XL: Welcome. Do you prefer Jorge, or Patricio. Your first name is Jorge, but everyone who’s spoken of you calls you Patricio.

JPJ: It’s a second name. It comes from my mother preferring it to “George”. I guess that’s why it’s stuck with me.

XL: So, is your preference Patricio, then?

JPJ: Yeah, no problem. [laughs] Whatever. No preference; I am Jorge or Patricio.

XL: Okay. Well, first and foremost, thank you for agreeing to the interview. We’re excited about having you join our Explorers’ League. You have quite a reputation for finding deposits-big ones. We’d like to talk to you about how you do that. Let’s start at the beginning – your education and how you got into prospecting. How did you get started?

JPJ: Initially, I graduated from the University of La Plata, in Argentina in 1967. I studied geology, though the system is a little bit different from what you have in North America. The geology degree was four years, and the fifth, there was a specialization. I took oil geology and water geology, and what I liked most was dealing with underground water resources. The following year, 1968, I went into the army, because it was compulsory and I had postponed it to complete my degree. So, during that year, I started looking for a job, and when I got out of the army, the only job available was a scholarship I got to go to South Africa and worked in mining. The army gave me my papers, and I went immediately, within a month, to Springs, in the eastern Transvaal in South Africa. I worked there at the East Geduld mine, which is now exhausted.

XL: Who offered the scholarship?

JPJ: The scholarship was from an organization called IAESTE, the International Association for the Exchange of Students for Technical Experience, which I believe still operates.

XL: So, you were ready to study geology when you went to school. Is there a story behind why you wanted to do that? When you were a little boy, did you like rocks?

JPJ: I had a very good friend in La Plata, which was my home town, whose uncle was one of the first geologists in Argentina. His name was Herrero DuCloux, which as you can tell is a mixture of a Spanish and French name. This fellow was one of the first well-known geologists-he did oil geology. I had a very good friend called Jose, who was his nephew and wanted to be a geologist. After he graduated, he continued in the field, of water geology, and is still doing that today. My life took a different turn, of course, when I accepted the scholarship to go to South Africa.

XL: So, when you were in South Africa, is that when you got excited about minerals?

JPJ: That’s right. I stayed three months at that mine, which was an underground gold mine at Witwatersrand Reef, and then I was moved to the Impala platinum mine. I stayed there for a few years, working for the Union Corporation that was later taken over by Gencor. You know, I was transferred to Rustenburg, which is a very nice ity-or used to be a very nice city; I haven’t been there for quite a while. I lived in the single quarters, which was a very nice hotel, and worked at the Impala platinum mine on the Merensky Reef.

XL: So, you finished the three-month student exchange at East Geduld, then stayed on for a few years working for Union at the Impala platinum mine?

JPJ: Exactly. The scholarship was a working scholarship with a salary attached to it, and the company that was providing that payment in South Africa was Union Corporation. Immediately after I finished the scholarship at the East Geduld mine in Springs, they offered me a job, and I said yes, and they transferred me to this Impala platinum mine.

XL: So that’s where you got your early experience. Did you do any discovering there, or were you just learning the business?

JPJ: No – initially I was there as a junior. I worked on the opening of the #5 shaft on the Merensky Reef, and a year or two later I rose to be the geologist in charge of that mine. It had the peculiarity that it has a lot of late pegmatoids invading the sequence, sometimes completely replacing the productive reef. It required quite a lot of underground mapping.

XL: That’s interesting. So, you had to do sideways drilling underground to see where the mineralization was?

JPJ: Exactly. The reef is very stable, in the sense that it’s not very much displaced by faults. The main complications were these replacements by the ultramafic pegmatoids, and the fact that the reef has potholes, which are circular depressions that may extend to various depths below the normal reference datum.

XL: So, you got a lot of great experience in South Africa, and then decided in the mid 70s to go back to South America?

