The CSE Quarterly | Issue #3
New exciting stories are coming to market on the CSE.
Read more about the latest in cloud computing and in vitro diagnostics and how to navigate a fluctuating metals market
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Contents
CSE | Quarterly Issue No. 3 www.thecse.com Publisher Fusion Publishing Media Inc. #317 – 1489 Marine Dr. West Vancouver, BC Canada V7T 1B8 1.888.925.0313 (Toll Free) www.FusionPublishingMedia.com info@FusionPublishingMedia.com Group Publisher Terry Tremaine Group Editor Connie Ekelund Production Manager Christie Smith Free Digital Subscription Published by Fusion Publishing Media Inc. on behalf of Canadian Securities Exchange. To receive your complimentary subscription, please visit www.thecse.com and complete the contact form.
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CEO’s Message
Feature Story 8 SecureCom’s app keeps day-to-day conversations safe from unwanted eyes by Deborah Bacal Company Profile 11 ChroMedX aims to shake up in vitro diagnostics by making existing technologies new again by Deborah Bacal 14
Novo Resources Plays a Smart Bet While Gold Prices Fluctuate by Christian Vakenti
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The Art of the Fair Deal and Artisanal Tailings in Latin America by Christian Vakenti
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A Passion for Exploration: Steve Williams on Pasinex’s Turkish Zinc Operation
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Atlas Cloud at “Tip of the Iceberg” as cloud computing catches on
www.thecse.com | @CSE_News
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
CEO’s Message
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s 2014 draws to a close, I wanted to take a moment to look back at an extraordinarily busy and successful year for the Canadian Securities Exchange. We have achieved a number of significant milestones over the course of the year: ÇÇ We successfully consolidated all of our listings and trading services under one brand – the Canadian Securities Exchange – at the beginning of the year. In concert, we consolidated all of our technical services on to a single trading system and market data platform, reducing costs for our investment dealers and our vendor partners. The exchange’s web site was also redeveloped to reflect our new branding, and to highlight our commitment to both enhanced investor information and listed company services. ÇÇ On the listings front, we will list a record number of companies in 2014, almost double the previous record from last year. We are also, likely, to claim a record share of the market for new listed companies in Canada this year as well- about one in three on a year to date basis. ÇÇ On the trading side, our listed companies have generated turnover of more than 2 billion shares on a year-to-date basis. The previous record set in 2012, was just over 950 million shares traded. Two factors contributed to this increase in trading: the listing of a number of new companies with compelling stories for investors, and increased access to our market from the Canadian discount broker community. On the business development front it has also been productive year. We parlayed our recognition by the US OTC Markets Group as a “designated foreign exchange” in January into a close working relationship with the New York-based operator of the QX, QB and Pink Sheet markets. A number of our issuers have taken advantage of the opportunity to obtain a quotation on the QX market and thereby gain access to the US retail brokerage market. We are looking to create similar opportunities for our listed companies to either dually list or be quoted on European and Asian exchanges in the coming year. Over the last few months I have had the opportunity to travel to China, Germany, Switzerland, the UK and the United States meeting with investors and prospective listed companies. All of the people I met told me how difficult it was for an early stage company in these countries to raise capital through the local public markets. The ability, offered by the CSE, to become a public company at a relatively modest cost and with minimal delay is seen as not only a boon to the entrepreneurs, but to the Canadian economy as a whole. To capitalize on these advantages, we will continue to sharpen our service offering to improve investor access to our trading and market data services, and to assist our listed companies with the burdens of operating a public company. We are really looking forward to 2015.
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The ability, offered by the CSE, to become a public company at a relatively modest cost... is seen as...a boon...
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feature story
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
SecureCom’s app keeps day-to-day conversations safe from unwanted eyes by Deborah Bacal
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he company’s product is timely, given the sheer increase in data breaches suffered in recent months by such industry giants as JPMorgan, Target and even Wal-Mart, and the growing number of celebrities that have had their personal Facebook or Gmail accounts hacked into for the cheap thrill of naked photographs. It also comes amid growing accounts of NSA surveillance. S e c u r e C o m Mobile (CSE:SCE) is offering an alternative to email that promises to keep private communications away from the hands of untrusted third parties, potentially turning day-today conversations on their head by shielding them from mass surveillance. “Whether you’re a soccer mom or an international celebrity, no one has the right to listen to your conversations,” says chief executive officer Peter Wilson.
