Salazar Resources (TSX-V: SRL) – Cause We’ve All Been Painted by Numbers (Transcript)

Interview with Merlin Marr-Johnson, Director of Salazar Resources (TSX-V: SRL).

We really like this business model and we like Marr-Johnson. Both are smart. They have farmed out the first copper-gold asset, the El Domo Curipamba VMS discovery, and received a Royalty payment, ongoing management fees and can lease out their 3 drills. Plus they are fully carried for 25%. That takes them to c.$5M in the bank to continue exploring other portfolio assets. Salazar has 4 additional copper-gold assets and other licences in the hopper.

In addition, they have a zinc-exploration JV that contains two projects, Pijili and Santiago with Adventus (80%) funding all activities in the Alliance up to a construction decision on any project.

Geologist Fredy Salazar, ex-Newmont team leader in country, has been exploring and discovering major copper-gold assets in country for 20 years. Listen to Marr-Johnson’s numbers. He paints a very exciting picture. You have to work out if you like this model and if you think he can deliver it.

Ecuador is a country that major mining companies are rushing to because it is under explored but is already showing its potential for big, big projects. Salazar will continue to farm out some of the projects , but are very keen to 100% develop one or more of their own.

Interview highlights:

  • Company Overview
  • Background Story: What Interested Merlin to Get Involved?
  • Team Experience and Ecuador – a Mining-Friendly Jurisdiction?
  • Business Model and Creating Value: What Have They Done so far?
  • Assets and Focus
  • Managing Finances: Where are They Spending Money and Where Will They Look for More?
  • VMS Deposits: What’s Special About Them?
  • The Future: What are They Excited About for Next Year?
  • Why Should You Invest in Salazar Resources?

Click here to watch the interview.


Matthew Gordon: Hi Merlin. You are involved with Salazar Resources, this Ecuadorian miner. I had a look, fascinated by the business model and that’s really what I want to talk to you about today. But let’s kick-off if you can give us a one minute summary of the business for people who are new to this, and then we’ll pick it up from there.

Merlin Marr-Johnson: Salazar Resources is an exploration company listed on the Venture Exchange in Toronto and Vancouver. It’s got a market cap around USD$15M and it is a prospect generator in some ways, it’s got an asset that its been fully carried on through to production, and its got its own portfolio that its looking to explore and develop.

Matthew Gordon: Right, we’re going to get into the model in a second, but maybe lets start with how did you get involved? Who did you know in Ecuador to get involved with this project?

Merlin Marr-Johnson: Arlington Asset Management bought a stake in Salazar Resources last year, in the middle of 2018. I was invited down on a site visit at the end of last year, I’m a geologist, I speak Spanish, and I was potentially going to be asked on as a non-executive director. When we looked at the company we were very impressed by the geology and by the team and the model, what they didn’t have as much strength in was a capital markets presence, and at that point they asked me to join as a director. So, I’m actually an executive director of the company, responsible for Corporate Development.

Matthew Gordon: Right, so Arlington Funds which are based here in London is the introductory point.

Merlin Marr-Johnson: Yes.

Matthew Gordon: So, let’s talk about some things you mentioned there. So you met the team, you had a look at the geology, so can we start with the team. Ecuador is quite a nascent country for mining, is it not? What can you tell us about it?

Merlin Marr-Johnson: Just a little bit on Ecuador before we get onto the team, if that’s okay?

Matthew Gordon: Okay, let’s do that.

Merlin Marr-Johnson: Ecuador as you know, right on the Andes, and the mineral deposits of the Andes are prolific; the Copper production in Chile through Peru, and the geology doesn’t stop at the border, it carries right through Ecuador and into Colombia. But over time there’s never really been a development of a mining industry in Ecuador, principally because the fiscal regime has been insufficiently attractive to get the miners in there, and they’ve been really promoting the tourist agenda.

There was a socialist government that came in, in 2010, that was very-very pro the environment and pro tourism, they want to be the greenest economy in the world, the problem was they couldn’t fund it. That socialist government over the course of its 7-year administration turned Ecuador into a proto-mining economy; they realised that to fund their deficit, to fund their budget they needed to bring in foreign direct investment, and they needed to bring in export earnings, and the only industry that was left for them to grow in was mining. The ex-growth of agriculture, the ex-growth of tourism, the oil industry, and they had this phenomenal geology but no mining industry. So they really started reforming the mining code, they dropped the windfall tax which had been put in earlier, and they did a review of all the mining codes across South America and looked at the tax regimes, and then they brought Ecuador in line with that.

So, that’s an ongoing process, and from that basis the country is opening up and yet it hasn’t had the exploration that all the other countries have had, and that combination of the same geological potential but without the advanced exploration, means if you want to find Copper-Gold assets in the world anywhere now, you go to Ecuador.

Matthew Gordon:  Do miners have to find a different way of working in an environment like that? Is it going to be more costly to work in an environment like that, or is there a dose of realism within the mining code which is being constructed at the moment?

Merlin Marr-Johnson: I’d say there are three elements to that question. 1. Is that all the miners are looking to come into Ecuador, everybody is looking for Copper-Gold assets, so all of the majors are suddenly interested in Ecuador. There’s competition for assets and there’s competition for ground, and there’s competition for good people that know the country.

Matthew Gordon: But from meaningful companies, sizeable companies?

Merlin Marr-Johnson: Rio Tinto, BHP, Newcrest, Anglo-American, all the big guys are in.

The other thing is, it is evolving slowly, so you can’t just build the mining industry overnight. The government regulations have changed, for example the mining cadastre, the mining department closed in 2018 or maybe late 2017, and it’s not going to reopen until Q3 next year.

Matthew Gordon: Why?

Merlin Marr-Johnson: There was a flood of money that came into Ecuador, they were just trying to work out how to handle it. People on the explorational licencing were promising too much money in a four year term. Their investment plans were unrealistic and it was viewed that perhaps some companies were doing a land grab, and they weren’t going to follow through the exploration expenditure. So now they’re just in regulation that we believe, so that the mining companies that take out an explorational licence will have to spend the money, and be accountable for it, and if you don’t spend a certain proportion in the first year, you lose your licence.

Matthew Gordon: Which happens the world over.

Merlin Marr-Johnson: They’re tinkering, they’re changing the mining code. So, just coming back to question, the three things. 1) All the big guys are there. 2) Its an evolving industry. 3) That there will be winners and losers in Ecuador. It’s one of those countries where because you don’t have a history of large scale mining, or industrialised mining, there’s a lack of awareness. There are communities that don’t want mining, or don’t know what mining comes, and change is difficult to assimilate on any level in any society, and in Ecuador its no different; you say, ‘We’re going to build the mine’, and people say, ‘Is that going to affect me negatively?’ So you have to go through this education process, and the winners will be the ones that can manage their community relations properly.

Matthew Gordon: I think these are common problems, common threads through different countries around the world, but I agree with you. Can we talk specifically about what you think you’ve come into, like I’ve said, this is the exciting bit for me; the model that you have employed, or the company has employed to move forward excites me, I’ve seen this work elsewhere. Can you explain what you’ve done.

Merlin Marr-Johnson: Well, the reason why I got excited about it, is that I’ve worked on the by-side for 5-years, and I worked as a mining analyst for 6-years, and I run exploration companies. One of the things which is a real differentiator in a company is, when you have an income stream and when you’ve got an asset of significant value that de-risks the downside to your investment.

Matthew Gordon: Right, so what have you done?

Merlin Marr-Johnson: Salazar Resources made a discovery in 2008 called the Curipamba VMS deposit, it’s a volcanogenic mass of sulphide, they drilled it out and they’ve farmed it out. They farmed it out to a partner who is investing USD$25M to take it to a Feasibility Study by 2021, and then they’re going to continue to fund it, all the way through to production. So, Salazar Resources is carried on a 25% stake, all the way through to production.

Matthew Gordon: What does that mean in terms of dollars, what’s the income?

Merlin Marr-Johnson: The income up until it gets into production is based on advanced Royalties, and a management fee of 10% on the basis of a minimum of USD$3.5M a year. So, we’re talking hard numbers, USD$600,000 minimum a year income to the company. In addition to that, Salazar Resources owns three drill rigs which it contracts out to the partnership, and to third parties, and we anticipate about a USD$1M coming in from that, on an annual basis.

Matthew Gordon: On top of your $600,000?

Merlin Marr-Johnson: On top of the USD$600,000.

Matthew Gordon: Interesting.

Merlin Marr-Johnson: So, the base position is, we’ll be income generating USD$1.6M, possibly up to USD$2M on an annual basis.

Matthew Gordon: For a small company, an exploration company, that allows you to do what?

Merlin Marr-Johnson: That allows us to fund on a discretionary basis our 100% owned portfolio. We are an Ecuadorian team, the headquarters is in Quito, and we can do extremely low-cost effective exploration in Ecuador for a small amount of money. So, that USD$1.6M goes a long way, and I should add that we’ve got about USD$3.7M in treasury anyway, which is a function of previous income, and sale of some shares that we got as part of the farm-out deal.

Matthew Gordon: That’s interesting, that’s a very good start. So, you’ve got some 100% owned portfolio assets, are there any which would take the lead there? Are you focusing on one, or several at the same time? How do you intend to spend your time and money?

Merlin Marr-Johnson: At the moment we’ve got four licences which are 100% owned by us. I want to say, we’re not just stopping there at that four. Before the Mining Cadastre closed we applied for five or six permits beforehand, and we hope to get a couple of those through, they’re in process. We’ve also done prospecting over the last couple of years, we want to apply for another 10 to 12 licences afterwards. So, we know that we actually want to grow our licence portfolio.

Now, in terms of where we want to put our money, and how we want to do it, it all slightly depends on how we can trade our cards, because if for example, we can do a farm-out on one licence area that comes with a cash payment upfront, and is fully carried, then we can use that money to invest into one of the other projects, so we can play things around. But if I was to pull out a priority asset I would focus on the Rumiñahui porphyry target, which is in the northern portion of Ecuador, and there’s a line of porphyry’s. It goes the SolGold Cascabel deposit, which as we know is a billion tonnes here or there at around 0.6% Copper equivalent. Then you travel 55Kms to an asset called Yurimaguas which is owned by Codelco, and that’s over USD$1Bn, and that’s at 0.8% Copper equivalent combined.

Then 22Kms on from that is Rumiñahui which is the asset that Fredy Salazar has been looking at for over 20-years. We’ve got the licences over that, and the preliminary work that we’ve done on that indicates that it’s a porphyry, and that its Gold-rich, and that it’s a large system.

Matthew Gordon: Okay, we’ll come onto that. I want to stay on the, how do people make money bit, which is I think is why people watch this. So, you’ve got a model you’ve employed which is identifying a target-rich property, you farm it out, retain or you’re carried for…?

Merlin Marr-Johnson: 25%.

Matthew Gordon: 25% of that. You may get a lump sum cash amount for that, or not? But you will get some income in the shape of management fees, perhaps leasing out your drill rigs, and what was the other…?

Merlin Marr-Johnson: Advance Royalties, but that’s all within the USD$600,000.

Matthew Gordon: So replicating that model kind of keeps you ticking over and developing more and more of your portfolio as you build this out.

Merlin Marr-Johnson: Yes.

Matthew Gordon: So you’re an incubator as such.

Merlin Marr-Johnson: We are an incubator but talking about making money and where the share price could go to, or where it should be for example, the Curipamba VMS that we’ve farmed out is at the PFS stage. Earlier this year we produced a PEA that gave an NPV of USD$288M on base case. So, our base case NPV was USD$288M and we are 25% fully carried on that. Now, obviously there has to be a discount applied to that because we’re a few years away from production, so what is the right price for our 25%?

One way of looking at it is to look at the value of our partner, which is pretty much a single asset company, and its earning into the Curipamba Project, and they’ve got a market capitalisation of USD$75M, but they have to keep funding the entire – they have to carry the whole thing. So, one could say that our 25% should be at least USD$25M, if not more, because their 75 for 75%, and our 25 to make the 100%.  

Another valuation yardstick is a Royalty that was bought on that VMS project, 2% Royalty was bought for USD$10M earlier this year, and I use a rule of thumb equity to Royalty of around three times, which puts our 25% at a value of about USD$42M. So, we’ve got these yardsticks, let’s call it more than 25 because we don’t have to be diluted, and within USD$40M, so, let’s call it in the $30’s. Our current market cap is $15-16m, so in a sense just on the value of the 25% stake you’re looking at a 50% discount to fair value.

Matthew Gordon: Okay, I’ll buy that.

Merlin Marr-Johnson: So, a potential double on the share price right there. Then you throw on top of that the fact that Ecuador is the hottest country globally at the moment, because of the way the government is going, the fiscal terms, and the geology. The fact that we are an exploration team with a really good footprint of licences within Ecuador, and the fact that Fredy Salazar who is head of the company is recognised and renowned as probably the best explorer in Ecuador.

Matthew Gordon: Yeah, I think there are people who will give you credit for that, and some people who will see it in the opposite direction, because Ecuador is early stages. So I think just to be fair in all of this I think you’ve got some great things, and you’ve got some unknown things.

Merlin Marr-Johnson: Oh yes.

Matthew Gordon: Again, it comes back to this model for me, I’ve seen this work extremely well elsewhere, and I like that you’re employing it, and you’ve actually done Stage 1, you’ve got advance payment, and in terms of Royalty you’re getting management fees, and you’re getting the rig fees, and you’ve got this portfolio of assets where you can replicate, replicate, replicate. Accumulatively, it could be very meaningful for you without necessarily needing to go and raise significant cash or dilute shareholders. So, that’s the bit that interests me.

So, Fredy’s knowledge of country, he’s been in country I’ve read 20-odd years, and has worked for…

Merlin Marr-Johnson: Newmont.

Matthew Gordon: Newmont, so again it’s not amateur local stuff, this is a significant global leadership player that he worked for and led the team for. So, I like that his knowledge is extensive, I like the fact you’re picking up these licences; the question is, when are you going to be able to start moving this thing at a pace? You will have circa USD$5M available to you, can you break that down for me a little bit more, I know you’ve kind of touched on it but break that down for me, how do you create value? How do you take that USD$5M and create significantly more value for shareholders?

Merlin Marr-Johnson: We’ve got four licences that we are taking up the value curve through exploration, three of those are in Ecuador, one is actually just over the border in Columbia. Our plan for 2020 will be to drill 2 or 3 of those licences in Ecuador, we’ve got a budget for 8,500m of drilling, and 3,500 of those will be at Rumiñahui. We are waiting for water permits in all our licences, and that has actually been a delay across Ecuador throughout 2019, and the Mines Ministry is on it. The Head of the Water Board was blocking the issue of water permits for exploration drilling, there’s been a change in the Water Board, the new Head of the Water Board is someone with environmental and mining experience, he’s an engineer within environmental credentials, and a mining engineering degree.

So, the water permits are coming through more quickly. We expect to have our first water permits through in Q1, which will enable us to start drilling. We anticipate drilling Rumiñahui in the second half of the year.

Matthew Gordon: For how long, is it seasonal there?

Merlin Marr-Johnson: It’s not seasonal. We’ve budgeted a meterage of 8,500m as a total plan for the year. What then will happen, it will be slightly dependent on Copper prices and what we discover.

Matthew Gordon: And these are your own drills, so the cost must be relatively low, presumably.

Merlin Marr-Johnson: Yes.

Matthew Gordon: So, where are we with this $5m after you’ve done all of this? How much have you spent?

Merlin Marr-Johnson:  Our plan is around USD$2M, and its discretionary, so the smaller amount of work is about USD$2.1M and it dials up to USD$3M depending on what we find. Now, we don’t of course want to run the treasury down to below USD$2M, so we’ll always tailor our expenditure carefully with what we can see in terms of the deal flow.

Matthew Gordon: Are you having conversations now with companies about Rumiñahui? Or, are you going to wait until you know a little bit more? And what’s your expectations of what a deal could look like, what type of deals are you looking for from whoever you’re going to be speaking to?

Merlin Marr-Johnson: Yes, yes, yes, all of the above. Because Ecuador is a country of great interest to all the major mining companies, the eyes are on Ecuador and people are looking for the next Cascabel. Fredy Salazar is well-known, and if you are the exploration director for a major company one of the first things you do when you come into a country like Ecuador is, you call up the team that knows what’s going on. So, we get a lot of inbound from the guys saying, ‘Hey Fredy, what are you up to?’ He’s well respected within industry, and critically its not just him, so between him and his two colleagues, we’ve got three geologists who between the three of them have made a lot of the discoveries in Ecuador over the last 20-30 years.

Matthew Gordon: Anything we’ve heard of?

Merlin Marr-Johnson: Fruta del Norte, and the Lundin Gold asset. Success has many fathers, he was involved in that, there are a number of other assets you might not have of as well, and of course Curipamba which is the VMS project. You mustn’t forget that Rio Tinto got started on a VMS, Agnico Eagle got started on a VMS, Lundin Gold got started on a VMS, old Lundin Mining, these are…

Matthew Gordon: Explain to people why they possibly should look at VMS-type projects, because we’re looking at a few, and its all down to the reporting what you can and can’t report, but VMS projects tend to be a lot bigger than exchanges that allow you to report. Tell us about what you know about the VMS structures in Ecuador.

Merlin Marr-Johnson: VMS is globally, they tend to come in clusters, and so what happens is, you drill off one of the pods, and that is really where you are restricted in your reporting, because you will drill off a pod and it might be 2-3M/t of ore. It’s high-value ore, but it’s still only 2-3M/t. In fact, if you look at it in the distribution base, most are 2-3M/t.

Matthew Gordon: And it’s restricted why? Because in terms of the depth that you’re allowed to report on?

Merlin Marr-Johnson: They are fossil black smokers on an ocean floor, and they just form in a oner, it’s a unit, but there are several of those in the cluster. Now the Curipamba one is we’ve got 9 M/t in measured and indicated resources at 2% Copper, and 2.6g/t Gold. It’s 5% Copper equivalent at surface, which means that the NPV is high, the capital is low, the margins are great, and that’s where you make money on your VMS’s.

Now the other thing is, that if you look at the discovery of VMS’s globally, they’re very dense and they appear on gravity. So people do mag surveys and then they sometimes come back and do a gravity survey, and if you look at the Iberian Pyrite Belt, Southern Spain and Portugal, all the big discoveries are made by gravity. So Lundin got going on Neves-Corvo, Rio Tinto, on Rio Tinto it’s the name of the deposit down there, and we’ve just flown the geophysics at Curipamba, it’s a 9M/t core to that deposit, it’s a much bigger licence area. Watch this space.

Matthew Gordon: Okay, so you’re excited by that, but what else are you thinking the end of next year? You’re answering the question of, yes, yes, yes, talking to lots of people, optionality, but what are you hoping for?

Merlin Marr-Johnson: The first stage is to get CEAs with the right groups. The first met farm-out we did was with Aventis Mining which was a start-up company, obviously now for something like Rumiñahui which is potentially a very large porphyry target, you’d want to be going higher up the food chain in terms of capability and size. So, we would want to have signed a number of CEAs with majors, and potentially we want to do the first phase of drilling by ourselves.

Now, if a major comes in with an offer beforehand, which is sufficiently attractive in terms of an equitable funded approach to the development, or the exploration of Rumiñahui, we might consider it. We’re not drilling it until the second-half of the year, so we’ve actually got some space to talk to some of the majors whether they really are serious about striking up some kind of farm-out.

Matthew Gordon: I guess what investors would want a sense of is, your ability to preserve cash, create value, and that means making sure you’re not spending more money than you need to, whilst having these conversations, because its all in the negotiation if you’ve got enough data to have that discussion.

Merlin Marr-Johnson: Yes. The amount of data we’ve got is relatively limited.

Matthew Gordon: That’s my point.

Merlin Marr-Johnson: We’ve got geological context, we’ve got outcrop, in one of the riverbeds we’ve got 55m at 2.7g/t, it’s a great outcrop. We’ve got a lot of Gold, we’ve got a lot of Copper, we’ve got a lot of context.

Matthew Gordon: Yes, but negotiations are done, effectively with more information.

Merlin Marr-Johnson: Yes.

Matthew Gordon: So that’s what I’m saying, I’m intrigued in how much you’re going to spend. Will you have enough cash to get to the point you need to…

Merlin Marr-Johnson: Yes.

Matthew Gordon: …without diluting shareholders at any point soon?

Merlin Marr-Johnson: There are precedents of good at farm-outs in Ecuador on slightly more advanced assets. We also know that there are groups out there looking for relatively earlier stage joint venture programmes on areas of interest, and Rumiñahui certainly falls within that. It changes the tenure of the conversation, how advanced your asset is or not.

What I would say is that we’ve got the capital, the drill rigs, and the time to do our first 100% owned drilling programme on Rumiñahui. And I would just add in that, is that we always want to have a flagship asset that we control, and that we can take on 100%. We’ve got Los Osos which is a high-grade Copper-Gold project on a much smaller licence area, that we’ll be drilling on 100% basis. We’ve got a Macara project which is a Gold target, and of course if the mining cadastre opens in Q3, and we get some of the licences that we’ve applied for 2-years ago, then suddenly we’ve got more properties with which we can trade. And so if there’s a bit drill out on Rumiñahui that perhaps is not within our budget to fund, we’d be more willing to take it on.

Matthew Gordon: You said right at the beginning, you’re a markets guy. I know you’re a geologist, you run companies, and you’ve been an analyst, and so you’re a markets guy compared to the team that is currently there.

Merlin Marr-Johnson: Yes.

Matthew Gordon: So, is there expectation that you’re going to go and raise some capital? Are you going to need to, or is this just about helping them construct better deals with these farm-out opportunities?

Merlin Marr-Johnson: We’re not planning on raising capital, as we’ve got almost USD$4M, we’ve got USD$1-USD$1.5M coming in, maybe up to USD$2M. At the end of next year it depends on what our opportunity suite offers, and ideally we will have structured a farm-out whereby we can continue to fund our main assets, and we continue to earn money from our drill rigs, and we continue to earn income from advanced Royalties and the management fee, we may not need to raise capital. If we suddenly decide that the best use of shareholder funds would be to drill an asset 100%, then of course we would consider it, but its not in the plan.

Matthew Gordon: Okay. So, I’m excited, you’ve said you’re excited about the opportunity here. We’ve done a lot of work on this before we came to speak to you today, why do you think shareholders should be excited? So let’s talk about the financial side of things, you’re a public company, $15m market cap, inconsequential in the scheme of things, there’s lots of companies in and around your level, why you guys?

Merlin Marr-Johnson: We’ve got two things, we’ve got risk protection, and we’ve got upside potential. So, the risk protection is the income from the advanced Royalties, the drill rigs, and the management fees, and the other side of the risk protection is, the fact that we’ve got 25% stake in a fantastic asset that is marching on the way to production, and our share is going to grow in value from USD$35M to USD$100M, as a ballpark trajectory. 

Matthew Gordon: Without necessarily needing to dilute?

Merlin Marr-Johnson: We don’t have to invest a single cent in that, that’s all carried, we’re fully carried in that asset, and that’s Curipamba in the joint venture, and that is an investment case on itself. Now in addition to that we offer the sex and violence of exploration, the opportunity to have a transformational discovery on any one of our four properties, and knowing the interest that we’ve got in country, and from the majors that are in country, we’ve got the opportunity to do that on a funded basis as well, if we can get a farm-out.

Matthew Gordon: Interesting. So, to make sure I understand this, you’re saying with Curipamba, with Rumiñahui potentially, and the others in your portfolio, from those that covers your G&A, you’ve got income coming through, so no need to dilute.

Merlin Marr-Johnson: No need to dilute.

Matthew Gordon: Then on top of that, if one of these JV partners hits it big with any of those assets, you’ve got that 25% free carry there, that’s the big uplift. No one’s investing in this but G&A right? This is what the big uplift could be, plus if I understand you correctly, if you develop one of these 100% owned assets yourself, then potentially you’ve got control of your own destiny there to a degree, well in the context of mining.