JPJ: Yes. You know, in those days there were quite a lot of freedom movements in Africa. I had essentially left Union Corporation in ‘74, and was involved with a company called Loxton-Hunting, which was part of the Hunting Geophysics Group, of London. The idea of leaving Union Corporation was that I had been at the mines for quite a few years, and I needed some exploration experience. They sent me to Lorenzo Marques which was the capital of Mozambique in those days. When I got to Lorenzo Marques there were the guerillas coming in and the Portuguese flying out. I was so deeply impressed that I still remember the areas I was supposed to check; they were Morumbala and Mutarara. So, even though I was a little naïve at the time, and though that being Argentinean would keep me out of troubles with the guerrillas , I realized that the fact that I was white might put my security at risk. So I left Africa. I did want to go into exploration, but not so much that I wanted to run that kind of risk.

XL: So, you returned to South America and did … what?

JPJ: The Company I worked for got a contract to fly over the Amazon jungle in Brazil and do geophysics.

XL: Working for the Brazilian government?

JPJ: Yes. What happened was that in November of year, which was ‘74, I said, “Okay, I want to go spend Christmas at home.” The Hunting Group said they would relocate me to Brazil, so we sold everything in South Africa and went home to Argentina. But we found out in about February that the Hunting Group didn’t get the contract in Brazil, and wanted me to come back to South Africa. Given the circumstances-my wife was expecting our third child-I said no, but didn’t want to stay in Argentina either, as it was unstable at the time. So I went to Brazil myself to look for a job. I spent about a month without getting a job. My circumstances were getting pretty difficult-then I got three job offers in one day!

XL: Wow!

JPJ: [Laughs] Yes, it was a big moment in my life. I had some friends who were geologists in Rio, so I asked them which one of the three companies they recommended and they all recommended Inco-International Nickel of Canada-very highly. In those days, Inco was just starting to look for nickel and base metals in Brazil. So, I went to work for Inco in the Goiás region, which is a state that contains Brasilia, for example, the Distrito Federal. I started with a project that had all the appearances of wanting to be a mine, but it never made it. It’s called Chapada. It’s a copper-gold project, a plateau covered with laterites, which had, if I recall correctly, about 0.3% copper and about 0.2 grams of gold. So, the grades were very marginal and they still are. Then I was involved with one that later became a mine, in the Goiás greenstone belt. There were some others, minor projects like the one in Mara-Rosa that also became a mine, all related to greenstone belt rock types.

XL: Those were all while you were working for Inco?

JPJ: Yes, I stayed with Inco until ‘78. I was essentially the exploration geologist there, covering several areas of Brazil, so that gave me quite a lot of experience. Old rocks. This was shield geology. The experience in South Africa was relevant here.

XL: So, you worked on that first target that didn’t become economic, then were involved with several smaller ones that did. But you didn’t discover them. What was your involvement?

JPJ: I was part of a team that had to make decisions about which projects to develop. It wasn’t only my decision. My main contribution was with the mapping, and with the assessment about which projects were economically relevant, and which were not.

XL: Very good. So, after Inco was BP minerals?

JPJ: Yes. There was a small period in which I was a consultant, involved with a very large deposit called Urucum in Corumbá, which is at the border between Brazil and Bolivia. This is a mine operated by Rio Tinto. In those days, it was a very far-away project. If you went by air, it was okay, but if you went by ground, you had to go through the Pantanal, which is a big swamp in Matogrosso-it was really far out there. I spent a very interesting 3 months there.

XL: How do they get the ore out of a place like that?

JPJ: This was one of those mega-projects, a very big deposit of iron and manganese, but land-locked. The idea was to involve a fleet of flat ships that could bring the ore down the Paraguay River to the Parana river and all the way to the shore. It had a lot of political implications because in those days the Carajaz in Brazil was not developed, and some of the directors of the project were with the army in Brazil. In Argentina in those days it was also Army power. And that’s why it took so many years to develop. It only started going in production about year 2000 or so, after RTZ through BP, got involved in it.

XL: So, after that you went to work for the BP Minerals-BrasCan JV and found those three high grade tin deposits?

JPJ: Yes, Serra de Onca, 14 de Abril-14th of April-which was the day we discovered it-and the other one was Serra Da Caçimba.

