Interview: Continental Gold CEO Ari Sussman Says ‘There Is a lot More Gold to Find’ in Colombia

Mining has come under increasing scrutiny over the past year in Colombia, as various communities have voted to ban the practice in their local area.

While this has led to difficulty operating for some industry firms, including AngloGold Ashanti of South Africa, Canadian mining company Continental Gold (TSX: CNL) continues to celebrate milestones in its push toward commercial production at its main holding, the Buriticá gold mine in the central Colombian department of Antioquia.

Photo: “Our current reserves and resources are just a tip of the iceberg of what’s to come,” Ari Sussman, CEO of Continental Gold (center), told Finance Colombia. (Photo credit: Loren Moss)

The Toronto-based company secured some key financing in May 2017, with a $109 million USD investment from Newmont Mining Corporation. It also secured a debt facility of $250 million USD from RK Mine Finance in January 2017.

“Are we fully financed? No,” Ari Sussman, CEO of Continental Gold, told Finance Colombia. “We’re going to need some money in 2019. But we financed the vast majority of what we need.”

Sussman recently sat down with Loren Moss, executive editor of Finance Colombia, to talk about Continental Gold’s financing and the ongoing work the company is doing to meets its goals. Overall, he is optimistic about sticking to the company’s timeline to start production in 2020.

“We’re expecting to pour our first gold bar in the first half of 2020,” Sussman told Finance Colombia. “And from the date of that first pour, we expect commercial production to be reached approximately six months after that.”

Below, Sussman elaborates on these plans, the push to make a new discovery, the ore that is already coming out of the ground in Buriticá, meeting the company’s current needs for funding, and how the firm has been prioritizing its relationship with the local community.

Earthworks are almost complete for the mine infrastructure, including mills, crushers, detoxification, and water treatment plant. (Photo credit: Loren Moss)

Loren Moss: So I’m speaking with Ari Sussman, the CEO of Continental Gold, and Continental Gold is making significant progress at Buriticá gold mine in Colombia. Let’s start by going over what you’ve been able to accomplish this past year. Tell me about your exploration at the mine. You started a 25,000-meter exploration program I believe, last year?

“We’ve set a goal to make a new discovery in this calendar year, and that’s what we are aiming to do.” – Ari Sussman

Ari Sussman: That’s correct, Loren. We actually started with a 25,000-meter program but announced that it has been expanded to up to a 137,000-meter program, which will culminate at the end of this 2018 calendar year. We are hoping we can drill a lot. We are hoping to do many things.

First and foremost, we want to infill — or tighten up — the density of drilling on the two deposits that make up the mineral resources. As you know, we are finding much broader results, potentially for mining, and we want to make sure that we asses those to assure that we have a clear understanding of the mechanics.

But, also, we’ve set a corporate goal to make a new discovery. You know that we are excited about the project — and to think that our current reserves and resources are just a tip of the iceberg of what’s to come. We think there is a lot more gold to find. So, we set a goal — it’s a hard goal to accomplish — but we’ve set a goal to make a new discovery in this calendar year, and that’s what we are aiming to do with the drill.

Test bores in the broad mineralized zones (BMZs) at Continental Gold’s Buriticá mine often show large amounts of visible gold. “We’re expecting to pour our first gold bar on the first half of 2020 and from the date of that first pour, we expect commercial production to be reached approximately six months after that,” said Ari Sussman, head of Continental Gold. (Photo credit: Loren Moss)

Loren Moss: Yes, the ore examples that you showed me were extremely high quality. I was very impressed. What kinds of yields and grades are you expecting out of your BMZ, or broad mineralized zone, to use some of your industry lingo?

Ari Sussman: Yeah, so broad mineralized zones, so your readers are clear, will be defined as everywhere where we aggregate the series of veins together into one zone where there is mineralization existing between those known veins. We’re finding new mineralization in between.

Look, we’ve only drilled one of six broad mineralized zone targets to date. And, as it stands right now, the average grade of the broad mineralized zones that we’ve been drilling is about 10 grams per ton of gold. You might say, “Well, 10 grams per ton of gold — that’s just slightly higher than the mineral reserve grade of about 8.5 grams per ton.”

That’s true. However, the width of the zone is more than 10 times greater. So when you multiply your average grade times your width, you’re looking at a much more robust amount of rock — a lot more rock that’s mineralized at a high grade — than we were initially contemplating on the original mine plan.

Some bores are showing gold reserves exceeding 21 grams per ton of ore. (Photo credit: Loren Moss)

Loren Moss: It’s amazing the amount of gold here in the Antioquia area, here in Colombia. I was at the Secretaría de Minas, the Secretary of Mines for Antioquia, earlier this week and looking at some of the maps they showed me. It’s obviously a rich area. Let’s talk about the progress on the site development. How is the site infrastructure and construction moving along?

“There’s over 1,000 people now working either as employees for the company or as contractors for the company.” – Ari Sussman

Ari Sussman: We’re moving along at a very good pace. It’s going well. We are really at, I guess, what you’d call the exciting portion of the construction of the mine. We’re about to pour concrete for the first time, so major ore works are underway. There are all kinds of trucks in the valley where we are going to build the mill, and we are looking forward to that concrete pour this month.

You know, there’s a lot of people now. It’s a lot to manage as you would expect. There’s over 1,000 people now working either as employees for the company or as contractors for the company. But we’re making great progress.

In addition to the surface construction, we are also developing on three separate headings underground. So we are tunneling on three different locations underground, and we’re making positive progress on that regard in terms of advance rate per day. So we’re roughly on schedule, which is good. As you know, we’re expecting to pour our first gold bar in the first half of 2020 and from the date of that first pour, we expect commercial production to be reached approximately six months after that.