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In comes SecureCom’s product, which is a deviceto-device encryption app that uses peer-to-peer key negotiation with every communication session. The keys, which are automatically generated by the software, lie only in the possession of the user, and are destroyed at the end of every call and text conversation, eliminating the possibility of hacking after the fact and the ability of mobile carriers to circumvent. “We don’t have the keys necessary to decrypt the messages even if we wanted to,” says Sean Comeau, the company’s chief technology officer. “The advantage is that you know there aren’t any back doors.” The platform is supported using open source code to ensure there are no third-party pathways into its devices.
Whether you’re a soccer mom or an international celebrity, no one has the right to listen to your conversations.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
In other words, open source software is computer software that makes its code available for anyone to review, meaning any programmer can trust the encryption product to be exactly what it is intended through verification. Any updates to the software are also published and independently audited. The way it works is simple, says the company, with a subscriber of the app able to make a phone call or send a text or private message to another SecureCom Mobile device, with transmission secured end-to-end from the subscriber’s device to the receiving device. Both the sender and the receiver are required to have the app, a must for any communication involving encryption, says Comeau. It also requires no programming by the user, and the voice app integrates with one’s contact list seamlessly, making it as user-friendly as possible. Importantly, the voice app works worldwide with Wi-Fi access, and has no long distance charges. The app, which is now available on Android and was just released on BlackBerry devices earlier this month, will soon be supported by Windows and Apple devices, for iPhones, iPads and eventually for desktops on Mac OS X. “The purpose of the product is to allow us users to continue communicating in a manner we’re used to without putting private communications in the hands of third parties we don’t trust, and who don’t have our personal interest at heart,” explains the CTO.
While enterprise clients would obviously have a keen interest in this type of secure communication, SecureCom is really targeting everybody, hence its strategy to make the technology available on all platforms. “It doesn’t matter whether you’re a celebrity, Wal-Mart, or a hospital sending out patient data, none of these communications are safe from access right now. The way we communicate now is creating piles and piles of unsecured information just waiting to be breached,” says Wilson.
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The ultimate function of the app is to use it in place of what people use email for...
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“Just look at the NSA, they couldn’t even keep their plan to spy on us all confidential.” The revenue model for the app will be similar to LinkedIn, with basic use of the service completely free for users, while premium services require a paid subscription. While there are no limits on the number of messages a user can send with the basic service, there is a limit on how large a file can be sent as an attachment without the premium account. The premium account will also include other features such as priority support and increased bandwidth.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
The ultimate function of the app is to use it in place of what people use email for, including written conversations, as well as the exchange of documents, videos and pictures. Right now, SecureCom’s focus is on making its app accessible on all platforms, which it expects will be completed by the early part of next year. At the same time, it will spend its resources on acquiring a user base, launching marketing campaigns in target areas.
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But it’s not just Germany. It’s the US, it’s the world. Everybody is having the same concerns right now.
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The company just recently listed on the Frankfurt Stock Exchange, and is beginning an aggressive campaign there shortly to help drive critical app downloads. Its launch on BlackBerry models Z10, Z30, Z3, Q10 and Q5 devices is also a big feat, with there being approximately 11.8 million users on the BlackBerry platform, according to mobile device tracker Statista.com.
