Precipitate Gold (PRG) – Exciting Developer near Barrick’s Top-5 Global Gold Asset

Precipitate Gold Corp.
  • TSX-V: PRG
  • Shares Outstanding: 106M
  • Share price C$0.16 (04.06.2020)
  • Market Cap: C$16M

Interview with Jeffrey Wilson, President & CEO of Precipitate Gold Corp. (TSX-V:PRG)

READ ARTICLE FOR THIS INTERVIEW HERE

Precipitate Gold is another gold mining story looking to take its place in the gold bull environment. Precipitate Gold is a gold developer that owns 3 gold assets in the Dominican Republic: the flagship Pueblo Grande gold project, the early-stage Ponton gold project and the parked Juan de Herrera gold project. What is the latest news?

The ground magnetics geophysical survey conducted at the Copey Hill epithermal gold target of the 100%-owned Ponton Project has reported highlight values of 53g/t gold and 17g/t gold. In general, this project could have some good geological potential. Ponton’s tenement measures 3,250 ha and it is excitingly situated just 35km east of Barrick’s ‘world-class’ Pueblo Viejo mine and 20km east of Pueblo Grande Project. Investors should note that Pueblo Viejo is the largest active gold mining operation in Latin America and is one of the top 5 global gold assets. One couldn’t really wish for better company. Things appear to be lining up nicely and the share price has been on the rise impressively. It is clear than Precipitate Gold is trying to leverage the under-explored, highly-prospective nature of Dominican geology to develop Ponton into a de-risked, district-scale gold resource before selling it to a mid-tier/major gold mining company.

Having reached an agreement with Barrick Gold this year, Precipitate Gold has sufficient capital to continue drilling at Ponton whilst developing the 9,863ha Pueblo Grande land package. Work includes selective surface geochemical sampling, systematic rock-clay alteration surveying (via portable spectral mineral analysers), geological mapping and, most importantly, an initial 2,500m of exploration drilling. Precipitate Gold has recently signed an agreement with gold giant Barrick Gold for Pueblo Grande: a $10M earn-in agreement for 70% interest.

Precipitate Gold has US$2.3M of cash to conduct its drill programme alongside Barrick at Pueblo Grande, while keeping Ponton as the second priority. Juan de Herrera still has regional licensing issues and sits on the back-burner.

We Discuss:

  1. 1:43 – Company Overview
  2. 3:09 – Mining in the Dominican Republic: Change of Government Beneficial to Companies?
  3. 7:27 – Progress & Potential: The Business Plan
  4. 12:38 – Financing it All: Options Available
  5. 13:44 – Progress with Pueblo Grande: Deal with Barrick Gold & Terms
  6. 18:55 – Ponton Project: Challenges and Progress
  7. 25:40 – Cash Position, Allocation and Debts
  8. 27:08 – Acquisition of Equipment: How are They Sharing with Barrick?
  9. 29:44 – Bull Market’s Impact on Timeline, Strategy, & Raises

CLICK HERE to watch the full interview.

Matthew Gordon: What have you been up to? 

Jeff Wilson: It’s been interesting times, and lots have been happening, not only for the company but certainly here in the market, and the Gold space has been a very exciting spring and summer.

Matthew Gordon: Your share price has doubled since we last saw you.

Jeff Wilson: We had a few news catalysts that came together late spring, and we’ve seen some nice trading volume and some nice movements here, but it’s a little bit of rising tide. We’ve also had some fairly progressive good news into the market and been rewarded for it, which is nice.

Matthew Gordon: Give us that 1-minute overview of what you have and then we’ll pick it up from there.

Jeff Wilson: We’re a junior exploration company focused in the Dominican Republic as a jurisdiction. We have got 3 key projects or assets all in the Dominican Republic at various stages of work, one of our first forays into the country was a project called Juan de Herrera, which is adjacent to an existing resource held by a company called Gold Quest. We’ve done a couple of drill programs there, delineating the number of targets, many of which are drill ready. We’ve parked that over the last couple of years due to some circumstances with respect to politics. We then shifted over to the central part of the country where there’s much more mining activity. It’s a little bit more mining-friendly and we picked up 2 key projects in that part of the country:  Pueblo Grande & ponton. Pueblo Grande is very strategically located; adjacent to one of the largest mining operations in the world run by Barrick. Ponton was a very interesting, early-stage but quite significant untested project about 25km away. Those are the main 3 properties that make up our property portfolio and we’re looking forward to seeing work on all 3 of those projects between now and year-end.

Matthew Gordon: How have things been since the new government stepped in?

Jeff Wilson: Things have been quite positive. We did have some stalls with the previous government. Nothing major as far as we are concerned. There were some hang-ups with certain projects. But our experience was we were able to get our permits and do our work, get the necessary green license needed. But this change in government has shifted to a much more business-friendly economy, and in turn, pro-mining mandate. Obviously, with what’s happening with COVID in the economic downturn that creates in a very tourist-centric economy like the Dominican Republic we’re seeing much more of a push towards the upside and the potential economic benefits of mining. We’re hearing a lot of that commentary from the new inbound president and the government so that’s been very positive for us.

Matthew Gordon: You must be pleased, but imagine not as pleased as Gold Quest on the Juan de Herrera project,

Jeff Wilson: Correct. As some people may know, Gold Quest and their Juan de Herrera project is a several million-ounce resource project at a Prefeasibility stage. It’s got lots of exploration potential and was one of the catalysts for our entry into the country back in 2012. It’s been hung up on some politics and really a permitting or a license to get through into exploitation from exploration, that’s been a long-drawn-out process under the previous regime. There were some issues related to the outgoing president that it just seemed to sit on his desk, and I think with the change in politics, as you say, I think this shines a very positive light for Herrera and hopefully getting that that license that it needs to move this project through development and any forward movement there will benefit us as well.

Matthew Gordon: What are the economics looking like for you if the project gets going? When do your shareholders get some benefit?

Jeff Wilson: Again, it is a great unknown in terms of when a license would be granted by the government. There are lots of shuffling, as you can imagine, with respect to cabinet appointments and new ministers and that kind of thing. We’re going to have a little bit of a transition period here compounded by what’s happening in the COVID world that we’re still living in so I’m not under the impression that something’s going to happen tomorrow. I think in due course there will be some positivity. That would allow Gold Quest to move that project into Environmental Impact Studies and marching down the path towards a proper Feasibility Study deposit.

The positive impact on that for us does not only do they have a significant existing resource; they have a lot of exploration targets within their property package as well. We’re sitting immediately adjacent to them, right up against their claim boundary for about a 40km strike. In the same geological terrain, many of their existing exploration targets butt-up against our claim boundary and seemed to coincide with some areas where we’d identified some significant mineralisation as well, whether geochemistry or drill results of our own. You’ve got this potential of this underexplored exploration potential throughout the belt. I think for anybody to go in and want to really push hard on exploration to try to find Gold in an area, you want to know that the guys that have already found it can be successful in extracting it; that paves the way for investors to be more comfortable, for our company to be more comfortable and Gold Quest similarly, in continuing to invest in the exploration upside and identifying more known mineralisation.

Matthew Gordon: What are you relying on now happening?

Jeff Wilson: We’ve got an extensive amount of data. We were there operating fairly actively again. The market wasn’t great so there were some fits and starts with respect to access to capital etc. But we were there from 2012 and quite active up until 2016-2017, so we’ve got an extensive number of targets. We’ve done an extensive amount of soil and rock sampling, geochemistry, geophysics and delineated a number of targets. In fact, we’ve got drill permits for multiple target areas within our land package.

 Gold Quest, when they put the brakes on, they had just received about USD$23 24M equity investment from Agnico Eagle whose mandate with that investment was the exploration upside. They believed that Gold Quest had a nice deposit in a nice attractive possible mining operation, but the exploration potential within the district was really what attracted them. I think that’s validation. I think when a mid-tier major comes in and invests in the exploration upside, it’s a validation of the potential to find more in this belt and district.

We feel as if our land package is as prospective as many of the targets that Gold Quest delineated, yet our market cap is significantly lower. We don’t have the anchor or the foundation of several million-ounce deposits in place, but we think there’s lots of potential in this belt and really, it’s a matter of getting the social comfort and the licensing comfort to justify investing back into the exploration of this district.

We’ve got multiple, very advanced targets that we’ve delineated through several stages of work and are keen to, at the right time, to deploy our crews back into the field and try to bring these targets to a drilling stage very promptly. Again, many of them are permitted already.

Matthew Gordon: Have a conversation with Gold Quest?

Jeff Wilson: Yes. There’s been a lot of talk about that since 2012 frankly when we entered into the fray and picked up the ground adjacent to them. One little sidebar to that is the Dominican Republic had a policy under the previous government about a certain number of hectares that any company could own so we were often asked: why were you able to get this very strategic land package immediately adjacent to a brand-new discovery? The reason was that they were maxed-out on their landholding, so we were able to slide in ahead of the crowd and pick up a pretty extensive land package in the same geological terrain. So yes, there’s been a lot of talk about the potential coming together or consolidation of that land package, and we’ll see.

Matthew Gordon: Is this something you would want?

Jeff Wilson: It would have to be in the best interests of shareholders. For us currently, there’s lots of upside for us to add value within our own land package. We really only drilled 2 targets, maybe a total of 25 drill holes, something like that, so there’s still a lot of work to be done on our ground to really delineate and get a better understanding of what we have. Doing something like that today might be a bit premature. But anything’s possible, I suppose.

Matthew Gordon: Do you know what your plan is yet?

Jeff Wilson: Right now, the best path forward for that land package is to advance some of these targets, get some of the primary targets within our land package better tested, get a better handle on what we have. With respect to – what you’re insinuating here – to a consolidation. I think it may be the kind of thing wherein the current Gold environment Gold Quest has a fairly attractive Prefeasibility-staged asset in a jurisdiction that has suddenly become a little more attractive or de-risked to some extent in the eyes of the bigger industry. You may start to see some mid-tiers or maybe even some majors starting to look at what Gold Quest has, look at the surrounding ground in the land package. Maybe that’s where the consolidation could come. Something like that might make more sense.

Matthew Gordon: Where are you going to get the money to do further work on it from?

Jeff Wilson: Up to this point we haven’t really raised money or sought money because, for the last few years, it’s kind of been passive and been sitting on the sidelines. The money that we have in the treasury and the money we raised was largely for Ponton, but this emergence of Juan de Herrera and the upside of Romero we saw coming because we knew that the presidential election was coming and that going to be a change and we were monitoring the polls. What we’d like to do if we’re going to start to contemplate getting back and getting active there again, it’s a big land package, lots of targets so it will require a little bit of cash. We would go back and revisit some of those targets, revisit some of that prior data, which was quite impressive, and maybe start to shine up the potential of that project, perhaps look to do financing specific to what that budget or those needs might be.

Matthew Gordon: Can we talk about Pueblo Grande? How much money have they spent so far, and have they spoken to you about it?

Jeff Wilson: It has moved on. I don’t have a number for you in terms of what they’ve spent so far. I will admit right off the bat, they were affected a little bit by COVID restrictions in terms of boots on the ground and doing work. Because the exploration of Pueblo Grande was outside of the mining operation at Pueblo Viejo, which is their operation right next door. They were able to continue mining at Pueblo Viejo under very strict policies but getting boots on the ground on our project was delayed a little bit. That’s since been relaxed. They can get going again. We’ve been informed by Barrick, and in fact, we put a news release this effect a couple of months ago, is that they had started data evaluation and revisiting some of the geochemical and geophysical work that had been done. They were going to initiate some of their own ground surveying. My understanding is they are currently altering some of the drill permit applications. We had drill permits for it ourselves. They’re maybe going to drill it a little bit differently than we had initially planned so they’re altering and dealing with the government and altering some of the permits. The message from them is they expect to do a minimum of 2,500m of drilling at the primary target where we were focused, which is the Lithocap zone, between now and year-end.

Under the terms of the agreement, they have to provide us copies of any approved budgets, work programs and quarterly reports of any work that’s been done. The question always arises once you do a deal with a major, you’re never going to get any news flow. You’re never going to know what’s going on. In this case, we’ve got a fairly good handle on keeping ourselves informed and therefore being able to keep our investors informed. We expect some things to come between now and year-end. If that drill program gets conducted, we should have results by the end of the year.

Matthew Gordon: Are you going to cut them any slack, given that Covid has happened? Do the terms change?

Jeff Wilson: We cut them a little slack in the final stages of negotiating of the deal because COVID was upon us at that time, and the initial deal put their feet to the fire pretty quickly to spend in year 1. We agreed to push that out, instead of USD$1M in year 1, we made it USD$2M in the first 2-years in order to compensate for the fact that the whole COVID thing was a bit of an unknown. I think they’ve been given a reasonable amount of slack and we would expect them to uphold the terms the deal.

Matthew Gordon: Within the 6-year time frame, can they opt out at any point? Are there any kind of punitive charges for them doing that?

Jeff Wilson: A couple of quick things: one is they have to spend a minimum of USD$1M regardless if they want to cancel the deal tomorrow. The way that that manifests itself is if whatever they have not spent to get to USD$1M, they pay us in lieu of cash. Let’s say they spent USD$500,000. They kill the deal. They write us a cheque for USD$500,000 and walk away. After the first USD$1M, they have the right to walk away at any point in time. What we like about this deal is that it really is an all or nothing on that 70%. There’s no spend USD$3M, get to 51% and then take the hammer and delay in this instance. It’s spent the USD$10M over 6-years to earn 70%. They must deliver Prefeasibility otherwise they get nothing. For those who don’t know, it’s no small task to spend USD$10M in the Dominican Republic, when you have a central operation right next door, you have people, equipment, you’re not shipping things in from other places. It’s a big spend to spend USD$10M in the DR, and to deliver Prefeasibility in 6-years, so I don’t see a lot of room for them to delay. Again, we feel as if we have got, not their feet to the fire, but it’s a deal that keeps them on track. If at some point it doesn’t deliver for them, we will get it back 100%.

Matthew Gordon: What was happening at Ponton?

Jeff Wilson: It’s actually come together quite nicely since we last spoke. That was a project that initially when we did the deal with Barrick, they had inquired about including Ponton in the Greater Pueblo Grande earning agreement because it’s only about 25km away from Pueblo Grande and Barrick’s Pueblo Viejo mining operation, in the same geology. We elected to keep it. My technical team, my Vice President exploration, Michael Moore, really liked the project in spite of the fact that we hadn’t really done a lot of work with it ourselves. We inherited a data set from the previous operators that we hadn’t spent a lot of time looking at because were very focused on the big prize next to Barrick. When were force with do we want to keep this or make it part of the Barrick deal, we dug a little deeper and recognised that there’s a really compelling geochemical target here: there is Gold in soil anomaly that’s never been drilled? It is peripheral to a fairly interesting, what appears to be a Gold-Copper porphyry. All of this speaks to what could be a pretty compelling epithermal system.

We kept it ourselves and when we did the deal with Barrick, we got a USD$400,000 injection of capital from Barrick in the form of a private placement so we were nicely cashed up with USD$2.5M or so in the till at that time. We set out to better understand this project and some of the prior work.

We inherited some geochemical anomalies on the property package, but our first phase of work was to go in send crews in, which were able to do because of our existing tenure in the Dominican Republic, in spite of the COVID restrictions. We had a good network of in-country geological expertise and field crews that we’re able to send locals into the project, again a little bit later than we had initially expected because of early restrictions. We basically collected soils over that Copey Hill Zone within the property and we expanded that anomaly. There was already a fairly sizable 1km by 0.5km Gold anomaly in soils. We expanded that out to the north and northwest and tightened up the spacing. Where prior operators had collected soils every 50m, we collected soil samples every 25m to really get a better density and understand the concentrations. That has returned some nice Geochem in soils, but also along the way we collected some fairly compelling rock samples as well. We were collecting many high-grade rock samples: 7 g/t, 17g/t, 53g/t Gold in rock samples all within a fairly consistent and concentrated area within the Copy Hill.

Now, just as a bit of a sidebar, the Dominican Republic in our experience hasn’t delivered a lot of that kind of surface mineralisation. A lot of the projects in the targets that we’ve delineated, just based on the country’s geology has been a little bit more benign and you get these subtle anomalies. But in this case, to get these high-grade numbers was quite unusual.

The next phase of work that we are finalising now is to run ground magnetics over that. Again, it’s the same sequence of work that we conducted at other projects that have been successful. We will get the Geochem, get an idea where there’s Gold at the surface and then run ground magnetics or ground geophysics over that to see if you get some indication of what the geophysical signature might be. And we’re hoping to have those geophysical results in the coming weeks, which will give us an additional layer of data that we will utilise for drill targets.

Matthew Gordon: What do you hope to know at the end? What do you want to be able to go to the market and say about Ponton?

Jeff Wilson: If you were to ask my geologist, even 6-months ago, when we shifted gears from Pueblo Grande to Ponton, I think his words were, ‘If you put a gun to my head, I could drill this project tomorrow.’ It’s compelling enough. It’s a fairly straightforward model. In fact, one of my geologists on the board, Quinton Hennigh, said early on in this project when some of this geochemical data came up, he said, ‘This is a walk-up drill target. You don’t have to over-science this; this is pretty straightforward stuff. We have a very concise and simple geochemical anomaly and model, but what we like to do and we’ve done this in the past with Juan de Herrera, with target delineation and with Pueblo Grande, we add layers of data that help us vector so that we know where within a broader anomaly where we actually want to put a drill hole. For us, we see the characteristics of an epithermal Gold system here early on, and if the geophysics pan out and we get some magnetic lows coincidental with these rock samples and high-grade concentrations of Gold, that will be that second layer of data that vectors us to where we might set up a drill rig.

The goal here is to get this drill-ready in the coming months, sometime in the next couple of months seems realistic to me. It will be a compilation of geochemical results, geophysical or magnetic results and some mapping, just understand the geology. We layer those 3 together and start to plot up a drill plan.

Matthew Gordon: When will you next need to come back to market and raise some capital?

Jeff Wilson: We are in a fortunate position. I’d like to give ourselves credit for it; we own all of our projects 100%, so we don’t have any underlying option payments where we’ve got a dole out hundreds of thousands of dollars every 6-12-months. Along with that, we don’t have any work commitments where you’ve got to spend USD$500,000 in year 1. The projects are owned by 100%. Holding costs are minimal in the DR so our treasury is fully discretionary, and we can spend this money as we see fit. Right now, we’re focusing the majority of our efforts towards a drill play for Ponton in the months ahead.

We’re currently sitting on a little over USD$2M, that could get us through a couple of phases of drilling at Ponton, and/or some drilling at Juan de Herrera if we decide to do that. Although, as I said earlier, I think the better plan would be to raise capital specifically for that, so our drill costs are quite low in the Dominican Republic. We purchased drill rigs earlier this year, in January.

Matthew Gordon: You talked previously about 50% acquisition costs and maintenance shared with Gold Quest. Is that still the case?

Jeff Wilson: Yes. We acquired those out of receivership for pennies on the dollar. We got what equates to about USD$800,000 worth of drilling equipment for USD$80. We split that cost with Gold Quest on a 50/50 basis and formed a little Dominican subsidiary to hold those assets. We’ve got full access to, if you were to piece it all back together because it’s in parts, 1 fully operational rig right now, we’ve got it all spit-shined and ready to go and then a couple of others that can be updated if we needed to if, at any point in time, we both want to be drilling at the same time. Up until now and maybe in the near term anyway, Gold Quest is not doing any drilling. They’ve been fairly passive while we await this license. We expect to have, essentially, full access to the drill and are hoping to deploy that, get it turning at Ponton in the months ahead.

Matthew Gordon: How do you work that? How do you guys sort that out?

Jeff Wilson: We’ve got some mechanisms in there. One of the key issues is that there are multiple drill rigs so if/when, say Gold Quest wants to ramp up and get 3 drills turning on at Romero while we want to get 1-2 at Ponton or somewhere else, there’s a capacity to, essentially, it’s a bit of a cash call and we would inject a little bit of capital to get these things up and running and go from there. We’ve got some mechanisms in the way that we’ve set up the deal with respect to costs. Essentially, if you’re using the drill rigs, you’re paying for in terms of the personnel and that sort of thing. You pay for your own costs, but we expect there to be fairly significant cost savings. We’ve also got some high-level guys in-country, a drill crew headed up by a Canadian foreman who lives in-country, and so we get the good people, we get the equipment and we can do this at a fraction of the drilling cost of what it would have cost us to contract out and do the same work. It’s the same drill rigs we’ve used, and Gold Quest has used for years, so we know it very well and it’s the right equipment for these projects

Matthew Gordon: What it’s doing at the moment with Gold are you not tempted to go to market and just raise a little bit more money?

Jeff Wilson: It’s a conversation that we’ve had internally for a few weeks. As you and I have talked about previously, the amount of money that was coming into the system over the last several months was staggering quite frankly, and I think when you see a market like that your first response is, this isn’t going to last, and then it continued to last and more and more money came in. Some of the dialogue I’ve had with some of the banking guys that I deal with is, we’re starting to see some generalist money, so you can’t help but think to yourself, should we put our hand up here and make a case for getting a little bit of capital into the treasury – strike while the iron’s hot.

We felt, however, and I do feel, and I always have that certainly raising money when the money’s there makes all the sense in the world, and I don’t dispute that ever. But I’ve always taken the view that we like to, or I like to, raise money at a time where we’ve got a very clear and focused rationale for it. And in the last couple of months, we were working on relatively inexpensive low-level work to get Ponton ready. As things start to unfold there and as Juan de Herrera starts to see some daylight, which happened in July and August, I think that creates an opportunity to say, maybe there’s an opportunity here to revisit some of those targets at Juan de Herrera, that’s going to require a little added capital that we didn’t already have in the treasury and didn’t have budgeted. This now is the rationale for it. I think people want to see that if you’re going to raise money, it’s not just to top up the treasury. It’s with a specific purpose that can bring about a return on investment for those investors. I’m going to raise money, here’s how I’m going to deploy it. And here’s the timeline for us to find out if we’re heroes or zeros based on the results of that work.

Matthew Gordon: Did you have those sorts of conversations internally?

Jeff Wilson: Certainly. And again, we wouldn’t be where we are with regards to our landholding at Juan de Herrera adjacent to Romero if we didn’t believe 3-months ago, 6-months ago 12-months ago, that the political environment was going to work favourably in that things were going to work in favour of that permit. If that was to us a complete dead Issue, we would have abandoned the ground. But we’ve always believed that the Dominican government understood the importance of mining and was going to recognise the importance of Romero and the economic benefit that it could bring.

We saw this development coming. I didn’t see this coming in the Gold market or the Gold price. I don’t know how many people saw that per se, but we saw that the landscape in the Dominican Republic was going to improve and we could see that there would be the potential to spend more money on more targets and be more active on multiple fronts. We definitely had those conversations in the summer when things were really rocking and rolling. I think that our strategy was – let’s advance a couple of these targets. The Ponton target – let’s get it to drill ready. Let’s get the final layers of work pulled together so that we’re going out and saying this is where we’re going to drill, this and how we’re going to drill. This is going to require these many metres, these many holes, similar to Juan de Herrera.

I think we’re very close now to starting to revisit some of the previous work that we’ve done there, perhaps reintroduce people, because I think a lot of people have bought Precipitate in the last couple of years solely for Pueblo Grande and are not particularly aware of the prior work that we’ve done at Juan de Herrera. If we’re able to reintroduce some of those anomalies, those targets, the prior drill results, people will recognise that in the right Gold and right political environment in the DR, which I think we’re in right now, there’s a justification for a fairly sizable budget of that project. We’re definitely thinking about that. But again, right now we’re trying to play out our strategy and bring these things to a point where hopefully we get a little bit more value. That’s a great unknown in the market and it could go the other way anytime soon. But if we lay out some of the fundamentals on a couple of projects and target areas perhaps that’s the opportune time to strike and raise the capital.

Matthew Gordon: Jeff, thank you very much for that. It seems to work elsewhere, stay in touch.

Jeff Wilson: I really appreciate the opportunity, Matt. Thanks again.

Company Website: https://www.precipitategold.com/

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OutCrop Gold (OCG) – ‘Hybrid’ Generator Clear on Narrow Focus

Outcrop Gold 
  • TSX-V: OCG
  • Shares Outstanding: 84.97M
  • Share price A$0.53 (23.09.2020)
  • Market Cap: A$45.034M

Interview with Joe Hebert, President & CEO of OutCrop Gold (TSX-V: OCG)

OutCrop Gold is a Canadian precious metals explorer with assets in Colombia. The company operates under a prospect generator JV business mode: a strong hybrid business model. Prospect generators are generally a lot more honest and pragmatic than conventional miners. Their sole focus is monetisation and their fundraising capacity is usually severely inhibited.

Having recently raised $5.75M, OutCrop Gold are clear where is best to put this money. The share price has struggled in recent years, but a recent uptick has got the market interested again. OutCrop Gold has a portfolio of advanced exploration gold projects called Santa Ana, Cauca and Mallama; non-developed projects in Antares, Oribella, Lyra, Argelia and Kuntur; and also a royalty in the Willow Creek project in Alaska. There is an encouraging institutional backbone to this gold mining story, with Eric Sprott sitting on close to 20%. The management team holds 25%, so they are clearly aligned with shareholders. So, what will the focus be for OutCrop Gold?

Everything has been parked up except for Santa Ana, which is where Outcrop Gold will be spending all of its time, money and resources. The gold player will be chasing high-grade, narrow gold veins and is attempting to develop its gold asset in a methodical, logical fashion. We like what we’re hearing so far, now it’s time to deliver some value to the market.

We Discuss:

  1. 2:20 – Company Overview
  2. 3:13 – Business Plan & Strategy of a Hybrid Company
  3. 4:43 – Team Track Record
  4. 6:17 – Market VS Company: Drivers of Success
  5. 8:51 – Comparisons & Competition: How Will OutCrop Gold Stand Out?
  6. 12:16 – Accelerating Timelines: Any Changes in Planning?
  7. 14:06 – JV Possibilities and Types of Deals Considered
  8. 15:43 – The Assets: What Have They Got and What are the Plans?
  9. 18:55 – Overvalued? Deliverables to Excite the Market
  10. 23:59 – The Future and End Game Possibilities
  11. 25:04 – Market Predictions & Expectations for Price
  12. 27:56 – Shareholder Relations: Profits, Warrants, Options

CLICK HERE to watch the full interview.

Matthew Gordon: Give us that 1-minute overview on the business and we’ll pick it up from there.

Joe Hebert: OutCrop is a hybrid generator in Colombia, or a prospect-generator in Columbia. When they say hybrid, we will do drilling as part of a joint venture model to add value, especially where it’s fairly direct and relatively cheap exploration, to significantly add value to the project. We’ve been to Columbia, our entire focus now for 8 years. We’ve built an incredibly strong portfolio. And what we aren’t currently drilling will go to funding joint venture. We have 3 flagship properties and one we’re drilling on until further notice and on the others, we will try to seek joint funding, joint ventures.

Matthew Gordon: Prospect generator, we understand, what’s your version of that?

Joe Hebert: We drill. We’re not against drilling our own projects if there’s a specific reason to do it and add value. Basically, if it’s a no-brainer, we will drill it.

Matthew Gordon: When are you in a JV, or are you drilling outside of any JV in place?

Joe Hebert: We will drill outside of a JV. We’ll drill outside of the JV, 100% property. Even though we intend to continue to bring in joint venture partners, hopefully, majors, if possible, to fully fund other projects.

Matthew Gordon: Are you tempted to be more than just a prospector??

Joe Hebert: In this market, you have to be reactive to value. We’re fully funded to drill 1,600m p/m, or at least till next June. Actually, we would probably tee up another prospect, that might be Cauca or Mallama where we would do at least a scout drilling program and then use those results to attract better quality agreements and better-quality companies.

Matthew Gordon: What is your track record?

