Roxgold (TSX: ROXG) – Little Fish Taste Sweet (Transcript)

In our second interview with John Dorward, CEO of Roxgold (TSX: ROXG) he digs in to the strategy and thinking behind the company’s approach to Gold mining and operating Gold mines in West Africa.

What is their exit strategy? Will their plan to have 3 projects plus one world class asset, a game changer, work out and how? What are their priorities? Can investors get cash in hand or do they prefer having cash reinvested by the company at higher and higher rates?

We discuss these topics and more:

  • Drill Announcement
  • Piecing together the Company Strategy
  • Fundamentals of Mining in Africa and the Competition in the Country
  • Possible Gold Market Prediction

Click here to watch the interview.

John Dorward: Roxgold is a development and an operating Gold mining company. Our principal asset is the Yaramoko Gold Mine in Burkina Faso, which Roxgold discovered in 2011 and put it into production in 2016. So it’s been in operation now for three years. It’s a very profitable, very good operation and has been a strong underpinning source of cash flow for our company. And we’ve just made our first significant investment in terms of growth by buying the Séguéla Gold project in Côte d’Ivoire from Australia’s Newcrest Mining.

Matthew Gordon: So let’s talk about that. I want to paint a picture here for investors who are watching this on Crux Investor. You outlined a strategy to me, which I thought was fascinating. You thought, we’ve got an asset, rather than work out what you’ve got in the ground, you got quickly into production. And that’s given you the cash to be able to look at additional acquisitions. But it was also out of necessity because of the mine life at Yaramoko is what it is. And we can maybe get into that now. Tell us a little bit about Yaramoko. What you saw there, and perhaps what the restrictions were in terms of things like mine life?

John Dorward: So, I mean, Yaramoko is really a great asset. It’s really, I think for a company that starting out is a junior with a development asset, Yaramoko is exactly the sort of asset that you want to find. High-grade. So extremely high-grade, double digit Resource grade. We’ve been mining high-grade now for three years. The interesting thing with respect to the mine life is that we published a Feasibility Study in 2014 which showed that we had a 7 year mine life at 100,000oz a year. So 700,000oz of production. We’ve been in production now for three years. We have produced over 350,000oz and we still have a 7 year mine life, with eight 830,000oz of Resources.

Matthew Gordon: So you’re continuing to drill out and step out, and work out how you can develop that body there. You mentioned when we spoke last, there are a couple of other targets you’re looking at in and around Yaramoko. How’s that going?

John Dorward: It’s going well. So we’ve had a very active program of generating new targets, which we are setting up to start targeting and drilling in the second half of this year. I think for, as with a lot of projects, the brownfields potential is always the most compelling. If we can find another deposit like Bagassi South or the 55 Zone, which are currently in operation, then the returns to our shareholders and the company should be very good. So that’s motivating the search in and around where we’ve got infrastructure already.

Matthew Gordon: So let’s get into some numbers there with Yaramoko as people understand that, because I have talked about short mine life, but you’re extending that out slowly and surely. You’ve got a good team there, I’ve looked at the track record of delivering. Mining’s mining. It’s tough, it’s hard work. There’s no kind of easy shortcuts here. But you’ve been building that out. You hoped to grow that and extend the mine life even further. So what are the things that you are looking at with your team on a daily basis? What’s the things that are keeping you awake at night in terms of needing to deliver?

John Dorward: Really continuing to deliver consistent production is the key for us. So if you look at our track record, we’ve tried to establish a record of under-promising and over-delivering. I think if you look at our first two full years of production being 2017, 2018, both years we increased our guidance and then came in above the top end of our guidance range. This year we’re guiding to what would be record production at Yaramoko. The guidance range is 145,000oz to 155,000oz. We’re very much on track to deliver that guidance, again.

Matthew Gordon: Yeah, I’d encourage viewers to go to Page 4 of your current PowerPoint. It’s got some quite interesting numbers on there which backs that up. So, it’s been a cash cow for you. You created enough cash, I think shareholders should be happy with what you built there. It’s enabled you to have enough cash to look at the second asset, which is Séguéla. Why don’t you tell us a bit about what you saw there and why you’ve gone for that?