Okay, I understand that, you’ve painted quite a nice picture there for shareholders, and you’re putting a number on that, are you? What does that look like? Without dilution, where do you think you can move to if you were able to deliver this model?

Merlin Marr-Johnson: Well, lets just say that our value in Curipamba is USD$30M today, and it should be at USD$50M at the end of next year, end of 2020. That’s a trebling of the share price right there, doubling or trebling that would be fantastic, at $0.16 to $0.17 cents depending on the bid after the spread at the moment. So if you could get that up to $0.50 that’s a tremendous result, and I think we could do that just on growing awareness of what we’ve actually got, and the deal we’ve already done, and an asset that we’ve already got.

Now, if we get a good drill hole on any of the other projects, particularly if we open up Rumiñahui as a real palfrey target, then things get much more exciting, if that’s not already exciting enough.

Matthew Gordon: Merlin, thank you very much, nice introduction. Let’s catch up in the New Year, I want to get into some of the detail around the numbers, and your plans for the year. But as the first passing that’s quite nice for some of our viewers to be introduced to what is quite a small story now, but again, I do like the model so I’m encouraged.


Company page: https://www.salazarresources.com/

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Margaux Resources (TSX-V: MRL) – 1Moz Maiden Gold Resource + 600kt Tailings @+1g/t (Transcript)

We caught up with with Tyler Rice, President and CEO of Margaux Resources , as well as comments from Linda Caron, VP of Exploration, Kaesy Gladwin, Senior Geologist and Scott Zelligan, a Consultant who worked on the historic resource update.

This is probably one of our favourite small mining projects. It’s a gold bulk tonnage play with some high-grade upside and a lot of historic drill data. We’ve seen these work but the management will need to be cognisant of how to develop it without large dilatory financings. We typically don’t spend much time looking at this end of the market but there is the sheer scale here. The G&A is low and the team is experienced in Orogenic Gold systems. This opportunity is something that we are interested in. It has been described as the next Barkerville Gold and an early stage Osisko. Nice parallels and the early signs are good, but still a lot of work to do – one to watch for sure as it is still cheap.

Also, their tailings project (600,000t @ 1.2g/t) could potentially net them $4M-$5M cash if they outsource the processing. Tyler indicates that they are evaluating this but do not expect it to happen in the next 12 months. The recent Maiden Resource of +1Moz puts them on a firm footing but what next?

Interview Highlights:

  • Recent News: Funding and Announcing The Maiden Resource
  • Company Financials: What is Their Cash Position and What Are They Going to Do With The Money?
  • Gold Market Conditions
  • Tailings Project: When Are They Moving it Forwards?
  • The Expert’s View: Geologists Explain Their Excitement Over the Projects

Click here to watch the interview.


Matthew Gordon: It’s been a while since we spoke. I wanted to catch up and see how things are going. This is one of our favourite smaller exploration stories in Canada. I notice a couple of things had come up. Obviously, you’ve updated the historic resource like you said you would. And also, there’s this raise. Can you tell us a little bit about what’s going on? Seems to be quite busy.

Tyler Rice: Very busy, indeed. We’re very excited about the recent announcement with regards to our 1Moz Resource, at 8.7g/t cut off, which results in an average rate of 1.43g/t. In addition to that, we recently announced the financing of $750,000, which will go towards our winter season of interpreting our field season data that was obtained by Kaesy and Linda.

Matthew Gordon: We’ve arranged to speak with Kaesy and Linda later. We’re going to catch up with them and find out what’s been going on in the field. What else is the money going to be used for? Obviously looking at some of the samples that you’ve picked up in the summer which is great. What else are you doing in terms of driving that share price? Since we last spoke, you were at $0.05 cents. You’re now up to $0.09 cents. Things are moving the right direction.

Tyler Rice: In this bull run that we’re seeing for gold and expected continued run for the price of gold, having two major properties in a safe jurisdiction in British Columbia, Canada; One being in the south at the Sheep Creek and one being in the North at the Cassiar property, which have both been identified by Dr.Murray Alan’s report through BC Geoscience as comparable to Barkerville, from a geological plumbing perspective. Most recently, we focused our field season up at the Cassiar property, which is 60,000 hectares of land. We inherited a substantial amount of data and our field crews went through the data. They went out to the field. And not only did they look at the work that was done previously, they expanded the thinking of lower-grade, bulk tonnage type deposits within the past great high-grade veins. And so, Linda and Kaesy will speak directly to that. And the excitement from our geos is second to none.

Matthew Gordon: I’m looking forward to that conversation. We spoke with Steve Letwin a couple of months ago. He was really excited about what you’ve got.  He’s really excited about what’s going on there. He compared you guys to early stage at Osisko. That’s kind of high praise and which is why we’re following this story. Can I ask about market conditions, obviously last couple of months, gold has moved. I think that’s clearly going to have an impact for gold producers. Has it has done much for you guys as junior explorers?

Tyler Rice: Some of the sentiment that has come out of Beavercreek recently is that the momentum that we’ve seen for the run up of the majors hasn’t quite hit the junior sector yet. And so, we are in a right position with the announcement of our Resource to get consumed by that vacuum that’s going to be coming down the pipe as the communication of the successes in the gold space contribute in the mainstream media .And with majors calling for $2,000 gold and beyond there’s going to be that vacuum that we’re going to get sucked up into.

Matthew Gordon: You’ve kind of got to work out where you fit in the cycle. Are you going to hit this gold cycle or are you preparing yourself for the next gold cycle? And I guess your data analysis will tell you that. There was one project which I was really excited about when we spoke last, which was this tailings project. You had something like 600,000 tons of tailings. And I think previous data suggested it was circa 1g/t or just over a gram. Have you managed to move that forward any or has that not been a focus for you?

Tyler Rice: For the field season this year that wasn’t a primary focus. We continue to evaluate that as a near-term cash flow opportunity. And that’s going to be part of our winter work from a permitting perspective to evaluate that launch in the next couple of years.

Matthew Gordon: That’s kind of an interesting strategy if you think about the amount of money that’s sitting there on the surface, ready to go. What are the things the needs a look at to make that decision? I appreciate you’ve got to fit it in around available money that you’ve got today to be able to do that, finding strategic partners to be able to maybe do that and working out what the plan is, but it seems to be a lot of money to be left on the ground.

Tyler Rice: But relative to proving up a 43-101 compliant Resource of 1Moz which definitely migrates us into a new category. That was our primary focus. And there is further associated low-hanging fruit around that that will position us for a bigger picture opportunity as we see this rising gold price. We continue to work on that initiative and the focus there is looking at the recoverability of that historically processed material.

Matthew Gordon: When do we expect to hear some news about how you’re going to move that forward?

Tyler Rice: Over this winter.

Matthew Gordon: And then I guess with 60,000 hectares to go and explore, there is this need to maybe do a second… I know you’re doing a financing now, but you’re going to have to go back out to market at some point, presumably next year, at some point after the winter analysis. Any sort of sense of how much money you think you’re going to need to raise for that?

Tyler Rice: We haven’t finalized the budget for next season because we’ve gotten so many new opportunities and targets that have been identified from this field season. As we get the results back from the chip sampling, soil samples, other field work that’s been conducted. Then we can articulate the drill program for next season.

Matthew Gordon: I managed to catch Linda briefly on a call. She seems very, very excited about what’s going on up there. New discoveries every day. Thanks very much for that update. Keep in touch with us. We’re keen to see how this goes. You’re one of the smaller companies that we look at, but a very exciting story. And like I say you’re delivering for shareholders. You’ve got to keep doing that.

Tyler Rice: Having a million-ounce resource in a bull market, having strong supporters such as Steve Letwin, who will be participating in this financing and having a Resource up North at the Cassiar property that has so much infrastructure. One of the new discoveries is 30 meters from our camp, which means it’s 30m off Highway 37. Our field crews literally walk to that location from our office and the opportunity is so great.

Linda Caron: Bottom line, I would say this is an outstanding potential, huge upside potential. The thing that sticks with me most is the size and the strength of the gold system there. Literally 15km over one mountain range, through the valley, up another mountain range. And you’re still in the same mineralizing system. Not that it’s mineralizing absolutely everywhere in that 15km, but you can see that you’re still part of that same system.

Kaesy Gladwin: We’re not just looking at the gold veins. That’s a nice little upgrade. We want to see a big system. It’s going to have lower grades, but it’s going to be more exciting because it’s bigger and it’s shallow. And it’s got these exciting quartz veins that have gold in them all through. But that’s an upgrade. That’s a sweetener.

Scott Zelligan: There’s a really good system there. And they have a ton of data that’s in pretty good shape. There’s a bit of work to kind of organize it all.

Kaesy Gladwin: There’s been a lot of operators. They’ve been taking a different approach. They had a different focus. They did some great work. But to have one company holding the entire property, as Margot does, really opens things up to look at a regional scale and say, OK, we’ve got these high-grade veins. We’ve got these smaller targets, these tight, confined things. But how does the system as a whole fit in? Because you’re looking at such a large area, you’re talking about 15km or 16km, much of the area has not been examined for a bulk tonnage targets. And I think this is a huge opportunity. When I started looking at the data, I thought this is something I’d like to really get into.

Linda Caron: There’s a lot of value in that data. The Taurus area is in the valley, not a lot of outcrop. So back in the mid-90s, they did IP. 25 years have passed since that that work was done. It was really good quality data, but the processing techniques have changed. So, we just took three lines of data right over the Taurus zone and we had that digitized and re processed. And within those three lines, we can see new targets that look just like the Taurus signature that don’t have a drill. So that’s what the old data does for us. It’s just generating new places for us to look.

Kaesy Gladwin: What you see in the resource model or in the mine maps or in the surface outcrops is all the same story. It’s a high-grade vein and that’s got alteration that’s very visible, very standardized across all these properties, so previously differently held properties. It’s easy to recognize the alteration, it’s easy to follow it and it’s easy to pick up pieces that are high-grade. Of course, those are the ones we get excited about. I know talked-about visible gold before. That’s a wonderful thing to see. But in terms of a bulk tonnage model, you really have to incorporate those at the margins of the veins. And in a lot of cases, historically, those areas weren’t even sampled because it’s not the focus. It wasn’t the mandate at the time.

Scott Zelligan: It’s a huge system. So, there’s a lot that hasn’t been explored. So, on top of the existing resources that are hopefully easy to exploit, there’s a lot of potential for new stuff.

Linda Caron: One of the really interesting targets is called Wings Canyon. I’m not exaggerating. It’s about 500m from the east side of the tourist deposit. You walk across to this zone, you don’t cross a single outcrop. There’s not a drill hole in that 500m zone. You get to the edge of this canyon and as far as you can see, east, west, up, down in all directions is alteration and veining. And there is no drilling between that and the Taurus zone. So, I think the potential for expansion for new areas, for new discoveries is really very, very good.

Kaesy Gladwin: This is a really great opportunity. The access on the property is really good. There’s a lot of historic roads.

Scott Zelligan: All the trails, you can get everything by the truck. You don’t have to use a helicopter or anything expensive to mobilize. Once you get to extraction, build any roads or anything.

Kaesy Gladwin: It’s not like you’re clinging to the side of a mountain slope or anything like that. You can move things and you can get your fuel cheaply. You can get your personnel to site. You can get your samples in and out and your equipment moved. And that’s exciting as far as controlling costs and also being able to test more targets.

Linda Carron: Table Mountain, half of the project, they never even looked at the bulk tonnage possibilities. All they were doing was following high-grade veins. So, there’s 2,000 drill holes on Table Mountain. We’ve got all the logs, we’ve got all the data in the database. Mostly they didn’t sample what looked like low-grade and we’ve got that drill core. We can assess some of these areas very cheaply. We don’t have to drill a new hole. We just have to go to a hole that’s already been drilled and sampled.

Kaesy Gladwin: Everything holds together really well, both geologically and in terms of the database. It’s a really well compiled project that we’re excited to take. I’m excited. We’re all excited to take it to the next level.


Company website: https://margauxresources.com/

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Vimy Resources (ASX: VMY) – Production in 2 Years with 2.9Mlbs! (Transcript)

Interview with Mike Young, CEO of Vimy Resources (ASX:VMY). Vimy is on a non-deal roadshow in London meeting investors and potential investors. They report that the mood in the market is good because the macro story is well understood.

Mike Young is great value entertainment but he also knows a lot and is very well connected. He does a very good job of explaining the short-term micro and how the financing in the space operates. As well as what is happening with the supply deficit.. Do both sides of the Demand/supply equation understand each other? Mikes doesn’t think so.

Vimy is doing a refresh on the cost-side and they have been talking to debt providers. How are the conversations going? How are they going to market to finance their project? Mike says they are looking for strategic partners, but where? And what does that look like?

Interview Highlights:

  • Mood at The WNA
  • Overview of Vimy Resources
  • DFS: Going to Market and Transport Costs
  • When Will Vimy Resources Go Into Production? When Will We See Contracts Being Signed?
  • Some Juniors Aren’t Going to Make It: Why and How is Vimy Different?
  • Message to Investors

Click here to watch the interview.


Matthew Gordon: You’re here at the WNA Symposium London. What are you here for?

Mike Young: We’re here for the World Nuclear Association Symposium. But we’ve also spent a couple of days on the road with Bacchus Capital.

Matthew Gordon: You’ve been talking to a few institutions, family offices about the potential of raising some money?

Mike Young: Well, it’s called a non-deal roadshow. So basically, what you’re doing is just introducing Vimy to these people in the event at some point the future you might raise money. What’s been good is that the calibre of people we’re seeing is high.

Matthew Gordon: And what’s the mood?

Mike Young: The mood is actually good. I think we’ve come out of a couple of years where the mood’s been bad. And what’s interesting is that the mood of the investors is quite independent of the WNA, because most of these people won’t be at the WNA. But the WNA itself is releasing the WNA Nuclear Fuel Report is the best one that’s come out in the last seven.

Matthew Gordon: But back to these investors.

Mike Young: These investors are people who understand the uranium macro story. Some of them already own uranium shares, and some of the people we saw have small uranium funds. We picked Bacchus Capital on purpose because they did the Yellow Cake float. So, they understand uranium.

Matthew Gordon: So, these investors that you’re seeing, they understood the macro situation, the supply / demand and the economics. What were most of the questions about?

Mike Young: When’s the price going to go up? The constant theme was when are you going to write a contract? They understand the uranium macro. But unless you live in the industry, you don’t understand the micro and there’s a lot of different micros that are pushing in different directions.

Matthew Gordon: Like what?

Mike Young: Well, for example, contracting. I think people expected the Section 232 petition decision to have some sort of effect on the spot price, like it would have in, say, gold, copper, nickel, where there’s a market in a speculative market and it just didn’t. The spot price is basically a reflection of the contracting that’s going on. There was just no contracting. Nobody wrote contracts the day after the Section 232 petition. Now, part of the reason was it was August and it was North America. I mean, the place closes down.

Matthew Gordon: Did you have to explain that to them? Or were they aware of what had been going on there?

Mike Young: A lot of the discussion revolved around exactly how the utilities operate. Why they’re taking their time. The timing and what our expectations were. And as we explained to them, the early contracts aren’t going to be much more than the current term price. And that’s because you’ve got lower cost producers. There’s definitely demand, and we know that open requirement has to be filled.

Matthew Gordon: Well, you say there’s definitely demand, but there’s still timing issues on that. There is no demand today.

Mike Young: No, they’re burning material they bought three years ago.

Matthew Gordon: Demand is coming. The demand story is understood. But did these investors understand that?

Mike Young: No. A lot don’t. A lot of investors are commodity investors. And I made the same assumptions when I started in this space that there’s more immediacy in most other commodities than there is in the uranium.

Matthew Gordon: There’s a lot more understanding of other commodities than uranium?

Mike Young: Correct. And uranium is more like LNG (liquefied natural gas), which are long term contracts. In fact, I was having a discussion in Perth with someone in government and I remember one of the policy advisers say, ‘hey, that sounds just like LNG’. And I went, ‘well, it’s kind of like LNG’. There’s a very small spot market and there’s this time lag. So, I think I think there’s a couple of things at play. People have uranium fatigue. I heard it all before. It’s going to come. It’s going to come. And this is what I mean about the micro. So, some of the things like Yellow Cake, for example, we’ve never seen that before, where a group comes in and buys that much uranium and sequesters it. It’s basically parked. Because they trade on net asset value. You’ve got KazAtomProm which is now Westernised, so two years ago they were behaving…

Matthew Gordon: Partially westernised, surely?

Mike Young: Well, but they still have they still have an accountability to their guidance. They never had before.

Matthew Gordon: Ok, let’s say that’s true.

Mike Young: Well, Riaz Rizvi who’s their chief commercial officer and does the marketing says that’s true. He says that we have to be careful now because we have a responsibility. But not only that, they have westernised their accounting. I mean, when Riaz went in there, they had old Soviet style accounts and they were just churning out the pounds. That’s how they measured it, they weren’t looking at margins. So that’s different. I think the utilities; their buying habits may change. They used to write these 10-year contracts. I think I think that may change. The contract cycles may come down lower. So, there’s a lot of a lot of different things that are interconnected, and some aren’t that are different this time. But the thing is, the Section 232 really focused everyone’s attention here or outside the industry on it, because it was got a lot of airplay. But in terms of the contracting cycle, what will happen over the next 18 months as they fill their forward requirements? The early bird will get the worm, right? The early contracts will get the cheaper prices and they’ll basically climb up the price curve. And because we sit in the third quartile, happily, we’ll be one of the people getting contracts as they creep up the curve and the price increases, because as they continue to write contracts, the lower price material will start to disappear. And as Julian will talk about, the long-term macro. There is a supply deficit. We can see it. We talk about investors not getting part of the or any market. What’s interesting is people in the uranium side don’t get investment side now. What people on the buy side of uranium are missing is just how long it takes to put new production into the marketplace. And that’s really fascinating that both sides don’t quite get the other.

Matthew Gordon: I want to talk about you. You’ve got a couple of assets, Mulga Rock etc. Where are you with those very quickly for people, because I want to talk about them.

Mike Young: Ok, Mulga Rock, DFS finished. We’re looking at a refresh. We want to try and get our capital costs down. Particularly on the mining fleet side. So, there’s S100M there of Australian mining fleet. And we think we’ve got a solution to that. So, we’re working with people on that.

Matthew Gordon: Solution to do what?

Mike Young: In the DFS, we assumed that we would manage and own the mining fleet. Now, that has inherent risk. It’s the cheapest option on paper. But if you have problems in your mining fleet or mining, then it becomes a more significant problem. Whereas you can you can put that risk onto an earthmoving contractor, but you pay a bit more. And it goes onto your operating side. So, things like that, you know, staffing levels, cost of people. 18 months ago, a mine manager was different price than he is today. Things like that. So, we’ve called it a refresh, if you will, that we’re doing that. There’s not much else to do on that. That’s just going to be market driven. So, you know, you get the contracts, you get the debt. We have talked to debt providers on this trip.

Matthew Gordon: This is what I want to talk about. I want to get into the numbers, because you’ve got a couple of good assets. You’re at DFS stage. You know what you’ve got you got a sense what you’ve got your refreshing that. But you’re in this waiting period, this twilight zone, like everyone.

Mike Young: No man’s land.

Matthew Gordon: You’ve now got a sense of the economics of this project. Have you made decisions about how you’re going to go to market? You’ve got lots of options. The DFS tells you a lot of stuff. It doesn’t necessarily mean you’ve got to follow that path as laid out because the market changes, prices change and financing will drive this, the type of financing you get can drive this. You’re having some debt conversations at some point and have some equity partner, strategic partner type conversations too.

Mike Young: We’re having those.

Matthew Gordon: So, tell us about those.

Mike Young: We have put feelers out there saying, if you would like to partner with us coming on as a JV partner.

Matthew Gordon: Where have you gone to?

Mike Young: Everywhere and anywhere you can imagine. China mainly. The US utilities don’t do that. That’s off the table. They just don’t take that risk. They tried it once. They took some shares, but they don’t do that sort of partnership. So, you know, China’s the main one for strategic partners. But we’ve basically started the process of just letting people know that if you’re looking for a strategic partnership, that could be a large equity group, it could be a PE fund. I mean, they do that in gold.

Matthew Gordon: Is this a case of I’m going to hand the keys over this is a strategic partner?

Mike Young: Yes. For example, you earn into 40% of the project through a sale on a fair evaluation and then you have 40% of the offtake.

Matthew Gordon: So where are you with these conversations??

Mike Young: We’re not that far down. In terms of pure debt, we did announce some time ago that we had SOC Gen doing some work for us. Nataxys is now upping their presence in Australia. They’ve just done a merge with a boutique advisement firm. They’re a French bank so they get uranium. We talk to Australian banks all the time. And then there’s some non-traditional style debt here in the city that we’ve said, look, this is our model. We have a minimum contract price. We’ve made it public. It’s fifty-five dollars. We need 55. That’s our floor. We get more. The study was done at 60. The feedback from the utilities is that your price expectations for 2023, when you would likely be in production, are realistic. That’s the feedback. Now, they’re not signing contracts today for that, but they do the maths as well. So, what we do with that is we say, here’s our financial model. Here’s the numbers that we’re inputting. This is the debt we need. And then we sort of flex, how much offtake will you have? Will it be 50%, 75%? And the answer is, well you tell me because you’re lending me the money, we need to know what they payback is. And they’re not things that are announceable. Anybody who understands the space would assume I’m having those conversations.

Matthew Gordon: So, help me understand a little bit of it technically around what DFS has got in it. I imagine it tells you what it’s going to take to get the uranium out of the ground in terms of cost in terms of cost, economics around that. Does it factor in transportation from port to end user? He’s nodding. He says yes. That’s the economics guy.

Mike Young: That’s right. So, he that you’re pointing at, Julian Tapp. He’s sitting way over there because his brain is too big. We couldn’t fit him at the table. So basically, the ownership transfer is at the converter. So, we deliver to the converter and then they take possession and pay us.

Matthew Gordon: And that’s your $55?

Mike Young: Yes.

Matthew Gordon: So how do you do that? Surely it depends where they are in the world and what the cost of getting there right?  Like, you can’t say it’s $55 if you’re selling to China. It’s going to be different price if you’re selling to…

Mike Young: There’s only three places it can go. And that’s France, Blind River Ontario, which it’s delivered at Halifax and then railed.

Matthew Gordon: There’s got to be some variation but not meaningful.

Mike Young: There is a little bit.

Matthew Gordon: I know you’re keeping a really tight ship. You’re not hiring people. You don’t need to hire now, you’ll hire them when you need them. If the price hits $55 and you can get some contracts in place and you can press the big green button, how quick are you to production?

Mike Young: Two years. FID to production is two years.

Matthew Gordon: Build and spitting out product at the other end?

Mike Young: Yeah. So, I think the first year 2.9Mlbs, in year one and then we ramp up to 3.5Mlbs by the end of year two.

Matthew Gordon: So that’s kind of quick into production, there’s no kind of ramp up stage?

Mike Young: To me It’s not. There is a ramp up but it’s because we pre-dig some of the pits and stockpile because the pits will become the tailings facilities. So as part of a build, we actually dig some of the pits and we have stockpiles sitting on the surface so that that assists with your ramp up. So, we’ve got the ore ready to go. So, two years to me, it seems really long, because when I ran that iron ore company, we went from our very first drill hole to ship in four years. Our previous COO, who’s still on our board, Tony Chamberlain, shook his head at me and said, this isn’t an iron ore mine.

Matthew Gordon: He’s right.

Mike Young: I know he is. But, you know, we have to build a camp. The plant’s relatively small. It’s a big mine. It’s 8KM long, 2.5KM across at its widest. We’ll mine it a strip mine. You know, since there’s a lot of dirt to move. But the plant itself is actually relatively small because the front end, we do beneficiation. We wash sand at of the ore, reduce the volume by 50% with no loss in uranium. And so suddenly you’re dealing with a relatively small amount of material.

