First Mining Gold (TSX: FF) – I Sip On 24’s, You Sit On 24’s (Transcript)

First Mining Gold Corp.
  • TSX: FF
  • Shares Outstanding: 629M
  • Share price C$0.15 (17.03.2020)
  • Market Cap: C$94M

Interview with straight-talking Dan Wilton, CEO of First Mining Gold Corp. (TSX: FF).

First Mining Gold Corp. (formed in 2015) is a North American gold development company with a diverse portfolio of gold projects. First Mining Gold Corp. has a large resource base of 7.4Moz gold in the Measured and Indicated categories, and 3.8Moz of gold in the Inferred category. Its assets are in ‘mining-friendly’ jurisdictions: Eastern Canada, Western America and Northern Mexico (one in the south). First Mining Gold Corp. is focussed on advancing its assets towards production. It holds a portfolio of 24 mineral assets. Is 24 too many? Will it look to cash in on some of these soon?

What was the business plan on day one? Wilton says it wanted to find value in projects that companies had given up on. By adopting a roll-up strategy, and trying to excite the market with promising, underdeveloped projects, First Mining Gold Corp. hoped to create something of a PR frenzy via aggressive promotion.

How has it worked out? Investors may be worried, based on market performance. First Mining Gold Corp. had a share price of C$0.41 in March 2019, but sits at C$0.21 today; this from a company that reached C$1.18 in July 2016. The market cap stands at around C$124M today. So, why this decline? Wilton seems to be aware that First Mining Gold Corp. has suffered from its legacy as a promotional entity. As is always the case in mining, investors have long memories, and a full transition to becoming a project development company seems to have gone unnoticed. Wilton remarks that the stock has good liquidity, but this will mean little to investors if the share price continues on its current trajectory. Wilton states that First Mining Gold Corp. needs to find a way to maintain investor enthusiasm throughout the project development phase. The story of project development seems less attractive to the market, but is this because if the way the story has been told?

One worrying stat is the CAPEX needed to get First Mining Gold into production: c. C$800-850M. Wilton states the fundamental value of First Mining Gold Corp. will come by reaching “value milestones” and de-risking the project. Investors will wonder why Wilton is so hell-bent on starting with a portfolio of this size, but Wilton sees the opportunity as too good to pass up. Could First Mining Gold Corp. have started smaller and scaled up? Wilton states that history has shown single asset projects to be risky…

Wilton talks through their two main projects, and the plans for 2020: raising capital and getting permitted. First Mining Gold is currently finalising the second half of its private placement: c. C$5M. Wilton plans to spend the money on conducting a PFS, and edging the two main projects closer to permitting, construction, and eventual production.

We think Wilton needs to give the market more detail in the meantime about what the company is doing to work towards these permits and to further develop these projects. This vacuum of information is being filled by negative sentiment at the moment. Investors need to be made comfortable that this play isn’t set up to fail. Let’s see how First Mining Gold proceeds in 2020. It’s sure to be interesting.

CLICK HERE to watch the full interview.

We Discuss:

– Company Overview

3:38 – Original Plan: Changes Made Throughout the Years and Options Available

9:21 – Dan Wilton’s Background: What Was He Brought on to do?

12:44 – Legacy Issues and Low Share Price: Re-Modelling the Story

15:29 – Business Strategy: Have They Considered Less-Costly Means Forward?

17:17 – 8 Assets Altogether: What Are the Plans for the 6 Smaller Ones?

24:46 – The 2 Main Projects: Building Value for Shareholders

27:51, 35:29 – Raising Money and Getting Permitted

30:54 – 2020 Milestones: Convincing Investors of Future Success

39:45 – Diversifying the Company and Getting Noticed

Hello Dan, how are you sir?

Dan Wilton: I’m well, thank you. I’m well, thanks for having me here today.

Matthew Gordon:: Good, good. Now I know you’ve hot-footed it back from Bemo, Miami, in the sun, back up to base and then shortly off to PDAC, which is obviously going to be a very different experience for you. Are you are excited about what PDAC is going to bring?

Dan Wilton: Very excited, you know, having just kind of come back from Miami, I think the one thing, the real takeaway that you get is where we are as an industry and you’re starting to have the largest mining companies in the world talking about how they’re struggling to replace their reserves and they’re going to need to find new projects and add more productive capacity. So that all bodes well for a company that’s holding 6 projects in Canada with a total of about 11Moz of Gold in them.