XL: How did you discover them?

JPJ: These were done by a mixture of satellite imagery and following the structures-there had been very little structural work, though they were not very far from existing mines. 14 de Abril was absolutely new and unknown. There was a vegetation anomaly there, so we went to have a look and found eluvial tin.

XL: Did you spot that from looking at a satellite image?

JPJ: Yes, that’s right. We used to have a very, very good photo interpreter. Figueroa was his name, and he had been with the United Nations, on the look out for porphyry copper in Argentina for several years.

XL: And the other two, Serra de Onca and Serra de Cacimba, were they already known?

JPJ: No, no. All three were new and unknown.

XL: How big were they?

JPJ: The deposits largely exceeded 4000 Tn of Sn.
The good thing about them was that they were very, very high grade-about three times what was normal for mines in those days. Locally with grades larger than 1 kg/of Sn.

XL: Can you give us a number on that?

JPJ: I’d have to look it up, but it was in the range of a kilo of tin per ton, whereas other deposits were working below half a kilo. The company was looking at developing some paleo-valleys where the tin was beneath 40 meters of overburden and extraction would have been capital-intensive. With the discovery of these three deposits, that became unnecessary. They even survived the drastic drop of the tin price in 1986, when tin went from something like $16 to $4. So, they were very rich mines. After that success, I was sent on a trip to Malaysia, to look at the big dredges, and I saw Nanay , which was a sea dredge on the Andaman Sea, at the border between Malaysia and Thailand, which used to be operated by Shell/Billiton. I went to East Kemptville mine in Canada, in New Brunswick, which they put into production-and three or four days after they started production, the tin price collapsed. Them on to Hemlo, Afton the Guichon batholith and Carlin.

XL: So, what caused you to move on from BP?

JPJ: BP promoted me to working on some of the gold projects, and I got moved to some gold projects in MinaGerais and also being sent to several Latin American countries, to Chile and Bolivia and Venezuela and Ecuador to look at gold projects. The job evolved from being exploration manager for tin, to gold. Then my responsibility became essentially to look for projects all over Latin America. In Chile, I was looking in the area around Chuquicamata, projects called Ketena, Serra Gorda and others.

XL: Is that when you got familiar with projects you later recommended to the Lundin Group?

JPJ: I recommended them to BP, but those were the days of Pinochet, so BP never invested in Chile. They did invest in some of the projects we recommended in Bolivia, which were taken over by Rio Tinto when RTZ bought BP Minerals. By 1987, we had been away from Argentina for about 20 years and my wife really wanted to come back here. It was good timing, because a year later Brazil passed some laws restricting foreign ownership of mining companies to less than 50%.

XL: The opposite of what Mexico did.

JPJ: Exactly.

XL: Is that still the case in Brazil?

JPJ: No. With Lula now, almost 15 years later , apparently they changed them, but I have not followed the issue. But back then, the fact that my wife wanted to return to Argentina was providential, because it saved us from the big collapse of the mining industry in Brazil when everybody left. So, we went back to Argentina, where there had been no history of mining-

XL: Wait a minute. Never any history of mining? If that were so, how could it get a name like Argentina?

JPJ: Well, I meant in the modern era, since the 1940s, and after Perón.

XL: Ah, one would think that with a name like Argentina, the Conquistadors had to have found silver there.

JPJ: That was in Potosi, which now falls in Bolivia. So, I went back to Argentina and got a new kind of experience by becoming the manager of an operating silver mine. The milling circuit was horrible. The ball mills didn’t have linings inside them, there wasn’t enough water to float, there wasn’t enough heat to dry the concentrate … So, we fixed those things and increased production three-fold.

XL: This was the Providencia Mine?

JPJ: Yes. Then the remaining problem was that the royalty was 10%. The taxes levied by the province through the royalty and the smelting royalty were such that it was impossible to make a profit. That hadn’t been a problem for the owners, as what they wanted were the tax credits they could deduct from other companies they owned. But for me, as production manager, it was a very difficult situation. So, I parted ways with those people, and a week later, I met Lukas Lundin.