Matthew Gordon: Relatively compared to a lot of people, two years is a short time just to let you know I haven’t heard anyone today say less. And for some of the juniors who are not producers, it’s three years. So, you’re ahead of the curve there, that’s actually something people should take note of. But what does that tell you in terms of timing for the conversations that you do need to have? I know you’re speaking to utilities, but you can have a different conversation with them today than you will maybe in a year’s time. They’re giving indications about what makes what makes sense to them. But at what point do you actually start talking about contracts?

Mike Young: We’ve been doing that for two years.

Matthew Gordon: No, I mean meaningfully talking about contracts.

Mike Young: Let me let me take you through the process. Let’s go back to our strategy. So, we had to think about where do we want to sell uranium? So, you look around the world, you go, ‘who are the five top countries using this stuff?’. Well, it’s the US, France, China, South Korea and Russia. So, of those five, Korea only buys at spot. And they have some pretty arduous contract requirements, so they’re gone. China and Russia, they’re sourcing their material from the stands. So, they’re not real unless you have a strategic partnership. You’re not going to be selling a lot of material there. And China’s probably going to buy on the spot anyway. So, to be frank, the two countries you want to be looking at are France and US. EDF fuel buyers have told us we’re only going to buy from people in production. So, now you’ve got the US. What’s interesting about that is they’re about 28% of the market. So that’s a big part of the market. So we’re going to do the US. Is there a market for our material? The way the US utilities manage their portfolios is they like to spread the risk and they actually layer cake it. They baseload it with a Cameco and then they’ll actually have these little tranches that are that are absolutely set for juniors from Australia. So, what we did, we went around to all utilities and we said, price being no object, what’s your requirement from Vimy?

Matthew Gordon: Who’s your guy in the states?

Mike Young: Scott Hyman.

Matthew Gordon: He’s full time? You have been thinking about this. You have been having these conversations. You’re readying yourselves.

Mike Young: Correct. And one of the things we’ve addressed previously is our DNA and our overheads. And what was interesting is that conversation came up. What’s your spend? What’s your burn rate? And what we did recently was we had an AGM where we voted. We got permission to do salary sacrifice. The reason for that is I wanted to buy shares in the company, but I don’t want to reward someone for selling them. And this keeps money in the Treasury. And some of our staff, some of our directors have gone to 50%. So that’s one way of saving money.

Matthew Gordon: 50% of what?

Mike Young: Of their salary, they actually receive in shares. So, we’ve done that as a way of saying to people, you can buy shares in the company, but the money stays in the company, which is a really good win-win. It’s a way of saving money. One of the things we had to look at was, how ready do we want to be? To answer your question, when can you push the big green button? You can’t downsize to a point where it’s going to take you two years just to person up again right before you press the button. You want to have your team ready. So, we that’s why we’ve got Scott on board. That’s why we’ve got Julian working part-time. Scott’s working part-time. So, we’ve sort of struck a balance. We downsized the office. We’ve done a lot of cost-cutting, cost savings. We’ve got the team ready to go because this is the sort of market that’ll flip very quickly. One day we’ve got a contract and they’ll cascade.

Matthew Gordon: It may well flip quickly, but the point at which it flips is undetermined at the moment. Today I’ve heard very different views as to where it’s going to go from people inside the industry. And you’d think they would have a bit more of an insight. What’s your take on when this thing starts to motor because some junior companies won’t be able to make it through to the end, because either they need to raise money and can do that, or, because investors are getting better at understanding of the fundamentals of uranium, perhaps that company had their moment in the sun when they could raise money, may not be able to do now.

Mike Young: That’s a really interesting question. And one of the things that Fuel Report does talk about is who is ready. Think of a Formula One race, who’s in grid, who’s in pole. And when you look at that, there’s not very many. And that’s our point of difference. That we have kept the guys on board ready to go. We’ve got no reserve. We’re going through those secondary approvals, the building permits, if you like. Those will be done well before we have all the contracts we need for the debt. My window is the next 18 months. We get contracts and we move into if FID towards the end of next year. That’s my working hypothesis.

Matthew Gordon: We’ve been asking people of the 55 old companies which are around. Do you think many will be around if this thing does go on another 12 months, let alone 18 months? What do you think?

Mike Young: I think some people will fall by the wayside, partly because they were in it for a speculation, not to build a long term mine. And we’re about building a mine and building long term value. When I ran BC Iron that was a $13M listing. And by the time I left, it was a $650M company and it got up to $800M before the iron price fell. We generated a lot of value and that was by getting into production, paying dividends. You just bring on a different class of shareholder. So, we’ve got some major shareholders in Andrew Forest, Sachem Cove, Mike Elkin, Paradise. They’re all there all long. They’re not in this to make a quick buck.

Matthew Gordon: What’s your message to existing shareholders?

Mike Young: Thank you for supporting us and continuing to support us. And we’ve always said this is a long story. And you know, the people that are in, they get that. We’d like to get some share appreciation along the way. That’s what Alligator River does for us. So that’s a shorter-term exploration play with a longer-term development play. So that was part of the reason we brought that in. Because I know through my experience that if you’re building a project, there’s two years of not a lot of news. Isn’t that sexy?

Matthew Gordon: But your point is, so existing shareholders, they’re in it for the long haul. It’s going to be fine. You may get a bump with Alligator River or not, depending on how the market reacts to what’s going on. And it is a question of waiting for this price discovery. That’s the only way you can affect share price, because the reality is it’s out of your control.

Mike Young: It’s existential. Absolutely. Thanks mate.

Matthew Gordon: Good to see you. We love talking to you every single time we speak to you, over here.

Mike Young: Well, hopefully it’ll be more because I hope we get some of these London groups to come in and that’ll give me an excuse to pop by.


Company website: https://www.vimyresources.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

IsoEnergy (TSX-V: ISO) – What are they doing in the Next 12 Months? (Transcript)

IsoEnergy

We spoke with Craig Parry, CEO of Uranium explorer IsoEnergy (TSX-V: ISO) to give us his view of the WNA Nuclear Fuel Report. He agrees the Demand story is growing and performing but that the Supply side is lagging. Cameco needs to buy 12Mlbs by the end of the year. Or if they delay, they will need to buy 22Mlbs in 2020. Expectation is that this may drive the the price discovery in the uranium space.

IsoEnergy is an Athabasca basin project. NexGen is a major shareholder, as is Cameco. For NexGen, IsoEnergy is effectively an exploration arm. Whilst Cameco may just see them as optionality.

They have done some drilling and defined a mineralised zone with good grades. Next year they will have 2 drill rigs operating, will look at Uranium exploration and also infill work. We wait to see how they tackle the work programme and what results look like. With only $2M in the bank they will have to dilute shareholders some more to raise cash. NexGen will put some money in which helps. But this will be an expensive dilution given the lack of movement in their share price. The money will allow them to assess results and work out what to do next. Craig says they could look to add properties to their portfolio. We aren’t sure this should be core focus given capital constraints. Their share price is static. He feels he can raise money easily. They haven’t got a clear plan yet but they will be working out what they want to do in the next couple of months. So far 30 holes drilled; 17 holes recently. This a very early stage project. They want to spend $5M on drilling in the next 12 months. So they will need to raise at least that. Useful data for investors to calculate dilution vs. upside. Craig says IsoEnergy is constantly talking to institutional investors about raising capital. Or they could sell some of their non-Athabasca Basin Uranium assets for cash. This would be low cash contribution or will, dependent on structure of the deal, take a while before cash comes so it is not realistically going to contribute to the next raise.

Click here to watch the interview.


Matthew Gordon: You’re at the WNA Symposium London meeting people. What are you trying to get out of it?

Craig Parry: The WNA Symposium is the premiere industry event. You’ve got everyone from explorers through to operators and customers here. It’s the event to be at. And there are different dinners and social events to attend. Also being in London, we take the opportunity to go and see some of our investors here.

Matthew Gordon: What are people talking about?

Craig Parry: I suppose on the supply side, there’s a sense of cautious optimism.

Matthew Gordon: Did you see the WNA Fuel Report be presented?

Craig Parry: We saw the WNA Fuel Report. And at the heart of that is that the supply side is probably pretty challenged at the moment. Demand continues to grow very strong, So that’s a real positive. But the supply side is where the challenge is and where the issues are.

Matthew Gordon: The macro story is understood. That’s coming very, very quickly. On the supply side, there are some games being played in terms of price discovery. The market is working out how they deal with that. We we’re talking, before the cameras started rolling, about Cameco’s need to supply quite a large number of pounds to customers.

Craig Parry: That’s right. That’s one of the great reasons to come to the WNA is that you hear so much of what’s going on in the marketplace. And Cameco has confirmed to us yesterday that they need to buy 12Mlbs before year end. And in the last half of last year, they bought 4Mlbs and that was enough to drive the price from $17 a pound to $29 a pound. So, this year, they’ve got to buy four times that. The spot price of uranium is currently $25 a pound. So, I think at some point late this year or early next, assuming they go ahead with that program, which we know they have to because they do have long term contracts that they need to put that product into, we should see a much higher price. And if they delay that, they’ve got to buy 22Mlbs next year on the open market. Because it’s a very shallow market at the moment, there’s been very little trading there for the last six months. So, that’s probably the most positive thing I’ve seen for a long time.

Matthew Gordon: Let’s talk about you. When we last spoke, some good things going on but still fairly early days. You spun out of NexGen. You’re in the right part of the part of the world. What have you been doing since we last we spoke?

Craig Parry: When we started the company, we cast the net far and wide all around the world looking for uranium deposits and assets.

Matthew Gordon: And ended up next door!

Craig Parry: That’s right! We keep coming back to the Athabasca Basin because it’s home to the highest-grade uranium deposits, the biggest uranium mines in the world. So, we always end up back there. And in May last year, we acquired our La Rocque property from Cameco.

Matthew Gordon: They are a shareholder?

Craig Parry: Yes, they are a shareholder. At the end of this interview, I’m off to see a couple of guys there. Big shareholder, 5.4% of the company. And they got that holding through deals we’ve done with them. So, they’ve been willing to do deals with us. We acquired that La Rocque property in May last year. We had a drill rig out there. Six weeks later, we announced the discovery hole two weeks after that. So, we went from sort of conceptualization deal to discovery within eight weeks, which is a tremendous outcome. And we’ve been there drilling ever since and putting out some very, very good results. We just completed our summer campaign. We drilled another 17 holes on the property, some very, very good results. Probably the best of those holes was 7m of 5.4% so really spectacular high-grade Athabasca style uranium mineralization. So we’ll just keep working away at that. We’ve now defined a mineralized zone there. That’s 500m long, 40m wide. On average in 5m thick. So very much typical of those sort of conformity related deposits. And the plan going forward, come winter, we’ll have probably another drill rig out. This will go from moving up from one drill rig program to two drill rig programs.

Matthew Gordon: You’ve identified targets. Are they near each other or are they separate?

Craig Parry: Good question. We’ve got some infill drilling to do. We haven’t closed off many of those sections. And we’ve got a 250m gap between the eastern-most hole in the heart of the deposit. So, we’re going to do all of that infill work. So one rig will be working on that. And then very nice to my mind, possibly the most promising thing we saw from the program. We got the results of a resistive survey back, we which we did earlier in the year, and that shows about 500m to the East of the hurricane deposit, a very large conductive anomaly, typically associated with the graphite that hosts these deposits. We drilled one hole on the edge of that, got some very elevated radioactivity 50m up above the sandstone. And very strong geochemistry, very strong alteration all the way up the sandstone in that hole. So, we’re very excited about that. And we think we could be on the edge of something very, very significant. That hole looks a little bit like the discovery hole at Hurricane.

Matthew Gordon: So how much cash are you sitting on at the moment?

Craig Parry: We’ve got about $2M in the bank.

Matthew Gordon: What does that mean for you?

Craig Parry: We finish the year with a little bit under $1M in the bank. At some point we’ll have to come back to the market and raise some money. At this point in time we’re pretty well funded. We’ve still got NexGen there supporting us. NexGen is the mother ship, if you like, with 54% shareholder.

Matthew Gordon: They’ve got their own priorities, though haven’t they?

Craig Parry: They’ve got their own priorities. But plenty of cash as well.

Matthew Gordon: So, NexGen will follow their money, they’ll retain their current position? And then you’re going to go to market or are you going to Cameco?

Craig Parry: We’ll certainly talk to them, Lee from NexGen likes to say that ISO Energy will pay for the CapEx of the Arrow development. That’s a $1Bn. Lee’s very, very happy with what we’ve got here. And of course, when we started Next Gen, we wanted to become a major player in the space. You need more than one deposit to do that. So, having sort of options and alternatives is important.

Matthew Gordon: You’ve got to raise some cash. Have you any sort of sense of what you might do next? What’s the plan for the next six months?

Craig Parry: Good question. We have to sit there and assess those results we’ve got from this project. We only just put out our final announcement from that last week. So, we will look at all of that data and then work on a plan and a budget that approaches the deposit optimally. Between a mix of infill resource delineation, drilling and then on to exploration to find out some of those other targets. That’s the focus for us at the moment. We’ll continue to try and pick up other properties in the…

Matthew Gordon: I’m trying to get an idea of how do small companies survive? Either by keeping drilling. How do they pay for that? Do they rein things in until the price discovery comes back in the market place? Because you’re nowhere near exploration, you’re going to have to raise capital, but it’s going to be slightly cheaper if you get some sort of bump in your stock. So what are you doing to influence share price that reduce your cost of raising capital?

Craig Parry: Very good question. And I guess in our corporate presentation, you’ll see one of the most prominent slides early in the deck is NexGen share price chart, we started that company to $0.05 capital rise and it’s now trading around $2 a share. The point of all of that is discoveries still matter. And I think ISO Energy is one of the very few uranium companies that is in positive territory in terms of share price for the last 52 weeks off the back of that discovery. So, it’s not going too bad on that front. We’ve got to get out there and explain what we’re doing to the market. There’s a little bit of apathy…

Matthew Gordon: They’re going to ask the same questions I’m asking you, which is what are you going to do to be able to capitalize your program. Whatever you decide, is that for the next six months, or if you want to raise enough for 12 months, because there is no certainty about price discovery. It could be 3-6 months, maybe 18 months. No-one knows. What are you planning to do to get you through, or to be able to raise capital to get through to whatever point in time you think price discovery comes back to market.

Craig Parry: We’re in a fortunate position in that because of our association with NexGen and the fact we’ve got Lee on the board, we don’t have much trouble raising capital. We’ve got very good support by the market. So, we’re okay on that front.

Matthew Gordon: So, you can go into the market regularly, so you’re not diluting unnecessarily. Now, that’s expensive. And you’ve got NexGen in there for circa 50%? So, that’s good and Cameco’s a good brand. You’ve got all these good brands and you’ve made a discovery. So, lots of good things. I want you to tell me what you’re thinking is for the next 12 months to help people understand why you versus someone else.

Craig Parry: We’ve got to assess all of that information before we have a clear plan. So, you’ve got to do that work before you start coming up with that.

Matthew Gordon: How long does that take?

Craig Parry: We’ve got the full exploration team coming to Vancouver in a couple of week’s time. We’ll sit down and go through everything in detail and work out an exact plan and budget. We’ve now drilled about 30 holes on the property. We did 17 holes this last program, that program costs us about $2.2M.

Matthew Gordon: These are all quite shallow holes?

Craig Parry: Quite shallow, down to 350m or thereabouts, 400m max. We drill a little bit deeper into the basement than some of our competitors because we are looking for that basement hosted arrow type of deposit below everything that we’ve got. Another one of those would be fantastic. But I’d say, look, we want to have two rigs on the ground. I would think that, you know, a two-rig program, we probably want to spend somewhere of the order of $5M over the next 12 months on exploration through to the end of next year. So, we’ve got to raise that sort of level of money at some point.

Matthew Gordon: That gives us a sense of the quantum involved. Clearly there is dilution involved, that’s what people are looking at. But at the same time, you’re talking about the opportunity of creating value. Are you entirely independent of NexGen. I know you speak with NexGen, you’re ex-NexGen, but what you decide to do, that’s your decision?

Craig Parry: We are yes.

Matthew Gordon: Even though they’re 54% shareholder?

Craig Parry: Completely independent, arm’s length. Notwithstanding the fact that we’ve got a number of board members in common. Lee Courier our chairman, is the CEO of Next Gen. We’ve got Chris McFadden, Richard Patricia, Trevor Healy, all on the board of Next Gen. I’m a senior adviser to NexGen. I stepped off the board to focus on ISO Energy. There’s a little bit of crossover there. But we are we operate completely independently. We present our plan and what we’re doing to the board, every board meeting. That gets supported and quick queried and supported on an independent basis. We have all of those correct governance structures in place. Having NexGen there and being part of that brand and following those processes, that helps.

Matthew Gordon: Have those fund-raising conversations started?

Craig Parry: Well, they’re happening all the time.

Matthew Gordon: You’re talking to people about raising money all the time?

Craig Parry: You’re always out there talking to the banks and investors. That’s what we’re doing in part in London. One of our more significant shareholders is CQS. We’ll be seeing them tomorrow. So, you’re out there talking to people all the time on that front.

Matthew Gordon: So they know this is coming?

Craig Parry: Yes. There’s always that expectation. We do have a number of other opportunities. And I think when we last spoke, we talked about ‘are we at all concerned that when the uranium prices rise and equities start to bounce back that you’ll see a flood of other junior companies, ex cannabis companies change their name to Uranium ‘Something. And as I said then, we look forward to that. We’ve got a bunch of other properties, both in the Athabasca and another deposit outside the Athabasca that’s up in the Northern part of Canada. And, there’s an opportunity to sell those projects for cash and stock and sort of taken a less dilutive approach to raising capital there as well. We’re thinking about all of those things all the time.

Matthew Gordon: Juniors uranium Explorers need to show that they can build a mining business and develop it in to a uranium company. With Cameco and NexGen as shareholders, is that why you feel it’s going to easy to go to raise money because the market appreciates your connection with these guys?

Craig Parry: No, it’s never easy to raise money. I guess we look forward to a time when it becomes easy to raise money.

Matthew Gordon: That’s what I’m asking because you said earlier, “we find it easy”. But the truth is it’s difficult. I want to understand what you’re saying that other companies can’t say.

Craig Parry: You just got to do all of that prep work. And, it helps if you’ve got a discovery. It helps if you’ve got a team with a track record. There’s a bunch of challenges to do to get be able to get there. We’ve all personally supported the rights of financing. So, we’re all involved. And as Richard and Patricia was telling me last night, when you see the CEO writing a check for financing, something’s going on. You want to you want to back that one.

Matthew Gordon: Have you been writing cheques?

Craig Parry: I certainly have been writing cheques.

Matthew Gordon: For this company?

Craig Parry: For this company.

Matthew Gordon: Just checking…

Craig Parry: So, you’ve got the major shareholder there doing the same. So, Lee and the team of NexGen have backed us heavily, which is fantastic. And with all of that going on, we’ve got tremendous relationships with some of the Canadian banks, so Cormark and PI Financial, they gave us some $5.5M bought deal. First bought deal of any size in the junior uranium space for some years. Apart from having the capital to do what we need to do. That was a bit of a feather in our cap.

Matthew Gordon: Do you think you are moving on from the shadow of your big brother NexGen? You’ve now got to stand on your own two feet. You’ve now got to start showing that you’re capable of doing this yourself. I know you’ve told me some things that you’ve got planned. You want to make two-rigs out this year. What’s your expectation of where you need to be at the end of next year? What would you need to prove?

Craig Parry: Very good question. I would expect that we want to see that deposit grow substantially. We want to be well on the way, with all of that resource delineation drilling well on the way to having a resource defined. And then it wouldn’t hurt to see a bit more scale to what we’ve got there. So, we’ve done some aggressive step outs that support the next phase of work. I’d like to see us where we’d really need to be is well on our way to having a resource.

Matthew Gordon: And do you get that for $5M?

Craig Parry: A really good question. This sort of Athabasca unconformity related mineralization is typically quite drill intensive, a little bit like vein gold deposit. You do have to have a lot of tight sized drilling. But with about $5M of drilling we’re going to know very clearly where we stand. And hopefully we’ll have another discovery. Of course, these deposits occur along structures in a sort of string of pearls. You’ve got down to our South, West Cameco’s, La Rocque zone, very high-grade. They drill a hole there, 7m at 30%. You’ve then got a La Rocque North zone. Our Hurricane deposit and then these other mineralized intercepts along that structure. So, we want to get out and test some of those as well.

Matthew Gordon: You’ve only just started. Usually it takes 10 years to build a mine.

Craig Parry: You can do it quicker than that. We were talking before. We built a coal mine in Far Eastern Russia. We took that from discovery to production in 4 years. So, you can you can do it faster than that.

Matthew Gordon: Coking coal. Different. Different ballgame!

Craig Parry: Well look, uranium, that’s sort of a bit of a controversial topic at the moment because, you’ve got some of our competitors, NexGen’s competitors, out there saying it will take 10 years to permit and build that mine. I think that that project will get built a lot faster anyway.

Matthew Gordon: Let’s say 7 years.

Craig Parry: I think it’ll be faster than that.

Matthew Gordon: But you’re only at exploration stage. You’ve got a lot of things to prove to the market by the end of this coming year. $5M might get you there. But before then you’ve got to explain to shareholders the process of how you are going to get from where you are today to production. It’s a long time away. So why should investors come in now? Why look at ISO Energy when they are lots of other Athabasca juniors at the same place as you?

Craig Parry: Good and tough question. You see what the guys are doing are at Arrow. That’s our approach. We’re following that NexGen template, plus It took about two years to get the Maiden Resource on it. Then another year or so before they moved into that development phase. We’ve been working on this project for six or seven months now. So, we’re at the earliest stages. The deposit has to stack up as something that is an ore body that can be mined. So, we’ve got to get to that point before we understand that. But we know beyond that, those next steps, I’ve done it before. I’ve got a track record with every company I’ve been involved with and started and we’ve always taken the approach that we’re not only explorers, we are developers and operators. And that’s what we did at the coal mine in Eastern Russia, now in production. So, we take that approach. We’ve got that track record of doing that. So, we’re pretty well positioned to do well.

Matthew Gordon: That is a differentiator for sure compared to some of the people we’ve been speaking to who have not done it before. Mining is mining, but uranium mining is something where you need a team who have been there, learned what works, and you’ve got a lot of the right people around you because of NexGen. I think that’s what a lot of people are giving you a lot of credit for.

Craig Parry: We I think our track record speaks for itself. The reason to come on board as an investor now is that we’ve got a $35M market cap and we’re the only junior with a high-grade uranium discovery in recent years. Look at that NexGen share price chart, $0.05 and got as high as $4.60. That’s the ride we’re taking investors on.

Matthew Gordon: What are you at the moment, trading at $0.50?

Craig Parry: Trading about $0.50.

Matthew Gordon: How many shares did you say?

Craig Parry: 68 million.

Matthew Gordon: You’re going to have to dilute a bit to get through the next 12 months.

Craig Parry: Probably a little bit.

Matthew Gordon: Price appreciation will do a little bit for you. And then you’ve got to deliver results. So your message is you’re happy with the asset that you’ve got. You need to understand more. You are going to raise some money to get you through the next period. You still got the support of the big guys, NexGen and Cameco. This outlook is quite positive!

Craig Parry: Very, very positive. The thing I’m most excited for and we’ve got a little bit of news flow to come out over the next couple of months. So, we’ve still got some more assays to come out. And then, the rest of the news flow for the year will be about planning for that next drill program. And then look out for some more results early next year.

Matthew Gordon: We like your approach and we like the people you’re surrounded by and the fact you’ve been there done it before. Why don’t we get back in contact when you’ve got your plans laid out, had some of those results back through. We’d love to hear from you again.


