GoGold Resources (TSX: GGD) – 2 For The Price Of 1

The GoGold Resources company logo
GoGold Resources
  • TSX: GGD
  • Shares Outstanding: 222M
  • Share price C$0.59 (26.03.2020)
  • Market Cap: C$124M

Interview with Bradley Langille, President & CEO of gold and silver company, GoGold Resources (TSX:GGD).

This is a Mexican gold and silver play with plenty to be excited about. GoGold Resources Inc. is a Canadian-based silver and gold producer with projects in Mexico. The management has experience building, buying and selling mines. The team has built three mines, and is developed a fourth in Mexico, over the last 24 years. GoGold Resources has one project generating cash flow, the Parral Tailings Project, in addition to its recently acquired Mexican exploration play, Los Ricos. Langille thinks the project in Mexico is one of the very best remaining undeveloped trends in the jurisdiction.

Historically, the management team has raised over C$800M equity and C$200M debt for their projects. The management team appears to be decisive and does what it says it will do.

Langille starts by talking about what all investors want to know: how is COVID-19 affecting the business? It has certainly changed the way that GoGold Resources is operating though. Sanitation is the order of the day, but are these new WHO protocols anything more than a mild inconvenience? Langille says they aren’t. It is business as usual. Langille thinks these current market conditions are simply a broad-based sell-off. Investors are selling anything that isn’t nailed down. Langille thinks the quantitative easing that governments around the world are currently engaging in has historically always been good for gold and other precious metals companies.

Parral is currently generating around US$700,000 per month, and GoGold Resources has around US$20M in the bank and is owed US$11.5M from the Mexican government. GoGold’s US$25M financing at the end of February looks like a great deal given current market conditions; raising capital at today’s rates would be far from ideal.

The balance sheet looks strong, and Langille is confident GoGold Resources’ share price will bounce back once COVID-19 comes under some sort of control. Operational figures have been impressive, and other than a delay in delivering its 43-101 (now due in May), things appear to be running smoothly.

At Los Ricos, GoGold is currently undertaking a 10,000m diamond drilling program of HQ size core in conjunction with a field program of geological mapping, sampling and trenching on the property. This has recently increased from 2 drill rigs to 6. The focus is on the southern end of the 35km trend. Work is also underway at a separate project 20km North. Deals have been sealed to secure GoGold’s control of the Resource. A drill hole in the northern structure has demonstrated 24m @ 27g/t gold, and Langille claims there are plenty more. Langille believes Los Ricos South will have a Resource size of around 1Moz gold equivalent, but the earlier stage Northern project has the potential to be even larger.

In terms of timeline, Los Ricos North is about a year behind Los Ricos South. Los Ricos South should have a gold Resource delivered on it in the near future. If investors base their economic assessment around the “anchor” of 1Moz gold equivalent at Los Ricos South, without even factoring in the potential of the north and the existing cash flow at Parral, GoGold Resources is shaping up to be a strong player in the gold space.

Institutional investors have bought into the holistic business model: a solid producer at one end, with a secure, an expandable resource at Los Ricos South and cash flow from Parral, and the excitement and risk of exploration at Los Ricos North at the other end. This looks like a tempting package, but what do you think?

We Discuss:

  • 2:09 – Company Overview
  • 3:20 – Covid-19’s Impact: Business as Usual or New Problems to Deal With?
  • 5:57 – Market Conditions: Ongoing Struggles and Getting Back to Where They Were Once it Recovers
  • 9:42 – Company Financials: Recent Raise and Cash Position Going Forwards
  • 13:25 – Volatile Silver Prices & Managing Contract Terms
  • 15:25 – Tailings: Plans and Findings
  • 21:15 – Growing the Los Ricos Project: What Have They Got and Found?
  • 29:03 – Economic Studies and Timeline of Delivery
  • 32:49 – What did Institutions Buy Into: The Possibilities of GoGold

CLICK HERE to watch the full interview.

Company Website: https://gogoldresources.com/

Matthew Gordon: Hello Brad. How are you sir?

Bradley Langille: Good, good. I’m good in this new world were living in.

Matthew Gordon: You’re coping, you’re coping. So where are you at the moment?

Bradley Langille: I’m in Halifax, Nova Scotia – at home.

Matthew Gordon: At home. Okay. Well that’s the place to be. Well, let’s get into this. I’m sure we will talk about the C-word somewhere in the conversation, but for now, why don’t you kick off with a one-minute overview for people new to the story, and we’ll get into it.

Bradley Langille: Okay. GoGold Resources is a Mexican-focused mining exploration development company. We have one operating mine and we have an exploration project, which has really now developed into two exploration projects over a 35km trends. The group and the four public companies that I’ve been management of, CEO of, had been based in Mexico for, well my whole career; I’ve been at this 27-years now, so excellent relationships in the country of Mexico. We’re good at raising capital, which we deploy into our projects. We’ve built three mines over the last 24-years. We’ve major refurbished a 4th mine, raised over USD$800M equity for our projects and we’ve raised over USD$200M of debt for our projects over the years.

Matthew Gordon: Okay, thanks, Brad. There’s, you know, and we’ll flash up some of the previous interviews on the screen up here. People should go and reference those for a bit more detail about the projects. But, so let’s kick off the question everyone’s going to be asking: is the Corona virus affecting business?

Bradley Langille: Well, certainly the way we’re operating is a little bit different than how we’re operating a month ago. We’re following all the procedures as far as sanitary, as far as, in fact, people entering the site. We’re taking care of temperatures, we’re following, abiding by all the you know, the laws enacted in Mexico to come up with this, and above; we’re trying to follow the WHO protocols. So the operation, the mine is still running as per normal with the exception of those protocols. And our development asset is still drilling away.

Matthew Gordon: Okay. So it hasn’t slowed down what you’re doing, but you have had to implement some new procedures. Those don’t sound like costly procedures. So is it generally business as usual?

Bradley Langille: No, it’s generally business as usual. Those procedures aren’t costly really at all. They’re just, you know, we are abiding to, most of it is just good common sense.

Matthew Gordon: Right. Okay.

Bradley Langille: In Mexico at least so far, and we certainly hope it remains this way, the rate of Covid in the population appears to be much lower than obviously in Europe, and in even in Canada, in the US. So for now, that’s a function of; who knows? We don’t know, maybe it’s warmer weather, or maybe it’s just a lack of testing; we’re not sure at this point and we’re monitoring it day by day.

Matthew Gordon: So all of your workers are Mexican, then you’re not having travel restrictions, and local Mexicans at that. So it’s not affecting travel plans, but it has a knock on effect on your business by the sounds of it.

Bradley Langille: So travel: I mean, we do have 2 gentlemen from Halifax who travel back and forth. So that has been, well for now it has been terminated, that travel. Myself, I’m very hands on. I’m usually there every month. It’s been a month now since I’ve been there. And you know, it’ll make it more difficult to be onsite from Canada here, but fortunately, most of our people, and we have a very, very strong team and a very strong management team in Mexico, our chief operating officer’s lives in Mexico, in Jalisco, so he’s there. So it really hasn’t impacted us too much.

Matthew Gordon: Now, we’re getting that a lot from a lot of the CEOs that we’ve been interviewing. There seems to be a resounding ‘business as usual’. However, obviously the markets are taking a different approach. I think we had that reset where, you know, at the end of quite a long bull run, I think a lot of the institutions are taking money off the table. Normal. You’d expect that, but very quickly followed close on the heels by the Covid-19 outbreak, and it going global very quickly. That’s had a big impact on a lot of junior companies. You’re in production, you’re got some cash flows, you’ve raised some money recently, but your share price got knocked. And I’m not going to pick companies up on this because everyone’s got knocked; the market sentiment seems to have taken a whack to the abdomen. So what’s your take on market conditions? When it’s going to recover? And if so, do you think you’ll get back to where you were?

Bradley Langille: You know, I think we’re just in a broad-base sell off right now, and people are selling anything that’s not nailed down. So it’s a run to cash, but we saw this in 2008. I mean everything was sold in 2008 and then it came back up after the crisis had settled down. I do feel that all this quantitative easing, and I think the governance and the central banks are doing the right thing; that’s what they have to do, but there’s been being a tremendous amount of money created right now, and that typically in the longer-term is good for precious metals. So I look forward to the price of the metal regaining what it’s lost and going up from there. I think that we just almost exponentially increased the amount of money out there. And the stimulus.

Matthew Gordon: Yes, for sure. But let’s be clear; you’re talking about 2 different things there: we’re talking about your share price and its ability to regain value, and then you’re talking about the price of Gold. So can you give me your views on how both of those things correct themselves?

Bradley Langille: Right. And we talk about how our share price has taken a hit. I mean, it had a very, very good year last year; we were up 200%, and we did get our new project down at Jalisco, and we’ve been drilling there and the results have been extremely good, which was very good for our share price. You know, we hit a high of USD$0.85 cents. We did opt to do a financing and there was some discussion about that. It was dilutive but we did it for one reason; because we were getting such great results on our project down in Jalisco at Los Ricos and we were able to nail down some deals for some plains in what we’re calling our Los Ricos North project. And that project, we’re slowly working, a little bit quietly working away at that. And we saw an opportunity there, but we had to get that consolidation done first. And really we’ve gone from starting at two rigs to now where it’s six drill rigs, so it hasn’t slowed us down there at all. And we had the opportunity, we were noted for USD$15M. There was a demand for over USD$50M, and we sell it at CAD$25M. So the company has over US$20M. We report in US dollars, in the bank. Parral, hey you know, the metal price just hit USD$1,250. But really, we’ve been making money at Parral at around USD$700,000 us a month. We’re also owed USD$11.5M from the Mexican Government. So you know, we’re well-positioned, and actually, the financing now in hindsight looks pretty good.

Matthew Gordon: Well, it looks like a stroke of genius, and sometimes luck plays a part, and timing plays a part. But you did that at $0.70 cents. It gives you a lot of cash in the bank at the moment. And you know, if things did get worse, you’ve got optionality I guess there. I should say that you’ve got a little bit of revenue coming in, I want to dig into that in a second. So the companies that we see struggling, the ones that don’t have cash in the bank, you know, they are restricted in terms of what they can do, and if they do go and raise now, just one short month after you raised your money, that’s a very expensive raise for most of these guys. So you must be pleased, I guess.

Bradley Langille: Yes, look, we’re happy. We’re happy with the raise. We’re very happy with our balance sheet. Even at USD$1,250, you know, USD$1,250 is below our All in Sustaining Costs (AISC), but now our All In Sustaining Costs has probably changed because the peso has just been clobbered. It’s up close to 24 pesos to the US dollar. And we generate, we sell in US dollars. 60% of our costs are in pesos. So the peso devalues, our costs goes down, and we’re getting that US dollar which is strengthening. It’s interesting that the US dollar is strengthening and Gold’s going up. But you know, so we look at that and we say, strong balance sheet, we have a mine that we’ve been operating now for five and a half years, which is working great. I really think that sober being at $1,250 is an anomaly, but the base will devalue. I think we’re pretty close to being cashflow positive still at site. And there’s one other thing there I’d like to mention; on site at the mine, we just are commissioning and we should be finished commissioning imminently a SART. And that is a plant that we built for USD$3M. It should pay back for the next 6-months. As we speak here, we were consuming 14t of cianide a day. That’s our biggest consumable, and it’s in US dollars by the way, and it’s about USD$2,500 per ton now. That SART plant right now is generating about 4t a day – so an extra USD$10,000 a day, and it’s generating Copper too.  

Really at Parral, I feel that at mine site, we’re breaking even still at these prices, or doing a little better and breaking even. And I think it’s an anomaly. The Silver price at $USD1,250. It’s at a ratio to Gold of, it almost a hit 120:1, which has never happened.

Matthew Gordon: Yes. So Silver has always has been fairly volatile, you know, so you’ve got to take a slightly longer-term view, which is, I guess what you’re doing in terms of your decision-making and your planning. I do understand that, but can I just compartmentalise, because I don’t want to bounce around too much, can I sort of compartmentalise this. So with the Silver component of revenue stream, you know, we talked last time about the tailings component for instance, where I think you talked about a USD$13 Silver price being paid. I mean, how do you manage the terms of those contracts whenever Silver dips to below the price which you’re being asked to pay, how does that work?

Bradley Langille: I’m sorry, the contracts?

