Interview With Patricio Varas, Chairman of Boreal Metals Corp. (1/3)

Welcome to the first part of this three part dialogue between Peter Bell and Patricio Varas, Chairman of Boreal Metals Corp. In this first part, Patricio speaks of his history in the business and how it has shaped his expertise moving forward with Boreal Metals. Boreal Metals is also featured in our latest contest; The Cobalt Boom! Join now for your chance to win $2,500 in prizes.
Boreal Metals Corp. (TSXV:BMX | FWB:O3E) is a mineral exploration company focused on the discovery of Zinc, Copper, Silver, Gold, Cobalt and Nickel deposits in exceptional, historical mining project areas spanning Sweden and Norway. The Company aims to discover new economic mineral deposits in known mining districts that have seen little or no modern exploration techniques. The Company is led by an experienced management and technical teams, with successful track records in mineral discovery, mining development and financing.

Peter Bell: Patricio, you’ve had some big wins in the mining industry. I wonder, how did you get involved with juniors and why are you still involved today?
Patricio Varas: Thanks, Peter. As you may know, I have basically 30 years of experience in the mining sector. I worked with Rio Tinto in some of my earlier years, which was a mixed experience. When you work for major companies, you acquire tremendous experience as a geologist but you eventually recognize that some of the junior companies you are working with under joint venture agreements do extremely well financially because they have more exposure to the markets through their stock positions, stock options, and such.
We had significant success at Rio Tinto when I was there. I was part of the team that discovered the Diavik diamond mine — I managed the exploration program for Rio Tinto. That discovery was a huge success and the mine is still in production but, of course, we didn’t make a lot of money as employees of the company compared with some of the people who were working for Aber and other juniors involved in the discovery. So, I started working with some of the junior companies.
Initially, I worked as a project manager or helped evaluate and acquire projects for companies like Canarc Resource and Consolidated Magna, which were around over 20 years ago now. I looked at projects for Nevsun, Far West, and a number of other companies, as well. Through all that, I ended up getting a lot of experience traveling around the world looking at everything from VMS, IOCG, epithermal gold, porphyries CRDs, BHT’s and so on. I’ve been very lucky in acquiring a wide range of mineral exploration experiences.
Eventually, I ended up working with Far West Mining in Sweden. I had worked with that company in Canada, Australia and Chile before that, and we had a lot of success in Chile where we found a deposit called Santo Domingo Sur when I was the manager and the Vice President of Exploration. We had a lot of success there again, as that company was eventually acquired by Capstone Mining for about $750 million, which is a fair-sized transaction in the mining business. It was a win for the shareholders.
As I worked with all these companies I was able to get more of a stock position and stock options along the way, so I did very well. Later on, I worked with Western Potash and, once again, we had some fantastic technical results. We came up with a nice discovery in the Milestone Deposit, which led to a change of control transaction of the company being bought by a Chinese investment company under much better conditions in the potash market. Since then, potash price has collapsed and I don’t know where we would be with that deposit today.
I mentioned that I had worked a little bit in Sweden before with some drilling programs by Far West under a global strategic alliance with BHP Billiton that provided us with access to their land in Sweden, Australia, Canada, and Chile. We drilled many projects, among which one of them was in an area called Norbot, the project was called the Jokkmoc Project. We did some drilling there and had some interesting geological results, but it really left an impression on me of how good it was to work in Sweden and Scandinavia. I was so surprised by how quickly you could permit things there at that time and execute a drill program.
Fast forward to about two years ago when I met with the team at EMX. We had looked at some porphyry projects in Arizona over the years, so I had a willingness to do some work with them, but then in one of those property visits they mentioned that they were generating some projects in Scandinavia that they thought looked pretty interesting. I really like these guys – I liked their strong technical and academic backgrounds, and all the deals they had done with majors in the past. I had a look at their Scandinavian projects about two years ago at PDAC in 2016 and I really liked what I saw.
I don’t know if you remember but, at that time, the mining sector was just starting to come out of a deep sleep where junior companies couldn’t raise much money at all. It was very difficult. We were trying to develop the Milestone project, which had a huge capex of about $3.3 billion. I recognized that everyone, not just smaller companies like ours, would not be able to finance a project of that scale. The major companies were putting these huge projects on standby, like Olympic Dam and others. I looked at all this and thought “What is the trend?”
When we were looking for money to develop Milestone, we had a chance to talk with many institutional investors. We talked to just about everybody out there in mining finance, from the Chinese to the Indians, the Saudis – everybody from Hong Kong, New York, London, Zurich and everywhere else. They all wanted projects that were more advanced, ready to develop, with lower capex, and high IRR’s. After a while, I realized that most of these mega projects wouldill have a hard time meeting those conditions. I don’t care whether it’s iron, copper, coal – these gigantic projects generally don’t have large IRR numbers.
All that led me to think that there must be good opportunities if you can come up with a development project that requires maybe $100-$200 million then you’re much more likely to find financing, particularly if you have high-grade material because the high-grade can insulate you from the markets to some degree.
At that time, we were seeing a bit of a move in the zinc market and that led us to take a closer look at these Scandinavian projects from EMX. They are high-grade – not big, bulk-tonnage deposits – and there is a great history of mining in the area. There are some very significant deposits around our projects, like the one we’re drilling right now called the Gumsberg Project. It’s about thirty kilometers away from the Garpenberg Deposit that Boliden is mining. We’ve talked to some of the people at Boliden and they have a deposit with pretty significant size there. It also makes quite a bit of money for Boliden.
We see many of the same characteristics at our Gumsberg project as they are seeing in their mine at Garpenberg. These are all VMS and replacement style systems that have been metamorphosed, giving rise to high-grade remobilized ore shoots and mineralized structures. In fact, you can see what that looks like in one of our recent news releases. One of those intercepts can yield quite impressive numbers in terms of grade and maybe we’ll talk about that a little bit later.
But first, why did we go to Scandinavia? I think it was a combination of many things. It was a combination of trends in financing projects in the market. It was also due to the fact that we liked zinc, particularly high-grade deposits. And the fact that these projects all have old mine workings, some of which go back to the 1,200’s!

Isn’t that amazing?
Peter Bell: Yeah!
Patricio Varas: Of course, they haven’t been looked at very much recently. I think that geologists haven’t considered them because the consensus is that VMS deposits are usually not very large deposits and because VMS exploration is drilling intensive. That may be true, but I think we’re coming onto a cycle where things like zinc and silver are going to be good metals to invest in.
That’s the long and the short of why we became involved. There was an evolution from looking at big, low-grade deposits to smaller things that can make significant amounts of money in the short term. These smaller mines may not have such a long mine life, but they can make a lot of money in a short period of time.
Peter Bell: And it’s realistic to get them into production! They’re not stranded projects facing billion-dollar capex.
Patricio Varas: Exactly, you know, if you’re mining high-grade, and you’re not mining huge bulk deposits, well of course it’s gonna be much cheaper, your capex is gonna be significantly lower. And your return is gonna be quicker, too because of the high-grade.
Peter Bell: Very interesting, Patricio. Thank you for introducing me to things here. I look forward to talking with you again.
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Boreal Metals Corp. is a paid marketing client of Stockpools Inc. and one or more of the owners does own shares in Boreal Metals Corp.

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