Good day, and welcome to the United States Antimony Corporation Conference Call. Today’s conference is being recorded. Before we begin our presentation, I would like to advise you that today’s call will include forward-looking statements within the meaning of the federal securities laws. Our presentation will include statements regarding our projections, estimates, expectations, beliefs, and assumptions. These forward-looking statements will relate to among other things our revenues and production. These statements are qualified by important factors that could cause our actual results to differ materially from those reflected by the forward-looking statements including those factors set forth in the Risk Factors section of our 2015 10-K form and our current 10-Q if applicable. These reports also include glossaries of certain industry terms that may be used in today’s conference call. The full forward-looking statements disclaimer is included in our press releases and this disclaimer is in effect for the duration of the call. At this time, I would like to turn the conference over to Mr. John Lawrence. Please go ahead, sir.

Welcome everyone to this quarterly investor call. And I’m going to call on our CFO, Dan Parks to give a thumbnail sketch of the figures for Q2 referenced last year and Q, and then at that point we’ll start in on the rest of the presentation. Dan, it’s all yours.

Thank you, John. For the second quarter of 2016, we recognized a net loss of $156,670 after depreciation and amortization of $213,450 on sales of $3,014,394 compared to a net loss of $197,761 after depreciation and amortization of $222,375 in the second quarter of 2015 on sales of $3,388,242. The loss in the second quarter of 2016 was primarily due to a decrease in the price of antimony from $4.06 in quarter two of 2015 to $2.81 in quarter two of 2016, a decrease in the price of $1.25 per pound. For the first six months of 2016, we reported a net loss of $345,276 after depreciation and amortization of $442,100. For the same period of 2015, we reported a profit of $242,267, the profit primarily due to a negotiated adjustment of $914,967 to the company’s cost of raw materials. For the second quarter of 2016, our earnings before income, taxes, depreciation and amortization was $86,780 compared to an EBITDA earnings of $24,614 for the same period of 2015. Our antimony sales were 732,802 pounds for quarter two of 2016, an increase of 59,917 pounds over the sales in quarter two of 2015, an increase of 8.9%. Our revenues for quarter two of 2016 were less than our revenues in quarter two of 2015, primarily due to the decrease in the price of antimony. Gross antimony revenue net of discount was $2,056,644 for quarter two of 2016, down $676,113 from quarter two of 2015. Again, the decrease in revenues was due to the decrease in the price of antimony from $4.06 during the second quarter of 2015 to $2.81 in the second quarter of 2016. The amount of metal sold from Mexico production was approximately 422,000 pounds for the second quarter of 2016 compared to approximately 360,000 pounds for the second quarter of 2015. For zeolite, during quarter two of 2016, our Bear River Zeolite sold 4,218 tons of zeolite, an increase of 287 tons, 7.3% from the same period in 2015. During the first six months of 2016, BRZ sold 7,315 tons of zeolite, an increase of 352 tons, 5.1% from the same period in 2015. During quarter two of 2016, Bear River Zeolite realized a net income of $100,472 compared to a net income of $154,157 for quarter one of 2015, a decrease of $53,685. During the first six months of 2016, U.S. Antimony shipped $529,501 of gold and silver compared to $182,798 for the same period of 2015, an increase of 189%. This included gross revenues of $226,532 for Hillgrove gold, of which $205,158 was paid to Hillgrove for a net precious metals revenue of $324,343 for this first six months of 2016. Back to you, John.

Okay. Dan, thanks for the microscopic view of the company. And I'd like to take a second and zoom in on the macroscopic view of this company. Three points. The first is that we’re in a phase of rapid growth and its rapid growth in all three sections; antimony, silver and gold and zeolite. Secondly, as a result of the depressed commodity market and a somewhat flat world economic economy, we have done two things. We've reduced costs out of absolute necessity and we have increased production. So we're poised for an increase in prices and marketing. The third thing I've got to point out is the company has not gone outside for funding. And during this period, I think it's an outstanding accomplishment. Turning briefly to antimony. The overall price decrease started about 6.5 years ago and the price of antimony metal as antimony metal or as oxide has fallen from $8 a pound to the $2.81 level during the first half of 2016. This is the lowest it's been and as a matter of fact since – as Dan pointed out, since Q2 of 2015 it has dropped $1.25 per pound to Q2 2016. The important thing here is historically the antimony market is a very thin market, primarily production is China and it's thin in terms of inventory and we have seen very rapid increases in the price of antimony that can be triggered by dock strikes, the closing of the Ho Chi Minh trail outside of China or a low inventory level in Europe. This will typically spark a rapid buying into the market which actually compounds the upward price. And this happened historically in late 1969 when the price went from roughly $0.60 to over $4 a pound in one week. I’m going to call on Matt Keane who is our VP in charge of sales for antimony for a quick view of what's going on right now on the market. Matt?