Matthew Gordon: Okay, we’ll get into it, well, let’s do a one minute summary of the total story there and then we’ll get into some of the details. So why don’t you kick off and do that for us?

Dan Wilton: Yes, so First Mining is a project developer that was originally put together in 2015, 2016 by Keith Neumeyer as kind of a on an acquisition strategy, and put this portfolio of Gold projects together. Six main projects are in Canada, four of them are in the same area of North-western Ontario. Total resource is about 11Moz of Gold, and we’re actively advancing two of our key projects. One of them is Springpole, which is a 5Moz open pit project that we’re advancing through pre-feasibility, which we hope to have done by the end of the year. And getting our environmental impact statement completed and submitted early next year. And our Goldlund project where we’re actively drilling right now, is right now 800,000oz of Measure & Indicated, 875,000oz of Inferred at just off the highway between Dryden and Sioux Lookout. So we’re actively growing and exploring what we think is a very impactful project.

Matthew Gordon: Excellent. Thanks for that. Can we just kick off by talking about what the original plan was; obviously, Keith Neuymeyer, you know, a reasonably well known guy and you know, you start off with a plan in mind. Is that still the plan or have you had to evolve and change?

Dan Wilton: You know?  It’s interesting; we hear a lot about that because the company was started in 2015, and originally the original game plan was they were going to consolidate a bunch of exploration projects in Mexico; Greenfields exploration projects, but at the time, and we all remember how difficult the mining industry was in 2015, they looked around and said, we can spend USD$30 or USD$40 per oz exploring to try and find ounces, but you look in the market and you can buy ounces for less than USD$10 per oz in these really good projects that a lot of people had given up on.

And so, you know, they raised a bit of money and used this company; First Mining Gold to start acquiring projects with the theory of being a land bank. So the original strategy was we’ll acquire it, we’ll do just kind of minimal holding costs, the environment will get better and, you know, then we’ll be able to monetise these projects, retain interests, hold onto royalties, things like that. And so they were very aggressive in the acquisition phase and bought eight companies or projects in 12-months from 2015 to about mid-2016, and that really gave us the portfolio that we have today.

And people really kind of bought into this mineral bank concept, to the point that when they completed the last acquisition, the market cap of First Mining, with the exact same portfolio that we have today was about CAD$630M. You know, today we’re sitting, having raised a bit more money, having done 40,000m of infill drilling at Goldlund, having done two PEAs at Springpole, a really transformational metallurgical program to, I think, unlock a bunch of the recoveries and we’re trading at CAD$150M market cap, you know, four years later. So it continues for us to come to the point that we think that there is real, real value in this portfolio.

Matthew Gordon: Why I’m asking this question, I just want to get an idea of what’s going on in the minds of the management team. So, you know, I do remember that period in 2012 to 2015 when people were coming to us about giving them money to do this land banking, not just mining, but also, you know, oil & gas. And it was not something, I guess we were a little bit more conventional and couldn’t really sort of see the upside there, but some people were able to raise money. So you guys; that was the genesis of this, but you’ve had to pivot at some point. Was there a realisation that the market was not rewarding you as it once did; that must have been a big moment, big discussion?

Dan Wilton: Yes, it was. And listen, that happened before I arrived so it was really late 2017 as they finished up our previous PEA on Springpole that they came to realise, you know, we’re sitting with this world-class asset and we’re not getting the value that we think we can get from it. There’s been an enormous amount of work done already at that point, de-risking it, that we’ve continued doing. But the only way that you’re really going to surface the value from this project is to get it permanent. And it’s because Springpole sits under the deposits; it’s under the bay of a Lake and the development plan is building a couple of small cofferdams and de-watering the bay of this Lake, which all the technical and environmental data that we’ve compiled over 8-years says is entirely possible. And so they embarked on a strategy then and really kind of changed the message; in some senses, maybe a little bit too aggressively, they changed the message that we are going to build Springpole

Matthew Gordon: Okay. So before we get into Springpole, and we do have time to talk about it, so let’s park that for now. I’m just kind of coming back to that moment. So what do you know, I know you weren’t there, but you’ve been brought in for, when did you arrive actually? Let’s start with that.

Dan Wilton: Yes, I started on January 7th of last year, so I’ve been here just a little bit more than a year.