Joe Hebert: I’ve worked for Placer Dome, Ur-Energy, Superior Metals, some short contracts for Major Freeport McMoran, extensive generative work in Mongolia, Suriname and a bit in Mexico. Then I started working in Columbia in 1997, doing a big mapping project on Mt Moto, which is currently being divested, I think, by Gran Columbia to Calder, I believe.

I’ve spent a lot of time in Columbia. What Columbia offers is, it’s the last place in the Andes to work where we acquire out cropping deposits. It’s not conceptual, it’s put your hand on it and drill it.

Matthew Gordon: What about the rest of the team?

Joe Hebert: The rest of the team is, we have a VPEx, Dave Thomas, who’s married to a Colombian, he lives in Bogota. Then the rest of the entire team of geologists, GIS support and other technical work involved is all Columbia. I would say that’s a big draw because we can do work that you couldn’t do if you didn’t have Colombians on the ground.

Matthew Gordon: The market has suddenly gone nuts. You’re a beneficiary of that, but you haven’t seen these dizzy heights for a long time. What’s driving that?

Joe Hebert: What’s really driving it is we’ve got a strong message that’s being received by the market in Santa Ana. It really correlates with delivering some pretty impressive, over 4kg/t Silver in our drilling, up to 37g/t Gold. People are interested in the story and to date, we’ve said everything we said we’d do.

Matthew Gordon: Have you delivered real value on the ground?

Joe Hebert: No, I think we deliver real value in the ground. If you look at it historically, actually narrow veins produce more Silver than any other deposit type. The other thing is that we’ve been upfront about the narrow veins, but they are usually in packages. We have several examples: we have one example in Roberto Tovar, where we can composite 3 veins over 18m, straight-line dilution, and still arrive at 450g Silver. That’s almost 50% more than the average grade that’s in production right now for Silver mines.

The other is the number of veins will result in the number of faces that will result in a number of flexibilities in future mining, if it comes to that. It will be shrinking stope at 1.2m. You could certainly do it. It’d be Slusher Stopes, 1.8m and then it would be a composite and high-angle veins at bulk dunnage underground. It’s all a matter of grade and, actually, narrow veins, very high grade – you move fewer tons than wide veins because it is just wide and high-grade veins – that is a unicorn – they don’t exist.

Matthew Gordon: There have been some unfavourable comparisons made this week. What’s your response to that?

Joe Hebert: There are 3distinctions that could be made: the size of the shoots. We have 200m ingenuous shoots at 10g/t equivalent Gold, 800g/t equivalent Silver. These things are massive with respect to epithermal systems. The grade contour is excellent. We don’t have any knolls within the high grade. Every high-grade hole is within a 10m, 800g/t equivalent Silver contour. Then we have the composite veins. We have vein packages so you have narrow veins, but you might mine 3 of them a slot at over 18m at 450g/t. Narrow veins are the basis and what you have to work with, but depending on their characteristics, people mine them. It’s better than some of the current Silver production.

Matthew Gordon: How do you go about making yourself attractive for what’s to come?  How does that usually work and why is it different today?

Joe Hebert: How it’s different presently is, I can tell you that Columbia was in a real dry spell, honestly, for prospect-generators that didn’t also do drilling, as we couldn’t sit on the money we raised. Also, news, like Santa Ana, drives joint venture interest from companies. I will say that majors don’t go into Columbia except by juniors. Look in the phone book in Columbia and there aren’t many companies to go to. We have noticed a big uptick in companies that want to talk to us, want to visit us when they can, when to visit projects. There’s no rule that says you can’t JV and drill. It’s just not commonly done, but eyes are on us for that drilling, for the drill results we have produced.

I’m have online meetings with three majors coming up in Beaver Creek, the Gold Summit. I’m fielding calls and we’re not in a hurry to joint venture Santa Ana, because we control catalysts that way, but at the same time they’re looking at it and at our other projects.

Matthew Gordon: Why are you not changing your plans?

Joe Hebert: We’re bringing down the second rig on September 8th. What we’ll do with that is, we’ve got three shoots identified. We’ve only drilled them to 200m. With that second rig, if we don’t have additional shoots to drill for the second rig, we can come in and set up on the same or similar stations and drill from 200 to 400m. It’s looking like those shoots don’t extend that deep. We are in the middle about a 5,000-soil sampling program, we’re coming up on over 1km of trenching, if those result in additional targets, some gradient resistivity if those generate targets ahead of us, we can easily bring in a third rig in 6 months.

Matthew Gordon: What does that do? Does 1 rig deliver 1,600m a month or is that 2 rigs?

Joe Hebert: That’s 2 rigs.

Matthew Gordon: Give me a realistic view of what a JV looks like in this environment, what you think it could be?

Joe Hebert: For us, the trigger would be when we are about to enter the resource or when the project is ready to enter a resource delineation stage. What the deal would like in this case, with a bona fide discovery and high grade, the framework of the deal would be a 51 JV and then maybe a 70 JV at their option. That total spend would exceed, in this case because we would have resources to delineate exceed USD$20-$25M.

We’re not miners right now. The company has mined before. It’s certainly less fun than exploration, and less forgiving, but I don’t think we’re going to become miners.

Matthew Gordon: Are you going to reassess those?

Joe Hebert: Yes, we are constantly looking for new stuff. We’re actually considering another jurisdiction, but it would be limited in focus. If you look at Cauca, there’s 22,000m in our Cauca project, it’s a huge porphyry, the veins were never honoured in the models. We have re-logged, we have over 35 intercepts of epithermal veins, whereas you have an uninteresting porphyry of about 45 to 55M tons at roughly 0.5g. We think with a fairly small program, like Santa Ana come into the core of the porphyry and drill out high-grade veins, model that and maintain the tonnage or increase the tonnage and increase that deposit to a 1.5g mineable deposit.

Mallama is very similar. It is probably technically superior, possibly, to Santa Ana, in potential, because you have clustered veins of up to 8 veins over 0.5km. The miners, we know, they let us in the mines. They’re producing at 23g p/t Gold and over 200g Silver. Mallama could be very similar to a Borrusica, so there’s certainly going to be people interested in both projects. I would say we’ve got advanced discussions on at 3 three projects for a joint venture, on which we’ve done minimal exploration, maybe as much as USD$100,000-$200,000. If we weren’t offered a JV on those, we would probably accept that those would be advanced.

Matthew Gordon: How much money does it cost you to keep those ticking over while you’re focused on Santa Ana?

Joe Hebert: It is minimal, really just holding costs, titles. They have a canon fee. They have to have a work program in place, but that doesn’t have to include drilling. Outside of Santa Ana, we might have a spend of USD$100,000, every 6-months on holding those, roughly.

Matthew Gordon: Are you attributing any value on the balance sheet to either of those at the moment?

Joe Hebert: There is a value on the balance sheet, but it’s pretty much our dollars invested, it doesn’t reflect really the value in it.

Matthew Gordon: Do you think you’re overvalued, given what you’ve been able to tell the market so far?

Joe Hebert: No, not overvalued. You saw us go to USD$0.08c and you certainly saw pull back from there. I can’t say I’m surprised. But I think, just benchmarking some other companies in a similar situation with respect to market cap, we still have significant room to grow.

Matthew Gordon: What are you going to be able to tell the market over the next year that’s going to get them remotely excited?

Joe Hebert: When we bring in the second rig on the 8th, you’re going to see a, assay turnaround of 2 weeks for the next 6-7 months. Our next 2 targets teed up, El Dorado and Megapozo, Eldorado has as much as 180g Gold and 2kg Silver over 0.6m, 1.2m, I believe. Our next targets are well supported by trenching. What we see at the surface, we expect in the drilling. You’re going to see a continual flow of good assays, like in the past, they’re going to conform to what people have seen so far, maybe higher. And then, what we showed in our last news release a couple of weeks ago is that we’re now in Guanabanera below the mine zone. We are averaging up on our vein with, I think people are anxious to see that. Then we’ll pull together 1-2 JVs in the next 6-8 months, let’s say 1 in 6 months and 2 in 9 months.

Matthew Gordon: What are they waiting for?

Joe Hebert: Because major companies are slower than the second coming of Christ – it’s just a fact. You baby them through the decision. You say, guys, it’s right here, you know?  I’ve been in big companies. No-one wants to make a decision; it goes down the food chain until someone makes a decision. That’s the way it’s been in the past. We’ve had Newmont, we’ve had Newcrest and it’s always, they’re not companies, they’re committees, honestly.

Matthew Gordon: There’s a process you’ve got to get through.

Joe Hebert: You can look at Gramalote, we all know B2Gold, their only project in Columbia is Gramalote. We’re in the same district. We have bigger soil anomaly. And you can probably guess that the companies, maybe a NewCo that might be attracted to Mallama, because it’s so much like Borrusica. In the past, you might recall we had a fully funded generative alliance with Agnico Eagle, only 3 years ago, they spent over USD$3.5M. We spent 20% of that just to generate projects. Agnico Eagle has an office in Metagene and we can help them get traction in Columbia again. Columbia is a bit of a tar baby for some companies, but on the other hand, you have big outcropping deposits still. Relatively speaking, the technical risk is quite low. And then good, experienced companies that can deliver and be technically relied on by majors to either perform or generate projects for them, like I say, I can’t think of another one in Columbia right now.

Matthew Gordon: What is the kind of rerate that you would be looking for once you do sign a JV? What are you looking for? What is a good outcome?

Joe Hebert: A good out for come for us, to leave the market cap side of it for a moment, the good outcome for us is a much bigger spin from third parties that just comes into the company. We don’t have to raise, we do not dilute, and they keep for a relatively long term, because it looks like a discovery in front of them. Then I think we would see at least a USD$120M market cap per venture.

Matthew Gordon: What do you make of this Gold market? Are we going to see a pullback?

Joe Hebert: Yes, everything pulls back, but on the other hand, boy, I don’t want to get too greedy. I’m happy as a clam at USD$2,000. What is that? Has it been USD$2000, in ‘83?

The other thing is, just looking at the performance lately with respect to where else you can go everyone talks about the historical ratio, but it’s real, it’s gone from 97 to 80 in less than 3-months because we had to revise all our equivalent calculations. But yes, this is great. These things don’t come often in your career, you can even count them on one hand. It’s where all the excitement of the job is.

Matthew Gordon: How long do you think this thing lasts? You’ve been through a few cycles, why is this so different?

Joe Hebert: It is certainly different but it’s not that different. Maybe the numbers are different, but a 3-4 year bowl, it’s not unusual. I don’t see any large-picture things looming to detract from what’s driving it now. It’s cheap money, cheap capital. The investments are basically protected by the federal reserve, in a sense, from heavy retraction. Gold is exciting right now. It’s going to take a while for that enthusiasm to peel off. We have a lot of investors that are very happy because they’ve made money and they think they’ll make money again. They’re sort of forgiving, not entirely, but they’re a bit forgiving if you don’t. I looked at a situation where the company is not too worried about the high-level metrics for the next 3-4 years.

Matthew Gordon: Taking advantage of the prices you’re reaching for the first time in 3 years?

Joe Hebert: Do you mean investors taking profits? Well, they had better. I want them to.

Speaking of warrants, we have some warrant exercises that have taken an impact. We’ve been cashflow positive for 3 months with this drilling, you really can’t fault people for taking advantage of their warrants. Internally, none of us can take any of that. We would, but we can’t take any options. It’s where every time we get into a broker placement, we’re locked out for 4-6 months. We have this last financing coming, Cree trading, I believe October 19th, but I think what you’re going to see is we’re just going to absorb it. I think the interest is out there for people looking for big positions and it can be a buying opportunity, let’s see what happens on about October 18th. I think it’s going to be a whimper. I don’t think we’re going to see a lot of stuff.

Matthew Gordon: What was it done at?

Joe Hebert: 28. USD$0.28c per unit, half warrant at 60, I think, I would have to check.

Matthew Gordon: Good, that’s what we want to see. Thanks for the run through. I do like a prospect generator story. 2 drills, potential for a third. Keep the information coming out to the market, people want to know how you’re getting on.

Joe Hebert: As I say, there was too long of an interval for a while, but we have 2 rigs starting the 8th. Once we get the lab loaded up, we’ll see assays every 2 weeks.

Company Website: https://outcropgoldcorp.com/

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Minnova Corp. (MCI) – Restarting Production High-Grade Manitoban Gold Mine

Minnova Corp.
  • TSX-V: MCI
  • Shares Outstanding: 37.08M
  • Share price C$0.36 (21.09.2020)
  • Market Cap: C$13.350M

Interview with Gorden Glenn, President & CEO of Minnova Corp. (TSX-V: MCI)

READ FULL ARTICLE FOR THIS INTERVIEW HERE

Minnova is a CVE-listed gold developer that hopes to soon become a gold producer. There are no shortage of promising gold stories with the gold price hovering at around US$2,000/oz, so what sets this one apart?

On the face of things, this looks quite conventional. It all hinges on bringing a previously producing gold mine into production. The current 5-year life-of-mine will need extending imminently, otherwise, investors are unlikely to show interest. Glenn is confident this can be achieved, and he is also cheery regarding the abundance of historical, high-grade data at his disposal. The company also has an old processing plant which can be recommissioned for c.$10M, which adds some value to this small story.

It’s a gold play with a market cap of c.15M. Investors are going to have to weigh up Minnova stock VS the ubiquitous gold juniors that also present compelling investment propositions. This model of restarting production at a mine previously shut down in a depressed gold bear environment has worked before but needs the fundamentals to stack up and the money to it. Will it work again?

We Discuss:

  1. 3:17 – Company Overview
  2. 4:47 – Business Plan & Strategy: What do They Have?
  3. 14:26 – “Potential Increase in Grade”: How?
  4. 20:04 – Process of Growth: Limits to Making Money for Investors
  5. 31:09 – Raising Capital Without Dilution: How?
  6. 35:51 – Shareholder Breakdown, Management Stake & Remuneration
  7. 37:26 – Frustrations and Market Disinterest: What’ll Change?

CLICK HERE to watch the full interview.

Matthew Gordon: Just give us that one-minute overview of what Minnova is.

Gorden Glenn: Minnova is an emerging Gold producer. We are a venture-listed company: MCI.V, emerging Gold producer focussed on restarting the past-producing PL Mine, briefly operating in 1989. We acquired the project in 2011 and have been diligently, steadily progressing the project through the various stages of technical milestones, NI43.101 compliant reports and related programs to get it to the point where we can restart it. We are advancing the project, completing the technical milestones. We completed a positive Feasibility Study in 2017. It has relatively small mine life based on a reserve base of about 260,000oz at 7g of a decent grade.

We didn’t go for size initially; we went for a time to restart. Smaller reserve base, we have doubled that in resources, about 700,000oz in the global resource base. The plan is to get it up and running in a logical way and continue to explore and expand based on cashflow.

Matthew Gordon: Was that the business plan?

Gorden Glenn: You talk to different investors; some are focussed on cashflow, time to action, some are focusing on what’s the exploration upside? We have both. I don’t mean to confuse people; as much as we are a producer with a permitted, very advanced, low CAPEX project, in a tier-one district; Central Manitoba, Canada, we are also an exploration company. There has been very little work done of our permitted lease in 40 years. We are evolving, I’d say at light speed, based on the calls I’m having with my crew, the structural interpretations of the deposit and controls on Gold mineralisation. There is lots of exploration upside, so it’s a balancing act to where do my investors, shareholders, where do they want me to focus? I’m very close to them, I talk to them regularly. If they want to go to production, we work for production. If they want to strictly drill and explore, we go that way. Both have costs and pros and cons associated with them, it’s really just managing the opportunities for both, good opportunities.

Matthew Gordon: What data have you got and what do you need to do, having just completed your Feasibility Study?

Gorden Glenn: The mine was operating in 1988. There is about 7km of underground development already on it that, quite frankly, was in the wrong position. There is a 1000-ton p/day mill that is in very good repair. All that information, historical drilling, obviously, our drilling to further de-risk and define the reserves and resources that exist on the project, all that was fed into the Feasibility Study. That was done at USD$1,250 Gold. $0.77c a dollar or $1.30 to the USD$. That all fed into a positive study. But the market wasn’t there. I’m very aligned with my shareholders and we are obviously cognisant of these things, looking at the optimal time to develop the project, it wasn’t at USD$1,250, $1,300 Gold, we didn’t push too hard. We let the project mature, let the market mature. We all had a view, the shareholders and board, the Gold price was going to be higher at some point in the future. We were really focussed on the option value of our project at higher Gold prices, so the mathematical calculations of mine model and NPV, IRR, also what’s the exploration potential associated with a developed Gold mine and an operating mine? 

We had tremendous leverage and upside to both developments, and at these prices, exploration.

Matthew Gordon: You are talking in the Feasibility Study about a 5-year life of mine (LOM) which would normally terrify a lot of people.

Gorden Glenn: We know that the mine’s challenges at the time were more to do with the scale of operation that they envisioned. Quite frankly, that 1000t p/day mill that they built was too big for the mine that they developed. In essence, they over-capitalised the surface structure and they under-capitalised the underground mine. They didn’t have enough mine development to feed that mill. They tried to proceed to operate at that level but put tons over the grade and didn’t deliver the grade to make the project economics for the mill.

We see this in our industry often when people overpromote and underdeliver. It is management decision errors at the end of the day. Our focus is on detailed infill drilling, better geological milling and controls to develop a compliant NI43 101 reserve and resource.

We independently calculated a Feasibility Study with some top-notch, very experienced mining engineers that understand these types of deposits; narrow-vein, shallow-dipping, not an unusual circumstance for a deposit.

The grades are good. The infrastructure is excellent. The location is excellent. We have many of the positive attributes that I would look for and you would look for as an investor, to tick the boxes. We have everything there. Do we have a scale? Not quite yet, but we do more drilling and exploration, we will get there. Our past press releases have highlighted new discoveries, good grades, good mineralisation, wide open to exploration. As I said, in 40 years, they really haven’t stepped off the mining lease to explore the 10-odd km of prospective geological formations and structural domains.

Matthew Gordon:  If I go to USD$1,700, that goes to over CAD$147M. The numbers are there if you are able to deliver and get into production.

Gorden Glenn: Significant infrastructure on site. It is really what makes the project’s capital so low; USD$35M to restart a mine in Canada – no – you don’t see numbers like that. That’s because of the mill, the location and existing infrastructure.

The underground mine development is no magic; it is drill blast rock, 4m around, we can calculate out most of the mining contractors that I deal with and am in talks with. They can map this out in great detail and that number is there. If I break it down to USD$35M, that will give you a sense of how we go from here to there in a relatively short period of time.

USD$35M breaks down: $15M for the mine development. Properly capitalising the underground so we have enough slopes developed, producing, being pace backfilled wherever the case may be.

$10M for mill refurbishment. That infrastructure that you see behind me, again, it is in excellent repair. The mill refurbishment is more to do with the electrical. The mill was vandalised in the ‘90s, mostly stealing wire out of the wire racks to sell it to whatever, for Copper. We have to replace all that. We have to modernise certain things, install a new gravity circuit, new components within the mill. It’s no magic; it’s a very plain, vanilla metallurgy. Very typical of Canadian Archean Gold deposits. It is projected recoveries plus.

When the mill operated, the mill operated pretty well. It was milling below head-grade ores and getting between 80 to 90% recovery, they got higher recoveries when they had higher grades. So, very simple mine milling process.

Then there’s another CAD$5M for surface infrastructure, roughly that’s about USD$30M. Then about $5 or $6M in owners’ costs, contingency, first bills, all the usual stuff. So $35M, it’s not big stuff.

The other important thing to remember about our project is that we are permitted; we can literally be in production tomorrow, had the capital and investment already been done, we would already be in production. 12-months plus timeline to production. There are not too many projects out there that can achieve a realistic timeline to production that is that short, with that little capital and still have tremendous exploration upside.

Matthew Gordon: You have got some data, you have done some work, what do you mean by a potential to increase Reserve grade?

Gorden Glenn: With many of these high-grade deposits, you get a nugget effect. During the original Feasibility Study in 1997, Lakefield did the metallurgy, SGS today. They estimated a certain grade and a certain recovery, and they slid it out in terms of gravity recovery, which could have been up to 60-70%. Total recover of 90%. The vast majority id free gold coming out of a gravity circuit. When the mill was operating, they only got about 40% and they struggled with understanding their nugget effect, their grime size, to optimise the liberation of free Gold. When we were doing our infill drilling through the Feasibility Study, what we noticed was that the geologists would sometimes recognise visible Golden core or they would recognise very prospective mineralogy or see pyrite, pyrite paratype. This inter-drill assay is going to grade very well, and they were coming back lower than expected. Eventually, we twigged and said, just a second here, what are we missing? We looked at total metallic stream-fire assay, which is a much more detailed, much more focussed on consuming the entire assay, and splitting that assay to capture all the Gold in the sample. Not just a 30g cut of what cut be 2000g total weight of an assay.

We identified over 60% of those samples that could be representative of across the deposit strike and across the deposit dip, we were seeing positive variance in grade. It cuts both ways: we had high-grade samples reduced and lower-grade samples increased, but overall, we saw initially a 20% positive variance. As we did more data, we are sitting at about 12 to 13% positive variance. It just tells us that there is the potential that the reserve and resource grade have been underestimated because they mostly relied on traditional FIRE assay methodologies.

Going forward, we do total metallic screenings so we can try to eliminate the uncertainty of that. But at the end of the day it comes down to, you have to get on the ore, develop stopes and test the ore for the actual grade you get at the stope.

Matthew Gordon: How meaningful is it to you in terms of incremental margin?

Gorden Glenn: If you go to the original Feasibility Study, if you go to the sensitivity table, a 10% increase in the grade of the deposit is almost equivalent to a 10% increase in gold price. The impact on the project’s NPV and a commensurate increase in Gold grade have a big impact on the project.

Again, the data is incomplete on that. I can look at the Gold price and do a simple, updated Gold price-sensitivity leverage. As you pointed out earlier, I’ll just use USD$2000 Gold as it is a simple number for everybody in the Gold space to target, the project has an NPV-5 of over $200M and higher. And an IRR of over 200%. That’s because of low CAPEX, short timeline to production,

The grades are the grades. No change to any other parameter of the Feasibility Study.

If we had been able to demonstrate a higher reserve grade, then that number will equally bump. Those are the numbers just adjusting the Feasibility Study. If we are able to stand upon our resource, which is not unreasonable, demonstrate exploration potential, convert existing resources into the mine plan, adding 1 year to the mine plan can add NPV of $30M to $40M. I’m pulling numbers there that you can calculate from the Feasibility Study. It’s about $1/share because our leverage is not only to the price of Gold going up or potentially higher Gold grades, it’s also that we have a low share count that has been managed prudently over the last few years to offer shareholders leverage per share, ounces per share, NAV per share-type higher numbers.

I think we have, again, back to criteria investors look at to evaluate a project, I think we can tick many boxes with few exceptions. The ones we haven’t ticked yet, if I had more money to spend, I’d be able to tick them.

Matthew Gordon: When do you know enough about the screening project of the assays to say, here is the process by which we will economically extract this incremental Gold?

Gorden Glenn: Starting the mill has nothing to do with certain forecasts or an anticipated higher grade. Our metallurgy is fairly straight forward, plain vanilla. We could restart the mill as it stands right now, working with these grades right now and generate a very attractive cashflow in return. The opportunities to us at the project level are really about exploration, resource expansion and right now, we are running that 1000 t/day mill from our Feasibility Study at 6000 t/day. We are trying to right-size our mill throughput for our mine. As we develop the mine and gain experienced mining, we should be able to ramp up the organic growth from our existing resource base, basically grow into that mill and then we have a satellite deposit 8km away called NKOMAS, which right now is about 60,000oz.

We will start drilling that this winter then works it into a future Feasibility Study. I can see our production plan over a 5-year period being a little bit less than 50,000oz, going up to 60,000 to 65,000oz with no significant incremental CAPEX, really just expanding and converting what we know.

Matthew Gordon: What’s to stop this from being just another mining exercise? Whatever money is made from production just gets ploughed back into exploration?

Gorden Glenn: That would suck and that is not the plan. I crank my model. I flex my Feasibility model once a week, especially in the last quarter as Gold prices marched up USD$1,500, $1,600, $1,700 to where we are today, the cusp of $2000.

This is all something that could deduce from the public documentation, Feasibility Study. Free cashflow in Y1 at USD$1,950 and current exchange rates would be well over CAD$60M. Pay back – less than half the year.

In Y2, well over CAD$70M, Y3, over CAD$60M. It is, quite frankly, a bit of a cash cow.

We will definitely be allocating capital to exploration and resource expansion. We don’t need mill expansion capacity; we need to demonstrate exploration then regional exploration. I know this from past experience in past lives, I want to attract institutional investors, ultimately an M&A from a bigger player that says, hey Gorden, that’s an interesting project 50,000oz p/a doesn’t really do it for us, what have you got in your back pocket? Do you have 100,000? Do you have 150,000? I’m talking a little casually here, but the point is, if we explore from our cashflow, I think we have a good chance of demonstrating that scalable upside, and that is at the project level.

One of the things I didn’t really highlight for you here, Matt, because we are really talking about the postage stamp of the property, in the context of the Flin Flon Snow Lake Greenstone belt, a belt that has been developed over 100 years, still mining continuously over 100 years. Three Gold mining deposits. It has lacked competition. It has lacked other junior companies being fully funded and active and competitive in the belt. It was really dominated by one company: Hudson Bay Mining and Smelting in the day, what we know as Hud Bay the public company today, they would have been looking for a base metal project to feed a Copper smelter and a Zinc refinery. Totally different exploration approach. We believe there are significant structurally controlled Gold deposits in the belt that just haven’t been identified because there wasn’t a focus or ownership or active and prospecting junior community.

The PL deposit and the work we have done on the project and getting very specific, detailed, looking at new structural interpretation has really afforded us an edge on what I think are controlling structural domains in the belt. And one of the medium to long-term targets for the company is really to expand our property position, get a big enough footprint to really attract institutional investors, more intermediate and senior companies to the camp to either look at us for what we have or just to become in the camp. Any success in the camp on the Gold side just enhances our project and our star.

Matthew Gordon: How do investors make money?

Gorden Glenn: I think we are massively undervalued relative to the typical criteria that anyone could, I know you hear that all the time, but it’s simple: Feasibility Stage project, go and grab your peer group of similar FS, permitted, shovel-ready, basically pending finance projects and you will see different multiples: NAV, resource, ounces, discount to NAV, to NPV – pick your number, our number is low. For whatever reason? There is no good reason. Marketing, marketing, marketing. That’s why I’m talking to you; you’re going to make it all better.

The issue with the valuation here is pretty significant in a rising Gold environment. What we have in our back pocket is exploration upside. We are releasing, we have had a couple of press releases on that. We have our leverage to the Gold price based on the current Gold price environment. All these things drive value, it’s all about attracting eyeballs to our development strategy and timeline to production.

I think people can make money on an increasing, obviously, Minnova share price is increasing, to some relatively higher valuation. I’m not saying we are going to exactly reach the peer group we are in, we are still a relatively small forecast producer, but I think we can get much higher than we are. Then if we have some further exploration success, develop some new targets, which we are doing, that adds some speculative blue sky to the story. We are pretty excited about it.

Matthew Gordon: Is it a re-evaluation by the market, by institutions on the basis of exploration success? What’s the plan?

Gorden Glenn: I have 2 plans and they don’t compete; they augment one another for the different shareholder factions that are there. We are both an emerging Gold producer with a short timeline to production and low CAPEX and we are an exploration company in the shadow of our mine-development project, off the mining lease. Both of those should be attractive to any investor. You just need to decide which way you want to play it. Do you want to play it as short-term Gold production and a rerating and cashflow that’s going to be deployed to further expand and explore the property in general? Or do you just want us to spend money on exploration and get to 1Moz? Personally, I am an NPV guy. I am a risk driven guy, I’m a risk-averse guy. I see a project that is feasible, permitted, very short timeline to production. I want to get to cashflow, but I listen to my shareholders, I listen to all investors; they want to see the blue sky on top of that. We are working on that right now.