John Dorward: It really plays to, I guess, our real strategy, which is to offer per share growth in both Resources, Reserves, production, but most importantly, earnings and cash flow. Slide four of our current presentation I think is a good starting point, where it shows on a per share basis how we’ve gone and it’s some pretty impressive growth in terms of production and especially Resources. So what I think happens with a lot of mining companies, and this is sometimes why I think investors may have a bit of a jaded view of the mining sector, is that the mining companies chase growth at pretty much any cost. And a lot of that comes with issuing shares to acquire new development assets or new producing assets. And we think that it’s very difficult to deliver long-term sustainable value in doing such a way, because if you’re buying someone else’s producing mine or you’re buying someone else’s development projects, they’ve probably surfaced a lot of the potential value. We would like to do that ourselves. We believe we have a team, we have a good cash flow. So we’d like to take an asset maybe at an earlier stage, invest capital in it, invest the expertise, de-risk it, move it along and ultimately make it more valuable.

Matthew Gordon: So how do you do that? Because obviously no one sells good assets. Right. Or if they do, they don’t sell it cheap. So you’ve got to come in at an early phase. Makes sense. But there’s a lot of crap out there, too, right? So what are you looking for that says this is the one out of the hundred that we’ve looked at?

John Dorward: Yes. Well, you’re absolutely right. There is a lot of crap out there. We’ve popped the hood on a lot of assets, both operating and development and exploration assets. And to be honest, often not as advertised. And I think that’s something that we’re concerned about. With Séguéla, which is our first acquisition, I think is a really good case study to understand how we look at  opportunities and what we want to do. It came out of Newcrest. Newcrest is Australia’s, as many people will know, Australia’s largest Gold producer. It’s the third largest Gold producer in the world and really has a strong exploration focus. I mean, Newcrest has discovered the majority of its assets over time. So it’s really focused on exploration. Exploration is held in high regard.

Matthew Gordon: So why did they sell it to you?

John Dorward: So it probably looked like it didn’t make their size threshold. As I mentioned, the third largest Gold company in the world. The asset now, we just published a new Resource at nearly 550,000oz. So I guess they couldn’t see visibility to the 5 million plus ounces that a company of that size needs to be able to justify the effort.

Matthew Gordon: But you’re not looking for that? Certainly not day one.

John Dorward: I’d love to find it!

Matthew Gordon: Sure, that’ll be nice. But this is what I’m trying to get at, so investors get a sense of what your thinking is here. You’re not looking for world beaters, you know, global, scale assets. You’re looking for a mid-sized, profitable, low operating costs, reasonable AISC to this and piecing together this picture. So tell us about the thinking. That’s what investors want to understand. How do you think about these things and why does that make sense and how are you going to deliver it?

John Dorward: Sure. So I think we have the the belief that little fish tastes sweet. Yaramoko, and we think it’s not done and we’re finding more Gold there, but it’s not a world scale, world-class scale asset, although very profitable. So we’ve taken that model and said okay, ‘this is interesting. We believe this is an interesting model. This is a way that we can operate in the competitive landscape and still add value on an appropriate risk reward basis’. So buying Séguéla at just north of 500,000oz now for $20M cash. And that’s very important to us because we were able to pay cash that we generated at Yaramoko.

Matthew Gordon: So no dilution?

John Dorward: No dilution.

Matthew Gordon: And I know the share count has barely risen in the last two years, two and a half years.

John Dorward: We haven’t issued shares, in terms of a traditional equity financing, since early 2015. And we want to keep it that way. We want the owners of Roxgold to enjoy increasing share of Resources and Reserves and profitability, and earnings and cash flow, as opposed to having to share that with new shareholders who’ve come in on the back of a dilutive financing. So, Séguéla presents itself as an opportunity we can get into at a reasonable price. It’s $20M on the barrelhead that we’ve paid to Newcrest, another $10M payable upon first production. So we think the interests, the risk is shared there. If the project doesn’t make the production hurdle, then we don’t pay Newcrest $10M. If it does, we’ll be happy to pay that $10M.

Matthew Gordon: But, okay, if you don’t, you’re $20M into this, albeit with cash you’ve generated, it’ll be a non-dilutive exercise, but why is $20M a good price?

