"Invicta is a high-grade resource, so it can withstand varying metal prices."

Will Ansley

PRESIDENT AND CEO, LUPAKA GOLD

February 08, 2018

What attracted you to Lupaka Gold?

What attracted me to the company was the location of the assets in a pro-mining country like Peru, the existing infrastructure and the grades and widths at the Invicta gold development project. The width of the ore body at Invicta is eight meters on average, which would allow for a fairly straightforward mining operation with low startup costs. The average grade is quite robust and gold represents approximately around 65% of the expected revenue; the rest is split almost equally between copper, silver, zinc and lead. Our plan is to produce three separate concentrates from Invicta.

What is your vision for the Invicta project to facilitate its development?

Our plan is to start mine development, use a contract miner and then send the ore to a toll milling facility for processing. The project was originally a Barrick asset and the previous owners, Andean American, had a plan to develop a large tonnage open pit and underground operation for a total of 5,200 metric tons of processing per day (mt/d). Of course, back then the pricing scenario was different and they faced significant challenges in their relationship with the local communities.  Our vision is to initially commence a much smaller scale mine development scenario at 350 mt/d using a mining contractor and we will send the ore to a nearby facility for toll milling. We also believe we have a strong relationship with our local communities as we have worked on contributing to local development through the financing and construction of various sustainability projects at Invicta.

We were able to buy the asset during the downturn for an attractive price and saw that we could advance the project as an underground operation focusing on the higher-grade areas. The main access is at 3,400 meters where there is a camp in place that can house 65 people.  We are currently widening the roads with a berm for safety. As part of our agreement with the local communities, the road was designed to divert traffic from the mine around the communities to minimize disruption of their daily lives.

What is the defined resource so far and what do you think is the upside potential?

As part of the preliminary economic assessment (PEA), we are going to update the resource to match our startup strategy and the current metal prices. We intend to operate at an initial 350 mt/d. We have an initial mine plan which outlines a six-year mine life, utilizing the existing infrastructure and covering a height of 130 meters, with a further 150 meters above. At the surface, we have the same widths and grades so we are pretty confident that with the initial plan, we will actually be mining for at least 12 years or more. By 2019, we will have another updated resource with an expanded concept of between 500 and 1,000 mt/d. Investing in our own plant on-site would allow us to double or triple production.

What is your financial position and what was the importance of selling the Crucero gold project?

Our current cash position is $3 million, however we have secured a total of C$7.5 million through forward gold sales of a portion of gold production to Pandion Mine Finance. As part of the agreement, the Company was to raise an additional $2 million from any source, so we chose to sell our Crucero project to GoldMining Inc. At Crucero, we were able to drill off in excess of two million ounces of gold. However, it is at a high altitude and has a sizeable royalty. This sale made sense to us because it meant we were able to focus all our efforts and capital on Invicta, our flagship asset.

 What is the exploration potential of your Josnitoro project further down the line?

Josnitoro is a joint venture with Hochschild that offers great geological potential and we are planning to start exploration work this year.  It is a high-grade, large copper skarn four kilometres in length located within Peru’s southern copper belt. Historical work on the project has comprised geologic mapping and rock chip and trench sampling.

The first thing we need to do is to sign an agreement with the community for exploration access. We have and are building a great track record in community relationships; for instance, signing an agreement at Crucero when most thought it would be impossible, and at Invicta we overcame the social issues and signed a community agreement in 2017.

How do you think the market perceives Lupaka Gold?

If you look at the relative value of our company  per ounce versus other peers in the industry, we are significantly undervalued. Invicta is a high-grade resource, so it can withstand varying metal prices, yet the market has not caught on to this. The shares have held reasonably well as our existing shareholders are very loyal and understand the opportunity we offer. The management owns around 20 percent of the shares which demonstrates that they believe in the company’s potential.

What are going to be the highlights for Lupaka Gold in 2018?

The main goal is to put Invicta into production and generate cash flow for our investors. In order to do this, we need to build up our local management team to oversee the mining contractor and the infrastructure revamp, which will take about three months.  There is some initial development work from surface such as building a cross-cut and a fresh air ventilation circuit which should be completed in less than six months. We are on the cusp of production and cash-flow generation, in what we hope will be a good year for gold stocks.

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