One of the things, that may be important to some of the investors out there, we don’t spend a lot of money to get where we want to be, relatively speaking. As you know, there are exploration companies out there, and some of them have multiples of our market capitalisation and they don’t really have the assets we have, or they are maybe half our size, and again, they don’t have the assets we have. It’s trying to get people to really think about what is less risky, what is a higher reward?

If I am able to put in place a project finance structure in the US, USD$20M+ range, then my requirements for equity are significantly less than virtually anybody else out there to get to production. I’m not going to dilute the crap out of it for my shareholders. I’m going to try to prudently, strategically, quickly and then have that cash to explore, expand and develop, and then maybe there is a dividend out there in the future, which is crazy for a little junior company to say, but the project is a cash cow at these prices.

Matthew Gordon: What is it going to cost you?

Gorden Glenn: Any project finance facility comes with a contingent equity component. Do we have enough market capitalisation at this point to do this? Realistically, no. Can I have those conversations with the project finance private equity groups? It’s been going on for a very long time, I typically don’t take a pen to a meeting, i.e. I’m not going to sign something right away unless I can deliver on the contingent equity contribution. But there are more groups out there than ever before. They are all looking for access to near-term tier-one jurisdiction, reasonable gold exposure with projects that are robust. I think our project falls into the robust category at these current Gold prices. We are having those conversations with multiple parties. We will see where we get to in the next couple of weeks or months. In the meantime, I have lots of technical programs on the go to deliver news to the market. I have exploration upside. The reasonableness of this project is a very attractive prospect to investors. I would hope that is going to resonate with investors and I’ll see more buying in the stock.

We’ve already seen that in the last couple of weeks and months as we have bee able to get out there and talk the story and get new eyeballs on the story. I have a US investor taking a serious look at the project. I have overseas investors looking at it, investing in the project. It is coming together now. The project has been the same for a couple of years, we are expanding with exploration. We are just poised and ready to go. We have prepared ourselves at the capital structure level for today’s environment. I just need to see the share price go up a little higher than I think I can finalise some project finance discussions.

Again, USD$20M, USD$25M. The project pays back quickly, it’s actually pretty attractive.

Matthew Gordon: How much money have you put in?

Gorden Glenn: At the end of this quarter, I’ll probably own 10% of this company direct. I haven’t paid myself very regularly, if at all. I convert to equity at prices that are higher than your typical junior mining company CEO does. I work with my shareholders, I’m very respectful towards them, I have good relations with them. It’s a two-way conversation, I tell them the plans, goals, and then I deliver on those. They give me feedback. If they want to see more exploration, I manage the programs accordingly. If they want me to scale back, I scale back. It’s usually me saying scale back, the market conditions aren’t good, and we aren’t getting value for the asset. It’s really about feeding a line with your shareholders, respecting them, and quite frankly, trying to fight hard for valuations that are reasonable and fair, both to an existing shareholder, if we are talking about equity financing, I want a valuation that is fair and respectful to my current shareholders and the new shareholders. I think I can meet both those obligations and continue to grow and offer more value in the future.

Matthew Gordon: Are you taking all of your salaries as equity?

Gorden Glenn: I am in the process of converting a large amount of money into, I haven’t paid myself in years, and I have no issues with that. It’s really about to call it ‘sweat-equity’, which is what it is, there’s been a lot of sweat, and getting the project to be what it needs to be. Not dropping the ball, and if I do drop the ball, I catch it very quickly and get it right back up in the air.

We have managed the project through all the logical milestones, we are in the right environment, we are perfectly able to move it forward, and in the next 3 to 6 months, we will see a lot of catalysts for that. Whether that be on the exploration upside or the mine development side.

Matthew Gordon: Who are these shareholders that are telling you what they want you to do?

Gorden Glenn: I call them ‘big-book retail’ guys. I have guys in Camcor, the usual guys on the street. I won’t name names, for obvious reasons, but if I did name names off the record, everybody’s head would nod and they’d go, yes, they know their stuff, they know what they are doing. They are there for a reason. Again, I don’t have the broadest shareholder base. It is actually pretty concentrated, but they are all solid and many of the shareholders have been involved in the company before I did, which is over 8-years ago. They have been steadfast in the project for many of the same reasons that I am here because the project does tick the boxes. It may be small but small can be beautiful. Small means I have a fewer dollar amount to raise. I don’t have the same challenges as a big project. I’d rather get the cashflow quickly then to grow at that point rather than dilute and grow, I’d rather get to the production profile and grow. Then maybe there is some M&A beyond that.

Matthew Gordon: Are you frustrated that the conversations haven’t led to financing before now?

Gorden Glenn: No. I’m frustrated with my valuation but that’s up to me to get the workout. I do need a receptive audience. I need ears like yours. I need your distribution potential, which is amazing. I need people to understand what the project is, and some people will like it, some won’t. It’s too small for some people, it’s okay for others…

I have told you, in the past I was an analyst, I covered everything A-Z, top to bottom. When I was a banker at a bank-owned firm, the focus was always big. Big doesn’t always work out. Big creates scope and scale problems that many investors don’t fully appreciate. It also creates the risk that a management team has perhaps over-promised and can’t deliver on that promise.

This project, in my humble opinion, is scaled to minimise the risks. In my career, if you don’t focus on the risks, you are going to be bitten by them. We have focussed on all the risks at the PL deposit, which is mine-ability, continuity of resource, does it hang together? The grade which is consistent over 5 resource calculations over the last 8-years and that reconciles, actually, with the resource calculations going back 30-years.

We are trying to de-risk the project, mitigate the potential risks and overcome them. I didn’t even talk about the prospects for this project for new things. The incorporation of new technology, old technology, old Gold profile mining equipment. Battery electric mining equipment, things that will enable us to make the project small and efficient.

We are in a region, I wanted to talk to you a little about biomass power generating. It could potentially become a green energy producer and be a neutral carbon mine. We are in a jurisdiction that doesn’t have a lot of employment, it doesn’t have a lot of industry going on. We are a little bit further north than Hud Bay Flin Flon, Manitoba, we are not that far north, but you still have limited economic development initiatives. One of our initiatives up there, as part of our CSR program, First Nations, is really working with the First Nations to other job and economic opportunities were we a partner with them. I created a program called, Minnova Renewable Energy, which is the first step in a plan to have First Nations partner, and we develop a biomass power generating station. That biomass power generating station would sell electron to the PL Mine and mill – sounds like a pretty good deal. We would create more jobs than just the mine, and unlike the mine, which right now we have a 5-year Feasibility Study on, I think it would go for 10+, I hope. A biomass power generator can go for 100 years. We are dealing with the biomass up there, it’s got a very long growth cycle, like 100 years, these plants are feasible in Norway, Sweden, Finland, all these northern latitudes, they would be perfectly feasible here. We have a ready, willing and able workforce that is local communities and First Nations. It is all the ways that we think about doing good for the communities, good for the environment.

Company Page: http://www.minnovacorp.ca/

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Roscan Gold (ROS) – Military Coup but Business as Usual

Roscan Gold.
  • TSX-V: ROS
  • Shares Outstanding: 244.59M
  • Share price C$0.35 (21.09.2020)
  • Market Cap: C$88.051M

Interview with Nana Bompeh Sangmuah, President & CEO of Roscan Gold (TSX-V: ROS)

READ FULL ARTICLE FOR THIS INTERVIEW HERE

Gold has retreated a little in recent weeks, but this bull environment is still undoubtedly exciting for gold investors throughout the investment sphere.

Roscan Gold is a gold explorer and developer with assets in Mali, West Africa. Mali isn’t exactly the most secure mining jurisdiction, and there have been numerous articles released on the Crux Investor regarding the potential hazards of Malian investments.

Click here to check out one such article

The situation in the region did appear to be improving because of cooperation between countries and the involvement of the French and British security forces, but Mali suffered a military coup last week. Military coups tend to be reflective of the mood of the people who are tired of corruption in government. This seems to be the case. Discussions are only ongoing about the 3-year transition period and the feedback from the street is that the people welcome the change. Western investors are less sure and are playing a watching brief.

We really appreciated Sangmuah’s candour on this issue. He was keen to articulate the company’s path through the current geopolitical difficulties. He will be using the company’s C$15M + warrants (available in December) to develop the company’s gold assets with the aim of giving investors leverage to a favourable gold price.

We Discuss:

  1. 2:29 – The Situation in Mali: Outcomes and Implications
  2. 11:36 – Is the Political Situation Affecting Business in Mali?
  3. 13:44 – Business Plan and Strategy
  4. 18:36 – Team Experience
  5. 21:04 – Impact of COVID-19 and Border Closures
  6. 23:23 – Kandiolé Project: Numbers, Tech, & Timing
  7. 29:33 – Money: Order of Allocation & Focus
  8. 35:57 – Interesting the Market: Why Now, and Not 3yrs Ago?
  9. 37:23 – Shareholder Breakdown and Relations

CLICK HERE to watch the full interview.

Matthew Gordon: You’re going to tell us a little bit about the project and what you’re up to there, but we’ve getting an exclusive here. You’re going to give us an update on what’s going on in Mali. There was a military coup about a week ago. They have been in discussion with the economic community of West African States to work out a peaceful resolution.

Nana Bompeh Sangmuah: The transition discussions are ongoing. I was just informed here by my country manager that the military leader just refuted the sessions in the marketplace that he’s looking for a three-year mandated rule for the transition. That has been refuted by him. And he’s gone back to his initial mantra by saying that the transitional process is going to be dictated by the Malian people in consultation with the military and the ECOWAS body. It’s going to be a much more consultative process rather than a dictatorial process coming from the military. This transition has had a lot of support from the Malian people, it has been very peaceful, and if it stays that way, I think it’s ushering in a very good future for the country where we’ll actually see a much more solid transition to a long-lasting democratic process.

Matthew Gordon: What are your hopes for the way that this negotiation is carried out? 3-year transition. It’s going to be done in consultation with the Malian people. What do you think that actually means in reality?

Nana Bompeh Sangmuah: I think what that actually signals is it’s not a system where you see in other places where a military junta comes in and outweigh and they dictate the pace and they keep and siphon off the country’s resources forever and actually throws the State into further destabilisation. I personally have lived through this in Ghana as a young kid where we had military transitions come through and that ushered in the perfect, the best democratic rule in Africa for now. That’s through the Flt. Lt and Jerry Rawlings days. It was also a popular uprising, and initially, there was some talks and opposition from the West, but eventually the transitional cared and we have one of the best stable democracies that can be boasted of in Africa to date. I think these people are working their way towards that direction.
I think it’s going to be really silly for them to think they can use their power and do whatever they want in Mali. Given the fact that Mali is a landlocked country, and nothing is produced there, and they depend a lot on exports. Their borders are sensitive and ECOWAS controls on these borders and they can put the screws on them to get them to do whatever is right for the people. But now it appears the people want this change. They want to transition. And the military has been used as a medium to get that process in place.

Matthew Gordon: What were they getting rid of? Is this about corruption?

Nana Bompeh Sangmuah: There are multiple issues. I think corruption is high on the agenda there. Government officials have been noted for lining their pockets and not looking at the interests of the common Joe below on the street. Social-economic harshness has been quite intense and people have not seen a lot of progress. And they have also not seen a lot of seriousness from the government to deal with the jihadist movements. And it’s not been that clear. There’s been a sort of dependence on the French and other foreign governments to help in that regard. It’s sort of a change that the people want, they tried to do it themselves. It was tougher for them to do and the military has added their voice. And I would say, it’s probably one of the most popular military uprisings I’ve seen for a while now. I think the military guys are also being very smart and so far, they’ve not flouted at any rules. Everybody has been kept safe until the ex-president is going to be allowed to be part of the country. There’s no black shirt. It’s pointing more towards a consultative framework to transition Mali to the next place.

Matthew Gordon: What do you hope is the outcome of that conversation?

Nana Bompeh Sangmuah: I think the tough stand is probably to signal to the military government is that ECOWAS, is not going to accept any games here and come up with a timetable and let’s stick with it, which oftentimes becomes the issue with some of these interventionists governments, the come in and promise, we’re going to do X, and it slips along the way at times. Once ECOWAS, shows his hand and communicates their seriousness in transition in every country in the block into democratic rule, I think they’ll have that at the back of their mind that no games should be played here and whatever transitional timetables that be agreed to with ECOWAS, I have the utmost confidence that they’re going to stick with it.

Matthew Gordon: Are they now going to deal with the issue of the terrorist infractions, which have been going on? This could be an opportunity for other interested parties to insert themselves.

Nana Bompeh Sangmuah: I think that’s actually what’s probably driving the urgency of these discussions because the last thing the West and ECOWAS, and all of us here want is to have a failed state because that is just for the ones that we don’t want further down the line. It’s a very intricate process so far. I’m very happy from what I read; the French are still well immersed in the country and still taking their military commitments seriously. I don’t think a vacuum has been created for these guys to take advantage of, but clearly, if you don’t have a proper transitional negotiation process or a timetable put down, then people might take advantage of that. The key is to see what the outcome of these negotiations are, and I think it’s going to be a workable solution for all parties.

Matthew Gordon: In terms of some of the terrorist activity that has been going on in parts of Mali, has that affected mining companies’ ability to do business?

Nana Bompeh Sangmuah: Virtually we’ve not had any impact at all because the terrorists are a concentrated way to the North in that part of Northern Mali that wanted to succeed and before you even get to the centre part of Mali, there’s a big military barracks, which has a lot of French installations so it prevents any widespread movement from the North coming down South. If you come to where the mines are located, Southwest, you’re talking close to about 700km, 800km from the hotspots. It’s been set up really calm business as usual. I think every mining company has, including ourselves. also, put down good security measures to keep the workers safe in coming in and out of the capital and wherever they live in the country.

Matthew Gordon: You’re monitoring that situation because it’s not just the North; there have been isolated incidents throughout the country, but that’s the situation you continue to monitor?

Nana Bompeh Sangmuah: We have got security personnel who are highly experienced on our roster that watches out for all the developments and sounds any cautions if necessary, but there’s been no need for any alarmist evacuation so far.


Matthew Gordon: What is a business plan? What is it that I, as an investor am buying into here? You’ve set out to do what? Where are you currently with that plan?

Nana Bompeh Sangmuah: What we set up to do is to pick up one of the prime exploration real estates that I’ve seen in Africa, plugged into the shadows of a lot of significant operating mines and projects. We’ve identified quite a number of targets there, and we want to make as many discoveries as we can on the real estate. That’s going to drive up valuation and give significant returns to shareholders. In so doing, we’ve attracted the attention of a few other players in the industry that have expressed serious interest to follow what we’re doing, even to the point of having on us. We are running the business to add value through the drill bit, make as many discoveries as possible so that if that should happen it actually happens at a much higher price.
And basically, the alternative here is the team, we’ve assembled together with the likes of Sir Samuel Jonah, that’s been able to build a lot of junior mining companies into many significant entities, as we get our valuation rerating going with the discovery of more deposits in this prolific land package, we get the currency to do some interesting things that could be valuable to shareholders as well.
I think it’s a very unique junior company where we wouldn’t just be at the mercy of finding stuff and twiddling our thumbs and waiting for people to dictate the pace for us. Once we get to a point where we think we have something that could be very accretive, we would also pull the trigger and go for it.

Matthew Gordon: How much money have you raised to date?

Nana Bompeh Sangmuah: In total, we are north of USD$15M to USD$20M in the treasury, based on straight equity issues and warrants that are deeply in the money that’s coming through. That’s been very humbling because that signals a lot of support from our shareholders that have confidence in the team and what they can execute. We are well funded to execute the campaign that we have in front of us. Essentially, we expect another USD$10M to come in from the warrants, in March and next December.

Matthew Gordon: How much have you raised in total since this began?

Nana Bompeh Sangmuah: I would say, from before my time you might have another USD$10M or so that’s been dropped into this.

You are an Explorer developer, is that what I should read into this? You are guys that are discovering value through the drill bit, but your explorer-developers. You’re not mine builders and you’re looking out for someone to step in either as a partner, JV or take you out?

I would say we are an explorer, and basically, we’re doing the work that will get us into a developer status very quickly because we’ve just made one major discovery, but we are expanding out of about 11 targets to go. And we are actively drilling those targets as well. We should have a backlog of news coming through in the fall. Essentially, we would classify ourselves as an explorer-developer at this stage. I would highlight the fact that we have the ability, based on the team we’ve assembled, to transition ourselves into whatever adds more value to the company.

Matthew Gordon: Who has done this before? Who has made money for shareholders?

Nana Bompeh Sangmuah: To start with, our chairman, Sir Samuel Jonah, he started with AngloGold Ashanti of Boston mine and transitioned that into a 10-mine conglomerate out of Africa in general. Listed it on the New York Stock Exchange, made quite a number of people money during that process. He moved on to Equinox as well and helped them up the value chain as well, and helped people make money in that process. He was associated with Moto, which is now the Kibale mine that also made investors money. I think that’s a very good figure to have as ahead here. The other groups that are associated with the company that has added value to shareholders in various aspects.

Matthew Gordon: Who are the guys on the day-to-day that are going to make you and make shareholders all this money?

Nana Bompeh Sangmuah: Sir Sam is very much involved in Roscan. For a company our size, we have weekly board meetings, where he drives to the process home. And he’s as involved in every single decision that we make. At times I have more calls from him in the day than I do from my wife, depending on what we are discussing. It’s not just a name rental out there. He saw the opportunity to be involved with us, he came to site the very next day after his appointment as chairman. And he walked all the priority targets that we currently drill with us. He was very excited about this ground. Actually, part of this ground was formerly owned by Ashanti, his initial company, that did some of the historical geochemical analysis on the ground.

Matthew Gordon: Coming back to those border closures and indeed COVID, how are those things restricting your ability to do business?

Nana Bompeh Sangmuah: Initially, we quickly put up the COVID protocols just to help the site become COVID proof once it hit. And we actually made a donation to the community that we operated in. I think we were the first mining company to give some PPE to that town, and the mayor was ecstatic about it. We’ve had no COVID-related issues on site, and we’ve not lost a single day of drilling. We executed one of the most aggressive drill campaigns in the company’s history through the rainy season with about four rigs running right now and we just added a fifth week. It’s been busy through this period, and we’ve not had any interruptions on that front. The part that has been a little bit of a challenge is some of our samples have to be sent from Bamako to Abidjan and then back to Bamako. The cross border, you get some delays in the mix. And we went to about 27-days turnaround up from about 10-11, which was the norm. So that was an issue that impacted our cycle of news flow.
But the borders are being opened in most of West Africa. The military junta has opened the borders right now, I’m told that flights can get in. Goods and services have not so far been impacted and we still get some samples from our labs. One of our main labs is now full functionality in Bamako and can process everything internally. Going forward, we don’t foresee a lot of disruptions in that regard to our sample and our results coming through.

Matthew Gordon: You’ve got 4 drills going even and you’re looking at it at a fifth. How are you managing to do that?

Nana Bompeh Sangmuah: We planned hard for it; we knew that we would need a lot of good, skilled labour to man theses rigs, so we have consistently added to our team and the Malians are very skilled at this. We actually run this company for six months remotely. They delivered it to the T and attracted bonuses for doing exactly what we expected them to do. It’s a very skilled team that we’ve got down there, and the technical team with the addition of David Reading and Greg Isenor have also not taken their eyes off the ball. We have periodic. We receive daily lots of drilling and we know every day what each drill is doing wherever on the project. And it’s so flat a structure that anybody on the technical team can chime in if they want us to keep going, they want it to stop. It’s up to debate very quickly. It’s more hands-on there. And essentially, we also make sure that we delegate a lot of responsibility to them. They are free to take the actions they deem fit and it gets explained to us in our weekly calls, which have now been increased to 2-weekly technical sessions. There are lots of eyes on this, we are excited about what we have seen. We’re excited about the new targets we are drilling, and we hope because I think the current valuation of the company is just reflective of one discovery and we are working hard to change that.

Matthew Gordon: What do you know about the drill program in terms of the way that you’re planning it out over the next 12-months?

Nana Bompeh Sangmuah: Aside from South Mankouke, which the market knows very well, we started actually with some very interesting hits from the central Mankouke zone. The whole Mankouke is an 8km mineralised corridor, I’m not suggesting that the whole 8km is all mineralised, but we think there are some jewels in there. We’re doing a lot of work in that corridor and we’ve got drills turning there. We got work also ongoing in another permit, which is actually a larger permit that has a bit of artisanal activity in there, Niala, which we are waiting to see results back. Quite a bit of drilling has been completed on that as well. We have got the ground that we acquired from Komet, which we thought was a very strategic acquisition because it gave us more ground on a structural corridor, up to 20km, very close to the targets that we are working on, and you can even see a potential extension of some of their targets into the ground, and we have got rigs turning on these targets as well.

Matthew Gordon: Tell me about the Komet deal: what was the thinking behind this? What were you hoping to achieve?

Nana Bompeh Sangmuah: We are constantly looking at ways to expand our footprint, and the more land that we can accumulate, the better. And we had done a desktop study where a technical team had established a structural corridor trail which has close to 400,000oz at 2g/t delineated, ready for running through South Mankouke into central Mankouke, running through Kandiole and further going up. The most extreme portion, we already had a permit, which we had drilled, which gave some interesting numbers: about 35g/t over 2m that weren’t followed up. We quickly knew the importance of that corridor and our due diligence on the work that had been done on the zone they had already drilled and delineated as a resource made us aware that this was extremely shallow drilling at 60m vertical depth. There were a few high-grade trench results that I went and followed up – very promising AC results, like 8g/t over 40m that were never followed up. The opportunity to grow big system results, which was actually calculated at USD$1,350 Gold price was high. And then further doing our Google due diligence we actually saw that essentially, the artisanal activity had expanded the footprint that was there. We know for a fact that we are onto something there and it looks like some of the deep structures on the ground is coming into that. And it’s interesting and exciting times, I would say,

Matthew Gordon: Why didn’t Oklo step in there?

Nana Bompeh Sangmuah: Think that would be a question better suited for them, but it is in a competitive region, so we saw the opportunity and we jumped in as quickly as possible for it.

Matthew Gordon: You’re expanding the footprint. How much money have you spent on that?

Nana Bompeh Sangmuah: On the acquisition?

Matthew Gordon: On the acquisition, any drilling that you’ve done subsequently?

Nana Bompeh Sangmuah: The acquisition was less than, I think, USD$3.2M – so not a whole lot. And with ounces on, we got it for $16 p/oz in-ground, which was very accretive. We are going to be put in some good number of holes on right now, actually the drills are mobilised on it. As part of a broader, expanded, regional activity, we should have quite a number of metres for a direct target.

Matthew Gordon: What’s the order of play?

Nana Bompeh Sangmuah: The amount of money we have possibly gives us a run room until March, where we have our next tranche of warrants coming through, which is another USD$5M, and then we have another top-up in December. From what we’ve decided ourselves to do here, it’s pretty much funded from the current resources that we have, and on top of that, we have initiated a helicopter airborne survey, which will give us even more targets, deeper-seated targets. We doing a lot of AC on anomalies right now, and we put it all together and the deep geophysics is going to really connect the dots much more succinctly for us and refine some of these targets that we are working on. Our hope is to basically have a good sense of where we should be devoting a lot of our sprints. And the goal is to have about two, three solid targets that have a lot of legs for them to run and move us into the resource delineation phase sometime in the second half of next year.

Matthew Gordon: Tell me about the significance of fresh rock, certainly in relation to some of the other deposits, Kekolo, Seko.

Nana Bompeh Sangmuah: I think the significance of Fresh Rock clearly establishes the root sources of the mineralisation, as you see on our regional map, you’ll see that nobody can lie to you that there’s no Gold there. There’s definitely a lot of Gold all over the place. The question is, how do you connect them together, and it’s their feed source and how it’s transported? Those are the questions that the street has. We are working with our current drill program to address and answer those. We are very confident because we’ve had some very good hits in the fresh rock already. And it answered the question that this is not supergene and we continue to do a lot deeper drilling to establish the dimensions of this resource area. It’s good to continue to focus on the fresh, but I also would establish the economic importance of the oxides as well, because the oxide profiles are usually straightforward metallurgy, easy strip ratios, low mining costs, so you are pretty much printing money in this environment. The appeal of some of the oxide material to some of our sister projects around us would be quite significant because you blend some of the extensive oxide profiles here, particularly at the grades we are getting, you can enhance your throughput and production without putting any extra CAPEX in your plants.

Matthew Gordon: Tell me about how you’re prioritising targeting in relation to you’re spending your money in terms of AC/RC/ Diamond drill.

Nana Bompeh Sangmuah: What we do first and foremost is to detect the anomalies and if we have something of significance: handrail, PPB, anomalies, either by soils or by termites, that makes it something worth following up to see what is beneath them. Our first preference is to test these anomalies with AC, just to see if there’s roots, we need them. And that’s exactly what we did at Southern Mankouke. We saw the white section, we tested it with AC to connect then we followed up with RC and DD to establish the depth extent, and we continue to do that. So that’s the methodical approach that we use across the board. It’s good that way because the AC drilling is quick and not too expensive, and it can get us through a lot of these targets and establish the ones that we have to follow aggressively and some that need to be discarded.
But I think there’s a third layer to that process, that’s why we are doing the geophysics, that is a deep geophysical technique where we can actually size targets as deep as 300m. Some of these will be lost to certain termite profiles. And once that is completed in September, October timeframe, we will have all our targets rejigged by a consultant that Barrack uses for the 3d target generation, and that gives us another layer. This story is going to get more exciting and interesting because we are trying to apply all possible techniques available to find the positives there. And we’ve got the team that can get us through that.

Matthew Gordon: What do you think they were missing or is it a case of you haven’t delivered the grades yet?

Nana Bompeh Sangmuah: I think the market couldn’t appreciate the quality of the asset package that the founder, Greg Isenor had put together, and this is not the first time he has done something like that. All that he’s done has actually ended up as projects in the laps of major companies. We clearly devised a strategy to show the parallels and drill the holes and show that we’ve got the grade, we’ve got the widths that’s comparable to some of our peers that were trading 4x our valuation. I think some people listened, and that valuation has closed up, but I think it’s still worth highlighting that it’s just been on one target that’s being really well defined in the market, hopefully as we get more success on some of the other targets, we’ll catch up with some of the discount left and probably move the story to even another high premium, because people will see that the execution of the exploration strategy is yielding results.

Matthew Gordon: There are some big names in there, but no big holders in there. Is that something you would like to address, get a cornerstone in there?

Nana Bompeh Sangmuah: I think we were happy to welcome some big names on the register in the last phase. That’s Testament on people believing the potential there. I think actually, that creates more opportunities here because there are a lot of people sizing and trying to figure out how this plays out, and with continued success, I think we should be seeing a lot of these people jumping because it’s a unique story; we have a discovery story where you actually have the best returns in mining and equity. You also have an exit strategy where a lot of people looking in our kitchen, trying to be part of the story. It’s very compelling. We’ve been talking to a lot of these potential cornerstone investors. Obviously, most of them were trying to figure out the entry point where we needed money so that they could be part of the register. That’s been a challenge because we virtually have funded our campaign right now, but who knows where the opportunities would be down the line, but there’s potential for these to come in on market transactions or another form as we evolve.

Matthew Gordon: Do you feel compelled to spend your money to keep the market excited or do you feel compelled to actually do things the right way in terms of geologically, technically?

Nana Bompeh Sangmuah: All the money is going into the ground. I think that’s the best marketing tool we have. The rocks will speak for us, and once we get more success on the ground, the rest becomes history. That’s the company’s management focus right now.

Matthew Gordon: Management has 11.8%. How much of that have you got?

Nana Bompeh Sangmuah: I’m up to about 1M shares that I purchased personally before coming on board. I would love to purchase shares on weakness, but we always have to respect the blackout policies. We see those as a great opportunity to add, and I got some exposure on all the performance options and all that. I’m clearly well-aligned to shareholders and the success of Roscan is going to have a personal impact on me as well. I take that very seriously.

Matthew Gordon: Thank you very much. Great to hear that story.

