Richard Warke has spent over twenty-five years in the global resource sector. An experienced, well-respected leader, he is the founder of the Augusta Group of companies – a conglomerate of public companies and private businesses in the resource industry.
Now, Richard Warke is embarking on his latest venture as founder and Executive Chair of Titan Mining Corporation (TSX: TI), a mining company that produces zinc concentrate at its 100%-owned Empire State Mine (“ESM”) in New York State.
Executive with a Midas Touch
In an industry that is often marked by extreme risk and uncertainty, Richard Warke’s track record as a mining executive has shown an enviably consistent pattern: he has had the foresight to acquire undervalued companies, and the ability to increase their value substantially through a well thought out, disciplined approach. His ability to generate shareholder value in the resource industry has been exceptional.
The Augusta Group was founded by Warke in 2005 and included Ventana Gold Corporation, Augusta Resource Corporation and Arizona Mining Inc. Under his leadership, Ventana Gold acquired the La Bodega gold project in Colombia, and expanded it into one of the larger high-grade deposits in South America. In 2011, a few years after its initial public offering, Ventana Gold was sold for approximately $1.6 billion, reflecting an increase of almost 13,000% in the share price.
In 2006, Augusta Resource acquired the promising Rosemont copper property in Arizona. Warke and his team succeeded in defining a large copper resource at Rosemont, and in 2014, the company was sold for roughly C$666 million, a 3,300% increase in share price for early investors such as Warke.
Arizona Mining, which owned the Hermosa-Taylor zinc-lead-silver project in Arizona, also experienced exploration success and an impressive increase in share price. The project was acquired in 2006 and the large high-grade sulphide deposit, which was discovered at depth in 2014, is now the fifth largest primary zinc deposit in the world, based on contained zinc-equivalent metal. This year, Warke sold Arizona Mining for approximately C$2.1 billion, reflecting a 6,100% increase in share price since his initial investment.
The Augusta Group of companies also included Newcastle Gold which owned the Castle Mountain gold project in California. Newcastle Gold merged into Equinox Gold through a roughly C$200 million deal in 2017, leading to a 700% increase in share price for Warke.
In short, over the past few decades, Warke has founded and led companies, acquired projects, installed high-quality management teams, and sold more than C$4.5 billion worth of mining companies, creating extraordinary shareholder value in the process.
Warke has shown discipline with his investments, purchasing shares when he believes they are undervalued, and holding on to his position until the entire company is sold. This “all-in” approach means that Warke remains aligned with other shareholders, and demonstrates his commitment and confidence that each company in which he invests will yield an attractive return on investment.
What’s Next? – Titan Mining Corporation
Warke believes that his new venture, Titan Mining Corporation, also has the potential for strong returns.
Titan Mining produces zinc concentrate at its 100%-owned Empire State Mine (“ESM”) in St. Lawrence County, New York State. ESM is a suite of seven historic high-grade zinc mines located in a 100-year-old mining district.
Titan Mining now controls more than 80,000 acres of mineral rights in this highly prospective district. Mill commissioning was completed and the first ore hoisted at ESM in late January 2018, and production ramp up is underway.
The team at Titan Mining is focused on discovering and developing additional high-grade low-cost mineral resources, increasing production and extending the mine life at ESM. In April 2018, the company announced updated mineral resources at ESM which reflected more than a doubling of the inferred mineral resources to 5.4 million tons at a grade of 12.5% zinc. Since then, additional mineralized zones have been identified near to the existing mine infrastructure.
For Warke, the growth potential at ESM is just as important as gaining the support of the local community, an approach he has taken for all previous projects.
As Titan recognizes that the discovery, development and production of mineral resources requires broad community support, ESM has been purchasing goods and services from nearby businesses and working to attract employees from the local area. The company has developed a training program to provide prospective local workers with the skills needed to become qualified underground miners at ESM.
Once ramped up to 1,800 tons per day (“tpd”), the Empire State Mine is forecast to produce an annual average of 80 million pounds of payable zinc over an eight-year mine life, at C1 cash costs (1) of US$0.70/lb and all-in sustaining costs (“AISC”) of US$0.79/lb of zinc. With the first concentrate shipped in March 2018, the company expects to achieve commercial production in the second half of the year.
Exploration is taking place concurrently with the ramp up. Prioritization of near-mine targets means that ESM has the potential to increase both production and mine life with relatively low capital expenditure. A study has already commenced on an expansion of production at ESM #4 mine to 3,000 tpd in 2020, and an extension of the estimated mine life beyond the initial eight years. In 2022, the company is targeting further expansion of production to fill the mill capacity of 5,000 tpd.
Moving forward, modernization and innovation are expected to be an integral part of the growth plan at ESM, driving a 20% to 40% increase in productivity, lowering costs and increasing the mine life.
The restart of production in this historic mining district in northern New York State has been driven by attractive economic returns, and Titan Mining is positioned to benefit from elevated zinc prices supported by low inventories.
For Richard Warke, Titan Mining has all the elements of a good investment. When more fully explored, developed and ramped up, the Empire State Mine will likely deliver another win for his consistent record of successful mining ventures. There are many uncertainties in the resource industry, but what sets Warke apart is that he has delivered extraordinary shareholder value on multiple occasions – and he is committed to doing it again with Titan Mining.
(1) C1 cash costs are defined as site-level cash operating costs (mining, processing, G&A, royalties), plus off-site transportation and treatment charges. AISC refers to all-in sustaining costs which are defined as C1 cash costs plus sustaining capital. C1 cash costs and AISC per pound are calculated by dividing the C1 cash costs and AISC, respectively, by the payable metal production expected in the period.
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