Company page: www.isoenergy.ca

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

IsoEnergy

Noble Mineral Exploration Inc. Announces Creation of Canada Nickel Company

Mark Selby, former CEO of RNC Minerals, and the owner of Dumont Nickel project in Quebec, has resurfaced at a new Nickel company called Canada Nickel Company. To us it looks like Dumont 2.0 but with a $12.5M market cap versus comps at $20M-$200M. Selby says it is potentially the first new large-scale Nickel resource in more than a decade, which will command a much higher valuation in the coming bull nickel market. Highlights are:

  • Located 10km north of Timmins adjacent to all major infrastructure
  • Multi-kilometre anomaly with potential for Dumont scale resource 
  • Mineralogy and geology similar to Dumont so they could leverage some of the work done there
  • What is most exciting is potential for similar or higher grade zone 
  • The new entity will be created with just 50M shares outstanding
  • It’s early stage exploration and has 4 holes in a multi-kilometre anomaly and if anything like Dumont, the geophysics results could allow them to put together large resource relatively quickly.

Continue below to read the full press release.


  • Mark Selby Appointed Chairman and CEO of Canada Nickel Company
  • 100% Consolidation & Spin-out of Crawford Nickel-Cobalt Sulphide Project
  • Fully-subscribed $5 Million Private Placement in Canada Nickel Company

September 30, 2019 – Noble Mineral Exploration Inc. (TSX-V NOB) (“Noble” or “the Company”) today announced its plan to:

  • create the Canada Nickel Company (“Canada Nickel”), which will own a consolidated 100% interest in the Crawford nickel-cobalt sulphide project, and
  • distribute a significant portion of Noble’s interest in Canada Nickel to Noble shareholders and qualify Canada Nickel as a new public entity.

Canada Nickel will be led by Mark Selby, who will be appointed Chairman & CEO. The Company also announced the plan to complete a fully-subscribed $5 million private placement into Canada Nickel, subject to regulatory approval, to fund the cost of the Crawford project consolidation and continue exploration and mineralogical work to advance the project.

“I am delighted to welcome Mark Selby to lead Canada Nickel through the next phases of exploration and development to unlock the massive potential of Crawford. Mark is a recognized leader in the global nickel industry given his experience and network successfully advancing the Dumont nickel project,” said Mr. Vance White, Chairman & CEO of Noble. “I am very proud of the team that made the Crawford nickel discovery, which is one of the few nickel discoveries in many years with large scale potential.

With the planned consolidation of ownership in Crawford and private placement, Canada Nickel is well- positioned for the next exciting phase of growth and value creation for Noble shareholders.”

Mark Selby was most recently President & CEO of RNC Minerals, where he led the development of the Dumont nickel-cobalt project through to a fully permitted, construction ready project. Before RNC, he held senior management roles at Quadra and Inco and he is recognized as a leading authority on the nickel market.

“I am pleased to lead Canada Nickel and advance Crawford, which is an exciting project. While it is still early days, the promising drill assay results and the encouraging initial mineralogical work demonstrate many similarities to the Dumont project. Coupled with the close proximity to significant infrastructure near Timmins, I believe this will allow me to leverage all the experience and insights we learned in advancing Dumont,” said Mr. Selby. “The timing of this discovery is excellent. We are in a robust nickel market increasingly driven by demand for nickel from the electric vehicle (EV) market which will require new nickel projects to be built over the coming decade. I am encouraged by the strong support we have received from a number of new and existing investors who have committed to $5 million in financing which will allow us to execute the next phase of drilling and metallurgical work for the project.”

Crawford Nickel-Cobalt Sulphide Project

The recent drilling program by Spruce Ridge (TSX-V SHL) and its Joint Venture partners, a group of private investors, Dr. K. Sethu Raman, Robert Hirschberg and Sam Sehota, was focused on the Crawford Ultramafic Complex, a 3.5-kilometre long body of peridotite, dunite and their serpentinized equivalents. The target, entirely under cover, was defined by a helicopter-borne magnetic and electromagnetic
survey and an airborne gravity survey, both conducted over of the entire project area of 100 sq. km. An Artificial Intelligence (A.I.) review of data, provided by Albert Mining Inc. (TSX-V AIIM), also identified the area as being prospective for nickel. All four discovery holes totaling 1,818 metres intersected multi- hundred metre intervals of serpentinized dunite with persistent nickel values with two of the four holes ending in mineralization. (see Noble release March 4, 2019)

Highlights from the drilling:

  • Hole CR18-01 intersected 558 m of 0.26% nickel, 0.013% (127ppm) cobalt, (ended in mineralization)
  • Hole CR18-03 intersected 318 m of 0.25% nickel, 0.013% (126 ppm) cobalt
  • Hole CR18-04 intersected 208.5 m of 0.32% nickel, 0.013% (135 ppm) cobalt (ended in mineralization)

Drilling on the project has resumed both east and west of the existing drilling and to infill the existing drilling to test the southern contact.

Table 1 – Recent Drilling Results

Crawford Nickel-Cobalt Location

Initial Mineralogical Results (see Noble release dated June 11, 2019)

Twelve samples of drill core were selected from 1.5-metre analyzed intervals from the recent 1,818- metre, four-hole drill program, to cover a range of nickel, cobalt and palladium contents as well as differing degrees of serpentinization and a range of sulphur contents. Polished thin sections were made from the core samples and were examined under reflected-light microscope and a scanning electron microscope (SEM), which provided chemical analyses of individual mineral grains to aid in their identification. The following minerals were identified as carrying most of the nickel and cobalt (in order of decreasing abundance): pentlandite (nickel-iron sulphide – 50%), heazlewoodite (nickel sulphide – 35%), awaruite (nickel-iron alloy – 15%) and minor godlevskite (nickel sulphide with minor iron). In addition to the mineralogical identification study, an analysis was performed on pulp samples of the 12 core intervals from which the mineralogy samples were taken. Table 2 shows a comparison between the Peroxide Fusion analysis and the Aqua Regia analysis for cobalt and nickel and establishes the potential percentages of ‘Liberation” of these key elements.

Table 2 – Peroxide Fusion vs. Aqua Regia Analysis for Nickel & Cobalt

100% Crawford Project Consolidation

The planned consolidation of the Crawford properties will be implemented under the terms of a binding letter of intent that has been entered by Noble, Mr. Selby, Spruce Ridge Resources Ltd. (TSX-V SHL) (“Spruce Ridge”) and certain private investors (the “Investors”) under which, subject to certain specified conditions including required regulatory and shareholder approvals:

  • Noble will receive 12 million common shares of Canada Nickel (representing a 24% interest in Canada Nickel post-financing) and $2 million in cash; 10 million of the Canada Nickel common shares will be distributed to Noble shareholders;
  • Spruce Ridge will relinquish its joint venture interest in the Crawford project (the current joint venture arrangements are described below) on the following terms:
    • Noble will pay $1 million to Spruce and cause Canada Nickel to issue 20 million common shares of Canada Nickel to Spruce;
    • Spruce will issue 2 million common shares to Noble;
    • Noble will issue 10 million units to Spruce, each unit to be comprised of one common share of Noble and one-half of a common share purchase warrant of Noble (exercisable for three years at $0.15 per share); and
    • Noble will transfer certain assets to Spruce (unrelated to the Crawford project) subject to 25% earn-in rights.
  • The Investors have agreed to relinquish their joint venture interest in the Crawford project (the current joint venture arrangements are described below) on the following terms:
    • Spruce will transfer 10 million common shares of Canada Nickel received from Noble (representing a 20% interest in Canada Nickel post-financing) to the Investors; Spruce will hold the remaining balance of 10 million shares of Canada Nickel (also representing a 20% interest post-financing); and
    • Spruce will issue 10 million units to the Investors, each unit to be comprised of one common share of Spruce and one-half of a common share purchase warrant of Spruce (exercisable for three years at $0.10 per share).

Noble and Spruce Ridge are parties to a joint venture agreement dated May 4, 2018 (the “Crawford JV Agreement”) under which Spruce has the right, subject to the terms and conditions thereof, to earn up to a 75% undivided interest in the Crawford project. Spruce and the Investors entered into an agreement relating to the Crawford JV Agreement, dated September 9, 2018 under which the Investors have the right to earn up to a 37.5% undivided interest in the Crawford project (with Spruce retaining a 37.5% undivided interest therein). For a description of the existing joint venture agreements between Noble, Spruce Ridge and the Investors, please refer to Noble news release dated May 8, 2018 and Spruce Ridge release dated September 27, 2018 (both available under the applicable corporate profiles on www.sedar.com).

Canada Nickel – $5 million Private Company Financing

A $5 million private placement of common shares and flow through common shares into Canada Nickel has been fully subscribed and is expected to close on or before October 15, 2019. Under this private company financing, it is expected that Canada Nickel will issue 13 million common shares at $0.25 per share and 5 million flow through shares at $0.35 per share. The proceeds of the private placement will be used to fund the joint venture consolidation described above, mineral exploration of the Crawford project, and working capital requirements ancillary thereto. This financing will be completed by way of a private placement to qualified investors.

Special Meeting – Distribution of Canada Nickel Shares

A special meeting of the shareholders of Noble is expected to be called to approve the distribution of the Canada Nickel common shares received as part of the transactions described and other matters relating thereto.

Timing – Property Consolidation, Share Distribution & Canada Nickel Qualification as Public Entity

Subject to the receipt of regulatory and shareholder approval, it is expected that the consolidation of the Crawford properties will be completed on or prior to October 31, 2019, and that the distribution of the Canada Nickel common shares to Noble shareholders and qualification of Canada Nickel as a public entity will be completed on or prior to December 31, 2019.

It is expected that Canada Nickel will have 50 million shares outstanding following the transactions and private placement described above.

Qualified Person

Randy S C Singh PGeo (ON), PEng (ON), VP Exploration & Project Development of Noble and a “qualified person” as such term is defined by National Instrument 43-101, has verified the data disclosed in this news release, and has otherwise reviewed and approved the technical information in this news release on behalf of Noble Mineral Exploration Inc.

Contacts (Noble):

H. Vance White, President

Phone: 416-214-2250 Fax: 416-367-1954 Email: info@noblemineralexploration.com Investor Relations Email: ir@noblemineralexploration.com

Contacts (Canada Nickel Company):

Russell Starr
Phone: 647-669-9801

email: RussellStarr@canadanickel.com

About Noble Mineral Exploration

Noble Mineral Exploration Inc. is a Canadian-based junior exploration company which, in addition to its shareholdings in in Spruce Ridge Resources Ltd. and MacDonald Mines Exploration Ltd., and its interest in the Holdsworth gold exploration property in the area of Wawa, Ontario, holds in excess of 79,000 hectares of mineral rights in the Timmins – Cochrane areas of Northern Ontario known as Project 81.

Project 81 hosts diversified drill-ready gold, nickel-cobalt and base metal exploration targets at various stages of exploration. More detailed information is available on the website at www.noblemineralexploration.com.

Noble’s common shares trade on the TSX Venture Exchange under the symbol “NOB”.

Forward-Looking Statements

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This News Release includes certain “forward-looking statements” which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management’s expectations. Risks, uncertainties and other factors involved with forward- looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward looking information in this news release includes, but is not limited to, the intention to complete the transactions and the expected expenditure of the proceeds of the private placement, and the Company’s objectives, goals or future plans. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to an inability to complete the Transactions, failure to identify mineral resources, failure to convert estimated mineral resources to reserves, delays in obtaining or failures to obtain required regulatory, governmental, environmental or other project approvals, political risks, inability to fulfill the duty to accommodate First Nations and other indigenous peoples, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital and operating costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry, and those risks set out in the Company’s public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise, other than as required by law.

This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, including any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”) or any state securities laws and may not be offered or sold within the United States or to, or for account or benefit of, U.S. Persons (as defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration requirements is available.

Exore Resources (ASX: ERX) – Gold Explorer with $10M in cash. Maiden Resource in September (Transcript)

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.

Interview Highlights:

  • 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/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

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Fission 3.0 (TSX-V:FUU) – The Strategy for Uranium Explorer Spin-off from Fission Uranium (Transcript)

Interview with Ross McElroy, Uranium COO and Chief Geologist of Fission 3.0 (TSX-V: FUU). Another small Uranium explorer speaks to us and tells us how they think they can make it. Fission 3.0 are in the Athabasca basin and believe they have picked up some quality assets.

We interrogate them about how long it has taken to get to where they are today and why they think that investors should think about investing on this Uranium exploration play.

Interview Highlights:

  • Overview of the Company & Birth of Fission 3.0
  • Relevant team experience with Uranium exploration.
  • What’s been done in the 5 years the Company’s been running?
  • M&A and their financing options.
  • Their strategy for growth and their model to make it attractive to shareholder.
  • Targeting projects: uranium winners vs picking up scraps in the Athabasca basin.

Click here to watch the video.


Matthew Gordon: So, tell us about Fission 3.0.

Ross McElroy: You know, really it was all about still wanting to be able to be an explorer. Fission Uranium, the big company, is really all about developing the PLS project, RRR deposit. That’s a project that the legs and the ability to go through to, ultimately, a production story, quite different than the exploration arm. Really that’s why Fission 3.0 was set up several years ago, and was spun out of Fission Uranium Corp. Just to be simple about it, what we did is we’ve acquired a lot of grassroots projects, primarily in the Athabasca Basin. Our goal in Fission 3.0 is really to go out and make a new discovery, similar to what we’ve already done several times.

Matthew Gordon: So, let’s say this is a new story to everyone here. Tell us a bit about you. What’s your background? What’s your skill set relative to this exploration play?

Ross McElroy: I’m a geologist. I started working in the industry back in the mid-1980s. Interesting enough and relevant for this story. My first job was with what’s now Cameco. So, I worked with a uranium major. That was my first real job out of school. I’ve spent the good part of my early career in the Athabasca Basin hunting for uranium, looking for those high-grade deposits with Cameco. I ended up working with the French conglomerate as well, currently called Orano, and they were really in the same space and looking for deposits in the Athabasca Basin. So, that’s really where I got started. I spent about 14 years with BHP, mostly in gold exploration – gold and diamonds. So, I’ve been a mining geologist with them. So, I guess you could say my career has really spanned everything from grassroots exploration, through to mining and multiple commodities. But really, uranium is my main focus.

Matthew Gordon: Tell us a little bit about Paul Charlish, what does he do?

Ross McElroy: Paul Charlish is our CFO. He’s been the CFO with Fission Uranium Corp and has the same role with Fission 3.0.

Matthew Gordon: Dev’s the market guy. You’re the technical guy and you’re driving the business, but you’ve been doing this for five years. So what’s happened in five years?

Ross McElroy: What we’ve done and probably I guess the whole history of the company, really, since I got involved working with Dev back in 2007. We’ve been acquiring our own ground. So, we’re kind of set up to do our own staking. Do our own investigating of where we want to be. Staking ground organically. So, we haven’t done any acquisition deals. We like to pick up the ground early because that’s the least expensive, but you have to have the expertise to do it. We’ve got a team that been acquiring good ground that way and we’ve been successful. And ultimately, if we are successful, we’ve been able, at least in the past, we’ve sold projects. We’ve been a project generator. We’ve been able to get other people to invest in our products. And really, that’s been the model that we that we do.

Matthew Gordon: I’m looking through the presentation. There’s a lot going on in there, there’s a lot of ground. What’s the strategy? You’re looking at a lot of optioning or building out a lot of options here. At some point, you’ve got to make decisions because you need to finance this.

Ross McElroy: It is, very much so. You know, first of all, we start with the Athabasca Basin. That’s the premium uranium district in the world. Certainly, the home of the highest-grade deposits. It’s where I spend a good deal of my career looking for deposits. I’ve been very successful at it. What we’ve been able to do is build a team of experts, geochemists, geophysicists, structural geologists looking for these deposits because although the rewards are tremendous, when you find a high-grade uranium deposit probably more valuable than any other commodity. They’re hard to find as well. So, you have to apply the sciences of geochemistry, geophysics. So that’s really what our team is built around. And that’s how we go about starting to explore and make these discoveries.

Matthew Gordon: Not all uranium plays are born equal. Even in the Athabasca Basin. So, what is the process that you’re going through to identify the targets which you’re going to focus on? We’ve spoken to a lot of juniors in the Athabasca Basin and they’re saying because we’re here, it’s a home run, no problem.

Ross McElroy: And that’s not true. I mean, it’s a home run if you make that discovery. But the failure rate has been pretty high among juniors. Even with the majors. If you make a significant discovery in the Athabasca Basin, about 1 in every 5-10 years. That’s sort of when you look at it as a whole. I’ve been fortunate enough when I first started, I was working with Cameco. We made the discovery of McArthur River, which is the world’s largest high-grade uranium deposit. So, that was a pretty good experience. You learn the things that you’re looking for. Because these are deposits that occur below the surface, with no surface exposure. So, you’re really trying to use the science of vectoring in with geochemistry and geophysics. And so, it does take a pretty multidiscipline team in order to be successful at it. And I think that, having spent time with the majors, learning how they do it, I think that’s boded very well for us and that’s why we’ve been successful at what we do. So, there’s nothing easy about it. There’s nothing fast about it. But if you learn how to select the right ground, you’d know the techniques to go through discovery. You sort of know when you’re in the right area. That’s what’s important.

Matthew Gordon: So how many projects have you got at the moment?

Ross McElroy: Fission 3.0 has 16 projects.

Matthew Gordon: That’s a lot of projects. So, you’ve got to know what you’re looking for or else you’re going to spend a lot of money. So, how quickly do you get to the point we can decide and 16 goes down to 10, goes down to 8 etc. How do you play that? How does it actually work?

Ross McElroy: That’s always it’s a bit of an iterative process. You have a land tenure, sort of always in a state of flux. We picked up new ground. We shed other ones. That’s part of the overall strategy. Because you’re right, otherwise you’ll be spending money where you don’t need to. And I think what we try to do is, first of all, we have a pretty good idea where the key areas are. And one of the strategies that we’ve used successfully with other companies in the past, Fission Uranium being a good example, Fission Energy, the predecessor of that, is we pick ground that’s very shallow, where we expect to make a discovery within about 3 or 4 hundred metres of the surface. In the high-grade uranium business, that’s shallow. It decreases your cost., it makes exploration actually somewhat easier and less expensive. And it’s just that the whole process is really about evaluating. Ultimately, you want to get to a drill target, so you do your geophysics, you do some chemistry studies, understand soils etc. If you get to the point where you do a drill target, then you’re really looking for the subtle clues. You’re trying to read the tea leaves that allow you to vector, vector, vector, vector, vector. What we’re always looking for at the beginning is “smoke”. All these high-grade uranium deposits have an aura around them of what we call “smoke”. And we’re really looking for the fire, which is the prize, right in the middle of that is the high-grade uranium. The dimensions of it are probably not big, they never are. Even the biggest, best mines have relatively small deposits, a lot of uranium packed into that. So, you’re really trying to get yourself focused, focused, focused and make that hit.

Matthew Gordon: Obviously, market cap at $14M. It’s not huge. You’ve been going at this for 5 years. How long have you been going at it properly in terms of this, Fission 3.0, proper?

Ross McElroy: Well, we spun Fission 3.0 out of Fission Uranium back in 2014. But at that time really the market in uranium had been very slow. So, one of the things that we did during that period from 2014-2017 is we’ve been quietly getting ground, staking ground, picking areas where nobody’s looking. And a lot of companies have not been all that active, because the uranium market’s been slow. So, it’s given us an opportunity to pick the best the best places. So, we’re picking the best fruit off the tree in the slow times. And then towards the end of 2018 we were starting to raise money into the company that allowed us to get those dollars into exploration, money into the ground. And so very quiet, lean time for the first few years. Now we’re starting to get to work.

Matthew Gordon: People will say “they’ve been going 5 years and they’ve not done anything” but the reality is, it’s only been just over a year. When you raised money, the share price was around $0.30, people got excited. It’s around $0.09-$0.10 cents today. I’m sure you’ll say “undervalued”. But I’m more interested in the stage that you’re at and it really is about these projects and understanding what’s there and vectoring in on which ones are more important to you than others before you the move the company forward to the next stage.

Ross McElroy: Yeah, that’s right. My kind of group are projects, although we’re in the Athabasca Basin, where all of the products are fairly shallow and kind of go around the edge of the Basin, where you would expect the shallowest deposits to be as you move toward the middle of the basin, deposits could be there, but they tend to be pretty deep. So, our ground is around there, but we are focused in areas where you would have historic mining district in the Key Lakes side in the southeast part of the basin, there’s been a lot of discoveries and activities for the last 40 years there. We have property in and around there, using new models to look for uranium that people haven’t really used before. But in a historic area of known uranium. We also have a really good land package up in the Beaver Lodge, Uranium City district in the North West corner of the Basin. And that’s where uranium mining first gets started in the province of Saskatchewan. Everybody forgot about it. That was in the 1950s-60s. And we went chasing stuff around Key Lake and forgot about those areas. So, they’re really under explored by modern exploration techniques. The third area that we focus on is around in the South West part, around our PLS project. This is where the newest, best discoveries in the Basin have been in the last 10 years. In Fission uranium we’ve made the RRR discovery. NexGen made the Arrow discovery. These are big high-grade deposits in a brand-new area. And so, our land package sort of focuses mostly in those key areas.

Matthew Gordon: I’m trying to work out was the timing from where you are today to that point where you’re just creating DFS, BFS? What’s that timeframe? So, do I come in now, get in early? Do I wait? Do something else and come back to you later? What do I do?

Ross McElroy: Well, let me give you some perspective. With Fission Uranium in the PLS project, for example, that was a grassroots play, very similar to the sort of projects we have in Fission 3.0. In 2010, we did our first airborne survey of radium metrics and we found radioactive anomalies. In 2011 we made the discovery to figure out what those were, that was a high-grade boulder. In 2012 we were drilling along the trend and made the discovery. So, it was really a 2-3 year period of starting to look at that project to making that discovery that was an absolute game changer. I think that’s the kind of model that we’re looking at. When we start looking at these projects, to me it’s probably about at least a 2-4 year window for when you start getting something really interesting that you might tag into. It generally never happens in your first pass on a project. I’ve never seen anyone stake ground and make a discovery the first year just started. It doesn’t happen that way.

Matthew Gordon: And you’ve also got something in Peru?

Ross McElroy: We do. It dates back to the predecessor of all of them, Strathmore minerals. That was the first project in the Strathmore in the 1990s. Now, Strathmore was various versions of Fission out of that. That was a first project put into the company back then, the government released ground. Prior to that, you couldn’t stake for uranium as a public company. So, it was government’s held strategic mineral titles. So, they opened it up and we acquired some ground down in that area. There has been an interesting history down in Peru. We’ve focused more on the Athabasca, in our life. But others have made some great advancements down in Peru and the Machu Stanley Plateau Energy

Matthew Gordon: Are you parking that for now?

Ross McElroy: No and the reason we don’t park is it because we’re also a project generator. We’ve been able to attract an investment group that’s interested in advancing properties down there. So, we’re looking for uranium and lithium in a partnership with a private company right there. So that really follows our preferred model of a business that we do in Fission 3.0, which is we acquire the ground, bringing in others to spend money and jointly together we explore and make discoveries.

Matthew Gordon: There will be other starters there. It happened that last cycle. It’s going to happen again. There’ll be more people coming to the party. Do you think that you’ve hit this at the right time? Do you think that people coming in are going to be left with scraps? If you’ve spent five years looking at stuff, surely you and others will have picked up the good stuff. What does it mean for all of these new entrants coming in?