Nana Bompeh Sangmuah: Great. Thanks for having me. It’s been a very fruitful discussion and stay tuned to the milestones as we get through them.

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Galane Gold (GG) – African Gold Player with 50% Insider Ownership

Galane Gold.
  • CVE: GG
  • Shares Outstanding: 236.82M
  • Share price C$0.22 (21.09.2020)
  • Market Cap: C$55.652M

Interview with Ravi Sood, Chairman of Galane Gold (TSX-V: GG)

Galane Gold is a gold producer and explorer that has experienced a bit of success recently, though the share price has tailed off in the last few weeks. Galane Gold has gold mining operations and exploration tenements in Botswana and South Africa. These are two of the better gold mining jurisdictions in Africa. Galane Gold was first listed on the CVE in September 2011, so this is a story 9-years in the making. The formation of the company was quite complicated, with Galane Gold acquiring Gallery Gold from IAMGOLD in August 2011, with Gallery Gold being the 100% owner of Botswanan gold producer, Mupane Gold Mining, which has been producing gold from the Mupane operation since back in 2005. Further acquisitions were made in 2015, as Galane Gold acquired Galaxy Gold, a South American gold player that restarted operations sometime in 2019.

The long-term aim for Sood and his experienced team is to turn Galane Gold into a meaningful gold producer that can create value across gold cycles. Mupane has produced 700,000oz of gold since 2005, and Galane will hope to continue in this vein, as the company targets exploration and development to increase the mine life and the size of the resource. Mupane looks promising and is situated within the Tati Greenstone Belt, which is part of the larger Zimbabwe Craton, a renowned and prolific area for gold production, producing in excess of 77Moz of gold historically. Over 120 exploration targets have been identified based on geochemistry and aero-magnetic work.

Back in March 2018, Galane agreed on a JV with B2Gold in the shape of an earn-in agreement. B2Gold would be enabled to acquire up to a 70% stake in the company by spending $4M over 3-years to bankroll 70% of the JV, and by targeting a 1Moz+ resource.

We Discuss:

  1. 1:41 – Company Overview
  2. 5:07 – The Foundation: Background & Business Model
  3. 7:39 – Hindsight Mining: Lessons Learned and Applied
  4. 11:55 – Company VS Market: Reasons for Share Price Increase
  5. 13:10 – All About the Money: Cash Position, Allocation, & Debt
  6. 15:10 – Impact of COVID-19: Reworking the Timeline
  7. 23:51 – Driving Growth & Funding it All: Why Not Raise Now?
  8. 30:24 – Guidance on the Future: AISC, Cash Flow, Warrants
  9. 34:55 – Mupane & Galaxy Projects: Plans and Timelines
  10. 39:51 – B2Gold Deal Terms and Upside
  11. 41:37 – Keeping Costs Low & Looking at M&A Opportunities

CLICK HERE to watch the full interview.

Matthew Gordon: Why don’t you kick off with that 1-minute overview of the business, then we will pick it up from there.

Ravi Sood: Galane Gold is a Gold producer. We started almost 10-years ago by buying what we called the Mupane Gold mine in Botswana from IAM Gold. IAM Gold was a seller at that time. They bought that company in 2006. It was an ASX-listed company at the time. It was an important asset to IAM Gold, it was very much relevant to them in terms of production and percentage of their total portfolio. By 2010/2011, we actually closed the acquisition in Ravi Sood: August 2011. It was too small for them and geographically isolated in their portfolio, so itmade sense forthem to sell it, but a great opportunity for us to buy it. We saw it as an asset that was, for a couple of years, anyways, very much under-managed.

Obviously, IAM Gold is a great company. they have great people. But being the smallest operating asset in their portfolio, it was a little unloved and there is a lot of opportunities to improve it through active management and fit-for-purpose management and to also extend the operating life. It was meant to close as an open-pit operation only 2-years after we bought it, but we saw an opportunity to transition to underground mining and dramatically extend the operating life.

We did that, that was the main order of business for the first few years of our company, then we saw an opportunity; we looked at many opportunities, as you can imagine, but an opportunity to leverage that platform in Botswana, and a team that had built and commissioned an underground mine and cut costs from an existing operation.

We acquired the Galaxy Mine in South Africa out of a restructuring process. This is a mine that has produced in some shape or form, almost continuously since the 1880s, if you can believe that. It was a huge opportunity with lots of infrastructure, well-understood geology. At the time, it came with a 1.6Moz resource, all categories. It was, what I call, a hot restart. It was a shutdown mine, effectively on care and maintenance, but the Wi-Fi was on, the lights were on, skeleton staff, everything was ready to get going, so I call it a rolling start or a hot restart. That acquisition closed for us in December 2015 – almost 5 years ago. While we muddled through the very low Gold price period in 2015,15,16,17 and started to see the light at the end of the tunnel in 2018, we made some incremental progress to restarting that mine. As we got higher Gold prices, we completed small financing, primarily debt, in 2018. We started the restart in earnest and started to see some production in 2019 and in 2020, but we were definitely affected by COVID. We are now seeing the near completion on phase 1 of production, which is 23,000oz to 24,000oz p/a.

Matthew Gordon: When you acquired these things, that you were getting the cheaper? Was that part of the allure?

Ravi Sood: Definitely. My background: I spent the first half of my career as a fund manager, is based in Canada, of course, there is a heavy focus on natural resources. I spent a lot of time evolving my thinking on how you create value for yourself as an investor. Of course, that then had to evolve further as I jumped to the side of the desk and became the person asking for money as opposed to the person doing it out. I still had that frame of reference very much in my mind. When I look at these opportunities, most of the money to be completely plain, in any highly cyclical business-like Gold, is made on how you ride your cycle. We closed out first acquisition in August 2011, which you may recall, was the month Gold topped USD$1,900 and did not see it again for approximately 9 years. That was a brutal time to close that acquisition, but that was us entering the game so our mantra for 5 or 6 years was; batten down the hatches, don’t blow up the capital structure, keep ourselves afloat under our own steam, fund ourselves and come out the other side. I don’t know when the other side is going to appear or what it will look like, but Gold will go higher or back to where it was, as long as we’re in the game and we’re intact, it’s going to be fine, it’s going to be great. That was the key thing to do.

The last thing we wanted to do was look at where we were going to buy something and plough USD$100M or USD$200M, the CAPEX. When there are opportunities to buy things – a little trickier – they all have their twist to them, but where you have literally in both of our assets, over USD$100M had gone in, in terms of infrastructure. That’s something we would never have been able to fund, certainly at that time, it would take years, and we got it like that. We just showed up and it was there. Huge opportunity to leverage that infrastructure base and really generate returns for ourselves.

Matthew Gordon: What do you think you have learned from that first acquisition? Do you look back and go, we should have paid a lot less? Looking back that you would have done?

Ravi Sood: It’s hard to put a clear lens on it because that is what got us into the game. Of course, I wish I had bought it 6-months later, never mind 2-years later. If we had waited for 2-years in that case, the asset would have been shut. The primary thing is how do you ride this cycle? It doesn’t mean you don’t do deals on the way up or even at the peak, but it should be a different deal. We structured that deal in a way that was, it was a USD$30M purchase price of which USD$10M was cash, so that was money right in the door. USD$5M note, so we did pay that out of cashflow. We paid IAM Gold over a period of a couple of years. We didn’t have to do a financing to do it. It was under our own steam. The other half was in the paper in NewCo. There was no Royalty. There was no residual ownership at the operating level. That was a way of back-ending it, to de-risk it and leave some upside if Gold had done something different, for IAM Gold. Structurally we can deal with that, but, yes, of course, if I had a time machine, I’d say let’s put this asset in 2013, not 2011.

Matthew Gordon: What were the lessons you applied to the next deal which you did in 2015?

Ravi Sood: There are similar aspects to it. That one already had debt on it. Then when it appeared in that process where it was on our desks and we were the beneficiary then of a couple of years of the bear market in the Gold market and buyers’ market. We were able to put a minimal outlay of stock, almost nominal outlay of cash: less than USD$1M, really just covering people’s bills. Then an assumption of debt, which we restructured substantially to be heavily in our favour; unsecured, subordinated, no cash interest, very flexible terms on repayment. That was one that we picked up, what was at the time, 1.6Moz of all categories, now 2.4Moz. If you look at our acquisition costs per lb, it was almost 0 in terms of equity and cash funds. In deferred debt, we paid a couple of dollars p/oz. It was a fantastic acquisition, one that could only be done at the bottom of the cycle.

One thing I do want to clarify – the MPONIE acquisition, it looked great for 2011/2012 – remember, Gold did hang in for USD$1,600+ for a year, year and a half. It looked very bad for several years, but we have continued to produce. We have continued to pay all our bills, continued to fund the acquisition of the Galaxy mine and the care and maintenance costs there for the first couple of years. Now, 9-years later, with Gold at USD$1,900+, the Mupane Mine is a huge contributor. It was an overnight success for 9-years in the making, but now the purchase price looks fantastic again.

Matthew Gordon: Do you think a more experienced head would have negotiated a better deal? or have you done something which the market has reacted to?

Ravi Sood: It’s both. The market has gone up a lot but it’s still below where it was when we acquired the first asset.

Matthew Gordon: Yes, inflation-adjusted, for sure.

Ravi Sood: This is an opportunity for those buying now and this underscores your point that we have to look back and learn from the past. To your second point about the share price – is it anything we’ve done or is it the market? It is clearly both. Our share price would not have moved anywhere near as much without that huge move in Gold. But from a management and execution point of view, this move-in Gold price has happened at the same time that we commissioned our 2nd asset, and our production profile is going up, our debt profile is going down, and it’s been one of those happy intersections of good things happening internally at the same time they are happening externally.

Matthew Gordon: You are throwing off a lot more cash, what are you going to be doing with that?

Ravi Sood: We have 2 pieces of debt. Just to give you a more complete answer on what we are doing with our cash, we are generating free cash at this point – quite a bit of it. The first priority is repaying debt. We have 2 series of debt: one is a secured loan with a South African lender. We are paying that down at USD$200,000 per month in principle. It’s a USD$5M loan. That will get paid off in 1.5 years. We have another USD$6.5M piece of debt. We are paying down USD$250,000 per month there. Those pieces of debt will be paid off by 2022, but our cash is also increasing in excess of what we are using to pay down debt. On a net basis, at some point in 2021, we will have a net debt of 0.

Second priority: funding the growth at Galaxy. We are self-funding. All the primary CAPEX, with the exception of some development drilling, is done at Galaxy, but we have a Phase II expansion which we release the details of in June, and we can fund that out of our cashflow. It’s highly accretive for us to do that.

Matthew Gordon: What has the impact been on you and output?

Ravi Sood: We have been impacted in a number of ways: as COVID started to evolve, we started to expand our inventory of critical stores. Our working capital consumption went up. That was more of a precautionary measure, particularly with Botswana being a landlocked country. In Gold mining you need cyanide, you need oxygen, grinding media, all sorts of things you need to come in on a regular basis. We managed that as compact a supply chain and minimised our working capital, but we took the advantage of higher Gold prices, more cash flowing to increase our stores and build up that buffer. No major supply chain disruptions. I was a little worried in March/April, but nothing serious hit us.

Secondly, outright shut down, which we did have in Botswana and South Africa for a while. We lost about 1-month in total, plus or minus, in both jurisdictions. That was in both places that we have deemed a critical industry, so we were able to go on operating, but as that evolved and regulations and protocols were determined, we did have a period of shutdown. That hit our Q2, and we discussed that in our disclosures. Now, looking at us here in September, Botswana hasn’t been heavily impacted. South Africa has had a large number of cases and the situation continues to evolve there. We are operating with strict protocols in place, which as an underground miner, has affected our ability and throughput underground. It reduces our headcount and trying to maintain social distancing in those compact spaces is a challenge. In Botswana, it continues to be an impact, but it is limited. We are able to get most of our throughput on the mining side is little reduced. On the plant and processing side, we don’t have so much of an issue. That is not the bottleneck, it’s definitely on the mining side.

At Galaxy, in South Africa, there is a little bit more of an impact there, no real bottleneck on the processing side, we have excess capacity there, so we are getting slowed down on the mining. The ore is not going anywhere, it is still in the ground, we wish we could get it faster but as of now, we are just following the protocols as strictly as we can and watching the situation evolve. We don’t have specific dates but I’m optimistic that by 2021 we will be back at normal staffing levels.

Matthew Gordon: How much ore is sitting at the surface for processing in South Africa?

Ravi Sood: We have no bottleneck there, so no issue with the processing. It is really the number of people that we can have underground at once and on the throughput side. We don’t have any build-up or anything like that, we are just trying to maximise what we can get out on the mining side.

Matthew Gordon: What percentage of your staff are working underground at the moment?

Ravi Sood: In certain parts, we are down to 2 people where otherwise we would have 4 or 6. It is impacting us, we can mitigate that by running more shifts, doing other things to automate the process, so it’s not a linear reduction: we don’t have 1/3 or 1/2 of throughput but it is affecting it. We saw it in our Q2 numbers, we discussed it a little, it’s in our Q3. The production is starting to go up because Galaxy is contributing more and with Mupane we didn’t lose a whole month as we did in Q2. But it is impacting us and will continue to do so throughout the year. We would expect to lose 15% to 20% of our production at the margin.

At Mupane, we can get it back and have a lift in 2021, at Galaxy – no. Its just time-shifted out, so a little bit of a deeper bite. As I said, with these Gold prices we are still self-funding. We are still generating cashflow and we are doing our best to operate within the protocols.

Matthew Gordon: What’s 15%-20% production as a percentage of your margin?

Ravi Sood: In our normal course, we would be operating Mupane at 35,000oz this year. So you take 15% off that, we might do a little better than 15%. It might be closer to 10% but we will see. If it had been Gold prices of 2018, that would have been very painful for us, but now, instead of having an All in Operating Cost that would have been more like USD$10,50, we will come out with around USD$11,50 at Mupane so it does hit us. Of course, we have reduced staffing and there is less mining activity; we pay per metre, per ton, so there are variable costs that have come down, but it does impact our total cost and margin. Now, we are talking about instead of USD$800 p/oz/USD$900 p/oz margin, it is USD$700 to USD$750 p/oz now. Negative impact – no question. At Mupane, hopefully, we can get that back in 2021 with an accelerated production schedule.

Matthew Gordon: The number I’m trying to get it as how much less free cashflow will you have from operations before the debt is paid?

Ravi Sood: You take off 3,000 to 4,000oz from Mupane, say we would have had USD$750 to USD$800 p/oz margin on that. You are talking on the order of USD$3M of operating margin we would have had. The numbers are going to look amazing at the year, they would have looked more amazing if we hadn’t had COVID, but then Gold price wouldn’t have moved up so fast either.

Matthew Gordon: What are your expectation for Q1?

Ravi Sood: Phase 1 was to complete our previous guidance, pre-COVID, this was August/September. Where that flows from is when we hit Galaxy, we call it a constellation of 21 ore bodies. For our phase 1 production most of the contribution was from the Galaxy ore body, hence the name Galaxy. As we developed into Galaxy, we are getting incidental production from the development work, but also mining from another ore body called Princeton and also some production from Old Mineral Sands, which we are reprocessing through the plant we built there. We are getting production along the way, month by month, but not in that full swing, 24,000oz p/a primarily from Galaxy until we get into that ore body. That September timeframe has now been shifted to January. We have pushed everything out for 4-months. That was the month we lost plus delays on the way, giving ourselves buffer for other issues that may crop up with COVID.

For 2021, for that year, we will be in full phase 1 production at Galaxy. Huge contributor of in the order of 23,000 net oz of production to Galane.

Our original plan 3-years ago, assuming the market would be like it was where we couldn’t really access capital on anything other than absolutely horrific terms; super-dilutive and very expensive debt, if you could get it, we had planned to just pay down debt out of cashflow, accumulate cash and fund our transition to phase 2. We had already built the plant to accommodate phase 2 so it was basically doubling mining capacity and everything that went with that it. Because of the much higher Gold prices, we can fund that internally, no financing, no debt, and do it under our own steam in 2021. We will start work on phase 2 as soon as we have completed phase 1. We expect to get phase 2 production levels as soon as 2023.

Matthew Gordon: Why not go and raise money in the market now? You like a bit of M&A? You have projects outside of Galane, has that been a consideration or conversation that you guys have had?

Ravi Sood: Absolutely. There are a few factors at work: our company is quite unusual in the management, board and immediate family members own over 50% of Galane Gold, so that’s a level of insider ownership that you just don’t see in almost any company, certainly not a junior Gold miner. We treat our shares as though they are very precious. Offsetting that, we are a growth-minded group; my way for the past 10-years has been growth by acquisition, so we get a lot of deal flow. Our management team; our CFO, our CEO are ex-Glencore. Our COO worked at all of the largest Gold mining companies in Africa and several others. There is a lot of experience with M&A and integration, and there’s a lot of opportunities for us to leverage our platform, especially as we have that cashflow from our assets and phase 2 taken care of and our debt paid off, we have a lot of capacity to fund something ourselves so what we are looking for is something with not much upfront dilution, not afraid of a big deal, especially if the dilution will hit us later on after we can show more value and a way to leverage the skillset of our management team and the cashflow from the existing assets. We are definitely looking at other opportunities.

Matthew Gordon: How are you going to fund it all? The last I saw; you have about USD$3M in cash. How much debt have you got?

Ravi Sood: We have a net debt of USD$12M to USD$13M.

Matthew Gordon: What are you doing about the growth component?

Ravi Sood: I wouldn’t describe it as hand to mouth, we are generating millions of dollars every month.

Matthew Gordon: How do you spend it?

Ravi Sood: The priorities; 1 – pay down debt. 2 – fund the CAPEX for phase 2 at Galaxy. After that, in 2022 when we have free cash, and the numbers aren’t so small; when you are talking about exploration, these are operating mines so when you talk about extension drilling we are talking about spending a few hundred thousand dollars – that’s easily funded out of our existing operations. I wouldn’t call it small: Galaxy is 2.4Moz all categories. That is not a small resource. It’s been going since the 1880s. We do have a lot of cashflow.

What kind of deals are we looking at? Is it a mine with some infrastructure that we can buy that need USD30M to USD$40M to put into production? That’s something that when we are looking at taking 1-2-years to do a bankable Feasibility Study which we can easily fund, and spend USD30,m 40M, even 50M where we can contribute half of that in the equity component of funding that CAPEX from our cash flow, we can get the rest through debt, we have a lot of opportunities. We would love to do a bigger deal. Some of those are coming across our desks, and we will use capital markets but, as I said, our shares are very precious to us. Even though they have moved up a lot, and we could access markets, we are not going to do it unless the opportunity is accretive. We have a great thing with what we have. We spent almost 10-years getting to this point and now we have a Gold market hitting us at the same time that our production is going up, so now is the time to take advantage of that, prove what we are doing is working and let that value be shown in the market.

Matthew Gordon: To bring the inferred into M&A, you are going to need to spend money. It is not a few hundred thousand dollars, is it?

Ravi Sood: Actually, we released a new PEA in June where we increased the measured and indicated to 970,000. To put that in perspective, our phase 2 production rate averages 43,000ox p/a. We have a huge mine life off what we already have. The inferred is over 1Moz at Galaxy. We will convert that as we go. Converting it for a mature mine that is already operating, where we are already underground, that is not millions of dollars, that is hundreds of thousands of dollars of expenditure. It is not a burning priority – if we go to the market and say, we got a good life and the market reacted positively when we went from 1.6M to 2.4Moz all categories, but that also came with a PEA for the expansion to phase 2. With a 10+ years mine life with double the production – 440,000oz over 10 years, so the market reacted to that. If we add another 300,000oz-400,000oz, which I can say with some humility we can easily do, It won’t have much impact, certainly in the short to medium term, on our mining plans. It is really academic. That is not a focus for us at this point. Even if we were able to make it 3.5Moz – it sounds good, but it won’t have any short-term impact, in the next few years, on anything we are actually mining. I don’t see it as a huge part of the value equation, it will not be a huge drain of our resources to continue to expand and backfill our resource as we mine some of it out.

Matthew Gordon: What else did you talk about in terms of forwarding guidance in the last quarterly? With regards to AISC or cashflow?

Ravi Sood: Because of COVID, we backed off giving formal guidance, but I can tell you what our previous guidance was, we are not going to meet it this year, the primary reason being COVID. We are expecting to be into Galaxy by August/September, now that is pushed out. That was an asset that was going to produce 18,000oz this year, that has been backed off as most of that production was coming from September through to December. It is going to come in at 3,000oz to 4,000oz there, for that production, we hit that run rate for 2021. Mupane has bounced between 30,000 and 36,000oz and we are going to continue there.

Mupane is mature. We have taken every bit of cost out of it that we can. For example, when we took it over, it had 611 direct employees, now it has 147 – so a very different way of operating. We didn’t get rid of 75% of the people but we converted it from a primarily fixed-cost business with everything internalised to a 65%-70% variable cost business, which has certainly helped us with COVID as our AISC hasn’t soared when production came down because some of those costs melt away as our throughput goes down.

There we got to about USD1,050 to USD$1,100 All-in Sustaining Costs. You can see in the dark days of USD$1,100 to $1,200 Gold, that was truly handed to mouth. Now at USD$1,900 Gold, that is a fabulous contributor. It’s a huge funding source for us. Galaxy, as it hits full phase 1, and we have the technical report we released in June and phase 2, it’s in the mid-USD$800s in 2021, as we get to phase 2, it is mid-USD$700s. It is not at the low end of the cost curve, but it is dragging down our overall costs. Again, hand to mouth for 2020 and 2019, but at these Gold prices, a fantastic contributor going forward.

Matthew Gordon: Do you have some warrants coming up soon?

Ravi Sood: Yes, we have only done one financing since going public, which was 2018. We had a debt piece for USD$5M which had a precondition precedent of raising USD$2M of equity alongside or contemporaneous with closing that debt. We did that. Most of that was purchased by insiders, almost all of it, 85% were purchased by insiders and family members. Even just 2-years ago, no-one really cared for Gold. That came with a warrant which is expiring in 3-weeks. About USD$5M of the USD$54M warrants have been exercised. About half were exercised last year. Those came in in December. They have been trickling in, they accelerated over the Summer. It put a little pressure on our stock; none of the insiders is selling or close holders, but we have a few million shares, and people on the watch, obviously. There have been a few million shares of selling. I would expect that all the warrants are exercised in the next 2-weeks or sooner, 1-2-weeks before the deadline. They expire in October. We are seeing some of that pressure now which I expect to be burned off by the end of October.

Matthew Gordon: With regards to exploration at Mupane, it has a short life of mine, and it is a small resource so what is the plan there in terms of building that out?

Ravi Sood: Just going back in time, the primary pit was called Tau, that was open-pit and was mostly what IAM Gold mined. Most of the last 5-years is us having transitioned that to the underground. That opened up additional resource, it was supposed to be a couple of years, but we have added year after year to that. We are coming to the end of what was known, we found even more so we will get some more contribution there. We can’t talk to the market in a compliant sense about how much more we think is there. We started a new underground mine adjacent to Tau, which is an area we mined previously as open-pit, called the Golden Eagle. Going back to the early; 90s, that was an underground mine operated by Phelps Dodge, if you can believe that. we reopened that as an underground mine, and we are starting production there. It only has about 1.5-years of contribution, however, it is open at depth. The last significant exploration that was done there was over 20-years ago. In the context of today’s Gold prices, we expect to extend that. It won’t be a monster for us, but in terms of incremental contribution – yes. There will be more there. We have our Jim’s Luck asset, which we drilled up in 2012 and have sat on for the better part of 10-years. That is something we will come back to and possibly have a contribution there.

Third – we did a JV about 1-2-years ago with B2Gold. They approached us. We farmed out to them, we basically had the entire Greenstone belt in Botswana under our prospecting license, we farmed most of it out to B2Gold. They approached us. The had an idea, maybe they know something we don’t, they were looking for bigger targets, something to fit their size requirements. We have a deal where if they find something – great, we are carried to a bankable Feasibility. They will have a great asset and maybe they will want to buy out our infrastructure to have an operating mill and could be in production tomorrow. Or, if they find 100,00oz, 150,000oz or 500,000oz, a huge contribution for us, and they will walk away because it doesn’t move the needle for them.

One last thing I’ll add: we have been producing, and IAM Gold has been producing in aggregate at Mupane since 2005. We have tailings with something like 180-190,000oz. once we hit the end of life on our mine and we can say, look, we are done at this price. We are years away from that, we are going to go back at those tailings, in round numbers – we don’t have a complaint report on this – we can recover about half the Gold in there and do it about 1-year. We have some CAPEX associated with that to reconfigure the mill to process tailings – it’s a different process, but we have all the nuts and bolts that are there. that will be the single biggest year contribution in the history of Mupane because we will get 70-80-90,000oz from it in 1-year at minimal operating costs. We have no mining or trucking costs; it is all tailings right next to the plant. That’s the final act at Mupane. It will be a great one, but that is still years out.

All that stuff I listed; we are still talking about hundreds of thousands of dollars of expenditure because we are mining at Golden Eagle. We have a compliant resource at Jim’s Luck. We are mining at Tau. We are talking just incremental expenditure for a little bit of exploration that is all near mine.

Matthew Gordon: Why wouldn’t you just sell that now?

Ravi Sood: The other thing is you would want to use our plant or the nuts and bolts of our plant which we need for processing. If I was to pick anyone on earth who knows the situation the best, who knows how to get the most economic value out of it, it would be us. We are not hurting for cash. we are funding it as we go. It makes sense for us to keep that margin for ourselves and be greedy about it. It will be a few years from now but when it comes it will be a big contributor.

Matthew Gordon: On B2 Gold – what is the upside there? What happens if they discover something more there?

Ravi Sood: At only 30%, and especially with us now in a stronger position than we were when we signed the deal, not so easy to bully us around, but if they find something big, using their methods and capabilities which, from an exploration side, clearly exceed ours. Then we have 30% of it and we can try and fund or they buy us out of 30%. The most likely outcome is we try and do a deal where they buy our plant because anything within the Greenstone belt is trucking distance to that plant, and you have a 1.2M ton plant and you could be in production overnight, in a mining sense, obviously not overnight. That’s the most likely outcome in that scenario. Realistically, the most likely outcome overall is they find some promising things, maybe a few hundred thousand ounces, and they walk away. That’s not very good mining promoter speak on my part, but that is the highest probability outcome. That’s not negative for us either in the sense that we have spent nothing, and a couple of hundred thousand dollars is absolutely meaningful to us at Mupane.

Matthew Gordon: It has been interesting. A new story to us, I wanted to understand how you guys think about it. You are obviously keeping costs nice and tight, you are not rushing to do any M&A. I guess if the right thing comes along, you think you can finance that.

Ravi Sood: Yes. Again, in the world of the realistic, I would love to do a great, big open-pit with a strip ratio that is in Canada or Australia.

Matthew Gordon: So would 100 other people.

Ravi Sood: Ravi. Probably, we are not the lead bidder or if we won, it would be at a price which is exorbitant but put a few twists on that – maybe it is underground – you lose 80% of your audience there. Maybe there’s an issue with Metallurgy, Sulphides, refractory ore, stuff that we already deal with – you lose half your audience again. Maybe there’s a jurisdictional twist? Our whole management team has worked in interesting, colourful places for most of our career so we can realistically and credibly look at opportunities that have a smaller universe of people that we are competing against. It’s bigger than it was 1-2-years ago but still small. That’s a sweet spot for us. It doesn’t preclude doing deals in Canada and Australia but they are most likely going to be underground and also be sub-100,000oz, once you get over that level, we will be competing with your man at IAM Gold and things. That’s not a place we want to be but 50,000oz p/a mine in a great jurisdiction? That’s something we would love to add to our portfolio.

Matthew Gordon: I like that – a great finish to the conversation. Ravi – thanks so much. We will speak again. Stay in touch, pick up the phone if there’s more news.

Ravi Sood: Fantastic. Will do.

Company Page: http://www.galanegold.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.

