Interview With Chad Williams, Director of Honey Badger Silver (TSXV:TUF)

Cachinal de la Sierra Project.

Honey Badger Silver (TSXV:TUF) recently announced steps towards a critical acquisition in Chile, the Cachinal De La Sierra Silver-Gold Project(Cachinal)  that significantly advances the company’s aim to build a high-value portfolio of silver assets. The acquisition once finalized brings a quality project with an existing resource in Chile’s Antofagasta Region, a mineral-rich area famous for high-grade deposits. 

This accretive addition to Honey Badger Silver’s portfolio is also in a favourable jurisdiction in close proximity to Austral’s Guanaco mine and mill complex which present compelling synergies for the project’s advancement to production. 

MiningFeeds spoke with Honey Badger Silver’s Non-Executive Chair, Chad Williams, about the acquisition and the company’s distinctive strategy that sets it apart from most other silver companies:

So we’ll start off with Honey Badger’s current focus, Cachinal and why it could become a cornerstone asset for the company.

Chad:  It’s one more step in the execution of our business plan and fulfilling our vision of being a high-quality go-to silver stock. And what Cachinal has is a resource. 

If you envision, if you will, creating a company that will be worth a billion dollars when the silver price hits $100 an ounce. So we can discuss why we think silver’s going to go there. But clearly, silver is a long way from there today.  

And I know how to do that because I used to run a gold exploration company called Victoria Gold. And during the financial crisis, we acquired the Dublin Gulch project in the Yukon. We paid $8 million for it. When everybody else was in the fetal position, we thought it was a buyer’s market, just like it is now.

We were very aggressive by it. And now Victoria Gold is a multi-billion dollar company. Now, obviously, they’ve executed their business plan and built a mine. They’ve done lots of really good things, but the point is that we are going to continue to be aggressive and add value, while everybody else is hiding under their desks.We want to be seen as an active ETF,  an Exchange Traded Fund, whereby an investor can, let’s say, participate in the price of silver because an ETF can hold a lot of silver bullion or silver stocks, but we’re different in the sense that we’ll be accumulating silver assets and managing them. We’ll be adding value to them. In some instances, they’ll be accretive to the point of selling, while in others, we’ll be spinning off royalties. There are all kinds of things we can do to create value.

Cachinal is a roughly 20 million-ounce silver deposit in Chile, one of the best jurisdictions and mining-friendly. Additionally, it’s located very close to Austral Gold’s Guanaco mill. And we are in very good standing with Austral Gold. Think of Honey Badger as a big sister company to Austral Gold. The location makes ultimate logistic sense and I don’t think the market really understands how important that mill is or will be to our future.

To go back to the ETF analogy, the Cachinal acquisition adds an element of diversification to a portfolio essentially focused in Canada correct? 

That’s definitely one favourable aspect to it.  What really sets Honey Badger Silver apart from the field is its three-tiered portfolio strategy of aggregating diversified silver assets at various stages of advancement including royalties and streams utilizing the balance sheets of others. This allows us to advance and derisk assets while trading at a net present value similar to valuing a commodity ETF. That’s category one. Category two is ounces in the ground and Cachinal is a great example of that. 

The third category ’is the exploration-development of high-quality assets, which Plata is a great example of and Clear Lake is another very good example. So we’ve got assets in the Yukon, Ontario, and Chile, which if you look on a global scale, are three jurisdictions that always rank in the top 10. They’re very attractive jurisdictions for mining.

And for Cachinal specifically, with a historical resource place, is there a timeline for the property?

So obviously, our focus right now is closing the transaction and things are going well on that front. One of the benefits, ironically, is that Chile is in the opposite season. So while it’s getting colder here in North America, it’s actually starting to get warmer there, allowing for work to be done then. It’s a little bit more advantageous to do it in the period say September to July. 

Now, as for the timeline, that will be determined with the assistance of Austral Gold. We’ll determine what the right course of action is. They absolutely would like to have some of the mill feed from Cachinal right now.

