Interview with Justin Tremain, Managing Director of Gold explorer Exore Resources (ASX: ERX).
How does Exore Resources stand out in a busy field of Gold Explorers? The Birimian Greenstone Belt has over 60 +1Moz Gold Resource companies. Which one should investors choose? Exore is in the right region but also leads to a challenge about how to get investors to notice them. We listen to what Justin Tremain has to say on the matter. One of the big plus points is that they have $10M in cash to be able to choose what to do next. We find out how Exore intends to spend their money to create actual shareholder value. What’s the exit?
They are looking to deliver a maiden Resource in the next few weeks. Hoping to deliver 400,000-5000,000 oz. What is Exore doing about promoting their company to retails and what are they saying? We want to find out how they are differentiating themselves in front of institutional shareholders. All licences and permits in place for now and hitting comparable grades for the region if not slightly higher.
- The Overview of the Company
- Mining in West Africa and Companies of Côte d’Ivoire
- Promotion: How Do You Stand Out From the Rest?
- Cash is King and They’ve Got It
- Strategy of the company: Why Put Out a Maiden Resource Now?
- Share Price and Shareholders
- Assets, Drilling and Permits – Do They Know What They Have?
- Management Team and Relevant Experience
- Are the Markets Treating Them Fairly?
Click here to watch the interview.
Matthew Gordon: Could you give us a one-minute a summary of the company and then we could look into some questions after that?
Justin Tremain: Exore is a very new company in its current form. It’s only been around for less than one year. We’re a gold exploration company listed on the Australian Stock Exchange with a head office here in Perth in Australia. But our project and our sole focus is on a gold expiration project in the Northern part of Cote d’Ivoire, which we acquired in December last year. So we’ve be aggressively exploring that project over the last 7-8 months, we’ve had a lot of success as our drilling results will show over the last 6 months.
Matthew Gordon: You’ve been in the current form for less than a year. What was it before?
Justin Tremain: Before it was just a cash shell, going back some time and had some lithium assets and that’s where the cash came from and then I joined the company. When I joined the company last year it was just a well-funded cash vehicle without a project and looking for a project. We had a $15MIL market cap with $15MIL in the bank.
Matthew Gordon: Cote d’Ivoire, West Africa, well-known gold producing area, lots of companies in the area. I assume that’s why you decided to go there? How did you get into the project? How did you find it?
Justin Tremain: It was really the project that attracted us first and foremost. It was a project that I was familiar with, when we looked at the project, we could say that there’d been a lot of early reconnaissance exploration work done by the previous explorer, but not a lot of drilling. And there was a really stellar walk up drill targets, and obviously we had the money to be able to do the project justice. And then when we looked at the country, we really saw a huge opportunity in Cote d’Ivoire. It really is the most stable place in West Africa now. And there’s long been an argument that it’s got the greatest opportunity because it has a very large percentage of the Birimian greenstone belts situated in Cote d’Ivoire, but it just hasn’t had the same exploration focus of the neighbouring countries. Yet it is that now over the last five or six years, the more stable countries now. So, it was really a project that got us that interested first. But then when we looked at the country, we could really see a lot of activity and a lot of interest building in Cote d’Ivoire of the next couple of years.
Matthew Gordon: I noticed a very interesting chart at the back of your power point, ranking for terrorist activity. I see Cote d’Ivoire is actually below the UK and the US which I thought it was quite amusing.
Justin Tremain: It’s a very topical issue for West Africa and really for the world. But in West Africa, in some of the Northern countries, it’s becoming a major issue and it becomes very difficult to take exploration when you have those security issues. And unfortunately, Cote d’Ivoire did have one incident a number of years ago, but it hasn’t had any recent experiences.
Matthew Gordon: You must get that question a lot with regards to safety. I think there are some countries slightly further North of you that perhaps do have that consideration. Cote de ’Ivoire, great country, I’ve worked there, nice people as well. So, if we look at the Birimian greenstone, it is prolific. In your PowerPoint you say there are over 60 +1Moz businesses there already so it is prolific. But isn’t that part of the problem? It’s all it’s very attractive but isn’t that part of your problem too in that you are one of many gold explorers in the region and you’re trying to stand out. Do you agree that’s a problem? And if so, what are you doing about it?
Justin Tremain: I don’t really see it as a problem. At the end of the day, large gold discoveries are going to get interest from the market. The issue is getting a land position in the country because all of West Africa is highly sought after. But the ground we have managed to put our foot on, it’s very difficult to get a position like that. We have over 1,000km2 under tenure now and we’re very fortunate that the exploration company prior to us spent 4 years in putting together that package and spent 4 years before they could get on the ground and do any exploration, which obviously becomes a very frustrating and costly period. And when it was done we were able to step in and get started straight away with our exploration. So, the challenge there is more just getting that ground position and we’re able to do that in one transaction.
Matthew Gordon: That’s a factor of getting land and being able to do mining. But your team also needs to worry about financing, share price…. You have a lot of cash in the bank, and we’ll come onto that in a second, because that’s your plus point. But in terms of promoting the company, is it not a concern of yours that you’ve got lots of people going around telling pretty much the same story and they’re sitting with Resource as well?
Justin Tremain: For us it’s all about just adding value to the project and undertaking exploration in a very financially prudent and efficient manner. And then drilling results, as we’ve being put out over the last 6 months, will ultimately attract the attention of investors. Then obviously as an exploration company you are beholden to your share price. Do you need to raise further funds at some point in the future? And therefore, it’s important to be able to set yourself apart. But ultimately, that’s just in drilling results and then being able to find Resources. So, I think new discoveries, which we think we’re on to 2 such new discoveries, are always going to generate quite a lot of excitement.
Matthew Gordon: You do have to do those things, but there’s a bunch of other companies doing exactly the same thing and they’re going to be going back to the ASX or AIM and reporting the same story as you. So how do you stand out? What is the plan going forward? I know you are early stages, but I’m just interested in your think thinking.
Justin Tremain: It’s a good question. What actually got me interested in Exore as a company before we had a project was its cash position. I mean, most junior exploration companies don’t have the benefit of having $15M in the bank that they can put to work and therefore really are beholden to exploration results and market conditions over the next 6 months. Whereas we were able to not worry about that, well-funded and not having to worry about raising any capital in the future and able to go about our business.
Matthew Gordon: Let’s talk about the cash position, because I think that the two things in your favour I think, Aussie gold price.
Justin Tremain: I mean, really, it’s the US gold price that is generating up interest for us with as we’re sort of US dollar environment in Cote de ‘Ivoire.
Matthew Gordon: And so, cash. You’ve got what, $10M?
Justin Tremain: Yeah, that’s right. I’m just under $10M now, right around doing very active exploration programs.
Matthew Gordon: So how are you going to spend that? When will that last you through to? You’re going to $30M-ish market cap today. You’re going to spend $10M. What do you want to see at the end of that?
Justin Tremain: Well, what got us interested in this project is we wouldn’t be here if we didn’t see the potential for a multimillion-ounce gold project ultimately. And for us that’s 2Moz-3Moz plus, which is a standalone project, which you could then take through to feasibility and ultimately development and production. So that’s our goal, where we sit today. It’s been 6 months and we’ve spent about $5M. I believe we’ll come out with a Maiden Resource in the next few weeks. And that should be a stepping stone towards that ultimate goal of a 2Moz-3Moz project. And I think it would be quite a significant stepping stone towards there and we’ve been able to achieve that with about $5M of expenditure. And so hopefully we can continue to continue to grow that Maiden Resource going forward over the next 12 months. And then when we next come back to the market, we’ll be based on a project that has a Resource firstly, and a much more substantial Resource, than what we’ll be putting out in the next few weeks. And a far more advanced project.
Matthew Gordon: A Maiden Resource. That’s good. And so, you’re expecting what sort of level?
Justin Tremain: Oh, it’s difficult to say until we put it out as an announcement. But I think, for us to say it is a material milestone, we’d be really looking for an initial position of for 400,000-500,000oz of gold. And that to us would be a pretty significant milestone to achieve in just 6 months of exploration.
Matthew Gordon: And why did you feel the need to put out a Maiden Resource now? Shouldn’t you just be drilling, drilling and drilling and put out a meaningful Maiden Resource, 1Moz plus, that sort of level? You’ve got the cash. You’re not under any pressure. Why do it?
Justin Tremain: Once again, that’s a very good question and something of much debate. We are an exploration company. So, going back to what you’re touching on before, what sets us apart is we want to be able to show that we’ve achieved something tangible in the first 6 months rather than just a whole lot of drilling results and be able say, what does this mean? And that sort of leads us to putting a Maiden Resource out, albeit very much an interim position, that then allows the analyst to say, well, they’ve actually achieved what they said they were going to do in the first 6 months and gives people confidence in what we’ll do in the next 6 months.
Matthew Gordon: But it’s a very conventional response to mining, is to do it the way that you’ve done it. So, there’s nothing wrong with it because it’s conventional. But if we look at companies like Great Bear in Canada, they’re just drilling. There’s no Resource being put out because they’re hitting the grades. They’re drilling, drilling, drilling. But the analysts understand that. Again, coming back to the thinking of management team.
Justin Tremain: Again, I think it’s a slightly different model for TSX listed companies vs. ASX listed companies. TSX listed companies just like to drill, drill, drill until they have a very substantial Resource, a Maiden Resource. Whereas ASX companies tend to try and show a little bit more progression as the project ways forward. Really for us, we started out as a cash shell, no institutional shareholders, no analysts following. And I think just putting a Resource out allows us to attract some more institutions and we’ve been able to do in the last 6 months, but hopefully attract further institutions to our register, on the back of also some analysts picking up coverage of the company going forward.
Matthew Gordon: You’ve got all this cash, so you’ve got all the optionality. You can decide how you’re going to spend it, how quickly you going to spend it, how many drills you’ve got running at the same time. But you’re conscious of the share price. What are you, $0.07 cents, something like that?
Justin Tremain: Yeah, we’re trading around 8-8.5 cents. I wouldn’t say we’re too conscious about the share price over the next 6 months. But we are conscious where the share price may be in a years’ time the share price, it doesn’t happen overnight. So, gaining exposure doesn’t happen overnight. It’s a gradual process.
Matthew Gordon: But it’s something that you’re conscious of, that you need to be speaking to institutions and Retail. You’ve got about 50% Retail following, mostly Australian.
Justin Tremain: Yeah, look I think all expiration companies are conscious of the share price because it is ultimately the way they fund the company going forward. And the most critical thing for an exploration company is to try and minimise dilution for its shareholders going forward and therefore the share prices are always a critical thing for our junior exploration company.
Matthew Gordon: How are you differentiating yourself with your story to those analysts who’ve seen a lot of gold stories out there, there’s a lot of West African gold stories out there, you’re an explorer, high risk stage of Exploration.
Justin Tremain: Well, there’s 2 things the really that differentiate us. One is our cash position and therefore, if therefore people who invest in Exore today they are unlikely to be facing dilution in the short term. And then secondly, and ultimately the most important, is the drilling results that we’ve been able to put out which shows that we’ve made a discovery of what we call the Antoinette area and looks like we’re making a second discovery in emerging discovery at Veronique. And that really differentiates us and the grade of those intercepts. And ultimately that’ll come out in our Maiden Resource, we think we’ll be able to show a modest start in terms of quantum. It should be at a pretty good grade for our Resource, which is sitting at surface.
Matthew Gordon: Right. If I’m looking at comps, like at Cardinal next door, Ghana. They’re sitting up 5Moz, heading towards 7Moz, market cap $130MIL… They’ve been drilling, but they haven’t got the response in the market that they had hoped for. So, are you nervous about the current strategy delivering for you? Or do you have some degree of confidence? If so, where do that come from?
Justin Tremain: We have a lot of confidence because what we’re talking about is an initial step, it’s just on one very small area at Antoinette. We’ve been drilling elsewhere, step out on that particular area that we’re looking at putting a Resource around within the broader Antoinette area. But also, at this new discovery, Veronique, which we’re not featuring any Maiden Resource but at some point in the future we hope that that will provide a step change to the project in terms of scale.
Matthew Gordon: You’ve got all the licenses and permits that you currently need to be doing this drilling and you are drilling without any interference or obstruction.
Justin Tremain: Correct, actually, it’s a very important point. So, obviously tenure is always topical in a developing country and in Africa. And so it is part of the acquisition of this project at the end of last year, one of the critical conditions was the government approving the transaction, which they did, but also to renewing the permit which happened in the beginning of December. And that was really the final condition to the application. So, in Cote d’Ivoire, we had our permits renewed as part of the mining code for 3 years. And then we have the right to renew those for a further 2 periods, subject obviously to meeting our work commitments. But given the amount of drilling that we’ve been doing over the last 6 months, there is no question of meeting our work commitments.
Matthew Gordon: You’re hitting similar grades to lots of companies in that Birimian greenstone belt. They’re good grades. Your focus going forward is about understanding how much of it you’ve got, right? Because at the moment, you don’t quite know what you’ve got.
Justin Tremain: That’s right. I think the grades we’re hitting are at the upper end of some of the other round operating gold mines and just deposits around us. So, I think the grades is reasonably good, reasonably high-grade for surface mineralization. But you’re absolutely right. It’s all about how much gold we can define and the scale of the soil anomalies that we’re drilling definitely demonstrate that potential for that multimillion-ounce discovery. And the area that we’ve been drilling at Antoinette, represents probably, I think 10-15% soil anomaly within that area there. And as I said, we have a number of other very large-scale soil anomalies and one of which we’ve started to drill and have some success there.
Matthew Gordon: So, let me just understand it better. You’ve started a process. You’ve got a land package, got the licenses, permits, the grades are at the upper end of the Birimian type usual numbers. But where’s this thing going once you’ve kind of built out some scale to it? Where’s the exit point for you guys? Because all of the mid-tier or the big boys are looking for ounces in the ground. And you must be conscious of that. So, what are you doing about it? How do you stand from the 60 other explorers in that region?
Justin Tremain: My view is, you take the project forward. We’re at the stage of exploration, which I think is really where the value is created, is discovery and defining a Resource. But once we have the critical mass, which in my view is 2Moz-3Moz of gold Resource, then the company will evolve. The team will evolve. And we take that that Resource and project through Feasibility and ultimately develop. That’s where we’ll go. Now, if there’s interest along the way, so be it. But if we’re not taking the project forward and adding value to the project, then we’re not going to attract any interest in the future. So that that would be our strategy. But also, the area that we’re operating in, there is 2 existing operations in close proximity to us already, which have reasonably limited mine life as well, which when we look to these projects was always a little bit of a fall-back position, that there are 2 operating mills in close proximity, which in the next couple of years we’ll probably need additional mill feet.
Matthew Gordon: And from what perspective? Go and buy those mills or just offer feedstock?
Justin Tremain: We’d be way too early to tell at this stage. As I said, that’s very much a fall-back position for us. Our current strategy is to go into line and discover a Resource that has the economies of scale to development as a standalone project.
Matthew Gordon: Have you seen any examples of companies being taken out with 2Moz-3Moz? Is that a normal scenario in West Africa?
Justin Tremain: You know, there’s a lot of cases of West Africa companies getting to that 2-3MIL ounces and then being taken out. No question about that. I mean, it was a recent transaction within Cote d’Ivoire a few months ago, it was only 0.5MIL ounce Resource. Not a company, but a project held by the company, Newcrest, which Rosco came in and bought. So, that’s an example of a transaction I think that pays from maybe $20M with another $20M to come for 0.5Moz Resources. So, you can put that sort of that as the benchmark against Exore.
Matthew Gordon: That’s a good one. I think there’s a lot of data that came with that project as well. So that’s a fair point. So let’s talk about the management team, track record and experience in the region and creating shareholder value ie making people money. Tell us a bit about the team.
Justin Tremain: Yes. So the county is chaired by John Fitzgerald. He’s a very well-known mining financier here in Australia. He sits on the board of Northern Star, which is obviously one of the most successful gold company in Australia over the last 10 years. Then myself, I joined the company 12 months ago really with the mandate to secure a project for the company, to put money to work on a project that offered a lot of upside in terms of our exploration potential. Prior to joining Exore, I founded and ran a company that defined and completed a feasibility study on the first gold mining project in Cambodia, so another developing jurisdiction. That company got taken over in 2016 and that company is now taking that project through development. And I remained at that for 12 months before coming across into Exore. And then on ground we have an Exploration Manager who is highly experienced in West Africa, spent the last 12 years purely in West Africa on a gold projects and has been involved in 2 quite significant gold discoveries in the Burkina Faso and some exposure in Cote d’Ivoire. He saw the potential of our projects and that’s why he was keen to join us on the ground as our exploration manager.
Matthew Gordon: What’s the shareholding structure look like? There’s a big retail component to this, but how much of the management sitting on?
Justin Tremain: On a diluted basis it’s just under 10% of the company.. A lot of that has been actual shares bought on market.
Matthew Gordon: Any significant shareholders or significant parties that we should be aware of?
Justin Tremain: As I touched on before, as a cash shell had no institutions on our register yet, in December last year and now we have a number of institutions on our register which our drilling results have attracted that interest and that sort of set us apart from these companies that you refer to. We’ve been able to attract these institutions on our registry in a market that’s reasonably challenging still for exploration. One of those is a North American institution that’s a very active gold fund. It owns over 6% of the company. Then we have a number of Australian institutions sitting below that 5% disclosure level.
Matthew Gordon: And do you think the market’s giving you fair value at $30M for what you have?
Justin Tremain: I don’t think too many managing directors would think that. But look, as I said before, there’s a reasonably recent corporate transaction, where hard cash is being paid for fairly modest size Resources of I think 430,000 ounces at the time, which was a transaction at higher than our current value. But ultimately, we’re well-funded. So the share price is what it is. We just keep going and stepping out and producing the drilling results that we’ve been putting out over the last 6 months, which show these projects grow and grow. And ultimately, I think the share price will react accordingly.
Matthew Gordon: You’ve got 4 projects – there’s a great chart on page 16 of your most recent presentation. Antoinette, Veronique, Liberty and Project Wide. So they’re all at different stages. You’ve got to allocate your $10M somehow. So where’s it mostly being focused and directed?
Justin Tremain: Really, we have 2 permit areas, the Northern one we call Bogoe project and then the southern one, the Liberty Project. And whilst we call them different project names, they’re actually only about 35km apart. So if we define Resources, depending on the grade, obviously, on either of those projects, they definitely are complementary to each other. 90% of our focus has been on the Bogoe project which within that sits the Antoinette Prospect and discovery and also about 12km to the South, the Veronique new emerging gold discovery. So that that’s definitely our focus and both those areas are quite large. They’re about 7-8km, by 3-4km in width and we’ve really just touched the tip of the iceberg on both of those areas.
Matthew Gordon: And these are relatively shallow deposits as well. Is that right?
Justin Tremain: Everything we’re drilling is. Open pittable Resources is what we’re targeting. So really in the top 150m. Everything is mineralization, is outcropping at surface there. And our priority is actually drilling the at the top 100m, which is predominantly where the oxide material is, which has also metallurgical and mining benefits. And that is actually one of the advantages of this part of the well in Northern Cote d’Ivoire, the weathering is very, very deep. So to be talking about 60m or 70m of weathering, which is very deep.
Matthew Gordon: The other thing that’s an important point for people to understand about the gold in this region in the Birimian, is it does make it easier and cheaper to mine. So you’re expecting reasonably good ASIC numbers when you get to that point of understanding it. There are 60 other explorers and developers there who we can use some of their data to extrapolate from.
Justin Tremain: I would say about Cote d’Ivoire as well, which is surprising, is the infrastructure is very good, which then has some advantages particularly in capital cost. We’re no more than 30 kilometres off Silk Road. There’s high voltage power lines throughout northern Cote d’Ivoire, probably no further than 30 kilometres from a high voltage power line, so they have some cost advantages as well and the ground is all very open and the ground is very flat. So we have all these significant advantages when we get to that point. But ultimately, grade is king and what we are defining is pretty good grade when we compare ourselves to other deposits in the region.
Matthew Gordon: I think I think that’s fair to say. Justin, thank you very much for your time today. That’s been a wonderful introduction to Exore. Very interesting indeed. That’s a fantastic part of the world. We look forward to hearing more from you as things develop.
Justin Tremain: Thanks for your time today and look forward to chatting further in the future.
Company page: http://www.exoreresources.com.au/
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