John Dorward: Well, we believe it’s an excellent price. So we believe it, as I say, Newcrest were motivated to sell because they didn’t see the long-run pathway. We can still have a very good asset. Anything above what we’ve found today. So we believe today, as it currently stands, Séguéla is an economic asset and we’ll be the next Goldmine that Yaramoko builds.

Matthew Gordon: But the Resource is half a million right?

John Dorward: Absolutely.

Matthew Gordon: I normally wouldn’t look at anything under a million. So what are you seeing?

John Dorward: And to be honest, I think that’s the sort of thinking that we’re trying to take advantage of. Perseus has just built a new project in Côte d’Ivoire called Sissingué, which has been very successful for them. It’s actually a small Resource and a lower-grade than what we have today, at Séguéla. So I think there’s a good case study that this can be worthwhile.

Matthew Gordon: Well, case studies, neurology, whatever. That doesn’t answer the question about what you were looking at. What are you seeing over and above the data that Newcrest has given you, which says, I think we can make this bigger?

John Dorward: Yes. So we see, the Resource we’ve put out, 530,000oz @2.4g will get bigger from the recent drilling that we’ve done. So we’ve done some additional drilling recently in the last few months over and above what’s included in that Resource. And we published that earlier this week.

Matthew Gordon: But that is a kind of post the event thing. I’m intrigued by again the thinking. So you agree $20M plus $10M with the data you had, the drill results that you inherited or you were allowed to look at before you decided to make the decision. What did you understand that others didn’t?

John Dorward: Well, I think we understood I think it’s probably buying option value at a reasonable price. When I say reasonable price, I mean, we bought a project that we thought would be economic and we could make money off, off what we saw if it didn’t get any bigger. 530,000oz, 550,000oz doesn’t ring a lot of bells for people. But when you come from a company of our size, it’s still a meaningful increase in production. So we’re realistic about where we are and how big we are. So we saw our base case was squared away with an economic asset. We then saw that there was a series of other potential deposits that Newcrest had done work on all around Séguéla. And if you look in our presentation, you’ll see a map with concentric circles. So within 10 kilometres of the intended deposit, which is the current deposit that has a Resource at Séguéla. There’s over a dozen targets that Newcrest has delineated, some of which are quite advanced, mainly Boulder and Agouti. We put those results out earlier this week and it’s from additional drilling that we’ve done, and you see very attractive, high-grade over broad intervals close to surface. So we’re very confident that some of these…and we were very confident when we bought the project.

Matthew Gordon: So that is page 17 of the PowerPoint.

John Dorward: That’s right. So if you look at that. So we were very confident that some of these additional satellite targets would make the grade and become additional feed sources for a central mill. So it wasn’t a question that we had to grow Antenna, the one with the Resource. It didn’t have to make that any bigger. What we wanted to see was some of these additional come in that would improve the economics.

Matthew Gordon: Would you have done that deal if you had to borrow the money?

John Dorward: Yes, I think so, yeah. I think if we had the borrowing capacity, I mean, we’re relatively agnostic to capital. If you borrow the money, you have to repay it. We have a relatively modest gearing level, so I’ll be able to do that.

Matthew Gordon: But there’s a very different conversation with the shareholders, you’re going ‘right, I’m borrowing some money, diluting the company down here’. I appreciate your market cap is where it is. But versus actually ‘we’ve got the cash, we’re going to give this a go because the optionality looks good to us’.

John Dorward: Yeah. I think that’s right. And I think being able to go to Newcrest and say, ‘here’s a cash offer’. I think that was a competitive advantage for us.

Matthew Gordon: You could close the deal a lot quicker.

John Dorward: Yeah. And we always look at where we sit in the competitive landscape. So we think we’ve got an area that sort of flies under the competition of the larger companies, even sort of the mid-cap companies that are well capitalised are probably looking for projects bigger than us. And I don’t want the viewers to think that we’re deliberately looking for small projects. We just think that on balance, there’s probably more opportunities for us –

Matthew Gordon: – and less competition. And with less competition comes, the price doesn’t get inflated.

