Exore Resources (ASX: ERX) – Ivory Coast Gold Play With Lithium Exploration Leases

The Exore Resources company logo
Exore Resources Ltd
  • ASX: ERX
  • Shares Outstanding: 589M
  • Share price A$0.05 (29.04.2020)
  • Market Cap: A$27M

Crux Investor recently interviewed Justin Tremain, Managing Director of gold explorer, Exore Resources (ASX: ERX)

A screenshot of the popular 'Gold Miner' game.

Gold, Gold, Gold

Gold had a good year in 2019.

Rising prices led to good market performance for gold producers, but not every gold junior was so fortunate. We think it is important to investigate why the macro story of a sector can fail to correlate with the individual market performance of certain mining companies.

One such company this is true of is Exore Resources, formerly Oroya Mining Limited, an Australian-based gold exploration and development company listed on the ASX. Exore Resources was founded in 1985 and also has lithium exploration leases covering properties of 126km2 in Sweden and 391km2 in Portugal.

Compelling Gold Exploration?

Exore Resources recently acquired what it claims to be ‘some of the most compelling gold exploration ground in northern Cote d’Ivoire, covering 1,345km2, located along strike from Randgold’s 4.2Moz Tongon Gold Mine and Perseus’s Sissingue Gold Mine.’

Ivory Coast?

Exore Resources claims that Côte d’Ivoire is an ‘established and proven jurisdiction for exploration, permitting, and mine development, with an attractive fiscal regime and mining code.’

The Ivory Coast flag against the backdrop of a blue sky on a sunny, mildly cloudy day

There have been 5 gold mines developed over the past 10-years in Côte d’Ivoire, with several recent additional +1Moz gold discoveries at resource definition/feasibility stage. However, Crux Investor was keen to ask about the current operational environment; specifically, the surge of terrorist activity regarded by the UN as ‘unprecedented terrorist violence‘ in the Sahel (West Africa), particularly in the neighbouring countries of Mali and Burkino Faso. Is this really an investable jurisdiction right now? This is a hot topic on the minds of investors, and we have had several recent contributor articles that have shed light on the important subject.

Exore Resources’ flagship asset is right on the border with Burkina Faso, a country that has descended into chaos, with hundreds dead and around 650,000 citizens displaced at the hands of ISGS, Ansar ul-Islam, Boko Haram and al Qaeda amongst others.

Despite the obvious worries and risk, Tremain was adamant that while this is a situation they are monitoring “very closely,” it is not one that will affect their operations. We appreciated Tremain forthright approach when answering this question. Several companies have been rather more evasive. However, we knew investors would want some hard evidence that Exore Resources isn’t at risk. Tremain pointed to the statistical inexistence of terrorist attacks in the Côte d’Ivoire, in addition to the strong government as reasons for investors to feel reassured. He also touched on the heavy local military presence in the area, supported by the French government. As a consequence of Tremain’s confidence, Exore Resources itself does not employ security. Investors might be reassured by this answer, but this is a relevant risk that no company is truly immune from. Let’s keep a watchful eye on how the situation develops.

Business Strategy – A Change Of Plan?

Exore Resources stated it would deliver a Maiden Resource of c. 400,000oz – 500,000oz in September, 2019 to show analysts the company is progressing.

We questioned the benefit of doing so at the time: would the market exhibit much interest? In the end, Exore Resources didn’t deliver a Maiden Resource.

Tremain explains that while the company didn’t deliver on their commitment, the team at Exore Resources has been busy at work. The new intention it appears is to make the Maiden Resource larger after conducting additional drilling.  Tremain claims shareholder feedback was a big factor behind this decision, with shareholders allegedly saying they were very pleased with drilling results and wanted to see continued drilling. The overall strategy is to define a +2Moz resource. Tremain claims the Maiden Resource would have been an interim step rather than a true reflection of Exore Resources’ potential.