The app is expected to play out well in Germany, where private communications and lack of security has become an extremely topical conversation piece lately due to the country’s chancellor Angela Merkel reportedly hacked into by the NSA on her BlackBerry device. “[Germany’s] sovereignty was compromised, and we believe the market there will very much understand the need for our app given that the situation is at the forefront of discussions in Germany,” says Wilson. “But it’s not just Germany. It’s the US, it’s the world. Everybody is having the same concerns right now.” The company, which went public about a month ago on the Canadian Securities Exchange, has about 60 million shares outstanding and 18 million warrants. It has so far raised approximately $1.5 million and as SecureCom begins to roll out and acquire users, it will seek to raise more funds. The goal is to target mobile platforms for its apps first — which Comeau says is where people communicate on a day-to-day basis the most — and then move on to desktop formats, as it starts to ramp up development this quarter. Once SecureCom reaches what its management calls “critical mass”, it will begin to look at developing new features and expanding the limits for file attachment sizes. Currently, attachments are limited to five megabytes. Wilson says that so far, things are looking up, with the company having already received multiple inquiries about its app from corporate communication departments and security companies as far as Africa and China, where privacy is of the utmost concern. “When the internet was first conceived, it was good enough for communication to function like a post card. Now the internet is pervasive and everywhere, an intimate part of our lives. It’s time to start putting some security measures in place to protect our communications,” affirms the CEO. n
Originally published on Proactiveinvestors.com on October 21, 2014
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ChroMedX aims to shake up in vitro diagnostics by making existing technologies new again
company profile
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
by Deborah Bacal
C
hroMedX (CSE:CHX) is working on two new medical devices that will change the face of in vitro diagnostics, but with a much less risky approach than other companies in the healthcare field with a project that purports to integrate existing, proven technology into a new package, reducing the time to market. The in vitro diagnostics market, driven by an aging population and demand for improved medical care, is projected to reach $58.6 billion in 2014, according to company estimates, with ChroMedX’s technologies targeting roughly 51 percent of this. Its first device, called HemoPalm, targets the point-of-care subset of the in vitro diagnostics market, and is a handheld analyzer and suite of single-use cartridges that test the oxygen-carrying capabilities of blood, blood gases and electrolytes. Normally, these type of tests are taken with an arterial blood sample (typically an artery in the arm), and are then sent off to a central lab, where a bench top unit uses spectroscopy and electrochemical sensor measurements to provide results. It can take hours to get the results. But the HemoPalm takes the sample of blood with a simple finger prick, providing a result on the spot, with no specialist required.
The benefit, aside from the obvious less pain, is that the test opens the market up to first responders, such as paramedics, who can take the blood sample right at the scene and then transfer the data back to the hospital before the patient even arrives.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
This saves both time and money, and can help a patient become discharged faster from the hospital, improving efficiency across a wide range of departments. “This is especially important with fire victims. Paramedics don’t really know how badly the patient has been poisoned by carbon monoxide, and the HemoPalm allows them to know this,” says president and chief executive officer Wayne Maddever. “The same goes for someone with a heart attack. The HemoPalm can detect the need for a transfusion early on. The information can then be transmitted back to the hospital,” he adds.
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The HemoPalm could no doubt be beneficial in hospital too...
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There are similar devices on the market, says Maddever, but ChroMedX uses the same analytical techniques as central laboratory machines. “If you want to provide true co-oximetry, then you have to use spectroscopy, which is analysis by light. “None of the competitive devices use this true analysis of the hemoglobin part of the blood.” Indeed, the technology is the only handheld device to provide full co-oximetry (the oxygen-carrying state of hemoglobin), blood gases and electrolytes. Aside from the first responders market, it can also be used for disaster relief, emerging economies or in the military where central laboratories may not exist or may be too far away. The HemoPalm could no doubt be beneficial in hospital too, simplifying sample collection and expediting patient results, both in the emergency department and the operating room, where the device could replace multiple machines currently in use. Another use would be for respiratory care, allowing respiratory therapists to optimize patient treatment in the hospital and at home with comprehensive results of oxygen in the blood. 12 | www.thecse.com