John Dorward: That’s right. And then Newcrest, and I don’t know what other offers they received, but I imagine it would have been offers from very junior companies with a lot of script in it. So Newcrest would have ended up being a large shareholder of a junior without a cash flow. And then really sort of hostage to the success of that company being able to finance and take the project forward. With us, It was a clean exit. We’ve known the Newcrest people very well, and I think they they’ve seen what we done at Yaramoko. And I think for a large company, and especially one like Newcrest, leaving a good legacy of where they’ve been is important. So they want to see it go to a good home. People who will be good operators, good stewards. And we’ve been able to demonstrate that in Burkina Faso. The minister for Mines of Burkina Faso, actually wrote to his counterpart in Côte d’Ivoire, giving us a recommendation and endorsement.

Matthew Gordon: Always good. So Newcrest, are they sitting on more assets in West Africa that you’re aware of?

John Dorward: They still have a joint venture position with Barrick that they inherited, part of the Randgold acquisition.

Matthew Gordon: And what’s that doing?

John Dorward: I’m not really sure, they don’t talk about it a lot, but I’m always interested to know, to learn more.

Matthew Gordon: So are we! Okay, so that helps us understand a little bit about your thinking. The small fish tastes sweeter. And you think you’ve got the team to be able to extract the value there. And there’s a big list of things to look at in that portfolio, that come along with Séguéla.

John Dorward: That’s right. I mean, if you go forward. We’ve talked a little bit about what attracted us to the asset. If you roll forward over the next couple of years. So, we will deliver a Preliminary Economic assessment later this year. And I think the opportunities that, in talking to analysts and investors who are active in Roxgold, a lot of them are still carrying these assets at $20M in their valuation, what we paid. So I think when we table a P.E.A. (Preliminary Economic Assesment) and not to to front run what that will look like, but I think it’s going to to be better than $20M.

Matthew Gordon: Well it’s interesting. People have different views of PEA’s, in terms of their accuracy and the relevance of them. So, yes, some people might like it. Some people may wait for the next step. Okay. Let’s talk about…before we talk about drill results, we’ll come onto that in a second. Your share price. You took a big hit. We talked about this in the last conversation. We’ll put a link up to that interview. But let’s talk about that here. The share price took a bit of a hit because of some selling, you believe? Why don’t you tell us about that?

John Dorward: Yeah, look, I think we’ve actually recovered a little bit in recent…last week or so.

Matthew Gordon: You have. I want people to explain…because if they look at the chart, they’re going to go, ‘oh, there’s something going on here’. But it’s explainable so why don’t you.

John Dorward: Absolutely. So, it’s been quite an eventful 12 months for Roxgold in terms of its share register. Probably a lot of your viewers would have seen this rippling through junior mining companies when M&G lost their Vanguard mandate in July of last year. And that went to Wellington. And we’ve, and I think we might have talked a little bit about that, so that was announced, I think in July last year when we were trading at a point $1.40. And we’re not looking to make excuses, but when you look at the share graph performance, basically from the day of that announcement, it trailed from a $1.40 down to $0.70 or thereabouts. As the stock…as that overhang leaned on our stock. And that is a little bit of a subtle difference that happened, too, because we historically have been a fairly thinly traded company. So we’ve got a good number of very long-term loyal shareholders who own big chunks of Roxgold and don’t sell them and don’t buy more, don’t sell more. They’re happy with their position. So we’ve had a lot of…we’ve had limited trading. And so when you have your second largest shareholder loses its mandate, and everyone expects it to be sold, which it subsequently was. That’s a bit of a problem for you. So that predictable response, share price down, that cleared in late January. So there was a bought deal…a deal done and a block traded which went to a lot of good homes, good long-term, strong hands. And that really marks the share price which has turned around quite a bit since then. And that’s been very helpful for us. And what that’s also done is it’s really increased the velocity of our trading. So, our share trading has gone up considerably. And the up-shot of that is interesting because one of the one of the key structural shifts in the junior Resource market has really been the rise of passive investing. And that’s that’s not just junior resource companies, it’s across the board.

Matthew Gordon: Yeah. We’ve talked about them in previous interviews.

John Dorward: We’re well on track for inclusion in the junior ETF, the GDXJ at the next re-balance.

Matthew Gordon: How do you know that?

