Ken Berry: Olympic Hockey Player to Junior Mining Chairman
Ken Berry is a Founding Director of Northern Vertex Mining Corp (TSX-V:NEE) and Kootenay Silver Inc. (TSX-V:KTN). Since inception, both companies have made incredible strides forward, despite poor market conditions. Kootenay Silver has delineated millions of ounces of silver in Mexico and Northern Vertex is in the midst of transition from development into production.
Ken started his career as a professional hockey player, even participating in the 1980 and 1984 Olympic games. Teamwork and determination are two skills Ken developed while playing professionally – skills he believes are key to creating a successful mining company.
Northern Vertex is perfectly poised to move from development into production and take advantage of the turn in the market. The company anticipates a low cost of production and will be competitive even in a market pull back.
Their flagship asset, the Moss Mine is located an hour and half from Las Vegas and 3.5 hours from Phoenix. In fact, Palisade made a trip to the property earlier this month, and a detailed report can be read here – (http://palisade-research.com/palisade-mine-tour-iii-guns-meth-and-gold-in-arizona/)
Palisade Radio Host, Collin Kettell: Welcome back to another episode of Palisade Radio. This is your host, Collin Kettell. On the line with us today is a new guest to the program. His name is Ken Berry. He is the chairman and founder of both Northern Vertex Mining and Kootenay Silver. Ken, welcome to the program.
Chairman, Northern Vertex Mining Corp., Ken Berry: Collin, thank you very much for having me on. I am really pleased to be here on Palisade Radio and have a chance to tell our story.
CK: Well, we sent our head geologist down. He flew into Las Vegas just a couple weeks ago and met up with you. You guys took about an hour long drive down to what is soon to be Northern Vertex’s producing Moss Mine. We put out an article called Palisade Mine Tour III – Guns, Meth, and Gold in Arizona; a very exciting title and a very exciting story to go along with it.
Before we jump in to the mining side of things, your background is quite interesting in that you were a professional hockey player. You, in fact, played in the Olympics, I believe, two different times on the Canadian hockey team. Ken, how does somebody go from being a professional hockey player to getting into the junior mining game?
KB: Well, Collin, it was an interesting transition. As you say I was fortunate to be able to play in a couple Olympics and also had a brief stint in the NHL. Moving from sports into investment— investment adviser was my first step and then onto the resource market. As in sports there are lots of ups and downs. We have seen that over the last half a dozen years in the resource market as well. I think it prepares you well for the resource market as well as the team aspect of sports, are directly translatable into building a company.
CK: Well, there are many things that define a successful company in the junior resource sector in a bear market as we have just gone through for the past four or five years. Just weathering the storm and advancing a project and getting financing in is key. You did that very successfully over the past couple of years and now the markets turned. You are in a perfect position with Northern Vertex. Why don’t you give our listeners a brief overview o f what Northern Vertex holds and what the next year looks like in terms of moving from development into production?
KB: Sure, Collin. As you mentioned, over the last half a dozen years, even dating back to about 2010, in a challenging market one of the key fundamentals that we focused on is fund raising. We are fortunate with Northern Vertex to be able to raise $40M+ and as you mentioned I am also chairman of Kootenay Silver. With Kootenay, we raised in excess of about $55 – $60M over the last seven or eight years. That has enabled us to continue to thrive and build companies during these challenging periods and really be in a position to profit and excel when the market turns like we are seeing today.
With Northern Vertex that is a situation where we started up in 2011, looking for a project that we could take to production, in a timely manner, and in a good jurisdiction. What we found was the Moss Mine which is located about an hour and a half south of Las Vegas. It is next to the town of Bullhead City, about six miles outside of the town of Bullhead City. It lends itself to development and excellent location, infrastructure, all aspects that reduce the cost and capital expenditures for projects to go to production.
We are in a position now where we have finished our feasibility study. We have also done a test mining phase to de-risk the commercial production. We were able to produce 4,000 ounces of gold and in excess of 20,000 ounces of silver and really prove out the economics of the project. We see it as a very robust project economics, probably stronger than anything that we have seen in the marketplace and we are poised to move towards commercial production.
CK: Ken, very few projects in the market we have been in have had all of the different requirements to getting into production. One of those, for a small company like Northern Vertex, is to have a manageable CAPEX to get into production. You guys focused all of your money on defining a sizable resource that had enough ounces in the ground to put together a mine plan that made a lot of sense for not too much money. What you will be producing, I believe, is about 42,000 ounces per year. The CAPEX of the project is well below $50M, which is certainly in the lower cortile for CAPEX in this sector.
The one thing that is kind of been left out of the story and some people are apprehensive about is that your resource is relatively small. We are not talking about a million ounce resource here. But one thing our geologist identified when he got down there is how easy it would probably be to start adding ounces to the resource. Talk a little bit about why you guys focused your attention on just building up the core resource and not doing additional drilling and building that out yet?
KB: Well, that is a very good question, Collin. If I can just review a few of the highlights and you will see the strength of this project and the reasoning behind moving it towards production at the earliest possible stage. Some of the project highlights, as you mentioned, the annual production will be approximately 42,000 ounces per year; capital expenditures are US$33M. We have cash cost of $514; all-in sustaining cost of $624. What that means is should gold have a pull back to $1000, when other projects are shutting down, the Moss Mine will still be a profitable operation.