The prototype for the hemoglobin blood analyzer is currently in development, with the company also working to build a second model cartridge for the early detection of jaundice in the neonatal unit, prior to patient release. This would allow for proper in-home care and avoid having to rush back to the emergency room. “Often parents go home, and their baby is yellow, and they panic. But the treatment is quite simple – it’s just ultra-violet light. We can do a pre-screen for jaundice before babies even leave the hospital with just a little heel prick.” And there is plenty of room for expansion, as once the HemoPalm analyzer exists, it will be about developing the cartridge that treats the sample property so the device being used can analyze it. The next test being considered is lactate, which is a measure of sepsis or blood poisoning “It’s all about point of care. It’s better care, with more information coming to physicians as opposed to waiting for the results.” The company is looking to generate the bulk of its revenue from the sale of a family of cartridges it plans to offer. “Once customers start using them, they won’t be able to stop.” Maddever calculates, using what he says are conservative assumptions, that the company will be able to sell about 1,500 handheld analyzers in its fifth year, which now cost about $5,000 apiece. Cartridges are estimated at about 1,500 per analyzer per year, with the company assuming a price of $10 for each cartridge. Cartridge revenues will be cumulative, taking the “razor/razorblade model”. As a comparison, the market leader in the space, Abbott Diagnostics, sells its i-STAT point-of-care system for $9,000 to $10,000, and manufactures 200,000 cartridges a day at between $20 to $65, says the CEO. “The best part about our product is that it is not a medical project, it is an engineering project,” explains Maddever, who holds a Ph.D. in metallurgical and materials science engineering from the University of Toronto. “All of the technologies behind it are well defined,” he adds. This means that instead of the rigorous FDA approval process for drugs, the HemoPalm has to be approved under a Class II device 510(k) status, which simply requires proof of equivalence.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
In other words, the device must be tested against an already-approved product, with a blood sample split in half and run through both machines. “We need to show equivalence [to the third party device]. It’s a six-month process, and nothing like drug trials. It’s a much simpler test.” The CEO reckons the device will be ready for submission in about a year, highlighting management’s experience in engineering integration. ChroMedX’s chief scientific officer, James Samsoondar, previously developed a device that uses spectroscopy analysis for the operating room, but did not offer full co-oximetry analysis. The company’s second platform, known as Automated Ultra Filtration, or AUF, is another single use disposable cartridge which targets a different market. This device uses ultrafiltration technology to remove proteins from the blood for immunoassays of free hormones and therapeutic drugs. The goal of these tests is to see how hormones affect metabolism or how therapeutics impact the body, allowing physicians to know exactly how much is free and active in the system. Therapeutic drugs and hormones that are bound to proteins become inactive, meaning only free species are effective and need to be measured. “Right now, it is an expensive test because it is manual,” says Maddever. “Doctors like to have it, but labs like to do it as little of it as possible. If there is a way to make it easy, it will be a selffulfilling prophecy.”
The device uses ultrafiltration to separate proteins from the plasma sample for analysis, using the same general principle of a membrane to filter things out of a certain size. It will replace the conventional lab centrifugation protein separation process, which is manual, expensive and can take up to 30 minutes, as opposed to the fully automated 1-minute AUF process. “This device will offer significant savings. There is no real competitor for this. It doesn’t just offer a technical advantage like HemoPalm, but rather AUF is a disruptive technology in terms of how it will change how people analyze for things.” The goal is to license AUF to major industry players, such as Roche, Beckman, Becton Dickinson, Abbott and Siemens, with ChroMedX figuring a potential royalty steam of about $50 million a year based on a $30 per cartridge price. A prototype of the AUF cartridge is being built right now, with the company aiming for the same time frame as HemoPalm. “There are very good programs here in Ontario for industry collaboration to access expertise in specific areas. Our goal is to find the people who are experts in our fields and work with them to build prototypes to move our projects forward,” says Maddever. The company says it already has a link with a major ultrafiltration membrane manufacturer for its AUF prototype, and its consultants on HemoPalm include former executives “from major industry players.” ChroMedX, which began trading on the Canadian Securities Exchange in July, is in the process of raising equity, after completing a $517,000 financing in June and another $614,000 financing which was announced on September 22. The chief executive says the company is focused on keeping its overheads low to achieve its goals in a “focused manner.” “It’s all about risk mitigation for investors. The life sciences market is fabulous, but it’s fraught with pitfalls. We don’t have any groundbreaking technology and it’s not a drug project. We are taking known things and integrating them into a novel package.” n
Originally published on Proactiveinvestors.com on September 23, 2014
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company profile
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Novo Resources Plays a Smart Bet While Gold Prices Fluctuate Near Surface Oxidization Funds Strong Entry into 2015 for Australian Gold Producer
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By Christian Vakenti
here’s an excitement attached to gold that is unlike any other resource or commodity. There is a draw to it, a pull that is unique. Our language and culture are littered with references to this excitement. When you “hit it big“, you don‘t strike platinum or any other precious metal, you strike gold. When a band puts out an album that sells 500,000 copies, they have a gold record. Part and parcel of this unique love affair we have with gold is that as much as we value it, we love to manipulate it‘s worth on the open markets.
