Tag Archives: Andrew Kessel

Cerro de Pasco Resources: A new generation breathes life into an old mine with benefits that reach far and wide

Cerro de Pasco is a centuries-old community nestled high in the Andes Mountains of Peru, but after nearly 400 years, a local mine that once brought prosperity must rethink a path forward in alliance with the nearly 50,000 people who now live there.

What began as an underground operation became an open pit at the centre of a growing population of miners and their families. Outdated mining technology resulted in inefficient yields. Tailings and stockpiles grew, and contaminated dust and water crept into surrounding areas.

There’s a huge economic opportunity in the tailings and stockpile at the site, though, not to mention known in-situ resources, 11,000 hectares of concessions, and unexplored areas.

But Cerro de Pasco Resources (CSE:CDPR) wants to do more than make money.

Chief Executive Officer Guy Goulet and Executive Chairman Steven Zadka have a vision that, if everything goes right, will see parts of the population relocate away from certain areas to new locations with clean drinking water, heat in their homes, and well-paying jobs – for the benefit of all stakeholders.

The company bought the mineral rights to the tailings and stockpile in 2012 and in November, inked a deal to acquire the mine itself and all accompanying infrastructure. Public Entrepreneur caught up with Goulet and Zadka as they began transitioning the company into production, initiating a multi-decade plan to revitalize a mine and restore a city.

Tell me about your background in the mining industry and how Cerro de Pasco came to be.

Zadka: In 2011, through my capacity as an investment banker, I came across the opportunity to buy the mineral rights on the tailings and stockpile in Cerro de Pasco and decided to jump on it.

Guy was running a company called Maya Gold & Silver in the early 2010s, and I was one of the bankers. He closed a very difficult client of mine and had incredible energy, so I said, “This guy knows how to do things.” He left that company in 2017 and I reached out.

Goulet: I was working in Morocco, and Steven approached me while I was on my way out, following the restart of a silver mine there.

We teamed up to accelerate the development of the project and list the company on the Canadian Securities Exchange.

I’m also attracted to pro-environmental projects. In 2000, I co-founded H2O Innovation, which is the largest water treatment company in Canada as of today.

What are we looking at here in terms of metals? What’s the game plan on the mining side?

Zadka: I knew that there was silver, lead, and zinc. And I discovered that there was also copper and gold in the tailings. The grades are pretty good, both because they’re old and they come from one of the richest mines in the world.

You’ve got material, metals literally sitting on top of the ground, which is much less expensive than traditional exploration.

We’re buying two subsidiaries that are producing and permitted. For 2019, we estimate their revenues were about $120 million combined.

Permitted capacity is about 20,000 tonnes per day on sulfides and right now, it’s doing 7,000 tonnes a day, and once we bring these tailings into production, the annual revenue starts getting into the $250 million to $300 million range.

With all the resources we have and what we’re acquiring, we have a 17 year mine life. But the reality is that the mine is going to go for much longer because there’s 11,000 hectares of concessions and areas that are largely unexplored.

Goulet: Post-acquisition combined, Cerro de Pasco will be the largest holder of silver in one single site. There is a need to increase the current production capacity up to its permitted level of 20,000 tonnes per day.  We estimate this will require about $35 million of capital. Once production levels are up, cash flow will start to generate rapidly.

We’re in the process of raising the capital required for the first phase, which is $65 million USD.

You’ve called Cerro de Pasco a resource management company. What does that mean?

Zadka: A traditional mining company is only focused on extracting metals from the ground. That’s what mining is; it’s going into the ground, digging up dirt, and putting the waste somewhere.

We call ourselves a resource management company because we plan to do more than just mining. There are some aspects of mining at Cerro, but there’s other aspects involved.

For one, we’re reprocessing the materials that are sitting on top of the ground, which is not theoretically mining. There’s also storage of waste.

If you can return clean water to the environment, you’re managing a resource. If you can turn your waste into building products, or turn pyrite into heat to generate hot water, you’re managing a resource.

With that in mind, how is resource management going to help the people of Cerro de Pasco?

Zadka: We’ve been completely open and transparent with the community and the local government. We’ve told them the truth, and the truth is that this is a mess that can be turned into an opportunity with some reorganization, planning, and support from the local authorities and community.

The government acknowledges that Cerro de Pasco is laden with lead, and they have a plan to relocate sections of the city 30 kilometres away from the mine. What they need in order to do that, amongst other important factors, is support from the most important economic driver in town. That’s us.

Peru has a program called “Obras por Impuestos,” or taxes for works, that enables a company to use taxes generated from operations to fund infrastructure projects for the benefit of society. You can fund roads, sewer lines, hospitals, and schools.  One of our main objectives is to do just that.