Coarse gold

How has the market responded to this strategy? The share price was A$0.07 this time last year, but now sits at A$.06. Has all this drilling actually added value? The market cap stands at A$36M. Tremain has major work to do. Regardless of what he says, we remain very sceptical about Exore Resources’ decision-making processes. Will an expanded Maiden Resource really be the key to getting the market to stand up and take notice? We have no doubt investors will have a lot to say about this. Make your comments down below!

While Exore Resources’ recent drill results were promising, there are question marks elsewhere: does the management team have the technical proficiency or competence to get this gold resource out of the ground economically? Tremain’s “surprise” at the falling share price speaks volumes. Is this team really in control? We will keep a watchful eye over proceedings, but for now, we’re on the fence.

Finances

Exore Resources recently went to market towards the end of 2019, raising A$10M at A$0.085. Around 80% of this investment came from institutional gold investors: is this the sign of informed interest or speculative option money?

Exore Resources has spent AS$8M in Côte d’Ivoire. How much has actually gone into the ground? Tremain says 90%, so why hasn’t the share price gone up? Once again, Tremain is left scratching his head, given the strong drill results. Management who don’t know what’s going wrong? This is often a red flag in our books.

Regardless of how Tremain tries to dress up this new strategy, it is simply more drilling. Is this the same old story? What is the end game? Tremain states he intends Exore Resources to develop a mine and go into production on a large scale, standalone Resource. This is some way off. Exore Resources has a huge amount of work to do.

The quality of the resource isn’t in doubt, but there are lots of moving pieces to this story: a worrying jurisdiction, an ever-changing business strategy, high-quality drill results, and an evolving shareholder base. Exore Resources is worthy of attention but needs to be clearer to the market about where it is going.

Company Website: https://exoreresources.com.au/

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

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 Exore Resources company logo

Rio2 (TSXV: RIO) – An Undervalued Gold Mining Gem?

The RIO2 company logo.
Rio2 Ltd 
  • TSXV: RIO
  • Shares Outstanding: 181M
  • Share price C$0.43 (22.02.2020)
  • Market Cap: C$80M

Gold is especially hot property at the moment.

A picture of cartoon gold bars.

In 2019, the performance of the gold market was excellent, and 2020 has continued in a similar fashion as we creep back past US$1,700/oz. Bull cycles don’t last forever though. If investors want to look for gold winners, they need to start looking sooner rather than later.

I’m a big believer in seeking out small, undervalued companies and getting in early. Simple things like the lack of an ability to tell a story well to the market can often lead to some remarkable undervaluations, and if they are spotted before the market discovers the value discrepancy, investors can expect big returns.

I’ve looked at some examples of undervalued companies in recent weeks; Neometals springs to mind: an Australian mining and processing company with burgeoning green credentials that has been valued at cash by the market despite also having several promising projects. There is no way I believe that these projects have zero value, and there is no way we buy the market’s assessment of pragmatic Chilean gold-developer, Rio2 Ltd (TSXV: RIO), either.

Rio2

Crux Investor recently interviewed Alex Black, President and CEO of gold-developer, Rio2.

I liked his honesty and authenticity; if only other CEOs could take a leaf out of his book… The management team’s track record is fundamentally strong. They have a history of making investors money.

The elephant in the room for Rio2 is that it has a problem with water supply, but it appears to have reached a temporary workaround in the form of trucking the water in. How long will this solution hold-up, and when exactly will the permit go through? Black tells Crux Investor that he will be able to talk more on that point shortly.

A screenshot of the popular 'Gold Miner' game.
If only picking winners was so easy…

Another important element of this story is that Rio2 inherited a feasibility plan, one that they felt was unrealistic for the asset that they bought into. Rio2 recently put out a revised feasibility study plan for its Fenix Gold Project, which halved the resource. Investors are obviously concerned, but this information could actually be positive if investors read between the lines. A smaller CAPEX in today’s fundraising environment should mean getting into production sooner to take advantage of a high gold price. Investors have to learn to not be greedy.

The Model

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; however, things have changed in the last couple of years. Since hitting C$2.85 at the end of March 2017, the share price has fallen to just C$0.43 today. The market cap stands at c. C$80M. This decline will be more concerning given 2019 and the start of 2020’s strong gold performance.

