[0:05]Hello, and welcome to Kitco Mining's Digging Deep with me, Paul Harris, here in person at the 2026 Prospectors and Developers Association Conference in Toronto, in Canada. Joining me today is David Earthley, editor of Junior Mining Junky. David, welcome back to Kitco. Thanks. Always a pleasure, Paul. Today is Tuesday the 2nd of March, and the miners and the gold price are getting a punch in the ghouls today as we start today. Is this the PDAC curse or is there something else going on, David? PDAC curse right on cue. Yeah, well, you know, it's with yesterday's lackluster reaction to the goings on in in in the Middle East, yeah, it was kind of expected, I would say. Um, we had a gold price that was up over $100 yesterday, I think, and the miners were down. Um, the miners were down quite a bit earlier, but uh weakness was bought yesterday, but today they're down quite a bit more. It was the gold price I I think tested 5,000 this morning right before we started speaking here and the and the silver price is uh trying to hold $80 an ounce. What's that the the the fall in the the miners? Did you see that across the spectrum, you know, um quite expect to see the precious metals miners down, but what about the base metals miners, the critical minerals miners, you know, the Trump administration has made a big deal about increasing inventories of critical minerals and now it's shifting those inventories to to Iran? Right, yeah, I mean, I've I've just, you know, been so busy here at PDAC. I really I I just glance at my my screen every once in a while. I haven't seen much, but, you know, these miners have had such incredible moves and they're extremely overbought, but I'm on on the other hand, there's a lot of money on the sidelines waiting to get in because it's still underinvested. Okay. Well, let's talk about some of the key news items that we've seen over the past couple of days. The main one is Hudbay Minerals announcing it's going to acquire Arizona copper developer, Arizona Sonoran Copper in a 1.5 billion dollar U.S. transaction at a 30% premium. The all stock transaction will see shareholders receive 0.242 of a Hudbay share at an implied valuation of $9.35 Canadian. For this, Hudbay will obtain the Cactus Copper Development project that will seek to produce 99,000 tons per year of copper cathodes for 22 years in Arizona. Hudbay says, it gives the company a pathway to grow its annual copper production from about 125,000 tons per year to more than 350,000 tons per year. Hudbay, of course, possible synergies with its Copper World Development project in Arizona. Let's start here, David, this seems to be a good win for Arizona Sonoran. Yes, and for myself and my subscribers. I mean, we've been in Arizona Sonoran since I I think, uh, late 2022.
[2:45]Um, the the stock is is one of the only stocks that's not down today. I think, but, uh, you know, it's, uh, an incredible win for, uh, uh, Arizona Sonoran shareholders. Um, it's it's a decent premium, you know, um, and, uh, it's it's as far as Hudbay is concerned, it's it's good for for that part of Arizona where they're trying to tie up that whole district. They got the Copper World project, I think, which is a $1.9 billion capex project, and this Cactus project is a billion, so they're going to have to spend $3 billion building both of these projects. There's some good synergies there because Copperworld will uh, that will produce sulfuric acid which uh, cactus will need to help with the leaching. Right. Exactly. Yeah, so it's it's good, but, you know, I'm holding out hope that maybe uh Robert Friedland is is going to make a bid, you know, from from the experts that I I've spoken with at the show, they think it's it's it's kind of a pipe dream, but I think I'm going to hold on to my shares for a little while longer because he's got that Santa Cruz project right next door. And it literally is right next door. There's a road. On one side of the road, you got Cactus, on the other, you got Santa Cruz. We missed out on it, so it's not there. Exactly. Now, um, here's a question. Well, will people, will Arizona Sonoran shareholders be happy taking Hudbay stock? Oh, absolutely. I I I think so, yes. I mean, it's it it it's a really good marriage. Okay. Um, the US critical minerals narrative is very, very strong. Copper cathode is a key part of that, and obviously Cactus is going to be producing copper cathode. So, uh, for Hudbay, it seems they're very much in the right ball park at the right time. Right. Absolutely. Yeah. I mean, uh, Glencore also they're they're they're, you know, making noises about uh uh M and A and and grabbing more copper as well. So, uh, okay. Well, Glencore has been active in M and A this week, but on the, uh, let's say the receiving side, as Discovery Silver said, it's going to buy Glencore's Kid operations in Timmins, Ontario, that include the Kid Creek Copper Zinc and Silver Mine for initial $10 million in stock.