Ross McElroy: Well, you’re absolutely right. We saw that in the last bull run, that started in 2003 & 2004. I remember seeing the entire Athabasca Basin stake dust. Prior to that, the whole eastern side of the Basin was state that had been sold for 30 years and that was mostly Cameco’s holding. You’re right, there wasn’t a whole lot of ground available, but even the big guys dropped ground. The ground that we picked up in the old Fission Energy was a throw away from Cameco called Waterbury Lake. And it’s just part of the process. They hadn’t made a discovery there, they shaved off some ground. You could look at it as scrap. We picked up a significant package in there, made a discovery, right beside where a company called Hathor Uranium had made their discovery. That was part of the same thing. So that deposit crossed the boundary. So, you can still look at these same areas, 40 and 50 year out, exploration and still make a significant discovery. So that does happen. I think the key to everything is not thinking whether you got the scraps or not, but it’s whether you have a technical team capable to look at something in a new way and make a new discovery and have the guts and the capital to be able to go out and explore. I’ve seen that too often. Now, PLS is another example where we just used a brand-new idea, thinking outside the box, doing something that majors hadn’t even done, nobody had really done, which was look for uranium in a new area outside of the Basin and we were successful. So, you know, you can win both ways.

Matthew Gordon: Sounds like you’ve got a great team there. You’re in the right part of the world so it’ll be interesting to see how these projects develop. You’ve got to stay in touch with us and let us know.

Ross McElroy: We’d love to. Where we think that this is just the start of a new uranium market. And now that we do have an established land package, we’re not new to the game. I think that really gives us a leg up on what everybody else is doing. We’ve got the team, we’ve got the land. We know what to do. We know you start bringing people back into the uranium market and it will become a bull market again, once the price of the commodity continues to work its way upwards. I’m not going to get into the supply demand story, but once the price of the commodity moves up and there is every reason to believe it. Well, that does create excitement for exploration companies in the uranium sector. We’re so well positioned to take advantage of that.

Matthew Gordon: We look forward to hearing all about it over the next few months. Appreciate your time, Ross. We’ll speak to you again real soon. Thanks again.

Ross McElroy: Thank you very much. A pleasure.


Company page: https://www.fission3corp.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Aura Energy (ASX: AEE, AIM: AURA) – Uranium Cash Flow to Support their World Class Vanadium Exploration (Transcript)

See our interview with Peter Reeve, Executive Chairman of Uranium & Vanadium Explorer, Aura Energy (ASX: AEE, AIM: AURA). Peter worked with Robert Friedland at Ivanhoe so he explains how the big company experience translates to the smaller junior side. He explains the thinking behind their Uranium and Vanadium strategy and how they intend to deliver growth for shareholders.

Interview highlights: 

  • Overview of the Company
  • Mentality and Company Strategy: Choosing Two Very Different Assets
  • Junior vs Big Company Mentality & Experience of the Team
  • Company Financials, Raising Money & Director Remuneration
  • Lack of Marketing: Reasons and Solutions going forward
  • Three Projects and strategy for them
  • Wishful thinking for the Vanadium Story?
  • Views on the Uranium and Vanadium Markets

Click here to watch the interview.


Matthew Gordon: Why don’t we kick off with a summary of the business and then we’ll get stuck into some questions.

Peter Reeve: Aura’s got three major parts to its business.  The first one is the Tiris Uranium project in Mauritania where we’ve just released the Feasibility Study.  We’ve got a Vanadium project called Haggan up in Sweden and we have some fantastic Gold and Base Metal and Battery Metal tenements for exploration down in Mauritania.  Quite a lot of work’s been done on those and that’s an interesting situation, a third off the rank, if you like, before two development projects.  We are focusing on getting cash flow out of Tiris, and with that cash flow help to build the other projects, but we’re also considering each one of these businesses to be essentially separate entities, so we’re trying to fund them separately.  So we do talk about an IPO separately for Haggan and we talk about some form of separate funding for the Gold, base and battery metal exploration. 

Matthew Gordon: What was the big idea when you put this together?  If I look at your track record, there’s some big names in there.  Big company experience, but this is a start-up.  So what are you looking to do?

Peter Reeve:  If I talk to the management team for a start, the majority of the management team and a couple of the Directors came from BHP Billiton.  In fact one of my Directors was my boss back in BHP Billiton when we were 30.   So we’re essentially from big companies and what big companies do really, really well is they do a lot of good, boring, technical stuff but they fail to capitalise on it all the time and commercialise it because big companies don’t have the financial imperative that little companies have. I left BHP Billiton and went out… I did a lot of things.  I became a fund manager, I went to a lot of other mining companies, did some big IPOs and then one of the Directors asked me to come back in.  The reason why I came back in after having run some large companies was because I believed and I still believe that these assets can deliver a very, very large company over time when we get those projects in cash flow.  So that’s probably the core thinking.  Very, very good technical people, very experienced technical people, but hand in hand probably as much commercial impetus as we needed to get these things driving. So what we want to do with the projects is we don’t want to trade shares on the stock market.  We don’t want to flip projects.  We want to cut the ribbon on production for our projects, but obviously it’s a Director’s decision.  If somebody else has a lot of money for projects, of course we’ll sell them, but what we really want to do, we believe the best way to get best value for shareholders, is by cash flow receipts.   You can do it by takeover, you can do it via other methods, but we believe cash flow receipts will ultimately give you the highest valuations.  So we want to get these things into production and make them very valuable for the shareholders.

Matthew Gordon:  That’s about what you want to do.  I’m more interested in the strategy.  You’ve selected Uranium.  You’ve selected Vanadium and Battery Metals.  They’re quite volatile, certainly in the case of Vanadium.  Uranium’s in a tricky position at the moment, but obviously people expecting that story to bear fruit, and Battery Metals, flavour of the month.   Why did you pick on those very different commodities in Mauritania and Sweden?  Two very different types of environments.  Was it a case of they were there or was it case of actually we specifically identified these commodities or these jurisdictions?

Peter Reeve:  Going back to the first comment I made about the fact that the company started and was based on highly technical people well before I joined, we had very, very intrepid geos.  They see rocks and mineralisation.  So it was 2007 / 2008 and they thought Uranium was a very good idea.  So they went and discovered Uranium in Mauritania.  A survey had been sitting there without any work, a radiometric survey without any overview of anybody external for five or six years.  Managed the expedition, went out into the desert and found the first Uranium out there. 

Similarly one of our Directors, had done some work in the Scandinavian countries as a younger geo, and knew that the alum shale ran into Sweden and eventually a long story short, that became a piece of ground they picked and cut the first Resource for Uranium and Vanadium. So the very nice thing again about our company, both those projects were virgin discoveries to us.  They haven’t cost us a lot of money.  We found them out of real geology, so we selected it.

The Swedish government about 18 months ago banned the Uranium mining, as you’re probably aware.   We had done a lot of study on Vanadium in the past.  The Vanadium price had been through low and so we put that in the background, but there are a lot of other metals in it.  When Uranium looked like it was going to be problematic in Sweden, we recut the Resource immediately on the Vanadium side.  Of course, the Vanadium price for a period of time looked sensational and frankly for good projects, it’s still okay now.  And so we recast that project, which we discovered in 2009 / 10.  We recast that as a Vanadium project with some by-product credits.

And then just to flick onto the Gold side of it. Slightly more complicated.  We had a parallel sister company called ‘Drake Resources.’  Drake Resources, under our principle geologist, had put together this Gold package in Mauritania.  Some years ago they raised $10M.  They spent $3M of that on the project and Neil Clifford, who’s my principle geo, conceived that project when he was principle geo for Drake and when Drake decided to do other things corporately, we quickly picked that project up.

So again, it goes back.  Every one of our projects is a technical genesis of our people over a long period of time and we rank our technical people very highly.  Neil Clifford, regardless, is probably one of the best geos in Australia and nobody knows his name.  He’s fantastic.  He found 20Moz of Gold in Australia.  Essentially found the Sun Rise deposit. Our technical people, have driven what we’ve done.

Matthew Gordon:  But to finish off with the strategy.  These projects have been identified and pegged by your technical team.  Was that all done before you arrived?

Peter Reeve:  Discoveries were done before I arrived here. The shift to Vanadium was done under my direction.  I sort of drove a fair bit of that.  The pickup of the Gold and Base Metals and Battery Metals was done under my time as well.

Matthew Gordon:  So on the Uranium project, would you have chosen to do that if you were starting today? 

Peter Reeve:  I’m still a believer in the Uranium price. Absolutely, definitely.  I do believe its something to do, but what I recognised really quickly was the Uranium price. You couldn’t guarantee anybody that the Uranium price was going to go up in the next 12 months, two years or three years, and that’s been right. So we quickly started to diversify.  So what you’re seeing, if you’re trying to get to where we are on strategy, is what we did decide to do, is don’t put our eggs in one basket.  Let’s broaden this out.  We started with pure Uranium.  We’ve not got Uranium, Vanadium, and we’ve got Gold, base and battery metal exploration.  We’ve broadened it right out.

Matthew Gordon:  Juniors have got lots of challenges, but you’re making sure that you’re mitigating that country risk. You talked about the team being technical.  I hear that loud and clear, a very technical team, a very good team, but what about all the other experience or skill sets required?  You guys have come from big companies.  Is there anyone in there who’s been used to running junior companies because it‘s got a whole bunch of different needs?

Peter Reeve:  Well, quite a few of us have been involved in junior companies.  Let’s just say we all came out of large companies, but five or six junior companies are mixed amongst all our experience.  Since 2006/ 2007 Bob Beeson, one of our Directors, junior mining companies.  Neil Clifford, our geologist has done a lot of consulting and worked in junior mining companies.  Will Goodall, our principle metallurgist.  I’ve probably worked now in something of the order of say, five or six junior mining companies.  I’ve been a Director of most of those, maybe investments from Ivanhoe into junior mining companies.  So we’ve got a lot of junior mining experience as well.  Nothing prepares you for a bad time in a junior mining company.  All the experience in the world you tend to run those things because the biggest bucking bull you’ll see in our rodeo is a cakewalk compared to a junior mining company in the sector.

Matthew Gordon:  So let’s talk about some of those things.  Let’s talk about finance first of all.  Obviously with the Ivanhoe you were associated with Robert Friedland.  He could open a lot of doors in terms of the finance, but how are you finding it now going from big boy stuff down to juniors and are some of those doors shut or just polite conversations? 

Peter Reeve:  Robert will go into his grave as one of the world’s best mining CEOs that’s probably set foot on the earth.  And I say that simply by the score card for the number of great operating projects that he will have to his name out there, still putting dirt through the mill.  Nobody at the top of Rio or BHP has done what he has done. 

Going with that, is Robert’s ability.  He’s got a magical offer bottle in his coat jacket and he pulls it out and he passes this little bottle and the investors just hand over money.  It’s fantastic. He’s got some magic about him where he raises money and he does it very, very well, and I haven’t got a clue how he does it.  As much as I sat next to him for five or six years, haven’t got a clue.

Matthew Gordon: So what are you going to do now?  How are you going to raise money?  How do you go about it?

Peter Reeve:  We’ve got to do it more incrementally.  We had a strategy to get the Gold and Base Metals moving through the DFS period for Tiris, but we couldn’t get those tenements granted quick enough for that strategy to come off.  We thought that would be a good strategy to sort of go parallel with that boring sort of development phase because we know investors and share prices go to sleep when you’re trying to develop a project.  But now we’re in a situation where with Tiris in particular, the strategy we are pursuing is export credit agency finance.  Not completely well known but I think perfect for what a junior mining development company does and that’s obviously where a sovereign nation lends the junior money and the quid pro for that is that buy the equipment for its project from that country.

Matthew Gordon:  So you’ve had to look at alternative financing, alternative structures to be able to get this going.  How are you funded now?  How much cash have you got today? 

Peter Reeve:  According to yesterday we’ve got $830,000 in the bank.  We are essentially equity funding all our projects via a corporate.  That’s how we’re doing it. We are looking at various deals.  The IPO for Haggan is another way to relieve Aura corporate from having to fund all their programmes.  If I could find – and we are looking for a royalty interest in the Gold and base metal part of the business in order to keep the funding off there.  So as I said initially, we’re trying to look at Aura at the moment as three distinct businesses and each need their distinct form of funding.

Matthew Gordon:  So is Aura potentially an incubator or a hold co for these assets, which may be spun out into their own vehicles?

Peter Reeve:  It’s not quite as direct as that as a strategy because if I was doing that I would have started the conversation and say, ”Hey, we’re a company incubator and we’re going to spin those things out.”  But you’re right.  It’s a correct pick up, that’s essentially what we’re trying to do.  We don’t want to keep on making shareholders who are here for our Uranium asset fund Vanadium when it might not be their flavour of the month.  We don’t necessarily think everybody’s interested in more primary exploration in Gold base metals and battery metals.  So if we can fund it separately we’ve got less criticism from shareholders.

Matthew Gordon:  So corporate, ie, your shareholders who have invested into Aura Energy are paying for this.  How do you Directors remunerate yourselves?  Are you on big salaries and big warrants, big options? 

Peter Reeve:  The Directors are just on moderate and normal Director’s salaries.  I’m on a salary that I’ve taken for quite a lot of time between cash and shares.  I’ve got performance rights.  It’s just a mix of the norm.

Matthew Gordon:  So your $800,000 is going to last you till when and what’s that being spent on?  Is that mostly G&A?

Peter Reeve:  Oh, no, it’s G&A.  We did a $2million financing, only about two and a half, three months ago, and we were very focused on putting all that money into getting the Tiris BFS finished.

Matthew Gordon:  And that’s been the bulk of the money that you’ve spent since then till now, is it?

Peter Reeve:  Yes, that’s right.  And also the work we’re doing on Haggan.  So we drilled for about three or four months in Haggan.  We’ve now been cutting the core, doing the assays because we’re trying to get a measure, an indicator Resource up for Haggan, a Resource estimate done, a mining plan done so we can release the scoping study very shortly.  So really all are corporate and that money we raised is really focused on getting the DFS done and that’s now ticked off.

Matthew Gordon:  So when do you need to go and raise more capital? 

Peter Reeve: I’m not going to answer that question in an interview because that’s a selective briefing so I’ve got to be very careful with stuff like that.  So we wouldn’t answer when we’re going to run out the money,  We wouldn’t answer when we’re going to raise money again.  We put it out in the quarterly yesterday.  We put out forecasts, the amounts of cash we’re going to spend over a period of time.  So people can make their own decisions on that. 

What we’re trying to do is make sure that every single bit of money we spend is ticking off some form of technical box in one of the projects. So really the money we raised recently was about the DFS and Haggan to that scoping study stage.  And out of that and no money on the Gold, out of that everything’s really got to flow.  Everything’s got to fund itself.  I’m not going to take any more money out of Aura Corporate to fund Haggan.  Not going to take any money out of Aura to fund the Gold and base battery metals.  We’ve got to find alternative sources of funds for that.

Matthew Gordon: You’ll find alternative funds for those two, but Tiris, you think with this export agency finance should also fund itself?  Everything’s fully funded.

Peter Reeve:  The export credit agency finance is a combined package for both Haggan and Tiris, but Haggan’s there’s a time lag so yes, it’s more focused on Tiris at the front end.

Matthew Gordon:  And then just to finish off on the team’s experience.  Uranium’s very different from Gold, Battery Metals, Vanadium.  What’s the relevant experience in the team in those commodities?

Peter Reeve:  Neil was a part of the discovery team for Tiris Uranium.  He‘s a geologist.  He found a fantastic Gold deposit as well.  So good geo’s can do both.  Tiris wasn’t particularly… It was sitting there essentially.  It was a very good survey. I’ve worked in Uranium in Australia 20 years ago. Will is a very, very good metallurgist across many disciplines.  He works for First Quantum.  He works for BHP, so yeah, we’ve got enough experience in the different areas, but what we do and we do it really well, we’ve got a great technical network.  We basically employ 60 year old people wherever we can because they’ve got the best experience and they come on per diom’s and they work for us for a period of time.  So if we need a Gold expert, a Vanadium expert, we go and find it.

Matthew Gordon:  But what about your commitment?  Are you sitting on any other Boards?  How do you spend your time?  How much time is spent on Aura?

Peter Reeve:  I’m full time, but I’m one other Board which I was on before I left. 

Matthew Gordon:  The other thing that I noticed from one of your previous interviews, you said, I think it was in November last year – “We haven’t spent enough on marketing steps, but we’re going to make positive changes.”  Think you’ve done that?

Peter Reeve:  Have we done enough on marketing?

Matthew Gordon:  You said in November that you were going to make positive step changes.

Peter Reeve:  Did I really? 

Matthew Gordon:    On film.

Peter Reeve:  I’ve been around long enough to know that when the Uranium price is sitting still at $24, $25 a pound, it’s pretty hard to go open market Uranium.  I would have said that and I do say that on the basis of commodities doing some good work.  Really at the moment the commodities aren’t doing good work.  Gold’s doing some good work.  Uranium’s not.  Vanadium’s not.  But we still believe in our projects. 

I’m a little bit of the mind where we’ve sort of tucked our baton under our arm for the last 200m, and in tucking our arm under, what I’m really saying is we’ve got all the technical steps done.  We’ve come across the finish line and now is the time to really get out and talk very broadly about getting the Tiris project understood out in the market.  But that said, again, I’ve done thousands of investor meetings in my time, you can imagine, with Robert and people like that, and I’m not going to get a super warm, “Oh yeah, come on, let’s have a talk about Uranium, it’s a fantastic commodity,” because at the moment it’s not.  But we also know the way Uranium moves, that if a few utilities decide to walk through the door at the wrong time, ie together at the same time and sign big long-term contracts, the Uranium price will pop and things will change within a week.

So my favourite saying in business is “Success is where preparation meets opportunity” and that’s what we’ve been trying to do.  We wanted to get prepared and we are so happy and relieved and getting these DFS materials completed and we’re so happy that it’s in such a great condition and it’s got such good stats, and it sits there as something we can now, if you like, park technically and now really push our mind towards the financing and getting out and marketing that completed document.  Being modestly hard to go out and market Tiris without a completed DFS.  Now we really can, nothing holds us back.

Matthew Gordon:  So that’s a long way of saying you’ve consciously decided not to do any marketing because you don’t think the market’s right.  Money’s tight, but now you will up your game in that department.  Is that what you’re saying?

Peter Reeve:  In November when I made that statement, we were looking at… if you go back then, you’ll probably see our presentation we were going to release the DFS probably in about February or March.  It was actually a February date, okay.  What happened was we came across, as you are meant to do in technical studies, we came across a clay issue within the ore and that affected the processing and that delayed the scoping study, much to the chagrin of our shareholders, but that delayed the study by another three or four months.  But it’s the same story.  I wanted to get the study done in February, then get out and market.  Now we’ve belied that by three or four months.

Matthew Gordon: In the interview I watched you were talking about a July release.  So I think it was slightly prior to that.  Let’s just finish off on that thought, which is around the importance of marketing, the importance of talking to the market because especially for juniors who need that liquidity, that increased volume of trading, that comes from retail.  I know with the Aussie market it’s a big retail market and I know you’re obviously listed on AIM as well.  Those are two very large retail markets.  So is your idea to do more promotion now?  Do you believe in it or are you just a technical team?

Peter Reeve:  I was a metallurgist originally, but I’m a very rusty metallurgist now, I like to say.  I did a dozen years out of my 35 in the field and I’ve been really pushing corporate finance since then.  I’ve done a huge amount of marketing.  I think I know how to do it. 

The issue, I suppose, around marketing for us has just been getting a really good sell of a story and I think we’re getting there with both of them.  We’ve made a change to our London broker as well.  We’ve taken on SP Angel, who’s very Resource focused and they are at the moment our joint broker and there’ll be another change coming up to put them more in the box seat for helping us.  So that’s one big change.

Matthew Gordon:  Have they produced any broker reports for you? 

Peter Reeve:  They are in the process of getting a broker report together because we only signed them up about eight or nine weeks ago.  Seven or eight weeks ago, whatever it was, quite recently.  It’s one of our announcements.  But they’ve put some quite good value reports out on us, a full research piece is in the pipeline. 

Matthew Gordon:  Again, just in summary. So you value promotion, the question was timing?

Peter Reeve:  We value promotion very much.  I learned it all the way back when I was a fund manager.  I said that western mining, I’d describe – which under Hugh Morgan was a company that essentially was a little shop front window with the blinds pulled down and we could never get the information out of them, and so that’s what made you really have to have your windows cleaned, your blinds up and your door open.  So now I’m a big believer in promotion.  I would never have been a part of Robert’s group had I not believed in promotion.  I really believe it.

Your only customers for Resource companies, I don’t care what size you are and what commodity you are, your only customers in the world are your shareholders.  We’re all in commodities. Commodities walk out the door.  The only customers we have are our shareholders.

Matthew Gordon:  Glad you said it.  Not many people recognise that. 

Peter Reeve:  It’s number one.  I mean, I’m not saying I always do it as best as I could. I’m sure I can do things better at different times, but I’m a serious believer in it.

Matthew Gordon:  The last presentation on your website is from March, it’s now August.  We’re getting an update on that soon, getting a broker report soon and you’re going to get into the market more?

Peter Reeve:  Yes, absolutely. 

Matthew Gordon:  Shall we talk about your projects?  Let’s start with Tiris.  Again, like to understand the thinking.  Everyone’s got different business models.  Yours is get into production first and then we’ll worry about building out the Resource.  Is that it?

Peter Reeve:  That’s a big part of it, absolutely.

Matthew Gordon:  Tell me more.

Peter Reeve:  We said to our shareholders on Tiris quite some ago – we’ve got a 52Mlbs Inferred Resource there.  We’ve just put basically 13Mlbs into mineable Reserve plus a little bit of inventory, but we’ve got a much bigger conversion to come from that.  But I said to them, “I haven’t got any interest in spending a lot of your precious money on pushing that Resource out to be 30Mlbs or 40Mlbs of Reserve when I can only spend 1Mlbs of it a year.” 

You think of Tiris as 52Mlbs Inferred, 13Mlbs in the reserve mining inventory for the DFS.  We have got a 1Mlbs per annum project call at the moment, 800lbs and something on average, but call it a one million pound per annum project in a production sense.  And we’ve already got some pretty interesting plans to look at expanding that to 3Mlbs per annum over time when we get more of that reserve conversion done.

Matthew Gordon:  So let’s understand where that sits in your strategy.  That’s not a big project.  It’s not particularly high-grade.  It’s Mauritania, with all that kind of risk, but it potentially gives you cash flow to focus on a project that you want to focus on, which is slightly further north, up in Sweden.  Is that right? 

Peter Reeve:  When it comes down to it, just on Tiris, we came out the other day and said that in Australian dollar terms we could make 27 million dollars per annum of after-tax cash flow.  Put that on a 10 to 20 times multiple, which are part of the cycle you’re in, and you can start seeing what a project with a good Uranium price and working could do.  So it will go some way to funding what you do on Haggan absolutely, but Haggan will then stand on its own for a proportion of…

Matthew Gordon:  Eventually it will stand on its own, but right now it’s not at that point.  Again, I’d love to understand junior mining management mentality.  That’s not a bad strategy.  Not the first time we’ve seen it.  It’s worked elsewhere.  Nothing wrong with it, not criticising it.  I just want to understand if that’s your thinking.

Peter Reeve:  That has been our thinking all the way all the way along.  However, at the moment we’re varying that a little bit by bringing in this concept of doing the IPO to fund Haggan in its own right.

One of the other issues with Haggan is that when the Swedish sun rises, we go to sleep.  That’s a pretty good analogy for what happens to projects like that.  I think unless you have a really well paid, engaged and active management team in Sweden, it’s difficult to make projects come alive.   A part of the Haggan IPO strategy is to get enough cash to set up a permanent management team who speak Swedish, who like pickled herrings, who do all the right stuff in Sweden to make projects get ahead and that’s really a part of where we are now.  We want the Swedish project to live in Swedish daylight hours, not try and make it live in Australian daylight hours.

Matthew Gordon:  We talk to management teams who think they can manage projects from the other side of the world.  It’s tougher.  It’s not impossible, it’s just a lot tougher and creates problems.

Peter Reeve:  Really hard.