Matthew Gordon: Okay, but in 2017, they started seeing these changes in the markets and they knew they had to do something different to be able to raise capital, to be able to survive and what the market was doing then, which was a whole bunch of nothing, right? So you’re sitting on these cheap assets. So do you know what were the options available?

Dan Wilton: Well, I think at the time, the options are do nothing; just kind of hold and, you know, wait for better environments. But the company had raised USD$27M in 2016, and you know, even going through the due diligence in acquiring the assets, there were sort of opportunities identified that, you know, whether it’s at Goldlund, you know, firming up the resource or you know, hopefully adding to it, but certainly converting some of the inferred into indicated led to a 40,000m infill program that allowed us to really much better understand the deposit. And you know, the company at the time was reasonably well funded to execute on a couple of these sizeable plants. So they just kind of looked a little bit at the incremental risks and said, okay, well, we’ll fund this program, we’ll fund that program, just to try and answer some of the questions that investors and other potential partners would have about the projects.

Matthew Gordon: Yes, okay, but the cash is also a big driver that, you know, either access to it or whatever you had left after your various programs there. So, okay, well, let’s talk about you – why did they bring you on board? What were you going to do for them?

Dan Wilton: Yes, so I mean my background prior to joining First Mining, I was one of the three executive partners at a private equity fund called Pacific Road Capital, and we had USD$800M under management in two funds: investing in largely late-stage mining projects around the world. And you know, it actually, at Pacific road, looked at most of the projects in the first mining portfolio before they bought them. But I hadn’t really spent a lot of time you know, looking at First Mining as it came together because it was, you know, it was the whole mineral bank strategy, which I thought was kind of interesting, but then it was pretty aggressively promoted at the time and, you know, lots of momentum as they built up this portfolio. But it was targeted away from, not exactly targeted toward institution, it was really targeted towards more of a retail audience.

And so someone had said to me in 2018, after I left Pacific Road, you should really look at some of these assets at First Mining, right? So I did, and sure enough, I recognised that we’d looked at Springpole in 2013, we looked at Goldlund twice you know, down to drill databases and block models, like at a pretty good understanding. And we couldn’t get deals done in 2013, 2014, sort of as the market was rolling over and valuation expectations hadn’t quite adjusted yet. But I really liked these projects and so come late 2018, my predecessor had left as CEO of First Mining, and someone said, ‘Oh, maybe you should talk to Keith.’ So I more or less cold-called Keith. I didn’t know him very well. I’d met him a couple of times and said, you know, I think this is the most interesting portfolio of Gold projects sitting in a development company and in this sector. And I think as much as you need a CEO, part of what you need is someone to help you manage this portfolio.

So that’s kind of what I saw. And then I joined in early 2019. The first thing that we did was look at inside this portfolio, what are the best risk return investments you can make to surface the most value? And as you look at everything you could do to the assets in this portfolio: whether it’s drilling, whether it’s doing economic studies, the single biggest driver of value, if you believe that you can get a permit for Springpole, and we do, the single biggest driver of value is getting a permit for that.

Matthew Gordon: Okay. Again, we’ll come on to that. Again, I’m trying to get a sense of the management team here. So, I get your background, I think I might have actually come across you as well. There seems to be a sort of a, a kind of where two seas meet moment here where you’ve got an extremely, by your words, promotional team previously. I don’t know why the former CFO left, but you are coming along with a much more institutional mindset. And I’m just sort of wondering, you know, where it is today? Because I’m looking at your share price, it’s been falling away and you’re going to tell me it should be worth a lot more and we can have that discussion as well. But you know, NPVs don’t necessarily count for much, but the market cap is the market cap, and the share price is the share price. So do you think you have suffered from that legacy of being perceived as a promotional entity previously? I appreciate your telling me that there is a fine line now, but you’re now having to tell that story to the market that actually you’re bringing us a bit more rigour and process into the company now?

Dan Wilton:  Well, you know, when you go back to the history and how the company was kind of put together, we’re still the beneficiary of a lot of that, right? We have a lot of great long-term shareholders who bought into this idea and the value of this portfolio in 2015, 2016. And the other thing that a lot of people don’t appreciate is that by buying all of these companies and projects, we actually provided a lot of liquidity to the shareholders of these other companies who were kind of stuck in 2015. And the one thing you can say when you look at our stock, it is nothing if not liquid. You know, we still trade a million-ish shares a day in the TSX and another half a million in the US, so we have this great base of shareholders who we kind of acquired or you know, bought into the vision.