[5:01]Offtake arrangements with Glencore and a 1% NSR. There's also deferred payment of up to $75 million upon Discovery Silver receiving received of permit and approvals to be able to deposit gold tailings in the Kid Tailings manage facility. Discovery said this acquisition supports its vision to more than double gold production in Timmins to over 500,000 ounces per year. Um, it became a gold producer in the district. Well, this year as it bought the nearby or sorry, in 2025, when it bought the Porcupine mine from Newmont. Uh David, this seems to be another key transaction for Discovery Silver, uh, and obviously increasing its Timmins footprint. Right, and for James shareholders, you're you're, I mean, uh, uh and JM members, it's you keep bringing up the companies that I own. I'm telling I'm having to give away my my stocks here, Paul, but, uh, yeah, it's it's, uh, Tony Mccooch has done an incredible job there. I mean, we've been in the stock since 2020. It's been a big winner for us. Um, this is a fantastic deal. It's an all-share deal. I think it's the total is only 85 million, and it's only 10 million in shares up front, but the important thing is it doubles their land package in one of the in in one of the best gold camps in the world in the Timmins gold camp. And it also, you know, it it it's going to eventually increase their production and increase their their their their tailings facility and there there's a Met lab there. So, this is a fantastic, a fantastic opportunity. So now they don't have to build this. It it's right there. So, um, yeah, I mean, Tony Mccooch does it again. I mean, he he bought Porcupine for $25 an ounce in the ground and the stock has gone up, I think, 12 times since that deal. So this is I think this is another big win that down the road, it it's going to pay dividends for them. I think Discovery Silver stocks up a what? 7 or 800% year on year. Yeah, it's yeah, it's it's been done really well for us. And it really highlights the the the expertise and the long part of their career both for Tony and his team that they've spent in this Tim means they know the area, they know the assets and obviously he's got his eyes on things and looking to expand things there. Uh in addition to the exploration potential that you mentioned, David, there's process facilities and the Tailing storage aspect. Uh, key things that don't need to be built and or permitted. Great point. Absolutely. And uh, Abra's been getting a lot more love lately too because of the unfortunate situation it it uh that's happened in in Vizla in Mexico. was that was, you know, that that Penuco project is in a class by itself, just a world class project and now, I think, um, Abra's project is now a cut above it because uh of of the situation that's happened in in in in Sinaloa. So, you see investors perhaps cycling out of Vizla and or Mexico into into Abra. Yeah, absolutely. Yeah, yeah, unfortunately, because it's, you know, they they've done such a fantastic job there proving up that project. It's a huge district that that they've only scratched the surface there and it's just an unfortunate situation what's happened there. Okay. Abra Silva, their shares are up uh again 500, maybe a bit more percent year on year. So congratulations to John on the team there. Uh, sticking with uh let's let's close with another sort of potential acquisition, or an acquisition in waiting. Elemental Royalty upsizing its revolving credit facility to $150 million US dollars with a $50 million accordion feature. It does seem, David, that they are prepping for another transaction. Absolutely. Yeah, I mean, that's that's that's what's great about this royalty model, you know, they have all this cash and then they they've been make these royalty deals and it really works well for them. It's a great model. Okay. Um, we're on the, so one, two, three, third day of PDAC. You've been walking the floor, you've had a lot of meetings. What what has really struck you about this year's event? Well, it's a bull market, finally. I mean, uh, I kind of made a last minute decision to come this year because I I wanted to experience PDAC in a bull market for the first time. Has it delivered? Has it? Delivered? Well, it was interesting because Sunday it was it was a lot less crowded than I expected it to to be. It wasn't really that, uh, that busy, but then Monday it was very busy.
[9:30]And, um, it's it's great to see um colleagues, friends, happy. It's great to see everyone cashed up. You know, these early stage companies, they have these great projects and they haven't had the cash to to drill them and now they have the cash to drill them, so they're very excited. And, um, it's it's an exciting time to be an early stage explorer and and early earlier stage developer now that that that the financial window is opened wide here.
[10:04]We've we've covered some of the what I think are the news highlights in in this episode, David, but uh, to be fair, I think I was expecting much more news to come out this week. Uh news has been quite in the ground, no disrespect to anybody that's put things out, but I was expecting more and perhaps bigger announcements. Yeah, you're right. I mean, we've had the one take over candidate, the Arizona, we usually have a a big takeover happen during the conference and that's not saying that that's not big, but um I was expecting more bigger news as well, yeah, or more important news, yeah.
[10:44]Well, perhaps the positive there is that's yet to come. We'll see. Okay. Well, David, it's been an absolute pleasure doing a Digging Deep with you in person. Uh, look forward to the next time we have the opportunity to do so, which hopefully will be Beaver Creek in Colorado. Uh, until then, thank you very much for joining me today. Thank you, Paul. Always a pleasure. And we have a lot more to come from the 2026 Prospectors and Developers Association Conference in Toronto. So hit that subscribe button. I'm Paul Harris, and this is Kitco Mining.