John Dorward: Well, so you look at the criteria for entry and it’s pretty straightforward. You need a market capitalisation of greater than $150M U.S. So that’s a check for Roxgold. And you need to have $1M…an average of $1M per day traded for three consecutive quarters. Now they’re not calendar quarters. So this current quarter finishes in August. But we’ve already cleared that hurdle for two quarters. We’re halfway through the third quarter and we’re trading at over $1.5M U.S. a day. As we speak.

Matthew Gordon: That’s a big deal. The GDXJ is a big deal.

John Dorward: It is quite a big deal because you’re looking at a significant new shareholder buying onto the register. And also that facilitates other shareholders I think who may be looking at being tied to the index and then increasing our liquidity.

Matthew Gordon: Right. Okay. Well, I hope that comes because I think for a Retail Family Office and High Net Worth, that’s a big deal. It shouldn’t be understated. Okay. So, we will watch out and see if that happens. Now, generally you…I’m looking at things like you’re AISC, your overheads, your cost and your G&A, all of that good stuff. And I always ask the CEOs, in terms of what do they think juniors should be paying their board, the management? And how do they remunerate each other? Is it incentivised on deliverables? Or is it ‘actually, I’ll just take a big salary here’. How do you guys look at that? How do you approach that?

John Dorward: So I think I mean, and there’s a lot of commentary on what’s the appropriate –

Matthew Gordon: – Quite rightly.

John Dorward: Absolutely. I know it can be a hot button item for a lot of people. With Roxgold, we have a combination of fixed and variable pay. And really it’s, fixed pay is a salary and the rest is really to be put at risk. And there’s two components to the risk base salary. There’s the short-term and long-term. Short-term is really set around delivering metrics. So for myself and for my team at Roxgold. We’re incentivised on on a variety of metrics. Safety is first and foremost. Production targets, making sure we hit various milestones in terms of developments.

Matthew Gordon: Who sets those?

John Dorward: Those are set by the board.

Matthew Gordon: So the board set the targets by which they are remunerated?

John Dorward: No, no, so the board don’t have those sort of targets, this is for the executive team. I happen to be on the board but this is for the executive team.

Matthew Gordon: Got it. Okay. I understand.

John Dorward: So you have to deliver. And if you…and there’s a range and if you don’t deliver, then you don’t get that component of your short-term incentive. And then on the long-term incentive, is essentially fully tied to shareholder returns.

Matthew Gordon: And who watches the watchers, as it were? I’ve been talking to a company, let’s say, in the last two weeks to keep it vague. They have a little bit of production. They have a market cap of circa somewhere between $200M and £300M. And their board pays themselves as much as the Kirkland Lake board. And I’m like, wow, that’s pretty ballsy for a low revenue business. We got a lot of communication from investors saying, well, ‘what are the rules? Who manages that. Who oversees that?’. Because people forget to read the prospectus when they’re putting their money in. If there’s a private placement or if there’s a fund raise of any description, I mean, it’s just interesting how juniors manage that.

John Dorward: Yeah. So I guess the ‘who’s who’s watching the watcher’ and it’s not an exact science. But I think the rise of the proxy advisor has been interesting in recent years. I’m sure a lot of your viewers are aware, a lot of funds are advised by proxy advisors. And these proxy advisors comb through the management circulars and annual reports to see what the the pay mix is. And they basically have a recommended approach. I have a template and that’s largely in line with what I was saying. So there’s things that they don’t like. They prefer whole share units over options because they’re less dilutive. Things like that. They want to see performance metrics that, if your company outperforms its peers set then that’s good. If it underperforms, then there’s less reward. So they want to see that the management team make some gains and the shareholders and the company is doing well and feels them pain on the on the down side.

Matthew Gordon: We’re here to help investors understand why they should invest in Roxgold. So let’s get back to that picture painting. You’ve got Yaramoko, you are enhancing that, you’re continuing to work and extend the life of mine. Very high-grade, very low AISC. It’s a good, solid project. And you will keep sweating that. And it’s producing cash to all you…give you the freedom to do things. You’ve just bought Séguéla. You like what you see. You explained why you bought it, why you paid the price that you do. So how do those things set in terms of your vision, the complete picture, the overall picture of what Roxgold could be. Without getting into the, ‘we’re going to get into development, etc. We will never sell’. Don’t do that. Do the reality. What are the options for you if you build this out the way that you could?