The challenge has been when things are, you know, aggressively promoted and they achieve certain values, you know, in enthusiastic times and with great enthusiasm, maintaining that enthusiasm as you get into like doing the real work can be hard sometimes. And so I think that’s where we’ve had, you know, people are sold to dream and I think that dream and the value of this portfolio is absolutely intact. I think the way going to realise that value, just I think comes a bit more from, you know, my background is fundamental value; I’ve spent my whole career trying to understand or, you know, invest in fundamental value in mining.

Matthew Gordon: Yes. Okay. I’ll take that as a yes. Fundamental value is a phrase that you use in your PowerPoint, actually. And you know, it stuck out to me and I know you have to throw the word potential in there. But what do you think is missing here in terms of the story? Because you look at the NPV, you look at the AISC, well, I guess the one big number in there is obviously the capex number; you’re going to have to find USD$800M, USD$850M to kind of get this thing going here. Have you guys considered starting smaller? Have you guys considered other strategies which don’t involve the need to go out and raise so much money for a USD$140M company?

Dan Wilton: Yes, listen; we faced this a lot on the concept of potential dilution; people talk about it. Listen, our strategy is advancing the value of this project, getting it through real value milestones and taking real risk out of it. And then in 2023, when we are having a discussion about is, a single asset company the right one to build an USD$800M project on their own? History has shown that to not be an entirely universally constructive exercise. So at that point then I think you have a bunch more options, but you should see the value of the project there. This is one of very few 5Moz projects that, you know, in good jurisdictions you get it permitted, you know, there aren’t that many projects in the world that can produce 400,000oz a year.

Matthew Gordon: Yes. But therein lies the problem; if you can get it permitted, it’s sitting under a Lake. Canada  is a very good jurisdiction mostly, but sometimes things take a little bit longer. And I do appreciate the size and scale of the Springpole project that you’re talking about, and there’s so much to like about it. But as I say, therein lies the problem of the single asset company, which you highlighted, which is if you have to wait around for that thing to be monetised in some way or you know, or give you the bump in the share price, then you could be waiting for an unquantifiable period of time. So what are you doing with the other asset, Goldlund for instance? Where’s that at?

Dan Wilton: Yes. So it’s one thing when you look at this portfolio, you can draw conclusions; this is not a single asset company. We’ve got a lot of really interesting projects and in some senses, honestly, probably a few too many for us to spend money.

Matthew Gordon: I’m glad you said it. I was getting there.

Dan Wilton: Exactly. And that’s been the other part of the recognition that, you know, as we’ve been setting capital budgets and priorities, getting our permits for Springpole, and in part of getting permits, it’s getting the permission to mine and the social license to mine, and that’s really important in us working with our indigenous communities. And we’re in early and active consultation there so that’s an important part of it. But you know, while that is going through a process, we have a lot, you know, a lot of other projects, five other projects that we need to help surface value from. And from our perspective, listen, the market is moving, the Gold industry is moving to a point where there is going to be a lot of capital needing to find homes to try and build productive capacity. People are going to need projects. We have some. So it’s about getting the projects to the position where they are able to attract other capital or attracting other capital now to get them ready for the time when the industry really needs them.

Matthew Gordon: Exactly. But you know, the money controls that conversation. So you do have to put as many things in place as possible. You’ve got your PEA, PFS later this year and hopefully EIA approvals in the first quarter of next year. I get it. So you’re moving that along like everyone’s got to do, right? It’s the usual path. It’s very clear. But what else are you going to be able to do? So you may have too many projects. I suspect you do. Are you looking to cash some of those in and off-load some of them? Are you bringing in strategic partners and how do you bring more cash into the company now? Over the course of this year, to allow you to do the things you’re going to need to do to be able to have meaningful conversations with materials or large caps who are looking at a 5Moz scale operation?

Dan Wilton: Yes, so I think we’re executing on that right now. So, we announced an earn-in deal on our Pickle Crow project in January, with an Australian company called Auteco, which a lot of people don’t appreciate if you haven’t actually done the read through, but it’s the same team that was behind Bellevue Gold, which if you look at what they have done with Bellevue, this is the Australian Explorers of the year, last year, you know, and they surfaced value in Bellevue by going into a past-producing, high-grade Gold camp and applying, you know, good state of the art geo science to delineate.

