http://www.midasletter.com/index.php/golden-predator-ceo-bill-sheriff-and-james-west-discuss-the-companys-progress-toward-mid-tier-gold-producer/

Golden Predator Corp. (TSX:GPD) CEO Bill Sheriff and James West discuss the company’s progress towards becoming the next Canadian mid-tier gold producer. Bill talks about the Brewery Creek project, a past producing heap leach gold mining operation located in the northwestern region of the Yukon.

A total of 278,484 oz Au was produced from seven near-surface oxide deposits along the property’s Reserve Trend from 1996 through 2002, when the mine (then operating under Viceroy Resource Corporation) shut down due to low gold prices.

Here’s the transcription of the interview:

James West: Hi, I’m James West. This is Midas Letter Money. My next guest is the chairman and CEO of a mining company that’s developing a project in Yukon. Bill Sheriff, he’s the chairman and CEO of Golden Predator, trades on the TSX under the symbol GPD. Bill, thank you for joining us today.

Bill Sheriff: Thank you James.

James West: Bill, I’ve been following this story for years and you keep coming up with some great intercepts indicating that you’ve got most of deposits on a big land package up there, I understand you are the biggest land holder in the area. Tell us what’s going on with Golden Predator right now.

Bill Sheriff: Well, we think the Yukon is the number one first world jurisdiction for the discovery of major gold deposits going forward. We like the political certainty. We like the reform in the regulatory environment in the Yukon and we certainly like the natural endowment of gold deposits there. We think it’ll be emerged as a new Nevada, if you will, over the next few decades, which is a lofty statement. But I think it gives people something to look forward to over the next decade or two. I think we are at the forefront of that and in fact we’ll be the next producer in the Yukon.

James West: Okay. So let’s talk about that a bit. It’s on your website it says that you’re mandated to become a mid-tier gold producer in the Yukon. Where are you at with that strategy?

Bill Sheriff: Well we’re looking at an initial production in 2013 and that’s some of the reactivation of the old Viceroy mine plan. Brewery Creek was a producer from 1996 to 2002 when Viceroy ran it. It was the first sub-arctic heap leach proven technology was developed there. It was a bit of an experiment in terms of heat bleach and the climate weather conditions that you get in the Yukon and it’s through their efforts that we actually now have such successful heat bleaches as Fort Knox at Kinross operates in Alaska and in fact the technology that we’ll be using when we restart the operation. We’re fully permitted in terms of the old Viceroy mine plant which is our phase one and that’s what we begin construction on actually this year.

James West: Okay. So what’s the production profile of that going to look like?

Bill Sherriff: Well it’s a little early to say that just because we haven’t announced our feasibility and all but we’re looking forward just in an average sense something in the order of 30,000 to 40,000 maybe 50,000 ounces a year for the first three of four years when we reactivate the old heap. That’s based entirely on past production records and basically just finishing the mine plan that was in existence when they close the mine in 2002 due to $240 gold.

James West: Sure. So does that mean because you are operation on an existing plan that the CAPEX is going to be low to get this thing in their production?

Bill Sheriff: It’ll be very low by comparison. Brownfield’s restart obviously is a whole lot easier to get back in. Nothing is easy in this business but it’s a whole lot easier and a whole lot less capital intensive and the heap leach is there. We’ve gone through extensive testing to indicate three sonic drilling in nine months of testing at the McClelland Labs in Reno in the metallurgy, that we can in fact restart the leach pad, that’s a major plus. We also have –

James West: So the metallurgy is proving that well.

Bill Sheriff: Metallurgy is certainly significant. When a pad sets out there, they initially had 60% recovery. When a pad sets out and weather is in essence in the natural elements for 15 or 20 years, then you get a number of things that are potentially good in terms of oxidation of sulfides. This was run at minor(ph) so you get a natural withering. It breaks down to particle sizes. But you also have some potentially negative things such as clays and things that inhibit the percolation and permeability of the pad. These are the things that we’ve tested and we believe that we can recover roughly a third of the gold that’s in the pad.

James West: Okay. So 30,000 to 40,000 ounces a year doesn’t make you a mid-tier producer. What’s your strategy to get there?

Bill Sheriff: It doesn’t. We actually employ what I would like to call the crawl and then walking and run strategy. Right now, the world markets are rightfully so quite concern about large CAPEX you see it everyday. CAPEX are for projects ranging in the hundreds of millions of dollars and especially for companies with market caps who have only small fraction of their CAPEX needs. It just doesn’t work. I mean, their projects like this lined up that aren’t going anywhere right now due to financing needs.