We also want to take it a step further. None of the cities in the Andes Mountains have heat, and it’s freezing every night. We have so much pyrite, which produces heat on its own, that we can harness to produce hot water and we could pump that hot water through the city.

Goulet: We want to do more water treatment systems and educate the young people to wash their hands before they eat. We want them to play in parks where we’re going to renew the topsoil.

I come from Thetford Mines in Quebec, which was the world capital of asbestos. You know what I was doing as a kid? I was going with my bike and playing in the dumps. In Cerro de Pasco, we want to avoid that.

There is a problem of contamination in Cerro de Pasco, but just as important is the problem of poverty. That mine used to employ 7,000 people.  Some 1,200 work there now in some capacity. In an area that is 4,400 metres high, what else is there to do for work besides mining?

Let’s recall that the problem of contamination is not mainly due to mining activities. The old city is located on a geological natural accident: a massive intrusion of lead, zinc, copper, silver, and gold. A “mine” is what it’s called today! And the population has been living from that operation over the past 400 years.

We want to help solve that problem of poverty and restore prosperity in the community.

The company is listed in North America, but what does your management team look like in Peru?

Zadka: I’m based in New York, and Guy’s based in Canada, but the heart of the management team is in Lima and Cerro de Pasco.

We employ several Spanish speaking expat VPs, who are specialists in different areas like mining, geology, metallurgy, environment, health, and safety.

Everybody that works with us has a very special drive, and I don’t think you find that at other mining companies because this isn’t only about making money. Here, we’re trying to make a difference.

Goulet: We’re going to spend $58 million over the next four years on HSEC (Health, Environmental, Social and Communities). We have a social license, which is essentially a vote of confidence from a key component of the population that agrees with our business plan. That’s an important asset in Peru. We received positive signals from the Minister of Energy and Mines, the local government, and the President himself.

Can an environmental restoration project like this also be profitable?

Zadka: There are multiple benefits to the local population and the environment, but at the end of the day we believe this is a very compelling investment.

Not surprisingly, investors are cautious about tailings and stockpiles because they tend to be a finite resource. They would not normally offer the opportunity to find something above and beyond expectation that could make the stock go up by 10 times overnight.

However, Cerro de Pasco not only has 170 million tonnes of reserves in the tailings and stockpiles, but also 140 million tonnes of material in the ground and 11,000 hectares of concessions in one of the most prolific mining districts in the world, which has never been properly explored.

We’re talking about almost 1.6 billion ounces of silver equivalent.  That would be the biggest amount of silver in one location on the entire planet. Nobody else has that.

What does the long-term picture look like?

Seventeen years from now, a large portion of the population won’t be living in Cerro de Pasco anymore. They’ll no longer be affected by the hazards of the area.  They’ll have access to clean water and live in proper homes.

There are still two approaches to mining. There are companies that try to skirt ESG-related issues, and there are those that see the opportunity to deal with these issues head on.

We aspire to be a leading example of why you shouldn’t run away from these problems. If you’re innovative and you’re willing to go the extra mile, you’re going to have a much better impact on the outcome. Cerro de Pasco needs that outcome.

This story was featured in the Public Entrepreneur magazine.

Learn more about Cerro de Pasco Resources Inc. at https://pascoresources.com/.

New Wave Esports: Esports investments are the latest thing and this CEO is at the top of his game

Esports in North America is undergoing a metamorphosis. Video games like Fortnite and Overwatch have taken the world by storm, viewership at tournaments is bigger than ever and capital is flowing into the industry from sources that had never considered it before.

New Wave Esports (CSE:NWES) provides the spark for organizations looking for oxygen in the space, whether it’s esports teams, platforms, tournament organizers or technology innovators. If you have a great moneymaking idea in this industry, New Wave Esports is the type of company you turn to for the capital to make your dream a reality.

And it has not taken long for the company’s investments to begin paying off. In July, Lazarus Esports, a competitive team in which New Wave owns a minority stake, took home US$3.5 million at the Fortnite World Cup.

At the helm is Chief Executive Officer Daniel Mitre, who perfectly fits the profile of an esports CEO. He’s fresh-faced – young enough to have spent his whole life growing up around video games, but old enough to remember carrying a roll of quarters to the arcade. With a beard, gauges in his ears and a sleeve of tattoos down each arm, he looks the part.

New Wave Esports went public in October and Public Entrepreneur caught up with Mitre in the midst of a road show to talk about where his company, and the industry as a whole, goes from here.

Tell me about your background in the gaming industry and how New Wave Esports came to be.

I’ve been in gaming for over 17 years. I started off testing video games way back in the early 2000s, where I learned the fundamentals of game development and gained an understanding of what motivates players to keep coming back.

I went on to do community management, and eventually started doing global marketing campaigns. I’ve worked at Electronic Arts (EA), THQ, Sega, Sierra Online, and various music and toy companies.