Cartier Resources (ECR) – Meticulous Abitibi Gold Explorer Nears PEA

Cartier Resources.
  • TSX-V: ECR
  • Shares Outstanding: 194.89M
  • Share price C$0.30 (21.09.2020)
  • Market Cap: C$58.467M

Interview with Philippe Cloutier, President & CEO of Cartier Resources (TSX-V: ECR)

A mining company with credibility at its core?

Cartier Resources is a CVE-listed gold exploration company situated in the renowned Abitibi Gold Belt. Since we last spoke to Cloutier around a month ago, the share price has doubled. A lot of sceptical investors will put that purely down to the gold bull run, but growth remains impressive. Capital is predominantly being absorbed by gold producers, with some now trickling down to the gold explorers, but the explorers need to be doing the right things in the first place in order to attract interest from the market.

The company’s flagship Chimo Gold Mine is being developed meticulously, and a PEA is just around the corner. Cartier Resources has raised $9.3M of flowthrough capital since we last spoke, and now has around $14M in the treasury to put into the ground and create catalyst moments. The market cap is now around $65M, and Cloutier is pleased to see Cartier Resources finally being valued close to what he thinks it deserves.

We Discuss:

  1. 2:02 – Quick Update
  2. 4:12 – Company Overview
  3. 5:34 – Promises in May: Company Processes and End Goal
  4. 14:07 – Chimo Mine: Average Grade too Average?
  5. 19:52 – Ore Sorter: Costs & Processes
  6. 21:09 – PEA Timings and Clues to Economics
  7. 21:51 – Comparable Peers: Who is Cartier Resources Like?
  8. 23:01 – Benoist: Plans and Goals
  9. 25:33 – Exciting the Market: Why Not Raise More Money?
  10. 30:43 – End Goal and Business Model
  11. 35:01 – Impact of COVID-19

CLICK HERE to watch the full interview.

Matthew Gordon: We spoke to you back in May, how have you been since then? How’s life?

Philippe Cloutier: Excellent. We’ve had a terrific summer here. This is mine country, so obviously, a lot of contractors are busy, busy in the Abitibi. And because of COVID issues, obviously, not many people took vacations, and we’ve readjusted the work around that. But it’s been a terrific summer, really nice weather. I’ve been growing a lot of tomatoes; I discovered the journey of tomato growing quite a challenge. We’ve actually dovetailed into more of a corporate development process with Cartier where the consultants that are working with us have had to rearrange their personal lives as well, and all to the benefit of where we’re moving next. And you might’ve seen throughout all that, right in the middle of summer, a pretty important financing.

Matthew Gordon: What do you mean by corporate development? What do you mean by that?

Philippe Cloutier: What I mean by that is that obviously, so far in the last three years, we’ve been focused exclusively on developing the Chimo mine project, exploring it and orienting it towards can this thing fly? Can this thing get off the ground and fly? In the last interview I had with you, we had demonstrated that, yes, this thing is going to work. We’ve completed all that heavy lifting and now we’re in the final stages of setting the table with the third resource estimate and working towards a PEA. That’s the corporate development aspect.

But our corporation is not just Chimo. It’s three other projects, it’s three other deposits. We’ve had to engineer our corporate development around continuing and completing the work efforts on Chimo while emerging dynamic exploration program on Benoist and Fenton.

Matthew Gordon: What it is Cartier Resources?

Philippe Cloutier: Cartier Resources is Gold-centric. We explore for Gold in the Abitibi Greenstone Belt, the Quebec portion. Essentially, we got listed in 2007. By 2012, we redesigned our corporate strategy to focus on projects where Gold endowment had been demonstrated and we had Gold deposits. We picked up from 2012 to 2015, four Gold deposits. One of which was a past-producing mine. In the last few years, we’ve focused most of our exploration work, almost 60,000m of diamond drilling, within 500m of the Chimo mine historical shaft. And we’ve delivered two resource estimates and we’re working on a third, and most likely walking into a PEA. Now we believe it is high time that we migrate towards developing or unlocking the value of our three other deposits: Benoist, Wilson and Fenton.

Matthew Gordon: Why don’t we start off with the money first because that’s was going to be optionality to deliver on some of the other information you’ve been building during that period.

Philippe Cloutier: In the last 4-months, what we’ve discovered is off Chimo is clearly moving towards the end zone. We’ve done the bulk of the heavy lifting, right? And now the game is essentially in the hands of the resource estimate consultants and the engineers to deliver the final value of Chimo. It requires high-level supervision on our part but having seen that, were on the lookout for additional funds to be able to jumpstart rapidly on our other exploration place. And therein lies the reason for the financing; we had at the time of that decision and that epiphany, USD$4.5M hard cash, and we didn’t want to burn through that doing exploration work on Benoist, Wilson and Fenton. So therein lies the rationale for the raise.

Everything that we learnt: the strategy, exploration strategy, the techniques that we learnt on Chimo in the past few years, we’re going to apply in a dynamic or relatively aggressive manner on Benoist and Fenton, and maybe Wilson.

That’s basically what we’ve done in the last four months. And when I said we would come to a decision within those six months, is that well, at Chimo, we’ve decided that we’ve done enough, we could continue exploring at depth, but we wouldn’t be able to capture all that much additional value from deep drilling, for 1. For 2, it would delay or further delay resource estimate work and engineering work. At one point you have to cap off your work and just roll the dice and let it go and then move on to another project.

Matthew Gordon: Benoist, Wilson and Fenton. What you did there and at the point at which you decided to stop and then we’ll get onto the other three projects.

Philippe Cloutier: It would be fair though to comment to the fact that there’s currently a trend, a very favourable trend for Gold and a window of opportunity, hence our accelerated decision. Perhaps if it was a shitty market, we would continue, but in this environment, we’ve done enough. We know this thing flies, so what have we done at Chimo Mine? The Chimo mine project is a past producer, we’ve had the benefit of being able to anchor or calibrate all of our exploration work on known data, 4,000 diamond drill holes, a layout of underground infrastructure, costs of local access to mills, trucking, et cetera, et cetera. Therefore, we’re able to focus on the direct exploration at depth of, I think, there were 25 or 27 known Gold zones. Throughout a 3-year program, we were able to target all 27 zones, bring that down to 12 and then 6 and now 3. That doesn’t say that the remaining 24 zones still don’t have potential. It’s just that we felt that we’ve drilled those enough, and they ultimately could be drilled from underground once this thing gets into production. We’ve drilled up to 60,000m, as you’ve seen in a recent press release. 60,000m on the zones that are within 500m of the shaft laterally and at depth. We’ve produced two resource estimates.

With this morning’s press release, we’re able to shut the database and launch the third resource estimate process. And then once that reaches a critical aspect, then we can bring in the engineering reports and walk right into a fully-fledged PEA. That’s what we’ve done.

We’re very comfortable with where we’re at, and that’s why we’re also comfortable moving on to the deposits. And the market, the M&A ecosystem or what will happen to Chimo, we’ll see those recommendations emerge from the work that we’ve recently launched.

Matthew Gordon: What was the profile of the assets that you look for?

Philippe Cloutier: On Chimo we’ve addressed the issue. We believe it’s going to fly. We simply need to rush the ball the last nine yards over the touchdown line. On the other projects, we have the benefit of having been through a process that we know works on the type of deposits that are in the pipeline of our portfolio. What we’ve learned in the last few years, our intention is to apply that more comfortably. I mean, the learning curve on Chimo is way behind us and we’re going to apply that more dynamically on Benoist.

Now, business model, when we built this portfolio was to identify projects that clearly had endowment metal factors. I mean, grades of Gold over widths that demonstrate that the projects have legs to them. For us, we don’t want to be prospecting with a drill or burn through cash trying to make a discovery. We focus our exploration, on stuff that has already been discovered, but were discovered at a period in time where drilling was naturally limited to the first few hundred metres. Now our job is to just pick these things up from what they let were left off and to drill at depth and to continue to explore and build ounces on these things.

As luck would have it, our first asset that we focused our attention on was on that very productive and prospective Cadillac Fault Extension. Now we are going to focus our exploration attention on what everybody’s seeing as an emerging mining district: The Windfall Belt. And so, there’s going to be a lot of bang for the buck because we’ve developed a process that can really benefit the three other assets that we have.

Matthew Gordon: Do you feel that economics are not going to be as good as you thought?

Philippe Cloutier: In today’s press release, in the second table we present high-grade intervals. And we purposely did that because we get the criticism that, this is low grade or average grade. Chimo, much like any other project in the Abitibi, has its sweet headline pockets within the mineralisation panels. We always have tended to focus on the number of ounces or the volumes that generate ounces rather than the teaser headlines. Our focus on Chimo was making sure that the mineralisation that we outlined was amenable to mining with modern techniques. Mining in modern times has migrated towards bolt mining underground, or more so open pit, in some cases. People that look at Chimo or any other project with a 1990s mindset, they’re missing the point. Gold X is a brilliant example, Canadian Malartic is a brilliant example, where you take known deposits and you look at them with a modern set of white glasses and you design a program to address that target type, and at Chimo that worked.

That’s why the crucial components of our third resource estimate is to come to an understanding of what is the appropriate cut-off grade for the Chimo-type mineralisation and run various simulations and scenarios. And what I forgot to mention in the previous part of the interview is that throughout the past four months or six months, we’ve stumbled on what I would call technical discoveries. In discussing with the resource estimate people and the engineers they’ve brought to our attention, some technical advantages to the Chimo mineralisation infrastructure.

Matthew Gordon: What are you able to tell us about the way that this could be processed?

Philippe Cloutier: At Chimo, when engineers and resource estimate people look at it as a deposit, they don’t look at it from an exploration geologist standpoint, right? They look at this and they say, why don’t you lower your cut-off? Without any additional drilling, you’re generating a lot more ounces. But the engineers will look at this and say, hold on. Can I wrap wire frames around this? Can I actually come up with a stope design? It’s a lot of back and forth work with the geological team, the resource estimate team and the engineering team. And then in the process you get these Eureka moments, and when you map it out, when you go to the drawing board, that’s what I call technical advantages or technical discoveries that are made that aren’t through the drill bit, but through an understanding and a mapping out of the various scenarios.

For instance, at Chimo, we know that ore sorting works. We know that if you take the mineralisation and you put it through an optical or an electromagnetic sorter, it can sort, the material can be recognised and separated into ore and waste. It either does already, or it doesn’t. If it doesn’t, that’s it, you don’t investigate that path anymore. In our case, it does.

In our case, we’re also very proximal to the to the Val d’Or mining camp. And you could either truck your ore on paved highway, or you could truck your ore on forest roads. You could send it to a lower volume mill, or you could send it to a higher volume mill. And we have the advantage of having locally, I think, six mills by six different owners. You’ve got the LaRonde mill by Agnico. You’ve got the Canadian Malartic mill, which is co-owned by Yamana and Agnico. You have the Goldex mill, which is Agnico. You have the Western mill, which is keynote, which is Western. You have the QMX mill, which has an option on. You have the Eldorado mill, you have a lot of different players, a lot of different mills and all that optionality that goes with it. An important part of the engineering design of the project is to unlock the value of each scenario; to be fully aware of which scenario can give you a revenue of X and which scenario gives you a revenue of Y, and just map it all out.

Matthew Gordon: How much work have you done on that in terms of engineering? What’s the increased recovery rates? What’s the cost of it?

Philippe Cloutier: The cost of it is actually low. The ore sorting plants themselves, purchasing them and installing them – that’s low. That’s a low-cost item. It’s not even mentionable in terms of CAPEX and OPEX. The essential point is the trade-off; are you better sorting this thing and high grading your ore, lowering the trucking cost, sending it to more potential mill sites, or are you going to just throughput as much tonnage as you can at the lowest grade possible, just send it to a local mill and let them sort it out? It’s the measure of trade-offs that we’re going through right now. That process is ongoing, but obviously, you can assume that if we’re doing that process it’s got passing grades and therefore, we’re going to deliver on it.

Matthew Gordon: When do we start getting more clues about the economics around this?

Philippe Cloutier: Ultimately, the public has to wait for the PEA to be published. The more sophisticated investors will actually wrap their heads around what we have, they’ll go to local other PEAs and 43-101, where you could find in these reports, these cost estimates, these trucking costs, these milling costs, and they could piece together their own napkin study PEA-type thing.

Matthew Gordon: Who do you consider your peers are in terms of similar ore bodies, etc?

Philippe Cloutier: Not in terms of similar ore bodies, but in terms of similar dynamics, there would be Monarch, there would be Radisson. There would be Probe, there would be O3. Listen, even Agnico Eagle, in 2006, developed the Lapa mine, and the Lapa mine ultimately produced 825,000oz of Gold, from 2006 to 2018. Don’t let anybody tell you that senior mining companies don’t tackle million ounce deposits; they do when it makes sense. And so we’re working on Chimo to deliver it. We’re already, at 1.2, we’re working to deliver a minimum of 1.7 that we arm-waved in our corporate presentation. And I’m quite confident that we may even top that.

Matthew Gordon: Benoist. What are you doing there now with this new money of yours? Or what do you plan to do?

Philippe Cloutier: If we dial back to 2016, when Agnico Eagle invested USD$4.5M for a USD$19.9M stake, that USD$4.5M was to drill Wilson, Fenton, Benoist and Chimo. We never got around to drilling Benoist, so it’s a given that we already have a drill program mapped out for Benoist. However, in light of what we’ve discovered that Chimo, the program at Benoist has now developed into a three-component program, we will be drilling the natural depth extension of the Benoist deposit as known today. We will be drilling the deep-seated ore vision anomalies that are distributed in and around of the Benoist deposit. And we will be drilling the deposit itself. All three parts of the program are directed, or their objective is to rapidly vault Benoist into the limelight and properly evaluate. The drilling of the deposit itself is meant to reflect, whereas at Chimo, we had historical metallurgy in rock production and production reports at Benoist, this is not a past producer so drilling the deposit itself is meant to rapidly jumpstart metallurgical studies on the project. Whereas drilling the extension of the deposit and the ore vision anomalies is meant to build or scope out the potential that this project has to deliver how many ounces in a given time.

Matthew Gordon: What are you going to need to do with Benoist, with Fenton, to really get the market excited?

Philippe Cloutier: In our opinion, the market has only recently started to recognise some value at  Chimo, but zero value at Benoist, Fenton and Wilson, because these are all historical resources, they are not 43-101, given the fact that they were essentially outlined in drilled off before the pre-Bre-X scandal. 43-101 norm and regulation come into play in 2001. What we aim to do is to take the historical resource estimates that we have on these projects and flesh them out. This is our embryo. This is our start number. And look at the program; the program is built to develop rapidly, expand the number. At Benoist, for example, there are, I think half a million tons, am historical resource assessment mine, not 43-101 on half a million tons at 5g/t Gold, 12g/t Silver and 0.3g/t Copper.

If you take half a million tons 5g/t, that’s about 90,000oz in the first 100 or 200m, but we’ve drilled down, in 2014, to 750m. We know the systems there. We have to design a drill program that will clearly show the market the value that we’re building at Benoist, and have it understand the value of Benoist and also at Fenton. And then ultimately, at Wilson.

Right now, we’re getting zero value for the three other deposits. And we’re also only getting partial value from Chimo. Our challenge is essentially, not a technical one, it’s raised awareness of what we’re doing and have the market recognise our value. Have the market recognise that we’re not vulnerable financially; we have the cash. We have the right team to do the right work. And obviously, we have the right assets in the right location. The market valuation will perhaps at one point meet the corporate valuation. And that’s where I think the value proposition is.

Matthew Gordon: Money is flying around left, right. And centre. Why not take more to accelerate this so you can actually deliver in a very positive Gold bull environment?

Philippe Cloutier: Obviously, there’s a world between investing funds properly and just blowing it out and spending it. USD$9M-ish is on the high side of what we can appropriately manage and deliver in the Cartier fashion. Above that, the work would get done. We can manage it, we could deliver, but it wouldn’t respect our signature program. That amount basically reflects the backend interests that we’re able to generate. USD$9.3M that you mentioned is flowed through. When you raise flow-through dollars, it’s a promise to the market that you’re going to invest that money in exploration. You can’t use that money for GNA and stuff like that. The retail investment community should be hearing, wow, we’re going to get USD$9.3M worth of diamond drilling, because Cartier doesn’t fly airborne surveys or do grab sample trench programs and stuff like that.

The majority, if not, all of it is going to go directly to diamond drilling, some reserved for engineering and 43-101 resource estimate work. It’s going to be a very, very dynamic year for Cartier in terms of news flow, in terms of deliverables.

Matthew Gordon: What’s the end point for you, and how much more money and how much more time is it going take to get to that point?

Philippe Cloutier: We’re looking at USD$500,000 to USD$700,000 to complete the work on Chimo, have the market fully appreciate in terms of resource estimates and preliminary economic assessment of the project – the value of Chimo. From that point on, it’s a different ball game; the market comes into play, the corporates come into play. Even at the board level, we have to make a decision of how we’re going to capture that value and monetize it for our shareholders. What remains to be done on Chimo is simply bringing to the market an evaluation picture of Chimo. And from that point on, we’ve got two elements: we’ve got a defence mechanism if there’s an opportunistic bid or a delinquent bid on Cartier or Chimo. And then we have the blueprints to build it ourselves if we have to make that sort of decision. We’ll have covered the basic needs as a team and we’ll have protected what we’ve generated as value, we’ll have protected that for sure.

Matthew Gordon: Whats your business model?

Philippe Cloutier: That’s our business model, and in the best of worlds that’s what you do. Junior companies, a four-man team junior company that says that it’s going to build a deposit in this day and age, with the permitting, with the capital raise, you have got to be credible when you want to do this type of thing. It’s one thing having a four-man team and doing exploration, quite another having 200 men onsite or women, and having health and safety meetings on Monday morning. It’s two different worlds. If you decide to walk the talk and say, you’re going to build this thing that can become scary. You could always have that up your sleeve, but at least with the third resource assessment and the engineering work that we’re doing, and eventually the PEA, that will spell the value for Cartier and the shareholders. Obviously, we’re hoping that all of this is done and delivered while the price of Gold is still going up and the market is favourable. That’s why we’re very content where we’re at right now. I would hate to be delivering when the market crashes.

Matthew Gordon: What are we walking into? Are we in this for some sort of long haul with you, or is there an event coming up soon? 

Philippe Cloutier: There are several events coming up.

Matthew Gordon: I know we’re going to catch up in a few months as things progress and we’ve talked about staying in touch more regularly. I appreciate that. Things are going well. You seem to have delivered everything you told me you were going to deliver, which is unusual. COVID is not making too much impact on moving things forward dates not changing?

Philippe Cloutier: I’ll tell you something: because of what I mentioned earlier on, people not taking vacation time, saying, I can’t travel abroad. I can’t do this and that. I’ll just stay at work and stuff. And then working off-site, working from home, we’ve managed to do it quite well. Some of our contractors or some of the other groups that we intervene with, will they manage that the same way? When you have a whole bunch of different moving parts and they try to coordinate meeting times and that falls because things get bullied around a bit. We could answer to our plans and that’s what we aim to continue doing. It hasn’t impacted us yet. What will COVID bring us in the second wave or even third wave? I don’t know, but we have taken the necessary steps here to manage that accordingly. We have the cash, the team and the assets.

Company Page: https://ressourcescartier.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.

Canex Metals (CANX) – Early-Stage Gold Explorer Built for Success

Canex Metals.
  • TSX-V: CANX
  • Shares Outstanding: 53.06M
  • Share price C$0.26 (21.09.2020)
  • Market Cap: C$13.53M

Interview with Shane Ebert, President of Canex Metals (TSX-V: CANX)

We like this one. Canex Metals is an early-stage gold explorer with 3 gold exploration tenements in Northern Arizona: a strong mining jurisdiction. With $1.3M in the treasury and another USD$490,000 available through warrants at this end of this year, Canex Metals appears to have the credentials to deliver gold in the ground. Canex Metals is a small player, but there is always room for gold early-stage exploration in your investment portfolio. The geology is good, the share registry is excellent and the corporate structure is unusually tight. They have taken great care to set themselves up properly. Why is that important? Because it means they can afford to have a couple of dusters, raise additional capital and still have a good share count. Well, that’s the way we read it.

The team has a strong track record and Ebert, a geologist, was candid and transparent. Lots of discoveries made by the team and also a record of M&A. They are chasing high-grade gold at surface.

Canex Metals’ c.$13M market cap has recently seen a bump. Canex Metals has started to market itself effectively. The restructured the company a couple of years ago using money from Altius Resources. Talking to us is a good start, but this story needs to be heard by gold bugs. In this gold environment, anything seems possible. With $400,000 to spend on drilling over the next month, the market should have a much clearer idea of the Canex value proposition that is on offer in the near future. If they hit gold they should raise more money.

We Discuss:

  1. 2:34 – Company Overview
  2. 3:22 – The Foundation: History & Track Record
  3. 6:36 – Relationship with Altius Minerals Corp: Raises and Cash Position
  4. 8:11 – Team Experience
  5. 8:42 – Acquiring the Asset: What’s There?
  6. 17:25 – Management Shareholding, Remuneration and Cost Mitigation
  7. 19:19 – Plan for Money Allocation: Drilling and Expectations
  8. 24:22 – Value Creation & Exciting the Market: Means of Minimising Dilution
  9. 28:31 – Thinking of Partnerships

CLICK HERE to watch the full interview.

Matthew Gordon: Why don’t you kick off, give us a one-minute overview of the project and then we’ll pick it up from there.

Shane Ebert: Canex is focused on high-grade Gold, Northern Arizona. We’re into an area with lots of widespread Gold mineralisation, not a lot of past exploration and a lot of good opportunities. We’re excited about getting in there and exploring this new zone. It holds some really good, high-grade, near surface Gold upside for investors. We are putting together some really good targets and now we’re at the drill stage, so this is where we start to test some of those targets.

Matthew Gordon: What’s your history and track record?

Shane Ebert: I’m a geologist. Did degrees in Canada and Australia. I did my studies in Nevada, so a lot of history in the great basin. I worked through Nevada, Mexico from Alaska to South America, quite a bit. I’ve been part of a team that’s had quite a bit of success over the last 20 years. Initially with Tyler resources, our team found and sold a large Copper deposit in Mexico. Since then we went on to discover Gold deposits in Newfoundland. I’ve been involved in Copper-Gold discoveries in British Columbia and a lot of project work throughout the Western U.S. This is an area we’re comfortable with, we are comfortable with and we see a lot of upside.

Matthew Gordon: When did you get involved?

Shane Ebert: I’ve been involved now for about 12-years. After Tyler wrapped up and that company was taken over, we took on new management roles in this company. The precursor was Northern Abitibi Mining, involved in exploration all over the place. A few years back we restructured the company and Altius Minerals came in as a founding partner. They helped us recapitalise and they’ve been a really strong supporter of the company. This new company was looking for projects, and basically an opportunity came up in Northern Arizona that had really good potential. We saw a lot of Gold over a widespread area and a project where we could go in and put things together for low costs and meet our criteria, which are: we’re looking for opportunity, but in this case, Gold, which is a great commodity in a fantastic location. Arizona is clearly one of the premier first-world mining jurisdictions. They’re in the top 10 of the Fraser Institute. It’s a great location. If you look, we have Nevada to the North, we’ve got Northern Mexico to the South. The geology continues through the two, lots of opportunities here. The management team loved the jurisdiction, saw good early-stage opportunity where we could leverage our skill sets and add value quickly through low cost, really good science on the ground, and bring to investors high-grade, near-surface targets that we see the scale to. I mean, it’s exploration, it’s early stage, but we’re seeing what we want to see in terms of checking boxes for size, for potential, for what we need to actually make a real discovery that we can move to the next level, which would be resources and eventually monetising ore.

Matthew Gordon: You’ve been involved with this entity for 12-years, and Altius got involved when? When did they put money in?

Shane Ebert: A couple of years ago, we restructured, they helped us recapitalised and they got behind us as an exploration company.

Matthew Gordon: How much money did they put in?

Shane Ebert: They put in a few hundred thousand initially, to get us off the ground, get us moving. And that was the catalyst. It was at a time when it was hard to raise money. They saw the opportunity. They liked the background. They liked the people involved. They’ve been a strong supporter. I’ve done work for them in the past. They know our group very well. We’ve worked on projects. We made a Gold discovery with Altius in Newfoundland five, six years ago. We have a good working relationship. They liked the way that we put money into the ground. We’re very effective and efficient with the capital that we do raise. It goes mostly into exploration, and they were very happy to support us at a time when it was tough to raise money a few years back. Definitely.

That kept us going, that got us the ability to look for targets, to focus and to move the company before.

Matthew Gordon: How much money have you raised since then and how much money have you got today?

Shane Ebert: Since then, just over USD$1M and a bit. Right now, we have about USD$1.2M cash and equivalents. We’re spending a portion of that on this drilling program, but we’ll come out of this with not as high a bank account as we’d like, but with still a healthy bank account to get us through the next 6 to 12-months.

Matthew Gordon: I just want to finish off with the management team: it’s you and who?

Shane Ebert: The other technical person on the technical team is JP Jutra. He’s a geologist, technical background. We have a couple of directors with a financial background that have really helped with the business side of things. And then we just have some core management teams that are great at capital markets, corporate, the rules and the regs of navigating the system.

Matthew Gordon: When and how did you then find the asset?

Shane Ebert: That’s interesting: about a year ago, I got a call from a prospector who lives part-time down in Arizona. We did a deal with a separate company with that group, so he knew us from a different life. He was out metal detecting and he found some course nuggety Gold in place with his metal detector, they ended up taking out about 20oz of Gold from a little pocket that they’d had up. He took a picture, he showed it to me: it was a nice quartz vein with splashy Gold, looks really impressive. And I thought, that’s pretty interesting – new discovery area that hasn’t been looked at under about a foot of cover, looked like lots of upsides. I love Arizona. We’re looking in the Western U.S. for projects. I hopped on a plane, came down, went out, looked at the site with him. It was definitely of interest.

It wasn’t enough exposed to say too much about his discovery, but I spent a few days just walking around and I started to come up with some old workings from the 1880s, starting to trace some bigger structures. All of a sudden, I could see that there’s potential here to put something together with some good, honest boots and hammer work on the ground. Seeing some visible Gold in some of these quartz veins, so you know it’s mineralised before assays, and widths up to 5m. Right off the bat, I had a pretty positive impression. And we ended up doing a deal on a few claims. Since then we’ve grown the claims exponentially. We now have 145 claims, which surrounded that area, we’ve incorporated four or five small-scale past-producing Gold operations dating to the 1880s and including a small-scale heap leach operation dating from the 1980s.

We were able to assemble a land package and start to trace some of these mineralised zones. One of them we’ve traced for over 5km. We’re starting to see the scale that we want in the system and widespread veins. Some of these veins are small. They’re discontinuous. They’re not what they’re looking for, but put together as the whole package, they give us a really good idea of what’s going on structurally, and our focus is to pull out via structure in good geology and geochem and all the typical methods, including geophysics, the bigger zones, the bigger targets, and that’s what we’ve been focused on.

Matthew Gordon: What I would like to understand is how do we identify? What you think you’ve got there and why this isn’t just a sort of capital promote type project?

Shane Ebert: Most exploration projects don’t pan out. I mean, this is the riskiest stage. Basically, we’re in the business of trying to mitigate risks. We’ve mitigated the political, social risk by being in a good jurisdiction, but how do we mitigate the exploration risk, the geology? How do you separate this from something that’s of interest, but not going to go anywhere? To do that, what I like to do is look at certain criteria and check certain boxes in the exploration stage. One of it is them is, there is grade. We love to see grade.

Matthew Gordon: How do you know that?

Shane Ebert: You can have lots of mineralisation, but grade is hard to replicate. We see grade, we see halos around some of these things, but what we do is we have a picture here that has the potential for a bigger scale system. In nature, there’s tons of small-scale systems. There are only a few bigger scale systems that actually become mines and actually become minable. And the key is just try to recognise that. You want to look for certain things here. We see a genetic model that works for us. It’s got size, it’s got analogies. We see structure, we see a distribution of mineralisation over a large area, and we see the potential to have the right traps to get higher grades zones of high-grade mineralisation, over bigger areas. That’s what we’re focusing on.