Matthew Gordon: Yes, on the contracting side. Because you talked about, you know, with the tailings you were removing the liability, you’re doing the remediation there, but in the last interview you talked about a price of around USD$13, but at today’s prices that doesn’t necessarily work.

Bradley Langille: Yes,All in Costs was around USD$13, and the contracts that we have are with the municipality where it’s USD$50,000 a month that we pay; that’s our obligation. And no obligation to reacclimate the old tailing site, that’s the city’s obligation. We only have an obligation to reacclimate the facility we built, which is of course at the same standard is US, Canada, Europe at world standard. But as far as the cost at USD$13, I’d go back again to, you know, there’s been a lot of things shifting here, and one of the main things shifting here is that the peso has been massively devalued, because they’re an oil producer and their base got hit pretty hard. So that reduces our cost substantially.

Matthew Gordon: But by how much though? Are you making money still? I guess that is what I’m getting at.

Bradley Langille: Yes, that’s what I’m saying. We’re break even or making a bit of money at site, even at USD$12.50, so I think we’re in a very enviable position there. I doubt that there’s any, or very few other producers of Silver in Mexico right now making money at these prices. But we feel, and you know, we’re analysing it, but we feel that the peso will probably reduce our costs by around USD$1.50 an ounce.

Matthew Gordon: That’s the number I wanted. Okay. Understood. Understood. And with the tailings you talked about having some IP, some intellectual property there, you came out with your own process which you think is quite unique, obviously. And he talks about the ability to perhaps sell to other groups in South America because you know, companies like DRD Gold or Jubilee Metals, they are doing their thing in Africa. There’s no real competition in South America. Have you been carrying, I know it’s not the core focus, but have you been carrying on those conversations?

Bradley Langille: You know, we have, and the project is very much a project that the Mexican Government likes, you know, for obvious reasons, the social, economic environmental you know, we now have an operation that’s operating. It’s been operating five and a half years. We’re looking at all kinds of opportunities of other tailings, even if they’re kind of far away, if they’re high, high-grade or for us, high-grade, they can make economic sense to truck them over to our operation. So we have 8-years of Reserves today, next to us at Parral, but we’re looking for all of these other opportunities within trucking distance of our operation. And there’s some that we’re looking at right now that could substantially, if they come together, could substantially impact our costs; reducing it and increasing the metal produced. Also we’ve developed this technology, I mean this almost proprietary technology now, some of it’s an agglomerate deeply just not new to the world, but on tailings it is, and we’ve found a way to do it that works. And it wasn’t easy. The first 3-years were very difficult for the mine, but the last year and a half, 2-years have been running quite nicely, and I just wanted to touch base here as well – currently our operation is running beautiful: like we’re going to have another order in line with what we’ve been doing the last two or three quarters. So yes, we do have something there. It’s not the sexiest mining project in the world, but if it can make money, there’s nothing wrong with that. Especially in this new world.

Matthew Gordon: That’s again where I’m getting at, because I think this market reset is going to, you know, sort the wheat from chaff. Right? And I’m trying to dig down and look at companies which have something different about them. You know, in terms of mitigating risk, alternative revenue streams and this, the tailings component here, I know it’s not core and we’re going to come onto Las Rico’s in a second, it seems to be that if you’ve got the process right, and Silver, volatile Silver, bumps up a bit over the course on average, you’re going to be able to contribute to your overhead by making a margin on these things. And if you’re capable of nailing down these tailings contracts with other groups, it could be quite meaningful. And it’s very attractive in terms of a sort of non-dilutory financial contribution. So when you say, ‘it’s business as usual’, you mean it, as opposed to, I’m sure I’m going to this week and next be hearing lots of businesses usual messages without doubt. But it’s not business. It’s not making money as usual. It’s a case of we’re surviving. So just trying to dig down sort of understand if that’s still on the table and if that is still, you think, going to deliver revenue for you going forward?

Bradley Langille: No, it probably is going to deliver revenue. I think even at this price it’s delivering revenue. And I think this price is an anomaly, but even though it’s delivering revenue right now, our costs have just got reduced a lot by that SART plant as well – by USD$10,000 a day – that’s substantial. So Parral is delivering revenue. We’re looking at more opportunity for Parral, we tried to increase that revenue, and we have something that could be applicable to other tailings in Mexico in the future. But I think the game may have changed a bit. I mean, I’m talking not just for GoGold, I’m talking for everybody. I think we’ll come out of this there’ll be more of a focus on who is generating revenue. And the exploration development place, even the exploration development place,  I think the focus on them will be more around, okay, you have something. Is this going to be a mine in five years, seven years? Or maybe there’s the 1Moz that you have in front of you that you basically drilled off and that that could be a mine in a couple of years. So I think the benefit of what I believe will be higher prices for the commodity are going to filter down, obviously to majors first and then to mid-tiers and producers and projects that are not in the grassroots but in the development stage. And I think we’re well-positioned in that regard as well.

Matthew Gordon: No, I think that’s true. A lot of what you just said is true and it’s going to require people to look at the fundamentals of a business in a way of which perhaps pre this current phase we find ourselves in, they haven’t done very well, and we’re certainly going to encourage people to look a little bit deeper as to the business fundamentals. You know, what does the management team doing to enable and ensure its success going forward? And I just quite like the tailings component as part of the story. But let’s get onto the main attraction, which is, you told me on a couple of occasions is the best project you’ve been on or seen for the last 20 years: Los Ricos. So what’s been happening?

Bradley Langille: : It is. And it still is. We were drilling with 2 rigs, now we are at six. We’ve been focused on the first area, which is Los Ricos, now we have two projects. Really it’s a 35km trend. We’re focused on the Southern end of that trend, which we’re going to call now Los Rico South. And then we had another called Montefiore at the North end of the trend. It’s 20km away. It is a separate project and it’s very good-looking project. We were in there with crews on the ground, but a little bit quietly because we had some real holes in the claim package that we had to close deals on, which we’ve done. We announced one about a month ago, and those deals now have consolidated everything we need there. And brought in data; it’s almost like at Los Rico’s North, or Montefiore, we are renaming it Los Ricos North project, it’s almost like we’re starting all over again a year later where we were at Los Ricos South.

 We started looking at Los Ricos South, we had 60 drill holes, and we went in there and started drilling and getting great results and showing, you know, building up a resource there, which we will still get out in the next couple of months. And at Las Rico’s North, we started off there, and once we got this deal done a month ago, that deal was really pivotal for us. That also came with 50 drill holes, and they’re not bad drill holes. There’s a drill hole up there that’s 24 meters at 27g/t Gold. And there’s a lot of drill holes up there like that.

So the company we were dealing with, they were last in there in the early 2000s, and they just did a few small claims, and we were all around them with the claims that we own, and they did a deal, they had a change of business. They’re going in a different direction, in a different business and they contacted us and said, would you like these claims? I saw the drill holes; we said, absolutely. And it’s not an inexpensive deal either. I mean, we’re paying here about USD$450,000 over a couple of years, and you know, tying everything together up there. Our team really feels that Las Ricos North, now at 50 drill holes. At an earlier stage in Los Ricos South because that’s getting close to the first resource and we think it should be a Million or a Million plus there in that first resource, Gold equivalent, that project to the North, Los Ricos North, we feel that that has the potential to even be larger. And there’s an old map that we have up there from 1916. from the Jalisco monograph, and that map shows 50 prospects on our claims up there.

On the Los Ricos South project, that map showed about 5. And we’ve got one of them, or two of them drilled now almost to completion. At Los Ricos North, we’ve had one team, they’re just out climbing those hills and prospecting and finding targets to drill. And up there as well, we have the first three targets that are ready to drill, and we’re just now getting the final permits so we can start drilling off those plus Ricos North.

Matthew Gordon: So again, when we spoke before you thought you’d have the resource by the end of March, around now, right? You’ve just explained why that’s sort of setback When do you think that’ll be ready?

Bradley Langille: I think by May, for sure, we’re going to get that resource out by May. And it is a little delayed, and we’ve been doing a lot of drilling and we’ve just thrown a lot more machines at it after the financing. You know, we’re hitting good results. We want to get everything into this main resource. I don’t think, especially where things are in the world at the moment, that an extra 60 days will make much difference. So it’s better if it’s cross, if it’s a better defined resource and it is more measured and indicated, and if it’s that’s size.

Matthew Gordon: Yes, well I don’t think in today’s market it matters if it’s 60-days out, if there’s a reason for it, because people still, investors still expect management team to do what they say, and if the reasons are good enough; like you’re hitting some big numbers and you’ve got some more drill rigs in there and they’re still hitting the kinds of numbers that you wanted – that’s fine. I agree with you on that. But I think there’s a need to, I mean, I’ve just looked at some anecdotal information here, but you know, our viewing numbers are up 70% in this last crazy month, and it’s not necessarily because we’re doing anything different. It’s just because I think people are sitting at home waiting for news because they’re not allowed out. They’ve got to get the data, right?

Bradley Langille: That’s a good point. We’re not distracted with other things as much, right? They’re actually at home, turning it up.

Matthew Gordon: Yes. But they need you guys – guys like your company to be talking to them and explaining why things are going on. So resource will be out end of May-ish. Is that fair?

Bradley Langille: Yes.

Matthew Gordon: Okay. You’re expecting 1Moz or so?

Bradley Langille: 1Moz or so. The grade we’re expecting, you know, it’s two to three grams. Two and a half to three grams is still the Gold equivalent grade that we’re expecting, and the things that we’re focusing on right now and take a little more time. We want to get some deep drilling in there because what we had seen as we drove this thing deeper and deeper, we’re getting some great results. You know, we had one of our deepest holes that hit 18m of 8g/t. Now that’s something we want to follow up. That’s something that can be material to follow that up for the resource. And then to the Northwest, on the trend that we’re drilling, the 1,100m trend, we’ve been getting some real good results there in a second war shoot that we’re seeing. So we want to drill that and we want to include that in the resource. We want this resource. We put out to best represent what we feel we have. And look, we’re going to have lots of news over the next 60 days about things like the SART being finished. We got lots of news over, lots of drill results coming out, and there’s some great drill results. I’m sure they’re going to come out in the next 60-days. And we’re going to develop that first resource that really is a better defined resource as well; one that we can move quickly into a PEA.

Matthew Gordon: Well, that brings it nicely on to my next point, Brad, which is; guys like you, you’ve been there and done it before. We’ve been doing it for a long time, successfully. You have bought, sold and made people money, which is fabulous, right? But you’ve got a picture in your head, and I’m looking at this going, okay, we’ve got a 43-101 coming out in May. You have told me in the past you’ve got a sense of what this thing’s going to cost. You’ve got a sense of the economics because you’ve built:  you’ve built plants, you’ve built mines, you have drilled holes. You know what’s coming down the line and you get a feel for it. But at what point, and how quickly can you get into some kind of economic study, which is what the market’s going to look out at? First thing; probably a PEA, it’s, you know, as a fairly early economic study. But how quickly can you get there? And when does a Pre-Feasibility Study happen? What’s that timeline look like?

Bradley Langille: Well, I think we can get there very quickly, especially now with, you know, I look at it this way – I think that if we can have an anchor on this project, this is where I’d like to end up – there’s an anchor that’s 1Moz. One pit, great grade and that we can put a PEA around and it’s solid. It’s mostly measured and indicated. And we can do that and we can say to the world, here’s something that’s solid. You put your economics around that. And by the way, we’re a year behind up at the other end of the trend, but we’re hitting some amazing drill results up there. And then we have the best of both worlds. Well, we have a mine that is producing cash, we have a project that now becomes more shorts than a PEA, but it becomes more nearer term, nearer-term economics, nearer-term production. And with a team that’s built three mines, and we’ve rebuilt a fourth, you know, that people say, well, these guys can sell it, and there probably could be a lot of interest from buyers, and also these guys can build it. And let’s see where the dust settles here. Let’s see what brings real value in the market.

Matthew Gordon: But if we can, let’s come back to the question, which was tell me what that timeline looks like? Or could look like.

Bradley Langille: Well, for the PEA; really drilling this, all this drilling right now can actually shorten up that timeline as well because when we’re finished here we’re going to have good data to do that PEA, and I think we can get that PEA done by the end of the year or first quarter next year.