That has attracted a lot of interests. We have an internal rate of return which a lot of companies point towards and if they look at a 20 – 25% return, they would be very happy. Well, our internal rate of return (IRR) after tax is 44%; pre tax, it is as high as 55%; and when we are in commercial production we will have approximately $60M in a tax pool to offset some of our obligations. We will be looking at somewhere in the neighborhood of about a 55% return on this project in the initial year; again, very strong.
As we have talked about the location of this project, it is one of the reasons why we have such a low capital expenditure being located just an hour and a half from Las Vegas, and about three and a half hours from Phoenix. We do not have to carry a lot of inventories. We do not have to build a mining camp. So that brings cost down and it is much more manageable.
Furthermore, one of the aspects that has been overlooked, I think, by the marketplace is the blue sky potential of the exploration. We are located in the mining district of Oatman and that has been famous. Historically, it has produced over 2.2 million ounces of gold. There are some high grade opportunities for exploration. I would point to the United Eastern Mine which was located to the east of us on strike with one of our exploration targets. That particular scenario produced over 770,000 ounces at over an ounce per ton.
We have numerous targets on the Moss property and we are looking forward to getting an exploration underway, identifying those targets, and preparing to drill them as we move forward, so lots of exploration upside, and tremendous opportunity to add ounces. We are looking at initial production of 42,000 ounces per year. There are another 200,000 ounces that are not included in the feasibility study, but are located right within the area of interest where we will be producing. That is also upside potential for investors.
CK: Well, Ken, several achievements have been made over the past couple years. What are the next immediate steps and big catalysts that investors should be watching for with Northern Vertex? You guys did just buy the JV Partner completely out of the project. There is just now a small underlying NSR, so Northern Vertex owned 100% of the Moss Mine, also, a recent announcement of a convertible debenture for $7.5M. What comes next?
KB: Well, we have been able to since 2011, deliver on the milestones. I think, just to sort of rewind a little bit- I would have to attribute the success of the development for Northern Vertex to our strong leadership and track record of our mining team. You were talking about the sports background – my sports background – earlier. That is one of the areas that I excelled in was team building.
We have been able to bring individuals such as Dick Whittington, our CEO; the former CEO of Farallon, took the G9 deposit into production in Mexico. We also have Jim McDonald, who is CEO of Kootenay Silver. He was on the board of Alamos for over a ten year period. He was part of their heap leach technical team for over ten years. He has a strong mining background as well. We have Gordon Ulrich who was with Luscar. He had six producing mines when he was the CEO of Luscar. These are all individuals on our team. In addition, on the financing side we got Dave Farrell. He was with Endeavour Financial with Frank Giustra for over twelve years.
With this team we have been able to achieve many milestones, the test mining phase, and now we are at the stage where we have announced a convertible debenture of $7.5M. We have a term sheet from Macquarie Bank. In addition, we have a major US bank who has given us a term sheet on the equipment building. With all of this financing being put in place we are in a position now where we can initiate and transition from a development company to a production company. We will be looking to start activities on the ground, the engineering necessary and the planning, and then starting the earthworks on the ground. We will also initiate that blue sky exploration that we talked about.
Really, the intention is to move from a development company where we are sitting now at about $35M market cap and transition into a full-fledged producer should we continue to hit these milestones, which we believe strongly are just ahead of us, and the ideas that a company that is producing comparable to some of the others in the market- a Golden Queen at over $150M market cap or say a Wesdome who is doing 50,000 ounces and well over $200M market cap. We believe that we are poised to move to that production and be rewarded with a re-rating in the marketplace.
CK: Well, for all of our Palisade Radio listeners, I would like to remind you that we did an interview with Rick Rule a couple months back, and part of the discussion in our Sprott-Palisade Monthly Market Update with Rick was Kootenay Silver and the team there led by Jim McDonald and Ken Berry. Rick is obviously a people person when it comes to mining business. He believes the most important aspect of any junior mining companies is having the right people behind it, supporting it, and building it. It was great to hear Rick talk about Ken and his team with Kootenay and Northern Vertex on that interview.
Also, if you would like to get a better and more detailed overview of the Moss Mine, which would require a lot more than twelve minutes, I am going to add a link to the Palisade Mine Tour III which is available at Palisade Research to the description on this interview. With that being said, Ken, I want to thank you for coming on the program. If there is any way for listeners to contact yourself directly or somebody with your team with any interest in finding out more information about Northern Vertex could you give us some contact details?
KB: Well, thank you very much, Collin, for having the opportunity to speak with you about the Moss Mine. We are excited to be in the doorstep of production and we encourage any of your listeners to contact us directly. If they would like they can visit our website and there is contact information on there. The site address is www.northernvertex.com. That is www.northernvertex.com. There will be contact information on there. We would be more than happy to speak with you or to line up any site visit if anyone is in the Las Vegas area.
CK: Great! Many thanks, Ken, for coming on the program
KB: Thank you very much, Collin. I appreciate that.
Kenneth Berry, Chairman of Northern Vertex Mining Corp., is a Founding Director and former President and CEO of the company. To date, Mr. Berry has played a major role in the successful advancement of the company’s Moss project. Mr. Berry has more than 20 years of experience specializing in the finance and management of public resource companies. Prior to his tenure in the resource sector, Mr. Berry played professional hockey in North America and Europe and participated for Canada’s National hockey team in the 1980 Olympics in Lake Placid, New York, and the 1984 Olympics in Calgary, Alberta.
Palisade Global Investments Limited holds shares of certain companies discussed in this interview. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this interview may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this interview are those of Palisade Global Investments and are subject to change without notice. The information in this interview may become outdated and there is no obligation to update any such information. Do your own due diligence.Share this on: