The World of Technical Reports Explained (Guest Josh Serfass, Integra Resources)

Karl Woll: 00:00:00

Hello, and welcome to Rock Talk, where we explore the world of mining through casual conversations with industry experts. I'm Karl Woll Senior Account Executive at VRIFY Technology. And in this episode, I'm joined by Josh Serfass, Corporate Development and Investor Relations at Integra Resources and Strategic Advisor at VRIFY. This conversation was originally recorded as a video interview on April 16th, published on YouTube. As there are some visuals that were shared on screen during the interview. I do recommend you watch over on our YouTube channel, if you can.

And I'll put a link to that in the show notes. That said, if you're listening on audio only, you'll still be able to follow along just fine.In this interview, we discussed how Josh broke into the mining industry, which is probably one of the most random stories I've heard for someone breaking into a new career. And then Josh gives us a high level introduction to technical reports. Those are the Pre Economic Assessments, the Feasibility Studies and the like. I wanted to learn a little bit more about these reports and Josh does a great job of taking us through that.

Primarily using Integra Resources as a current example. As this is a brand new podcast. I'd love any feedback you might have. If you have any suggestions for improvements to the show or guests, that would be great to have on. I will link to a feedback form in the show notes, or you can go to rock talk, pod.com. And there is a form on the website. And with that, let's jump into this week's conversation with Josh Serfass.

Karl Woll: 00:01:23

Josh, thanks for joining.

Josh Serfass: 00:01:27

Thanks, Karl. I'm honored to be the second guest, but I feel like I have pretty large shoes to follow because, the first guest Michael Hudson's got quite the project.

Karl Woll: 00:01:35

Yeah. Well, we love Mike, but, I'm sure you'll do a great job as well, Josh. And I introduced you as, Josh from Integra Resources, but, you've also been strategic advisor here at VRIFY for three, four months now.

Josh Serfass: 00:01:48

Yeah

Karl Woll: 00:01:49

I've gotten to know you a little bit. We talk, pretty much every day, but you're based in Denver. I'm based here in Vancouver. So we haven't had a chance to really sit down and, have any beers together yet. So I was super curious because. I've been on a few client calls with you and sometimes they're geologists and just seems like you can hang in any conversation no matter how technical it gets, or how into the weeds it gets.

But I know you don't have a background in geology yourself. So super curious to, your path into into the mining industry. And what was your sort of early career up into this point with with Integra and VRIFY

Josh Serfass: 00:02:21

And there's very kind words. I like to pretend I can hang. You know, I think it's part of the job in IR is you have to be relatively dangerous when it comes to specifically your projects, geology and engineering, metallurgy. They jokingly called me the corporate metallurgist for a long time at Integra because I knew just enough to like, have a conversation but if you went into the weeds, I'd be, caught as a fraud very quickly. But yes, my, essentially my background is pretty unusual in terms of getting into mining. I didn't study geology. I didn't study engineering or any of the sort of traditional technical ways folks get into the mining industry. And in fact, I didn't actually even start knowing what junior mining was until I moved to Canada in 2011. I grew up in the East coast of the U. S. I was living in New York. was trying to find out what I wanted to do in life was sort of jumping around from different jobs and businesses, trying to get a sense of like where I felt I fit and at the time my wife and I were both looking at leaving New York and trying, trying something new and she actually got recruited for a job in Vancouver.

So we moved up there. As part of that, I had to quit my job because they did not have a U.S. presence. And so I was stuck in Vancouver, with not a lot to do, but obviously looking for jobs and talking to recruiters. And one way I filled my spare time was I started baking quite a bit. And there's a few people I've told the story, and I think they don't always believe me.

But I was making a lot of cookies and bread and stuff because it was a great way, like in between sending out resumes and talking to folks, to pass time. And ironically I had some new neighbors moving in next door. I brought them some cookies, sort of said like, hey, welcome to the neighborhood.

We started chatting, come to find out both them worked in the junior mining space, but on the GIS side, and they asked what I did and you know, could I, had I done sales? Could I do something along those lines? And I said, sure. Went through a couple of interviews and got hired.

That, that job only lasted about a year cause we'd, we ran out of money. And in in a very Vancouver meet cute, if you will, I met Steve on a hike up the chief and we started talking, he was working at a Steve Dijon, who's the CEO of VRIFY should, should specify. And at the time he was working for a different junior mining company and I was obviously still working for mine.

rted working with him back in: 2012

Karl Woll: 00:04:50

Yeah, that is very much 1 of the most Vancouver stories I've ever heard.

ouver from New York and after: 2011

Josh Serfass: 00:05:26

You know, it's one of those where you kind of when you live and breathe it. And I think I found mining super fascinating. It's not something I'd studied or even thought much of before 2011. And so what I find really appealing about it is it's this mix of sort of, you know, science and engineering and all of these things that have to come together.