Why exactly has Rio2 struggled? Black explains the primary driver behind Rio2’s fall from grace is changing the expectations of investors by changing the business plan. Reducing the size of the large study plan that he inherited, despite being pragmatic, was always going to be unpopular with some. In addition, the water permit situation has likely caused investors to be concerned.

While Rio2 might have lost some of its sheen, the fundamentals are encouraging. I feel this is a case of the company not explaining the rationale properly, rather than being wrong about the change of plan. Investors who prefer aspirational stories of 20-baggers can keep on dreaming. This management team has built mines before and understands what it is going to take to do the same here. There are no short-cuts or platitudes that will ease the short-term pain. Alternatively, investors could stop searching for a pretty face and look a little beat deeper. ‘Boring’ is not a word that should be in the vocabulary of mining investors.  This might not have the glitz of big chunks of coarse gold, but the gold resource that Rio2 owns could comfortably turn them into a stable mid-tier gold producer in the near future. Will the plan work?

The Plan

As a gold mine development company, Rio2 plans to methodically develop a fully operational mine, but in the shortest possible timeframe to get cash flowing earlier.

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?

The reduction in the scale of the gold project laid out in a 2014 PFS (conducted by previous holders) was seen as especially strange, given the gold bull market. Why exactly did Rio2 decide to reduce the scale of the gold project laid out in a PFS conducted by a different company in 2014? Black acknowledges it might take some of the “sexiness” away from the opportunity Rio2 presents, but he is adamant it is the right way to go if Rio2 wants to get in to production sooner.

Gold nuggets on top of dirt.

On the surface, this looks like a lack of ambition and a bit of a disappointment. In reality, we think this is a smart management team trying to accelerate an investment opportunity for investors at a much lower cost and fund future growth from cash flow. Would raising the capital needed to fund a project of twice the scale have even been doable? If Rio2 delivers a resource at this scale, investors will be wondering why they worried in the first place.

An updated PFS was concluded in August 2019. The scale is clearly down to get cash flowing into Rio2. Will there be M&A and additional exploration expenditure in the future once Rio2 is cash flow positive? The company website remarks that ‘Rio2 will continue to pursue strategic acquisitions with the intention to build a ‘multi-asset, multi-jurisdiction, precious metals company focussed in the Americas.’  That could get investors more excited, but, for now, it is unlikely and distracting.

The CAPEX in the updated PFS has reduced from USD$400M to just over USD$100M. The strip ratio is lower, the IRR is marginally higher, and the AISC has increased, for now. This is a low-grade gold bulk tonnage operation. 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 share price growth.

The Small Print

Black was then keen to explain how his team is different from any other junior: diverse with a variety of specialist roles.

He also discussed 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 concurrently applying for a water permit while generating cash. This could mean investors won’t have to wait as long for value to be added. Again, this looks like adept and agile management making things happen.

He then explained why an EIA should be very straightforward for Rio2 to complete in the next few months. However, Rio2 needs to get its skates on. Investors won’t be patient forever. Rio2 has about US$13M in cash currently. They’ve already spent c. C$40M on the project already, so it is time to see some significant process.

Show me the money, Mr. Black!

Rio2 is starting to telling its gold story more aggressively to the markets. Rio2 needs to figure out a way to win the trust of its existing investors and then needs to find a way to make its story more exciting to new investors. For me, I think making good, safe returns on investments should be the main factor behind your excitement. Black instills confidence and boldness with his honest and pragmatic approach. If Black can show when he can unlock this project, I’m in.

Company Website: https://www.rio2.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 RIO2 company logo.

GoGold Resources (TSX: GGD) – The Excitement Of Exploration With Much Less Risk

The GoGold Resources company logo
GoGold Resources
  • TSX: GGD
  • Shares Outstanding: 222M
  • Share price C$0.55 (07.04.2020)
  • Market Cap: C$122M

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

Just before we get started, why not check out another one of our informative gold market articles, or maybe a different gold mining interview?

Gold: Time To Pick Some Winners

Gold has always been my go-to commodity; it’s a safe haven we can all usually retreat to.

