Maurice: Today, we're going to highlight Riverside Resources Inc. (RRI:TSX.V; RVSDF:OTCQB), a project generator that just consummated a definitive option agreement with a two-prong earn-in agreement worth $11 million and an additional $20 million for a buyout, with a 1% net smelter return.
Dr. Staude, pleasure to speak with you today.
John-Mark: Great to be here, Maurice.
Maurice: John-Mark, you have some exciting news for shareholders regarding a definitive option agreement on the Los Cuarentas Gold-Silver Project (press release). Dr. Staude, what would you like to share with us?
John-Mark: We're so excited. We've been working a long-time on the Los Cuarentas project, and to have a major partner like Hochschild Mining Plc (HOC:LSE) join us in conducting the exploration is wonderful. The option is for them to earn a 51% interest by investing over US$8 million into the ground, with us as the operator. For us, this is the perfect example of prospect generation. We generate projects, progress them, and now have the major command with an aggressive drill program, aggressive exploration to unlock the value for us and our partners. We're in a great position. We're very excited today about this news.
Maurice: There's some history between Hochschild and Riverside Resources. How did that factor into the consummation on the option agreement on the Los Cuarentas?
John-Mark: We're so lucky. We worked with them in the past. We had a strategic exploration alliance where we generated projects, forwarded those, and built out a portfolio working with Hochschild. We also really enjoyed working with them. In these difficult times, when things went down, they stuck with us and we stuck with them.
So now, here we are in COVID, yet again in challenging times, and we're delighted to know we're going with a partner that we worked within the past. We have good alignment in values, vision and particularly in a goal to make discoveries working with Hochschild and Riverside. So. . .now we get to go forward with a big drill program. We're in a great position.
Maurice: Speaking of the drill program, can you define the roles of Riverside and Hochschild's respectively? And when will it begin?
John-Mark: It's starting right away. Right now, we're working on the budget. We went out to the site earlier in January, and it's so lucky we did, because in March, as we know, things changed so much.
But by going out to site, we began to layout the program. And so now we're able to go out in the field; we have a team in Hermosillo, Mexico. We live and work there. We can work from that location and then up at the project site to carry out the exploration over the next months and be ready to drill. During this year, we'll have drill results and go for a drill discovery. We'll be pushing hard first, with geophysics and then with drilling. So we're in a great position now.
Maurice: John-Mark, why does Riverside like this epithermal gold-silver district so much?
John-Mark: Mexico has been a world leader for five centuries with epithermal. These are shallow systems where hot water brings gold and silver and deposits it with silica near the surface. The reason we like it is, first, it's rich. Second, it's often fairly easy to mine. Third, it's company makers. Many companies have been built out of this style of deposit, Hochschild, who've made their careers mining epithermal.
And right next to us, just to the east of us, is SilverCrest Metals Inc. (SIL:TSX.V; SILV:NYSE.American), with their mining operations and exploration that they're doing with the Los Chispas mine. And to the west of us is the Mercedes mining district. . .where we see Premier Gold Mines Ltd. (PG:TSX) developing and mining. To the north of us, we have Santa Gertrudis mine with Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), and to the south of us, we have First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) and the Santa Elena mine.
And all of those are within this world of epithermal, shallow mineralization—young, gold, very positive. So we're so excited to be right in the middle with this project. And these are the type of deposits we want to be a part of making in the discovery through exploration.
Maurice: Location, location, location. John-Mark, walk us through the transaction details, beginning with phase one of the earn-in option agreement.
John-Mark: In phase one, there's US$750,000 exploration funding in the first year. It's a four-year option. In the first phase. . .Hochschild will be spending $8 million in work [with] Riverside as the operator. Also, Hochschild is covering any of the lingering, underlying costs to buy out the underlying owners, and to pay for any of their taxes and other things like that. So for us, we've generated this in this phase one. We've got to test these targets that we've already come up with, and explore the property-wide program. It's a great situation for all parties.
Maurice: How about phase two?
John-Mark: Phase two is really exciting as well. Hochschild gets to go to 75% by doing another $3 million of work and completing a study, and of course, paying us, as well some more fees.
So it's a really good situation, and that's the type of deal we like to do where it gives them the upside, but it also gives us a chance where, if they carry it forward further, or it doesn't dilute us, or if we make a joint venture, we're able to be a large holder in it. So phase two is a great step, as well, for both companies.
Maurice: John-Mark, this is another great demonstration of the business acumen and on behalf of all the shareholders, as I am one myself, thank you. This is great.
All right, switching gears, John-Mark, please share the current share price and the capital structure for Riverside Resources.
John-Mark: Riverside right now is trading in about CA$0.20, and on the U.S. side is about $0.14 cents. Our share structure: 63 million shares. We're in a good position with over $2 million cash in the bank and no debt. Riverside's poised for doing well for the remainder of 2020 and onward.
Maurice: In closing, what did I forget to ask?
John-Mark: I think what took us so long to get this deal done was because of COVID. We wanted to get this done, but we had to wait a while to make sure we had it all aligned. We've all been very respectful, so delighted to work with Hochschild, and now we're ready to go ahead.
We had a bit of a hiatus during COVID, but we're set to go. We've gotten through that. Now, we're ready to go in the field. So I think that's our excitement now, is getting going with results.
Maurice: Dr. Staude, for someone listening that wants to get more information on Riverside Resources, please share the contact details.
John-Mark: Please come to our website: www.rivres.com.
Maurice: Dr. Staude, thank you for joining us today on Proven and Probable.
Riverside Resources trades on the TSX.V: RRI | OTCQB: RVSDF. Before you make your next bullion purchase, make sure you call me. I'm a licensed representative for Miles Franklin Precious Metals Investments. We have several options to expand your precious metals portfolio from physical delivery, offshore depositories and precious metal IRAs. Call me at (855) 505-1900, or you may e-mail [email protected].
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Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.[NLINSERT]
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