Gordon Ellis is the co-founder and chairman of Lupaka Gold and was willing to answer some questions about his background and Lupaka’s future.
Lupaka Gold is a Peru-focused gold explorer with geographic diversification and balance through its asset-based resource projects spread across three regions of Peru. Lupaka’s flagship project is the Crucero Gold Project, its 5,500 hectare gold property located in southern Peru.
The Company, based in Vancouver, Canada, is project operator and holds a 100% indirect interest in the Crucero property. Since commencing active exploration in April 2010, the Company has reported NI 43-101 compliant gold resource estimate updates for the Crucero property in the first quarter of 2011, 2012 and 2013.
As a result of the recent acquisition by the Company of Andean American, Lupaka’s assets now include the Invicta Gold Project, which has near- term underground gold and poly-metallic development potential, and a strategic 17% stake in Southern Legacy Minerals (TSX-V: LCY), owner of the AntaKori copper-gold deposit.
- You are one of the founders and currently Chairman of Lupaka Gold Corp. Please tell us something about your background.
- I am a Geophysical Engineer by training, with a Masters in Business and International Finance. I Began working in the mining industry on the Endako and Granduc mines in British Columbia during the late 1960’s. I got into mining exploration in 1970 with St. Joseph Phelps Dodge in Australia and moved from there to the Canadian high Arctic with Canadian Superior Exploration. I then partnered in and managed a mining exploration company from 1979 to 1988, during which time I visited and reviewed mine exploration sites of many kinds, participated in management of five junior mining companies simultaneously and was directly involved in the development of the Sonora open pit gold mine in California, USA. During the following years, I was the founder and leader of two start-up non-mining enterprises both of which became profitable organizations and technological leaders in their respective industries. Both were ultimately sold and became segments of billion dollar companies. I have always enjoyed the mining industry and when the opportunity to get involved in the Crucero project in Peru presented itself, I went for it.
- Why is Lupaka Gold focusing on Peru?
- Peru has that rare combination of a growing economy based on commodity export, a stable and supportive federal government, a long-standing body of law to support mineral rights, an experienced mining contractor and labour force, and lastly and most importantly, tremendous exploration opportunities. Peru is a country where small companies can effectively compete for exploration discoveries. We have demonstrated that, with our Crucero Project, which is a new district-sized gold discovery. We now have offices and personnel in Peru and therefore have the resources in-country to access new projects. We believe that the best use of our resources at this time is to pursue projects in Peru.
- How did you manage to attract such a top level management team for Lupaka Gold?
People are the most important asset in any business, and even more critical in exploration where investors back management equally with backing the projects. As a company still in the discovery stage, we were able to find experienced top level management people interested in participating in the Company’s upside and saw a significant opportunity to realize success from contributing their talents. Our management team and directors own 25% of the Company and are very focussed on creating shareholder value.
Eric Edwards, our President and CEO, has a long resumé of success in mining and exploration, having come to Lupaka after completing the sale of Andean Resources to Goldcorp in a $3.7 billion sale. Darryl Jones, our CFO, is an experienced mining and financial executive, who was CFO for Corriente Resources and key to the $680 million sale of that Company in 2010. Julio Castaneda is our senior Peruvian executive who has proven to be a successful explorationist with a number of mining and exploration companies throughout South America including Buenaventura and Hochschild. Our team has demonstrated that they can grow a company, complete an IPO under difficult circumstances, and that they can identify and complete a successful corporate transaction.
We are very particular and careful in our hiring, we make sure that our people are focussed and motivated, and then we let them do their jobs.
- What is the political situation in Peru?
- The current President of Peru, Ollanta Humala, is continuing to demonstrate his support for mining and exploration. Mid-tier producers in Peru are very successful and, with a few notable and high-profile exceptions, local communities are eager to participate in the benefits provided. For our project locations, we see the political landscape improving and have experienced strong community support.
- What kind of new projects are of interest for Lupaka Gold?
- We founded the Company in 2010 with a two-fold focus; Peru and gold. In the past year, we have added two strategic assets to our balance sheet with the Invicta near-term development project, and secondly, with our control block in Southern Legacy’s Antakori gold-copper project. Our assets now include open pit and underground gold resources, covering early to advanced stage projects.
This market in particular provides acquisition opportunities that we haven’t seen in over a generation. Good properties are coming available throughout Peru as many companies including Canadian listed, public companies are unable to finance and are forced to divest. In this market we believe we can buy gold ounces much cheaper than we can drill them. We have initiated a dedicated team to evaluate projects, and are hopeful that we can announce a new acquisition soon.
We are open to consideration of small producing gold properties. If a small producer is sitting on what we identify to be a potentially large resource, we will seriously consider that project.
We maintain our belief that gold provides tremendous price upside in these economically uncertain times, and that Peru is the most favourable geologic and political jurisdiction in the world today. If we find gold projects with unrecognized upside, having large-scale potential or strategic value where we can contribute the unique competencies of our team to add ounces and create value, we will consider those projects.
- Where do you see Lupaka Gold in five years from now?
- Within a five year scope Lupaka Gold will continue to explore, grow its resource base, and acquire additional gold properties. We are establishing a number of close relationships with Peruvian producing companies that can help us develop our projects beyond the exploration phase. It is a strategic option for us to hold joint venture interests, royalty streams, or to negotiate the outright sale of our discoveries to producers that need reserve growth and replacement. Effective delivery of these options will fund our ongoing exploration and development programs. This is the avenue that we can exploit to bring value to Lupaka Gold’s shareholders.
Beyond the five year timeframe, we believe that we will have other options available to us, including growing into a producing company. For now we will stick to our core competency, discovering gold ounces and de-risking projects.
- Where do you see the gold price in five years from now and why?
- There will always be some manipulation of the price of gold over shorter terms but it will continue to grow in value over the longer term.
On the face of fundamental supply and demand influences, I think the gold price will increase
significantly from current levels within the next five year window to over $2,000 per ounce. The absence of new gold discoveries in the past several years worldwide has led to critical reserve replacement issues for producers, and that will reduce gold supply. The current downturn in exploration expenditures will exacerbate this situation. Economic uncertainty, currency weakness and value fluctuations, demand for lifestyle improvements in developing countries, and erosion of personal wealth in developed countries will further increase gold demand.
Lupaka Gold is uniquely positioned to capitalize on opportunities that will arise in the short term — a softer gold price actually creates more acquisition opportunities for us. We are not in need of an immediate financing, and we have sufficient cash to implement our business plan for the next 12 months, including an aggressive project acquisition program.
Lupaka Gold is also unique in that we offer investors a vehicle that provides leverage to the gold price in the long-term. We are early in the discovery phase for Crucero, we have near-term development and interesting exploration at Invicta and, we have a compelling strategic shareholding at Southern Legacy.
Our business plan is constructed to take advantage of the short-term weakness in the gold price and the strength of gold in the long-term.
Disclosure: Lupaka Gold Corp. is a sponsoring company. Please see our disclaimer for current positions.