Matthew Gordon: But how can you say that? Give me some assurances about how you come to that conclusion?

Shane Ebert: To build those targets, you have to start from scratch. We started from scratch here. We had no information, no assays. Now we have over 2000 soil samples, over 500 rock samples. We use that surface data. We have flown a high-resolution airborne magnetic survey with drones. That survey has been really good, very low cost, but extremely good, high-quality information. We can map the structures and trace them on a surface. We can follow them and extend them with that geophysical survey. We can combine all of these quality datasets and start to develop targets understand the structure, understand the modifications of the mineralised zones, post mineral, which is common in this part of the world and put it all together into a picture where we can say, look, if there’s mineralisation here, we need a few holes in this zone because it has got size potential. It could be this big or not.

But just to back up here, over half of our targets are directly targeting high-grade mineralisation that we see at surface. A lot of our targets are low risk. If we can duplicate what we see at surface, it’s going to be a very good success for us. Then we go out and take a few flyers. Then we look at our model, we look at our structure, we look at the picture that we’re building, and we say, okay, here’s an area that we can’t seem like it’s covered. But if there’s mineralisation there and our structural model suggests that could be a really good trap. We put a few holes into these areas. Maybe we’ve got a big soil anomaly. Maybe we’ve got other criteria that suggests there’s Gold there. But basically, part of the risk exploration is you’re taking some low-risk drill hole bets, but you’re also taking some flyers on things that could maybe make a difference and change the game if they’re successful. But realistically, you’re only going to hit on a few of those if you do, right? That’s the risk of exploration.

Matthew Gordon: What did you see when you were on the ground? What is the data, which is saying to you, this is not just some interim step for me until I find something more decent to go work on?

Shane Ebert: I’s hard to quantify, but in a nutshell, what I see there is, is what I see when I work on other deposits that do have what it takes to become a mine. To make a direct analogy, I’ve worked a lot in the Pogo district in Alaska, and I’ve mapped a lot of these high-grade veins. I’ve mapped so many intrusions around there. I’ve seen some of the sheet and stock works in the intrusion and the distribution of these high grade around vein. By direct analogy, I liked what I saw there. On the ground here in Arizona, the desert has a pretty good memory, but you can go out there and there’s no trenches, there’s no drill holes. This has been gone over by a hundred companies in the past. We’re putting together a new project in this area and testing the guts of it for the first time. It hasn’t been done before.

The analogy that what we’re seeing on the ground here with what I’ve seen in the field, in deposits of this style is very compelling. I like what I see. There’s a lot of good similarities. Basically, analogies are a great way in this business to understand what you’re looking at and move things forward. That’s what we’re doing here. We like what we see, we’re seeing Gold, we’re seeing structure, we’re seeing the right kind of structure, and now we’re moving forward and testing it.

Matthew Gordon: How committed are you? How much of your money is in this?

Shane Ebert: Over the years, I’ve got a few 100,000 of my own money. It doesn’t sound like a lot, but as someone running and managing and doing this as a career, it’s significant on my end.

Matthew Gordon: What you’re going to do with USD$1M? How much are you burning through just in terms of the administrative component?

Shane Ebert: We’re around USD$350,000 to 400,000 p/a in GNA. We run a pretty tight ship. We share offices, we do a lot to control costs, and a lot of that is just regulatory compliance. We don’t have a lot of high overheads. We work project-specific and we do everything as cost-effectively as we can. We’ve done that for 20-years.

Matthew Gordon: How do you apportion your time between this and those projects?

Shane Ebert: With my other projects, we have teams involved in both. The last few years when things were slow, it’s not an issue. There’s not as much to do as you’d like, and work is good as things get busier as the demand on your time gets higher. It’s basically assembling good quality teams that can do the work, that you have trust in, that can go out and get the job done cost-effectively and do it right and move things forward. Time management is very important.

Matthew Gordon: Are you paying yourself here? How do you remunerate yourself?

Shane Ebert: In terms of renumeration, I take a modest, daily wag and options. I’m in this for the big picture. My shareholdings and the option package I have is basically my compensation.

Matthew Gordon: How are you allocating capital to further develop your understanding of what it is that you have?

Shane Ebert: We’re going to spend about USD$400,000 on this drill program. We’ve spent maybe USD$300,000 getting to this stage with the surface work, the geophysics, all the things that we’ve done. We’ll spend about USD$400,000, then we’ll have half a million, USD$600,000 in the bank post program. That is very much a results-driven way forward. We’ve got some really good shareholders behind us. We’ve got the ability to raise money when we need it. We can go into that a bit later, but as we have success and move forward like any junior, we need to raise money to keep things going. If things don’t pan out, then you take your next opportunity and move forward with that.

Matthew Gordon: When are you hoping to report back to the market?

Shane Ebert: We will give regular updates now that drilling’s commenced. Hopefully every week or thereabouts we’ll put out an update. We’ve done a ton of surface work, so we’ll be able to start putting out some surface results, but everybody wants to see drill results. That is what we’re in this for. We’re going to start sending complete drill holes to the lab in batches of two or three. Hopefully, depending on lab turnaround, in the next three, four weeks, we can start releasing drill hole results to the market and people can understand what it is that we’re getting.

Matthew Gordon: Do they tend to be a lot harder than diamond drill results, because they are sort of more selective?

Shane Ebert: The drill results are usually more representative.What we’re doing with this program, we have a lot of coarse Gold, so we can see Gold in a lot of the veins. That’s always the hardest material to analyse to get a representative, repeatable result. The nugget effect is well known and it’s challenging. What we’re doing to mitigate that with drilling is doing a big size, taking big samples and prepping them in a way that we get the most representative samples that we can.

We have over 500 chip and grab samples now. You’re right; sometimes you are understating, sometimes you are overstating. In case in point, we did a tranche about six months ago, we took a sample across an interval and we got around 2g/t Gold. We resampled the same interval and we got closer to 15g/t Gold. We know it’s mineralised. We can see Gold in the vein, but the volume and where you sample that vein can make a difference. You have got to do whatever you can to mitigate that. Yes, when you’re, when you’re out there taking chips and grabs, they can be overstated, they can be understated. Hopefully, they are somewhere around what’s representative, and you need big samples, but you also need to prep them right. You need to do everything that you can from a technical side to reduce the nugget effect.

Matthew Gordon: How do you go about assessing what is representative for the region or the district and what your expectations are when you start drilling?

Shane Ebert: When we released those samples, we’re including samples of high-grade veins and we’re including samples of the wall rock adjacent to the vein which could have low-grade mineralisation or no mineralisation. When we chip sample is zone, we want to get out of mineralisation. We want to sample the good stuff, but we also want the wall rock. When I say average is over 48 samples, or over 64 samples we’re including zero value and the best value; not always the best way, you should really actually pull out your mineralised veins and take that range for those things. But it just gives people an idea.

We’ve taken lots of samples from the zone, and there’s a lot of Gold in the zone. The drill will really help us determine continuity and grade through that zone. And that’s what we’re going to rely on.

Matthew Gordon: How long is this drill program lasting?

Shane Ebert: If all goes well and smoothly, which almost never happens in a field program, it should be about 21-days and we should have it wrapped up in about three weeks,

Matthew Gordon: Three weeks. And then in terms of your USD$400,000 spent, what period is that?

Shane Ebert: That’s all through the drill program. It’s all through the results that gets us to everything being done and complete and all results in, that will be a month and a half, that’s about what our cash balance will be.

Matthew Gordon: You’ve got some very understanding shareholders, I see LTSS and others who, all things being well, should follow their money.

Shane Ebert: I think we can raise money, especially in this market. On the back of positive results, it gets a lot easier. Definitely. At some point we’re going to have to look at keeping going, what’s the next stage? What are we going to give to investors after this? A lot of that will depend on what we find. When we’re done on this program, we’ve already got six or eight really good targets to drill test on phase two. If we can move forward with a few zones here that we can build resources on, that would be fantastic, because we can move right to the resource building stage and we can also start to bring on our new targets and test our new targets. As this program goes, we move things forward. We’re continually bringing on new targets and as we understand new zones, and as the drill shows us where to go, where not to go, we can act accordingly and start moving forward and start to build value with the drill.

Matthew Gordon: When do you think the real value starts being created?

Shane Ebert: Typically, the discovery phase with the drill is where you add the most value on any project in any company. We’re at that stage now. With some good drill results, there’s a lot of upside here for investors, definitely,

Matthew Gordon: There’s a lot of dilution coming, because you’re going to need to raise this capital, right?

Shane Ebert: Certainly, dilution is always part of it and we’re trying to manage that by adding value as we go. Two raises ago we raised money at USD$0.05c. The last time was at USD$0.09c. Now we’re up around USD$0.24c. Our cost of capital keeps coming down, we’re heading in the right direction. To exercise our business plan, we need more capital. We’re going to need to continue to raise money through stages as we go and develop the resource as we can, as we get through the exploration stages. Raising capital is part of the business. There are different ways of doing that and we’re going to be as sensitive as we can to keep our share structure as good as we can, as we move forward.

Matthew Gordon: Different ways of raising capital in the exploration phase – how is that?

Shane Ebert: You can bring in partners. You can look at other ways of bringing in capital. Different companies have different business models. We’re very much a true exploration company. We want to identify good targets that we think can add value and we want to move those forward ourselves. Other companies may look for targets and bring in other people’s capital to do the risky drilling and stuff. But we’re an exploration group. We see opportunity. We identify it. If we don’t like the opportunity, we’re going to move on to the next one. But the big way to add value in this business of exploration, which is high risk by nature, is to take those gambles, take your best shots. And those companies with drill discoveries do very well in the market for shareholders.

Another thing I’d like to point out, Matt, is we’ve got more money coming in as we move forward: we’ve got USD$$230,000 worth of USD$0.10c warrants due in October that we expect to be exercised, that money will come in. We’re going to receive about 125,000 shares of Canadian Nickel Corp through a deal we have with Spruce Ridge in holdings in an asset we monetize to Spruce Ridge in Newfoundland. That’s almost USD$500,000 coming in, which will more than cover our drill program. We’re going to have some money in the bank following this to move us to the next level.

Matthew Gordon: You are explorers. At what point do you start seeking a partner in whatever form or guise that maybe?

Shane Ebert: It’s hard to say at this stage. We are explorers, like you say, we’re not mine builders or developers; very different skillset. We recognise that and we’re not trying to be all things. We’ll focus on what we’re good at, which is identifying, exploring, defining the resource. As we move forward and we get to those decisions that we may or may not need a partner, we will make those decisions. Eventually we’ll potentially try to monetise the asset to a mine development group or other, but as we move forward, we’ll look at those opportunities and do what’s best for shareholders.

Matthew Gordon: Thanks very much for coming and telling us that story. It’s an early-stage project. You seem to have a very clear view of how you’re going to go about doing that. I do appreciate your track record and the involvement of people like Altius, et cetera. Come back on and let us know how the drill results go.

Shane Ebert: We’re testing lots of targets. We have five or six different targets. We’re testing multiple holes into each. We’ll see what holds, but I’m excited. I’m excited that the drill is finally turning and that we’re finally going to get a good look at what it is that we’re doing out here. Then we’ve got some new, big ideas coming together, which can add value down the road. Lots of good things to come from Canex.

Company Page: https://www.canexmetals.ca/

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Golden Minerals (AUMN) – Generating Cash Flow to Fund Development

Golden Minerals.
  • TSX/NYSE: AUMN
  • Shares Outstanding: 1.48M
  • Share price C$0.45 (21.09.2020)
  • Market Cap: C$67.85M

Interview with Warren Rehn, President & CEO of Golden Minerals Co. (TSX/NYSE: AUMN)

Golden Minerals was formed in 2009. Golden Minerals is a gold-silver exploration and development company that is based in Colorado. With gold and silver both going on remarkable bull runs at this moment, Golden Minerals hopes to give investors leverage to rising gold and silver prices.

Golden Minerals is a multinational player, with gold-silver projects in Mexico, Argentina and the US. There are 3 core projects: Velardeña, El Quevar, and Rodeo. Velardeña is definitely the flagship but bringing the small (2-year life-of-mine) but economic Rodeo into production will give the company the cash it needs to develop Velardeña. Developing Velardeña has been a rather protracted process, with issues resolving metallurgy, but now it looks like Golden Minerals could be primed to pull the trigger. The cash flow doesn’t end there; the company smartly opted to lease out an oxide mill at Velardeña for the last 4-years or so, and an earn-in agreement at El Quevar with Barrick Gold was signed in April; that one will be a little longer in the making.

The share price has been quite volatile, but for the most part, it has been gradually heading North. Can this gold-silver mining story give investors returns or is it too small to capture the attention?

We Discuss:

  1. 2:44 – Company Overview
  2. 3:30 – US Project: Sand Canyon Update and Plans
  3. 4:21 – Projects in Argentina: El Quevar Update and Plans
  4. 6:35 – Debt Turns Into Bought Deal: Why & What Do The Shareholders Think?
  5. 10:06 – Mexico Projects: Santa Maria and Rodeo. Overview, Plans and Deals
  6. 16:02 – The Velardena Project: Financing, Acceleration, and Economic Potential
  7. 26:06 – Blue Sky Potential and Upside to Look Forward to

CLICK HERE to watch the full interview.

Matthew Gordon: Can you give us a one-minute overview of the business and then we’ll pick it up from there?

Warren Rehn: We’re a publicly listed company. We’re in the Gold and Silver exploration and mining business. We have been a production company before and we’re getting ready to go back into production with a Gold asset in Mexico. Most of our assets are in Northern Mexico, Durango State, but we do also have a major asset in Northern Argentina and some exploration property in Nevada. It’s a transition period for the company, moving back into production early next year.

Matthew Gordon: The US project in Nevada – San Canyon, are you doing anything with that? Has anything changed since we last spoke?

Warren Rehn: Nothing new, we had the first round of drilling. It was interesting, not compelling. We’re looking at where else we will focus within that large property position, but nothing immediate. It’s still a property we are maintaining and we’re doing some surface work on, but no big spend in the immediate future. And frankly, we’ve met our commitments until 2021.

Matthew Gordon: Argentina, El Quevar is something that you have got, well, Barrick has got an option on it, what have they been able to do? Are they encouraged? Are you getting any feedback? What do you know?

Warren Rehn: Yes, they haven’t really been able to sink their teeth into it yet based on the COVID restrictions in Argentina. Argentina shut down early and completely, and they really have not yet been able to get back up on the project. We’re delayed a bit on that and that’s been delayed since April. We expect that they’ll be able to start work now the southern hemisphere spring. But we don’t have any news to follow up on that yet, but they are still ready to go as soon as they can.

Matthew Gordon: Remind me exactly what their commitment is to that project?

Warren Rehn: They’re committed to exploration work totalling at least USD$1M over the first 2-years. They’re going to start with surface work. They’re very interested in the high-sulfidation epithermal system there, they think they can find a big Gold deposit. We’ve found a reasonably-sized Silver deposit that just wasn’t quite big enough to make it work for us. It was a great opportunity for us to get a big company here, a company who really knows the ropes in these types of systems to come in and see if they can be successful. They’ve got up to 8-years to complete their process. In order to invest, they have to come out with a PFS, Pre-feasibility Study on a deposit that has at least 2Moz of Gold or Gold equivalent in it in order to invest. And they need to spend USD$10M in a minimum spend over that 8-year period. We expect them to move a lot faster than that.

Matthew Gordon: And you’ve got no liabilities, there’s no expenditure required from your part?

Warren Rehn: No, they’ll cover all the costs. We merely have to make the basic structure in Argentina, and they’ll cover the camp costs, property costs and all their costs moving forward until they invest, and we are carried at 30% once they do.

Matthew Gordon: You were talking about raising some debt, you’ve ended up doing a bought deal instead. What happened?

Warren Rehn: We looked hard at the debt possibility moving forward and the terms were not attractive. When we got to a point in capital markets where we could do an equity deal without warrants at a reasonable discount, we moved that way instead. Our share price had increased quite a bit since the April deal that we did, a small deal. And so, it gave us the opportunity, which was better in our mind for the company and the shareholder to do it on an equity basis than a debt basis. The problem is, these companies are asking for way too much collateral for the debt that you’re acquiring

Matthew Gordon:What were they asking for? What were the terms?

Warren Rehn: Actually, the collateral that they’re asking for was basically all of our assets in Mexico which are potentially worth USD$100M, more or less, just discounted. And that was for a USD$4M debt deal. You look at that and you say, well, what could go wrong here? We didn’t have a permit in hand, you don’t know what’s happening out there in the world beyond your control. It was much more favourable to the company and to the shareholder, in my opinion, to do the bought deal. It’s a matter of limiting risk here. So that’s what we were doing.

Matthew Gordon: If you’re looking for USD$4M and they want USD$100M of coverage. I guess they didn’t value your assets the same way you did.

Warren Rehn: From their perspective, it’s a matter of having a part of a company that would be able to produce the kind of money that they needed to recover in a worst-case scenario. The problem is their worst-case scenario is pretty drastic and it doesn’t take into account the shareholder or the company. It would have basically left us in an untenable position moving forward if for some reason we’d had to give collateral up instead of repaying the loan. So that level of risk just wasn’t acceptable to me and to the board, so we’ve moved the other way.

Matthew Gordon: What was the feedback from the shareholders?

Warren Rehn: Yes, the feedback was no, not again more dilution. It was perhaps a 15-20% dilution to the shareholder, but it gave us clear runway moving forward and we could move forward on more than just a Rodeo. We could also move forward on other exploration projects. We can move forward on plans at Velardeña earlier than we otherwise could. So, a bit of pain, but long-term gain and it completely de-risks our position moving forward, in terms of money in the bank. We have plenty of cash to do what we need to do. Now I can say categorically that we will not have to raise more money before Rodeo is in production.

Matthew Gordon: Let’s talk about Santa Maria because you’ve got an option where another junior company looking at that. What’s that deal look like and why have you done it?

Warren Rehn: Yes. Santa Maria was a focus for us since 2014, earlier on we thought we could build a production centre in the Parral area of Chihuahua, and that was going to be the basis. It didn’t get big enough fast enough. And we spent a fair bit of time and money moving it forward. It wasn’t quite big enough to capture our complete interest and get the board on the side and make a production decision. So we tried to find some partners in it, and we finally found a group, Fabled Copper, run by a guy who has had success in getting in the capital markets and getting things funded. Makes great sense for us as being too small a project for us to farm it out to a company that it’s the right size for. We’re pleased with the deal they’re going to pay us about USD$4M in cash over 2-years, USD$500,000 on signing and then we have a Royalty interest on top of that, which could, over the life of the mine, produce another USD$2M or USD$3M. More than pays us back. It’s a great little project for a smaller company and it removes a distraction from us. It’s just the way to go forward.

Matthew Gordon: Let’s talk about Rodeo, what you’re trying to do?

Warren Rehn: Rodeo is a Gold deposit within trucking distance to our Velardeña oxide mill. That’s an oxide mill that we’ve had leased out to Hecla mining company for 5 years. Their lease is ending in November of this year. And then we would obviously like a way to use that mill to make money. The best way forward for us with that asset right now with an oxide source is the Rodeo Gold deposit. It’s a small deposit, it’s close by. It’s about 90km from the mill. Haulage cost is low and it’s a high-grade open pit, low capital project that we can put together rapidly. We’re well on our way to getting permits to go ahead with it. It’ll produce about 44,000oz of Gold over about two and a quarter year at a cash cost of around USD$800 p/oz. So huge margin, very low capital, USD$1.5M capital cash before we actually make money. So that’s the spend going into the production period and we can gear up to have it running in January of 2021.

Matthew Gordon: But it is a 2-year life of mine, there’s not any exploration upside around it – this is purely to produce cash.

Warren Rehn: That’s the main, there is some upside and we will do some more work around it. But the key here is that you have to have a grade that allows you to track and mill process. You can’t heap leach this stuff. It has to be milled, given the type of ore that we’re talking about. But then the milling recoveries are good. They’re in the 80% range. There is an upside, I will do some more work on it but this gives us, the PEA was anticipating about USD$25M free cashflow net after tax. That was at $1,600 Gold, now with the sensitivities and looking at the increased Gold price that we’re talking north of USD$30M net after-tax income over a couple of years period. A great way to cash up the company and move us forward to bigger things, including Velardeña and possibly additional exploration in Rodeo and our other projects.

Matthew Gordon: Let’s say USD$20M+ free cash flow, but that’s going straight back in the ground on your other projects, mainly Velardeña, right?

Warren Rehn: Yes. And we don’t need that much. It gives us float to do what we need to do at Velardeña and do additional work and look at additional opportunities, which is really the way to grow the company. Velardeña is a great asset. It’s not a huge mine either, a narrow vein so you can’t produce it very quickly, but it does have a high value that we’ve unlocked using the bio-oxidation test work that we’ve done. We do need a bit of cash to make that go about USD$5 to USD$6M is what we think that’s going to cost us. And then a couple of millions just for working cap to get it going. But with the money we’re making from Rodeo, we’ll have more than enough there to move that forward and continue to move forward with our exploration plays:  Yoquivo, Sand Canyon, other opportunities, and there are many,

Matthew Gordon: Can we talk about Velardeña, there were some metallurgy issues for quite a while, which have been resolved? You have leased out the oxide mill for a period. Can you just tell us about that? The structure of that deal?

Warren Rehn: Yes. The lease out to Hecla mining company, they started that in 2015 and it’s been a 5-year run and we’ve been making about USD$5M p/an on the lease, free cash coming out after expenses. It’s been quite attractive to us. It’s helped us limit the amount of other cash we needed to raise, even though we have had to raise more capital to be a going concern. It’s been a very successful relationship with Hecla. They’re apt to have no additional needs going forward to use that mill again sometime, we’ll probably see some future relationship. We haven’t nailed that down yet. They’re still getting their permits for their oxide deposit together, or their additional oxide deposit. But meanwhile, the Rodeo fits in perfectly in the gap period after a Hecla leaves, until we have an additional source of oxide material, either from Velardeña, possibly, from additional material that Hecla wishes to run and, very significantly, from the bio-oxidation products that we will be able to produce from the sulphide mining at Velardeña.

So that has to be signed ideally then that would go to that oxide mill as well. It just doesn’t fill it up. We’d like to have additional feed sources down the road.

Matthew Gordon: Velardeña with Hecla, you mentioned the number USD$5M, is that per year or is that over the 5-year term?

Warren Rehn: Velardeña needs capital investment to build the bio-oxidation plant of USD$5M to 6M. That was 5M p/a that we were getting from Hecla on that, so they started production in 2016, about half a year pre-production period there, but we’ve netted USD$20M from that lease since 2015.

Matthew Gordon: Obviously, covering GNA and so forth. But what were you spending that money? What was it going on?

Warren Rehn: We’ve moved forward on exploration projects over that period of time, including the Santa Maria, the work we did at Yoquivo, which was significant work at Sand Canyon. Our exploration folio in general, that has been invested in, including the work we’ve done on Rodeo, getting that ready. Frankly, people don’t realise it, but it costs a lot of money to run a small public company in the US, more in the US than in Canada. So, if you’re US-domiciled, you’ll spend more money than you will if you’re Canadian domiciled, by far.

Matthew Gordon: Have you changed your plan with regards to Velardeña yet?

Warren Rehn: Yes, we have. And in my mind, this is still tentative, needing board approval and things like that, but the board is well behind this effort, we can accelerate the Velardeña restart. The question is understanding exactly how far we can accelerate, how fast we can accelerate and to make sure that we could be profitable selling the other two concentrates. We make three concentrates from the sulphite material coming out of the Velardeña. A Lead concentrate, which contains most of the Silver values, a Zinc which is fairly low value. And then the pyrite con, which contains all of the Gold value essentially. We’d have to be able to make money on the Lead con, Zinc con. And I think we can in this environment. I need to do a bit more work, just confirming that we can do that with the change in processing to get all of the Gold that we can get into the pyrite concentrate because of the better payable.

Then it’s a question of how long can we stockpile that material until we have the bio-oxidation facility built? So that’s the open question right now. I think we can start and stockpile, then once we have the bio-oxidation facility built, then process. That would potentially allow us to start Velardeña sulphide mining in 2021, accumulating the pyrite concentrate with all the Gold values and then process that bio-oxidation plant, once we have it built, which will take about a year and a half from today’s date through engineering studies, through design studies, construction plans to actually get that facility. There are some time things here.

Matthew Gordon: What confidence do you have that you’re going to be able to accelerate the Velardeña effort?

Warren Rehn: The big-time consumer was figuring out which way to go; so you look at every possibility, we looked at and all the different options from autoclaves to some sorts of fine grinding oxidation roasters. Now, having selected with two independent, separate tests over a period of years showing essentially the same result, I have a lot of confidence that we know what we’re doing now and the way to move forward. Now it’s a matter of just getting the details of what’s the sulphur content, how much material are we going to produce? What the tank sizes have to be to make this work before you start to build, you just don’t want to build the wrong size facility. You have to build the one that works for you best, otherwise, you overspend. I’m quite confident that we know how to go about it. It’s just a matter of getting these steps organised and in place. And we have a contract from the local engineering company here, is headed up by probably the best bio-oxidation expert in the country. I’m very pleased with the work that’s been going on there. And then the support we’ve had from Tetra Tech, who has championed the process, I’m very confident that we know doing and that we can excel.

Matthew Gordon: Remind me of some of the numbers.

Warren Rehn: The PEA that we put out earlier this year, using three-year trailing prices, which are quite low, this is a $1,300 Gold price and a $16 Silver price, that study showed a net present value of around USD$80M for a 10-year project at Velardeña. When you factor that up with the sensitivities on the new pricing, that’s over USD$100M, well over USD$100M and almost double what the PEA was suggesting at current prices. It’s a very dramatic prize for us to go after, for a company with a market cap of USD$65M. You see what we’re looking at here. We’ve got Rodeo in production; it gives us the cash we need to go forward on Velardeña. We move Velardeña forward as rapidly as we can, but being conscious and careful at every step, not overspend and not to waste money,

Matthew Gordon: What’s the next step with regards to Scoping Studies? What’s happening next after the PEA, how do you drive this?

Warren Rehn: We’ve engaged the engineering company to do the studies. They’ve done a gap study to see what we need to do to actually make it to the next step. Our next step will be getting new material out to do flotation separation studies, to further characterise the exact characteristics of that iron ore and our senior pyrite concentrate. We know what size plant to build and what we’ll need to neutralise acids and keep the oxygen or the air moving through it. That gives us the construction plans and the blueprint, basically, of what we need to build. And then we can move forward. If you don’t have the blueprint, you can’t build it, so it’s that series of steps.

From today’s date to completion, a realistic time schedule is about a year and a half to having that bio-oxidation facility built. Then the question is, how soon before that, do we start the sulphide production in the stockpile? We can process more of this material faster, basically, while still taking advantage of the sulphide production from Velardeña in the current price environment. To me, it works.

Matthew Gordon: Where is the blue sky upside coming from and can you fund it?

Warren Rehn: Yes, there’s a couple of obvious things with the current projects. One is exploration potential at Rodeo, we’ll carry that forward. As we’re producing, we’ll do the exploration. We’ll see exactly how much that can be increased in size – that would be the low hanging fruit. We’ll do that for sure. But the Velardeña resource is open at depth, it’s a small property, but these veins go deep, and we have evidence that there is another more than 500m of the vertical extent to the system based on drilling in hand. We know we can make that bigger and it’ll last longer, that increases value.

Then we have our portfolio of exploration projects, one of which we’ll be able to drill this fall; the Yoquivo district. It’s an epithermal vein district in Chihuahua, just on the East side of the Sierra Madre, great location, veins that are known, they’ve produced in the past in a historical fashion and we’re ready to go. We know of grade material on the surface, we have the drill permit in hand. We’ll have results on that by the end of the year. And we’ll know if that’s going to be a potential, big focus for the company after Velardeña, or to bring on next in the pipeline.