And then you have to, as like an IR person or as a corporate communications person, as a corporate development person, you have to take these various disciplines, geology, engineering, metallurgy, and weave them into a story that anyone can understand. And I think in sort of learning the aspect of kind of weaving those stories together, I just became very interested in each sort of the big disciplines that make up mining. Uh, and so you just sort of glean information and like, I've never been afraid to just sort of reach out and talk to our technical folks. I've always been fortunate to work with technical folks that have been very open to just talking with, you know, the, the measly IR person. And in doing that, you just sort of like pull information and they help you sort of get the basic recipes for why you have mineralization here.

And then you kind of talk to the engineers on, you know, the simple aspects of how this is going to work, even though it's not simple to obviously remove gold, for example, from a rock, like there's lots of steps, but you just sort of glean that information. And then I think for me, one of the biggest things, I've always worked on sort of one project at a time. And so I can really dig into that project. But in doing that, you're sort of learning a bit about the geology and engineering and other things. And so it's just kind of piecing those together and just having a general interest in it, I think, allows you to kind of build that knowledge up.

Karl Woll: 00:07:10

Yeah. And that is one thing I've noticed in this industry, like even just going to conferences and talking to someone at their booth, asking them about some, some core, whatever it may be, like people do seem pretty, willing to give you some of their time and their knowledge and do that education. So I think that's a great point.

Like, sometimes you just got to go out there and and have a curious mindset and ask some questions and strike up some conversations. And, um, I guess, in your case, just piece it together over a decade.

Josh Serfass: 00:07:29

We all love talking about our projects. That's the end of the day. It's like, that's sort of what we do right.

Karl Woll: 00:07:34

And then, I didn't mention at the top of our conversation, but with, with Rock Talk with this interview series, I'm starting out here, the idea is it's supposed to be sort of a casual chat about the mining industry with an expert from, from within the industry, but without the sort of overly technical discussion and use of jargon. So with that in mind, what I wanted to talk about today, just very briefly was, the technical reports that all the junior exploration companies put out, so I'm talking about your P.E.A. your P.F.S. and your F.S. which are jargony terms in themselves. So your Preliminary Economic Assessment. Pre Feasibility Study and Feasibility Study, if I have that correct.

Would you be able to walk us through, in very broad strokes, what are these reports?

Why are they important? And why are the major like milestones for a junior exploration company?

Josh Serfass: 00:08:21

Yeah. And I'll certainly do it with the IR hat on, uh, investor relations hat on. Uh, cause you know, it starts sort of with no reports and you know, some good drill holes and the hopes that you're got an ore body or at least a deposit there. And I say, I'll take it from the investor relations perspective cause it also is, uh, it is a time where companies have to constantly pivot because each report means you're sort of appealing to a different, usually you're appealing to a different investor base. you might be appealing to corporates for the first time. Um, but it does mean that you change your message a little bit as you go through this.

So, you know, once you have the resource estimate out there, you've now shown, okay, there's a deposit here. And once you've got that, then the junior minor, the developer starts thinking about economics because just having a deposit is great, but a deposit is only as good as the, the ability to remove the resource that the metal from the rock when you process it. So typically you start with a preliminary economic assessment or PEA. That typically is, you know, it's the start. It's very basic. You're showing that the projects economic. You're doing some, metallurgy that shows you can actually remove the metal from the rock. You're not necessarily having advanced drawings of plants or heap leach pads, but you're more or less showing in the future this is the processing that we're going to do. So whether it's going to be through a mill, through a flotation plant, through a heap leach with a PEA, the big distinction is that you can actually bring in inferred resources. So, you know, I kind of briefly mentioned that there's different levels of confidence in resource categories.

So inferred, measured, and indicated. And then you go into reserves, proven, and probable, which are the most confident. So in a PEA, you can actually include inferred resources. Um, so you're including a lot more resources as you go to from a PEA to a Pre Feasibility Study. You're no longer allowed to include inferred resources.

So you have to include M and I only so slightly higher confidence level in your resource and at the Pre Feasibility level study. You're going to start having a bit more advanced engineering. You'll have more detailed drawings on pads, mills, roads, and you'll get a lot more real costing going in there.

And so the study is just a lot more heavy from an engineering perspective, from a costing perspective, from a financial modeling perspective than the PEA. The PEA is really, okay, this is, we believe this makes money. You have parameters. The PFS is the next level where you're adding a lot more engineering, a lot more detailed work. And then from there you go to a feasibility level study. But when you're at the feasibility study level, you're now at the point where you've done additional engineering on top of that, and you're using that document most likely to secure project finance to build the mine off of, so they take typically there's, it takes multiple years to go through all of those. but the idea is that it's just a bit more, just like you have a more advanced or more higher confident resource level from inferred to proven probable. Same thing with the economic studies that are just more detailed.