Matthew Gordon: Okay. Okay. So that’s nice and aggressive. And then because of the amount of drilling, do you envisage being able to get a PFS out quicker? Because these are the signals, this is the language that is used in the market, again, to define how people value you. You listed off a whole bunch of reasons why you are very comfortable: because you’ve done it, you’ve done it, been there, got the t-shirt. I get that. But people need these signals from you. So this accelerated timeline is important to them because there’s a lot of people screaming for attention out there at the moment. So I’m just going to get you to tell me how you’re going to do it.

Bradley Langille: I think about that in my head and from my experience, and my team, you know. And the key guys have been with me for 10 to 15-years and we’ve built mines together. The way I think about it is that we drilled us off, we drilled us off, you know, we drill it off with the mindset, how does this look in the mine? It’s not just that we’re out doing exploration, we’re building models all the time. We build PIP models all the time, block modelling all the time. Every 10 holes we build, we added to our block model.

So what I’m trying to say is that, you know, for us, we’re really drilling this off for it to be a mine, for it to be big for, you know, for this to be something very, very solid. This is not just promotion. This is real economics. This is real. Something that the institutions in particular, and we just brought in some of the best institutions into that last financing and  those institutions can quickly see, and all of our investors, are able to see the real value in that. And at the same time, at the other end of the project, we also have something that’s going to develop to be what I think very, very large along with this. So you have the best of both worlds. You have one end of the project, which is Million, a Million plus, that is defined, that can quickly be moved through the next studies to get to the point where you say – hey, this thing’s ready to go. And at the other end, at the same time, we’ll be building up the 1Moz up there. And that’s just a year or year and a half behind. So I think that is the strategy. I think it’s a strategy that’s going to get us the most value in the market, and I think it’s going to make us very appealing to some of our peers as well. So we’re not sitting there hostage, you know, just sitting, waiting for somebody to come in and make us an offer. We don’t have to build mines.

Matthew Gordon: That’s my point; what have the institutions bought into it there? They bought into the fact that you’ve got, you mentioned a word there – big. You’ve got scale to this. This is a very long strike zone we’re talking about here, and you’re sitting at both ends. And what’s the idea? Do you sort of work your way down and meet up in the middle kind of thing? Or do they have the option of doing that? That’s what’s going to get the big guys to take notice of you and step in.

Bradley Langille: I believe that we have one of the very best trends remaining in Mexico that is not developed. From my 24-years of experience doing this from building some large mines, and I believe that we have consolidated what hasn’t been essentially consolidated since, you know, the early part of the last century. And, and we are, you know, it’s to come up with things that are Millions of ounces -that’s quite remarkable. I think, you know, myself and this is my own personal view, I think we have a trend that ultimately with drilling and exploration success can be +5Moz. And it’s just a strategy of how we develop what we see from our experience as being that has world-class size to it. And you know, part of that would be what’s the narrative in the market? What does the investor want to see as well?

Like, we could do good technical work; we know how to take a project and move it through the stages of resource, economic studies, and we know how to do it quickly. And we have a lot of experience that we know what’s worth chasing. And I’ll tell you one thing, that 35kms of strike length and Los Ricos North, and the project where we’re now moving on to the next stage, resource and beyond. That’s the things from my experience in my career that is exactly what we should be doing right now with GoGold Resources, and I hold the same opinion. This is the best thing I’ve had in the last 20-years. Maybe the best thing I’ve had in my career. And we have the bank account, we have the skill, we have the experience to develop this into what will be, I think the most attractive project in Mexico.

Matthew Gordon: Brilliant. Brad, ultimately though you’ve got to deliver for shareholders. Okay. So there’s a lot of positives today. It’s a difficult market. It’s mining; it was tough already. You’re going to have to deliver for shareholders this year, and I think you’re going to do that by better communication, or regular communication with them, because it seems to me that you know what you’re doing and you know where you’re going. So I appreciate your time today. Thank you very much. From your bolt hole to mine here. I hope we get out of this and the next few months but stay in touch. Let us know how you’re getting on.

Bradley Langille: I’m very sure we will get out of this. And we’re continuing on as per normal, and stay safe.

Matthew Gordon: Thanks very much.

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.

The GoGold Resources company logo

GoGold Resources (TSX: GGD) – 2 For The Price Of 1

The GoGold Resources company logo
GoGold Resources
  • TSX: GGD
  • Shares Outstanding: 222M
  • Share price C$0.59 (26.03.2020)
  • Market Cap: C$124M

Crux Investor recently enjoyed a great discussion with Bradley Langille; he’s the President & CEO of gold and silver company, GoGold Resources (TSX: GGD).

GoGold Resources is a gold producer with existing, reliable cash flow from the Parral Tailings Project.

However, GoGold also provides the excitement of exploration, in the form of the extremely promising Los Ricos projects (north & south).

While you’re here, why not check out another one of our informative gold market articles, or maybe a different gold mining interview?

GoGold Resources appears to be a great opportunity that might well be very undervalued.

We Discuss:

  1. A Business Model That Combines The Best Of Both Worlds
  2. The Impact Of COVID-19
  3. Current Cash Situation
  4. Raising Capital Last Month – An Inspired Move?

Company Website: https://gogoldresources.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.

The GoGold Resources company logo

Altamira Gold (TSX-V: ALTA) – Gold Junior Aiming For Production In 2020

The Altamira Gold company logo.
Altamira Gold Corp.
  • Shares Outstanding: 99M
  • Share price C$0.04 (19.03.2020)
  • Market Cap: C$4M

We recently interviewed Michael Bennett, President & CEO of Altamira Gold (TSX-V: ALTA). Gold had a great 2019, so has Altamira Gold managed to capitalise on it?

Altamira Gold is trying to fast-track itself into production by 2020. An outsourcing model is key to this; Bennett was keen to explain it in depth.

Now is the time for gold producers to pounce, and for gold investors to take note, especially given the current discount rates courtesy of COVID-19.

While you’re here, why not check out another one of our informative gold market articles, or maybe a different gold mining interview?

We Discuss:

  1. Company Overview
  2. Company Financials: Money Raised so far, its Uses and a $6.5M Raise. Where Will They Spend it?
  3. An Outsourcing Model to Get into Production: How Much Control Have They Got?
  4. Possible Barriers and Issues: Permitting, Licensing and Mining in Brazil
  5. The Future: Will Shareholders be Sitting Around for 2yrs or is There a Catalyst Moment Coming?

Company Website: https://altamiragold.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.

The Altamira Gold company logo.

China Gold Int (TSX: CGG) – Oh, now look at me and this opportunity (Transcript)

The China Gold International Resources Corp. company logo.
China Gold Int Resources
  • TSX: CGG
  • Shares Outstanding: 396M
  • Share price C$0.65 (17.03.2020)
  • Market Cap: C$274M

Interview with Jerry Xie, Executive Vice President and Corporate Secretary of China Gold International Resources Corp. (TSX: CGG, HKSE: 2099).

China Gold is a big gold producer, with a secondary focus on copper. The company orients itself around organic growth of its two large main gold and copper assets. It does have however very deep pockets if required for M&A. What we found particularly interesting was the companies approach to value. They can buy large-scale projects, but will not overpay. Now, given the relatively cheap cost of the money available to them, paying a premium would not be out of the question, which could give them a competitive advantage.

Founded in 2000, China Gold International has 2 main assets. Its main project is the CSH gold mine, one of China’s largest open-pit gold mines. And the extremely large Development play, Jiama Copper Mine. CSH is located in Inner Mongolia, China, the principal product is gold doré bars with silver as a by-product. In terms of measured and indicated (M&I) Resources, we’re looking at 262Mt, averaging 0.60g/t gold totaling 5Moz of gold at 0.28g/t cutoff gold grade, based on the most recent 2012 Feasibility Study. If fully-optimised, investors are looking at 60,000t per day of ore. The life of mine stands at 11-years (as of 2012), with an estimated LOM CAPEX of US$213M, and an impressive AISC of US$713/oz of gold.

Over at Jiama Copper Gold Polymetallic Mine, in Central Tibet, China, Phase II expansion started commercial production on July 1, 2018. Jiama Mine’s Phase II consists of two series. Each series has a mineral processing capacity of 22,000t per day. The full design capacity of ore processing at Jiama Mine will increase to 50,000t per day. Total copper production in 2019 is expected to reach c. 132lbs, and the expected life of mine is 35-years, with gold and silver credits. According to China Gold’s feasibility study, production is expected to grow to 176Mlbs of copper per year at full processing capacity.

While many gold producers share prices were buoyed by rising gold prices during 2H/19, China Gold International saw a slow and steady fall, now standing at CAD$1.06. The market cap is a sizeable CA$420, with 396.41M shares outstanding. Xie claims the share price issue has been mainly related to marketing issues. A potential easy and cheap fix? He claims marketing on the TSX vs the HKEX is very different, and retail gold investors have either not been told the story effectively, or haven’t been told it at all. So now what? Time for the company to step up its efforts.

Big changes for investors to look out for in 2020 will be cost-cutting and significant development of Jiama, maybe into optimised copper-gold production? Communicating effectively with the North American market will be important too. The management team appears very competent. The assets are large, it is producing and sitting on a lot of cash, but the business strategy and marketing needs to be better understood by the market.

China Gold needs to clearly communicate its strategy and focus to potential investors, and it needs to get the word out. This has the potential to be an exciting story: let’s see how this develops, but this one story we are going to follow with great interest.

CLICK HERE to watch.

We Discuss:

1:52 – Company Overview
3:32 – From Start to Finish: What Did They Set Out to Do? Why Do They Choose to Stay Public?
10:21 – Organic Growth and Restrictions to it: Project Overview
14:36 – M&A and Their Criteria: Can They Afford to be Aggressive?
23:13 – Share Price Dropped When Everyone Else’s Rose: What Happened?
27:38 – 2020 Goals: Building Value and Regaining Control
31:26 – Possible Road Blocks and Concerns Company page:

Company Website: http://www.chinagoldintl.com

Matthew Gordon: Hello and how are you, sir?

Jerry Xie: Well, I’m very good. Thank you very much. Well, thank you.

Matthew Gordon: Thanks for joining us. You’re you’re in Vancouver at the moment. And you’re gonna tell us all about China Gold International today, because it’s a good story. It’s a big successful company. But we want to hear about how you’re going to grow it. But before we do, can you give me one minute summary for people new to the story, so they can understand a little bit about this before we start talking.

Jerry Xie: All right. Thank you. I would love to. This company is named China Gold International. The former name was Jinshan. So many long-term investors still remember that name. Actually we changed the name from 2010 from Jinshan Gold Mine to China Gold International. So, for your information, this company’s founder was Robert Friedland. He set up this small company early 2000s and went to China for the gold opportunities and he found one named CSH. And in 2008, our parent company, which is the largest Gold producer, China National Gold Group. Bought it. He owned 42% of the company became the largest shareholder that basically was the 2008. Two years later, we changed the name to the China Gold International. It had already been listed on the TSX. And in 2010, we duel listed on Hong Kong stock Exchange. So right now, this company has two stock exchange listing. And I think 2010 we inject a one polymetallic mine from our parent company. Right now has the two listings, and 2 producing assets.

Matthew Gordon: Perfect. That’s a good start to this. Okay. So, can I just talk about what it was that you… I understand the history there, but what was it that you guys were selling act to build? Obviously, you are a gold producer. Great, but you’ve listed in Hong Kong. You’ve listed on the TSX. Why did you take this thing public first of all?

Jerry Xie: They original strategy. Actually, the market can take China Gold international and the China National Gold Group as one. We share the same strategy, we sit under the same under the same umbrella. So originally back to the year 2008, the China Gold Group was going out of China. They’re looking for the opportunity to grow, grow the group. So after a screening of would be target, they picked up Jinshan Gold Mine, as the first step. The reason behind that.. they set up the strategy, the criteria. Ideally the company should be a public company. Listed on the TSX or like Australia, somewhere like a very mature, stable jurisdiction. TSX is really the ideal place, public company and also ideally the asset, liquidity in China is easier to access, easier to manage, as a first step. That’s why they picked up this company after that…. We still want to keep that platform because obviously the reality is the Western…the North Americans investors… they want… it’s not really about the Chinese factor. Every time when we were in China people just got confused. So keep this platform. I mean, the listing position will ensure we’re not black sheep. And just  following exactly the rules, the public rules, to keep the transparency. Follow the rules. So that’s the purpose. So easier to access the partner to look.. to find us a real good opportunity.