The past five years I’ve been at EA, and I got to work on the Battlefield franchise, as well as some other competitive titles like FIFA, Madden, NBA Live, and Need for Speed. And esports has always been a common thread in the sustain/retention models of those games, so I’m able to bring my gaming network and my expertise to New Wave Esports.

Then, I met with Trumbull Fisher. He’s a 15-year finance industry expert who’s raised capital across Canada for industries like cannabis and mining, and he brings capital markets experience as New Wave Esports’ president. Between my gaming and his finance, we bring the investment vehicle that is New Wave Esports.

How does your investment process work?

We set up the company in two pillars, the first of which is the acquisition arm. We’re looking for companies that we can fold into the New Wave Esports family. They benefit from the performance of our shares as well as the ancillary services we provide, and their revenues are directly turned into our revenues.

The second pillar is the traditional holdings arm. We’ve built a phenomenal portfolio of minority investments, and as we go forward, I expect to see a shift in our investment approach toward majority stake investment.

We‘re unlike a traditional investment group that just puts in a bunch of money and checks in every quarter. We place investment capital and take stock options in companies, and we sweeten the deal with financial advisory services and new revenue streams.

We facilitate new sponsorships for teams and collaborations with big franchises like Fortnite or Battlefield, as examples, and that’s where teams thrive.

What do you look for when considering a potential investment?

We look at the esports industry in four verticals. The first one is teams and organizations – that’s Lazarus.

We also look at tournament organizers, whether an event is in your local hometown or a big arena – that’s Even Matchup Gaming.

The third is platforms and networks. This is anywhere gamers congregate online, such as online tournaments or an esports gambling platform – that’s PlayLine.

Fourthly, we target technology and tools, which is really the backbone of the industry. A lot of this is behind the scenes, including data insight and business intelligence for esports companies to better know their audience or build a better experience for gamers coming in – that’s Thunderbolt CDG.

We look at the esports industry as an ecosystem. First and foremost, we look for ethical teams that share the same vision as us. Secondly, we ask if these companies are led by executives that have run businesses before, and if not, how we can help. Thirdly, we consider whether these companies are positioned to thrive in a space that may be saturated or may not have any competition.

Speaking of Lazarus, congratulations are in order after the team won $3.5 million at the Fortnite World Cup this summer. What was your involvement there?

Lazarus is owned and operated by an organization called Tiidal. We came in and invested a sizeable chunk into Lazarus in March.

Not many people knew about Lazarus before the Fortnite World Cup, but the tournament came around and Lazarus took second in the duos and fourth in the singles, which led to that $3.5 million revenue into Tiidal. That put Lazarus on the map as one of the highest grossing esports teams in the world.

I was at the airport and I got a call from one of our advisors who said, “Dude, Lazarus just took home $3.5 million! Their athletes are like rock stars now!” I love calls like that.

Why did you decide to take New Wave Esports public?

We see the public vehicle as an opportunity for the esports community as well as other investors and brokers to invest in the industry. We are the first esports investment company to be traded publicly on the Canadian Securities Exchange, and we wear that with a badge of pride.

We went live on October 28, and so far it has been phenomenal. This generates exposure for us and opens up new opportunities worldwide. Not only are we listed on the CSE, but we also just listed on the Frankfurt Stock Exchange in Germany, where we know esports is massive.

How do you see esports evolving in North America?

The esports industry is still very much growing in North America. Asia is 20 years ahead of us, so we look to them as an opportunity to replicate those tried and true models. That’s why we opened up the New Wave Esports Asia department.

But with North America as an economic stronghold, everyone’s looking to see what we do to push esports forward. You’ve got celebrities like Will Smith putting sizeable money into a team called Gen G, and Drake took an ownership stake in gaming group 100 Thieves.

It’s just starting in North America, so the revenue multipliers have yet to hit. So, if you’re at the ground level, you’ll see that coming through.

Look, gaming has been around for 40 years, and it’s always been entertaining to watch someone play who’s better than us. I remember swarms of people at arcades watching someone play Street Fighter, and that’s why Twitch exists today.

As a video game player, how does it feel to be running your own esports company?

If you were going to tell 15-year-old Dan that he would have a career built on video games and ultimately become the CEO of an esports company, he’d be saying, “Get out of here, that’s insane.”

Back in the 90s, video games were still kind of for nerds. You didn’t have Internet connectivity, a mass audience and mobile games that make gaming accessible to everybody.

It’s phenomenal to see gaming grow, and it has created a community that I absolutely identify with. I’ve been able to build a sustainable life from it, and this is an opportunity for me as a CEO to grow the video game industry.

This story was featured in the Public Entrepreneur magazine.

Learn more about New Wave Esports at https://newwaveesports.com/.