So while it‘s never very stable for overly long, the gold market is something which every investor can get interested in, but can expect more fluctuation than similiar markets without being dismayed. During the times where it looks like there might be some downturns or adjustments, there are some smart strategies employed by savvy gold companies to weather the bumps. Point in case: Novo Resources Corp. They are currently sitting on an inferred resource estimate of 421,000 troy ounces of gold in Western Australia.
RC Drilling
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
If that number pans out to be anything close to actual findings, that‘s a truly staggering windfall for this company and one which will inevitably catapult them forward to well deserved fortune. But it‘s Novo‘s short term play that demonstrates the true business acumen of it‘s CEO, Dr. Quinton Hennigh. The 421,000 inferred ounces at Beatons Creek are contained in 8.9 million tonnes at a grade of 1.47 grammes gold per tonne. The site shows strong potential for a significant coarse gold, oxide deposit within approximately 20 m of surface. By utilizing gravity recovery on the easy-to-mill oxide material, Novo stands to make a quick turn around on their investment, plunging cash directly back into their coffers. At the time of this writing Novo has roughly $11 million in the bank, and will retain perhaps $9 million of that come next March, when the current drilling program should end. The Prospector contacted Leo Karabelas at Novo and he provided us with the latest figures.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Photos left, at top: Packing samples. Bottom, Discussing sampling. Photo above: Beatons Creek
According to him, gravity recoverable gold at Beatons Creek is very high, averaging 82% in their first five bulk samples. In addition, they are fast-tracking drilling and bulk sampling to put together a resource that can potentially be taken to bankable feasibility. Novo envisions a mine that produces about 1000-1500 tonnes per day, all processed by a gravity plant. They‘re also drilling a deep test of the gold-bearing conglomerates about 3km SW of the existing resource. “Beatons Creek has the potential to host a sizable gold deposit within multiple stacked gold-bearing conglomerate beds, or reefs,” says CEO and President Dr. Quinton Hennigh. “At depths of less than 20 meters, these beds are thoroughly oxidized and potentially amenable to cheap gravity recovery.” “Below 20 m, these same beds could extend under large areas giving us potential for lots of sulfide mineralization. Unlike sulfide mineralization in some deposits, our sulfides are not refractory and could also be amenable to gravity recovery.” 16 | www.thecse.com
“We are very encouraged by recent results from our gravity recovery study. “This data clearly tells us we have a strong possibility of processing these gold-bearing conglomerates in a very simple 1,000-1,500 tonne per day gravity plant that should be reasonably cheap to build and operate.” “We are moving exploration forward at a very fast pace to collect the necessary data to model a shallow oxide resource. At the same time, we are working on necessary environmental studies for upcoming permit applications. We are targeting completion of a BFS and having permits in hand by early 2016.” All of which culminates in a decidedly rosy picture for Novo and both it‘s short and long term prospects. As they continue to exploit those near surface deposits by a very cost-effective means of harvest, they can afford to watch the gold markets make their inevitable resurgence, allowing them to further increase shareholder returns. And that‘s what it‘s all about. Well, that and the excitement for gold. n
The Art of the Fair Deal and Artisanal Tailings in Latin America
company profile
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Newlox Sets the Gold Standard for Historical Refining By Christian Vakenti
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f there‘s such a thing as “lazy” mining, then tailings refinement is it. You take a pile of dirt that some poor miner dug up years ago, and run it through modern processes to find all the resources that the aforementioned sorry fellow was unable to sort out, given his limited technology at the time. No exploration. No drilling. You don‘t even have to dig it up; it‘s just sitting there in a large, unsightly pile. The claim has likely been untouched for decades and in some cases much longer. Environmentally, the area is something of a mess (while we have great respect for our mining forebears, their operations bear no resemblance to the strictly controlled and environmentally sound practices of today). And the local communities are often economically depressed with few high paying jobs and diminished prospects. In comes a Canadian mining firm, with the knowhow, the equipment and the management team to get the job done efficiently and cleanly; the mess is cleaned up, the local economy benefits, industry is created and jobs result. It‘s an all around win. So why is it some of the hardest mining to get right? Well for starters, it‘s because what‘s often needed isn‘t a mining company, but a trading diplomacy, an ambassador between countries who can establish relationships with the locals and translate that into a business which truly benefits everyone.