Mauricio Castañeda of Continental Gold shows off high-grade ore deposits. (Photo credit: Loren Moss)

Loren Moss: This past year also has been very eventful for Continental Gold financially. You’ve secured a very significant line of credit and received two Certificate Equity Investments. Can you tell me about that? How does that position Continental Gold for completing the mine build out and going into full production in 2020?

Ari Sussman: Well, we finance a large portion of what we are going to need for the mine. We took a credit facility from a group called Red Kite Mine Finance out of London, who are specialists on lending to the mining industry. They offer very flexible and fair terms for companies going through a construction period as far as debt.

READ MORE: Projects in Colombia Face Uncertainty as Another Town Votes Against Mining

And then we were fortunate enough to achieve a strategic investment from Newmont Mining, which is the largest gold company in the world. So, they bought 19.9% of the equity of our company for $110 million USD, about one year ago.

So, look, are we fully financed? No. We’re going to need some money in 2019. But we financed the vast majority of what we need, and we expect the working capital shortfall that we will have heading closer to production to be very manageable to say the least.

One of several primary tunnel entrances — and some big machinery — at Continental Gold’s Buriticá mine in Antioquia, Colombia. (Photo credit: Loren Moss)

Loren Moss: One of the things that I have been impressed by, on my visits — to not just the mine but the surrounding community — is that Continental Gold has put a lot of effort on sustainability and social infrastructure. The area where the mine is located has traditionally seen a lot of artisan, and even illegal mining. Tell me about your outreach efforts and how you are working to coexist with this small-scale and subsistence miners in the areas.

Ari Sussman: So, two things: One — sustainability efforts. I think, sustaining an area and ensuring that you have alignment of the local population is arguably more challenging than constructing a mine, especially in this day and age. And it comes now to ensuring that there’s education, education, education. And then that is followed by benefits to the community.

So, we spend almost on the model of one dollar in the ground deserves a high percentage into the social infrastructure of the area. And that’s worked very well for us.

“We’re expecting to pour our first gold bar in the first half of 2020, and from the date of that first pour, we expect commercial production to be reached approximately six months after that.” – Ari Sussman

You are correct, you know, we have a very high grade project and with that came a gold rush — an illegal mining gold rush, which we had to face and go through. Thankfully, first off, we’re thankful for the support that the government of Colombia has shown for the project in cleaning up the area so to speak — or eradicating the illegal mining in the area.

But with that came an innovative program that we put in place, with the support of the government, to formalize local small-scale miners. So in order to be formalized you need to be from the municipalities that are impacted by the project, and right now we have about 200 people working as small-scale formalized miners, and we expect that number to grow to over 300 as the program ramps up over the next 12 months.

It’s an excellent program for everybody involved. First and foremost, the individuals who were mining without a permanent title, now are getting trained on how to mine properly and safely and how to take care of the environment. And they also are now living within the law. They pay taxes. We buy their ore from them — and that eliminates the need to sell ore to more-challenged individuals that buy ore. We buy their ore from them, we pay a fair price, and everybody wins.

And the hope is that some — or all, maybe all, one day — of these small-scale miners will ultimately become employees of our company as they learn the methods of mining and as they get more comfortable operating within the law versus outside of it.

Colombia’s stunning central Andean mountain range, or cordillera, is home to mining projects like Buriticá and the nation’s second largest city, Medellín. (Photo credit: Loren Moss)

Loren Moss: Yeah, that certainly would make it not just safer but probably more profitable for them. They get the healthcare benefits and would be less prone to injury or to poisoning — a lot of the illegal mining uses mercury and things like that. That sounds like a win/win all the way around.

Speaking of training and the people, Colombia has something of a national community college program called SENA (Servicio Nacional de Aprendizaje). I saw something at your mine — something I didn’t expect to see — that really impressed me and that was that there were several women miners — not just on the surface but full-fledge miners working underground. Colombia is a very traditional country and mining is very much a male-dominated industry, especially once you go underground. How did that come to be and tell me more broadly about your collaboration with SENA and the local Buriticá community?

“Are we fully financed? No. We’re going to need some money in 2019. But we financed the vast majority of what we need.” – Ari Sussman

Ari Sussman: Well part of our sustainability strategy, with education, is to employee people right? And the best employees you can have are people that are invested in the area. So we did an alliance with SENA — even ahead of getting our environmental permit — which gave us permission to start the construction. We put this alliance in place and SENA agreed to open up a job-training facility right in the community of Buriticá.

And incredibly, to your point that Colombia is a traditional country, it was only recently that it became legal under law for women to mine underground. So our timing happened to be good because the law had just changed where anybody could become a miner underground, and we opened this school where anybody could register. You had to be a high-school graduate to register to go through the SENA program, which ultimately earned you a degree in mining.

READ MORE: Breaking Down Recent Developments in Colombian Mining Sector

Amazingly, we kind of had two groups in the first set of classes — you were split up — and you chose that you want to work on surface-related trades to mining or did you want to work underground. And to our surprise, the vast majority of the applicants for the underground portion were women. Right? So maybe it’s a traditional country but I think that the women haven’t been given enough of a voice, and I think giving them a voice and an opportunity has shown where Colombia can go.

In fact I’m happy to say that the next program just launched recently. So another 60 students are starting a class where they’ll be learning trades related to operating the mining plant itself. That just kicked off — there was a big event in Buriticá at the outside community center, which was very good.