We see this is a way to establish early cash flow and work our way into a much larger phase two. Phase two of course so we base it on the backs of our three new discoveries we had last year at Bohemian-Schooner, at Sleeman and also at the Classic Zone which is a whole new type of mineralization that’s a lower grade but much more continuous. It’s oxide mineralization, hundreds of meters of 0.3 to 0.5 gram material. It might not build a mine, but it will certainly keep on running profitability for a number of years.

James West: Mm-hmm.

Bill Sheriff: Now, we’ll end up giving us about a hundred — we’re targeting somewhere you know 120,000 to 130,000 ounce a year production range for phase two which would be a separate infrastructure on this 200 in some square kilometer property, so you can almost look at it as a separate mine.

James West: So two mines within five years.

Bill Sheriff: Right.

James West: Okay, with the first one coming on stream.

Bill Sheriff: We were looking for initial gold pour at 2013 on our phase one and 2015 on phase two. Here again, this is very a forward-looking statement and that we haven’t exactly fine-tuned that but we’re well down the road to it. As you might imagine with our Brownfield restart, we have a great wealth of data upon which to base this on without having to recreate the wheel.

James West: Okay, sure. Let’s talk a bit about your past, how did you end up in the mining business?

Bill Sheriff: Well, I’m a geologist by training and a graduate degree in geology as well. I, too, suffered the same fate in geology as Brewery Creek when the price of gold went down to 240. I found my self unemployed, so I turn to my second love which is the markets. I spent a number of years as a stockbroker and then ultimately a market maker and have gone back and forth between the two. I’ve got my first exposure to the public market scene in the early 2000s. The second venture was energy metals which was a uranium company in 2004 in the venture’s exchange. Then we took to the New York exchange in 2007 before selling out to Uranium One for over a billion dollars.

James West: Yeah, I remember that transaction. So that would explain your relative ease with what you seemed to be able to raise capital. What’s your cash position right now?

Bill Sheriff: Well, right now we are in the midst of financing but I can tell you before the financing we have about eight million. The financing now is on the order of 15 million. We also have a very strong relative portfolio that generates just short of a million dollars a year this year, but it will be expanding to multiples of that over the next few years as two of our projects with Berwick will be going into additional production. One of our properties has near term production visibility with a Midway Gold’s pan deposit.

James West: Okay.

Bill Sheriff: Which they just recently released the feasibility study on.

James West: Yeah, okay. So let’s talk quickly about your royalty portfolio because that’s actually a great source of cash for the company.

Bill Sheriff: Well it is, and it’s an underlying value for the company now and it will become a very strong cash flow over the next say two to four years. That you can go to Elko Free Press has an article that Berwick put out as to when their production plans are and that’s sort of thing. But our portfolio covers millions of ounces of gold, well over a million of ounces in any event. We’re a little constrain and that Berwick doesn’t put out 43 101s or everything else who aren’t particularly free with the data so we can’t release. But we have 30 square miles between the Alligator Ridge Mine and the Bald Mountain Mine that has a number of deposits that Berwick has drilled off and discusses including Yankee advantage, Poker Flats, casino, many of these are in the articles discussed by Berwick.

James West: So lots of opportunity for industries in the future. What’s the next 12 months goal for Golden Predator?

Bill Sheriff: For the next 12 months, you’ll see us in a very fast track development phase in terms of construction for phase one at Brewery Creek. Additionally, at the same time it will be running a parallel track of exploration on the Brewery Creek project to advance the three major projects that we discovered last year as well as search for additional new ones. We have 14 targets that are yet untested on the property and these will be the three discoveries last year plus any additional will be the future of the property including targeting over a million ounces of open pit oxide for our phase two. Then ultimately down the road five or six years, we’ll be looking at sulfide open pit which of course be our phase three and require here again even another jump in CAPEX to get them all.

James West: Well that’s fascinating stuff, Bill. We’re going to keep an eye on that. I’d like to thank you for joining us today.

Bill Sheriff: Well thank you. I enjoyed being here.

James West: If you’d like to learn more about Golden Predator, you can visit them online at goldenpredator.com and if you’d like to learn more about companies like Golden Predator visit midasletter.com. I’m James West and this is Midas Letter Money