Matthew Gordon: I mean, that’s a really interesting thing. You say that because I think when people talk about Chinese companies, there’s a mystery to it, in the sense that it doesn’t feel as open and transparent. But as a public company, you must be. You must follow and comply with the rules of both sets of Exchanges. So when you started off that the needs were very different from today. You have successfully, economically, commercially been producing gold. Okay. You have got a lot of cash that you have created, a lot of cash flow that you’ve created since you started. Do you still feel the need to remain public? Because you don’t need to be. You’ve got you’ve got the cash, you’ve got partners who will give you cash facilities. You are in a very lucky position compared to most. So you’re saying you’re keeping the public persona, because it gives you an air of transparency. Is that the driver today?

Jerry Xie: Yes. So that’s really good question. And also, the challenge as well. The reason I’m saying so is because some, like I said, from the beginning from the long-term investors still remember Robert Friedland’s name. A few remember Jinshan Gold Mine. Even though we changed our name from Jin Chang to China Gold International, since 2010. But people still take us as the ‘new company’, When, people sometimes people introduce that say, ‘hey guys, let me introduce a new company to you’. ‘Hey, come on, we’re not new’. We been here with a new name already for 10-years. So you’re right. And we should be talking to the market. Some people are asking, why do you guys still need us? You don’t need money. You are financing with no problem. You can see that our…We do have access, to very low-cost of financing. I could say we’re sitting on the $500M bond that global issuing, very low-coupon. The last one was 3.25%. So this this year, it’s this 3-year term ending year. So we will need to renew that, maybe not $500M. It depends on our needs, but a CapEx, is not as much as during the construction period. Maybe lower. It really depends if any acquisitions happen in the near future, but still not really a strong need compared to our peers. It’s not really for financing on the equity side. But two reasons. 1. is like we said, keep it transparent. When we approach people, if you know, I mean, like Canadian owners, the peers. 70% global gold owners are Canadian companies? No matter where. Africa, South of America. So we have to approach them here. So when they see China Gold International that are listed in TSX and Hong Kong, so that we can build up more confidence and they feel more comfortable to talk with us. 2. Another thing is if we can run this public… the company better. I mean, the better the stock price, if it performance is better, so we can use our stock, to buy the targets. Not like always with cash. So that way you see a higher multiple, if our share price performs better, the higher multiple to buy a lower multiple, that could be very good deal. It’s not always just in cash. So again, combined, it’s a more flexible.

Matthew Gordon: I hear you and I want to stick with this for now, because the thing that… I’ve looked at your company, we’ve done some analysis of your company, you’re in a very good position. But I want to understand the money side of things a little bit more, if I may? So if I look at some of your peers, you’re talking about your Canadian peers here, who perhaps don’t have readily, or not as readily, don’t find cash as readily accessible, and certainly not the types of rates that you’re managing to pick up. So you’re at a slight advantage to them. But so what is it that you’re trying to build? Because it seems to me you could go and buy a lot more ounces in the ground. You can do that. You are already producing gold with good margin today. So but you’re only a $400M company today. What’s the goal here? Surely with the amount of cash you’re throwing off, the cash that you’ve got access to. There are companies struggling who would like some of your cash. What’s the plan?

Jerry Xie: So that’s really depends on what kind of strategy, how to grow this company. That is the question basically you are asking.

Matthew Gordon: Yeah. Tell me that.

Jerry Xie: So basically all the mining companies are similar. The strategy is how to grow their mining company, it’s both like organic and external M&A. So organically, we have the two producing assets. One is purely gold, which in is Inner Mongolia. Naturally one province in China. It’s not a Mongolia country, just adjacent to the border. That is a pure gold. Open-pit, heap-leaching, really conventional like process. Another one is a polymetallic, mainly Copper, but a lots of Gold. You can see that every year we are sitting are 200,000oz. Part of this ounces comes from the by-product of the Polymetallic mine, named the Jiama in Tibet region. So two assets, have two different natures. So for the pure gold, to the CSS Gold Mine. Right now the peak of the production already passed. Well, we look at, we still have like 2P Reserve is about 2Moz. But every company needs pipeline. So if the gold price sitting on its level or looking even higher. So we can look at the deeper Resource or how to utilize that. The grid could be a challenge. Right now it’s open pit. If we could convert that terms on the ground. Maybe the grade cannot support the economics. So maybe they use some block caving. We really need to look at that. The different scenarios. But it’s still a question mark. So that’s like a 6-7-years to go. The other one is a much, much bigger. The Jiama Mine Polymetallic is a huge deposit. It’s only 9% of the area we own. So right now it’s 6Mt of Copper, plus some like a 100Mt, 100% of the Gold is there. Not mentioning the Silver, Molybdenum and small portion of the Lead and Zinc, mainly Copper and Gold. Now gives us a huge potential. Mine life is like a 30-years. Right now is after expansion, ramping up to the design capacity level, which is 176Mlbs per a year. Right now we’re aiming at 145Mlbs. We’re close, but still on the way to ramping up. But the thing is, we need a pipeline. So even though that’s a huge potential there. Copper is good, even though right now it’s not that strong, but still like Copper is Copper. The need is there. The demand is still there. But we are China Gold. We’re still looking for the bigger, multiple commodity, which is gold. So we keep looking for Gold assets, so which turn the topic to what should be the strategy of how to grow this company is by external acquisition.

Matthew Gordon: So you’ve explained the organic component, the organic growth. The restrictions and the opportunities. I get that. So come to the M&A bit. But because again, we’ve been talking to lots of people… we talked about Equinox Gold before this call started. They have gone through a process of acquiring ounces in the ground. They’ve made some good acquisitions. They’re a bulk gold play, low-grade bulk play. But it’s very clear to me what their strategy is. And I would like you to share with me, and the viewers here. Do you see M&A as a big part of the growth going forward? And how aggressive are you going to be? Do you feel you’ve got the finances in place to be aggressive?

Jerry Xie: For the external acquisitions? That’s another topic, right? But organic gave us very strong capability like we have $200M cash on hand. And we’re like $3Bn asset value and about $1.4Bn book value there. We can see that we’re a medium-tier, a second-tier of players. So when we’re going out, we can, like I said, we share the same strategy and same umbrella with our parent company. So every time we’re talking about China Gold International, keep in mind we were strongly supported and backed up by our parent company. So you can see, if people only look at this China Gold International, maybe the cash capability, even though we can access the bond, let’s say we can easily go for another $500M. We can reach more by leveraging the capability of the parent company. Thick line to short, money won’t be an issue. But the thing is, we funded… here is the thing. Every time, every day almost, so many sellers approach us, but not too many really met our criteria. We have our own metric? Where to go, and what kind of commodity, what time of play?

Matthew Gordon: Well, tell us.

Jerry Xie: Let’s come to thematics. Well, we basically.. the principle is project driven. So good quality. Good quality means. We’re looking for the producing mine with some potential. We’re not really focusing on the green or too early stage. We’re not patient enough to wait for that, and the higher-risk. So producing mines with some potential. And also commodity-wise, we mainly focus on Gold and Copper, or silver if it’s good enough, but nothing too much. Jurisdiction-wise, we prefer stable jurisdictions that everyone prefers too. So like Canada or Australia. We know that Australia is more expensive right now than Canada. And if we can see the trend is there is more and more consolidation there. So that real trend is there. We’re open to some countries in South America, and some countries in Africa. But some where we’re not going to like DRC. Don’t get me wrong, I don’t put any a judgment onto these country, but that’s our own judgment, our own strategy. That is our main metrics.

Matthew Gordon: The hard bit here is, as you say, if you set your targets quite high, there’s a lot of competition looking for the same stuff, you know? Do you think you’re going to be able to… you can compete financially, but you don’t want to overpay, necessarily. But you may decide something is worth more to you than it is to someone else. And you know, you’re paying a little premium is okay for you. But how many of these conversations have you got going on, and how close are you to doing something? Because M&A acquisitions excite the market. You’re buying more ounces, because you’re buying production, you’re buying more potential in terms of Reserve / Resource as well. Where are you today? What can you tell us?

Jerry Xie: So that’s turned into a little sensitive topic right now.

Matthew Gordon: But you can tell us, it’s fine.

Jerry Xie: Let’s continue my words. That’s say there’s so many people approaching us. But, I noticed the trend there is a people approach us, not only us, but it’s the approach the larger scale Chinese mining players,  because they know Chinese mining players have lots of cash. That’s why they approach us. People like cash rather than the paper. So that part of the reason, but for us, even though we can access the low-cost financing. We still want to use some paper. If our paper performs good enough. So that way we can avoid too much premium. Reason premium, reasonable, it’s acceptable to us. We can look at the average level  what the premium will be, and we can talk about actual re-valuation thing. But the thing is, we emphasize that producing mine plus the potential, that potential, can make-up that the premium. If we just paid premium, there is no money we can make. All the revenue side is a premium, so we’re not going to do that. So that’s why they can explain why China Gold moves so slow. We’ve been talking about this topic been almost 10-years. Since we listed in Hong Kong Stock Exchange, so many, Cornerstone investors keep chasing us, ‘hey, you guys promised us you’re going to buy this, buy that, but you still don’t take any real action’. But our team, we keep doing that, screening the things. Talk to people quite often. So some deal is really close to… I can’t say too much about it, so that I say it was sensitive, almost to the way joint deal process. And we’re close to writing the cheque. Really, really close to it. Open the dataroom, doing the due Diligence, been to site, did the site visit, valuations there. Ready to Ok, you know, external consultants, IBank, lawyers, we spend a lot of money on this. But eventually people were saying that it’s good… when we figured it out. It’s not that good. It does not meet our strategy metric. Or too expensive or the quality is not that good or our competitors, they offer higher than us. So, for a few reasons to make China Gold look not that nicely in this regard. So they really want to give you a example. I can talk to you about something already happened with people I already know. Many years ago before Lundin’s Gold group went to Ecuador ICN Project, China Gold joined the first three rounds of bidding process. And we were in the first rank. But due to some reason the bad communication, we lost the chance. That time was even better deal. So  I cannot talk about so many things ongoing. Or is it that people don’t want us to talk too much? I have already done that last year in Africa last year, I talked to the media, but it’s not nice to be very careful.

Matthew Gordon: That’s fine. And I understand that. Well, I guess what I’m trying to get a sense of from you is, I think historically Chinese companies have been branded as cavalier with their cash. They just want to get the asset and therefore they overpay, which makes it difficult to make money. What I’m hearing from you is, you’re cautious with your money. You’re sensible with your money. And you’re not going to… you’ll pay a premium if it’s worth it to you, as the sum of the parts of all of your portfolio. But you’re not going to be foolish. Which is good. Which is good. But that leads me to the share price. You’ve seen the share price come away. It was the last half. Basically, when all producing gold company share prices’ were going up. Yours has been trickling down. Do you know why?

Jerry Xie: Yes. That’s a good good question. That’s actually happened to us last September. And our price was not that nice, but it’s not that bad. We were just stable. But it’s not that really exciting, but not very bad. But when we were in the Denver Gold Show last year, September, we keep talking to our institutional investors. Van Eck, something and we talk very good talk, very quick just in that week and we came back to our Vancouver office and we found our share price had dropped a lot. We were shocked to see that, nothing really happen. And we talked to the… because retailer is one thing, but retailer just the follower normally. But I now this space interactions, but to the institution will be taking a leading role. So one more thing I need to add. We duel list this company. It’s really different to market in Hong Kong market and TSX market. TSX side. The Canadian side. The investors really understand mining investment is a long-term thing. But in Hong Kong side people only look like a short-term. They act more speculative, more than the TSX side, but some investor from mainland China they understand mining, but they go through some channels so called the connection between Hong Kong and the mainland development stock Exchange connection. We tried accessing that, but eventually but sat on that for one year because there’s some criteria. Your trading volume, your market… the market value needs be at some level. But China channel was shut down. We’re back to Hong Kong Exchange. So after 2010, we thought Hong Kong investor was understanding the China factor. They fully understanding what Central Asia know you mean. That’s a really positive factor than Hong Kong. So we pay more attention to Hong Kong than to the TSX. So that’s my fault. So we could be talking to the Hong Kong, and Hong Kong most of them are retail. They’re just following. More speculative. So when last year this kind of thing happened, because our institutional investor ‘oh, awesome it’s North American.’ But we found. ‘Oh, wait a minute. We should pay more attention back to the North American side’. That’s why since last October, we’re starting doing more to make communication with North Americans. There market let people the new story. So that’s why it a shock to me. Surprise people say your a new company, and they both say, ‘look at your solid deposit… Resource base, look at your solid management team and your performance. They said you’re a good company compared with some peers. But why are you undervalued that much’. People say, is there anything bad that we don’t know? ‘No, nothing I can tell you… everything has to keep there on chance. It’s the same. We’re still ramping up. But the stock price dropped down. That’s really our challenge. More people knowing about story.

