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Additional information

Additional	Information
Market:	TSX
Sector:	Gold Mining
Epic:	MFL
News:	Latest news
Web Site:	Minefinders Corporation
Other Articles:	05-02-201001-02-201015-12-2009

Minefinders Audio Interview Transcript with Mark Bailey, Director, President and CEO

Harry Norman: Hello this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview.  Today is the 19th of January 2010 and I’m talking with Mark Bailey, Director, President and CEO of Minefinders.  Listed on the TSX Metals and Minings sector.  Stock ticker MFL.  Share price $12.02 Canadian.  Market cap $786.31 million Canadian. Minefinders is also listed on the AMEX exchange. Stock ticker MFN.   Web address: wwww.minefinders.com. Mark thank you for joining us for this interview.

Mark Bailey: Oh thanks Harry.

Please give investors a brief introduction to Minefinders and what sets the company apart from its peers.

Minefinders is a new mid peer producer of gold and silver with our Dolores Mine in Mexico.  We currently are producing - our first year of production was last year.  We’re just entering our second year of a long life mine; a 15 year open pit heap leach operation.  We are set apart from most of our peers because we’ve successfully taken a grass roots discovery to productioin. There are  two and a half million ounces of gold and 127 million ounces of silver in the proven it and probable category.. We only have 65 million shares outstanding so we’ve been very good about not deluting our existing shareholders.  Most of our peer group are well above that.

The mine is in full production now.  Commercial production is at 18,000 tonnes per day and we are still ramping up with addition of some expansion of the project.  And now we have a flagship property that’s going to support the company going forward as we develop as a project.

After commercial production started at Dolores in May 2009, you were obliged to do some remediation work to your crushers.  How is production holding up at Dolores now?

Fine I mean we had some issues with one of our screens in our crushing circuit.  We have three tertiary screens and one of those had a warped exciter  beam. There were problems running it at full speed.  We finally identified the problem.  We’d been running that one screen at three quarter speed through the Fall and we were successful in ramping up to 18,000 tonnes per day on an average which is our name plate for the plant.

We successfully reached a little above 18,000 tonnes per day through the month of December, almost 18,000 in November.  We still are going to replace that exciter beam this month to allow us to run that one screen at full speed.

What progress has been made towards expanding production at Dolores?

Well we have two drills working at Dolores right now to further develop additional ore outlets outside the current mine plan.  We’re also completing a prefeasibility study on a mill addition to the plant and that’ll be done this quarter and announced to the public.

So our goal is to add a mill at Dolores which will improve recoveries of the higher grade and then the drilling we’re doing will expand the deposits.  So we’re working on both fronts.

What potential is there to expand the resource at Dolores?

We think it’s very good.  I mean we have high grade mineralization that we have drilled in the past up to 200 metres below the current pit bottom and we’re expanding on that now.  There’s also the east dyke which has about 100,000 ounces near surface and it’s outside the pit to the east side and there are mineralized structures projecting north and south of the pit.  So there’s quite a bit of mineralisation that’s been identified through drilling in the past but is not in our current mine plan.  We’ll be focussed on that now.

Are you satisfied with the progress being made towards a prefeasibility study at the La Bolsa project?

We are. That’s going to be completed this quarter as well hopefully here in February and a  go forward decision could be made as early as March.  That prefeasibility we closed off the resource pack in October of last year.  We’re still drilling at La Bolsa, so the resources that the prefeasibility was being done on, was frozen last fall.  We’re still adding to that but the prefeasibility will be done here.

At this current price for gold and silver it’s a very economical and very profitable mine so we’ll hopefully get a positive response from our Board of Directors.  And look forward to building that project.

What can you tell us about the recently acquired properties at La Virginia gold/silver district in Sonora Mark?

La Virginia is a high grade mineralised system.  It’s very similar to Dolores.  It’s about 100 kilometres north west.   We have quite a bit of surface sampling that we’ve completed on the property, numbers up to 20 gram per tonne over mineable width.  It’s never been drilled.  We spent about two years consolidating the district.  We have a large claim position now and we had to negotiate an option agreement to acquire an internal claim from a Mexican prospector and that took us a year and a half of negotiations.  We completed that this Fall in November. 

We’re now in the process of Permitting and we hope to be drilling at La Virginia in March or late March, early April.  Once we get our Permits and our roads built to our drill targets.  So once those roads are built and the drill path we’ll start drilling at La Virginia.

In November 2009 you described Minefinders as an outstanding value opportunity.  Is this still the case in January 2010?

It is. We’re still not trading at a comparable premium to our peer group, similar sized producers both in Mexico and outside of Mexico.  We’re trading  at a discount to our NAV .  We’re trading at about .9 to one times our NAV.  The average of our peer group is 1.4 to 1.7 times their nav.  Most of those have smaller resources and reserves.  They’re a little farther along. They’ve been in production may be a year to two years longer than we have.  The market has accepted them as producers and we’re still looked at as a development company because we’ve only been in production for a year.  So we hope that that value starts to show up in our share price, which it should.  And with only 65 million shares out, we have a lot of leverage.

So we’re still a valuable opportunity because we’re not fully valued. We’ve traded at may be 100 to 120 dollars an ounce  in the ground.  Our peer group trades at about $300 an ounce.  So we should see that valuation show up on our share price here in the next quarter or two.

What is Minefinders financial situation Mark?

We’re financially strong. We did a financing last year to raise some additional capital.  We had a $50 million revolving line of credit  and it had been fully drawn down in 2009.  We also paid that off in 2009 so by December of 2009 we paid back our revolving line of credit which was $50 million.  And we have a convertible debt that’s outstanding but that doesn’t come due until the end of 2011 and it would convert into shares anyway so it’s not…it’s just some interest payments on it.

I don’t have the financials for year end for 2009.  We haven’t put those out yet but we’re in a strong financial position with cash on hand.  And we’re generating a very strong revenue stream this year selling gold and silver.  At these numbers we should generate 150 to 200 million dollars of revenue in 2010.

What can investors expect from Minefinders over the next 12 to 18 months Mark?

Several things. We hope to get a go ahead by our Board Directors on building the La Bolsa mine which will be a fairly fast track operation.  A smaller mine, five year mine life, but it should throw up some very nice cash flows especially at these prices and with a very low capex.

Also a go ahead for the mill addition at Dolores. So we should have news coming out on that mill addition and the impact on our economics and financial value for the project by adding the mill.  Drill results from all the properties. We’re drilling at La Bolsa and Dolores right now.  We’ll be drilling at La Virginia.  We’ve just consolidated our Tepehuaje  claim group, which is another property we’ve spent the last couple of years trying to get all the land tied up.  And we should be drilling that later this year as well.

So we’re very excited about the projects we have in hand right now and the work we’re doing on them.  And we are looking at acquisitions and hope to make a substantial acquisition to add to the company over the next 12 to 18 months.

What are your thoughts about operating in Mexico Mark?

We’ve been in Mexico 15 years.  It’s been a very pro-mining country to work in.  It’ has  great exploration opportunities.  It’s an undeveloped country for exploration.  It hasn’t had a lot of modern exploration because the Mining Law wasn’t changed until 1992.  Prior to that, there was no real exploration.

It’s been a very successful country to work in, not just for us but for other companies.  There’s been a lot of new mines discovered and built in Mexico over the last ten years and we’re one of those.  And we have some very good property.  So the country has a long mining history, it’s great geology, great targets and mining  friendly government. So we think it’s a good place to be focused on and we plan to continue working in Mexico for the foreseeable future.

We have very good community relations.  We have worked closely with the community over a long time to develop a good relationship which can be an issue in Mexico.  It can be difficult to deal with several hundred people to solidify an agreement for surface rights.

We did that. We successfully relocated a village of about 200 people to a new village that we built.  And we have very strong community relations.  We employ most of the people at that village and we’re very well entrenched in the area.  We’ve been in this one area 15 years so we know everybody personally and most of the people out there now work for us.  So we have strong community relations.

It took us a long time to develop the close relationship, but it is possible in Mexico,if you provide good jobs, good opportunities and you treat everybody fairly.

What does the Minefinders team bring to the company?

They’ve a lot of experience, several hundred years, at least, just at the Board of Directors level.  Everybody in Minefinders, except for a few, are mining people.  We’re all professional engineers and geologists.  I, myself, have a Masters Degree in Geology and 34 years as a registered professional geologist.

Our Board of Directors are all technical people except for one who is a lawyer by profession but he was the CEO of a mining company, Echo Bay Mines, so he does have a long history in the mining business.  And the rest are all senior 30 to 40 year experienced engineers and geologists.

And then there is our team in the field, our management and field team, whom most have been with the company 10 to 12 years, and they’re all geologists and engineers.  So we’re very heavily oriented towards the technical side of the business and we’ve all been in this business for our entire careers.

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