Below is a summarization of an hour long discussion with Henk Van Alphen, CEO, Wealth Minerals (CSE:WML). Thank you for your time Mr. Van Alphen, looking forward to our next discussion.
In 1974 a young strapping Hendrik “Henk” Van Alphen arrived in Houston, BC from Holland with a dream of making the wilderness his home and living off the land. He built a log cabin by hand, and for the first year hunted, fished, and grew alfalfa sprouts to beat scurvy. He was satisfied with his accomplishment, but wanted a new challenge. As he made the 7 day trek back to civilization, little did he know the true adventure was about to unfold.
Fast forward a few years . . . after graduating university, Mr. Van Alphen joined Bema Gold Corp. (Predecessor of B2Gold, sold in 2006 for $3.1B), what was then a contracting company that required competent outdoorsmen who could navigate comfortably through rough and desolate landscapes preparing mineral claims to be explored. After working on dozens of projects, Van Alphen developed a sharp eye for what the winners and not-so-good-ones looked like.
In 1988, Mr. Van Alphen became a major shareholder of Pacific Rim Mining and eventually took over as Chief Executive Officer. As the industry faltered in the early 1990’s he heard about the major discoveries being made in Chile and Argentina which led him to South America. As properties were widely available, Pacific Rim filled up their portfolio acquiring the Diablillos and Aqua Rica projects which developed into significant deposits and high value M&A deals.
With a taste of success in South America, Van Alphen joined Corriente Resources and was with the company from 1994 to 2000 as it was exploring Peru, Argentina, Ecuador, Columbia, and Bolivia. In 1995, Van Alphen and the Corriente Argentina team discovered the world-class Taca Taca copper project. After passing hands through multiple companies Corriente was sold in 2014 by Lumina Copper to First Quantum Minerals for USD $470M.
Van Alphen’s next venture was Cardero Resouces which mainly operated in Peru and Argentina in 2000. Once again, as the market was in a slump, projects on a global scale were easy to come by and the company rapidly acquired promising prospects. With management thinned out over multiple projects across the Americas, it made more sense to spin these into new juniors. Thus, Trevali Mining and International Tower Hill were born, with Trevali becoming a producing mine in Peru and Tower Hill developing a 20M/Oz gold deposit in Alaska.
In 2002,Cardero Resources was actively looking for IOCG (Iron-Oxide -Copper-Gold) projects in Peru but ended up with a different project. At the time, Rio Tinto was holding an iron ore project in Peru which had annual dues of $80,000 in claim taxes, an amount that Rio did not have a budget for, so Van Alphen acquired the Pampa De Pongo iron play for $500K. The initial plan was to additionally acquire the neighbouring producing iron ore mine being operated by Shougang Hierro, a Chinese mining company, as they were losing money producing iron at $13/tonne in 2002. But Shougang was not interested in selling the mine even if they were producing at a loss, so Van Alphen continued to de-risk his newly acquired iron project.
After spending $3M on exploration drilling to solidify the 953MT inferred resource with 44%+ Fe grades, a Chinese mining conglomerate, Nanjinzhao Group, approached Cardero to buy the iron project in mid-2007. After a year of negotiations, several trips to China with smoked salmon and First Nations artwork in hand, many elegant dinners, and building a sound friendship (which is a requirement to deal with the Chinese), an agreement was finally made in 2009. The timing was not conducive to Cardero as the initial purchase price of $200M was renegotiated after the 2008 financial crisis along with iron ore prices crashing. Nanjinzhao Group now valued the project at $100M which it proposed as a counter offer. With a 200x return based on the initial purchase price this deal was a win-win for both parties and Mr. Van Alphen along with the Board agreed.
A serial entrepreneur, Mr. Van Alphen founded Wealth Minerals in 2006 with the mission to build a uranium mine in Argentina’s San Jorge basin in the Chubut province. The company was progressing well until the 2011 Fukushima nuclear disaster took the world by surprise and wiped out the uranium market along with Wealth Minerals.
With loyalty and integrity as personal pillars, Mr. Van Alphen plans to replicate the accretive deal making he executed with Cardero’s iron ore project for Wealth’s current shareholders. The new objective is to acquire three advanced stage precious metal exploration projects in prolific and proven mining jurisdictions.
The first project is being optioned from Balmoral Resources. It is the Casa-Berardi Gold Trend in Quebec and has a historical resource of 18.2MT at 1.48Au gpt for 775,000AuOz. Wealth has the option to acquire up to 75% of the project by issuing 3M shares, $5M in work commitments ($2.7M exclusively for drilling), and an additional $600K in cash or shares, all over a 6 year period. Please refer to the Summary of Option Terms below.
Wealth isn’t only optioning a highly prospective project in a proven gold jurisdiction but has also strategically partnered with one of the industry’s most technically competent teams. They also conveniently share an office which reduces G&A expenses and provides easily accessible technical oversight through exploration committee meetings.
The second project is the 100% owned Yanamina project which is an advanced stage high-grade low cost heap leachable gold-silver deposit in west-central Peru. The gold deposit is expected to have an average high grade and significant resource. Investors can expect actual figures to be released in the coming weeks from a new NI 43-101 preliminary economic assessment. But, Mr. Van Alphen sees this resource having a potential of growing by multiples through additional exploratory drilling. He believes the project will be a near term producer. The cost of production according to a previous PEA has a low all in sustaining cash cost.
The plan is to contract the whole project out to Peruvian operators which will create employment opportunities for the community. Preliminary discussions have been started with the contractors who are willing to fully finance the estimated low CAPEX project which would be non-dilutive to current shareholders, a huge plus. To date, significant exploration work has been performed by Coronet Metals Inc., the previous owners.
Mr. Van Alphen acquired this Peruvian gold-silver asset on the prolific Ancash fault zone as Coronet Metals faced significant social opposition from the town of Cruz de Mayo. This was a consequence of Duke Energy building a hydroelectric dam in the region with government’s approval, but without consulting locals. The result was flooding of hiking trails around the lake which locals used as a source of revenue for guiding tourists.
At that point, the Cruz de Mayo locals were opposed to foreign development which ousted Coronet Metals. Peru is a country where Mr. Van Alphen has significant experience. He understands the customs and the culture, how to deal with locals, and is intent on ensuring all parties benefit from any transactions. He believes Wealth will overcome this social strife. By coincidence, the project has phenomenal infrastructure Duke Energy’s hydroelectric dam is nearby, creating no shortage of affordable electricity.
Lastly, Mr. Van Alphen is actively seeking a third precious metals property to mitigate project risk and increase odds of success for Wealth shareholders. He evaluates projects across the globe on a daily basis, but says he prefers to operate in South America where his expertise is, and where the majority of his career in the resource sector has been focused. Give this, shareholders shouldn’t be surprised if an additional South American project is put into Wealth’s portfolio in the near future.
Full disclosure: Author does not own a position in any of the companies discussed. This is not investment advice. Please always do your own due diligence.