And that‘s where Canadian companies and Ryan Jackson, President of Newlox Gold Ventures, come in. “First off, let me say that we‘re not a mining company,” Ryan told The Prospector by phone at the beginning of November. “We‘re a gold production company. And that‘s a very important distinction,” Ryan carries on. Ryan is describing what he believes to be a paradigm shift in the mining industry – whereby small scale projects operate with minimal disturbance, with an eye towards frugal and rapidly commissionable projects which can quickly supply operational revenues. It‘s the type of business genius where the benefits are immediately apparent. “The growth in these kinds of projects is very organic,” continues Ryan. “Rapidly commissioned, small scale operations can generate the operational cash flow needed to expand without reliance on the expensive capital markets.” www.thecse.com | 17
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
“We are reprocessing high grade artisanal tailings to produce gold and silver with remarkably low capital and operating costs. However, this isn‘t the typical tailings story.” He explains that tailings refinement is a common tactic, but typically they‘re low grade. Artisanal mining, because it likely followed the veins very closely, “leave a lot of meat on the bone,” says Ryan.
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But where Newlox really flips the script is in its approach to the diplomacy and trading aspects.
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But where Newlox really flips the script is in its approach to the diplomacy and trading aspects. “We have a Canadian management team here in Vancouver, yes. And they‘re excellent at what they do. But the rest of the team is all Latin American. And it‘s this team that gives us the foothold we need.” In addition to the reprocessing, Newlox authorizes it‘s Latin American reps to trade in scrap gold. “We purchase scrap gold from the local peoples. We always pay a fair price, a very fair price,“ says Ryan. „This is key, you have to be consistent, you have to be always fair and always establishing yourself as a group that does a fair deal. Then you can build strong relationships and from these relationships come bigger things. New projects.” Ryan‘s degree in Environmental Science serves him well at Newlox and in Latin America. “There‘s no cyanide used in these operations, it simply isn‘t allowed. We have to be environmentally conscious as well as socially conscious if we‘re going to do best practices and if we‘re going to accomplish what we set out to do.”
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Newlox Gold‘s current project utilizes a gravity and flotation plant, processing up to 40/tonne per day (although Ryan notes that number is not typical) and capable of being easily doubled in size to handle 80/tonne per day. The gravity circuit is already in full swing, having produced close to 3 tonnes of valuable concentrate grading over 500 grammes per tonne gold, and the floatation circuit, commissioned just this September, is expected to deliver significant production growth once optimized. “We‘re continuing these trends into 2015,” says Ryan. “Our reprocessing methods remove contamination from the artisanal tailings,
delivering environmental and social benefits to local stakeholders. While at the same time our gold trading business sources precious metals locally and relies on rapid trading to mitigate commodity price risk while yielding additional revenue.” “Accordingly, our mission statement is to grow shareholder value through socially and environmentally responsible programs of waste remediation in Latin America.” “The appetite for gold continues to be strong. What is waning is the investor interest for risky exploration, protracted development and expensive construction,” finishes Ryan. n
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company profile
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
A Passion for Exploration
Steve Williams on Pasinex’s Turkish Zinc Operation
“I
wanted something with longevity and traction,” explains CEO Steve Williams. “I‘d been thinking about the matter for some time. It had to be simple, to the point, yet definitive of what I was trying to represent,” says Steve. Speaking with The Prospector by phone from Toronto, Steve is a veteran of both Australian and Canadian mining, working in the industry since 1976.
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Zinc is a great space to be. Steve Williams, CEO, Pasinex
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“I was at the PDAC, and it just hit me. I have a passion for exploration. That‘s what I‘m here for, it‘s what I‘m best suited to do,” says Steve. “So Pas-inex: passion for exploration – it just made sense. “And it‘s easy to spell,” laughs the good-natured business man. Steve is easy to talk to, and two things are immediately apparent. One, that he is truly passionate about mining, and two, that he knows what he‘s about.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
“Pinargozu. It‘s our zinc operation in Turkey. Well located. I laugh when people ask me that question about how close it is to road and rail. Turkey has very good infrastructure. We‘re right by a major road, leading into a city of 17 million people, Turkey‘s 4th largest, called Adana. And just two and a half hours down that road is Mersin, a major port. That‘s how we will get the ore out.” “Also it doesn‘t snow much or at all in southern Turkey. Weather doesn‘t impede our operation – we can operate, we can drill, year round.” Steve‘s plans for the tail end of this year and the beginning of the next are ambitious, but well within the scope of a junior which has posted promising results. “We‘re raising about $2.5 million by the end of this year. That funds 30 to 35 holes. We have some adits that we‘re refurbishing.”