Matthew Gordon:  So Tiris is in the Uranium space.  Uranium spot price is doing what it’s doing.  The utilities aren’t fully engaged yet.  I think you’ve got to buy into the macro story to get behind Uranium.  You talked about roughly 1Mlbs a year over a 15 year life of mine (LOM), but that depends on the price you can get in the market.  There’s a Resource and then there’s mineable ore and depending on the price that will determine the scale of this opportunity.  So what is your DFS telling you?

Peter Reeve:  In terms of the range of size of the project?

Matthew Gordon: Yes

Peter Reeve:  The conversion of Resource to reserve is very high and the reason is our deposit is, call it an evacuative surface deposit.  Average mine depth is about five metres.  So we aren’t looking at a pit wall which looks like a cone with the gem of a Gold deposit down the bottom and all that sort of thing.   We are in a really good situation where every piece of our ore is accessible, and I believe it’s the sort of operation that, you know, it’s one thing for us to devise us what we do in the DFS – and that’s a step you must go through for all sorts of reasons, the market, events, and Directors and everybody – but when we unleash our operating team on that project, they’re going to do it exactly the way they see the ore in the ground. 

My strong belief, and the geo’s strong belief, is that we will expand each of the Resources in the area now.  I mean, to get a reserve of course, they’ve got them off as nice square blocks because mine engineers like working in nice square blocks.  They don’t like shapes.  And so once we can start showing that there is shape to it and it does go a little deeper, it does go a little further, I think we’ll expand the Resource more than contract it.  A lot of it will convert to reserve or mineable, whatever we want to call it.  Mineable Resource.  And we still haven’t really started to do inspiration outside of the core discovery areas, and I think when we do that …

You know how it is.  You’ve got a plant built.  You’ve got a team there.  You ‘ve got everything set up. The marginal cost of then going out to get that extra bit of ore, which might just be a pot of 5Mlbs, three or four kilometres out, is a lot lower. 

We understand what happens to projects once you get them there and we’re pretty excited about what that will look like, but yeah, I would be hoping one day we’re going to mine 75Mlbs of this thing at least.

Matthew Gordon:  It’s low tech, low CapEx, low OpEx. 

Peter Reeve:  It’s not just low CapEx, by the way.  It’s sensationally low cap ex.  You want to get the odds of marketing.  You go and look at any other junior mining company or any other Uranium hopeful at the moment, and their capitals are mostly measured in the hundreds of millions of dollars.   So to get something sub a hundred with the C1 cash cost of 25, and an all in sustaining cost under 30, there’s not many of us around.  That’s why I make this nice marketing line.  I say that this is currently one of the most compelling Uranium development projects in the world as we speak.  As small as it is, it’s one of the most compelling projects because of that capital and that op ex.

Matthew Gordon:  Let’s talk about Haggan.  You’ve previously said this is the most valuable asset in your portfolio currently.  Tell us why you say that.  You’ve done some drilling recently.  How are you moving that forward?

Peter Reeve:  There’s a lot of metal in that system, just for one.  As I said, the Vanadium concentration has been equivalent almost to the Uranium for a long period of time, probably even higher than the Uranium.  We had to make this change from Uranium because the Swedish government decided that nuclear in 2040’s going to fall out of their energy balance, so they don’t need Uranium.  There was a bit of political stuff going on as you can imagine as well.

But we were fortunate that we had done enough work, we understood enough.  We’ve done a lot of good drilling, so within two or three weeks of that all happening, we recapped the Resource into Vanadium and we had it ready to go.  So now we’ve got cut off grads for our Vanadium deposit and we found what we call a high-grade zone, but it would be better to call it a higher-grade zone.  And that’s a higher-grade zone of about 90Mt of 0.42 per cent of V205. 

But again we’re fortunate.  Alum shale largely comes to surface and so that Resource will be encapsulated in a pit that starts at about 20m from surface and finishes by about 90m.  So again, a very manageable operation. 

Before we were talking about a heap leach, a Uranium heap leach that was going to be 25Mt to 30Mt per annum.  We’re now talking about a project which is Aura Clubs, and about 2.7Mt per annum.  So quite a modest scale project.   We did the capital and operating estimates last year, so again we spent our $80,000 to get one of the independent engineering firms to do the capital and operating estimates for Haggan.  ASX will not let us release that until we have the measured and indicated Resource.  We cannot release that unfortunately with an inferred Resource.  So again, it’s where preparation leads to opportunity.

We’ve got a lot of internal numbers and the project looks very, very good.  We are quite aligned to the idea of the whole battery push, but we’ll sell our Vanadium to anybody who wants it.  But I think the battery push in Vanadium is pretty interesting and when we start to look at the scale of this project, without giving too much away because I’m not allowed to, we’ve contemplated at the moment a 7,500Mt per annum V205 project, that’s about five per cent of the world’s Vanadium.  We sized it because five per cent sounded like a pretty non-disruptive sort of thing to do, but we could double the size of that if we had the right market.  We can make our cash costs go through the floor, and there’s all sorts of interesting technical things that I sort of kind to allude to just at the moment.

There’s a few proprietary things that are pretty interesting about some by-products we’re playing with there which really help that, and make it a really commercially robust project as well.  But what I’m saying is accelerate all our Vanadium, where it’s fallen to, it’s clearly not as good as $33 Vanadium.  But we can make money out of $7-$8 Vanadium and we can make a lot of money out of $7-$8 Vanadium if we expand our project.

And therefore all that then goes back to what are you doing as far as your linkages?  Who are you talking to?  Who do you want to get into bed with?  And we’ve made no secret of the point that we are talking to battery manufacturers, we’re talking to people who can be a part of us in whatever way that is. 

Matthew Gordon:  But how real is that?  All Vanadium producers are talking the battery story.  90% of the market is rebar. That’s the reality and it’s early days in terms of the VRFB.  And again, we have this conversation a lot with Vanadium producers and talk the battery story because it sounds great to shareholders, but you’ve got to have the prerequisite skills in house or you’ve got to have the right partners on board, strategic partners with the right balance sheet to be able to do that.  You’re early stages, so is this wishful thinking or is this actually a reality of what you can do because you think the scale of this will allow you to do that?

Peter Reeve:  Well, so far I’ve had three sort of pretty serious full day conversations in three different locations in the world on this particular battery initiative that we’re talking about, and we’re taking it pretty seriously. 

The Vanadium battery market, and people know that they have a cap on the Vanadium price before they say it doesn’t really work.  I think there’s some really smart things you can do in terms of partnerships to ensure that goes on. 

Matthew Gordon:  You may be treating this seriously, but what does that actually mean?   Are you at latter stage discussions with people, or is it just a process you’re going through?

Peter Reeve:  There is a particular party who we are talking to in some detail.  I would still put it at the… it’s gone beyond the concept stage.  We’re talking how things could work.  We haven’t stayed in each other’s laps yet,  we haven’t gone… You know how these things move along progressively, but it’s quite serious.  We like the story.  I’d like to make it happen. 

There’s a chart that I have in my presentation for March which you might have read.  It’s a battery storage …  At the moment I think that chart says that there’s something in the order of 15Gw to 20Gw of storage capacity.  And in 11 years, they’re saying  now 2030, and they’re saying that might be 300Gw of storage.  Now if that chart isn’t even half wrong, if it’s two thirds wrong, if that was the beer market or the underwear market, you’d want to be in that sector.  So I would just say that if that’s storage graph is even a third right, then it’s not a bad market to be in.  

So I’m a big believer, whether it’s Vanadium Redox Flow Batteries (VRFB) or not, the flow batteries are the ones that do store power for a long period of time, and that’s what interests me.  So I’m a bit of a believer in it.

Matthew Gordon:  That’s the macro.  That’s got nothing to do with you right now.  You’re at the point where you’ve got a scoping study coming out later this month, potentially end of August. 

Peter Reeve:  Yes

Matthew Gordon:  So you’re going to have an idea of what you’ve got then and you’ve got to then work out how you move that forward.  So what are your hopes for between now and the end of year in terms of what you can do, in terms of understanding what you’ve got and then what are you going to do with it?

Peter Reeve:  To push you back a little back there, we found this project ten or eleven years ago.  We spent $20 million on it.  Yes, a lot of it went onto Uranium.  We spent a lot also on Vanadium.  So we really understand this project.   We do know Sweden pretty well, very well.  We know the region, we know the local people, so this is more than just a concept project.  This is a pretty serious thing. So I do believe the next step is do something where we start to get a tie up with some of these people.

Like I say, I would be equally happy to tie up with a steel producer who needs the Vanadium.   I’ve got some people who are interested in that.  They are less interested now that the Vanadium price has gone down, clearly because they don’t feel they need it.  But no, I want to move this to a corporate stage.  I do want to get the IPO done.  I do want to do something with the battery tie up if that’s possible, and I want to do that within a reasonably short period of time.

Matthew Gordon:  So just on the IPO you’re looking to IPO on ASX or AIM?

Peter Reeve:  Because of the waking up in Swedish daylight hours, it’s got to be European time.

Matthew Gordon:  So those are the two projects.  Can you quickly go through the Mauritian Gold, battery metals project?

Peter Reeve:  What we’ve got there is greenstone belts.  All of Kalgoorlie and you’ll notice similar stuff in Canada, is greenstone belt. This is really, really an unusual set of greenstone belts because the only discovery on this greenstone belt is Kinross’ Tazius mine at 21Moz deposit.  Greenstone belts are renowned for not having a single discovery and they are renowned for once you have one discovery and you find another, there’s a raft of different sizes.

Neil, our Geo, talks about something called Zipf’s Law.  Zipf’s Law is that you have a curve from a 20Moz deposit all the way down to a one million ounce and everything in between.  So when you do Zipf’s Law on the Kalgoorlie field, you see 30 or 40 different deposits of varying size.  We’ve got one on this field and it’s Tazius and it’s 20Moz.  

We got our tenements granted and we then did a deal with another party, so we have now tied up about half of that greenstone belt.  All but for one tenement we’ve tied up half the greenstone belt and Kinross has the other half.  We’ve hit mineralisation.  As I said, we bought this for $100,000 in a royalty, but previously Drake had spent $3 million on the greenstone belt, on these tenements.  So we’re not going in there cold and the guy who conceived it and did the work is now my principle geo.

We found mineralisation – what you’ve got to get is you’ve got to get systems size and you’ve got to get grade.  We’ve hit system size with a little bit of grade and we’ve hit grade with not much system size.  We’ve just got to get the two together, but we’re talking about one drill hole.  For the money we’ve spent we’ve drilled one drill hole for every 20sq.m so far.  We’ve got a lot more work to do. 

One of the more exciting parts of it – and the reason why I put on the battery metals, is we did a fence of drilling, 1.6km long.  Again, if you go through that presentation, it’s the bright pink slide.  It was equal holes.  They were about 6m-7m deep.  Pretty well every one of them hit near per cent nickel. So we assayed one in ten and we found Cobalt and the Cobalt was as high as 0.58%. So pretty exciting to get back and look at. 

Matthew Gordon:  So again, early stages but the potential there, greenstone belts in West Africa.  So let’s go a little bit more macro.  What’s your view on the Uranium market? When’s it going to turn?  Is it your area of expertise?  What do you know?

Peter Reeve:  I don’t know anything about the Uranium market at all with respect to how a Uranium market expert knows about the Uranium market, but I make it my job to talk to… We’ve got an off-take agreement for Uranium from a group in London and I talk to them quite often and I talk to other players in London on that.

Matthew Gordon:  That’s Yellowcake presumably?

Peter Reeve:  No, no, that’s a ETF.

Matthew Gordon:  So you’re relying on them but you kind of don’t care.  If the price is right, you’re going to get into production and you’ll start producing.

Peter Reeve:  The big thing at the moment with the market for me, it’s really simple.  I seriously don’t make a habit of trying to count how many reactors are getting built and how many pounds goes into each reactor.  I let other people with a digital mind do that sort of stuff.  What I am focusing on is this big concept  of what happened in 2005.  If you look at, there’s again a chart that I use. 2005 there was about 50 – or maybe it was 2004, there was 50Mlbs of long term contracting in place and with Finn by the next year they had put 250Mlbs of contracting in place.  And that lasted for seven or eight years.  It wasn’t a fluke. 

The current coverage in 2021 and 2022 for long term contracts is four and three per cent.  They will get nervous.  I don’t know when it’s going to be, but they will get nervous.  It doesn’t matter the cost they pay for this stuff, as you well know, but they definitely cant run out of it.  So at some stage they will move. Look, the February results of Cameco, I always read the Cameco stuff.  Their marketing stuff is brilliant.  They’re fantastic at it.  They’ve got teams and teams of people who are much smarter than me focused on it all day long – read their stuff.  They also know these comments about the utilities looking like they’re coming back to the table to start with the balance of doing long term contracting. 

So what happened in 2004, 2005 that leaned to that big explosion in price was seven or eight of the utilities all decided to squeeze through the door at once and of course… I always remember I asked one of the guys in London.  I said, “What happened with that?  What was the max price paid in that clique?” He thought it was about $138 a pound.  And I said, “Do you know the guy who did it?”  And he said, “Yeah, I do. I know him.”  I said, “What sort of guy is he?”  And he said, “Well, he’s a nuclear physicist.  He’s sitting there and he basically had a manila folder and said he needed this much Uranium, and on the day when his boss had walked down the corridor and said “How’s that contracting going?” and he said, “I haven’t got much.”  Well, you’ve got to fix that.  First to bid, first to bid, and kept on going.  So a nuclear physicist running a plant is also looking at nuclear… So these are the sort of things that might happen.  I’m a believer that it’s the utilities charging through the door at once which will give us the…

Matthew Gordon:  What is your outlook on the Vanadium market?

Peter Reeve:  Outlook on the Vanadium market is probably confused, but I would say that getting up to $33 there was clearly a lot of speculation, and I think falling back down to $7, I’d say there’s a lot of play.  Some of the people who need Vanadium, they have confided to me that I don’t think they think it’s going to stay down here, but it’s not going to race back up to $33 either.  We always thought somewhere in the $10 to $15 range was more likely for it to sit and that’s what I think it will go back to at some stage.  But I don’t expect to see, $20 or $25.

Matthew Gordon:  Can you summarise your thoughts on where Aura Energy is going and why you think new investors should be looking at Aura Energy. From what you’ve told me today there’s a lot of things that you’re going to be doing. 

Peter Reeve:  Primarily start with what we’ve got in Tiris.  We’re putting together a very interesting chart just comparing the CapEx on our project, it’s C1 cash cost and the All In Sustaining cash Cost (ASIC) against our market cap.  There is no doubt about it.  We are the most undervalued of the junior mining companies in this Uranium space with a development project, with the low capital and with the low OpEx. 

For me, there’s three things.  The low CapEx means the project’s doable and the low OpEx means you’ll make cash flow and the low market cap means we’ve got room for the share price to go up.

So that’s a good enough reason for any shareholder.  If they can believe that we will deliver what we say we are, that’s a good enough reason for the shareholders to get in.  Then add on to it that if we do an IPO and we retain 70%-80% of that, we’ll get an independent counter attributed into our share price.  That’s number two.

And then number three, when we discover a 3Moz deposit on the greenstone belt in Mauritania, everybody will want to own our shares.  So that’s going to happen as well.

Matthew Gordon: I appreciate your time.  That was a great first introduction to your company.  I know the guys on Twitter are going to be really happy about the fact that we’ve spoken.  Please stay in touch.  Keep us up to date with how things are moving, perhaps later in Q4.  Thank you very much.

Peter Reeve:  Thanks for the time.


Company page: http://www.auraenergy.com.au/

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Premier Gold Mines (TSX: PG) – Increasing Production, Strategy, M&A, Gold Price and Share Price (Transcript)

We interviewed Ewan Downie, CEO of Premier Gold Mines. This team are capable of making deals, partnering with big companies and getting access to non-dilutory cash. Despite giving guidance to the market about depleting production at South Arturo mine, their share price has been punished. They need to focus on delivering +100,000oz. Lots of Exploration assets at different stages. Where did it start?

Click here to watch the interview.


Matthew Gordon: Thanks very much for taking the time out. We always get people to start off with a two minute summary of the business.  Then we get stuck into a few meaningful questions after that, so if you don’t mind?

Ewan Downie: Premier Gold Mines is an exploration development and producing company, a company that’s been around for just over a decade and has been one of a few mining companies that’s made the transition from explorer to producer. Currently we have two operating mines and several near development or development stage projects within our extensive portfolio of project.

Matthew Gordon: I think the obvious observation I had when going through the material was that you look like deal makers, as well as miners.  You’ve put together some packages, you’ve done some joint ventures, you’ve got some big names involved – Barrick Gold Corp.  Tell us a little bit about you and the team and perhaps that might explain the deal maker / miner perception that I have of you.

Ewan Downie: Well, Premier started, as I mentioned earlier, an exploration company, and as an explorer and one of the team that we started the company with were essentially geologists, etc.  And as a geological group and an exploration company we are a team that recognise that very few projects actually go from being a concept exploration effort to full production.  In fact, probably more than 99% of mineral properties don’t become mines.  So by having multiple projects gives us more options, so to speak, and we’ve always been a company that has a moral of ‘don’t always think that we have is the best.’  There could be something better and if we find something that’s as good or better than our current portfolio, we should own it.

So we’ve always been open to trading opportunities, if we found the right opportunities.

Matthew Gordon: This is for an audience perhaps who haven’t come across Premier Gold.  I know you’re a big company.  $400M market cap now, and you’re a producer.  Can you explain the process that you’ve been through in terms of where did you start? Which assets did you start with and talk about some of these joint ventures that you’ve managed to deliver?

Ewan Downie: We started in 2006.  We were Spiona, the company I founded in the late 90s called Wolfbein.  So at the time Premier was a free share to our shareholders.  We started in the Red Lake camp, one of the most prolific high-grade Gold camps, I think you’ll find anywhere in the world, and we established a fairly strategic land positioning amongst the two producers, which at the time were Gold Corp and Plasser Dome. 

We started by there by realising at some point that to our grow our company we couldn’t just sit around and wait for Gold Corp to do something with us.  So we identified the Hardrock project, our Greenstone Gold joint venture now with Centerra as a potential acquisition candidate that could host a significant open pit deposit and luckily we were very successful at delineating that open pit deposit.  In between open pit and under ground that project is now a 9Moz, but it’s expected to be a large open pit.  It’s in full company right now and the market hasn’t been at its highest for several years and we recognise that to build a project of its scale, that it would be a very tough task for a company outside to Gold mine.  And so we set out looking for a partner and were able to secure Centerra Gold as our partner who was solely funding that project.

They paid us a cash payment and with that cash payment when they came in, we continued to identify other opportunities and our two producing projects – the South Arturo in Nevada and Mercedes in Mexico – were acquired with or partially with the funds that we received from Centerra as they came in.  So we’ve been able to, I’d say, make some strategic acquisitions to grow our business with that joint venture.

Matthew Gordon: So you’ve kind of leapfrogged the process to getting to be a producer using cash from an exploration asset which you developed through with someone else’s money.  It enabled yourself to take their cash and buy producing assets which perhaps didn’t meet their profile, but were good enough for you to start. You’re not quite at 100,000 ounces.  How many ounces are you producing at the moment?

Ewan Downie: This year will be under 100,000 ounces.  Probably in the range of 80 – 85,000 ounces.  89,000 ounces this year mainly because the South Arturo project in Nevada we depleted our first pit and we’re not constructing a second pit, and in underground from the bottom of our first mining pit.  So the South Arturo mine is going through a bit of a rebirth stage with two new mines being constructed as we speak.

Matthew Gordon: You’ve also got four exploration assets at various stages of development and funding. You’re filling the hopper?

Ewan Downie: Yes.  We take the view that we’re not looking out just for next month.  What are we going to do next month or next quarter?  We recognise that if we’re going to build a successful long-term mining company, you can’t do it one asset, and unfortunately mining is a depleting commodity industry and if you don’t replace reserves or find additional reserves at other projects ultimately you won’t be a producer anymore.  So we’re always looking out for what will be the next project that we may be able to integrate to become our next production centre for the company. 

Currently we’re curating two projects that we hope we’re going to develop and open in the next couple of years.

Matthew Gordon: Well, that leads us nicely on to strategy.  I’ve got a sense of the mentality in terms of the way you go about doing business, and it seems there’s some deal making acumen there.  But I want to talk about the strategy now, which is these exploration assets presumably are going to follow a very similar model to that you’ve already employed successfully with Greenstone, for instance.  Is that true to say?

Ewan Downie: Yes. We’re quite open to developing our own deposits.  In fact, later this year we expect to start developing our Cove property, one of our high grade projects in Nevada, and that will be the first project that we initiated the development on our own and built Mercedes, our producing mine, was acquired from New Manor, was already operating, and our South Arturo project where the two mines are under construction is operated by our partner, Barrick. We are participating in the construction, but we’re not actually… Our strategy is to continue to grow our portfolio, such that we continue to hopefully maintain a steady production profile in the future and steady cash flow so that ultimately we can give back to shareholders.

Matthew Gordon: If I look at your share price, you have been as high as $5, back in July of 2016 and you’re around circa $2 today.  It’s been a bumpy ride.  At which point do you think the market investors have given you credit for your strategy?  Obviously the Greenstone project or getting Barrick involved, finding new exploration assets… what do you think they’re rewarding you for? Or is it all of the above?

Ewan Downie: I think right now we’re being somewhat penalised for being in a development stage.  Even though we do have the one producing asset and some Gold being still produced from stockpiles at South Arturo, given that you mentioned back in ’16 we were up at five dollars, that was when South Arturo was in full swing.  So we had the two mines operating, we generated a huge amount of cash flow in that year and in 2017 I think Premier was one of the top performing Gold stocks in all of the TSX, but then that Phase 2 open pit, as we called it, as South Arturo was depleted, and since then we’ve been processing some lower Gold stockpiles but our production profile dipped as we’ve been constructing the two new mines.

At the end of this year we expect the underground to come online and I’d like to think then we start to get rewarded for our future production growth.  However, right now I think we’re being somewhat penalised because we’re in that development stage and you’re spending a lot more cash than you’re making.

Matthew Gordon: Well, that’s true.  If you look back to that period, what are the key takeaways there?  Mining is cyclical.  Commodity prices are cyclical.  There are ups and downs and it’s a tough business, understand that.  What would you have done differently looking back to that period?

Ewan Downie: I don’t think we would have done anything really differently.  There’s maybe an acquisition or two we looked at that we passed on that turned out better than we thought.  You look at those opportunities.  We always had an internal mentality that we’re going to see this production gap and what we call it, we need to fill that gap, and we’re looking for producing or near producing opportunities that would have smoothed down our production profile.  All of the assets we looked at either sold for significantly more than we were willing to pay or were solar power and we viewed them as being really not profitable or not really economic. 

I think we made a lot of good decisions on what we passed on, but there’s maybe one or two that we did pass on that turned out to be better than we expected.  So really I think we wouldn’t have done anything really differently.  Just the only thing I wish is that we would have been more successful in finding something to bridge that gap.  Now the gap is closing, so we should outperform in my view going forward.

Matthew Gordon: So if I look at your share price It’s $400M. About a hundred of that in the last month or so with the price of Gold going up. That’s obviously a very welcome addition to the mix for everyone in the Gold space at the moment.  What are you going to do during that period?  Do you need money?  Do you need to go and raise cash?  It depends what your plans are.  What have you told the market?  What are you thinking?

Ewan Downie: We ended the last quarter with approximately $45M in cash, so we’re in great financial shape.  During the first half of the year we secured a credit facility for an additional $50M which provides us with the ability to fully fund the building of the Phase 1, El Nino underground mines at South Arturo and the advanced stage development at Cove. 

So currently for these projects that are near term, expectations we have for cash outflow we’re well funded to do those.  That will mean drawing from our facility.  However, Hard Rock, our Greenstone Gold joint venture, if we do make a production decision for that project, even though we have joint ventured half and we’re currently being free carried, ultimately once it goes into construction we will have to contribute and some time in the future we will look at different means of how we would finance that project. 