Thanks, John. While you touched base on a few things that changed the market and I think it was about in February when we heard that the Chinese were going to restrict their exports by about a third I think we figured of antimony metal and that's about when the price started to move and it hasn't continued, or it has continued to move ever since. In February, the average – this is in the U.S., the average U.S. low price, the average U.S. price was $2.44 where at that time in February our average United States Antimony’s average was about $2.56 and that's for metal contained. Currently that's changed. That’s come up considerably. The U.S. average currently as of just last week was about $3.05 while United States Antimony's was $3.13 per pound. Even though the economy may seem a little slow, we still have seems like plenty of customers that want antimony oxide and antimony metal. A lot of calls on antimony metal and then our oxide customer base is real strong with consistent orders. And we feel that – or it looks like this trend is going to continue, the upscale trend is going to continue just from what we've seen over the past few weeks. It's been jumping $50 to $100 a week and we hope that's the case. That's about it for me, John.

Okay. Thanks, Matt. How are we going to increase profitability in antimony besides price increase? And we have essentially three sources of feed. One is North American, one is Australian and the third which I regard as our sleeping giant is our Mexican mining feed. In the case of North American and Australian production, we have a cost factor we call in the smelting business a TC, a treatment charge. And then we enjoy a percentage of the profit. In terms of our Mexican production, we do not get a portion of the profit, we get all of the profit. And we think that as we ramp up in terms of production, our costs will be less than our cost of the North American and Australian feed. We’re not tied to a bracket. And if the price goes up $1 that basically hits the bottom line. Our properties in Mexico include Wadley which historically has produced up to approximately 5 million pounds per year contained antimony; Soyatal, which was a huge producer in the past, third only to Wadley. And a third property which is Guadalupe, which has been produced or almost no production records on it, but it was a very significant producer of sulfide material which is particularly important in terms of low-cost smelting. Russ, are you there? Okay. Basically, our Mexican smelter which is in [indiscernible] is producing both Australian feed and also we’re phasing in production from Wadley and Soyatal at the present time. I’m going to go ahead right now and touch on the second leg on this three-legged stool and that is silver and gold. Silver has come up more than 40% since the beginning of 2016, gold is up more than I believe 22% and in terms of commodities this is an incredible…

Yes. We have our silver and gold operation regarding Hillgrove worked out very well. We have two people fully able to do the leach process and we have four people fully able to do the pyro-metallurgical part of the process. We produce roughly 20 tons per week of gold. And of course that gets sold to a refiner and we think that's going to continue. We’ll do whatever we can to increase it. Thoughts on the silver from Los Juarez, it's a much bigger operation than what we're doing right now and it's a fairly straightforward procedure that we’ve worked out and it involves dissolving the silver out of slag and cementing it with copper bars. We get a silver that varies anywhere from 95% silver. We've had some as high as 99.9% silver; very marketable and that's, well it's a few hundred ounces of silver per ton of concentrate. So it's going to be a large volume to handle and when we get into full production, we’re obviously going to need larger equipment than we have now. I think that’s it, John.

Okay. Just to comment and projecting here even on the pilot mill operation, we could be in the neighborhood of 350 ounces of silver per day and as high as 4 to 7 ounces of gold. We have seen in the milling process and sampling spikes where the grades are much higher, but we anticipate that we take the conservative view. The drilling will allow the world to see the size of this deposit. And we plan to do it initially all from internal cash flow. But the vision will be a plant much larger than the pilot plant. I’m going to turn quickly now to zeolite and Dan has discussed the numerical background on it. We continue to increase production. The significant advances include an installation of a vertical shaft impactor for crushing and it has doubled our capacity to make granules. And in terms of the plant, we run various crushing operations using hammer mills, cone crushers, jaw crushers, but the bottom line at the end of the day if we take 100 tons of mined zeolite and we make granules, we end up with what we call minus 40 mesh and it's the fine material. So as a result of a large order and especially a result of line one coming on stream, we ended up at the end of Q2 with approximately 1,500 tons of what we call minus 40 mesh. This was discounted by the accountants and I think the inventory value is perhaps $20 a ton. But had it been sold, it would've made a major turnaround, a major improvement in profitability. So looking forward, we at this point have a surplus of minus 40 and on a normal production day, we're gaining about 100 tons a day of this product. So here is…

All right. Outlook on pricing is these are all gut feelings from just a salesman making calls. Maybe giving a bit more competitive on zeolite, it seems like there's a little bit more competition in the market. One thing I can say about that is 16 years ago when we started selling zeolite, my phone calls were cold calls; not too many people except on those that did, didn't know what zeolite was. And now that's changed. As John said, we’re making – we’re reaching out to the agricultural market a bit more than we have in the past. And the response to my phone calls have been pretty positive. People seem to know what zeolite is and are willing to listen. Those that don't know what it is, they’re still willing to listen. So that’s a real positive thing. Zeolite is becoming more of a household industry type word and that’s going to help us a lot in the future. Our sales are strong right on the average last month and this month. The big markets – the strongest markets are still water filtration, agriculture. And within agriculture, you've got subcategories like animal feed, which John talked about. We’re already doing a lot in animal feed. That’s probably our biggest market in the agricultural area. Soil amendments is the next and then composting is probably the next one within all that agriculture. Air filtration is still big, numerous truckloads a month. Synthetic turf remains strong, especially this time of year [indiscernible] year was strong. Order control is still a big one. And then miscellaneous. We still touch on all the miscellaneous landscaping which we call hardscaping; SpillCleans and as John mentioned that we're reaching out again into the oilfield industry. We hope that's going to pick up and it has great potential. Maybe if the price of oil keeps coming up a little, that will help a lot. And then animal litters is still strong also. So we see nothing but a lot of positives out there. John. Thanks.

You bet. We’ll go ahead and open it up to questions at this point.

Thank you. [Operator Instructions]. We’ll now take our first question from Dimitris Mentis with Arthur Wood [ph].

Hi, Dimitris.

How are you, John?

Good.

And Russell – I’m sorry, Matt not Russell if there’s anyone else on there. I know there’s some of the heavy breathing.

Yes, I think that someone’s breathing real heavy in the phone, it’s really upsetting.

So I’ve got a bunch of questions. And I came on late, so first let’s just go with zeolite. You spent some time on there. The zeolite expenses were up, profitability was down relative to a year ago. Did that have more to do with bringing up that --

Bringing up what, Dimitris?

That second production line in recently.

It did. And the reason is that we suddenly – we had a major order for granules and in making those granules, we produced a tremendous amount of minus 40 mesh and it was not valued at a normal inventory price. So it became a burden to the production numbers. It was the cost of producing that was included in our sale of granules. But it was not inventory at the full amount. And this presents really a tremendous opportunity one is to liquidate what we have in inventory and secondly is to handle the increased fines from production from two lines now.

Okay. And as regard to Hillgrove, in the last conference call there were three SRF that were still in progress, some of those Hillgrove SRFs that were still in progress to be fabricated or aligned or whatever, they still were not up. How are we on that?

There were actually I believe three and we have at this point 17 that are there. There are still two that lining is necessary in them and we’re working on that right now. We have been doing some work on the LRF which included the installation of a dryer. In other words, the constant crates we run in the LRF typically 11% moisture and it’s affected the production rate on the LRF as well as corrosion of the equipment. So we have prioritized that right now, Dimitris.

So is the LRF up and running or are you saying that there’s some sort of maintenance going on there?

No, it’s up and running. And simultaneous with that, we’re bringing the dryer online.

Okay. And the reason I ask, I know that sales for this quarter were 733,000 pounds versus a year ago 673,000. That was total. In Mexico, 422,000 pounds versus 359,000 pounds. And I guess a year ago we didn’t have the LRF warning. So I’m wondering – I know that you have to use some for the slag but I’m wondering should investors have been looking for a larger – some larger numbers? I know these are sales numbers and maybe not production numbers, can you scale production higher than what sales have been? A year ago, we didn’t have the LRF.

I don’t think so directly, Dimitris. So I don’t think that’s a major factor. But as we pointed out, the production of our own material, from our own mines in Mexico I think are going to give us a much better margin. And we were committed to produce primarily Australian material, so it’s just in the last quarter that we started to phase in our own production from Wadley and Soyatal and that will be ramped up by the end of the year to where we’re hoping that that will completely replace Australian production and we’ll take it from there. In other words we’ll continue to ramp up. And we will use the LRF which is restricted to high-grade concentrates from production from Guadalupe where we actually make a 60% to 65% concentrate.

Okay. But still that doesn’t really answer though. We only sold 422,000 pounds from Mexico this quarter versus 359,000 pounds in June of 2015’s quarter in Mexico and I’m wondering now we have this LRF. So weren’t we supposed to get a big production gain with that LRF?

That’s a little bit more involved and let me just say what happened. We had a very strong quarter for antimony production in 2016. Why? Because we shipped the product as metal from Mexico and we did not make a gold recovery involving that step. Now we have actually had to cut our antimony production slightly to process the gold.

Right. You snap [ph] the SRFs for producing metals out of slag I believe, right?

Correct.

Will that be the same process? I don’t think so, but will that be a problem or part of the same process when we have to do Los Juarez metal?

Not to the degree and this is a very technical thing. But when we produce a concentrate from Los Juarez, it will run anywhere from 250, 300. We’ve seen concentrates that have 700 ounces of silver and 7 or 8 ounces of gold per ton. Another words, it’s a very high-grade concentrate as opposed to for instance Australian concentrate that only contains – it’s primarily antimony but only contains about two-thirds of an ounce of gold. So in terms of throughput, if we have on this pilot mill 1 ton of concentrates per day, we’re not talking about using much over one SRF for that total production. And that’s what’s so beautiful about Los Juarez.

Okay. And I think the average cost was, what, 281 is what you retrieved in the second quarter. And I know for the last couple of months we’ve been talking about how the pricing has gone to 315 per pound I think on antimony metal. Do we start realizing that in the third quarter, these higher prices, and don’t you guys even actually get a higher price because you sell less than truckload batches and are you still doing that?

The answer, Dimitris – there’s two answers here. Yes, we do sell at prices higher than a truckload loss – for LTL, less-than-truckload loss, but we also enjoy a premium over Rotterdam due to quality, being a domestic producer, et cetera. Now in terms of – okay, Matt reported prices are coming up but typically for production purposes and insurance, Matt is selling one, two and historically three months in advance. And the reason for this is that for the last six and a half years, the price has been coming down. So if he can get a price which is at least equivalent to what we didn’t get or a little bit better, he’s been taking it. So now that prices are going up, we’ve shortened the spend and I think basically he’s selling one to two months ahead. So the price increases that happened with Rotterdam pricing in Q2 we do not realize until this quarter.

Okay, until this current quarter.

The one we’re in, Q3.

Okay. That’s what I thought and I just wanted to hear it from you.

Dimitris, this is Matt. When I give you the current USAC price unit and I said antimony price of about 313 as an average, I was really only using my bulk commodity sales on that. I wasn’t using all those small ones that I might get $6 a pound for or even up to $7 a pound. I want to kind of compare apples-to-apples so that the U.S. average for metal versus our average for the same time, the less metal in truckloads. So our actual average is probably more than that, is definitely more than that.

Okay. Thanks for the clarification, Matt. I ask because the 281 I saw was the average price in the second quarter but I realize that now we’re in the third quarter.

Right.

And before I hop off, just a couple more. I know Gus referred to more equipment. John, I think you used the word vision. As we need – we’re talking about something much bigger than a pilot plan, that’s going to need funding and I know you said currently we only have internal funding. Would you think about doing some sort of raise or taking some debt to if we do get the permitting okayed and really try to accelerate Los Juarez in some of these Mexican properties?

Okay. Now this is my personal strategy so to speak and I don’t know that I’m speaking for all the Board members but the first step is to make sure of our footing on the pilot mill. Everything we’ve done so far confirms the success of the cyanide leach and a huge increase in the recovery of gold and silver. So with that being ramped up slowly, as as confirmed, we want to drill a limited area to substantiate graves. And this is going to be a minimal budget. And obviously to drill something of this size we’re looking at tens of millions of dollars. At a certain point it becomes academic we think. So first we prove the metallurgy. Second, simultaneous with that we drill a few holes and then I would expect the stock to respond price wise very significantly. And I would say if we want to accelerate it, that would be the time to do it where dilution is minimal. The potential speed of increasing production is major. But one other thing that we’ve done is we have already essentially purchased the equipment and the mill to go to 500 tons per day and it is permitted right now. So we’re not talking about a huge infusion of cash to go from 100 to say 600 tons per day. Thereafter, we may be looking at much more investment but nothing like a lot of the major producers where they hand off everything to outside contractors and predicate on new equipment.

Okay. And just for – I’m just trying to get a timeframe of when we think that we might have proven the metallurgical aspects of Los Juarez?

I would hope that we have that done by the end of this year.

Okay. We’re just going to start slow and if it gets big, we’re willing to accelerate you’re saying?

Yes, I think we can accelerate very rapidly but we don’t want to make the classic mistakes of mining companies where they run a PEA and then one to full-scale production only to find that they have a fatal flaw in some of their original engineering metallurgy.

Okay. And then last question, I’ll let someone else jump in with some. I know we talked about the feed market back to the zeolite, a narrative and a supplement to all animals. Are there any benefits of Bear River Zeolite over other zeolites in this particular application?

Yes.

And are there any limitations on the consequential side of the limitations also?

I don’t know of any limitations but the --

Can you explain the benefits I guess, because I’m not sure?

Yes. The first one is that we have a very high cat iron exchange capacity. It rivals anything else in the world. In other words, it will exchange with various cat irons. The most important in the ag business is ammonium. And it binds it and it releases it slowly to the animal so that you get a better utilization of the ammonium, especially when it is what we call NPN, non-protein nitrogen, such as urea or if it’s a distiller grain, in other words from the production of ethanol. The high introduction of nitrogen does not founder the animal but it releases it slowly so they utilize the feed much better. Secondly, it has very little play so that it’s a hard granule compared to other zeolites. And this would apply to water filtration, waste water treatment, so forth. Third is that it has no soluble sodium. Sodium is a detriment in most feed materials and it’s also a huge detriment in terms of ending up in the manure and putting it on the field. It causes all sorts of soil problems. It’s been tested --

One point on that, John, is that instead of we do have a lack of sodium but we are very high in potassium.

Exactly.

Which you have to buy to put on the soil anyway.

Okay.

In other words, the potassium – if you’re going to buy the potassium that we are essentially selling free, Matt, what did you figure the dollar value was for potassium?

The dollar value for potassium in our zeolite is $28 per ton.

A huge advantage. I could go on, Dimitris, but those are the important ones.

Okay. And can I then just interject? Matt, I think you said something about – from the sales of your more competitive pressure --

A little bit more of course with more – go ahead and finish your question I guess.

Just to say if Bear River Zeolite has all these attributes for this particular application, I’m trying to dissect that in more competitive pressure? Competitive pressure usually means that maybe pricing might come down.

And it may in certain areas where we’re low on sodium, you can use our zeolite as a soil amendment. Where another zeolite is maybe giving us some competitive pressure is high in sodium, they can’t enter that market. So we might have to just select our markets a little bit more is all.

Okay.

Dimitris, let me just interject one thing that we have just done. Selling into that market is very, very important. And the best sales people would be actually nutritionists. But secondly you don’t walk into a dairy operation and cold. The person not only should have experience in bionics and so forth, he should have a chemical background to talk to the nutritionists. And I think we are solving that with the hiring of this new man who knows it inside out. Also, our Canadian sales person is very knowledgeable in that field and he’s selling into a variety of animal feed markets in Canada right now, always has. So I think the marketing is important – not as important as the product but similarly very important. You can have the best product and no sales staff in that area and miss out.

I think line computer [ph] is an example of a great product but couldn’t sell it. Sometimes it’s all the marketing. I’m going to get someone else come in with questions.

[Operator Instructions]. We’ll now take our next question from Charles Paradise [ph], a private investor.

Hi, John. [Indiscernible] I’ve been in U.S. Antimony for many years now since at least 2009. Robert Detwiler introduced me to the company. My first question is, tell me about the extent of the drill program in Los Juarez, how deep, how many holes? And can you please explain if the intent is for you to figure out where in the deposit is best to harvest from in order to get the richest ore, or is there something else – some other purpose that you’re putting --?

A little bit involved, Charles, on the answer but to start with, of course we sample the property; rock chip samples on the surface. And it was also done by various other people and companies. And the first thing we noticed is that we could go ahead and take a sample of rock chips in one area and move it over a matter of two or three feet and one assay would be like as high as 47 ounces per ton of silver and the next one would be 3 ounces of silver. So this was the first question what do we believe? So it turned into the – and we tested this to begin with. We actually drilled short holes up to typically 1 meter but up to 3 and 4 meters. And what we found is that the drilling homogenized the rock. So we didn’t get the spikes and we didn’t get the lows. And that was the first reason for drilling shallow. Secondly, the cost of drilling shallow was very small. So rather than come in and drill one hole for $20,000, we were able to take that $20,000 and reach out over a wide area. And so basically it told us and not only a more accurate homogenized number but it gave us an idea of the extent of this thing. And then in answer to your last question, did it focus in on one area versus the other? And the answer to that is yes, we are mining and have mined in areas that we verified with the drill. But the paradox is that in looking at all of these hotspots, they’re incredibly the same. So I can’t say that for instance the Reynaldo pit is any better than Mina Grande or any of the other areas we’ve drilled. It’s bulk minable. In other words, the mineralization is not confined to a narrow vein but it’s pervasive through pipes, some of which are hundreds of meters of whiff. It’s a classic type of gold deposit.

At one point I believe there were faces which I understand to be vertical faces going into the ore body and I don’t know how – do I remember correctly there were five faces that the company had named for its internal use? I’m wondering how much experience you have with those five faces to say what type of wealth or how rich the ore is coming off of each of those five faces?

Okay. We’ve mined at the present time about 30,000 tons of which we’ve milled several hundred actually several thousand tons. And the best sampler of all is the mill. Another words if you’re feeding 5 or 6 metric tons per hour, by the time it goes through the ball mill it’s very well homogenized. And we sample the belt going to the mill and we found that the mineralization is remarkably the same with the exception of hotspots now and then. The hotspots are hard to identify and we can’t selectively mine them. But they will show up in the normal mining process. So what we’ve done is we’ve established what we think is to use the term a global assay of the deposit. We are pretty well tied into a global average right now. We know what to expect in milling and metallurgy.

Okay. Now guessing here and I’m hoping that you will correct my guess or re-aim it. The consequences of having no drilling program at all is that the extent and the wealth of the ore body has no 43-101 compliant gauge, no measurement has been made that’s – at this point, I’ve never heard USAC ever say that it claimed so much reserves at Los Juarez. It’s been careful to say the opposite that there are no reserves claimed. Drilling gives USAC the ability to claim reserves. So if there’s a risk of just proceeding building up the LRFs, building up the mill, getting the permit to Los Juarez, apparently you got confidence in the ore body. Obviously myself and other investors do also because we’ve invested in it, but to what extent do you feel confident that the drilling program is a necessity for the company and also commit resources to pursuing that drilling?

Okay, a couple of comments. The first thing is to have a reserve, a reserve by definition has to be something that you can mine at a profit. And to begin with, the reason that the various majors who own part of this property got out of it is they could not make an economic recovery. So in effect you would have to say, okay, we have X number of tons of rock that we can’t make a recovery on and therefore we don’t have any reserves. So this is the reason and I would say that from experience and from a cursory examination of this huge deposit that we felt we had plenty of reserves just by experience but that we had to first demonstrate it could be mined to make a product that is profitable. So that’s the beginning issue. The confidence level is quite high and I’ve got to say I can’t reveal the other people that have examined it. But having gotten over the first hurdle of the recovery and demonstrate that, then I think the drilling program would enhance the investor confidence to identify this possibly as a world-class gold and silver deposit. Now in terms of the 43-101, there have been many 43-101s where perhaps they skipped the second step, the pilot testing and so forth and have jumped into full production only to fall flat on their face. In other words, the 43-101 does not guarantee anything until it’s tested. And the PEA actually doesn’t do that either with any very high degree of confidence. So when we have done this, when we’ve proven the metallurgy, are we going to do a full-blown PEA or a full-blown 43-101, the answer is probably no because the cost of drilling this thing out even to 400 meters is just huge. So we will take a selected area and we will drill that and we think perhaps continue our shallow drilling program and say, okay, this is our global average. This is the tonnage we’ve blocked out to say 100 meters and maybe it’s 100 meters by 100 meters or perhaps even 100 foot by 100 foot by 300 foot. And that will be plenty of reserve for the pilot mill and will get us into the 500 ton category and will further increase our confidence and our ability to make an economic recovery. Thereafter, as much money as you want to throw into a 43-101, we will be in production. We’ll have some drilled out reserves via the protocol, the 43-101 but in a smaller area.

Now a couple of equipment questions. U.S. Antimony owns the drills that would make these holes, is that not true?

We have and it depends on what sort of drill we’re talking about. But yes, we have equipment that’s currently in use at Bear River Zeolite and it’s actually a Tamrock that’s now owned by another company but it’s capable of 250-foot hole by air. We wouldn’t be using a drill fluid such as water and it can do it very quickly. And that’s basically what we would have in mind. It would be a hydraulic hammer with air recovery of the cuttings. And we do that over – we would use that favored over a conventional core drill because there’s almost no water in this area. We’d have to haul the water in. Secondly, it’s much faster. Third, it’s much cheaper. But we would probably twin one or two holes with a core drill.

Okay. And turning a little away from this subject of defining the ore body but a second equipment question. If I understand correctly there’s a number of LRFs or materials from which to construct LRFs that have been purchased. Do you see that as being allocated for future use at a greater capacity time or do you contemplate the assembly and use of more LRFs in the immediate future?

Okay. The LRF is designed for running a high-grade concentrate and I would say that we could go down to maybe 52%, 53% antimony. But it would be used on high-grade concentrates. And they’re to some degree proprietary and we build them ourselves at a fraction of the cost of having them build. Is that what you meant or are you referring --?

Well, it is what I meant. I guess what I would like to have is the sense of whether you want to build and put into operation more LRFs immediately or if you want to do that later when there’s a more urgent need for more LRFs than may be here in August 2016?

I think later, Charles. In order words, right now we want to focus on getting the leach plant in at Los Juarez and it’s not going to require initially over one SRF. Now the SRFs are used primarily where the grade is lower than we have to handle slag. That’s the drawback to the LRF.

And John, the turnaround time for us to build an LRF isn’t that long as compared to --

Right.

And you have materials from LRFs on hand I understand.

Well, we would purchase steel and refractory that and the hydraulic equipment.

Okay. The cost of the drilling, it sounds as if you are contemplating doing this drilling in phases rather than all in once. Is that correct? Your first goal is to do enough drilling to run a 500 ton per day mill, is that – John, am I understanding that correctly?

That’s correct and we wouldn’t do it all at once, Charles. What we would do while we’re running the pilot is we would probably buy another drill similar to what we’re using for blast hole right now and put it out there and we would be drilling simultaneous as we’re mining, et cetera. It wouldn’t be a huge cash confusion at one point.

What’s the shortest that approval could – forgive me if you already said this on the call, I may not have retained it. What’s the earliest that a permit for the cyanide leach might be granted or at least engage in a dialogue to answer questions they may have?

Technically from the time we filed, they have 60 days to respond. And I think we’re at this point within 30 days, maybe less of that first response. And the first response will be probably additional questions. And we will answer those probably very quickly. And then they have 20 working days to respond to those questions. And there may be another set of questions again another 20 days but typically the first set of questions will do it.

Good. Well, I certainly have more questions but I asked quite a few. I think I’ll turn it over and let somebody else ask questions now. I’m happy to understand that the natural gas pipeline is continuing to perform well and that’s all for me. I’ll hop off and let somebody else continue if you comment on that, I’d appreciate that.

We’ll now take our next question from Marshall Barrow with BLSH Financial [ph].

Hi. Thank you very much. Hello, John.

Hi, Marshall.

A couple of questions. For the pilot plant, how long do you anticipate operating that as a pilot plant operation to get the information that you’d be seeking from it?

In other words following the permit, Marshall, we will install one leach tank and we will also install the pond. And we will confirm the retention time, the optimum retention time for the cyanide recovery. At that point we will probably add another three leach tanks possibly as many as another seven. And by the time we get to the second or third leach tank, we will have confirmed the metallurgy and we’ll know just what else we need on that. It will also be a shakedown. This is a carbon recovery of gold from cyanide solution. So there’s several phases to this thing. The first is the tailings will go into a cylindrical agitated tank with cyanide solution. And that we call the leaching process. From there, the – and carbon is introduced to that. In order words, when the gold and silver is leached, it is absorbed by the carbon. The second step is the carbon handling and that includes the desorption of silver and gold and the regeneration of the carbon. We think – and it also includes a step which is called Merrill-Crowe and that’s the recovery of the silver and gold by adding zinc. We have run a leach plant using Merrill-Crowe before. We actually have four of the agitators that we used in that plant and we will go ahead and construct the Merrill-Crowe and carbon handling. We were quoted by a third party just for the carbon handling, which is a minor step of the deal for the equipment of 1.5 million. We think we can pull the full-scale leach plant with the carbon handling and the pond for roughly under 400,000. And we’re to farm this thing out I think we’re looking at easily several million dollars. So it’s going to be pretty rapid. And the first thing of course is retention time. We think we know what that is by test work and secondly will be the shakedown of the carbon handling equipment. But we’ve already done this in the past, so we think we’re pretty care footed.

So is that like 6 months, 9 months, 12 months?

I would say once we get started, it would be within six months.

Okay. And then on another question, another issue. Several years ago you had one of your good sized Mexican neighbors were drilling next to Los Juarez and are they still doing anything or what’s going on in that regard?

I haven’t talked to them for about a year and a half but when I left, we were talking about possibly mining their material and actually shipping to one of their refineries. They are our neighbor and they probably have about 15% to 20% of the ore body. And they’re not real excited because I’ve had problems in other areas and namely a large part of the ore body is under the Queretaro [ph] called Los Juarez. And our plan would be to mine that underground which is completely legal. So that’s where that stands. And we at some point are going to have an exchange of information and we really want that drill information. They drilled five holes to 400 meters.

And they haven’t done any drilling subsequently?

They didn’t do anything last year and of course silver and gold were pretty much in the tank and their other operations, for instance, in copper and other metals, the market for ferrous metals has been in the tank. So everyone has had issues, including them.

Okay. Thank you very much.

You bet.

[Operator Instructions].

Hi, John.

Hi, Mark.

How are you? I see our heavy breather has left, much better now. I’ll leave antimony alone. I see you got your cost down. Let’s just hope that the upward trend in the price continues. That would be a nice thing. Just getting back to the gold, I do remember specifically whether it was a year ago or two years ago when your neighbor was drilling down to 400 meters that they said that there was, “Good gold the whole way down.” Am I wrong?

Mark, I’m sort of restricted to comment on that if that gets you anything.

Okay. To get a sense on – you get the approval, you get the pilot out of the way and we get up to the 100 plus for 500 or 600 tons a day. Excluding hotspots, on what you have seen, on what you’ve refined already, can you just give me a sense of what kind of yield we could expect on that type of small project at 500, 600 tons a day? Have you done that math?

Well, I’m going to let you do it but you have in our mailings the global assay that we think is the global assay from very detailed sampling of mill runs and you also have an idea of recoveries of those values. And I think you have an idea of cost. So you can – by simple arithmetic come up with a rough ballpark of what that might yield for us.

Okay. I don’t have it at my fingertips. You’re going to make me work.

Yes.

Okay. Well let’s switch to – I don’t know if we’re talking 5 ounces, 50 ounces or 500 ounces?

Okay. Per ton, Mark, we’re in the 3, 3.5 ounce per ton silver.

Okay.

We’re in the 0.04, 0.05, possibly 0.06 gold and those are ounces per metric ton. And with a little depth which we have seen in the milling, we’re talking on the order of 0.5% antimony.

All right.

And I think that the number at today’s prices is – I think I ran it in the last news release, so I think it’s in the order of $140 plus.

Okay. I just got 155.

Okay. And then like I was saying, 155 – so the cost we’ve discussed and we’ve made projections in the past but it’s substantial and there is also a cost reduction factor by increased tonnage.