We will also continue in Nevada with the Sand Canyon project, great location, great project, interesting results, but nothing compelling, but we know there’s more to be done there as well. We also have an exploration portfolio in Argentina. As soon as we can move forward in Argentina. This is outside of El Quevar? That also looks quite attractive and frankly, one of the better properties I’ve seen in my career down there that we’re trying to move forward. So, there is exploration upside in the company and significant and that’s going to be basically able to be explored, self-financed from the cash flow from Rodeo and Velardeña. So that’s the model and that’s the blue sky.

In addition to that, Barrick success would change this company overnight into a very different beast. They find the 5Moz Gold deposit that they’re looking for, our 30% will be worth well more than any of these projects put together. There’s great blue sky there.

Matthew Gordon: If things happening in the right order for you. What I want to see from you is some accelerated delivery plan to take advantage of the current environment.

Warren Rehn: That’s exactly what we’re putting together. We will do that now. There is no question in my mind, we’ll be able to accelerate. And as we continue to get news flow from Rodeo, get the permits in hand, which I expect this fall, we get that put together and we go from there. We have our contractor in place. We start preparing to mine and we’ll be ready to get that ore moving to the mill early next year, January, and then be pouring Gold in late January, which would be a great step forward for us.

Matthew Gordon: Beautiful, Warren. Thanks very much for the update. Lovely to speak to you again. It’s great hearing what you’re up to. Give us a call when things start happening and especially looking forward to seeing if we can’t hit those deadlines. Appreciate it. Thanks again.

Warren Rehn: Thank you, Matt. Great talking to you.

Company Page: https://www.goldenminerals.com/

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Theta Gold Mines (TGM) – Methodical Gold Developer 6Moz Resources nears FS (Transcript)

Theta Gold Mines.
  • ASX: TGM
  • Shares Outstanding: 458.92M
  • Share price A$0.24 (17.09.2020)
  • Market Cap: A$117.02M

Interview with Bill Guy, Non-Exec. Chairman of Theta Gold Mines (ASX: TGM)

Theta Gold Mines is an Australian gold developer with assets in South Africa and over 6Moz of resources. Theta Gold Mines is an extremely methodical vessel that has moved its gold projects forward cautiously, with a 5-year ramp-up strategy taking centre stage.

Theta Gold Mines recently raised around $4M and this will be used to complete a feasibility study for Theta Gold’s 74%-owned Theta (open cut) high-margin, low CAPEX gold project. Theta Gold Mines will still need around $30M-$40M to get into production but with a gold resource this large and a gold bull environment as positive as it is right now, we see no reason why the company will have any difficulties.

This is a gold mining story done sensibly and correctly. It is clear that Theta Gold Mines believes it can become a successful gold mine builder. The board is predominantly comprised of mine builders and technical experts rather than bankers. In fact, Guy would like someone to pull this gold project out of his hand for a lot of money. A lot of work has gone into this, and investors will be hoping Theta Gold Mines can monetise its hard work and gain optimal value.

We Discuss:

  1. 2:16 – Company Overview
  2. 2:45 – History and Development: Do People Understand the Story?
  3. 5:32 – Moving it Forward: Money & Timeline for Deliverables
  4. 8:19 – Mining in South Africa & Impacts of COVID-19
  5. 11:24 – The Assets: What’s There & What’s the Plan?
  6. 16:13 – Generating Value: Exit Plans and Options
  7. 19:50 – Considerations, Conversations, & Evaluations
  8. 24:37 – Exploration Potential and Considerations
  9. 26:20 – Capital Needs & Expendature Plans
  10. 27:37 – The Team and Potential Opportunities

CLICK HERE to watch the full interview.

Matthew Gordon: Bill, how are you doing, sir?

Bill Guy: Very good, Matt. How are you going?

Matthew Gordon:  Not too bad. You’re joining us from what, Sydney? Near Sydney today. How are things?

Bill Guy: Very good. Weather is good, it’s very sunny and Gold price is high – it is all good.

Matthew Gordon: As long as the Gold price is high, you wouldn’t care if it was raining, would you? Whereabouts, are you? You are slightly North of Sydney?

Bill Guy: Yes, Terigal is on the beach. It’s a coastal town. It’s about an hour out of Sydney.

Matthew Gordon: Today we are going to hear about your project, Theta Gold. First time we’ve spoken, first time we’ve met, first time we’ll have heard this story. Why don’t you kick off, give us a one-minute overview of what you have and then we’ll pick it up from there.

Bill Guy: Theta Gold Mines is an explorer-developer. We’re a near-term production story. We’re listed on the ASX. We’re listed on the ATC QB in the U.S. and North America. The project sits in South Africa. There’s 620km2 under management. We have 43 historical Gold mines, and we’re aiming towards production in 2021.

Matthew Gordon: How long have you been at this then?

Bill Guy: I joined about three years ago. Essentially, my main background is geology exploration. Since I’ve joined, we’ve added about 3Moz to this story. We started off we about 3Moz. We’ve completed about 20,000m of drilling over that period. And really what I’ve asked the team to focus on is open-pit material in South Africa. They’re very keen to go on the ground all the time, but really what we’ve been developing is the open pit story first.

Matthew Gordon: You’ve seen some nice growth in the share price recently, but the accusation that’s been thrown at you a lot is the lack of communication. People just don’t know what you’re up to. What do you say to that?

Bill Guy: I think it’s really about us being in a position to really market the company hard. Recently, we have really been concentrating on restructuring it, rebuilding it, getting the resource space up, we’ve completed the Feasibility Study in May 2019. We actually got a good lift for the share price for that process, bringing on more believers into the marketplace. South Africa is an unusual jurisdiction for Australians in a way; there are only four companies on the ASX that are listed and working in South Africa. It’s hard for them, the market, to draw comparisons to us. That’s why we look to the ATC QB, effectively, when you’re looking North America. Most of the majors, Gold players out of South Africa are listed on that exchange.

Matthew Gordon: When you say rebuilding reconstructing, what are you fixing?

Bill Guy: It’s not so much about fixing, we’re just about a change in direction for me. We have a lot of shallow open pit resources here. Historically, they’ve always concentrated on the underground aspect of it. And really, with the geometry of the reefs and the hills, we saw an opportunity to look at doing some open-cast material. They have been mining here for 150 years, but there are no open pits, we’re one of the first ones that came up with this idea and concept.

Matthew Gordon: While you’ve been rebuilding, and reconstructing did you lose sight of all the other components that you need to do? Have you been too inward looking?

Bill Guy: There’s no point coming to the market until you’re ready until you’re ready to tell the story until you are very close to that process. We had drill results through 2019. We completed a Scoping Study, that didn’t really move the market. It wasn’t until we put out the Feasibility Study that the market really moved at price, that was a great catalyst for us. And it just tells us really the market’s working; when you’ve got something very meaningful to say the market will listen. We just needed to get to those points. I think we’re at a very exciting time now.

Matthew Gordon: Let’s talk about your corporate structure:  you’ve got what? 454 million shares out? How much cash are you sitting on today?

Bill Guy: This month we raised USD$4M to complete the final bit of working capital to finalise a few things. We’re currently doing our geotechnical drilling. We are doing our financing, we’re doing our payment thing, all that’s in train and at the moment we’ve got cash on hand.

Matthew Gordon: You’ve got about USD$4M, because you’ve raised USD$4M, or have you got a bit more?

Bill Guy: There’s probably a little bit less than that.

Matthew Gordon: Talk us through the timeline to deliver all of those things: permitting the Feasibility Study, et cetera.

Bill Guy: The Feasibility Study has been delivered. We have announced our preferred mining contractor. We’re finalising that contract. We’ve just completed our geotechnical drilling to go with that Feasibility Study. We’ve currently got five plant builders tendering for this process. There are five guys tending to this process and we’re in talks with a number of parties for financing the project. We expect to have all of this completed over the next two quarters.

Matthew Gordon: You’ve raised USD$4M, but what are you expecting that to do for you in terms of people’s perception of how you move this thing forward?

Bill Guy: For us, before we go back to the market to raise money, we expect to have the mining contract completed. There’ll be some trial mining. The permitting should be in place. All these key factors that we always look to try for with as little dilution as we can for the shareholders. The more we deliver before we have to raise money again, the better bang for the buck, for the shareholders.

Matthew Gordon: What’s the plan going forward? What are you? Are you a mine builder?

Bill Guy: We’re in the development phase now. We have an open-pit project. We call it to phase one, the Theta Starter open pit project. That’s on MR 83. We have another 500,000oz ready for conversion for phase 2 on a different mining lease.  In South Africa, you have to deal with the project farm by farm. You can’t, like in Western Australia, we just draw a circle around the bit we want, and we will go and get a mining rock permit for that. However, in South Africa it is a very sort of funny old-style system: you have a farm, you’ve got to get that one permitted and then can do it farm by farm. You can’t just cookie-cut the bit you want out of that mining run. So that’s why we are taking this approach.

The other approach really is we see unlocking the value for the shareholders is okay, once this permanent finance is ready to go then everyone’s going to put a real value on that whole 6Moz

Matthew Gordon: South Africa is suffering a lot with COVID conditions, like a lot of places, but they have really locked things down. How is it affecting your ability to do business in-country at the moment? I know you’re in Perth, but you’ve got a team over there.

Bill Guy: Theta has an office in Johannesburg and about 30 people on the mine site. The guys have been basically operating like this on Zoom. We have 11, 12, 15 consultants that have been working on this process. That’s all gone through. We’re dealing mainly with soft issues at the moment, not the construction and building phase so that hasn’t been a problem for us, the lockdown. Probably the only impediment we had with the lockdown was the Mines Department was closed for a while. That held up the permitting a little bit, but we’re through that process now. The site is operational, and the guys have completed their covert regulations. 900 pages of the documents at the mine site is now operational and it has been for over a month. The guys are in drilling and exploring there today.

Matthew Gordon: South Africa, this is an unusual place for an Aussie company to be operating and junior companies, without having a history of operating, it can be a tough place to operate. We’ve interviewed several South African companies who deal with strike action, union action disruption at the local and federal level. What’s your experience?

Bill Guy: I’m sort of a bit weird; I like it. South Africa to me seems a little bit like 1970s Australia. There are all the problems we had in Australia back then that we solved. People don’t give South Africa much credit, to be honest. It’s got a new president now. He went hard with the lockdown. He actually shut everything down when other countries were going, yes, no, maybe. He just said, no, we are shut. And he took control of the situation.

I think you know that guy, Cyril Ramaphosa? is a billionaire. He brought McDonald’s to Australia.  He made his first money out of mining. He understands mining. The Mine Minister is an ex-miner. He understands mining. There’s a very different vibe in South Africa now.

Matthew Gordon: They’re struggling to get cash. The IMF are having to step in and help get things going. Does that make mining even more important to the economy?

Bill Guy: Yes, the Mining Minister recently, about three, four weeks ago, he gave a presentation to the Minerals Council, which is effectively the industry’s representation body over there, basically, during his speech, he told the Minerals Council that South Africa is going in mining again, and that’s what they want to do. The challenge is there for the government, they were more than happy to meet the challenge. We’re excited about it. I really see South Africa as relatively unexplored on a number of fronts, particularly in terms of Gold and where we are, so we see a lot of upside with the project going forward as well. We just want to be developing. We will be exploring as well.

Matthew Gordon: Let’s start talking about the assets here: you are up in the Transvaal area, is that right?

Bill Guy: We are about 370kms Northeast of Johannesburg. We’re out in the country, it looks very similar to New South Wales. A very small population base. It’s relatively isolated out there, there’s not a lot of people, which is great because a lot of times the problems in South Africa, they talk about the Wits, the Wits is actually in Johannesburg. Johannesburg is the city of Gold, it is built on that mine, and the city basically outgrew the mines. Effectively, Johannesburg is almost a megacity now, and you’re trying to mine, like for us, we are trying the mine in parameters? is pretty hard work. But where we are is very gentle, rolling hills countryside, small population.

Matthew Gordon: Tell us a bit about what you have got, what are the numbers?

Bill Guy: 6Moz. Really, the idea is to capitalise on the first 2.75Moz. That’s 4 mines so there’ll be 4 phases. One phase is the first project we’re getting permanent now – the feed open-pit project, it’s a very shallow open-cut mine. On average, it’s about 60m. It goes down to 113 at its deepest point. That will all be done for through a process of contour haul back.

As we have a face that goes up a hill, the dirt is pushed behind us so a lot of that original contours will be restored to the people. The population is very supportive of this process. They’ll get their money, their jobs and their hill back. And then we’ll move into phase 2 on 3.41, which is another extension. There’s 500,000oz of inferred material over there, ready to be converted into a mining reserve.

We will also be looking at the underground. There’s a thing called Rietfontein contains that 8.5g at nearly 800,000oz. Vertical vein, very similar to Western Australia. Quartz sulphide. There’s about 3.5km of strike link there. The old mine was discovered. Effectively, Rietfontein sits in a 16km-long structure. We see potential to the North and to the South when we get into that.

We have a mine called Beta, which sits just across the road from the plant. 1.1Moz at about 6g, and it’s a flat reef and it tips about seven degrees. And that will be the last of the stage four projects. And that’ll give us access to the first 2.75oz. Hopefully, we are building up to a production profile of around 160,000oz over the next four or five years.

Matthew Gordon: Your plan of attack is, you will get through this next phase, spend your USD$4M. You’re going to go to the market, raise more capital to actually move things forward. What’s the plan of attack on the ground? What’s the number one target? Number two target?

Bill Guy: Effectively, tomorrow we will be submitting the permitting. That’ll go into the DMR. On the ground, the guys are currently looking at the underground, what the board wants to do with this high Gold price is looking at ways to accelerate that five-year program and shrink it down. We have brought in consultants with a lot of underground experience in South Africa, and they’re currently going for all their mines looking at what can and can’t be done. And we’ll be enunciating that vision and their results in October when they’ve completed their work.

In the meantime, the open pit goes forward relentlessly. So as far as we’re concerned at the moment, probably do some reserve drilling towards the end of the year for the phase two program.

Matthew Gordon: Are you tempted to try and accelerate this process, given the current Gold environment?

Bill Guy: Yes, we are. I’ll be honest, probably when I joined about three years ago, there wasn’t a lot of interest in the Gold space.  We have been a bit hand to mouth, to be honest, to push it forward. But the board has always had a great deal of belief in the project. They have always pushed forward with everything. If you look at the last 24 months of announcements, there has been a significant release nearly every month so there’s been a good steady stream of news flow. Really, the market is really looking for those key items at the moment. We’re always active. We don’t sit on the money, we moved the project forward and we’re pretty excited about it, to be honest. And we think, yes, at the higher Gold price and if the share price does what we hope, and the money at the right price, then you would accelerate this program for sure.

Matthew Gordon: I’m just trying to understand the mind of the management team here. You have a decent-sized resource. Where’s the ultimate value lie for you as a business? The Gold environment is like it is, it’s not going to get better than this. Why not sell this thing? There are people sniffing around. There are always people sniffing around when you have got a big resource like this. That’s what we’ve been hearing for the last two years. Majors are running out of resources. Have you got the stomach to go and be a mine builder?

Bill Guy: Yes, I think we do actually. If you look at the board structure, we are not so many bankers, don’t get me wrong, we have a banker on the board, Finn Behnken, he was the director of Gemfields. He worked with me on Jupiter Mine, so we have worked together. I was on the exploration side of Australia. He built the Tshipi mine as the CEO there. But for me, if you really want to get great value for something, the market has, and you have got to believe you’re actually going to build it. I want someone to pull this out of my cold, dead hand for a lot of money, if that’s what they want to do, there’s a lot of work gone into this, we’re not stopping for anyone. If someone wants to play catch up, that’s up to them.

Matthew Gordon: Looking at the AISC, it is pretty attractive, especially in today’s environment. Once you get going, you’ll make money, but it’s not a particularly large target you’re going for in the first few years, right?

Bill Guy: There’s a number of natural advantages here because there are 150 years of mining history, we have roads, we have water and we have electricity. We have a core staff, we have a plant that’s actually oversized in South Africa, for the permit, the plant footprint. What we’re basically doing is getting started, putting the plant on the footprint that’s fully permitted, the tailings dam that’s fully permitted already. And then we can expand it as we go along. I guess, currently in the Gold environment, there’s really only one model and they get bigger, bigger, bigger and sell out, which is great. That’s one model, but we feel, in South Africa with our environment, then the way the market is perceiving us, we’ll get a better bang for our buck for our shareholders once we start to pull Gold, then people are going to really, literally translate to the whole 6Moz.

Matthew Gordon: In this Gold environment, why are you starting with the starter pits optimisation, Feasibility Study? It seems quite modest in relation to what you’ve got, but are you continuing to look at that?

Bill Guy: For us at the moment, it’s about a stage process. Like I said, during what we’re talking about at the moment is really looking at that underground component, particularly Rietfontein and Beta. The guys are doing some work on that. And then look to see where we can accelerate that. We’ve got the permits ongoing, the financing going on, as an investor, once those two boxes are ticked, you want to be very confident about what’s going on. Then when we go into the extensions, all this stuff requires a fair amount of capital. And the question is, what price are you going to be buying that capital? I’d rather be buying at a higher price than the cheaper price.

Matthew Gordon: You’ve got to have a sense of what you think your investors and the board is going to be comfortable with. Now’s the time to take advantage of that. Money is being thrown around; it is cascading down from a lot of these big producers at the moment. Have you had conversations or approaches from strategic partners? Have you had any of those conversations?

Bill Guy: Yes, I’ll be honest: that used to be the case where we’re ringing everyone. Now people are ringing us, which is nice. I don’t really want to go out into an experienced market that we’re going to just sell it. That’s not really our goal here. Obviously, if the price was right, we would certainly look at it. We can make money and have value for the shareholders, whatever the best option is for the shareholders at the time. If you look at Cardinal, we sat for ages on a USD$100M market cap. It wasn’t until it was permanent that everyone started fighting over it.

Matthew Gordon: What are the sort of considerations that the board is discussing each month? What are you evaluating? In this market, it’s really dynamic. Things are changing relatively quickly. There’s a lot of M&A, there’s a lot of fundraising going on. You must be looking either over your shoulder or slightly jealous at some of the companies out there.

Bill Guy: For us, it’s really about that growth story. If we look at how the share price has been steadily going up, the volume in the shares is steadily going up – it’s a growing story. We’ve got a pipeline of projects at the right price and the right time in the cycle, which is probably not far away to what can be accelerated and what can’t. We would love to get in phase two probably a little bit earlier. For me, probably the exciting thing really long term is the underground because the underground resources there is immense, there is about 4.5Moz there already. And when you think about that, the replacement cost of Gold now is about USD$40 p/oz. There is a lot of value on those resources. We have pretty good access to, particularly the upper levels in the mine, and they’re all relatively shallow so nothing goes below about 350m. It’s a very shallow mine and even the underground. 

The guys are on the ground now in the underground looking at what can and can’t be done so we can come out with a central plan to accelerate that process, get the data, get the results, and let’s see where we are.

Matthew Gordon: Clearly the dynamics are going to change between the open pit and the underground, with the grades you’ve got, the numbers are going to change. The grades aren’t particularly high, they’re okay. You’re not chasing high-grade underground veins. Does that mean the AISC is going to change? Does that mean some of the economics are going to change?

Bill Guy: No, actually, underground mining in South Africa is relatively cheap.  When you sat the grades aren’t particularly high, I find that a little strange. Beta is about 6g. Riff*? contains about 8.5g.

If you look at some of the companies on the ASX now, like Bellevue, they’ve got 11g and they’re already cap nicer and fairway from mining.  I think the grades are perfectly acceptable and quite high in part. And those grades are also diluted. They’re diluted grades from mining. They’re not the reef grades so that is one of the things we’ll be looking at in the coming months to see what needs to be done there.

We have also, with our current geology and exploration models we developed, and we see potential around the areas that need to be explored and are underexplored. I brought in a top-tier firm from Australia called CS Global, a very good geological consulting company.

We are next to the world’s largest igneous intrusion, a big source of metal and heap, the richest metallogenic province on earth. And what they really identified for us was the key structure for delivering that metal. There are other opportunities we can look at as well.

Matthew Gordon: You have a decent sized resource. You are looking at open pit. You’re looking at the underground mining. You’re talking about raising money at reasonable values.  Exploration is me ways off isn’t it? You don’t need to be looking or talking about that happening anytime soon?

Bill Guy: The market is a funny thing. The market at the moment is loving exploration and drilling results. We’re aware of that, but we are focused on the main game, which is bringing the first phase into production. All the energy and effort go into that, but we don’t want the market to think, oh, this 6Moz either.  I don’t really think that’s going to be the case. And even if you look at the first four mines we will be tapping into 2.75Moz in the first four mines, that doesn’t include our biggest mine. Our biggest mine is Glenn’s, which is about 1.6Moz on the book, historically it was the largest mine in the region and produced over 34 tons of Gold. We basically control our own Goldfield, and what has killed a couple of companies, historically in this process is, they tried to do everything at once. They were too greedy if you know what I mean.

We’re really just trying to stage the approach and the growth, and with the current environment, we can look to accelerate as well. But we got to go about our business in a logical manner.

Matthew Gordon: That’s what I’m intrigued about: whether you want to mine this thing or are you building it to a certain point of development, advanced development because you’ve got to leave something on the table for the next guy as part of the negotiation. How do you plan out your capital needs and your capital expenditure?

Bill Guy: For the moment we know we need a total CAPEX and working capital to get in production is about USD$40. It’s a very low CAPEX project, that includes about USD$10 million of working capital to get through those phases. Really, our goal is to finance our last component of that CAPEX. There’s an opportunity with Project, there are all sorts of things that can be done there at the moment. We’re looking at all those things. I would park that separately. Then if we looked at underground, the original idea was to actually drive the underground from profits and the open-pit mining. And then do that, if you start to see the share price, good and working capital there available, then you would look to accelerate that on the ground program. Then you would shorten that five-year program down to maybe three, four years. And then you’re a mid-tier producer in four years. I still think that would be a great result.

Matthew Gordon: You are sitting in Perth. You’ve got the Aussie team, the South African team, what are you bringing to the table? You talked earlier about reconstructing the company, but are they fairly self-sufficient over there?

Bill Guy: Yes. The South Africans are very good engineers, they are very good geologists. There are no issues with that. I guess if you really think about it, the Australian/South African side of things has been very successful in the government space historically. The Wits – the South Africans don’t like you reminding them, but that was discovered by an Australian. Our Goldfield?, which is, I think the third one discovered, the first official Gold rush in South Africa was discovered by an Australian. It seems a very good combination I find. Australia is a very big producer of minerals. If people don’t always understand it. It doesn’t always have the best resources, but it’s very conceptual about how we go about our business. And I think it’s that conceptuality we bring to South Africa.

Matthew Gordon: Thanks for that overview and run through the company. I think that’s an interesting story you’ve got there and you’re obviously managing the way you take this forwards in the most effective way for your shareholders. You should come back on and tell us how you’re getting along, how you’re spending that USD$4M and let’s see if you can move that share price. I appreciate it.

Bill Guy No worries. We will. Thanks for your time, great to meet you. And thanks to all your viewers.

Company Page: http://thetagoldmines.com/

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Osino Resources (TSX-V: OSI) – Gold Player With a Bit More to Prove (Transcript)

Osino Resources Corp.
  • TSX-V: OSI
  • Shares Outstanding: 102M
  • Share price C$1.40 (10.08.2020)
  • Market Cap: C$143M

Interview with Heye Daun, CEO of Osino Resources (TSX-V: OSI)

FULL ARTICLE AVAILABLE TO READ FOR THIS INTERVIEW HERE

Is this gold explorer/developer overvalued?

This was an encouraging first conversation with Heye, and he has a track record of exiting mining companies having made investors money, but investors will need to make their own minds ups. Osino Resources is a TSXv-listed gold explorer & developer with assets in Namibia.

What Osino Resources needs sooner rather than later is report numbers. A Maiden Resource has been long in the making. Highly prospective gold geology is all well and good, and the market might buy into it, but eventually, this potential has to be proven through the drill bit. Gold investors are not short of opportunities to make money right now, and Osino Resources needs to keep them interested if it wants to create interest and show a growth story.

A PEA and PFS are on the horizon, and next year has been earmarked as the start of more concrete drilling data from this gold player. Can Heye accelerate the consolidation of this gold value proposition?

We Discuss:

  1. 2:18 – Update on South Africa and COVID-19
  2. 3:57 – Company Overview
  3. 4:49 – History and Track Record
  4. 9:41 – Foundation of Business: Asset Potential
  5. 13:49 – Turnaround Story: Problems Solved
  6. 18:36 – Backed by Ross Beaty: Why?
  7. 21:29 – $17M Raised: Plans of Allocation
  8. 23:37 – Mining in Namibia: Impact of Restrictions
  9. 25:19 – What They Have & What’s Coming: Lack of Data
  10. 31:05 – Gold Environment + Project Stage = Overvalued?
  11. 35:02 – M&A Possibilities
  12. 38:36 – End Goal: How Much Will They Manage?
  13. 42:54 – Asset Metallurgy: Drill Results Coming

CLICK HERE to watch the full interview.

Matthew Gordon: Heye, how are you doing, sir?

Heye Daun: Great. Thank you. It’s great to be on your show. Thanks for having me.

Matthew Gordon: Thanks for joining us. So, first time we’ve spoken, first time we’ve met.

So, you are down in South Africa at the moment. So how are things down there?

Heye Daun: Things are pretty stable. I live in Cape town. Our projects are in Namibia, but because I live in Cape Town I’ve got my office here. We are locked down. We obviously were affected by COVID, South Africa has got a big outbreak. Gold price is high, we are funded and so I’m pulling the strings by remote control. I’ve got a very good team in Namibia, so it’s working fine.

Matthew Gordon: We caught up with someone earlier this week on what’s happening down in South Africa. Sounds tough for people, and the government is doing what I can to help out, but what’s your take on how the government has reacted?

Heye Daun: They are trying their best, but the biggest issue is that they don’t have the fiscal power that European governments have. The economy is heavily impacted by the lockdown, but there’s no relief package from the government, or just a very limited relief package.  the everyday man on the streets is suffering. For us it’s okay because for a Gold company, the macro environment is good. And also we raise money in hard currency in Canadian dollars, but operating in Namibia, we have the Namibian dollar, which is linked to the South African Rand, which is very weak. We get a lot more bang for our buck. We are actually in a great position.

Matthew Gordon: I hope you guys come out of that soon. It’s always sad to hear what’s going on in various countries around the world. Why don’t we kick off with that one-minute overview of the business and then we’ll pick it up from there.

Heye Daun: I’m the CEO and founder of a company called Osino Resources Corp. Osino was a Gold exploration company active in Namibia. I say was, because we are rapidly evolving out of the exploration stage into the development stage. We made a very significant Gold discovery which we announced towards the end of last year. And we have since, in the last 10-months or so, we are doing everything we can to accelerate that discovery to demonstrate and turn it into an economic Gold mine. It’s really exciting times for us.

Matthew Gordon: It’s worth, for people new to this story to maybe go back a bit. You’re sitting at USD$125M worth of market cap today. Share price has been going up steadily. We’ve seen companies way ahead of you in terms of where they are on the curve, but not getting those sorts of valuations. You have got a track record that people really buy into and your ability to deliver access. Before we get into what I normally start with what is the plan? Can we just talk about that track record, what you have done in the past?