Matthew Gordon: It’s a great deal but what does that mean for you? What was the deal? Did you get cash out of it?

Dan Wilton: Yes, so the deal is, it’s not much cash up front. We’ll get a few shares up front and then they spend USD$10M over the next five years to earn an 80% interest. We’re carried through to a construction decision, which is pretty important in an underground mine where you know, that delineation of resource towards a mining decision is expensive. But what that project needed was a focus team and probably USD$10M to really outline the opportunity. The look through value on that for us, you know, if they have even a portion of the success that they had at Bellevue, which is now sitting in a USD$350M -odd market cap or something like that. You know, we still own 20% of the project. We have USD$4M of cash payments that would come in as part of the earn-in deal, and we he have 10% ish of the cases.

Matthew Gordon: Okay. So that’s a kind of medium to longer term play, and assuming they hit all the targets that they need to hit and they can continue to fund this thing, that could be something for the future. What else is happening with any of the other assets like Hope Brooke or Cameron for instance?

Dan Wilton: Yes, so you know, we spent, after we finished our financing in May of last year, we spent a little bit of time and a little bit of money trying to understand a proper game plan and look at a couple of the key risks on each of those projects. And so, as we looked at it, Cameron I think, is a real sleeper in this portfolio. The reality is, it was basically ready for production, or ready for feasibility; they did a Feasibility Study on it in the ‘80s, but there’s a 240m ramp down. It’s been developed into ore on three levels and there’s about a 30,000t bulk sample sitting on surface at the project right now. And it disappointed when they bulk sampled it on grade: so they thought they were going to get 5g/t, they got kind of 3.5g/t, and it has never been identified as big enough to support its own mill. But what’s happened from the 1980s to today is, someone’s built a 25,000tpd mill, 88kms away. So we’re thinking a little bit creatively about how that project could be moved forward. And at Hope Brook, you know, it is similar, there’s kind of one or two really interesting things that you need to understand about, you know, potentially could you be starting moving some waste rock and selling it as aggregate, for example, which some of the producers in Northern Newfoundland are doing. You’re right on tidewater, you’ve got a power line right on site that’s still energised. You’ve got, you know, ship, well, not ship-loading facilities, but you got a roll on roll off barge facility that’s still in great shape. You know, and there’s an almost a 1Moz resource there. So it’s kind of getting just enough information that you can understand what’s a right way to put it forward, whether it’s us or other people. But we haven’t had an environment where you can sell these projects for cash, right? That environment I think is coming. So in order to get them ready for that, it’s about finding partners who can help you move them to the position where they’re then in the right state that you can maximize the value.

Matthew Gordon: Okay. Well at least you’re answering my question; I do feel the whole way through this, you’re being quite straight with me. So you were talking and thinking about ways to monetise the non-core projects. You’ve got one which you’ve done a, what did you call it? A not a joint venture earning – an earn-in, and which may have some monetisation component to it at some point on-going. But today they’re not going to help you move the main story forward with, you know, Springpole or Goldlund. And I think that’s what shareholders, and certainly some of the viewers who have contacted us, are keen for you to start communicating to them; what are the points in this path forward that are going to allow them to, you know, they’re underwater, you know, get back to where they were. Stay around for the upside, hopefully, and stop the rot, as it were, because you’ve got all the right stuff, but you need to tell people how you’re putting it together. So what should they be focused on now? Now we’re very clear about the six non-core assets where you know, where they’re at, what are you doing on the Goldlund and Springpole to maximize that shareholder value?

Dan Wilton: Yes, as we talked about, at Goldlund, we’re drilling right now, and I think we’ve through our drill program last year identified at the Miller target, which is kind of 10 kms away from the Goldlund main zone. And we had some of the better open pit drill results in Canada last year. The challenge with Goldlund is that it sort of, like everything in our portfolio, gets overshadowed by Springpole. And so it’s difficult to get people to pay attention, when you get them to pay attention to, you know, 800,000oz at almost 2g/t of an indicated resource and another 870,000oz of inferred at 1.5g/t, that falls into an open pit with a sub 6:1 strip ratio, located just off the highway. We need to do a better job of highlighting the value of that. But it’s still wide open to continue to grow. But my concern to be honest, is we can put out great drivers; we put out 40m of 4g/t, and an open pit target 80m down last year and no one cared. Like you put out a 150m of 1.5g/t, that’s 10kms from our main deposit.

Matthew Gordon: Tell me what you’re going to do about that. That was the same for a lot of people. They put out stuff, they said this is a catalyst moment. The catalyst moment came and went. No one cared, right? So what do you do this year? You’re not a producer. Those are the people who are seeing the uplift and the benefit of the Gold price today. Gold’s gone up, your share price has gone down. What do you do?

Dan Wilton: So, listen, first of all, we are raising the capital to make sure that we’re funded to get there; we announced that we were raising USD$5M. We’re going to have a second close on that tomorrow, which will be larger than that. And what we’ve found is, you know, for all that we talk about, there are a number of shareholders who are disappointed, we have a number of great long-term committed shareholders. And I think when people look at how those shareholders have shown up to support us here, I mean, it’s been amazing for me and humbling that, you know, there is still a really great core group who are supporting us moving forward. And so that gives us a sense of, you know, we have the capital we need to move the project, particularly Springpole, through some of these catalysts. But you have to find other ways to do it, right? And part of that is our partnership with Asanko who are doing our Pre-Feasibility Study – all for shares, which is a pretty unique structure. But you know, we’re delighted to have that kind of partnership with what I think is the best engineering group we could be working with on this size and scale.

Matthew Gordon: Alright, So let’s come back to these raises; because you did one at the beginning of February, 14th February, and you said that you’re doing the second half of that now. Is that what you are saying?

Dan Wilton: This is, yes, it’s all been kind of been pulled together over the course of the last 5 weeks, yes.

Matthew Gordon: So that’s a total of 5+..?

Dan Wilton: It’ll end up being larger than that.

Matthew Gordon: A little bit more than that. Okay, great. So I guess what people want to hear is that that’s not for GNA and that’s not for director’s salaries. They want to hear what you’re going to do with that money which is going to generate, you know, dollar for dollar, more than that.

Dan Wilton: Yes. Well listen, this all comes down to what I think is pretty simple math. So as a corporate finance guy for 20-years, and a private equity guy for five years, if you look across the cycles, if you get a project permitted that’s of the size and scale that Springpole is, that project with permits should trade at somewhere around a 0.5 times its net asset value. So Springpole today, that’s USD$841M at a USD$1,300 Gold price, that’s USD$1.2Bn at a USD$1,500 Gold price. And you know, everyone used to kind of wring their hands when we’d talk about USD$1500 – does the project need USD$1,500? No it doesn’t. But in the environment we’re in, if we’re talking about a USD$1,500 Gold price and you know, C$0.75, this project is really, really robust.

And so to surface that value by getting the permit, gets you, I think a real opportunity at what is a multiple of our current share price rerating to get there. Now, it’s a lot of work and there’s still a lot of time to that. But getting this PFS done that takes, you know, I think a real demonstration of the technical risk out of it. Getting our environmental impact statements submitted, which we are aiming to do next year, that kicks off what in Ontario has been a pretty reliable two year process. So Ontario has permitted three big open pit mines in the last three years:  Red Lake, Hardrock and Magino: all of them, you know, tend to 35,000tpd open pit mines around a lot of water because there’s a lot of water everywhere in Ontario.

So when we get that permit and we get the project through that de-risking phase, and I don’t think it’s, you know you get no credit for it and then they hand you the permit and all of a sudden it goes up x4. You tend to, as you demonstrate that you are moving the project forward, you tend to see that value accrual.

Matthew Gordon: Talk to me about that because I’m fascinated by that because you know, there’s a line of logic here which says, don’t invest anything until there is certainty: and that’s when the permit has been submitted. There’s some level of certainty that you have got to a point where you think you can get it through, and then to when the other permit, or permits, are awarded. Okay. That’s some time away. But right now you’ve got, you know, you’re trading, but it’s trading down. Okay, so you’ve got 1M shares or so yes, that’s great, but it could be a whole bunch better. So what do you between now and then to say, look, we’re going through the process, putting the permit thing documentation together, but here’s what we can tell you between now and then to give people some comfort that you guys are going to be able to get this thing over the line. Because otherwise, people just sit back and wait, and that’s not good for you, especially when you’re raising money. That’s expensive money, right?

