Catching up with Dr. John-Mark Staude, President and CEO, Riverside Resources

POSTED ON February 18, 2015 BY Andrew Nelson
CATEGORY Riverside Resources,

Dr. John-Mark Staude in the trenches (literally) near Torreon, Mexico - October 2011 (CEO.ca Photo)

Investing in junior mining is highly speculative, but a thriving business model which significantly de-risks a company in this industry is the prospect generator. A prospect generator partakes in the business of exploration through powerful partner-funded networks to pay for the majority of exploration costs. The core model is to build a portfolio of targets and let others pay for the capital intensive exploration while holding onto a significant equity stake to profit from the upside.

One such prospect generator is Riverside Resources (TSX.V: RRI) founded by John-Mark Staude, CEO & President. Mr. Staude holds a Ph.D in economic geology from the University of Arizona and Master’s of Science from Harvard. On top of his impressive academic background he has 24 years of global mining and exploration experience in searching for precious metals and is now using his combined knowledge and experience to find the next big discovery.

Dr. Staude generously traded sleeping hours for a late night Skype interview while in Capetown, South Africa last week attending the 2015 Mining Indaba conference.

Andrew Nelson: Safety is often brought up as an issue for working in Mexico. Recently there have been news stories about kidnappings occurring in Guerrero state at Torex Gold’s project in the Guerrero Gold Belt. Do you have any concerns for your projects in northern Mexico in the states of Durango & Sonora?

Dr. Staude: Our projects are not near any high-risk areas and are not situated along the international border or in remote regions. We are very focused on the safety of our team and ensuring all necessary security measures are taken.

We have moved our portfolio over the last 4 years away from the Guerrero gold belt. We are over an hour south of the USA border, 100 km away. We have multiple accesses that are fairly open and wide on the desert of Sonora and flat Altiplano of Durango.

The Guerrero gold belt has been problematic for the last 20 years. Concerns surrounding safety and security are high in that region so we work in other parts of Mexico.

Andrew Nelson: Why do you prefer the “Prospect Generator” business model over the traditional mineral exploration model?

Dr. Staude: It has a greater probability of hitting a big discovery, particularly for an individual company. Prospect generators such as Riverside Resources increase the probability of hitting that big success through exploring multiple prospects.

One of the people that have documented this very well is legendary resource investor Rick Rule, CEO of Sprott Global. Mr. Rule has invested in roughly 90 prospect generator businesses and has significantly profited from 35 major discoveries.

Furthermore, to put it into perspective, David Lowell, the world’s greatest prospector says that “1 in 333 prospects may be a major discovery resulting in a mine being built”. Riverside has so far been able to have over 60 projects tested and is carrying a portfolio currently of 15 projects.

Andrew Nelson: What are your key rules of discovery?

Dr. Staude: The first and most important rule is quality. You have to look for projects that could potentially be rich and huge. If you are taking on tremendous risk you want to insure there is even greater upside potential.

Our second rule is to ensure that the project is not too expensive to test. If you can test in affordable ways to prove a theory you can attract key partners to help initiate a discovery.

The third rule is that mineralization should be close to surface. This provides for much more affordable exploration techniques.

A fourth rule is that we must own a significant stake in the asset. For instance, if we can only earn 51% from the project there is no more room to bring in additional partners.

Andrew Nelson: During 8 years of operations why haven’t any of your projects resulted in a major discovery?

Dr. Staude: The statistics of exploration are that it takes many shots to make a discovery. We have ended up with some excellent opportunities such as Gold Dome in the Yukon where Riverside drilled mineralization and the project was progressed in partnership with Copper Ridge. A second win is Sugarloaf Peak in Arizona where Riverside drilled and has had subsequent exploration by partners with current deals carrying the project forward. As well, Riverside holds free carry and ownership in the asset and shares in the company. A third deal is with Morro Bay at the Penoles Project in Durango where drilling of over 70 holes has identified various zones of strong consistent mineralization.

We have also had challenging times in the market the past 4 years with only 1 good upswing from 2009-2011. This bear market has not allowed us to implement detailed drilling programs, but the projects we have drilled we have hit on.

Our projects are positioned in stable countries where if you do hit you can build a mine. As well, it takes a bull market with funding to fund big discoveries and we believe we have that to look forward too.

Andrew Nelson: What’s happening with your current portfolio of projects?

Dr. Staude: The Tajitos gold project, our lead asset, is very accessible to explore and the property hosts high grade drilling, underground and surface samples. It possesses excellent mineralization in a safe, mining friendly area of Sonora, Mexico and also has significant exploration upside.

A major catalyst for the Tajitos project for shareholders would be to further sample the underground and then drill the project. Recently, Fresnillo gave a presentation in Hermosillo, Mexico where they presented on their portion of the adjoining ground a discovery and drilling of over 300 drill holes to begin proving up a gold resource. We are pleased to be major holders in this up and coming high quality district.

Other major catalysts for shareholders would be accretive acquisitions in 2015 to grow our portfolio of projects. In 2015 we have received funding from our strategic alliance partners Antofagasta and Hochschild, both of which are progressing mineral properties by fully funding the work and Riverside having an ownership position. In 2014, for every $1 Riverside spent on exploration our strategic partners spent $7 and for the life of Riverside we have had $5 of partner funding for every $1 of Riverside.

We are very excited about Morro Bay (CVE: MRB) moving forward on the Penoles project through further exploration work as well as providing Riverside with additional funding and shares. We have a continued carried interest for 3 years while they continue to de-risk the Penoles project.

Andrew Nelson: Audited annual financial statements were released January 28, 2015 showing $3.4 M in cash. What is that going to be spent on in 2015?

Dr. Staude: We will be using it to acquire good assets from struggling junior companies. In 2014, we acquired 4 new projects, all projects that had previous exploration work and locations that Riverside is pleased to own and have partners moving the projects forward. During 2015 we are looking for more advanced assets to own and leverage off our partnership relationships and strong cash position.

With our prospect generator model we will allocate our capital among various projects. We expect to have a very active 2015 by acquiring a few high quality projects in key jurisdictions which we believe will hold significant upside.

Thanks to Dr. Staude for taking the time. Learn more about Riverside at their web site (www.rivres.com). Also note the company came out with news this morning: Riverside Resources Stakes Thor Claims: A New Porphyry Copper Target in Sonora, Mexico

Andrew Nelson

Andrew Nelson is pursuing the CPA designation as an auditor at Davidson & Co., the leading service provider for junior mining clients globally. Mr. Nelson has experience working with TSX venture listed explorers in Kazakhstan, Paraguay, Peru, Namibia, Madagascar, West Africa, United States, and Canada reporting under IFRS framework. He is an Executive Officer with Young Mining Professionals a not-for-profit which holds networking events for young professionals in Vancouver's resource sector. His interests are reporting on Canadian precious metal explorers and holding informative interviews with accomplished mining professionals. If involved in junior mining he would love to hear from you at Andrew.GM.Nelson@Gmail.com. More →

Twitter: @https://twitter.com/ANelsonMining

andrew.gm.nelson@gmail.com

Andrew Nelson

Twitter: @https://twitter.com/ANelsonMining

andrew.gm.nelson@gmail.com

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