Pinnacle Delineates New Vein at El Potrero As Epithermal System Takes Shape

0:03 Good morning, good afternoon, good evening, depending on where in the world you're signing in from today. I saw at least somebody in Europe and somebody in Asia, so we got a fully international audience today, which I appreciate very much. I've got with me today Bob Archer, CEO of Pinnacle Silver and Gold to discuss recent news at El Potrero. Bob, how are you today? I'm doing well, Romeo. I hope you're doing well too. Yes, doing well. So here's how today's gonna work. I've got a number of questions for Bob, myself, on the recent news, but this is an interactive event, so please do enter questions in that chat button in the bottom right of your screen whenever you can during today's presentation. We'll get to as many as we can. I imagine we've got time for most of them. If for whatever reason I don't get to it, it's off topic, doesn't quite fit with the conversation or we just run out of time, I'll still make sure that the Pinnacle team gets it and get back to you as soon as possible. The only other thing I'll say for housekeeping is this

0:49 event is being recorded and will be available for replay probably at 4.30 p.m. Eastern today. It'll pop right into your inbox, but it'll also be available on Six's YouTube channel. So you'll be able to catch it there towards the end of the workday. But okay, enough out of me. I'd love to get into the protein of today's conversation. So Bob, based on that press release, you're now mapping what appears to be a quite robust, low sulfidation, epithermal system across many veins. So I'd love if you could walk us through how your understanding of El Patrero has evolved since you started systematically exploring the property? Yeah, it's really, I mean, I have to say no big surprises for me in the sense that, you know, as an exploration geologist myself, you know, I've spent my entire career working on vein systems, you know, in Canada and the Canadian Shield and, you know, in Mexico and Peru and that sort of thing. So, you know, knowing how these systems can be and, you know, the typical characteristics, You know, that's one of the things I really liked about the project was that I saw the potential for that when we first got involved.

1:54 And so what we're seeing now is really just kind of playing into our interpretation from the beginning. So, you know, finding these parallel veins, and then I fully expect that we'll see other veins that will connect the main ones. And, you know, those can often be well mineralized as well. So, and the fact that, you know, this project has never really been explored before. So this is just, we're basically cleaning out old trenches and pits on surface and taking samples where we can and connecting the dots.

2:31 So it's still coming together, but in a way that we're very, very pleased with the results to date. It's playing out exactly as we hoped it would. Awesome. I mean, not a surprise, but good news. That's really kind of the magic combo. That's what you're looking for? Yeah, yeah, for sure. Yeah. I know those higher silver grades at surface, this is the best of my understanding, obviously I'm not an expert, they suggest potential vertical zonation in the system. So what does that tell you about where you might be in the overall epithermal column and how does that info guide your exploration strategy from here? Well a couple of things, you know in a lot of these low sulfidation epithermal systems and in the Topia district is no exception, you know the the mineralized horizon is typically about 150 to 200, maybe 250 meters vertical.

3:25 So, you know, they're not really vertically extensive the way vein systems can be in, say, Canada, for example, in the Canadian Shield, where they can go down for, you know, thousands of meters.

3:36 But they can be very extensive laterally. They can go for kilometers along strike. We've already traced this vein for 1600 meters along strike on the property And so we know that it does have good lateral extent, but where we've been focusing is in and around the old mines. And so, you know, seeing this vertical extent and potential for zonation is, again, something that is fairly typical of a lot of these systems. And, you know, you can often get higher silver grades at surface. And we're seeing grades over a kilo, 1000 grams per ton, 1 sample was 2280 grams per ton silver. So in addition to high grade gold, we're getting 34, 37 grams Gold in places as well.

4:34 So, you know, it's really nice to see that on surface. And, you know, the fact that we are seeing that mineralization on surface immediately up dip from the underground workings implies a level of connectivity.

4:51 And because there's no information in between really, there's been no drilling on the system. So that's something that we'll get to ourselves. But having the mineralized there, it allows us to project from the underground to the surface and it gives us a lot more confidence going in with a drill as to what we can do to prove that up. Great. And this is something that stuck out. The newly identified Alkapalene vein, it appears to have more consistent grades than Dostomyo. How significant is this parallel structure to the whole project's potential? And what's your plan for advancing that specifically? One of the key things that it tells me, and sorry, I should back up. One of the key things that it tells me, and sorry, I should back up. One of the key things that we see about Kapolein is that the style of veining is a little bit different from Dos de Mayo. Dos de Mayo is a breccia vein.

5:48 And so the fragments of quartz that host the mineralization are broken up, and then

5:56 it just looks like, you know, think of it almost like a stew of sorts, you know, you've got chunks within, they're almost floating within a matrix of other material. And so, because these chunks are variably mineralized, you can get sometimes a fairly high degree of variability in the grates. And whereas the Kapolin vein is much more consistent in its texture. It's more of a consistent vein, if you like. It's not all broken up. It's not a breccia vein and it has nice epithelial banding in it. And so that's probably why it's a lot more consistent in grade. But what that tells me is that it was likely injected at a different time than the Breccia vein.