John Dorward: Sure. So the first and foremost is to try and make as many things as you can, put them under your control as best as you can. So there’s a lot of variables that we can’t control in our business, price, price of Gold, whatever. But what we can control is our capital structure, to a certain extent. And for us that’s very important. And on the theme of the ‘why we went to Séguéla’, the beauty of this project is we can build this out without raising another dollar in equity. And that’s as I said, we paid cash because we didn’t want to issue shares. From cash on their balance sheet and cash from Yaramoko and probably a combination of a re-cut financing or project finance arrangement, we should be able to build that Séguéla without going to our shareholders and asking them to dip into their pocket to fund our growth. And I think that’s important. So that’s really, sort of, set in stone for us. That’s what we want to do. So ideally, we would like to find a third project. And if we could rinse and repeat the Séguéla style of experience, we would do that. Because I think we could then schedule that to come in after say Séguéla. And again, if we could do that by minimising or avoiding dilution totally, and then use cash flow from Yamamoko and Séguéla to then build that, we’re actually starting to look like a real business as opposed to a mining company because we’re taking earnings, genuine cash flow and reinvesting at an increasing return on investment.

Matthew Gordon: That’s what interests me. That’s what interests me when we talked last online. The model was different. It seems to be a business which understands the needs of investors. You’re not asking them to continually fork out or diluting them. You’re creating your cash to give you optionality, which is great. Are we going to see dividends at some point?

John Dorward: So an interesting thing, a book that I’ve read, and I’ve read it a couple of times now, is Outliers. You may be familiar. It really talks about CEOs who have been very impactful and tries to sort of divine what was different about these actors or these CEOs who really compounded earnings and made extreme returns for their shareholders. And one of those is really, they don’t typically pay dividends. They favour buybacks. So that the form of return of capital to shareholders is buybacks. But what they do is they take the earnings from their business and they reinvest those earnings, allocate that capital into future growth. And that’s what we were looking to do. So I don’t think it’s a new idea. Certainly not a new idea that we’ve come up with.

Matthew Gordon: No, but it’s important for people to understand the way you think, because there are different ways you can come at this. Some people look at cost cutting exercises, some reinvesting in infrastructure, dividends for some, buybacks. Effectively, same thing. So. Yeah. Okay.

John Dorward: So my main job, the principal job that I have is really allocating capital. Now when you’re a single asset, as we were with Yaramoko, it’s pretty difficult. So for a man with a hammer, every problem looks like a nail. So you drill around and you drill Yaramoko. So now with Séguéla coming on, we’ve now taken our first step into being able to really establish a competition for capital within Roxgold. So the expiration team at Yaramoko needs to be able to justify why their targets are as good, if not better than the targets at Séguéla. Then we can adjudicate with our Vice President of Exploration, Paul Weedon, and direct the capital to where we think the best return is, both in terms of absolute returns, sort of temporal like ‘what’s the faster path to a return’, etc. So I think that’s really set up an interesting dynamic for our company that we now have the opportunity to direct cash flow in to different directions.

Matthew Gordon: Absolutely. It comes back to remembering. I like the fact you said you’re not a mining company. That’s great. One of the very few people to recognise this in this space and what they’re in existence for. I like the approach to growth capital. It’s a question of what’s that eventually going to mean to new people coming in and existing people, shareholders. How do they see a return? How are you going to get them that return? So that answers this question of, ‘well, maybe I should put my money somewhere else’. So why stick with you? Why come into Roxgold?

John Dorward: I think there’s two paths. So in my career, generally, the happiest path to realising returns has been to be taken out.

Matthew Gordon: Well, is that true these days? Because the multiples are not what they once were. So what would you think they would be?

John Dorward: Well, I think that’s because we’re in a cyclical business. So for me, the biggest returns come from being able to work within the cycle. So it’s classic. I mean, it’s easier said than done. Buy low, sell high.

Matthew Gordon: You’ve done it a couple of times I note.