However, at present we haven’t made a decision whether to go ahead with that property and don’t expect to do so until late this year or early next year.

Matthew Gordon: Even with the Gold price rising?  Well, tell us, what’s your expectation of the Gold price?  I guess, If I’d asked you two months’ ago, it would be a very different answer.  Now what are your thoughts on that because that’s got to effect the timing of when you’re even considering raising capital, because it’s going to be cheap money now.  If the price drops again, money gets more expensive.  Your decision making gets harder. 

Ewan Downie: I believe that we’ve assembled a number of assets that would be on the lower side on the production cost scale.  So we should generate good cash no matter where the price of Gold goes.  Over the last four or five, six years, we’ve seen Gold test the $1,350 several times and not break it, so after several attempts sometimes you lose a bit of your gung-ho.

Matthew Gordon: Maybe that’s a wise stance to take, certainly. But on that, you say whatever the price is you’ll make money.  If I look at Mercedes, you’re indicating AISC of $900 – $950.  Is that what you’re going to be expecting at South Arturo as well or is it a different price point?

Ewan Downie: I’d expect South Arturo will be a lower cost operation.  The Phase 2 pit, the all-in sustaining when that was in production was less than $400 an ounce.  Very high margin ounces.  We’re not expecting Phase 1 in El Nino to be quite as low cost but we expect them to be quite low cost.

Mercedes, last year and this year continue to be transition years as we are developing several new deposits.  However, the new deposits that we develop, the largest of those, Diluvio, is one of our lower grade deposits.  Has a bit better wind span, lower grade, and we’re currently drilling off Marianus, which is our higher grade – and what we anticipate to be our higher grade – zone at Mercedes, but we won’t see the benefits of Marianus until late this / early next year, and then we should see hopefully the analysis grow slightly because of the influence of higher grade material and with that, we’d hope the cost can get down. But Mercedes is a moderate grade, a moderate cost operation and we are optimistic in Marianus we’ll be able to improve on the operations starting next year and we continue to focus on exploration with the hopes of identifying new higher grade deposits than the current operation.

Matthew Gordon: That gives me a sense of what the management team’s focused on – the hot topics in your monthly meetings that you’re discussing.  You want to make sure it’s a much more smoother ride going forward.  With South Arturo coming onboard, you expect obviously one) start to be cash flowing from that, 2) you’ve got cash reserves, $45M, plus a facility of you said $50M, something like that. You feel that you’ve got enough in the armoury to move the exploration assets, which have possibly got the biggest chance of shareholder enhancement.  Is that the way your mind’s working or are there things that more than that are keeping you awake at night? If so, what are they?

Ewan Downie: Now with the new Barrick Newmont joint venture in Nevada, once that’s consummated – and I believe it was just announced yesterday that the deal has been consummated – Barrick, who’s the operator, will have to look at all of their operations and how are they going to fill the mill and all of those facilities and what deposits are going to go where?  We haven’t provided, I would say, very good guidance in terms of the future at South Arturo even though we’re constructing two new mines because of a bit of the unknown that’s coming with this joint venture.

However, we are building two new mines because we expect them to be good new mines, and so that’s going to be a big part of our future this year – seeing those new operations come online.  For Hard Rock part of the main deposit at Greenstone, our feasibility study was completed in 2016 and a substantial amount of work has been completed since then, including several drill campaigns and we are expecting in the second half of this year, a number of catalysts to come out of Hard Rock because of what we’ve been doing over the past two or three years at that property.

And then lastly, we are going to be drilling at a property that we’re acquiring from Barrick, called Rye, in Nevada, that we’re quite optimistic is going to return some really good – some of that sex appeal type thing you were taking about for shareholders. “Hey, what’s the next new thing, more than maybe a production coming.”

Matthew Gordon: If I look in chat rooms and forums and online platforms, people aren’t talking about you very much.  There’s not a lot of conversation, not a lot of chatter, and what there is, is not a lot of new information. I just wonder what you’re going to be doing to…  I guess, talking to people like me to start, but what’s the plan here in terms of explaining what is…?  There’s a lot of moving parts and it’s trying to break that down for investors to help them understand where the upside’s going to come from.   You mentioned the word ‘catalyst’ a second ago.  A lot of the regular catalysts that you and I have been used to over the past 10, 15 years, weren’t working last year.  Why are they going to work now?

Ewan Downie: I think one thing, we’re trying to simplify our story.  As you said, there’s a lot of moving parts.  Some people may get a little confused of where is this company going and how is trying to achieve?  I liken ourselves to what Agnico Eagle was years ago.  They grew several projects to go from being a small pay stock to a major producer.  To do that they went through their trials and tribulations over the years and built out operations.  We’re trying not to have anything that really…  We’re trying to smooth out our growth profile going forward rather than try to see the spikiness that you might see as an explorer.  Everybody’s excited about the exploration beyond the chat rooms, but ultimately if nobody buys you, then reality sets in and how much money do you need to build that etc?  You know, that rises up in exploration and development and then when you get into mining and hopefully profitable mining, then you should actually see your highest growth in your share price through that initiative.

So we try to be somewhat humble and steady on how we deliver news.  Obviously if we make a major discovery somewhere, we’ll talk about it, but our main thrust is saying we have one operating mine, two in construction, with one coming online later this year, the other one in 2020, and two additional projects in full permitting for future development.  So in terms of long-term production growth, I think there’s very few companies who offer the opportunity that Premier Gold does.

Matthew Gordon: So you think that all things being equal, the assets that you’ve got will allow you to deliver meaningful growth over the next couple of years.  That’s the message to investors, retail and institutional? Tell me, how do you balance worrying about the share price – because that’s got to be a key driver for you – and running a business.  How do you manage that?  Which is more important to you?

Ewan Downie: We have some very large shareholders.  We have several in the 5% to 12% range, so we’ve got some long-term steady shareholders.  Keeping those shareholders informed of what we’re doing and how developments are is very important.  We don’t want to lose our bigger shareholders, but we do spend a lot of time on the road marketing to new institutions, new retail groups. 

We’re trying more and more to get retail interest in our stock, given so many institutions have potentially closed their doors over the last few years.  I think we’re a bit more of an institutional star historically because of our growth profile and production rather than just being out there screaming our exploration results.  We kind of tuck the exploration behind the production growth rate.

So just trying to simplify the story. Instead of telling different stories in a presentation, trying to make it maybe a bit more like Barrick and Newmont are doing in Nevada, making Nevada in mind, rather than talk about Turquoise Ridge, Gold Strike and Lea Vale individually.  So we’re trying to package up our projects so that Nevada is a production centre, growth centre, for us.  Ontario is separate and then Mexico.  So really dumbing it down to three stories rather than eight stories.

Matthew Gordon: It would be interesting to see how you do that because I think right now when I was researching this, it just felt like there’s a lot of moving parts and mapping it out was more difficult than I think it perhaps needed to be. What I did like was the team’s attitude to building.  How do you get Barrick involved in a conversation with you?  When that happened? You were a small company.  How did you do it?

Ewan Downie: We identified, and we really found a relationship with some of the people in Barrick through the Greenstone or the Hard Rock acquisition.  Back in 2008, more than 10 years ago, we spent a lot of time approaching Barrick over and over.  I’d say very persistently we pestered them and they sold us a project not too far from our Head Office here in north western Ontario. 

So we got to know some of the people there and then formulated an even stronger relationship with Barrick when we acquired Gold Corp’s interest in South Arturo, and founded the building of a mine with Barrick, I think Barrick started to give us some credibility.  And since then we’ve done a joint venture with them at McCoy Cove, at the property surrounding our Cove deposit and we’re acquiring the Rye project from Barrick subject to a backing.

So right now we have essentially four projects that we’re moving for on sort of relationship, but it grew from an early acquisition ten years ago.  What we’ve made an effort to do is stay in touch with these people whom we work because you never know what future opportunities may come out of these major producers going forward.

Matthew Gordon: It’s a very reassuring name to have there, and obviously with their recent merger there may be more spin offs to be had if they open the door to you. I’ve really enjoyed that as a first run through your company.  It was a pleasure talking to you and understanding a little bit about the thinking and mentality here.  I’m very much looking forward to seeing how South Arturo develops and Greenstone because that sounds key to the growth component of what you’re doing.  So thank you very much for your time.

Ewan Downie: Thanks for having me on and hopefully we can talk again in the near future.


Company page: www.premiergoldmines.com

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Anfield Energy (TSX-V: AEC) – A Deep Dive Into This Acquisitive Uranium Explorer’s Strategy (Transcript)

How do junior Uranium explorers survive in this environment and what do they spend their money on? Corey Dias, CEO of Anfield Energy (TSX-V: AEC) believes it is closer to production than any of the currently non-producing uranium companies. They are ready to take advantage for when the market turns. The majority of its Uranium assets are in the USA, both ISR and conventional hard rock Uranium. Their Initial focus is on the Wyoming ISR project and the nearest-term asset which is the Charlie project. Long- term focus is in Utah and Colorado with their conventional Uranium assets.

The topics covered:

  • Detailed strategy discussion.
  • Breakdown of assets and focus.
  • How is Anfield Energy spending its investors money.
  • Section 232 desires and outcomes & expectation of the Working Committee.
  • Price discovery.

Click here to watch the interview.


Matthew Gordon: We usually kick off with a 1-minute summary, so if you don’t mind, give us a 1-minute summary of Anfield Energy.

Corey Dias: Anfield is a company with the majority of its Uranium assets in the United States. We have both ISR assets and conventional hard rock assets. Our near-term focus is on the ISR space and those are the assets that we hold in Wyoming. We recently closed a transaction whereby we acquired what’s called the Charlie property. Charlie property is a near-term production opportunity for us. We had the opportunity to pair that with Uranium One’s existing facility, processing facility, in Wyoming through a resin processing agreement we signed a couple of years ago. So, our near-term focus is Wyoming and ISR. Our longer-term blue-sky focus is the conventional assets that we have in Utah and Colorado.

Matthew Gordon: Right. Okay, perfect. Perfect summary. So, tell us a bit about you. What’s your background? Why are you in the Uranium space?

Corey Dias: Well, I am. My background is actually in finance. I worked as a research analyst for a number of years, for a couple of banks in Canada and some smaller firms. I had the opportunity to move to the other side of the market, on the dark side, as they’d say, to put my money where my mouth is, basically. And the opportunity was given to me by one of our directors. I was running another company at the time. I came in back in 2013 to take the reins of the company. We started off in Copper and then decided that Uranium was a fantastic space to look at because it was unloved and really uncovered at the time. And we’ve been accumulating assets from that point on, from both small companies and large companies. We’ve been able to partner with some pretty significant players in the industry, including Uranium One the fourth largest Uranium producer in the world. And with Cotter Corporation, which is actually a subsidiary of General Atomics, a us weapons defence manufacturer in the U.S., which is a private multi-billion-dollar organisation.

Matthew Gordon: Why don’t we get some of the basic numbers out of the way? Give us the scale of what we’re looking at here in terms of market cap, cash flows…not cash flows, cash in the bank.

Corey Dias: Cash flows…

Matthew Gordon: You wish right!

Corey Dias: We’re not quite in the cash flows here at this point. Our market cap in Canadian dollars is roughly, call it $13M or $14M. Our path to financials or financing is obviously through the equity markets. And we recently closed a $3.7M financing.

Matthew Gordon: Yeah, I saw that. You are a small company, but you’ve got quite a few assets, quite a few moving parts here. Give us some sense of what the strategy, what the thinking is. What are you trying to build out here? Because cash is going to be the restrictor in all of this. The quality of the assets, you’ve got to assess that, work out what you got, what you want to work on, what you perhaps want to park or flip. What’s the thinking?

Corey Dias: So, as I mentioned, we’ve got kind of a two-pronged strategy here. First of all, we have these ISR assets, which are primarily in Wyoming. We’ve recently acquired the Charlie property, but we also acquired 24 other properties from Uranium One back in 2016. So, the plan, and those 24 projects had a historical Resource of about 30Mlbs. Our aim here is to focus first on Charlie and then create a pipeline of produce to follow on from Charlie, behind this resin processing agreement we have with Uranium One in order to create a long-term opportunity in Wyoming.

Matthew Gordon: Okay. Our focus is Wyoming. Great. Charlie, a new asset. Fantastic. 24 assets. That’s a lot of moving parts. Have you any sense of what you’ve got there, you know, outside of what the historic was. Have you spent money on it?

Corey Dias: We’ve spent money. We don’t focus on exploration per se. We look for assets which have a historic Resource, because all we have to do is go back and get an engineering firm to confirm what’s there already. It’s a lot cheaper to do that, to spend $25,000 to $50,000 on a report to confirm the historic Resource as opposed to going out and drilling and spending hundreds of thousands of dollars.

Matthew Gordon: And the math being, there’s what was there, this is what’s come out of the ground, there should be a number which is left behind. Is it as simple as that?

Corey Dias: Or if the historical Resource is a Resource that’s there at the time, it just hasn’t been confirmed through a third party. We get an engineering firm to come in, as a third party, to come and say, yes, the Resource you’ve acquired is actually what is stated there. It’s not about what’s been taken out of the ground yet. It’s actually somebody has done the work already. It just hasn’t been recognised by a third party or by the TSX Exchange, etc.

Matthew Gordon: But at some point, you are going to have to spend the money to actually do a proper 43-101, or more. Is that right?

Corey Dias: Right. And that’s the $25,000 to $50,000 as opposed to getting a greenfield property where you have to go out and start drilling, and spend hundreds of thousands of dollars in order to delineate a Resource. The Resource is there already. We’re just confirming the Resource. Somebody else have done all the work and drilling.

Matthew Gordon: Okay. It seems a nice, cheap way to get to a number which is recognised. So that’s one 43-101 for all 24 assets or?

Corey Dias: No. We do for each individual. So, we’ve completed three already. We’ve done one for Charlie. And we’re now working at a Preliminary Economic Assessment for Charlie.

Matthew Gordon: Right. So, you could be at $1M to do all of them is that right? If you did a simple report.

Corey Dias: Yeah. About $1M. It all depends. And some of the Resources are much easier to delineate or confirm than others. So, you know, we’ll probably won’t go through all 24. We’ll probably look for the best 10 to 12. And then from those, figure out which ones have the best economics in order to create that pipeline that would behind Charlie. So if we get another 10Mlbs, perhaps 15Mlbs pounds out of those 24 projects to sit behind Charlie’s 4Mlbs. We have an agreement in place with Uranium One to process 500,000lbs per year. So that could get us anywhere from 20 to 30 plus years.

Matthew Gordon: Okay. Interesting. Let’s get into Charlie. Tell us tell what precisely you’ve bought. What have you got there?

Corey Dias: Well, essentially, it’s a state lease. And the important idea behind Charlie is that it sits in between two of Uranium One’s existing mines. Uranium One is mined on either side and this property is actually part of the same trend. Uranium One had tried to acquire this asset and was unsuccessful, and actually had a conversation with us about the potential of picking up the asset. And so, we spent 26 months trying to acquire this asset from Cotter and finally closed it this year. The beautiful thing about this asset is that, you know, we’ve got all the infrastructure around because Uranium One has been right there, we understand the property because it’s been mined on either side. We know what’s there. We know how to mine it. And Uranium One’s actually going to partner with us in order to facilitate production.

Matthew Gordon: And why couldn’t they do that themselves? Why did they need you?

Corey Dias: Oh, it’s you know, it’s a very interesting industry when it comes to trying to get deals done. Sometimes a lot of the parties look at it as a zero-sum game. So, we have to win and you’re going to lose in the transaction. Whereas from our perspective, we’re talking about win win. And we always ask, our first question is, what do you need? And what would you like? In order to get this deal done. And it’s worked well for us. We’ve done it with Uranium One twice. And now we’ve done it Cotter? We seem to be doing something right. And I guess Uranium One recognise our ability to get deals done and assets to pursue it.

Matthew Gordon: Okay. And what’s the split between you? How are you sharing that?

Corey Dias: Well, we’re not sharing it, it’s our asset.

Matthew Gordon: But there’s a relationship. How have you engaged with them?

Corey Dias: Well, they’re going to help us with well field development. Uranium One has all the skills. They will look at the ability to make money off of us through well field development. And they could potentially buy some of the pounds that we do end up creating at the site.

Matthew Gordon: Right. Okay. There’s an agreement in place there?

Corey Dias: Yeah, there’s an agreement in place for processing. We have to pay Uranium One to process the materials so there are making money on the property.

Shootaring Canyon Mill

Matthew Gordon: Okay. Talking of which, you’ve also got a mill. Shootaring Canyon?

Corey Dias: Shootaring Canyon.

Matthew Gordon: What is that?

Corey Dias: So actually, it’s one of only three licensed, permitted and constructed conventional Uranium mills in the U.S.

Matthew Gordon: Why is the word conventional important in there?

Corey Dias: Because it’s not an in-situ recovery. It’s a different type of recovery method. It’s a traditional type of mill. It can be used for Copper, Silver. It’s a hard rock underground milling facility, as opposed to processing for ISR is much more, it’s you’re basically shooting water into a well underground and sucking out the fluid and then separating the fluid.

Matthew Gordon: Right, and that was built when?

Corey Dias: That was built back in the early 1980s.

Matthew Gordon: 1980’s. And it ran for how long?

Corey Dias: It ran for four months.

Matthew Gordon: Okay. Talk me through that story.

Corey Dias: It ran long enough to justify final payment on the construction of the property. Then the Uranium prices fell. And nothing happened. The great thing about it only running for four months is that there’s not a lot of environmental liabilities there. So it’s the youngest mill of the three that are in existence the U.S. and it has very little, if any, environmental liability. It’s very clean.

Matthew Gordon: But it also hasn’t run. For a long time.

Corey Dias: It hasn’t run, but it has been staffed since it was built, because it has to be, because it is a Uranium facility.

Matthew Gordon: So, what were those staff doing? I mean, you can’t keep this thing in running order for 30 years.

Corey Dias: Yeah, you know, turning knobs and greasing areas where it needs to be greased and making sure that knobs turn. Making sure that there’s no seepage of anything. And it’s an old facility, and some of the parts have been removed because they haven’t been used but certainly, the building itself is still there. The conveyor belts need to be updated, but they’re still there. The control room looks like something out of Gene Roddenberry’s Star Trek from back in the 1970s, the coloured lights. But it’s still there. Everything turns on. There’s the ability to actually turn on lights but you can actually…there’s no running plant. You can’t turn on and run things all the way through the facility.

Matthew Gordon: Yeah. It’s like nearly 40 years old, right, it’s 35 years old or something like that. But how much money would need to be spent on it actually bring it up to speed. To actually work.

Corey Dias: You’d have to spend $25M to $30M.

Matthew Gordon: That’s $25M to $30M, which you don’t have right now. And obviously, the market being what it is, which we’ll talk about in a minute, you’re aren’t going to get that money anytime soon. There’s a point in the future where you’ve got the option of bringing this thing back on. How much did you pick it up for?

Corey Dias: Well, we bought that property. We bought a number of small mines and picked up some royalties for about $7.5M. And Uranium One had acquired the asset from a company called US Energy for about $100M.

Matthew Gordon: Right. Okay. But back then. When was that?

Corey Dias: That was 2007. 2008.

Matthew Gordon: Okay. Interesting. You’ve got all these various assets, so what’s the what’s the big idea here? You are a finance guy. You’re thinking of numbers. What are you putting together here? And why would investors get excited about that vision that you have? Tell us about it.

Corey Dias: Well, look, I think the important thing here is that ISR is the place where you want to be at a lower price environment when it comes to Uranium. We have and we’ve established a complex there in Wyoming. So, we have properties that we bought. We have the Charlie asset, which is a near-term production opportunity. We have a resin processing agreement in place in Wyoming, which means that we don’t have to build our own facility, which is a time killer and a cost killer. So we’re saving both time and the cost of building our own facility in Wyoming in order to get to production. So there’s a near-term opportunity there.

Matthew Gordon: When you say near-term, it’s all kind of relevant again because the market conditions. But near-term being you’re as near as anyone else is, that’s what you’re saying? But right now, we don’t know when that is.

Corey Dias: Well, look, I think of all the non-producers, we are closer to production than any of them. Other producers that are obviously in production, they have facilities in place, they can produce whenever they like. But anyone who is a non-producer in the U.S., we are further ahead.

Matthew Gordon: Yeah. Okay. Understood. Right. And the blue sky?

Corey Dias: Blue sky. Part of the transaction that we completed with Cotter Corporation included what were called the West Slope Properties. These are nine mines that are in Colorado, number of leases…the Department of Energy leases. We picked those up. They hold 11Mlbs of Uranium and 53Mlbs of Vanadium.

Matthew Gordon: Okay. You’ve got the Vanadium play here. Again, tricky space, variable pricing, etc. But, you know, how do you work out the economics around Vanadium? Given the market, or have you done any work on that?

Corey Dias: We have. We’ve done a little bit of work. I would say we’re very familiar with the battery sector. Actually, as an analyst, I used to cover Clean Tech. So I understand the battery and renewables.

Matthew Gordon: VRFB. Yeah.

Corey Dias: Yeah, so I understand the renewable space quite well. So that’s another opportunity. We can actually strap on a Vanadium circuit to our mill in order to produce at our mill, at some point in the future. So that gives us some optionality. There’s also another mill. The only running conventional mill in the U.S., which has a Vanadium circuit attached to it. There’s an opportunity for us to potentially partner with someone to extract Vanadium.

Matthew Gordon: Have you any sense of what the Vanadium price needs to be for you to to be able to do that.

Corey Dias: I think the Vanadium price, I think it’s around $7 or $8 right now and probably in and around this range, perhaps $10 is probably where we’d like it to be for us to go forward on that.

Matthew Gordon: Okay. But it’s not core focus. But maybe at some point if the price is right, you may be in the raise the capital to put that circuit in. Okay.

Corey Dias: Absolutely. And I think, an important part too, the conventional mill that we have, we have about 7Mlbs of Resource that came along with it, that you go through that mill. This acquisition of West Slope properties actually allows us to create a longer life for the mill potentially, with 11Mlbs of Uranium. We’ve got a 1Mlbs per year facility. So we’re talking about 18 years roughly right of mill life.

Matthew Gordon: Okay, so there’s another nine assets. You’ve got 24…How many assets are you sitting on in total? What’s that number?

Corey Dias: About 34.

Matthew Gordon: 34. Okay, 34. And you’re going through them all trying to work out what’s meaningful, commercial. However, you are defining that and you’re going to work out what to focus on because there’s limited funds- I know just raised another $3.7M and you’ve got to work out what to focus on. What is the focus? What is the use of the $3.7M? What’s that going on?

Corey Dias: Sure. I think that, you know, as I mentioned, our focus is on the ISR properties. The hard rock, the things in Colorado, Utah, Shootaring Canyon mill. Those are all things which are not our near-term focus. Our focus is Wyoming and our primary focus is Charlie. All of our focus is going to be on Charlie. and moving that forward. And that’ll be helped, you know, through our partnership with Uranium One.

Matthew Gordon: Totally. So how does that break down, though? I mean, is it literally all going on? You’ve got some G&A to cover. You’ve got a whole bunch of costs to cover. How much of it’s actually going on the assets and discovery around those assets?

Corey Dias: Well, yeah. I guess there are a couple of things. When we acquired the West Slope properties, there was some reclamation bonds associated with it. We had to spend…we’re using some of the funds that we’ve raised to cover off or to replace the existing reclamation bond. So, you know, we’re probably looking at $500,000 to focus, to use on Charlie in the near-term. So that, including the Preliminary Economic Assessment I mentioned. Some early well field development work that needs to be done and probably a little bit of permitting and licensing. So that’s the near-term focus.

Matthew Gordon: So that’s $500,000. What does the other $3M go on?

Corey Dias: There’s some that’s going to be G&A. And then, they are about $2.5M worth of reclamation bonds that are associated with the West Slope properties.