Matthew Gordon: Well, I buy some of that. I do buy some of that. But, once you’ve kind of got the downward movements, very hard to move. Go back up. So going out and telling a story to retail is, I think, a big part of what you need to do for sure. But can you succinctly, very quickly, say what are the things that you’re going to do.. more than just telling the story… What are you going to do with the company to allow people to believe that you’re going to deliver it? You’ve talked about organic growth. You’ve talk about potential acquisitions, but it’s quite hard to make those acquisitions. But those are the big meaningful numbers that you can you can deliver. But what else can you do?

Jerry Xie: You know what? It’s basically right now we’re emphasising ourselves. First on the organic side for now, it’s because the asset that on the purity gold mine are operating very smoothly. Well, like I said, if the gold price is sitting at this level, even though we you know, we don’t do something deeper, utilise a deeper resource. Keep current operation level, it’s still like 160,000oz per year. So that money, if they went to the channel it to improving our recovery rate in the heap and to the profit the drop down this cut to make a bigger room for our profit. So that’s on the gold mine. But not mentioning if the gold price got higher, we can look at a deeper one, as the next step. So for the Jiama, it’s more that complicated. That’s a huge mine. So we would send that in the past few years we’ve done the expansion. We call that Phase 2. That is a big jump. From 6,000t per day processing capacity to 50, 50,000t processing capacity. Given that elevation, the mill is sitting on 4,400m high. So right now they need more time to ramp up, right now on the waste, ramping up. So we are focusing on reaching that design capacity as quick as possible because the Jiama, we say that it’s complicated. It is because the three type of deposit on the surface, 30s XXXXXX it lowers the grade. On the ground, it’s a skarn type. It’s around 0.8% to 1% at highest. The deep is the Porphyry. We haven’t touched it at all. Not touched it. So right now we’ll only work on the surface and the skarn type. So the challenge is the 50,000t per day. 33,000t comes from the surface. 17,000t comes from underground. So we right now are focus on how to increase in the higher-grades ores comes from underground to increase to 17,000t to like a 25,000t, 26,000t. That could make a huge difference to the current situation. But that’s our effort to put in.

Matthew Gordon: And that’s what you want to focus on this year, because you can control that. You’re in control of that, right? With M&A, you’re not in control, I think is what you’re saying to me. You’re on the lookout, but it makes a big impact, a big noise in the market. But you’re not in control. So the Copper Porphyry seems like a very big target for 2020. So what are you actually going to do in 2020 versus 2021? What are the big moments that you’re going to come back to market, say? We have done this. What what are you going to be able to say this year?

Jerry Xie: Like I said, yes. There we are focused on cutting costs in general. In the Jiama most likely this year and that next year, it’s focused on the ground higher-grade zone, increase that. So that’s what we are focused on.

Matthew Gordon: Are you’re nervous about anything. I mean if you got issues around water, permitting, license, infrastructure, all the usual stuff. Meanwhile, is anything that we know?

Jerry Xie: No. Because everyone thinks Mining in Asia really have that risk thing… everywhere is the same. It does mean… in any country it’s the same, even though.. our parent company, we relied on them because there are a operating genius. We relied on them because they have very strong influence in China. They’re Central ISOE. So they have very strong operation team, that has very good in relation to the local governments and the local community. Some people have a different imagination in China, I can tell you mining is exactly the same in Canada or to … mining is mining? You’ll have to try your best to make relations to the local community. If you don’t, your done. So we’re trying so hard to build up there’s a good relationship between local governments and their community, to acquire their support. So nothing else. Right now the environmental protection in China getting more strict, but they have to be kept at a reasonable level. So right now, the people already saying that the government already tolerates that direct to pay more attention to the environmental protection. But meanwhile keep at a reasonable level. So there’s no concern about the license of some challenge like this. The only thing we cannot control is the market. The metal price. Let’s say right now the Corona Virus. That’s really out of hand. You’re out of control you have no idea by that. You can see that. After all our trying to communicate this to the American market, our stock price is coming back a little bit last December to the beginning of January. Look at now. With that virus attack.. Another thing about our strategy is the China Gold Group has owned this company before, they have very strong support to this company. All can being with us, selling Doré to their smelters. They have few smelters, large-scale smelters. Every smelter with refinery. We sell to them at very favorable price. Because China Gold is vertically highly-integrated. If you have been to China. Terminal 3 International Airport. You can see that very big store, physical jewelry store named China Gold. They over 2,000 physical stores. Very influential. If it, you know, take the whole thing of China Gold. It doesn’t matter if it is China International oo China Gold Group, we share the same strategy, the same strength.

Matthew Gordon: Thank you so much for telling that story. It’s new to us. I really appreciate you talking us through that. I’d love you to come back on the show another time. And let’s get into some of these numbers and how you’re progressing things. But these seem to have a lot of very good options available to you. I think you need to help the market be clearer on what your focus is, and how you’re gonna deliver that. I don’t worry about your access to money. I don’t know. And you’re saying a lot of the right things. So I do appreciate the time you’ve taken today to do that. Let’s stay in touch and speak very soon, please.

Jerry Xie: Thank you all very much. And also welcome to hear the feedback from their market and what people really want know. We are fully open. There is really a high transparency, and we are open to all the questions.

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.

The China Gold International Resources Corp. company logo.

Intercontinental Gold and Metals (TSX-V: ICAU) – Bolivian Gold Play With No Exploration Risk

The Intercontinental Gold and Metals company logo
Intercontinental Gold and Metals
  • Shares Outstanding: 18M
  • Share price C$0.28 (17.03.2020)
  • Market Cap: C$5M

We recently interviewed Gord Glenn, President and CEO of gold trader, Intercontinental Gold and Metals.

Intercontinental Gold and Metals tried to give investors exposure to the exciting upside of gold/precious metals investment, with none of the risk associated with the typical exploration, development and operation in the mining sector.

We’re a big fan of alternative mining-related investment opportunities here at Crux Investor, so how does this one stack up?

While you’re here, why not check out another one of our informative gold market articles, or maybe a different gold mining interview?

We Discuss:

  1. A Unique Business Model
  2. The Gold Market Outlook For 2020
  3. How Do Shareholders Make Money
  4. Delivering Growth

Company Website: https://www.intercontinentalgold.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.

The Intercontinental Gold and Metals company logo

Gold and the ESG Revolution

John Mulligan, Director, Member & Market Relations, World Gold Council

We are witnessing a seismic shift in the world of investing which is redefining how investors perceive and approach assets, companies and sectors. A clear and pervasive reality has emerged where investment decisions are increasingly driven by environmental, social and governance (ESG) factors. The ESG Revolution may, in fact, have been more of an Evolution, and some would argue has been a long time coming, but it is now definitely mainstream. And a substantial body of regulation is just around the corner that will catalyse further change, redirecting very substantial sums of capital towards sustainable investments.

This is not to say that practical financial and investment principles have been abandoned in favour of purely political, philanthropic or altruistic motivations. Rather, investors (and policy makers) are seeking to drive positive societal and environmental outcomes via investments underpinned by robust business cases. We may face a daunting range of challenges in moving towards a more sustainable global economy but, concurrently, very significant opportunities are also unfurling before us.

 … there are many common misperceptions regarding the nature of modern gold production.

Green bonds, for example, may still be a miniscule part of the overall global bond market, but funds are flowing into them at an accelerating rate; the year-on-year value of green bonds issued in the first half of 2019 rose by 48%.[1]

So why might this be of such significance for the mining sector, and gold mining in particular? Because I believe that the opportunities for positive action are such that, if grasped, they might hold the key to transforming societal perceptions of – and wider investor interest in – the industry.

For those not involved in gold mining, or those only aware of its past reputation or the negative social environmental impacts associated with the worst aspects of artisanal gold mining, there are many common misperceptions regarding the nature of modern gold production.

As investors have moved to embed a greater understanding of ESG-related risks into their thinking, similar considerations have been shaping the evolution of the gold supply chain. To ensure that gold is produced sustainably and responsibly, key market participants across the industry have evolved a range of initiatives and standards to give stakeholders, consumers and investors greater confidence in the provenance of gold as a responsibly sourced product or asset. And, of course, this all starts at the mine.

To guide and support this progress, World Gold Council recently launched the Responsible Gold Mining Principles (RGMPs)[2], a comprehensive framework through which gold mining companies can set out their position on a wide range of material ESG factors. The Principles acknowledge and consolidate several guidelines and standards that already exist to address specific aspects of responsible gold production[3], but integrate them into a single coherent and detailed definition of what responsible gold mining should look like.

World Gold Council’s Responsible Gold Mining Principles

Independent validation of company conformance to the RGMPs should provide further confidence to investors and stakeholders that the gold production process adheres to high ESG standards, reinforced by external assurance on performance, which should help minimise the risk of “greenwashing”.

The World Gold Council’s Member companies[4], which together represent over half of all annual corporate gold production, have committed to adhering to these principles and, over the next few years, we hope the wider industry will join them in embracing the opportunity to demonstrate its ESG credentials.

There is also often a common misunderstanding regarding the nature of the gold value chain and, specifically, of mining’s role in creating and distributing value in host countries and communities.

Gold mining companies are often a major source of income and economic growth and can play an important role in stimulating and supporting local socio-economic development. Contrary to the assumptions of many, the vast majority of gold company expenditure typically remains in the country in which an operation resides, with 70% of that money paid to suppliers, contractors and employees. Typically, in most regions, over 90% of the employees at gold mining operations are from the host country. The economic value from employment and gold company payments to local suppliers, with associated tax revenues for local governments, create far more value for gold producing countries than they obtain from direct royalties on land use and minerals extraction[5].

Deriving societal benefit from the revenues created by gold mining will, of course, also depend upon responsible host governments and, for the development potential of the gold mining industry to be realised, all stakeholders need to work together in partnership. But arriving at a shared understanding of the potential value of a vibrant, responsible and sustainable gold industry might help us move from the transactional type of relationship that often exists between many industry, government and community stakeholders, towards more collaborative partnerships.

… gold mining in particular, might be in a constructive position to … make a positive contribution to achieving net zero carbon targets.

As investors seek to focus on longer-term socio-economic development outcomes, they often orientate their objectives around the United Nations’ Sustainable Development Goals (SDGs); 17 goals focusing on key social challenges that range from ending world hunger to increasing access to clean and renewable energy. Importantly, in defining these goals and the possible paths to their achievement, the UN explicitly acknowledged the major role to be played by private companies. Financial firms are therefore increasingly looking to identify or develop investment opportunities in the private sector that might address global needs and meet the goals outlined by the SDGs while also attracting investors of scale.

Mining has a very significant role to play in addressing many of the SDGs and, while this potential has been much discussed by academics, policy advisors and civil society, it might also be to the advantage of the global mining community to consider in more detail the practical and investment implications of the goals.

Perhaps the most obvious example of how the mining sector might contribute to a specific development goals is its current and possible future role in facilitating the transition to clean energy and a low carbon economy.

Last year, the World Bank launched its Climate-Smart Mining[6] initiative, drawing attention to the strategic role metals and minerals will play in the manufacture of cleaner energy technologies. The move to these technologies is likely to significantly raise the levels of demand for many metals, requiring both more mining and more minerals recycling. While gold was not identified in the World Bank report as a ‘climate-smart’ mineral, there are some promising signs that gold as an industrial product or input may play a useful role in technological advancements needed to help mitigate climate change.

And broader recognition of climate-related risks and potential impacts has undoubtedly been the galvanising force and key driver behind the widespread escalation of ESG factors in investment decision-making and the regulatory landscape.