Heye Daun: That’s a good intro. I’m a Namibian citizen. I’m a mining engineer. I used to work for Anglo, but I’ve built and operated Gold mines in a previous life in West African oil places. I know the Gold space very well. I really know what works in terms of Gold mining. So, fast-forward a couple of years: in 2009, I became an entrepreneur after many twists and turns, I spent some time in finance and other places after having been an engineer. In 2009 there was a project in Namibia that became available in in a bank-run sales process called Otjikoto. At the time it had a 1.5Moz Gold. It was seen to be marginal and people didn’t think it could work. I came in together with my partners. I recognised its potential, so we acquired it. We raised money, did a classic TSX junior mining listing in 2010. Took the company public. Drilled the hell out of it. Did various things. Basically brought it out into the open to about 2Moz. And we ended up selling that project to B2Gold in 2012 for USD$200M. And B2Gold subsequently went ahead and actually built a very successful Gold mine on it.

So that was great for us because it demonstrated our thesis. B2 made us look very good because they demonstrated that these type of lower-grade Gold deposits could be highly profitable. And so that was a nice success. I made some money, but more importantly, I learned how to do it, how it’s done, had a nice success.

So, subsequent to that, the markets fell out of bed, so it became very difficult to do anything. I took another job, I did various other things. But then in 2016, I had another breakthrough where I ran a company, it was a turnaround situation in Ecuador, which I ended up selling to Ross Beaty. Ross Beaty is a big Canadian, one of the top Canadian mining investors. And, he was obviously on the other side of the table from me and we negotiated that deal. He took a liking to me and that process he liked my style. And he became my cornerstone investor in this company, Osino. Basically, at the time, I told him my vision, which was, I’ve done it once in Namibia before. B2Gold turned my project, which I sold for $200M, B2Gold turned that into a billion-dollar company, I can do that again so will you help me? And so that’s when Ross came on board. I put up a lot of family money and a lot of my money and a lot of my friends and family came in. And then with Ross came a lot of other credible money. That’s basically how we got started.

Actually, I am quite proud because Osino literally started as a dream, and the dream was, it was going to be a consolidation player, put some licenses together, credible management, quality money, and then see if we can make a discovery. Because geologically, we knew that the potential was there to make a discovery, but discoveries aren’t made every day. These things usually take many years and lots of capital. And so, as Osino we succeeded in doing that, again for a number of reasons, but primarily, knowing what we are doing, being well-funded and having dedication and good execution capacity. We pulled it through and that culminated in this discovery, which we made last year. Now, you must remember that it was a process from 2016, 2015, 2016, when we started all the way to 2019, when we ultimately made the discovery after having spent about USD$50M of risk money. So that’s a long journey. Now it’s very satisfying because it just, sorry, I’ll just say this: the discovery has been made and now, obviously, the company has evolved into something very different.

Matthew Gordon: I want to back management teams who are competent and know what they are doing and have done it before. I also like to discover whether they did it by accident, by good timing, by good fortune by planning, or just having the money available to do it.

Heye Daun: All of them!

Matthew Gordon: All of the above. Let me take you back to Otjikoto. I’m intrigued because someone else had looked at it, thought this isn’t going to go anywhere, but you came and said ‘actually, based on what I can see, I can see potential’. What was it that you saw that they didn’t? What was that moment where you go, because most people think, oh, someone’s looked at this, it doesn’t work, move on to the next thing. But was it because that’s all that was available or did something that they didn’t?

Heye Daun: A couple of reasons: the one thing is it was owned by a company that was actually focused on base metals in the Zambian copper belt, and they had this Gold project. It was clear that they weren’t going to give it the attention that it deserves. That was the one thing. The other thing is dogma – never underestimate dogma -mining like all industries are written with dogma. And I would say one of my key strengths amongst a few other things, but one of my key strengths is not to take no for an answer. I’ve got, usually when I have conviction in something, I’m not scared to bang the table and to go for it. And in this case it was pretty simple; I used just good money planning and expertise that I had built up at Anglo Gold. I took the existing resource model that was there. I gave it to some consultants. I said, can you re-evaluate this to me, for me with this operating philosophy and mine, and could that work? And they said, yes, it could work. It was literally that simple.

The dogma, I just want to come back to quickly, because this is very important to what Osino does now. And that is in those days, people were not that familiar yet, or some people weren’t that familiar with these high tonnage, lower grade deposits, especially not your retail investors, possibly listening to your show, none of the Canadians, they love these epithermal, low tonnage, high-grade next pop, share price pops – we can shoot. This is not it. This is large tonnage, continuous or lower grade, however, very profitably mined, and much more likely to actually become a Gold mine because of the continuous, disseminate nature. So that’s a technical aspect. And having mined these type of deposits before as a mining engineer, obviously, I had the conviction. And then there were other things like Namibia is at that stage, wasn’t known, wasn’t seen to be a Gold jurisdiction. It only had one other gold mine. It just didn’t have any track record. And that’s changed now with the success that B2Gold had with a Gold mine. I don’t know if that answers your question?

Matthew Gordon: It answer sthe question, but then you  segu over to Chile,  – the other side of the world. I know you sold that to Lumina Gold. Again, that was another moment for you. Tell me about the project first. We’ve had, , the Lumina Group on here, so we understand a little bit, but why did he go all the way to South America when you’re an expert in Africa?

Heye Daun: To be honest, I was doing all of that from this very same room that I’m sitting in right now. The beauty of our business is that strategic management of junior money companies can be done from just about anywhere, because it’s largely you work with consultants, with banks, with brokers, you travel a lot, but you can be anywhere. But to answer the question, the reason I got into that was just, I was just being opportunistic because one of the shareholders that made money on that B2 Gold deal on us was a large shareholder, an Ecuadorian company. And it was in the downturn in 2015, when they ran out of options, they had a problematic CEO, and they needed somebody that understands what’s going on, that can deliver a turnaround. And I just took the job. And for a couple of reasons, there was some unique aspects. It only took a year, year and a half and it ended in the sale to Ross. But more or less in parallel, I started putting Osino together, which I went back to then.

Matthew Gordon: Tell me about these couple of unique problems. I like problem solvers. I want to back people who can solve problems. Because mining is not easy, mining is a tough things happen. So when you go and do a turnaround what were the things that you were equipped to do that their previous CEO wasn’t?

Heye Daun:  well, the one thing is credibility, it is obviously hugely important. And Ross will back me up, Ross probably would confirm this if he were sitting here: they only looked at that company because I was the CEO. They wouldn’t have looked at it otherwise. So personal credibility is key. Obviously, the good old values: honesty, integrity, all the good stuff, I would say that that is a key aspect. Another aspect is ability to execute. It’s a high-flying term for just getting shit done – excuse my language. And I’m very good at that. I’m very good at crossing the T’s and dotting the I’s. I guess it’s just my German heritage; I tend to be thorough, detail-oriented. I make sure that stuff gets done. And I would say, you asked me earlier, what have been the ingredients of the success in Osino from getting it to a dream to a USD$120M market cap? Probably, the largest aspect is execution because that’s stuff that you can control. The markets and all that stuff is also important, but you can’t control it. So I tend to focus on the things that I can control, which very clearly in my case, it’s execution, and living in Cape town, close to where the assets are, helps me in niche. Sorry, I got side tracked, but that’s a key aspect of it.

Matthew Gordon: There’s no aspect in terms of a technical component that you had to solve. It was literally just joining the dots. Is that what you’re saying?

Heye Daun: No, neither. It’s always there in many, many aspects. There was a, actually, this is a great question, thank you. Thank you for asking it. There was a unique technical challenge that we solved in Namibia, which we are very proud of, which was a major factor, and that was exploration through cover. Everybody knows that in today’s world, most of the big deposits that are exposed out in the open have been found. So therefore, any new stuff will either be found in very difficult jurisdictions, like the ‘Stans, or Russia or complicated places like that, or in the jungle or undercover.

Namibia, if you look at it, remember it was largely under cover. It’s covered by desert sand. And although it is physically accessible, and it’s so easy to operate there it is actually totally under-explored or even unexplored because of the cover. And in Namibia, there’s a sand layer of about 20m, 10m to 20m that covers just about everything. Not everything but most areas. So we applied, well, first step: what I did was I found 2 very credible geologists that have a perfect combination of innovation and experience and ability to deliver, and those guys came up with a conceptual exploration model. I had the money with Ross and others, and I have enough self-confidence and experience that I could trust those geos, and I took a view on them and I said, okay, carry out a long term, large scale exploration program, which they did. And as part of that, they looked to Australia to find solutions for exploring through cover, because it has been done elsewhere before so we didn’t invent it. We just applied these Western Australian techniques to the Namibian situation because climatologically, it’s very similar.

So basically, just in a nutshell, when you have a lot of evaporation, you have ground water that percolates upwards, and it carries with it minute quantities of Gold which precipitate out near the top. And there were certain Western Australians and the CSI, a research organisation there, in the last 20 years, came up with assay techniques to analyse the minute quantities. And that resulted in some significant discoveries in Western Australia. And all we did is we imported those techniques. We applied it to Namibia and it worked. And so, by the beginning of last year or so, using these techniques, we delineated a very large surface expression of a Gold system through this cover. 15km system, which we call the Twin Hill system. And we then followed it up with the multiple rounds of drilling, and it ultimately resulted in this discovery, which is completely undercover, completely blind, which we are drilling now.

Matthew Gordon: You just raised some money: USD$17.1M – you can tell me what you did with that, but I just want to come back to this Ross Beaty moment, because it’s important. He’s backing you, the man, he likes your style, likes what you did. Okay. But you have still got to sell, he’s not going to pump money into something which isn’t going to work. How long was that conversation in terms of, here’s what I’ve got, Ross. I’m a good guy. I’ve made you some money. We’ve all made each other some money. Here’s what I’ve got today and here’s how I’m going to convert that into value and dollars for you. What was that conversation like? It could save us all a lot of time, right?

Heye Daun: It took 6-months to be honest, because that deal that I negotiated with his group on the sale of my company at that time, which became Lumina Gold, which by the way, I’m still on the board of, well, it was an extremely complicated transaction that took us probably almost a year to complete. 6-months of intensive negotiations. You can imagine in that process and we got to know each other intimately. Obviously, a relationship like that you don’t take lightly. I didn’t ask him on day one, whether he would invest in my new company. I asked him that after the other deal had closed and everything was done and dusted. Then the conversation automatically came to, what are you doing next? And I was already on the roach, and I said, what don’t you want to participate in? And at that point, it was a very, very quick conversation. Ross is always a tough negotiator. He negotiated me down and made me issue warrants and various other things that I didn’t want to do. But I wasn’t entirely reliant on him either because , this is a key lesson I just want to bring here:  one of the other key aspects that I’ve paid attention to, and in every deal I’ve done is to diversify my sources of funding, not to be reliant on one single funder, not even Ross Beaty. And so at that time that gives you a strength and Ross thrives on that. , if you come to Ross with your tail between your legs, you won’t get anything. So you have to face him. I did that. And so, yes.

Matthew Gordon: I’m building a points system of how do you go about building this and protecting your own shareholders, not putting his company in a position where it’s dependent on someone else, or something else in this case: money or individuals. But he did raise the awareness of this, because there’s a cult of Ross Beaty; people who will only invest in Ross Beaty projects. And that’s fine fair enough for some people’s strategy. He did raise their awareness for you, which helped. And the money helped because some companies struggle to raise the capital to actually get things going. And it slingshots you through the painful exploration process. Now, you’ve gone and raised some more money now, what are you going to do with it?

Heye Daun:  Did you say I have to, or I have?

Matthew Gordon: You have. It says here you oversubscribed at USD$17.7M.

Heye Daun: No, never. So just to finish off on Ross and then I’ll come onto the new financing. So you are absolutely right: Ross gave us credibility. And we were able to raise the USD$10M of risk money in a dead market that we use to bring us to this point. So absolutely. And, with him came other quality institutional money. That’s what it does often. So that is what Ross did for us.

Of course, once we made the discovery, which was towards the end of last year, it de-risked our company substantially from a technical perspective, because all of a sudden we weren’t just a dream with some quality money behind it anymore, but we were now a real project with a significant footprint. And at that point it opened us up to a different audience, a more institutional type of audience. So we did our first real institutional raise in January of this year where we raised about USD$15M or so, and that really set us free.

Most people at that time thought that that was going to be at for a while. And it would have been enough for a while. But you asked me earlier about the ingredients of success and one of those is also prudency. So when I felt, when I saw the money market heating up in the last couple of months, and I just saw one financing after the other, and our share price was performing, I felt it was prudent to take some more and make sure that we funded well into the development phase, not taking things for granted. And that’s why we did it. There were quite a few sceptics who said, maybe we took too much, we shouldn’t have done it, but I’m very confident that it was the right thing. And so, yes, we’ve got about USD$25M in the bank now. We’ve got significant warrants that are in the money and we can do whatever we want to do in terms of ramping up the project and executing to get it to the mining stage.

Matthew Gordon: Now, we know Namibia through a few Uranium companies operating in-country. And it’s tough out there as well. The government has had to make some decisions and they have restricted mining operations. How has that affected you?

Heye Daun: It is very tough, primarily because of tourism; Namibia is heavily dependent on tourism. So again, fiscally speaking, for the economy, socio-economically, it’s very complicated for them. The mining industry has plodded through. So yes, they had some restrictions. The operators were locked down for about 6-weeks. So basically, we just stopped our drill programs from about March to May. And then in May, we started up again and we are basically on full tilt.

We have four drill rigs drilling at the same time. And we are looking to add more rigs and ramp up our activities more. I guess the difficulty that we have is that we can’t travel there. I can’t go there and visit my own operations because of the international travel restrictions. But we are fortunate in that we have got a very credible Namibian team who are operating quite happily. So yes, so it hasn’t affected us much. But we are waiting sorely to be able to travel there again.

Matthew Gordon: Given the amount of money that you’ve got, and you’ve got 4 total rigs running at the moment, what are you working towards? When I looked through the presentation, you do talk about your experience and track record, and you’ve got some nice names there. Nice shareholders. You have got reasonable institutional coverage now, but there is not a lot of meaningful data compiled together to tell the story of what it is that you’ve got and what you’re going to do. So when is that coming?

Heye Daun:  Yes, thank you. That’s good criticism, fair criticism. I guess one of the reasons it isn’t there is because of 43-101: , the Canadian Stock Exchange approach, which is very prescriptive on what you are allowed to talk about on projects and economic information. So therefore, I’m allowed to paraphrase, but I can’t give you exact numbers. But in a nutshell, we used to be an exploration company. We made the discovery and we are now developing that discovery as fast as we can into an operating Gold mine. Now, that process that I’m talking about, that’s a 2 to 4-year timeline and we are right in the beginning of that timeline. And there are a couple of steps that we have to follow in order to do that. Firstly, we have to define an economic resource. So that’s step number one. And the plan is to put that out early next year, with a bit of luck maybe this year, but I don’t want to promise. And the idea is we feel confident that, and this is also,  why our market cap is where it is, we are going to put out a substantial initial resource, , in the, who knows, I don’t want to mention numbers, but it’s going to be between 1Moz and 2Moz, hopefully closer to 2Moz type of thing. It’s a resource that is of similar scale and look and size to the other 2 operating Gold mines in Namibia: the B2 Gold one, which produces 150,000oz pa. So it’s a typical tier-2 type of open pit operation.

That’s our target, that’s where we want to go. Our discovery promises or indicates this, it certainly shows the potential to achieve that. So that’s first. The initial resource. At the same time, ongoing exploration to make it bigger and better. And then at the same time, in parallel with this, somewhat offset, is to do a PEA. A PEA as a Canadian term, it’s a Preliminary Economic Assessment. It’s basically a Pre-feasibility Study but you have to do it if you’re going to speak about economics on a project, and you can’t do as many of these as you like. Typically operators usually explore, build a large resource and then later they do a PEA. I’m going to accelerate all of that because we want to put the project on the map and we want to show the true potential that it has.

So that’s what we are doing in the next 6 to 12-months. Beyond that it’s a full on development timeline then. Assuming that the resource is big enough and assuming that the economic numbers in the PEA are good enough, you would then look to do detailed Feasibility Studies, financing, start of construction and actually getting into mining.

Now, when I spoke about a 2 to 4-year timeline, so resource PEA is the first year, second year: financing, detailed Feasibility Studies, commencement of construction maybe, and third year, fourth year: construction and operation. So  in 3 or 4-years’ time there’s a good chance that there might be an operating Gold mine here. Of course, many other things could happen in the meantime from a corporate perspective; there is MNA, there’s all sorts of stuff that can happen that we position ourselves for. But that’s a different angle.

Matthew Gordon: I want to know what I’m getting into here: I know you have built mines with some big companies before, but your recent history is taking them through to a stage where you’re taken out, right? You are seeking that. Are you seeking that again here? It’s just the cookie cutter approach or do you genuinely want to get into it production?

Heye Daun: A lot of people ask me that, and it sounds too glib sometimes to say, oh no, we’ll just sell out, because it’s actually not about that. It’s ultimately about shareholder value. And as a CEO, of course I’ve got personal interests, I’ve got interest as a Namibian citizen. And they will converge, but ultimately my role is to deliver shareholder value in the best way possible. And shareholder value is not just returns. It’s also risks. So that’s why, you alluded to, I’ve sold some companies in the past, and I did the right thing, like B2Gold is the best example. I don’t think in 2012, if we had stuck with that project, likely we would have gone down in flames with the rest of the Gold market. Maybe we would have lost the project, who knows? We sold it at the right time to B2 Gold, who took on all that project risk and all the financing risk and they built a very successful Gold mine. And yes, we left some value on the table. That’s comes with the territory – I’m just painting a picture here. I can’t answer your question directly. I cannot say, yes, we definitely want to sell the company. We want to deliver shareholder value. And I do believe that the best way to achieve that is at the appropriate time, which is probably close to once we’ve delineated the true potential of what we have through exploration and through technical studies. And once it therefore, gets to the construction stage, that is an appropriate time to look for senior partners that have production expertise, that are well financed, et cetera. It’s possible that that outcome that you are painting will happen. But you never know. If we have to, we will construct and operate.

Matthew Gordon: It’s a great Gold environment at the moment. It has never been better for Gold companies. Given the stage that you’re at and given the market conditions at the moment, do you think you’re perhaps overvalued?

Heye Daun: Firstly of course, I’m the CEO of the company. What would I say? But apart from that, genuinely I’ll tell you very simply why I don’t think we are overvalued: I don’t know. You’re an ex-banker, so you’ve seen the comp tables. And that’s what you should look at, obviously it all depends on your valuation methodology, beauty is in the eye of the beholder. So, if you consider development, expert, advanced exploration development companies, like we are, what they trade for, and you look at the reasonable comps for us. I don’t know if your listeners know these companies like TA Resources in Ivory Coast, or Roscan in Mali, or Oclo, all these companies are well-run, well-financed, successful explorer/developers that have a range of valuations. Now, if you compare us to them, our valuation is reasonable.  our Achilles heel at the moment, which is probably why you say what you said, is the fact that we don’t have a resource out. People see us as just an exploration company. And we cannot talk about this resource which we are working towards because we haven’t done it yet and we are constricted by 43-101. And that’s why I am accelerating and going hell for leather on our drilling to get that resource out as fast as I can. But in doing so, I will only do it if it is substantial, because otherwise you shoot yourself in the foot. But if you and I talk again in 6 months’ time and we have a substantial resource out, and you apply our current market cap to that, let’s pick a number – let’s say 2 Moz. I’m not saying it, well, but let’s say 2Moz by next year. We will have that as a maiden resource, which would be a great achievement. I am not saying we will achieve that. And you apply our current market cap – that’s USD$50/oz. That’s half of what we sold to B2 Gold for. And that was 10-years ago, in a decent Gold environment with no track record. All of that is better now: better Gold market, much more track record. Namibia has got track record. We should easily achieve the valuation multiple of $100/oz, $150/oz at the resource stage. Once you get to production, of course, those multiples go up. Now, these numbers that I’m giving you is like 2x our current market cap. So I believe actually, let me just make this point, which  is a key point in terms of the value that Osino offers as an investment opportunity: I believe we are one of the best risk-return opportunities out there because  the risks, the key risks in junior exploration: financing, discovery, technical and management, have all been mitigated. We have got the money in the bank. We’ve made the discovery. What we are doing now is largely a mechanical process; ticking the boxes, drilling holes. So therefore, we totally de-risked and we’ve got significant upside opportunity through delivering this project and turning it into a feasible Goldmine. And there are other factors that we haven’t even spoken about, the M&A environment that’s unfolding in Namibia.

 So we were in a great position.  I’m not promising a 10-bagger, but the likelihood of us delivering on the plans that I’ve outlined is very high, that will be reflected in share prices.

Matthew Gordon: You’re good at joining the dots, you told me you were, so it should be nice and easy. But I’m interested in the M&A component, because Ross Beaty said to me when he was on the show, he said, Pan-American Silver, last big bet he is going to make. So he’s not going to be building up the next big thing in Africa with you, it sounds like to me. So with him or without him, do you think you’ve got the credibility to go and raise more capital for M&A in the market? I get in a very positive bull environment like this, everything is getting financed, but is that a conversation you seriously want to have? Is that something you want to take before you’ve really got this company established on the Twin Hill projects?

Heye Daun: To be honest, no, because I like to stick to my knitting, and building companies and creating things as we’ve done with Osino, that’s my core competence and I’m good at it. And I know what I know. I focus on the things that are under my control. However, we are in a unique situation Namibia because we are right next to an operating Gold mine which has many very interesting attributes, but it is owned by a group of people that want to sell it. So that mine it’s a couple of hundred, it’s well, anyway, let me not…

Matthew Gordon: It will cost dollars, right?

Heye Daun: It’s an open pit goldmine that Anglo used to own that’s been in production for 30-years. That’s got a large resource endowment. It’s got 4Moz or 5Moz left in production. It has a couple of issues. It’s been starved of capital for a long time, and it’s got absentee parents so it needs a new owner. Now, that mine is 20km away from our Twin Hills discovery, so there are obvious, glaring, operational synergies, where we have growth, they have established infrastructure. Putting us together is an just such an obvious case of 1+1 is going to be substantially more than 2. Not just operating synergies, also rerating. When I spoke to you earlier about the valuation of our ounces, that’s just on a standalone basis, but if you look at other examples that are out there, successful deals, like for example, Turanga bought that Massawa project from Berwick some time ago and the share price, , tripled or quadrupled subsequently.

There was a substantial rerate that took place. Now that rerating is value that could accrue to shareholders. Now, Osina, I would prefer for someone else to do all that hard lifting, and for us to just keep on exploring, delivering an excellent project, but I’m not sure I’m going to have that luxury. And that’s why, when M&A happens, we are going to be part of that in some shape or form, either as an acquirer or being acquired or in a JV or whatever. We are hopefully going to be the King-maker in all of this. And we are positioning ourselves for that. And that has mostly opportunity, but it also has some threats, obviously, because, , if you’re an exploration investor, do you all of a sudden want to be turned into operator, operational turnaround, et cetera. So it’s not all a silver bullet to a slam dunk, but it is downside protection for investors because it’s highly likely that this M&A, specifically in our neighbourhood, is going to come. 

Matthew Gordon: Your shareholders and people interested in you want to know what part you’re going to play. Because your CAD$125M market cap, Canadian market cap company. People are talking about the JV, but what they want to understand is, it is all well and good to say we are going to be the king-makers, but why aren’t you leading from the front and saying, well, actually we will manage this entire process. Or are you? What can you tell me?

Heye Daun: Yes, obviously this is all highly speculative because at the moment the process hasn’t even started. And we believe that it will start at some stage. We don’t know exactly when, but personally, I’m interested to buy time, because the more time I have to put a resource on the book and a PEA and get the share price up and so forth, the better position I am in. So that’s the first aspect. However, this is an aspect that we cannot control because the owners will decide themselves when to sell. And, considering that we are at a record Gold prices, I could imagine it would be soon. Probably soon after the lockdown restrictions have been lifted.

Now, how will we act then? Obviously, this is a public forum. I can’t tell you, but there are many permutations possible: we could seek partners, we could try to do it ourselves. We could set up a new co, which Osina will merely participate in, and that new co could be led by Ross Beaty and I’m not suggesting anything. This is just me. I cannot speak on behalf of Ross. I’m just painting a picture of us being in a beautiful position where we’ve got all the options in the world. We just, if we decide to, we can also just sit there and keep delivering and the deal will come to us, but that’s not in my nature. I tend to be more proactive in that. So for now, that’s all I can say. But it’s a very interesting aspect of the whole evolution of that gold mining district, where we are in the centre of.

What you need to bear in mind is, if you take a step back and look at the combined package, it would have something approaching 5Moz, 6Moz of Gold resources. It would have all the infrastructure in place in a brilliant jurisdiction like Namibia. And you can apply your own valuation metrics to that. That’s substantial value. And that’s why I do think this is a very interesting deal that one should pursue.

Matthew Gordon: I know you wouldn’t talk about it if you weren’t serious about it, because of the impact on your stock if it doesn’t come off would be extremely negative, so I do appreciate you are serious about it.

Heye Daun: Yes. Can I correct you there? I wouldn’t say so, because when I say, ‘one should pursue’, I’m not saying that Osina should pursue it. Remember: I’m a Namibian citizen, ex-Anglo. I used to be there. I could have different hats, but I would not do anything that’s prejudicial to Osina, that goes without saying, so whichever way one would do this, it would be advantageous for Osina. But I don’t think that our evaluation has a built-in M&A factor. I do think that it is downside protection to some extent, but if the deal doesn’t happen, if somebody else like, for example, a Chinese entity, Chinese tend to be very active these days. If they end up buying that mine and outbidding us, because one thing we won’t do is compete on price. So that’s possible. And then, but then it’s still going to be good for Osina because it’s highly likely, it looks like the resource that we are going to be delivering at the end of this year, likely it’s going to be better than what’s remaining at Novachock. So, whoever ends up owning Novachock would want to own us. So whichever way it goes, it will end up being positive for Osina.

Matthew Gordon: Thanks for clarifying your position. Can you talk to me about, just before we finish, because I have a really, really enjoyed learning, getting an idea of how you think and how you operate. Can you talk to me about assays and metallurgy? What, what do about what you have got on under the ground there?

Heye Daun: Now, you see, I’m very conscious of the fact that I promise people results sometime ago already, and we haven’t delivered. Mainly because they had some logistical issues. So yes -drill results. In the next few weeks, there will be some significant drill results. Metallurgical test work has been positive. We haven’t put it out because we were really busy with the next phase. So again, in the next week or so we will put something out on metallurgical test work, which generally it’s been no issues, it’s actually quite positive. But more excitingly is the progress that we’ve made. In fact, I can say it: we have appointed a very well-known engineering group that’s going to do a substantial follow-on metallurgical tests with program that’s actually already kicked off. We’ll report that too, and then also imminently, hopefully next week, we’ll put out some news on ongoing exploration and an IP survey, which has fielded some very interesting results that we are very excited about. It’s going to be quite a detailed press release on ongoing exploration and ramping up of activities that we are planning.

Matthew Gordon: That’s good to hear. And I’ll tell you why, because, there’s been conversation around the games that are played in the industry, assay results are promised, metallurgy results are promised and then it goes silent because they are fundraising. And, it usually is a case that the results aren’t to be what they should be- it might spoil the fundraise, but here you’re saying we should expect good news around the metallurgy?

Heye Daun:  Yes. The difficulty is, I’d love to report results as we receive them. But the problem is that it’s in the interpretation of those results. And what we’ve seen in the past is that people often misinterpret results. The market is very greedy. They only like good results, excellent results. And that’s why it’s actually, from a company perspective, the prudent approach is to report in significant batches because then you just see things in perspective, and that’s what we want to do. So that’s why we waited a bit; just because we wanted to get a nice spread of results across the area where we are drilling and we are waiting for a few additional ones and then we will put them out. But no, nothing, nothing strange.

Matthew Gordon: Heye, good man. Really enjoyed this. Thank you very much. Loved hearing about Osina, what you’re doing. I like the track record. You’re planning ahead on the optionality that you may have an M&A, but we’ll see what that turns out to look like. Thank you very much for your time, when you do have news pick up the phone, let us know.

Heye Daun: Will do. Thank you for the opportunity of being on your show. Thank you.

Company Page: https://osinoresources.com/

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