As reported in September of this year, assays obtained from about 570 tonnes of of zinc ore mined from the Pinargozu project report results of 34.0% Zn, 50 g/tonne Ag. “We‘re currently extracting about 25 tonnes a day. We have around 2,500 tonnes of this material, which we believe to be direct shipping ore and together with our joint venture partners, Akmetal AS, we‘ve begun to seek commercial offers for the sale of this material.” The next three years prove crucial to Steve and Pasinex‘s eventual success. With proper funding and careful management, Steve‘s company is looking to ramp up production severalfold over current operations. “Our target is about 300 tonnes per day. We believe there‘s about a million tonnes to be extracted, giving us about a ten year mine life.” www.thecse.com | 21
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
This timeline dovetails nicely with a coming rise in zinc prices, due in part to two major zinc operations which will be shutting down shortly. “We‘ve got two big global zinc operations shutting down in the next two to three years,” says Steve. “We‘re already seeing zinc prices rising, up from .85 cents to a dollar now, with much steeper rises in the forecast. It is going to go higher, without a doubt.” “Also, look at gold for instance, and there‘s hundreds, just hundreds of companies out there. But look at zinc – there‘s maybe, maybe at most 15 juniors working in zinc. The world market for zinc, supply and demand and the companies which are filling that need are so much tighter than most people understand.” “Zinc is a great space to be,“ says Steve. As for the country of origin, Steve is realistic about the challenges he faces, but optimistic. “Any time you step out of that mining wonderland, Canada, and venture out onto the world stage, you have to change gears,” says Steve. “There‘s a lot of considerations, a lot of tricks to the trade.” 22 | www.thecse.com
“Fortunately, Turkey is in wonderful shape. They‘re very mining friendly, very pro-business. We have a right wing, pro-business government in power. Which is actively and aggressively trying to grow their economy. They are well aware of the economic benefits of mining and are actively pursuing it.” “This all bodes well for our Turkey interests,” says Steve. Pasinex is seemingly so confident in the Turkish operations that they are pursuing other projects in the area. “We have two properties; we‘re looking to acquire more. We have a small starter mine currently and we‘re expanding that, plus we‘ve got good things coming. It‘s hard work, wait and see, and proven results. We‘re moving forward.” n
Atlas Cloud at “Tip of the Iceberg” as cloud computing catches on
I
t is tempting to say that all an investor needs to know about Atlas Cloud is that the young data centre expects to be profitable a few months from now, grow slowly but surely, and see earnings inch higher with each new contract signed. But that would be to overlook the larger, more interesting picture that revolves around the company’s decidedly refreshing business philosophy. It is equally important to understand that Atlas Cloud plans to prosper in Vancouver’s fast-moving technology scene by going back to basics. Founder and CEO Fred Stearman is a veteran of large communications companies such as Bell Canada and Telus. If you accessed a website to buy tickets to the Vancouver Winter Olympic Winter Games in 2010 or checked results of your favourite events, then you have seen Stearman’s handiwork. Designing and maintaining the Internet backbone for the Olympics is just one of the highlights of a 30-year career in programming, hosting and other activities, serving mostly large clients in western Canada. Good as his employers and other big companies were at taking care of larger clients, Stearman could never shake the feeling that other customers were often at a disadvantage simply because they were small fish in a big pond. Atlas Cloud’s mission is to upend that dynamic and put the small business first.
What Exactly is a Data Centre, You Ask?
The “cloud” is one of the higher profile topics in technology these days, as companies large and small begin to figure out the benefits of decentralizing data storage and access to resources. The traditional approach of investing directly in hardware and software and paying inhouse experts to maintain that proprietary system brings high costs and often sidesteps system redundancy.