Dan Wilton: It is. And we are at the most difficult point of projects to raise money right now. This is unprecedented in my career; where you can find exploration stories with no resource and two drill holes that will attract x3 our market because everyone’s looking for something new, which is great, but it’s irrational. So what’s going to solve this over time? And it all comes back to, you know, what the titans of the industry are saying about peak Gold, and about how they don’t have any projects. When your senior Gold producers are trading at two times their net asset value, and they’re generating, you know, two to two and a half times the free cash flow that they were three quarters ago because the Gold price has gone up, you know; unprecedented free cash flow and high trading multiples. When they go to look for where those projects are, and it’s not us specifically, but developers generally are trading at 0.1 to 0.2 times your net asset value. So what closes that gap? You start seeing partnerships again. You start seeing investments buying intermediate and large-cap Gold producers and you start seeing M&A deals, and that’s what is going to compress that and get, you know, back to the rational metrics which are; these projects should trade at x0.5, up to x0.7 NAV and get acquired at 1 x NAV by producers trading at x1.5 to x2.

Matthew Gordon: No, I hear you but, and again you’re talking my language, I get it, but again, you’re towards the end, you’re talking towards 2021 – that sort of timeframe. I’m talking about now; for the rest of 2020 – what are you going to be talking to the market about? I know you can’t talk about conversations that you know, that you may be having with strategics, et cetera or M&A, or any of that kind of good stuff. You’re going to have to be like, here’s what we’re doing on a quarter by quarter basis, which is helping bring certainty to those conversations that we’re going to have with those strategics. What are you going to do?

Dan Wilton: So listen, there’s the challenge that you’ve exactly hit on, is that there’s only so much that you can talk about when you’re going through a Pre-Feasibility Study (PFS), right? So what are we doing? We’re doing an enormous amount of work in the next 6-months to understand and really pin down the development potential, economics and permit ability of this project. And so that’s exciting things like hydro-geology and hydrology and waste rock characterization and tailings and ongoing metallurgy. So I think we can talk about some of the milestones and test work of those things that are coming out. Not draw conclusions, because conclusions get drawn in a PFS at the end of the year, and in your environmental impact statement. But until then we can keep in dialogue with our indigenous communities, and in consultation, and we can do everything that we can do to move the project forward. And you know, that might be having discussions with partners. It might be finding a longer term source of financing it, you know, it might be giving people some degree of hope that the company is not just a perpetual ‘dilution machine’, which we hear a lot and is one of the concerns.

But we’re in that point where there is a natural wait and see tendency and you’ve absolutely hit the nail on the head. But one of the things with having all the other sort of opportunities and leverage in the value of these other projects in our pipeline is that we hope that there will be a bunch of other catalysts: whether it’s our partners at Auteco who are putting out new drill results at Pickle Crow, or who are putting out a new resource to Pickle Crow, demonstrating that there is value in these projects and we’re going to be able to surface meaningful value. Yes, it might not be in 2020, but I think with this financing getting closed, we’re going to have enough money and line of sight and runway to demonstrate. We can get to some of these real value.

Matthew Gordon: Okay. So the money you’re in the money of raising now is going to get you through to when? A few months, maybe?

Dan Wilton: The money we are raising now, and we’ll see what the final number is, but the goal is that it gets us through to the end of this year. And then again, we’re talking about if there is some other sources of financing, we can sort of put on top of that with a longer time horizon to see us through. Ultimately, listen, where I would like to get to, is to be able to say this company is funded to get Springpole from where we are today to our EIA approvals in hand, which is 2023 by our timeframes right now. So the challenge with this portfolio is that there are, you know, there are G&A costs and there are holding costs of 6 projects; some of which you can offset by doing asset deals like we have done at Pickle Crow. So that takes all of the costs and, and you know, we bring a partner in to help us to do that. So there’s lots of different ways that I think we can look at that. And it’s not all just dilution, right? So we’re actively in discussions with a bunch of other sources of capital that might look more at the project.

Matthew Gordon: I think that’s what people need to hear because like I say, you have got a lot of eight assets growing out of that: there’s a lot of costs, a lot of time, effort, distraction, et cetera. You know what your number one asset is, you know what your number two asset is. And I think people would want you to say, stop this ‘dilatory machine’, to use the phrase that you used a second ago, and give them a sense or an idea of how you’re going to stop that from happening. And you know, because once you’ve done a PFS, guess what happens next? We need an FS, we need a DFS. So, you know, it keeps going. And this question of, again, people want to know are you going to be financing that? Or is that the time to bring in strategic partners to help you with that? Those are the sorts of clues I think people are looking for.