And so we’ve had very preliminary discussions. In a best-case scenario, we could conceivably be producing some cash flow and revenue within 18 months from that. And of course, the reason that could work is because of, and I keep repeating myself, the proximity and the desirability of Austral Gold and their mill; it has water access and tailings capacity etc.

So that’s why Cachinal is a very important strategic acquisition for us. In fact, I will add that even though Aftermath, the vendors, decided to sell Cachinal, they agreed to sell it to us because they know that our relationship with Austral Gold can unlock a tremendous amount of value from the Cachinal asset.

There’s been a lot of change in Latin America recently, but Chile and Gabriel Boric are very supportive of foreign investment and he understands the mining industry and resource development. Have you also looked at other projects in Chile before, or possibly in the future? Is this the start of a new frontier for Honey Badger’s future acquisitions?

So you touched on a few points. Chile has always been on the mining-friendly side for almost 30 years now, and been highly attractive to foreign investment. There were the spots with nationalization in the sixties and seventies but for as long as I’ve been in,the industry, Chile’s always been a very favourable jurisdiction. We were fortunate enough to listen to President Boric’s presentation in Ottawa, right after he met with Prime MinisterTrudeau. 

And I was incredibly impressed by him. He’s 36 years old. I have been very skeptical of politicians generally. And I quite frankly don’t even want to meet with them most of the time. But they announced the presentation, and I wanted to make sure that we weren’t going to do something improper. And I was so pleased with this presentation, as you mentioned, it’s very pro-investment.

He emphasized, “We need investment. We need industries. We need foreign investment, capital investment. And mining is right at the top of our list, especially investments related to electric vehicles, battery matters, that kind of a thing.” So one thing that’s also very interesting in Chile: Chile has been a location wherein if you staked or acquired claims, the holding costs were very low.

And so the large company just aggregated and held onto huge tracts of land. Okay. the recent government changed those rules. It doesn’t matter, but in the future, the land payments are going to go off. For us, Cachinal makes no material difference because we don’t have that much land there. For some of these large, let’s call them, multinational organizations, they have millions of acres. And that becomes a problem. And that’s going to free up some land for companies like us. 

So to answer your question, yes, Chile is definitely going to be an area of focus for us. Now, Chile doesn’t have a big history of silver. It’s not a very silver-rich country. And generally, although there are some silver deposits,  Cachinal is one that is a so-called gold-silver project, but there’s no doubt that Chile and also Argentina will be important locations for us in the future. So watch this space.

What are some of the important catalysts for the company in the coming months and quarters? 

To continue to be outrageously active in terms of looking at acquisitions. As mentioned, it’s a buyer’s market. We don’t face competition in our size range at the current time anyway. So look for more net asset value for share accretive deals. In terms of our message, we want to make sure that people understand that we’re not an exploration company. 

We’re not a royalty company. We’re not a mining company. In essence, we’re a little bit of all of that. And if you like silver, then you’re going to love Honey Badger. We’re all very much of the opinion that Silver’s going to go higher, including, obviously Eric Sprott who is a major investor. And so it’s going to take a little while for our, let’s call it our harvest.

Let’s say we’re making wine here. We’ve just spent the last year harvesting and  it’s going to take a little while for the wine to get its maximum flavor. And so investors need to be a little bit patient, but I want them to know that we’re very busy –  we are shareholders too. And we’re going to be very focused on creating value, including through marketing. We continue doing a lot of marketing like this, for example. Meeting with investors to make sure that they understand that we’re busy.

If potential investors or current investors want to learn more about Honey Badger, how should they go about that and get in touch with you or the company?

Obviously, on Honey Badger Silver’s website, there’s a link and a little box there. We call it a connector where you can get in touch with management and you can ask management for all kinds of information. You can even express interest in financing the firm if you want or in terms of buying stock. 

So just go to our website, we’re a very open and transparent company and welcome any inquiries from anyone that’s interested in learning about the world of Honey Badger Silver.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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