6:48 And so, you know, this kind of a thing, you know, as a geologist looking at a system, you know, you like to see systems that have been active over a long period of time, with multiple phases of mineralization getting injected into the fractures, the structures in the rock. So seeing 2 completely different styles of veining

7:13 within a couple of hundred meters of each other tells me that this is a longer-lived system with multiple pulses of mineralization. And those are all keys to having a more significant system. Because the more pulses of mineralization you have, typically the larger the system, the larger the deposit. So that's just a kind of a general rule of thumb that you can use in these systems. So it's nice to see that. No, it's helpful. And I know we've already touched on this, but you mentioned the vein's been traced for 1,600 meters, but only systematically explored for those 500. So to put a fine point on it, what's your priority for expanding the known mineralization? And where do you personally see the highest impact opportunity right up next?

8:03 It's going to be in the immediate area that we've been working on to date, Romeo, because as you know, our main focus is trying to fast track to production as much as we can. So, we will be focusing on that immediate area in and around the mines and now with the Aqa'pilin vein as well. So that will definitely be the main focus in the short term. And you know, we'd like to try and get to drilling those as quickly as we can. And meanwhile,

8:33 you know, following through with permitting for, you know, the reconstruction of the plant and everything that goes along with that, you know, the camp and the tailing storage facility and all of that. So, you know, that will all take a little bit of time, but if we can get to first, I hope, underground drilling, because with that there's no environmental impact, and then after that, surface drilling as well. So, we can be drilling this off and proving up a bit of a resource while we're advancing with the permitting for the plant. So basically 2 parallel lines of work, if you like. Great. And that's something you just said, actually, with historic workings and that existing plant on site, you got a lot of goodies that most early stage companies don't have and a pretty enviable production timeline, in my opinion. But for the investors in the room and folks watching on replay, what are the key steps and timeline for getting Alpachero into production? Just what's the plan?

9:36 So we've developed, one of our directors is a metallurgical engineer and he has his own consulting practice in Toronto and is building or overseeing the build of 3 other plants in Mexico right now. And so he's really helped to put together and overseeing the estimations on what it's going to take to rebuild our plant. And so we're working with that and putting those plans together. I'm starting to rebuild the team that we had with Great Panther in Mexico. So folks that really know what they're doing. And so, you know, moving this forward, you know, step by step, the permitting process, there are a number of permits that we need to get from different agencies and ministries in Mexico.

10:30 So, you know, we're working with a good environmental team as well to not just identify which permits we need, but what we have to do to put all those together and already started meetings with the authorities, you know, in terms of advancing all of that. So, we're just putting together a timeline really on what all of those will take. And then Once we have sufficient approvals for the camp construction, for example, which will need to house people to rebuild the plant, then we can start the plant reconstruction as soon as we get the permits to do that.

11:17 The area for the tailing storage facility, because it'll be dry stack tailings. And those will need to be permitted. Eventually, we'll need explosives permits for the underground. And those are separate permits again. So, you know, there are a variety of permits like that. Water is another one. That's a completely different ministry within Mexico.

11:43 And So, you know, we're just gradually working through all of that, you know, I just got back from Mexico City, and we had a project meeting on Monday, and we brought people in from all over Mexico and Canada to have that meeting, just to discuss all of us, all of these items. All of these items. So that's kind of our approach to it right now. It's still somewhat early days but you know we are putting all this together and you know I think we can move through everything systematically And I'm hopeful at this point that we can perhaps get everything up and running within maybe a 2 year timeframe, something like that.

12:30 If the permitting all comes together, which is always a big unknown. You like to be optimistic, but trying to be a little bit conservative too, because you just never know what the authorities are going to come back with. Yeah, no, it makes sense. Now, there are a number of questions in the chat. There's 3 easy ones and 1 long 1. So if you don't mind, I'll take the easy ones first, wrap those up. Yeah, absolutely. And we'll get a longer one. So Wesley from the chat asks, what's the company's current cash position? Are you funded through the end of the year?

13:04 So we're probably looking at about 750,800,000 at the moment. And we're getting warrants exercised now as well. So that's, you know, we have no real sight on, you know, how long those could come in, but I believe those expire April or May next year. So a few months, but nonetheless, we can bring those in. So that'll add to the cash position. How far along it gets us will depend to a large degree on if we can get going with underground drilling. If the authorities come back and say, yeah, we agree with you that you don't need a permit, you can go ahead, then yeah, obviously, goodwill and get going with that as soon as possible.