XL: How did that happen?

JPJ: It was absolutely by chance. A friend of mine was supposed to do some consulting for Lukas, regarding Bajo del Durazno, a property close to Bajo de la Alumbrera. He became ill and gave me the contact with Lukas, and it all started there.

XL: So, what had brought Bajo de la Alumbrera to your attention-why did you recommend it to Lukas?

JPJ: Lukas actually knew more about it than I did. He had been in contact with the people at YMAD, the entity that controlled Bajo de la Alumbrera, long before I came into the picture, but they had told him that it wasn’t for sale or for tender and that he should look at Bajo del Durazno. That’s what Lukas did, and he came to consult with me about taxes. Because of my production experience, I had dealt with Argentinean tax lawyers. So we met, and since I’m a geologist, he asked me to go look at Bajo del Durazno, which I did. In those days, the approach was on horseback. I looked, and told him, “Lukas, if you want to do something, you should do it with Bajo de la Alumbrera.” Eventually, there were some direct offers for Bajo de la Alumbrera, which were not according to law, so YMAD decided to tender it. I consulted with Lukas for about a year, I structured the tender offer, presented the papers, went to Canada, to Montreal, to legalize them with the embassy, came back, presented them. And then there was a long process until they finally awarded it to us (Musto Exploration).

XL: So, you didn’t discover it, but it was your local knowledge that made the acquisition possible.

JPJ: Yes. And my involvement in all the process led to my involvement with the re-drafting of the Argentinean mining law. Our lawyer, Enrique Loncan, was very involved in that.

XL: Were there changes in laws on percentage of foreign ownership that needed to be made?

JPJ: No, the changes really regarded the stability of the mining law. For companies to make the very large investments required, they needed a uniform and comprehensible system. For example, the royalties were previously set by the provinces, mostly very high, and it was difficult to work with them. And there was the matter of the derogation of the old law, which provided many tax advantages to other companies and was really misused. So, it was a major restructuring that the Minister of Economy put through in the early 90s .

XL: Were you a Musto Explorations employee at that time, or a consultant?

JPJ: No, I wasn’t a Musto employee until 1992, so I was still an independent consultant, working with other companies besides Lukas’. In 1992 we started with Musto-it took quite a while to get the tender.

XL: We can imagine. So, a couple years down the road, how did the Veladero project get started, with Argentina Gold?

JPJ: Well, I was a director of Minera Alumbrera, which was the company that started the development of Bajo de la Alumbrera, with Mount Isa in the chair, as part of the directorship of Musto. And then the Tequila came about, and we were having financial problems-

XL: Sorry, the what came about?

JPJ: The Tequila. The crisis in Mexico, it was called “Tequila” here. Mexico had a banking crisis that had consequences for all of Latin America.

XL: Is that when Mexico renationalized all the banks?

JPJ: 1995 – 1996. Argentina Gold essentially came from a meeting we had with Adolf in Buenos Aires in 1993, I think it was. I told him, “Adolf, besides Alumbrera, there are many other opportunities here.” He said, “Well, why don’t we form a company and go after them?” There was a subsidiary, a shell company they had that was called Napoleon Exploration. That name might have worked in an Anglo-Saxon culture, but in Latin America it wasn’t taken very seriously, so we changed it to Minera Argentina Gold. We had a very good project called Poposa, and there was a tender of some reserve areas in San Juan. One of them was called El Carmen, and the other was Veladero. We participated in this tender, and we competed against Lac. We offered an NSR to the province, which Lac hadn’t, so we were sure our offer was better, but the province awarded it to Lac. But then it turned out that there was a frontier zone prohibition, under which foreign companies couldn’t be awarded exploration claims near the border. And Lac, through its various companies that held El Indio mine in Chile, had some antecedents of trespassing over the border. There was a pre-condition of the call for bids that the army had to clear the applicants submitting bids. It was an old law left from the military days, but it was still in the call for bids. So, it was never awarded to Lac. I went to the Minister of Economy, whose name was Cavallo, and said: “Okay, we’re the second in line.” There was some discussion and we eventually were awarded the claims. We ended up doing a joint venture with Lac, in which they got 60% of El Carmen, and we got 40%, but we were carried, and for Veladero, we got 60% and they got 40%, but their 40% was a contributing interest.