John Dorward: Yes, that’s right. So we have. So we’ve had three exits. One I’ll always characterise as an honourable draw and two, which were, I think, very successful for everyone involved. NPI mines back in the early 2000s and Frontier Gold, had a very good team there. I worked with some very good mining professionals. And Newmont acquired Frontier in 2011 and they bought a really good project. But it was a good time to sell a project.

Matthew Gordon: But you weren’t CEO then. You weren’t running that. You were part of a team. So today, what do you think you need to create to put yourself in a position too, if you wanted, be taken out?

John Dorward: So my whiteboard has three projects, three operating projects on it. And then a potentially world-class scale asset in the future. So we’ve taken our step towards getting two of those. So we’ve got our second mine, so sequentially we’ll build that. I would love to find another Séguéla or something similar, hiding in someone’s portfolio that they don’t love.

Matthew Gordon: But where’s the bit where you are making investors money? Because spending money on stuff, great. How does this three plus one world class asset convert into a big payday for investors?

John Dorward: Well, I think so. I mean, I think compounding those earnings and making sure that our share count, if our share count of stay tight, then those 374 million shares that we have on issue today are earning a lot more cash. Now, I think you get down to a debate. Maybe it’s a bit more philosophical as to whether people want cash in their hands or whether they want to have that cash reinvested and continually growing at a higher and higher rate.

Matthew Gordon: I’d say both because it mitigates their exposure.

John Dorward: No, that’s right. So I think so for us, we think as long as there are opportunities to continue to reinvest capital at sort of the returns we expect to see from Séguéla and project number three, we would recommend continuing to do that. I would like to ultimately have an asset that’s in the pipeline that has the potential to be a real game changer. And that’s probably taking some geological risk and investing in it and and moving along. And and ultimately… I mean, one of the case studies that I liked to look at is was Redback A very successful company, made a lot of money for its shareholders, had a good mine at Chirano in Ghana, doing around 200,000oz. Then they had a massive projected Tasiast in Mauritania. It eventually proved irresistible to Kinross. And they came in and paid something in the order of, I think, $8Bn dollars. So the shareholders who were sitting in Redback 5 years earlier probably didn’t envisage an $8Bn payday. But I think if you get the timing right and you’ve done a good job building a compelling business.

Matthew Gordon: Well, obviously that’s the dream, because that’s a really good example. Putting today’s language, what are you trying to be? I mean, an $8Bn dollar company from where you are on today, that’s… you’ve got a ways to go, right?

John Dorward: Yes. But I mean, I think to be a $5 stock. Roxgold needs to take its 374M shares to around 1.6Bn-1.7Bn. Now from a +$300M market cap. Now, that may seem a little ambitious, but from what I’ve seen in the past, when the market cycles in your favour, then there’s the opportunity to make an outsized return. And that’s what we’re sort of looking to do. So we don’t know when or if that will happen again. If history is any guide, it will happen. Just hard to predict when. So what we’re going to do in the meantime is build a company that will be irresistible, both to investors along the journey and also potentially a large acquirer in the future.

Matthew Gordon: Okay. Thank you. Let’s talk about the future. The last time you wouldn’t give me a number about the Gold market, because you’ve been around too long. You know not fall for that one. But the Gold market since we spoke has started moving. There are some signs that it’s heading the right way. You talked about timing a second ago. How long do you think this cycle will last? Or do you think it’s just unpredictable these days?

John Dorward: Look, it’s definitely unpredictable. So I would generally stick to my practice of not providing number, certainly not numbers, and certainly not times, but I think as broad direction of travel, it looks extremely positive for precious metals. I think we’ve seen an operating…

Matthew Gordon: $1,800 bucks?

John Dorward: I think that’s well within the range. I don’t know when, but if you look at Gold in the 2000s when it came off its lows, around $250 at the turn of the millennium. It ran pretty strongly up and then immediately around the GFC, Gold didn’t perform very well at all. And then we had a bunch of radical action and then Gold took off. And then it’s come back down again, but still pretty high. I mean, North of $1,400 historically was not a bad Gold price. But I think as we see liquidity start to unfold, Central Banks looking after their balance sheet and maybe some normality return, then Gold stands a very good chance of seeing new highs.

Matthew Gordon: It’ll be happy days if it does.

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