Mako targeting 'millions of ounces of gold' in Nicaragua camp

Mako Mining is investing in exploration across its Nicaraguan assets after hitting nameplate capacity at its San Albino mine, the world’s highest-grade open-pit operation.

The objective is to find millions of ounces of gold in an emerging mining district, with the company's concessions covering 188km2.

As well as drilling around San Albino, exploration will focus on the nearby Las Conchitas project, which Mako expects to bring into production by end-2022, and the Potrerillos and La Segoviana concessions, where drill permits are expected in soon.

The company also plans to evaluate gold M&A opportunities, with a focus on the Americas, CEO Akiba Leisman, tells BNamericas.

BNamericas: What are your main aims for San Albino in 2021 and next year?

Leisman: We’re always working on three things at San Albino. We have now commercialized the highest-grade open-pit mine in the world, with a nameplate [throughput] capacity of 500t/d.

We are now basically at nameplate capacity. We will be consistently at nameplate capacity later in this quarter.

That was really the first of a three-step process to develop this into a burgeoning mining camp.

Secondly, we made a discovery a couple of kilometers to the south of San Albino at Las Conchitas. The objective there is to get a maiden resource some time in mid-2022 so that we can be mining Las Conchitas simultaneously with San Albino by end-2022, operating at 1,000t/d.

We are permitted to expand our plant by a factor of two. There is going to be very minor capex over at site needed to make that expansion as we prepared our 500t/d plant with expansion potential.

By 2023 we will be operating at 1,000t/d.

We think we are sitting on an orogenic gold mining camp, and we have consolidated all of the privately-owned concessions around our San Albino-Murra concessions and have now been granted 188km2 of mining concessions in this part of Nicaragua.

We have done fairly detailed prospecting across all of that, which amounts to almost 27km of strike, all of which contains very similar mineralization to what we have at San Albino.

Next year will be the first time that drills are actually turning at some of those regional targets, and the objective is to find millions of ounces of gold when all is said and done.

BNamericas: What are your main exploration priorities over the coming year?

Leisman: It all comes back to the three objectives. We currently have three rigs on site. We should have five, but two have been delayed in this global logistics supply crunch.

By mid-November we will have five rigs on-site and operational.

Of the three rigs on site now, two are located within direct extensions of the San Albino mine, outside of our 270,000oz resource, but [with] very direct expansion potential.

We intentionally made that resource smaller than it could have been just because there was not enough data for us to feel comfortable with putting additional ounces into a mineable resource, but the resource was completely open along strike and down dip.

So we have two rigs which are going to be expanding the San Albino mine, and the third rig that is on-site is looking for extensions of areas that we know about at Las Conchitas.

When the final two rigs come to site, they will be over at Las Conchitas to do both resource delineation drilling as well as finding the continuation from some of the targets we have at Las Conchitas, an area of about three times the size of what we have at San Albino.

At some point early next year we anticipate having permits on our last two concessions, one imminently, at Potrerillos, the direct north-east extension to San Albino.

We expect to have permits for that over the next couple of weeks.

And you have the La Segoviana concession, which the government granted to us in 2020. Our aim is to have permits on that for drilling in 1Q22.

Then the objective is to either use one or two of the five rigs or to bring in more rigs to start drilling some of these regional targets for the first time ever.

BNamericas: Are you able to provide production guidance?

Leisman: We do not have reserves, so we can’t provide formal guidance until we have three years of audited revenue. That being said, we put out very detailed information about our production and costs through press releases and social media, so investors can have a decent understanding of our production profile.

In Q3, our first quarter of commercial production, we were operating at about 75% of capacity. We sold roughly 8,200oz of gold, so we were averaging about 2,700oz per month.

Starting towards the end of Q3, and certainly continuing not only in Q4 but during the remaining San Albino mine life, we are going to be in the highest grade-thickness part of the mine, an area called Porcelana, so the grade is going to go up.

Likewise, we are going to be at capacity of 500t/d this quarter. You put those two factors together, our monthly production is going to be much higher than 2,700oz per month going forward.

We have publicly stated that we are going to be close to 4,000oz for October and expect to be at elevated levels going forward.

BNamericas: What impact has COVID-19 had on the ramp up at San Albino?

Leisman: There were a couple of phases. The first was when the global pandemic broke out in March 2020.

We made the decision to slow construction. Borders were effectively closed in Nicaragua for 6-7 months, and then there was a period of about eight weeks when the only way to get our senior staff into the country was through private jets.

Starting in August-September last year, we were able to get on commercial planes and get a reasonable rotation.

Everyone stepped up to the plate to build this mine in the middle of the pandemic. Our local contractors made a heroic effort to help build this thing.

On top of that, we were hit by two hurricanes during construction, in November of last year.

Then the second phase of COVID-19, the Delta Variant, went through the country in June-September, but infections have started to come down.

We don’t have an isolated camp, we are part of the community. To the extent that there were infections in the community, invariably there were going to be people that got sick and needed to be quarantined.

While all of those things were going on, we had to be extra cautious on how we managed operations. Luckily we got through that, and the mine and mill have been operating continuously without a hitch and it looks like the pandemic has peaked in Nicaragua quite some time ago.

BNamericas: What is your longer-term strategy for the company, including M&A?

Leisman: Even if everything works perfectly for Mako with our three-stage strategy, getting us up to a 1,000t/d mine and proving that this will be a generational-type gold mine, I still think we are too small to be an ideally situated public company just by running a single asset.

M&A has always been part of the strategy.

In all fairness, we were incapable of doing M&A until we were in cash flow. We were in the middle of building a mine, there were a lot of problems to solve.

That has started to change bit. There haven’t been a lot of opportunities that have come across our desk, and there really aren’t a lot of opportunities available that are suitable for us, but we are always ready to take advantage of opportunities.

For us, the main objective of Mako is to have our share price go up on a sustainable basis, so if that means buying something that would be accretive, great, if it means merging with someone of a similar size in a way that increases the value and underlying liquidity of Mako, great. If it means us selling to somebody larger, great.

But there’s a lot of work at Mako we need to take care of. This is really the first time we have had a little bit of bandwidth to start looking externally.

BNamericas: In terms of potential acquisitions, would you be focused on gold, and what jurisdictions would you consider?

Leisman: It would be gold. If we are the ones doing the buying, or if we are going to be merging with a similar sized company where our management is going to be there, in one form or another, we would have to focus on the Americas.

That’s a combination of our skillset, our experience and management style to a certain extent.

There are organizations around the world that are very good at delegating to very qualified teams, that allows them to be able to invest in projects across the world.

Hopefully, at some point, Mako can get to that point, it’s not there yet.

We do have a very direct focus on day-to-day operations at all levels of the company. For us to expand beyond a couple of time zones would be very difficult the way Mako is structured now.

From the US southwards is okay in terms of where we would look. In terms of utilizing local infrastructure we have already built, we have a lower hurdle rate of staying in countries we operate in, rather than going into a new country.

We have had operations in the US, Mexico and Nicaragua.

All three of those countries would have a lower hurdle rate than others. I wouldn’t preclude us from going into other countries, and there are other countries that are on our no-go list.

Decisions are always driven by the assets. It’s not like I start with the premise that I want to invest in a particular country and make sure we can find a mine that is great too.

It starts with the asset. If the asset is good enough, we can make a decision that will allow us to develop the infrastructure of going into a new country.

There are certain countries that are either in deep flux right now, so you don’t know what the political situation is going to be over an investable time horizon, or there are specific countries that have never been investable, irrespective of the quality of the assets.

But the countries we would look at are more than just the US, Mexico and Nicaragua.