XL: So, you got them to pay for most of the work.

JPJ: That’s right. We were the awardees, so we had, “la sartén por el mango” (“the pan by the handle”). [laughs] La sarten por el mango, so we could hit them on the head.

XL: Is that Lac, L-A-C?

JPJ: Yes, in those days they were a very famous Canadian company, because of their involvement in a lawsuit against Corona over the Hemlo gold deposit. They lost.

XL: So, they got 60% of El Carmen, and you got 60% of El Veladero, which ended up being the big one.

JPJ: Yes. And Lac had El Indio, which was a very famous, rich epithermal gold vein mine in Chile, right at the border and not that far from Veladero … something like 8 kilometers, they also had Nevada now Pascua.

XL: Fascinating. You really have been involved in some big deals.

JPJ: Yes, and after that, Lukas bought the land between El Indio and El Veladero, from Luksic , for Cd $13 million. That was a really big deal for us, as a junior. When all was said and done, we had invested some US$33 – US$35 in Veladero, between the purchase of all this extra ground and the exploration done.

XL: Are you exploring some of that extra land now?

JPJ: No, that all went to Homestake, now Barrick.

XL: But isn’t Tenke, another Lundin company, exploring in the same area?

JPJ: No, after Veladero, we started another company called Desarollo de Perspectos Mineros (DEPROMINSA). It’s a subsidiary of Tenke, and we are exploring about 80 kilometers north of Veladero. We’ve come up with two porphyry copper prospects which are running some very decent grades, like 0.6% copper and 0.6 grams per tonne gold. We’ll be busy drilling them this summer.

XL: So, that’s your focus now?

JPJ: Yes, that, and we have a third project called El Bagual, in the Santa Cruz province of Argentina. We’re getting very, very high grades-8, 10 and 40 grams on surface-high silver values there, and we’ll start drilling in January. [Tenke has announced the commencement of this drilling.]

XL: And what are the other two prospects called?

JPJ: One is called Jose Maria, a copper-gold porphyry and the other is Vicuña, on which we’ve done a joint venture with a Japanese group called the Japanese Oil and Gas Agency. They will contribute u$ 5 million over the next four years for a 40% interest. We’re still the operators.

XL: And you get to spend other people’s money. Very good. Of these three, which do you think is the most exciting?

JPJ: That’s a good question … I think both Jose Maria and El Bagual are very, very exciting. The only problem with Vicuña is its very high elevation. But there we’re dealing with 20 alteration zones, so it’s very, very big.

XL: Does that complexity make it more expensive to define the mineralization?

JPJ: Yes, exactly. That’s why we decided to JV it. So, we’re poised now for another big bang, like we did with Veladero and Bajo de la Alumbrera.

XL: If you had to guess, which one would you say will be the next home run?

JPJ: It could be any of these three, but it’s too early to say. At Jose Maria we have only ten holes. We should know by the end of the current drilling, perhaps by April, whether we should go forward with infill drilling or not. At El Bagual we have no holes, but it’s only 200 meters above sea level, so we can work year round. If the January drilling is good, we could be looking at the drilling needed for a resource by July. And at Vicuña we have 20 holes, but it’s a seven-by-one kilometer anomaly. We’ll have four rigs turning this season: one at El Bagual, two at Jose Maria, and one at Vicuña.

XL: You’re a geologist, but you also have a degree in business. Do you follow the stock side of your companies, or do you leave that to the others?

JPJ: My involvement isn’t with day-to-day operations, but still with the technical side, the geological side; I seldom watch our stocks.

XL: Do you have any thoughts on how fairly the market is valuing Tenke for its Argentinean prospects, or discounting them because of the Congo prospect?