There is no more pressing challenge facing humanity than that of climate change. The concentration of carbon dioxide (CO2) in the atmosphere caused by human activity is already wreaking havoc with environmental systems and weather patterns.  

The science is irrefutable and alarming. Atmospheric CO2 reached a high of over 415 parts per million in May of this year, a level not seen for 3 million years. According to the World Meteorological Organisation, the past 4 years have been the hottest on record (the 20 hottest years have occurred in the past 22 years).  Wildfires have raged across Siberia, Alaska, California and Australia and these fires appear to be getting larger and more intense. (The intensity and scale of destruction of the recent Australian bushfires has pushed the country to what has been described as an “absolutely seminal moment” in its history[7].)

Sadly, these fires also further exacerbate climate change – all that carbon literally goes up in smoke!

Last August, we also witnessed Hurricane Dorian, the most powerful storm ever observed in the North Atlantic. And over the last three years, the US has suffered three floods previously classified as once-in-500-year events. The global rise in floods is directly correlated with rising global temperatures.

Climate-related impacts threaten ecosystems, accelerate extinction trends and soil erosion, and contribute to greater food and water insecurity.  They are also a very major threat to public health, increasingly the likelihood of famine, and infectious and non-communicable diseases.

If we are to reduce these physical risks and stabilise the climate we need to act immediately and commit to actions that might curb global warming to a limit of no more than 1.5C above the pre-industrial average – we are already 1.1C degrees above that average! – by the end of the century.  This will require us to achieve net zero carbon emissions by around 2050 and, to do so, will require radical changes across all corners of the economy and society, including the restructuring of energy, land use, transport and buildings, with unwavering support from governments, businesses and individuals. These changes represent very substantial transition risks and some sectors will undoubtedly struggle to adapt.

In the World Gold Council’s recent report, ‘Gold and climate change: current and future impacts’[8],  we presented evidence that the gold supply chain, and gold mining in particular, might be in a constructive position to embrace these changes and make a positive contribution to achieving net zero carbon targets.  Overall, gold’s carbon footprint is relatively small, estimated at under 0.3% of annual global greenhouse gas (GHG) emissions. The vast majority of these emissions are generated by the mining and milling of gold and, more specifically, from the electricity and fuels used in powering these processes.

Fortunately, there are already a range of options, increasingly accessible and cost effective, to allow gold miners to move away from fossil fuels and decarbonise both their electricity and transportation. Many gold mining companies are already moving in this direction and our research indicates how, over the next few decades, renewable energy sources, such as wind, solar and hydro power, and complementary technologies might prove more cost effective for miners than the existing carbon-intensive options.

Illustrative potential emissions reduction and transition pathway for gold mining

As I have described, these are no longer peripheral issues for investors, bracketed with philanthropic CSR programmes and narrow sustainability specialisms, as was often the case in the past. At the risk of repetition, I think it important that the gold mining sector embrace the fact that consideration of climate-related risks is now a mainstream issue, core to business interests and increasingly at the heart of basic asset evaluation and selection processes.  Acknowledging this new reality, gold miners might now grasp the opportunity to demonstrate sectoral leadership in taking concerted action to further reduce their emissions and impacts, in line with science-based targets, to help curb the current climate trajectory and its potentially destructive consequences.

However, in addition to the question of how a company or sector might impact climate change, a key issue for potential gold investors – and, indeed, investors of all asset classes – is how possible climate-related risks and future scenarios are likely to impact the value of their investments and the overall performance of their portfolios.

Mercer, the world’s largest world’s largest institutional investment advisory firm, have been proposing that investment strategists integrate climate change risks into their asset allocation models for a decade or so[9]. More recently, the Task Force on Climate-related Financial Disclosures (TCFD) has been prompting organisations to implement effective climate-related financial reporting, emphasising the importance of transparency in evaluating climate-related risks to support efficient capital-allocation decisions. Only two years after its launch, nearly 800 organizations, including global financial firms responsible for assets of over US$118 trillion, have declared their support for the TCFD and its objectives.

Our findings suggest a relatively robust outlook for gold in the face of a wide range of climate-related risks.

This trend is mirrored by increased regulatory scrutiny and rising pressure from activist shareholders wishing to influence the environmental and climate policies of public companies. A very notable example of this trend is the investor group, Climate Action 100+, consisting of over 300 institutional investors who collectively manage more than $34 trillion in assets. The organisation’s stated aim is to “engage companies on improving governance, curbing emissions and strengthening climate-related financial disclosures.” They have already negotiated strategy changes from some very major GHG emitters.

With this context in mind, the World Gold Council’s research on climate change seeks to not only outline a credible path for the gold mining sector to move towards carbon neutrality, but to also offer insights regarding how gold’s value as an asset might be impacted by climate risks.

Collaborating with global sustainability consultancy Anthesis, we adopted a methodology broadly aligned with established analytical frameworks for institutional investors and focused on assessing the robustness or vulnerability of asset returns in the context of specific climate-related risks and scenarios. We considered how gold and a range of mainstream assets, representing a substantial proportion of current institutional portfolio holdings, might perform in relation to four different climate temperature scenarios: 1.5C, 2C, 3C; and 4C (above the pre-industrial average), and the potential impact on asset returns to year 2030, 2050, and 2100 (in comparison to our current, i.e. 2019, expectations).

In general, lower temperature scenarios (1.5C and 2C) will require rapid transition and therefore impacts will be more prominent in earlier timeframes. Physical risks, however, are more prominently borne out in the later higher temperature (3C and 4C) scenarios where direct tangible impacts overshadow transition aspects.

Our findings suggest a relatively robust outlook for gold in the face of a wide range of climate-related risks. Gold may face some initial headwinds in a rapid transition scenario due, in part, to the urgent diversion of investment to either build net zero carbon infrastructure or from a severe erosion of consumer confidence which would hit discretionary spending. However, many of these risks are perceived as a lower probability, and of less magnitude or duration, when applied to gold; compared with their likely impact on other assets.

Looking at possible outcomes for other key asset classes, transition risks may soon start to impact US equity valuations as the US economy appears to be less prepared for decarbonisation than, for example, the European markets. At the other extreme, inaction on climate change and consequent higher temperature scenarios will be very challenging in the longer-term for agriculture, food and soft commodities. Energy and utilities will also struggle as physical impacts become more frequent and destructive.

Gold’s relative resilience is broadly compatible with the World Gold Council’s wider research on gold’s role in contributing to optimal portfolio performance. We have repeatedly demonstrated gold’s potency as a diversification asset and its relative outperformance of many mainstream assets when specific risk factors impact their valuations. The wide-ranging nature of climate-related risks suggests heightened volatility and potentially destructive disruption across a range of markets and these conditions will likely bolster gold’s utility as a safe, stabilising asset and as market insurance. This suggests gold may increasingly come to be recognised by investors as having a positive role to play in balancing and moderating climate-related impacts on their portfolios.

The technicalities of institutional investment portfolio construction in the face of climate change may, admittedly, seem somewhat far removed from the perspective of an investor looking at a particular gold mining asset or company. But these factors are highly relevant if gold is going to continue expanding its role as a financial asset, and if gold mining is to reassert its credentials as a credible and attractive sector for a wider set of investors.

And there is cause for optimism; the whole gold supply chain, from mine to market, is now in a strong position to demonstrate high ESG standards and contribute to climate change mitigation. If the industry seizes these opportunities, then all its participants, investors and stakeholders should be able to face the future with greater confidence. Whether it’s a Revolution or an Evolution, now is the time to commit and act!

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.

[1] Source: Climate Bonds Initiative

[2] https://www.gold.org/about-gold/gold-supply/responsible-gold/responsible-gold-mining-principles

[3] United Nations Guiding Principles on Business and Human Rights; the OECD Due Diligence Guidance for Responsible Business Conduct; the Extractive Industries Transparency Initiative; Guidelines for Multinational Enterprises and the International Council on Mining and Metals’ (ICMM) Performance Expectations

[4] https://www.gold.org/who-we-are/our-members

[5] The socio-economic impacts of gold mining, World Gold Council, 2015

[6] https://www.worldbank.org/en/topic/extractiveindustries/brief/climate-smart-mining-minerals-for-climate-action

[7] Sydney Morning Herald, January 10, 2020

[8] https://www.gold.org/goldhub/research/gold-and-climate-change-current-and-future-impacts

[9] See, for example, Investing in a Time of Climate Change; The Sequel (2019), Mercer.

Vizsla Resources (TSX-V: VZLA) – Lucrative Potential?

The Vizsla Resources Logo.
Vizsla Resources Corp.
  • Shares Outstanding: 49M
  • Share price C$0.55 (06.03.2020)
  • Market Cap: C$27M

We recently conducted an interview with Michael Konnert, the president & CEO of Vizsla Resources (TSX-V: VZLA). It was a very interesting interview with a gold-cooper-silver explorer.

While you’re here, why not check out one of our recent articles covering the gold space, or even an interview with a gold producer?

This is a risky investment opportunity at its most transparent. It is an early-stage exploration play with many hurdles to clear. However, the prize at the end of the tunnel is, potentially, enormous.

Vizsla Resources is a Mexico-based mineral exploration company listed on the TSX-V. It was founded in 2017, and is engaged in the discovery, development and acquisition of precious and base metal assets in what it claims to be safe jurisdictions. 

We Discuss:

  1. Vizsla Resources’ Gold, Silver And Copper Assets
  2. Business Model, Including Cash On Hand, Remuneration Policy and Burn Rate.
  3. Financing Plans
  4. Reasons For Investors To Be Optimistic In 2020

Company Website: https://vizslaresources.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.

The Vizsla Resources Logo.

Novo Resources (TSXv: NVO) – An Unconventional Mining Story

The Novo Resources Corp. Logo
Novo Resources Corp.
  • TSXv: NVO
  • Shares Outstanding: 179M
  • Share price C$2.58 (06.03.2020)
  • Market Cap: C$461.5M

We recently conducted an interview with Quinton Hennigh. He’s the President of gold explorer, Novo Resources Corp. (TSXv: NVO).

While you’re here, why not check out another gold investment article, or another gold investment interview?

Not all stories in the world of gold mining are easy to understand, especially when they don’t open themselves up to understanding via conventional investment measures. Novo Resources does not have a producing gold asset yet, but the market has given it a sky-high valuation. Why?

We discuss:

  1. The Novo Story: One Hefty Valuation
  2. Novo Resources’ Portfolio Of Gold Assets
  3. Potential For Gold Exploration
  4. Plans To Solidify And Evidence The Share Price In 2020

Company Website: https://www.novoresources.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.

The Novo Resources Corp. Logo

Trans-Siberian Gold (LON: TSG) – What Are Investors Missing?

The Trans-Siberian Gold Logo.
Trans-Siberian Gold plc
  • LON: TSG
  • Shares Outstanding: 110M
  • Share price GB£0.66 (05.03.2020)
  • Market Cap: GB£57M

Crux Investor recently interviewed Stewart Dickson, Non-Executive Director of Gold producer, Trans-Siberian Gold (LON: TSG).

Trans-Siberian gold is a gold producer located in the eastern recesses of Siberia. Dickson is pleased that Trans-Siberian gold is paying healthy dividends, but the market isn’t responding. Why?

We’ve got multiple gold articles for you to read on this website, in addition to many gold interviews for you to check out.

We discuss:

  1. Russia As A Mining Jurisdiction: People’s Perception vs Reality
  2. Burn Rate And Remuneration
  3. Managers Buying (Or Not Buying) Shares
  4. Telling The Story Differently: Getting The Excitement Back

Company Website: http://www.trans-siberiangold.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.

The Trans-Siberian Gold Logo.

Gold: Rio2 – Take Me To The River, Dip Me In The Water (Transcript)

The Rio2 company logo.

CLICK HERE to watch the full interview.

Interview with Alex Black, President and CEO of Gold Developer, Rio2 Ltd (TSXV: RIO)

We like Black’s honesty. The management team’s track record is good. They have made investors money. They have a problem with water but have a workaround. They had a large Feasibility Study plan, which has halved in size. Investors are concerned. We ask him why investors should trust him.

Rio2 is a Gold mine development company, focussed on taking its Fenix Gold Project in Chile to production, and its exploration platform in Peru. Rio2 used to be the talk of the town, but things have changed in the last couple of years. Since hitting CAD$2.85 at the end of March 2017, the share price has fallen to CAD$0.43 today. The market cap stands at c. CAD$78M. This decline will be more concerning given 2019’s strong gold performance. Why has Rio2 struggled? Black explains the primary driver behind Rio2’s fall from grace is the expectations of investors.