Matthew Gordon: Oh wow. $2.5M on reclamation bonds, wow. Okay. And that’s something obviously you’ve got to do. You can’t not do it, but you don’t necessarily see $2.5M worth of value. But if you didn’t, there would be a problem. Is that the kind of issue with it?

Corey Dias: Yes. The properties all have reclamation bonds. The state forces you to put money up in order to cover the cost of reclaiming the land should you not move forward with the project or just something happened to your company. They don’t want to be responsible for taking a mine and returning it to fallow field. They want the owners of the property or the lessees of the property to do that.

Matthew Gordon: Yes. I mean, it’s pretty tough on a junior isn’t it. I appreciate there’s a lot of moving parts here and everyone wants a slice of it. But you guys are…we talked about, you aren’t cash flowing. You have to raise equity, expensive dilutive equity every year. If I look at last year, $5.8M in cost. But you’re like $2.5M on G&A. Stock based compensation, $1.9M, which is a chunk of change right. And then gain or loss…well, gain on the exchange rate. In terms of your junior miners’ available cash, you’ve got some big choices to make as to where you spend that. On this $3.6M, you’re going to spend $500,000 developing Charlie, you’ve got the PEA you mentioned, are you going to move that PEA to a PFS?

Corey Dias: No. We’re going to keep it at a PEA. The issue with creating a PFS or a Feasibility Study in the Uranium space is that usually you have to tie it to a long-term contract. In order for us, is always a challenge to get a contract especially in the current environment. Our aim is, you can go forward into production just using a PEA. And I think that’s our plan.

Matthew Gordon: Let’s come back to G&A and your strategy because I imagine they’re intertwined. Your strategy, you’ve got a lot of optionality. Thirty-five different assets. You are working out what’s there, what’s good, what’s not. And that’s taking a lot of time, I guess a lot of bought in consultancy and services. Is that $2.5M…I mean, how does that breakdown? Is that a lot of bought in costs for consultants to tell you what you have? Is that the problem?

Corey Dias: Some of it is, but some of it is, like for example, the share-based compensation are options. They’re not shares. It’s not a cash component that would have to come back into the company in order to get more shares. We do have consultants in place because we have a very small team. Essentially, I’m here and I have a part time CFO. Everybody else comes in as necessary. When it comes to some projects, when we’re trying to close on, for example, the Cotter Corporation transaction. We need, external lawyers to come in to help us with putting together the agreements and things like that. There are some costs associated, but it doesn’t…the times when it ramps up are usually the times when we are looking to close a significant transaction.

Matthew Gordon: Right. Well, at $1.7M, nearly $1.8M of the $2.5M on the G&A was consulting fees paid by the company. Is that all around the M&A type stuff, or the deals? That’s what you’re saying, okay.

Corey Dias: I mean, we are basically an M&A company.

Matthew Gordon: Yeah. Well, that’s what I wanted to understand about your strategy. You are an M&A company. Are you an incubator? Are you saying ‘we’re never going to get into production here? It’s a case of I need to find out what’s good, then maybe someone comes along and partners, JV’s, whatever’. What type of company are you? When investors are looking at you, what are they buying into?

Corey Dias: Well, look, I think there are a couple of things. I think our aim is to get into production. I think we’ve gone a long way around trying to get to an asset that can get into production. We started off in 2015 buying the conventional assets from Uranium One, but the market at the time was actually much stronger than it is today. I think everyone had the expectation that the market would continue to move north and then it didn’t. When we saw that the market was softening and realising the differentials between the cost of producing in an ISR environment versus a hard rock environment, we realised that it would take a very long time for us to get to the point where the hard rock assets are viable. So that’s when we started looking at ISR, because that’s the only place in the nearer-term, you get the opportunity to get into production. We picked up the asset from Uranium One to start moving forward in that direction. Obviously, there’s still a cost associated with trying to get those assets in production. We started looking around to see if there’s anything that’s closer to production status than what we had in our portfolio. And Uranium One facilitated that process by introducing us to Cotter and saying, you know, this would be a perfect asset given where it sits, given the cost to actually move material from this mine to the satellite plant and finally into the final processing plant, given its location, its proximity to our assets. We started off with hard rock, high cost, and we’ve moved all our way, moved way down into ISR near-term production. We’ve kind of gone backwards.

Matthew Gordon: But you said at the beginning, we’re an M&A company and I think that’s what you are today. It is what you are today.

Corey Dias: Absolutely. Look, we’re in a low-price environment and there are assets for sale. In a high price environment, we probably wouldn’t have been able to buy any of this.

Matthew Gordon: Right. People are buying into your ability to do deals, identify deals, which potentially have value. And for you to very quickly and cheaply discount the ones which perhaps don’t meet the required levels that you’re seeking, and for you to then be able to develop those and get into production at some point. And with the mill, you’re looking at being able to have an infrastructure to look at that whole chain. Okay. I just wanted to understand what you were today. That’s okay. One thing that stood out, investor relations – $500,000 last year. What were you promoting? Because that’s a lot of investor relations!

Corey Dias: It is, we have a lot of assets. We have a lot to talk about. We’ve got Vanadium to talk about. We’ve got ISR. We’ve got hard rock. We’ve got a lot of different things that we can focus on and depending on where the market is, we’ve put out news releases on Vanadium because our Utah assets have Vanadium in them. Now we’ve got Colorado, which has significant Uranium. So, you know, we’ve got different ways to skin the cat. Depending where the market is at the time, we will spend our time focusing on one area than another.

Matthew Gordon: So that’s the thing, I’m always intrigued with the junior company mentality. So, I’m looking to you for help here. You’ve not got a lot of cash. You’ve got a skill set. You know, your position, your M&A. You told me you were M&A. You’ve got a lot of optionality, but you must know what’s going to work, and what’s not going to work. I mean, for instance, spending time in Vanadium and the environment which Vanadium sat at, certainly in the last half of last year, that wasn’t necessarily where I would have thought you’d spend your time talking to people. When you’re doing investor relations, what does that involve? Are you traveling the world to have conversations with institutional investors? What does it actually mean?

Corey Dias: Yeah, look, we do spend a lot of time traveling and meeting with investors because it’s…the interesting thing about Uranium space is that it is more of an education at this point. It’s not a well-known space. When people have very little knowledge, it’s usually pretty negative or at least the perception is negative. So, we’re spending a lot of our time trying to overcome that negativity and really explain why is this space actually important. You know, it’s not all Chernobyl. There are real viable businesses which have run for a long, long time. And there’s been no risk.

Matthew Gordon: But that’s not your job. There’re some big guys with some big pockets. We’ve spoken to a few recently. They’ve got tens of millions in their back pocket. Isn’t that their job? You don’t need to do that do you?

Corey Dias: It is their job. But you still have to educate because not everybody is going to be in the same…Not everyone gets access to Cameco. Right. They need to understand from smaller companies. They can get a lot more information from us than they can get from Tim Gitzel over at Cameco. They don’t have access.  You need to talk to others in the space to really get a better understanding and really be able to dig into, you know, what exactly are you try to achieve here. And why.

Matthew Gordon: Ok. Well, let’s finish off in terms of the company bit. Where do you sit in the market? Where do you position yourself in the market when you’re going and doing this world tour of meeting institutions, where are you positioning yourself? And why should new investors looking at you, watching this video today, why should they be looking at you vs., you know, the next guy?

Corey Dias: Well, look, I think as I mentioned, we’re probably now the next company to get the production assuming the Uranium price moves in the direction that we all hope. We’ve got an asset which has been coveted by not only us but other parties in the sector because of, first of all, its proximity to infrastructure. The potential partnership with a significantly large producer in order to move that asset forward. I think that is key. The fact that we do have these relationships are very unique in the sector. Most of the juniors are off on an island, but we’ve managed to build relationships to the point where we can collaborate not only on this asset, but on other projects going forward. I think that’s very important. We have that path to production, which is near-term. And look, that path to production has been validated by our conversations and meetings with utilities. Utilities are looking at us, especially before 232, maybe the conversation might be a bit different now because 232 didn’t quite go the way we’d hoped. But the conversations were very much about looking to secure pounds going forward from junior players, including us. And we were part of that package. I think that’s an important point too, we have a path to production that’s been recognised by the ultimate buyers.

Matthew Gordon: But don’t the rules, the basic rules of mining still apply? You need to be able to mine, not just get into production. Just because it’s Uranium doesn’t make it hallowed ground. The basic rules of mining apply. You’ve got to be able to mine commercially, economically. The numbers need to stack up. Obviously, I’m talking to someone in the Athabasca Basin, they’re going to tell me that they’ve got it made. Whoever they are, the grades are high. Your grades are not so high. They’re a lot lower. But you’re looking, I guess, at the Uranium One guys and saying, well, there’s a nice comp, they are either side of me. That gives me a sense of, for Charlie, where we sit. You’re not there yet with your 24 assets plus 9 assets. You’ve still got to work that out? And right now, you’re a finance guy running a company, where’s the technical team that’s going to help you deliver this?

Corey Dias: If you look at my board, we have over 120 years of Uranium experience. One of our board members actually did the Feasibility Study for Charlie. So he is intimately familiar with the project we have.

Matthew Gordon: Who’s that?

Corey Dias: Steve Lunsford.

Matthew Gordon: Okay. So, Steve, tell us about him.

Corey Dias: Steve Lunsford has been, he’s a local Wyoming guy. He’s been in the business for 40 years, worked for Cameco Resources, which it acquired Power Resources, which owned the asset in the past. He is very familiar with Wyoming, familiar with ISR, intimately familiar with Charlie. He is our go to person on that.

Matthew Gordon: Right. And John Eckersley, who has just joined. He’s been advising you prior to that, though?

Corey Dias: He has been. John is an attorney. He’s worked with junior companies for a number of years and spent a lot of time going through our contracts. Any kind of NDAs that we have to put together, he helps us with that.

Matthew Gordon: And does inform us that there’s going to be more M&A?

Corey Dias: Well, you can interpret it that way. You could. I think that’s probably a good way to look at it. Yes.

Matthew Gordon: Okay. That’s good. Now, let’s talk about this last week.

Corey Dias: Sure.

Matthew Gordon: You ready? Have you got the energy to talk about this last week?

Corey Dias: Yes. Yeah, it’s been a rough week.

Matthew Gordon: It’s ever been a rough week. It’s been a rough week for U.S. companies. Now you’re sitting with U.S. assets. You had a little hit as well. And you used a phrase just now, ‘232 didn’t go the way we hoped’.

Corey Dias: Correct.

Matthew Gordon: Right. I’m guessing which camp you’re in.

Corey Dias: Well, of course, we are in the loser’s camp.

Matthew Gordon: Run us through that, obviously on the run up 232, everyone’s very, very excited about what Trump was going to do. Polarising views. Very, very passionate community, the Uranium community and Nuclear community. Your view was you hoped that there would be some kind of…What? What were you hoping for? What was a good outcome for you?

Corey Dias: I think the outcome that the producers were hoping for, at least the junior producers was, U.S. based producers, was a quota- 25%. You are you compelling the U.S. utilities to buy 25% of its needs from U.S. producers?

Matthew Gordon: But that wasn’t ever realistic, was it? I mean, you can’t go from zero to hundred miles an hour that quickly. What would that of looked like?

Corey Dias: It wouldn’t have been zero to 25%, it would have been a staged step up to 25%. Because certainly, there’s no way to produce 25% of its needs today.

Matthew Gordon: No.

Corey Dias: It would take some time.

Matthew Gordon: Were you buying the security argument? Which bit of the argument were you buying into or do you think it was a conversation that needed to happen? Where were you sitting?

Corey Dias: Well, I think it’s clear that the national security risk is significant. You know, you’ve got Russia, Uzbekistan, Kazakhstan controlling 40% of the market. And we’ve seen what Russia’s done in the past with natural gas over in Europe, turning off the spigot- there’s a big risk. The U.S. uses, you know, is the largest consumer of Uranium today and imports over 95% of its needs. So, if there’s any disruption to that supply, that’s a significant risk to 25% of your power in the United States. There is a national security risk. It was looked at a number of years ago when it came to oil. You had OPEC running and controlling everything. And there was a risk in the U.S. that you wouldn’t be able to receive the oil you needed. The market turned around and focused internally. So now the U.S is an oil exporter.

Matthew Gordon: Remind me about your shareholding. Who are the main major owners of the company?

Corey Dias: The major owners?

Matthew Gordon: Well, major shareholders.

Corey Dias: Yeah. The Cotter Corporation is a significant holder. And that was part of the transaction we closed with Cotter. They became a shareholder because we provided them with shares of our company as part of the compensation for consideration.

Matthew Gordon: And they sit on how much?

Corey Dias: They hold about 11.5M shares.

Matthew Gordon: Okay. And who are the other biggies?

Corey Dias: The other one of note would be a company called Radio Fuels, which is a private Uranium company with assets in Canada. And they wanted exposure to U.S. assets and so they participated in our last financing. Those are the two major ones.

Matthew Gordon: Fantastic. Sorry for that segue. With 232, you think you believe and still believe it is a security issue? Trump disagrees. We move to a 90-day working group. What are your hopes for that?

Corey Dias: Right. Just to clarify. Trump agrees with the national security risk. He doesn’t agree with the quota.

Matthew Gordon: Okay. You didn’t get what you wanted because he didn’t…yeah. Okay. He agrees, but he doesn’t agree. So, what is the 90-day working group going to do for you?

Corey Dias: That’s the big question.

Matthew Gordon: What do you want them to do?

Corey Dias: Well, I’d like them to put the quota in place, but that’s not going to happen. I think at this point, what is more likely is that there might be potential of incentives be provided for the utilities to buy American. I don’t know how significant those incentives would be, whether it’s subsidies or something like that. Perhaps there might be monies available to Uranium producers in order to facilitate production. Whether there are subsidies available to us, or cheap money for us to move assets forward to production? There will be small measures. But I don’t see them being nearly as significant as what it would’ve done for producers.

Matthew Gordon: Right. So again, possibly we’re in another period of uncertainty. Utilities aren’t necessarily going to move forward until they know what’s going on after this working group. And then there’s a period of evaluation. The Uranium equities companies need to get on, don’t they? They’re reliant on the spot price. They’re reliant on hopefully the contract market coming back online at some point, or some line of sight to when it’s going to come back on. But this 90-day working committee, this working group, is to look at the Nuclear industry as a whole, the holistic view of it. And in there, you’ve got the…The reactors are owned by the utilities generally in the U.S? Is that right?

Corey Dias: Yes, that’s right.

Matthew Gordon: Right. And so, they’re sitting there with their mix of presumably still Coal, gas, renewable energy portfolios. Nuclear is just part of that mix. So I guess they’re slightly conflicted in some sense. I mean, they were arguing against the 232.

Corey Dias: That’s right. They were arguing against it because of the potential increasing costs to the utilities when it came to Uranium inputs. But, you know, I think it’s important to note that a lot of the utilities are working on contracts, which were signed a number of years ago, at significantly higher prices then where we sit today. Contracts in that era between the $50 and the $80 a pound. So, you know, an increase to $40 to $50 is not outside of what has been the usual practice in terms of what has been paid. I think there is a little bit of panic and screaming, which was not entirely justified.

Matthew Gordon: Maybe. I mean, there’s a lot of moving parts and a lot of influencers, a lot of people with vested interests in this, obviously. And, ultimately, the utilities don’t necessarily want to pass on the cost to their customers. Or they don’t want their customers to have to stomach the cost of subsidies at a local level. If it’s a security issue, that’s a federal issue. Right? There’s a lot of arguments to be had here. But the bigger picture around Nuclear, it’s not just about the Uranium equity play. There’s the enrichment component, there’s no enrichment facility in the U.S. anymore. There’s a lot of things that need to be discussed. So therefore, are you worried that your bit of a it is going to get parked to one side and you’re going to continue in this vacuum of uncertainty until all of this resolved. It’s a pretty big picture that needs to be looked at.

Corey Dias: It is. But I guess, you’ve got a 90-day window in which to look at it. I’m not sure.

Matthew Gordon: Well what are they going to do in 90 days? Aren’t they just going to say ‘there’s a lot of things we need to look at and we need to kind of create some more secondary working groups to look at each of those components?’. This thing could run on.

Corey Dias: It could. But I think the reality of the market, I think what’s going to happen now, because we’ve had this delay in purchasing, there is a deficit in the marketplace. When it comes to supply and demand. As much as other parties would argue otherwise, it’s clear that there is a supply demand. But I think once now the utilities start to reengage and start to look at whether they’re doing contracting, or they’re going back to the spot market, they’ll realise that the pounds aren’t there. They will have to find a way to get those pounds. And those pounds will not be available at $25 unfortunately in terms of the long-term contract. Whether it is Cameco, whether it’s Kazatomprom. Kazatomprom has now put itself in an interesting position, because for a long time it was a state company, who was not public. And now, its aim as a public company is to show high price contracts to its investors, in order to show they’ll be a profit going forward.

Matthew Gordon: It’s an interesting thing, but it’s a question of who’s going to blink first. It’s going to be, who’s going to be the first guy to go. Is it going to be from supply side or the demand side? Because no one wants to go to have that chat with the boss and say, ‘hey, spot prices at let’s say $25 today, but I’ve got an opportunity to buy it at $50. But on a long-term contract’. No one’s going to do that right?

Corey Dias: No because utilities aren’t incentivised that way. Utilities are incentivised on a quarterly basis. So, you don’t want to be the guy who… it’s like whack a mole. You don’t want to be the guy whose head is above at $50 when everybody else is $25. You want to be in the lowest quartile. Your compensation is based on being in the lowest quartile. It doesn’t fit.

Matthew Gordon: So, who’s going to blink first? It doesn’t fit. But who’s going to be the guy that says, you know what? I’ll take this one for the team.

Corey Dias: Well, that’s a good question. I don’t know who the first guy will be. I mean, I think it’s that’s the challenge. But there will be a first guy because Cameco is not coming back online at $25. Kazatomprom will have a difficult time convincing its investors that it is good sense to sign a contract at $25. So, the price will have to move in order for contracts to start being signed. As much as the utilities are now…what it has now done, is basically turn into a global market. Now, they would’ve been forced to buy U.S. at $50 or $40, whatever the price would have been. But now it’s going to be a global price at those terms, a global market at those terms. There won’t be any more more contracts signed in the near-term, certainly not at $25. I think that the price will be probably +$40 before contracts are signed.

Matthew Gordon: I guess the issue is that there’s no one, not even Kazatomprom, not Cameco, that can on their own, fill that supply demand gap. It’s vast.

Corey Dias: They could probably fill it, but not at this price. It’s all price. Right. You know, Cameco does not make money at $25. Cameco has a long number of long-term contracts in place, probably in the $70 and the $60, that’s it is fulfilling now, but it’s fulfilling those through purchases in the spot market. So even if the utilities want to go into the spot market, they’re competing against Cameco. Cameco is buying old material that’s going into the market. There’ll be no spot market available for the utilities. Then the utilities have to turn to contracts and then nobody signing contracts at $25. They’re going to have to keep pushing that number up higher and higher in to get to the point where somebody on the supply side steps in and says, ‘okay, we’ll do it at $40 or $50’. At $25, it can’t stay here and it won’t stay here because there’s no material available here.

Matthew Gordon: Yeah. It’s such a big discussion around the supply demand curves. You’re a finance guy, an ex-analyst like me. The thing that interests me is there’s got to be a point in that curve where the big guys go, ‘well, we’re happy to keep the margins low enough, for this period of time, because that means we’ll have no new entrants, a lot of these guys was sitting on big assets, won’t be able to raise the cash. We can go pick up some cheap cash and we’ll make hay further down the line because we’ll own some of the better nearer-production assets. There is that thought in my head with regards to, do the big guys think like that? The geopolitics of it all, does it work like that? But I guess one for another day. One which is for today and we’ll finish off on this, is your small company, $13M, $14M Canadian. You just raised a bit of cash. We’ve spoken to a few new entrants into the marketplace and there will be more. If the market goes the way you need it to in the way you want it to go, there will be new entrants into the marketplace. It’s just the way these things work. There’ll be a lot of noise. You’ve got a little bit of a head start, your nearest-term production compared to the rest of the non-producers. Are you concerned about these new people coming into the marketplace and stealing your thunder?

Corey Dias: Absolutely not. As I said, we’ve been able to pick up some pretty decent assets which have near-term opportunity. And our aim is not just out here to promote, we’re here to get into production. As I said, Charlie, having a relation with Uranium One. Having something in place, moves us further ahead of a number of players in the sector. I think that the Shootaring Canyon mill, there won’t be another mill built anytime soon. And obviously with the refurbishment costs, seems, it sounds significant, but when you’ve put in the context of the cost of building a new mill, and the timeframe to build a new mill, and getting over Nimbyism, Not In My Backyard, it’s going to be a big challenge for anybody else to get a mill built. I’m not sure if you know that Western Uranium last year lost his license in Colorado. It had a licensed, had an actual reactive materials license, which, you know, the state pulled away. This shows you how unique these things are and how tough it is to keep them. But the interesting thing about that one is that it wasn’t tied to a facility. So, to get a license on your own without a facility is going to be a challenge. From our perspective, we are feeling very comfortable that we’ve got something of unique value.

Matthew Gordon: But aren’t you going to see some quite big because you haven’t enough money to get into production yet? You’ve got to go and raise some money. Okay. The assets, you’re not quite sure what you’re going to be able to do with these assets yet. And when you are sure, you are going to have to go to raise a stack of money. So today, the bulk of the value of your market cap or enterprise value, whichever one you look at, is the mill and the license for that mill to operate that mill presumably. No one’s giving you value for the assets that you’ve got on the books today. They’re not worth a lot.

Corey Dias: Well, look, I think the way that we have been valued is actually, the ISR Wyoming assets are getting value. I don’t think we are getting any value for the mill.

Matthew Gordon: You don’t think you are?

Corey Dias: I don’t think we are getting any value for our conventional assets as all.

Matthew Gordon: Okay.

Corey Dias: No. We don’t think we are. We think that anybody who’s investing in our story today is focused on Wyoming. They’re like, ‘it’s interesting. What does it cost to get to production? Conventional production, $60. Well, you know, where are we today? $25. Where’s the term price? $35′. Zero value there. I think everything is because everyone who is in production right now is actually in the ISR space. The fact that we have assets in the ISR space is giving us some value. But if we didn’t have these ISR properties, I don’t think we’d have a market cap where we are today.

Matthew Gordon: Well, it’s kind of insignificant. Whether you’re $13M or $30M, you’re no nearer at production and the spot market’s doing what it’s doing. And until contract comes on board, you may as well be worth zero. It’s the same net effect, right? Which is why it intrigues me, the mill intrigues me as a USP, as a differentiator for you when things come good, you would expect to see significant re-rate. Not just because the production or the potential economic assets, but because of what you can then do. Is that part of what you would argue to new people looking at you? That you’ve got a whole bunch of zero-rated or zero-value assets. So therefore, when the clock starts ticking, you’re going to get more of an uplift than others?

Corey Dias: Absolutely. I think that it’s a significant differentiator because, when the market does move in the direction that we all hope it does, we have an asset which is very unique in that sector, which we could turn on right now to give us +1Mlbs production.

Matthew Gordon: And then you need to come up with a solution of ‘where do I get the money? How do I keep dilution down?’ You know, all of that good stuff which finance guys go to bed thinking about. Corey I’ve really enjoyed our chat. That’s a fantastic run through on Anfield Energy. It’s nice to hear the story about where you sit in the marketplace. You’ve clearly got a thought in your mind. You’ve got a bunch of stuff to do. And you’ve got a lot of assets to look at and work your way through. I hope that the market is kind to you. I hope the Uranium market sees a change sometime soon. I’ll be interesting to see how the utility guys react and what time frame they react in. Because obviously you guys need that.

Corey Dias: Absolutely. Absolutely. Well, thank you for your time. I appreciate you having us on. And I love the questions. I think your questions are relevant and insightful. Thanks again.


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