JPJ: We just did a tour of North America-New York, Toronto, Boston-and what we found is that some investors are only valuing us for our Argentinean properties, and giving the company nothing for the African side; Others give Africa importance in spite of Congo. When you see that Tenke Fungurume is one of the greatest deposits in the world, with 3% copper and cobalt upside, and consider that the situation might be resolved …

XL: Well, that’s just it. The DRC has been such a mess for so long.

JPJ: Yes, but we see that the World Bank is trying to help them, and the problems have mostly been in the northeast, and we’re so far in the south that nothing’s ever happened there. I can’t say that they’ll end force majeur next week, but when that happens, the shares could increase substantially, just based on the Congo property. Back on the Argentina side, I think investors have heard our story, and expectations for our 2005 drilling are pretty high.

XL: You know, about your comments about the improving legal climate in Argentina, we’ve heard that about many Latin American countries. In spite of the socialist rhetoric of their leaders, many of them seem to be converging on a more pro-business, pro-foreign investment way of doing things. Is that how it looks to you?

JPJ: Another good question. Overall, I would say that the tendency is upwards, towards a better atmosphere. But you will always have minor setbacks and reversals. Remember that these are not mature countries for exploration or investment. In Chile, for example, they are reconsidering their royalty law. There will always be problems, but I’ve always felt that if you have local management helping you, and you have persistence over the years-which is what the Lundins have shown-the rewards can be huge.

XL: You say minor setbacks. You don’t see any renationalizations of industries in Latin America in the next few years?

JPJ: Not that I can perceive. When I say minor setbacks, I mean things like what happened at Esquel, in Argentina, which still has not been resolved. That sort of thing, involving local communities, as is happening in Peru. Those are local problems that require a lot of patience and ability and time to resolve.

XL: Do you think Esquel will ever become a mine?

JPJ: My answer is an unqualified yes. The question is, when? The government hasn’t taken a proactive attitude because they are dealing with other, larger problems. But I think it’s going to be resolved.

XL: How about beyond Latin America? What do you think of the global economy and the prospects for resources?

JPJ: Our attention has been focused on China by world media in the last years. In Argentina, we’ve had a visit from the Chinese president, from the Japanese authorities and those of Korea as well. So people here are very bullish on selling resources to Asia. On the personal level, as an investor, I have always been consistently supporting gold, in spite of all the low prices, such as when the dot-coms were the fashion. My view is that when humanity has problems, the price of oil and gold go up, and that’s the way it’s looking again now. If I had a portfolio to invest, I would carefully weigh how much of those commodities to hold. But there are a lot of good opportunities out there. The health and tourism industries show a lot of promise for investment as well. But I feel very confident about the prices of metals and gold in particular. We all know they are cyclical, but in the long run, I think they are great.

XL: So, the recent correction in gold, you think that was just a hiccough?

JPJ: [laughs] Well, we all know that before Christmas, people take their profits. We’ll see next year. There hasn’t been that much production, and while people point to all the gold held by the central banks, I think there is more to the picture than that.

XL: Very interesting. So, one of the things our readers like to know is if there are any other companies out there that you respect, that you believe are “doing it right.”

JPJ: There are several successful juniors I respect, and the majors, generally, do have technical staffs that are, I would say, brilliant, though they cannot always do what they would like to do. People like [Ivanhoe Mines’ Robert Friedland], what he has done with the ups and downs, is certainly admirable. There are so many, and I’m a bit isolated here in Argentina, to know them all. There’s the fellow who discovered Pierina, Lowell, the porphyry expert from Arizona. I have always admired Ray Woodall (Western Mining).

XL: All right then. Any final words of wisdom?

JPJ: I would say that persistence over the cycles of metals and the politics of various countries does pay. The Lundins have certainly excelled at taking such risks and turning them into profit, not only in Argentina, but in other parts of the world. One wonders sometimes, how they do it-how they do it so often.

XL: Yes, though they’ve lost some too.

JPJ: Of course. You have to lose some in order to win some. It’s the ratio that matters.

XL: Just so. Well, thank you very much for your time and your interesting stories.

JPJ: You’re very welcome. Un gran abrazo. [A large hug.]