As a gold mine development company, Rio2 plans to methodically develop a fully-operational mine in the shortest possible timescale. While Rio2’s management team has an impressive track record of developing gold mines, demonstrating technical prowess and adding value, what are they doing today to get Rio2 out of this slump? Strangely, given the current gold bull market, Rio2 has decided to reduce the scale of the gold project laid out in a PFS conducted by a different company in 2014. Why reduce scale? Black acknowledges it might take some of the “sexiness” away from the opportunity Rio2 presents, but is adamant it is the right way to go.

An updated PFS was concluded in August 2019. The scale is down to get cash flowing. CAPEX has reduced from USD$400M to just over USD$100M. The strip ratio is lower and the IRR is slightly higher, but the AISC has increased, for now. This is a low-grade gold bulk tonnage operation, so surely scale is the most important element of this resource? Rio2 will seek to get the gold mine constructed as quickly as possible to create value, increase the production rate from an initial 100,000oz per annum to 200,000oz of gold per annum, and reward investors with returns.

Black is keen to explain how his team is different from any other junior: diverse with a variety of specialist roles. Black also touches on the environmental and political challenges of Chile as a gold mining jurisdiction, with a particular focus on the water licence/trucking situation. Is this interim solution effective? Black is attempting to concurrently apply for a permit while generating cash. This could mean investors won’t have to wait as long for value to be added.

He then explains why an EIA should be very straightforward for Rio2 to complete in the next few months. Rio2 can’t afford to hang around. Investors will want to see results soon. Rio2 has about US$13M in cash currently. They’ve already spent c. CA$40M on the project.

Rio2 is going to be telling its gold story to the markets. What is going to make them stand out? Long-term Rio2 is M&A a possibility? Rio2 will continue to pursue strategic acquisitions with the intention to build a ‘multi-asset, multi-jurisdiction, precious metals company focussed in the Americas.’

Interview Highlights:

1:48 – Company Overview
2:41 – Share Price Decline: What Went Wrong?
4:11 – Background and Business Plan: What Did They Set Out to Build?
10:41 – Finding Value: Why, in a Gold Bull Market Situation, They Choose not to Expand? 19:57 – Jurisdiction: Water, Power and Political Challenges
27:07 – Money Spent on the Project to Date
28:27 – Raising the Share Price: How Will They do it and Why Should You Invest?

Company page: https://www.rio2.com/

Matthew Gordon: Thanks for joining us today. You are going to tell us about Rio2.

Alex Black: Rio2 is a mine building company. We are mine developers. We have built two mines in the last ten years here in Peru: La Arena and Shahuindo, when we were the old Rio Alto. And here we are again with a flagship project in Chile, which is very much a buildable proposition. It’s a large Gold deposit, and obviously, in this video you will learn more about it.

Matthew Gordon: You are after Gold. Let’s start with the big stuff. Share price: you have been absolutely hammered since 2017, for a long time, you were the darling. I remember people talking about you a lot. But since then, it has been on a downward slope. What’s gone wrong?

Alex Black: I think, once we became a mine development company, people’s expectations changed. I’ve had a lot of people ask me the same question and I’d say to people, ‘Look, if you are looking for the quick 10%, 15%, 20% increment in share price, because of drill holes or drill results or exploration results, that’s not us. We are actually in the process of getting a project ready to turn into a mine. This happened, to a certain extent, this happened to us back in 2009, when we started Rio Alto; it took a lot of time to get traction in the market, for people to understand and believe the story. And then, once we did, everything took off from there. Rio Alto started off as a USD$12M company when we acquired La Arena, and on the take out with Taho Resources, we were USD$1.2Bn. So we did create value, we can create value and will create value in this company.

Matthew Gordon: I have seen the track record, it is pretty impressive. Those are big numbers but that’s history. We’ve got to talk about today. What did you start off thinking you were going to build? What was the business plan Day 1?

Alex Black: What we did when we acquired this asset, it had a pre-feasibility study which was put together in 2014. Typical Junior company pre-feasibility study. Big project. Big CAPEX. Big NPV, everything big. Why? Because they were never going to build it. They were looking to flip it and it never happened. So we looked at the asset and we said, there’s some analogies here between what we have seen, both at La Arena and Shahuindo, which we both operated, built   here in Peru. And we said, look, the way we started those two projects was to start small and incrementally build up, and we created a lot of value doing that.

So, going from a USD$400m CAPEX in the original pre-feasibility study done in 2014, to our CAPEX today which is about USD$110 – 115m is a big change, but it is completely doable now because of that gearing down of that particular project. So with La Arena and Shahuindo, we geared down right at the beginning. We had the opportunity to build some pretty reasonable sized projects, which they eventually got to, but we started small and we are going to do exactly the same.

Matthew Gordon: It was another management team that had done this PFS in 2014?

Alex Black: Yes. Let me give you a quick overview of the story: Atacama Pacific discovered this asset in 2010. It was a geological discovery. Albrecht Schneider and Karl Hansen, who were the two principals of Atacama Pacific, they drilled this thing out and low and behold -bang! They hit pay dirt and cobbled together a reasonable sized resource. And the problem they had, because they were exploration geologists, they just didn’t have the ability to then take it that step further. And that’s part of the issue with the market these days; there are a lot of the companies out there with some good geologists, but at some point, they need to step aside and let a mining development team come in and take the project forward, and the company forward, after they have done it because there are too many disasters of people who just don’t know what they are doing in this industry. So in our case, we identified this opportunity. We thought this was right down our alley, being a Gold Oxide heap leach project, and we acquired it and then convinced them that they should be doing a deal with us.

Matthew Gordon: So the previous exploration team came up with a very large Capex number to build a very large scale mine. You then came in and said let’s start smaller, and get some cash flowing, and then we can build it out from there. So this is more like a Phase 1?

Alex Black: Exactly. We try not to call it a starter project, but essentially it is; it is a starter view of the project. And I think that is what not has translated through to the market. The market has gone – ‘oh shit, you know, you’ve got 5m oz of Gold, but you are going to build this really tiny project. Why are you doing that? And so, once again, typically, a Junior company would drill this thing, keep drilling it. We’ve got 1.4m oz of inferred resources here that we could pull a drill rig up to tomorrow, start drilling and convert most of that to indicated. But why would we do that? We’ve already got 5m oz before we even get to that point. So, we are all about building mines and that will translate to value down the track.

Matthew Gordon: It’s one thing saying the market doesn’t understand, but the reality is that that is your fault; you haven’t explained it properly.

Alex Black: What I say to the market, we started off with a reasonable valuation when we did the Atacama transaction. We then ran into this bad market. We raised about USD$7M back in February 2019. We had to put money together because we had to advance the project so that was done very cheaply. What can you do? You have got to go with the market. The market says that you are worth USD$0.30 c, at the time, or whatever it was. And we took the money. And then later on, in August 2019, we did another financing. This time it was a USD$25M financing. That financing was led by Eric Sprott, and a whole bunch of people came into that financing with Eric. When I say a whole bunch of people, people that I don’t even know, they are mainly retail followers of him. So they are the people that don’t understand what they are getting into. They follow Eric and Eric typically gets into stories that are exploration stories, putting out drill holes and things like that. We are not one of those.

He bought us because he could see us as being a little bit different to those other stories that he has been into. So the crowd that follows him watches that and goes, where’s all the juice here? Where’s all the sexiness here? All the sexiness happened back when this thing was discovered, now we’re going to build it.  As you probably know, in the lifecycle of a development company, this is the quiet time because here we go, leading ourselves into the construction phase of the project.

Matthew Gordon: Let’s go through some of the numbers: so you have taken the PFS and said ‘we are going to create a Feasibility Study, we are going to reduce the scale of this project, just to get things going’. So you have managed to lower things like the Capex down to, from whatever it is – down from $400M, strip ratio is lower; the IRR is slightly higher. The AISC has gone up. Because you haven’t got the scale there. This is a low grade, bulk tonnage operation.

Alex Black: Well, there are three peaks there. 1, 2 ,3. And basically, we’ll be mining all three of those. This is an extinct volcano. And you can see, hopefully you can see that photo clearly, but what I see here is terrain that is very accessible, and everything outcrops at surface so we are just knocking the tops of those hills off. It’s a beautiful thing and it’s very simple.

Matthew Gordon: Let’s answer the question the market is asking you, which is in a Gold bull market; prices are USD$1,500, your AISC is about $1,000, so there’s money to be made; surely you can go out and raise capital? You can put it back at the original PFS levels can’t you?

Alex Black: I think we can get the money to build this asset. The good thing is, we raised USD$25m in August. That money will last us all the way through, and we are going to make it last us all the way through to EIA approval. We are about to file our EIA in the next few weeks. And then we are anticipating approval about 12 months after that. Once we have got that, we will be in a position to look at raising a lot more money and obviously, taking a lot of the risk out of… any development project is getting the EIA.

Matthew Gordon: But the question was different; the question was, in a gold Bull market, USD$1,500 or so, you are making USD$500 per oz, you are still going with a smaller project – why?

Alex Black: Because we are a USD$70M valued company. If we were a USD$500M company, maybe we would go harder at this. But one of the key constraints we are dealing with here in Chile is water. Let me just clarify this because it is not as though there is a lack of water, there is plenty of water. We are right near to the Maricunga Salar. There is no mining going on in this district, right?  There’s plenty of water rights in this district. The issue is: applying for water rights is one thing, but getting permanent water rights, which means you can pull water from the rights you have been given, is another thing. That’s the issue in Chile. That’s been generally created by a big demand for water, to the north of us in the Atacama Salar, which is way to the north of us. We have all the big guys: the Codelcos and the Rio Tintos and the BHPs with Escondida, Quebrada etc, etc. There has been a huge drain on water supplies in those areas. So the Government has gone, ‘whoa, let’s just slow down here’. But it is supply that is slowing down for the whole country, as far as water is concerned.

Matthew Gordon: That doesn’t answer the question: are you able to go and have conversations with institutions, funds or strategic partners, to give you more money to do the larger project, yes or no? Or are you telling me that because of the water constraints, people are not minded to fund you for the larger level project?

Alex Black: So, if we had the water rights, and we had permanent water rights for 80 litres per second, which would satisfy an 80 tonne per day mine, we would aim to try to build that. Once again, constrained by our balance sheet and the size of our company; we are a Junior company. So, what we have done is, we have elegantly, I think, we have looked at how we expedite the start up of this project without getting entwined in this water rights, water permitting issue, and that is to truck the water from Cupiapo to the project.

Now -140 kms. And we can do that. It raises our AISC to about USD$1,000 per oz, as you pointed out. That’s at the moment, I think we can show that we are working on bringing that AISC down as we get closer to and into production. But the idea is to bring enough water up. 20,000 tonnes a day requires about 2,000 tonnes of water. So it is about 10% of the mineral that you put on the pad, is required to be irrigated on the pads. So we need to bring up 2,000 tonnes a day of water from Cupiapo, and we can do that in trucks, in tankers. We have costed it out. It’s about USD$1.50 per tonne. That’s haulage costs, water costs, all in costs, to drive from Cupiapo to the project, 140 kms. Eminently doable.  A lot of people go, ‘How do you do that/ Why are you bringing water up in trucks?’ It’s like any other consumable. We are going to bring fuel up in trucks, we are going to bring explosives up in trucks, we are going to bring everything up in trucks.   There’s a major international road that goes from Cupiapo to Argentina, it’s between 15kms to 18 kms of the mine, of this peak. So the infrastructure is fantastic. So bringing up trucks is not an issue. And I want to say that because I’ve had a lot of people go, ‘The only push-back here is the water.’ And I have said, ‘Why?’ We have got a solution for water: 20,000 tonnes a day, 2,000 tonnes of water going to come up the road, every day, eminently doable. We have costed it, we have worked it out and it has been built up into our EIA. What is does do is speed up the EIA process because we are not pulling water up from the ground. So we are going to have an EIA approved, according to our consultants and according to all our officials that we have been talking to, the authorities, etc, we will have an EIA approved in about 12 months. And that’s running fast in Chile, right?