Okay. Well, I’ve got a gross revenue figure of about $93,000 a day. So that would not hurt my feelings at all. Okay. Let’s just switch to zeolite real quick and I’m glad that you hired a new sales person there that knows the business.

Two people, Mark.

Two, okay.

Two new sales people, yes.

So would they be going in trying to – visiting these huge feed blocks in the Midwest, trying to educate the people on the uses of adding or the purpose of adding zeolite to the animal feed, or are you going after existing users of zeolite and trying to measure on existing business that other producers have? You’re going in either on yours is better, will do it cheaper, what is it?

Okay, the first fellow is already selling into that market but he’s selling a clay product. And the zeolite is much better. So he’s not reinventing the world or having to reeducate a lot of the users. And I think from that standpoint, he has a shoe in. And the market is huge. And we look at just the dairy market, the two leading states are Wisconsin and California. He lives in Wisconsin. He’s in California today. He’s setup, for instance we will be going to the World Expo of dairy cows held in Madison, Wisconsin beginning of October, then headed to Florida where there’s a sizable herd and the next areas are New Mexico which is a third biggest producer of milk, New York is another one. So the market exists and he will be replacing what he’s been currently selling with zeolite. Some of those people are already using zeolite. We are currently marketing into a very narrow part of the market and this is a huge market, absolutely huge.

Okay. Because to me it would be very difficult to convince people that have been in the business or it’s been run a certain way for 50 years and then saying, hey, you need to add this to your mix. I would see that as very risky. So, again, I just want to get a clarification. The buyers are familiar with zeolite, they’re using it or can see that other customers are using it with good results?

Mark, that’s the case but also it gets introduced into the feed as a full agent. You don’t necessarily need to talk about the mycotoxin binding and all that even though we do. But they’re all using a flow agent to keep the feed flowing through their system properly. So it may be just replacing of a flow agent and up selling with better attributes.

Okay. On the zeolite side, have you had any recent new customers for new uses of the product, besides filtration, maybe in the fertilization area? I vaguely understand that by adding zeolite to the soil that it allows certain reactions to occur more easily, that is allowing nitrogen to be absorbed into the plant’s system. Are there any new customers out there?

Potentially Matt is working on several right now. And the function of zeolite is you add a nitrogen source which we do with the liquid. A fertilizer has an NPK value, nitrogen, phosphorus, and potassium, okay. Our zeolite naturally holds potassium right now. So we would amend it with nitrogen and probably add as we have phosphate products. And Matt does have a relevantly new customer doing that. And the other – that would be --

We do have old customers that do that too. That’s not new to us in sales of zeolite. We are in that market. Again, however, soil applications are typically spring and fall because of farming. So it’s not huge right now but in the spring it is and in the fall typically it is.

Thanks, Matt. One of the trends right now is organic. And for instance milk right now is selling for $15 a 100 weight. Organic milk is selling for $23 to $27 per 100. And similarly with crops, when we talk about amending it with UAN 32, the nitrogen source and a phosphate product, we can do that organically and Matt’s working on a customer that is doing that with fish oil, which stinks to high heaven and he’s found that the zeolite completely controls the odor problem. So you would amend the nitrogen – you would add that with for instance fish oil, guano, chicken litter, many other sources. And you can do that – and then you have strictly an organic product. We are classified as an organic product through Amery [ph].

Okay. But you are saying that cattle feed could be huge for you on a product that almost appears to be like a waste product but you just keep on building up day-after-day-after?

Yes, once applied to the field the nutrients, mainly nitrogen, is held so it’s not water soluble. But it is plant accessible. So what happens, as the plant grows it gives phenolic acid or hydrogen in the form of phenolic acid, which replaces the ammonium. So as the plant grows, it releases the nitrogen from the zeolite. So that’s a huge advantage. It’s a time release program. Secondly, it holds it, so it’s not water soluble. If you go out and use another nitrogen product on the soil, as much as 30% or 40% of that will migrate just through rain activity to the groundwater where it flutes the groundwater with nitrates and --

I hope there’s not a quiz after this call. But going back to my last statement, the animal feed with the two fellers you just hired, you have been producing I think you called them fines. I see that as like zeolite dust. This is like a product that you have ample supply of almost by accident through milling or whatever you would call it that it could significantly – has the potential to significantly increase the amount of zeolite that you’re moving through animal feed.

Precisely, Mark. And the other applications would be in composting. This minus 40 fine product would go into that. It would also go into the rumen buffer product, which is in animal feed but it’s a very precise application.

Okay. Well, it looks like the next couple of quarters could be pretty exciting for us. It’s about time a couple of things start going our way, especially the price of antimony.

Yes.

Thank you, guys.

Thanks, Mark.

At this time, it appears we have no further questions in the queue. [Operator Instructions]. At this time, it appears we still have no questions in the queue.

Great. We really appreciate everyone’s involvement here. Thanks a lot.

Thanks, everyone.

That concludes today’s presentation. Thank you for your participation.