interesting that I
think they will deliver some good results for us. Second, our Board of
Directors is outstanding including, for example, Chuck Pebble, who was
previously president and CEO of Southern Peru Copper and later Peru Copper.
Third, finding a large joint venture partner for our zinc project will help
us to develop the project faster and shorten the period we need to get into
production. There has been interest from several international companies
from China, Peru and India so I am optimistic. Fourth, if we get good drill
results at any of our three projects our share price will benefit.
CEOCFO:
So you are expecting good things out of Rio Cristal?
Mr. Findley:
We expect good things absolutely! It was a tough eighteen months in 2009
into 2010, but we are looking for good things now. We are excited especially
about going back into our zinc project and getting to work again. We also
expect to start drilling our gold project in October and a copper project
early next year.
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Thomas
J. Findley