If you look at the latest EIA that was approved in Chile; it was for Salar es Norte: a big project that   Goldfield was, I don’t know, 150 kms to the north of us. They got that approved in 18 months but that involved tailings deposition, permitted water; very complex project in comparison to what we had. So that is what it is all about. And you are right; Gold is USD$1,500.  How long is it going to be USD$1,500? It could be more than USD$1,500, obviously.  The idea is to get to production as quickly as possible. That is what will create value for us and enable us to increase production from our initial rate of maybe 100,000oz per annum to plus 200,000oz per annum.

Matthew Gordon: I agree. I understand the model. You have been very clear about what your model is. Get into production as early as possible to generate cash. You have got to get into economic production.  I know water is the big issue that everyone wants to talk about – let’s just cover it and move on.  So you are trucking water up the mountain, I don’t know how many trucks that is and how many times a day?

Alex Black: I’ll tell you right away: very quickly – 25 trucks going up three times a day. So it is 75, essentially 75 trucks. We are going to have 25 trucks physically in the fleet that will be contracted out. And that means a truck, leaving Cupiapo, essentially, every 20 minutes.

Matthew Gordon: As an investor, all I’m concerned about is what does that add to the bottom line?  You have said it has. I’m more concerned and institutions will be concerned with this interim, this temporary solution is over strikes, or the towns and villages that you go through not liking 75 trucks going through each day, every day.

Alex Black: So we will be bringing the trucks up to the project and depositing the water, we are not going to be building a separate reservoir, we will be depositing the water in a major events pond. The major events pond is secondary to your leach pond that accumulates the pregnated cyanide that you are going to put through the plant. The major events pond will have the capacity of about 2 weeks of water, right. So we will make sure that before we start this project, we will fill this major events pond up and we will keep it filled up which means that we therefore have about 2-weeks of water. So if there is a weather event. Whether there is a labour event, or something like that, we believe that will be a way of mitigating those events.

Matthew Gordon: Well, 2 weeks of events. Sometimes these things can go on; whether it is natural events or people protesting or otherwise. And let’s face it, that happens in that part of the world a lot. So I appreciate that.

Alex Black: Good point but however, but during the latest event that happened in Chile, mining was not stopped anywhere in the country. And the road between Copiapo and where we are was never barricaded or anything like that, for any reason.

Matthew Gordon: Will you be applying for the full-permitted water license while this is going on?

Alex Black:  What we have guided is, we are looking at the longer-term water options, and there’s plenty of them. There are people building desalination projects.

At Copiapo and the coast.They are looking for clients. They are looking for end-users. The off-take we have with the water retreatment facility in Copiapo, owned by Aguas Chanar, we have the right to access up to 80 litres a second, which is for the bigger project, we are pulling 20 litres a second initially and putting them into trucks. We could build a pipeline from Aguas Chanar to the project, that’s still a possibility, we may do that in consortium with other people doing business in the area. Codelco have just mentioned that they are going to apply for exploration rights over the Maracunga Salar for Lithium. There’s going to be quite a lot of activity in that area. Having Codelco, the biggest mining company in the country, as our neighbour is going to be a good thing, I believe.  So there are options that are in the background, that we are working on and as we bring this thing into production, we will be able to say, we are in production now and in year 2, we are going to tap into this water X, whatever it is and we are going to increase production accordingly.. So that is how we see these things playing out, but I just don’t have those solutions –

Matthew Gordon: Today.

Alex Black: Right.

Matthew Gordon: Okay. So at that point, you are going to have to apply for an EIA permit, presumably?

Alex Black: Well, you do a modification.

And that’s the good thing about it; the modification of the EIAs take 6 to 8 months, typically. We have done quite a lot of research on this. Once you have got your first EIA, then it becomes a much easier process o modify and do things.  The good thing here is, and this is what investors need to understand: this is 100% Gold Oxide leap leach. There is no tailings, there is no complex sulphide transition zone, etc. This is going to be Gold Oxide heap leach. Which means no tailings dam. It’s only ever going to be a leach pad. So all the modifications we do to the EIA, will be relatively simple compared to this transitioning into a major sulphide project or a complex project with Copper and other things. There’s no Copper here. This is an anomaly in the Maracunga region: this is an anomaly because all the other Gold deposits in the Maracunga are associated with Copper, complex metallurgy, huge CAPEXand complexity.

Matthew Gordon: How are you getting power to site? Using diesel, or have you got another solution?

Alex Black: There’s a powerline within 15kms of this project. But instead of tying ourselves to the powerline, going through the negotiations, including that in the EIA, which would delay start up of this project, we said to ourselves, I’m going to start this with Gensan, which we did with La Arena, which we did with Shahuimindo, here in Peru. Once you tie yourselves into the grid, maybe in year 1 or 2 of production, Gensan then becomes back up power. So, we are going to start with Gensan and bring diesel up and power it that way. But there is a powerline 18 kms away.

Matthew Gordon: And how does this work? I’ve looked at similar projects elsewhere in the world, the people controlling the water, the people controlling the energy. They put their prices up at their discretion and that has a big impact on your costs. So what is it like in-country with regards to power, water, etc?

Alex Black: Well, in the case of water, we have got a fixed cost on water so there is no inflation built into the cost of the water we are pulling. We are actually using retreated sewage. Which is good from a leaching perspective, probably from other allergical perspectives it may not be, but for leaching it is okay, so we have got a fixed price. Energy:  Energy used to be a huge problem in Chile years ago and now it has stabilised and there is much more power on the grid. But typically, if oil prices go up, Gold prices move and other things – these are things we have to watch and build into our models as we go forward.

Matthew Gordon: How much money have you pumped into this project so far? You have talked to me about USD$7m and USD$25m, so far in cash, but how much did you pay?

Alex Black: Oh, we just did a share transaction; so we did a business combination with Atacama Pacific. We paid a premium – they were lucky because these days, nobody pays a premium.  It was all paper. We have raised in total so far, I’m just trying to do the maths, about CAN$40m, from the time we started Rio2, and here we are.

Matthew Gordon: How much cash are you sitting on today?

Alex Black: Today, about USD$13m.

Matthew Gordon: So you have spent about USD$40m, your market cap is about USD$75m – ish. You have about USD$13m in the bank.

Alex Black: And we are mixing currencies here. Let’s say it is CAN$15m or CAN$16m, sitting in the bank

Matthew Gordon: Sitting in the bank. Okay. So what’s going to happen this year that’s going to change the direction the share price is going in? Are you going to spend that on talking to the market more? What are you going to deliver?

Alex Black: Two things: we are going to be telling the story a lot more. We have just come out of the Christmas/New Year period. We came out with our updated PFS in August/September. We did two shows in Colorado. We went to New York last year. We are going to be going to Zurich this year, to the Denver forum in Zurich in April. We are going to be doing London, Frankfurt – you know, we are going to be marketing, telling people the same story I am telling you right now. So that’s one thing we will be doing. From a news perspective, we will be filing the EIA towards the end of the quarter. That’s a major milestone. We are also in the process of completing all our basic engineering for the project and that will be able to reveal how that looks, what tweaks we have done to the look of the project and traded off on OPEX, CAPEX to get to that point. We will start to talk to financiers about the project, once we get the compete overview of the project that is filed in the EIA, to present to financiers.  We will be doing that.

We also are refining our agreement with Aguas Chanar, which will be to our benefit and we will be announcing that at some point. We are also looking at the future of tying into the grid. We will be announcing things about that. That won’t be for the start-up of the project, but the longer-term future. And we will talk about the impacts to OPEX and future sustaining Capex that we will need to do those various things.

Matthew Gordon: That just sounds like every other story we are hearing every other week. I am trying to work out, what do I need to hear that says, this guy knows where this thing is going, alright? We look at people like Equinox right? They cleverly brough together three quite ordinary projects and did something quite big. You are in a district-wide, you have got Kinross behind you, who aren’t doing too much at the moment, and you are surrounded by some other big names. And you have got Eric Sprott involved in this thing, so why aren’t you offering up a bigger vision?

Alex Black: We have been talking about a bigger vision, and the bigger vision is to consolidate ourselves with other companies. We’ve got a management team that is second to none.

Matthew Gordon: You certainly have. So let’s do something with it.

Alex Black: And let me tell you, for the last three years, apart from doing this acquisition, for the last three years, we have been looking at lots of things. We are completely different to other Junior companies. We’ve got a full team here: geologists, financial people, mining people, environmental people, social people.  We can walk into a mine tomorrow and run it, anywhere, anywhere. And the other thing we come with is our Capital Markets experience, because I’ve been doing this for the last 20 years or so, front-end of companies, so we’ve got all the ingredients. But you think, there are people out there that, us plus them, that would look interesting, like what Equinox has done with Leagold, etc, let me tell you, it is just so difficult. So difficult. And there is entrenched management. Lack of management in various companies, skimming the game like we have. But you try and convince them that putting them together with is would make a lot of sense for the future of the company and also for shareholders, and it is like you might as well be talking to a rock.

Matthew Gordon: You’ve got Eric Sprott who is a big player. What does someone like him see in you? Is there something we need to know?

Alex Black: We continue to try to find deals. We may come up with something in the next short little while and everyone goes, wow, you’ve made the right move. All I’m saying is that until now, it has been difficult. With Eric, he is backing our management team, he has invested in a lot of things. At some point, those things have to perform. My reckoning is that they are either going to perform or he will potentially be a catalyst for consolidation, right?  You can have X number of investments but if they don’t form, it’s like, well why don’t I reduce the size of that pool to buy a factor of 2 or 3 and put things that have synergies or focusses that could be combined, and maybe that’s what he’s going to do. He hasn’t really said anything about that but I’m hoping he does that because at the end of the day, that’s what this business needs: consolidation.

You know what interests me as well? You know, here we are, we have been trying very hard to look at consolidation. Do you think anyone has come to me to say, why don’t you consolidate with us? Not one person has done that. That shows you the state of this business.

Matthew Gordon: At some point, as you say, it makes sense that he has got to pull the trigger because there are a lot of fundamentally good assets, there is some very average management and then there is some exceptional management.  I think your track record speaks for itself. What I’m hearing is: get into production early, earlier than you originally planned, and get some cash flowing.

Alex Black: Get into production that anyone else would do with this project. If this was in the hands of Kinross, they wouldn’t be doing what we are doing, right? If this was in the hands of anybody bigger, they wouldn’t be doing what we are doing. They would be looking at what impact can we make to 200,000+ oz per year, etc. So, we are doing something that nobody else would do with this particular project. But we did the same, and you’ve got to go back, and I keep harping and mentioning La Arena and Shahuindo, we did that there. We started those projects very small: La Arena was 10,000 tonnes a day to start with, focussed on high-grade, outcropping materials, which is exactly what we have here. And so, you know, we have that skillset to be able to do it and to have the vision of what it can become. What the market will eventually do, and this happened with Rio Alto, their market will eventually gel with that and go, yes, I want to be in this story.

The problem is that we are not in production yet. The closer we get to production, the more the interest and value will come into the story because everybody will doubt that we can do this, irrespective of the fact we have done it twice before, that’s just the nature of the market. People go,  ‘Oh, can you do this? You have never built a mine in Chile, have you?’ Etc, etc. It’s one of those things and I’m very pragmatic. I’ve been in the business 40 years.  I’ve been at the front end of the business for 20 years. I’m a technical guy, I’m a mining engineer. All I do, I’ve got a great team of people behind this wall here. Great team of people: second to none here in Latin America. All I do is   just focus on what we’ve got to do, let’s just show people that what we’ve been telling people for the last piece of time, we actually deliver on, and that’s all we can do – is deliver and execute on what we say.

Matthew Gordon: We shall see. Alex, thanks for telling us the story today.

Matthew Gordon: Alex, I appreciate your time, telling that story. It was great to get you to articulate what the plan is and why you’ve been doing it in this order. I can understand that now. I think you have got to get out there and tell the story in an articulate way to the market place, because your share price says; no one understands it. Eric Sprott coming on board – great new addition. I’ll look forward to seeing how your relationship with him develops.

Alex Black: Alright. And I just want to say that I like the way you ask questions; the tenor of the questions that you ask are really good. I think it really suits people who are maybe not so knowledgeable about mining, so you are doing a great job. Keep doing it. I look forward to following up.

Matthew Gordon: Thanks, Alex.

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