Dan Wilton: I can tell you that the discussions we are having with potential strategic partners today are markedly different than the discussions we had a year ago. Right? And we have just come from a great forum to have a bunch of those discussions. And the world is changing and what a lot of people don’t appreciate, investors particularly, they don’t appreciate that the free cash flow to the Gold sector in the last 6-months has doubled. Right? You work on the assumption that all in sustaining costs in the sector is about USD$1,000 p/oz. We were trading at USD$1,250 and the Gold price was trading at USD$1,250, and the Gold price goes up to USD$1,500; that doubles the free cashflow to the sector. But we’ve only had that for two quarters. And in the first quarter, no one believes it. And in the second quarter, they’re still kind of setting their budgets for next year, but money is pouring into the coffers of producers right now. And at the same time, just watch the year-end results announcements from all of them; they’re talking about reserve reductions, they’re talking about not having been able to replace the reserves because of eight years of, you know, systemic and systematic underinvestment in productive capacity, or exploration or development or whatever. So yes.

Matthew Gordon: Again, I got it. I mean: well told story, well-trodden, you know, story. Again, it comes back to, because I see so much that is right with this, you know? And I do appreciate your honesty and forthrightness about what you’ve got and what you’re trying to do. So I do like that. What I’m not hearing yet and, but you’re telling me it’s coming, is how you’re going to explain how you get a seat at the table when these newly moneyed-up producers, because the Gold price has been, as you say, only for 2 quarters, let’s remember that producing cash where perhaps they were once struggling. And there’s a few of the big boys who have struggled until recently – let’s be clear, right? They need this to continue just to make right some of the wrongs of the past couple of years, quite frankly. But assuming some of them do come to the table, like some of these Australian guys who are cashed up, how do you get them to listen to you? We’ve heard some fantastic South American stories, you know, some other Canadian stories; it’s a very competitive environment. You know, you are sitting in a lot of ounces, but so are a lot of other people. So how do you get to the front of the queue?

Dan Wilton: Well, listen, much as I’d like to say it’s my charm and ability to tell a story, it’s not. It’s the fact that we have a great portfolio of projects, and when you look around the world, let alone in Canada, but look around the world and where you can scope out projects capable of producing in excess of 400,000oz a year, that is a very small list. And when you look at those projects, and then there is a calculation I would encourage you to look at and encourage investors to look at: what’s the percentage of the capital. So how many of those could you conceivably build for less than $1Bn? The answer is almost none. And in those other projects of this size and scale, what’s the infrastructure build requirement to get there? So everyone looks at Springpole because we don’t have a road up to the project today and says, ‘Oh it’s remote.’  We are 30kms from a class one logging road that I drove last week, and we’re 30kms from a power line. The actual infrastructure component of this is minimal relative to the size and scale the operation. But listen, it has its own challenges. And the challenges are that the deposit sits under the bay of the lake, but you know, that’s been known since they discovered it, it’s been known that it sits under the bay of a lake and there’s been an enormous amount of environmental baseline work done, like 8-years of environmental baseline work, and a 380 page report that their conclusion of which is there’s no species at risk and there’s no unique fish habitat here that can’t be compensated for.

So that, you know, I think in the end anyone who has not looked at this project in 8-years, which is most of the world, when they come back to see all of the work that has been done and the money that’s been spent to understand the key risks, they actually really get it. So that’s where I think we can have a different discussion around, jurisdictionally if you’re going to try and pick one or two projects that you’re going to back,  do you want a project that’s at 5,000m in the Andes that needs a diesel plant on the coast and a pipeline? Or do you want a project 100kms east of Red Lake, just off a logging road.

Matthew Gordon: Thanks very much. I’m just sort of running out of time here, but I do appreciate you running through that story with us. Like I say, there’s lots to like I want to hear more from you, definitely, because this sounds like some good things coming up this year. And you know, I wish you well for PDAC next week.

Dan Wilton: Thank you very much. It’s going to be a busy time, a really interesting time in the industry, so we’re all pretty excited.

Matthew Gordon: Yes, yes. Okay. Well thank you very much for your time and we’ll speak to you again soon.

Dan Wilton: Okay, great. Thanks very much.

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