A screenshot of the popular 'Gold Miner' game.

Unfortunately, for my portfolio at least, even gold securities haven’t managed to escape the wrath of COVID-19. However, things have been looking up in recent weeks; gold has been building a bullish case for itself off the back of upbeat COVID-19 data and the share prices of gold companies have been moving back in the right direction.

I can’t recall many times where investors have had an opportunity this significant to access exponential growth. There are investors out there who will look back on the next few weeks in many years’ time as the moment they changed their lives. The message is clear: it’s time to pick some gold winners.

GoGold Resources

We here at Crux Investor have an affinity for smart business plans.

GoGold Resources delivers a business plan and fundamentals that are very clever indeed. Let’s get into it: what are the quick-fire facts?

  1. GoGold Resources Inc. is a Canadian-based silver and gold producer with projects in Mexico.
  2. 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.
  3. 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.
  4. 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.

COVID-19

I’m perfectly aware of the first question that will be on investors’ minds given the current global health situation: how is COVID-19 affecting GoGold Resources?

Langille explained the COVID-19 ramifications in great detail, starting with the obvious: it has changed many aspects of GoGold Resources’ day-to-day operational practices. GoGold Resources, like any sensible gold producer, is following the protocols issued by the WHO, and sanitation is the order of the day. However, investors will want to know if these new hygiene protocols are anything more than a mild inconvenience. Langille says they aren’t and it is business as usual. The facts seem to support this notion: GoGold’s operational figures have been impressive, and other than a delay in delivering a 43-101 (now due in May), things appear to be running smoothly.

Langille thinks these current market conditions are simply a “broad-based sell-off.” Investors are selling anything that isn’t nailed down. Investors will need to decide if they agree with Langille’s blunt assessment of the situation. 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; the evidence says he is right.

Operations

Parral is currently generating around US$700,000 per month; this might not be enormous, but it is definitely significant.

A graph of rising gold bars with a red arrow curving up them.

Cash flow should never be underestimated. Cash is cash. GoGold Resources has around US$20M in the bank and is owed US$11.5M from the Mexican government. If investors compare GoGold’s cash situation to many of its peers, its uncommonly healthy financial situation becomes obvious. GoGold’s US$25M financing at the end of February looks inspired given current market conditions. Raising capital with today’s rates would be far from ideal, and this is the situation many worse-positioned gold juniors are finding themselves in. All in all, the balance sheet looks robust. Langille is confident GoGold Resources’ share price will bounce back once COVID-19 comes under some sort of control.

At Los Ricos, GoGold is 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 operation has recently increased from 2 drill rigs to 6. The big focus is on the southern end of the 35km trend. Work is also underway at a separate project 20km North. Importantly, 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 many similar holes. The alleged grade of this undeveloped trend is undeniably exciting, but I’ll try to keep my sensible cap on, as should you. 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. GoGold Resources is really distancing itself from its peers now. Stable cash flow at Parral is now being elevated by what looks like immense exploration potential at Los Ricos. If GoGold Resources can create more definitive evidence regarding the resource at Los Ricos, I think that could be a real catalyst moment for market sentiment. These numbers are nothing to be sniffed at.

Timeline

Now, let’s consider the timeline. Los Ricos North is c. 1 year behind Los Ricos South. There should be a definitive gold resource released in the near future for Los Ricos South; is this the kind of clarification that could be a catalyst moment? 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. Even the most pragmatic assessment of GoGold Resources creates a degree of excitement.

Gold ore

It is likely that institutional investors have bought into the holistic business model. On its surface, GoGold Resources is a solid cash-generator operated by an experienced team, with a secure, expandable resource at Los Ricos South and cash flow from Parral. However, if you open it up and look inside, the excitement and risk of exploration at Los Ricos North reveals itself. This is a clever business plan and GoGold Resources is shaping up to be a package that gold investors may really consider.

But what do you think? Comment below and we will respond.

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

Nexus Gold Corp (TSX-V: NXS) – Do You Trust This Plan?