The decentralization concept at the core of cloud computing solves all of these problems. For the cloud to exist, through, the world needs data centres. “Primarily, we offer power, cooling and bandwidth for the IT industry,” says Stearman when asked for an explanation of the Atlas Cloud business.
company profile
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
“
Atlas Cloud’s mission is to upend that dynamic and put the small business first.
”
“If you can imagine you have a number of servers in your office and it produces a lot of heat, the power grid goes up and down so you need a battery backup, and for code you need some fire suppression, and if the power goes down for a long period of time, you hope there is a generator in your building. We consolidate all those pieces and share it amongst many people.” Touring the Atlas Cloud facility, a former manufacturing site on the city’s east side where cardboard boxes were formed, one quickly gets the picture. Rows of racks stand in a highly secure environment. These racks, explains Stearman, are for mounting servers. “They look like pizza boxes and you can fit 42 of them into a rack,” he says. Several metres away sits a large diesel generator to provide power in case of a major electrical grid failure. The generator is elevated from the floor to keep it safe if flooding occurs. www.thecse.com | 23
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
A second data centre, likely to come online in about a year, will look much the same, but with one big difference -- location. To hedge against the potential for a natural disaster in Vancouver, Atlas Cloud intends to establish a separate centre, likely in Kamloops or Calgary. That not only adds to the ability to ensure safety for customer data, it also enables the company to be close to a second significant customer base. The Vancouver location goes live on December 1.
A Fast Path to Operations and Profitability
Stearman is clearly someone accustomed to getting things done, the tone of his voice grabbing an edge when he talks about corporate strides made to date, even though the timeline he presents sounds more like a model of efficiency. “We raised money in July, ordered equipment in August, installed it in September and October, and will finish it in November,” he explains. 24 | www.thecse.com
“The reality is we should be EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) positive by January 1 and every month, we will keep adding to that.” To establish a bootstrapped technology business with growth supported entirely by cash flow once Fred Stearman service begins would be quite a feat. Making things a bit easier has been a co-working space at the front of the facility called The Cranium.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 3
Here, young technology companies rent desk space at bargain rates as they build from the ground up. It is a great networking environment, and having an experienced hand like Stearman around is pretty valuable, too. For Atlas Cloud, having The Cranium meant there was cash flow to help cover rent, utilities, insurance and other basic costs right off the bat. And since The Cranium sits on a wooden frame inappropriate for housing servers, it makes perfect sense to have a cashflowing business occupying space that perhaps could not be fully utilized by Atlas Cloud otherwise. Another way to grow quickly is through acquiring complementary businesses, and while Atlas Cloud is not targeting anything in particular at present, its public status opens the door to this possibility. “It is going to position us well as we expand,” says Stearman of Atlas Cloud’s CSE listing. “As we generate more revenue and EBITDA, our stock value will go up and enhance our currency to do an acquisition.”
Big Companies Don’t Pose a Threat
Technology behemoths such as Amazon (NASDAQ:AMZN) and IBM (NYSE:IBM) are the companies most often mentioned in media coverage of the cloud computing industry, but having such big names in the same sector is not really a concern for Atlas Cloud. “Our customer base is totally different than the national carriers,” Stearman says. “If you make it cost-effective for small businesses to have a good DR (Disaster Recovery) plan, there is a market for it.” In addition to attractive pricing, Atlas Cloud supports small businesses with the ability to negotiate terms of variable lengths so that their contracts are tailor-made. And then there is the biggest draw of all – superior customer service.
“We actually have people you can come in and meet, so you are not a number,” explains Stearman. “At larger companies,” he bemoans, “you call a 1-800 number and hope you get someone to help you out. Here we have named technicians and named people. I am the owner and will talk to every customer.” Value-added services such as data backup and website design round out a service line-up that should make any small business’s IT manager smile. Stearman believes it is a perfect time to be entering the data centre industry, as corporations are only just beginning to embrace the cloud concept and the benefits it offers. “People think everything is going to go cloud. I am going to trust my data to be somewhere and it is always going to run at 100%. The reality is that very few companies have embraced outsourcing their data services. We are the tip of the iceberg in terms of visualizing what the cloud is.” n
www.thecse.com | 25
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