14:00 But if they don't, or if they drag it out and don't give us an answer, then we'll just be continuing to do what we're doing now with the challenges, mapping, sampling, which is relatively low cost compared to some other forms of work. Great. One more question in the chat. What's the cost of refurbishing the plant? Right now, we're estimating about $2 million US, including the actual cost of installation, that includes the equipment and the installation costs. So it's not huge. And we hope to be able to finance that

14:40 out of an offtake agreement, an advance on an offtake agreement, basically. So we're not looking at financing that through equity. And that's fairly modest comparably. Yeah. So Jeff Finkle from the chat asks, is there talent nearby? What's the nearest town? Well, the nearest town is Topia, which that's where the Topia mine, which is now owned and operated by Iwana Wato Silver that was the first mine that we acquired when we started Great Panther back in 2004 so you know I first went in there in 2003 so you know I'm very familiar with the town and the community there, and Great Panther still has a good reputation there. So there are no issues as far as relationships go. Because Topia is a mining town, There are lots of skilled labor, they're mining contractors, so we can source people from there. But I'm also trying to rebuild the team that we had with Great Panthers.

15:44 I'm bringing in people that know what they're doing and trying to bring in some of the best people that we had at the time. And right now, 100% of our employees are Mexican. We haven't brought in any expats at all. And that was very much the case when we ran Great Panther before that, you know, when at its peak, I think we had something like 1200 employees and contractors between all the mines in Mexico. And I don't think we ever had more than 2 expats on site. So that really does go a long way to, you know, building relationships with the local communities and the government. Sure, yeah, 2 out of 1200 doesn't even really show up on a pie chart. You have to... No, it's great, yeah, exactly. I will get into the toughest question now.

16:30 So Graham asked right at the top of the hour, what is the current sentiment in Mexico or permits happening?

16:35 What permits are ahead for Pinnacle? So kind of broad question about mining in Mexico right now. Yeah, I mean, I've touched a little bit on what permits are required, you know, a number of different agencies that we need to, and we can do those in parallel. So, we can be dealing with the environmental agency at the same time we're talking to the Canago guys about water and when the timing is right, we'll talk to the military about explosives and all that kind of thing. So, you know, these can all be working in parallel. In terms of the situation in Mexico right now, it's certainly a lot better than it was under the previous administration, where they were just totally against mining. There were no permits being granted whatsoever.

17:22 Now President Scheinbaum is much more pragmatic than her predecessor, and I think she recognizes the importance of mining to Mexico. The fact that we have an underground operation as opposed to open pit, which is kind of their biggest bugaboo from an environmental standpoint, That is going to play in our favor. And it's also, you know, it's a bit on the small side. You know, that's by intent. You know, I'm not being defensive or embarrassed to say that. I mean, you know, we took on something small because we knew we could fast track it to production and that's really the whole business model and that's what we want to do. But the fact that it is smaller means we've got a smaller footprint and the fact that it was in production before means we're working with a disturbed site. So we're not building new roads, we're not cutting down trees, we don't have to get a forestry permit, for example.

18:22 And so these are all advantages that we have. And plus the fact that Topia is a mining district, you know, one of the oldest in Mexico dating back to 1538. And we're surrounded by 4 operating mines within 35 kilometers, one of which La Cienega, owned by Fresnillo, the largest silver producing company in the world. And that's, yeah, that's the largest, I think it's the largest, underground mine in Mexico. So this is a very, very well-known mining district. So whether you're talking to the local communities or right up to the federal government. To me, everybody knows the importance of mining to Mexico.

19:08 And although people were hiring locally right now, even just for casual labor, they're all locals and it's great for them to have the jobs. So we've got a great relationship with the locals right now. Awesome. I'll wrap up today, Bob, I just ask you, what are you most excited about for the rest of the year? I know you got a conference coming up, actually be at the same one, but what keeps you up with excitement for Pinnacle for the end of this year? Oh, gosh, I think that, you know, the potential, you know, just as things progress and, you know, I love writing these news releases because I just get excited writing about them. And it's, I think having, seeing things play out the way that we really hope they would, you know, is what, you know, every CEO dreams of really, you know, and especially with a technical background as well.

20:01 So, yeah, it's, you know, and it's a busy time of the year for marketing. We'll be traveling the world, London, mainland Europe, Hong Kong, all over the place. And So it will be a busy time. It's really nice that the market has turned and is finally supportive of the junior sector. And one thing I haven't mentioned is that we will be flying a LIDAR survey this fall as well. And that's, so we'll have some news out on that at some point, you know, but that'll that'll add to our interpretive capabilities on the project. So looking forward to those results.

20:47 Awesome. Bob, thank you so much for going through, giving people extra context for this most recent news. For the folks in the room, I know some people came in right towards the end. Please do watch the replay. It'll be available in your inbox in about an hour. And if you have any additional questions following from that, please let me know. Or you can reach out directly to Pinnacle Silver and Gold. You can contact me on the website or shoot me an email and I'll make sure that Bob and the team get it. Bob, thank you