They're more advanced that are higher level confidence in that this will actually be what you build.

I'm sharing my screen here and, again, this is interesting, and we don't spend too much time in it, but Integra started with a PFS that had a large mill and a large heap leach scenario. We wanted to show people both of those in an interactive presentation. We ended up pivoting away from the mill later after this, just dealing with inflation and things like that, which is common in the mining space.

hat we put out in February of: 2022

to: 8000

And so taking people through the process of actually producing an ounce of gold, whether it yeah. It's a production story. You're actually producing or in this case, we're showing how we will do it in the future. So it started, you know, with the picture of Florida Mountain, which is where we started mining.

And then you jump into the 3D world. And so you're getting a sense of all of these plants and drawings and renderings that we're pulling directly from our engineering firms. You know, so you've got your heap leach pad is there. These are development rock storage facilities. And then you can see in the middle, is the actually the processing system. And so again, just wanted to show people step by step what happens once you bring that rock down to the processing facility. So you've got your primary crusher, course ore storage. And then again, just essentially just continues walking people through the process of crushing this material down. And either in the case of the, the February PFS running it through a mill or putting it onto the, onto the heap leach pad. And then with any of these studies, you obviously are always showing, the upside as well because, you know, this is a snapshot in time. and you want to show, yes, this is the study we put out, but there's a lot more at this project.

That's exciting. And, you know, in the case of, in the case of DeLamar, we really wanted to show, there was a lot of non oxide material that was outside of the PFS pits. So you can see here, this is actually the pit that was used in the PFS that included both the oxide and non oxide. And this whole chunk of non oxide, I think George affectionately calls it sort of the, the blue whale, is outside of that resource.

And so we can, there's a...

Karl Woll: 00:14:19

Why is important? They like the non-oxide versus the oxide.

Josh Serfass: 00:14:24

So oxide and non oxide are processed differently. And so when Integra decided to pivot away from the mill and focus on the heap leach only, it's because that all that red that you see in this can go on the heap leach pad and just building a heap leach is lower cost.

It's a bit simpler mining. in this case we were showing the sulfide upside potential because they're non oxide potential because we did have a mill. but this is generally the upside of the project throughout is that, our feasibility study that we're working on. It's just going to come out this year will just include the oxide.

But in the future, if we were a major mining company, we would for sure permit the mill as well and add all the non oxide, there's a lot of non oxide here at the project that that could be included.

And so at the end of every PEA and PFS and FS, there's an opportunity section where you talk about future opportunities on the project. And for us, this was a big future opportunity, which was to bring in these non oxide components, which had been excluded from, from the PFS in February.

Karl Woll: 00:15:26

Makes sense. And then, sorry, you said, or later this year, you're planning to put out the feasibility study for the company.

Josh Serfass: 00:15:32

Yeah, so we're working on a feasibility study, um, which again will focus on heap leech that red. And that's kind of do out and sort of in the second half of the year towards the end of the year.

Karl Woll: 00:15:40

Okay, great. Thanks for taking through that. Appreciate the background. Actually learned quite a bit there. And final question to leave you on Josh. Any key advice you have for a stakeholder coming to the mining industry that sort of wants learn more? Dig in a little bit and sort of maybe self teach or, dig their heels into the industry.

Josh Serfass: 00:15:56

It's a great question. It's a It's a fun industry to learn because there's so much about it that's different than your average, you know, investment vehicle. Like, you know, you sort of want to get a sense of engineering and geology and marketing, which is a huge part of it. so I think, you know, just looking at sources that are out there, I find. X or, you know, what's formerly Twitter is, is a great source.

I also think Mining 101, which is a book you can buy is a great introduction to sort of the process of exploration, development, and then eventually mining. Okay. I think reading as much as you can and connecting with people that are willing to take the time to talk to you about it is certainly the best way to, to get a sense of, of the space and how you invest in it and how you, you engage with it.

Karl Woll: 00:16:37

Awesome. Well, thanks for your time today, Josh. And now that I know you're such a baker, I expect you to come to Vancouver

Josh Serfass: 00:16:43

I haven't done much of cookies or something next time you come up here. no problem for you. No problem, Karl. All right.

All right. Thank You'all. Have a good one.

Monica: 00:16:52

The information presented should not be considered investment advice and is provided for educational purposes only. Please consult a qualified financial advisor before making any investment decisions.

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