The Nexus Gold Corp. company logo
Nexus Gold Corp.
  • TSX-V: NXS
  • Shares Outstanding: 136M
  • Share price C$0.04 (06.04.2020)
  • Market Cap: C$4.8M

Crux Investor recently conducted an interview with a confident Alex Klenman; he’s the President & CEO of gold explorer, Nexus Gold Corp.

Nexus Gold is a gold exploration and development company with multiple projects in Canada and West Africa. West Africa is a widely-discussed region as of late; investors should check out some of the many articles from contributors on our website which outline the possibly elevated risk.

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

It was obvious from our conversation that Klenman wholeheartedly believes in his vision for the future of Nexus Gold Corp. However, what will he do to get the share moving in the right direction in a reasonable timescale?

We Discuss:

  1. Company Overview
  2. The Numbers: Cash Position, Liabilities & Debts, Raises and Talks with Investors
  3. Share Price: What Happened in 2017? What Have They Done About it?
  4. Burkina Faso as a Mining Jurisdiction: Managing Problems
  5. Business Plan: What Kind of Company are They Trying to Be?

Company Website: https://nxs.gold/

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 Nexus Gold Corp. company logo

Allegiant Gold (TSX-V: AUAU) – What Sets This Gold Explorer Apart

The Allegiant Gold Ltd company logo
Allegiant Gold Ltd
  • TSX-V: AUAU
  • Shares Outstanding: 62M
  • Share price C$0.13 (06.04.2020)
  • Market Cap: C$8M

Crux Investor recently interviewed Peter Gianulis; he’s the CEO of gold-explorer Allegiant Gold (TSX-V: AUAU).

Allegiant Gold: a gold exploration play in North America; specifically, Nevada, Utah, Arizona and New Mexico. Allegiant Gold holds 100% ownership of 10 ‘drill-ready’ gold projects in the U.S (7 of them in Nevada).

Allegiant Gold’s flagship project is the Eastside project. Allegiant Gold’s Bolo project has provided it with a modest degree of income, leaving the company with around US$500,000. 6 other projects with discovery potential have been drilled since April 2018. However, the share price performance has been far from impressive; what can Gianulis do to start pushing things back in the right direction?

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 and Background Story
  2. Business Plan: Who’s Moving Allegiant Gold Forward and Where are They Going?
  3. Building Value: Moving a Stagnant Share Price Upwards
  4. The Numbers: Cash Position, Burn Rate, Overheads and Future Raises
  5. Standing Out in the Crowd: What Makes Allegiant Gold Different?

Company Website: https://www.allegiantgold.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 Allegiant Gold Ltd company logo

Eclipse Gold Mining (TSX-V: EGLD) – Baking Cookies

The Eclipse Gold Mining company logo
Eclipse Gold Mining 
  • TSX-V: EGLD
  • Shares Outstanding: 41.5M
  • Share price C$0.75 (06.04.2020)
  • Market Cap: C$31.2M

Crux Investor recently sat down for an intriguing interview with Michael Allen, President & CEO of gold explorer, Eclipse Gold Mining (TSX-V: EGLD)

Eclipse Gold Mining started trading in February 2019. It is a Nevada-focussed gold exploration play that is hoping to extract the full potential from its “left-behind” gold-silver Hercules Project.

What exactly have gold investors got to get excited about? Well, the group at Eclipse Gold is responsible for 10 successful takeovers/exits that generated a total in excess of US$4,588,000,000 as well as several growth stories such as Sandstorm Gold Royalties and Equinox Gold. That’s enough to get anyone paying attention. In terms of the Hercules gold project, it looks like scale is the key to monetisation.

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. Business Plan: What Type of Business are They?
  3. Standing Out in the Crowd: Why Choose Them Over Any Other Gold Company?
  4. Plans for 2020 and Company Financials: Cash Position, Plans for the Money and Burn Rate
  5. The Future: Next Phases for the Business amid the Covid-19 Outbreak

Company Website: https://eclipsegoldmining.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 Eclipse Gold Mining company logo

GoGold Resources (TSX:GGD) – You get the best of both worlds (Transcript)

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.

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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.
  • TSX-V: ALTA
  • 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.