Equinox Gold (TSX-V: EQX) – Increase of Market Cap to $725M in 18 Months (Transcript)

We interviewed Christian Milau, the CEO and Director of Equinox Gold (TSX-V: EQX). We ask him about potential M&A, and where the potential shareholder gains are coming from. Do they need to diversify? Is there a retail investor story here? And will the Gold price stay steady?

Really robust conversation and an insight into some of their problems and challenges. This is the coming together of 3 Gold assets, 2 in California and 1 in Brazil, and 3 big names in the shape of Ross Beaty, Richard Warke and Lukus Lundin. A strong management team, who has invested a significant proportion of their own wealth, and is incentivised on deliverables and share price. They pride themselves on being in the lowest quartile for salary in Gold companies. This is a low-grade bulk tonnage business – so it’s about moving dirt effectively and extracting Gold efficiently. Achieving a market cap of $725M in 18 months is no mean feat.

Christian talks through their strategy and business model, including their 5 year plan. Long-term planning is the game, not short-term decision making. They have access to cash if they need it. Their Aurizona Gold mine is getting in to production which is important to the market and they feel they will do this following some delays caused by heavy rains.

Some highlights:

  • The start of Equinox Gold and how Ross Beaty got involved with their new partner.
  • The three Assets, bringing them together and issues that had to be dealt with .
  • Company Financials: a $725M Market Cap and the costs of the Assets.
  • Mining in Brazil: positives and negatives.
  • Equinox Gold Business Plans: Why a Convert? 5 year plan?
  • Share price and The Gold Market.
  • M&A Activity?
  • ETF’s and their impact on Equinox Gold.
  • The Upcoming Year, Remuneration, And Reasons to Invest.

Click here to watch the interview.


Matthew Gordon: We spoke back in February. A lot’s happened since then and I guess we’ll get into that in a minute. But why don’t you kick off for newcomers to the story, gives us a 1-2 minute overview of the business.

Christian Milau: We’re now a mid-tier Gold mining company based in the Americas. We’ve now got one producing mine in Brazil, which we’ll talk about, but also we’ve got a producing mine in California and we’ve got another we want to build in California starting in the next 6mths here. So we’re now going to be a three-asset company that’s focused on the Americas with roughly +200,000oz production today and with a goal of going to 400,000oz-500,000oz of production in the next few years. So we’ve got a nice platform in this kind of market where Gold seems to be picking up.

Matthew Gordon: Let’s get on to that in a second. We’ve got a few questions from subscribers. I’d love to throw a couple of those at you. They’re really about the origins of this all because you’ve brought together three Gold assets. You’ve got some big names attached to those assets: Ross Beaty, Richard Warke, and your team, obviously.  Tell us about that first conversation that you had, how did this come together?

Christian Milau: Yeah it was interesting. I guess with Ross, he had a Brazilian asset and company called Anfield back in the day, a couple of years ago. We started with Luna Gold which was the Brazilian asset in Arizona which we now have put into production. We had some commonality and we obviously interact in Vancouver on a regular basis, see each other – it’s a small city. And we always talked about ‘how is it going in Brazil’ and ‘what do you plan to do in the future’ and we realised that we had the same vision and goal. We both want to create sort of that mid-tier to larger Gold mining company at this bottom point of the Gold cycle. Ross’s vision is really around building something in Gold, it’s very similar to Pan American Silver, which is now an 11-mine company, which is a good larger silver company, wants to do the same in Gold at this point. And my view is, do the same as we’ve done recently, myself, and some of their team, and Endeavour Mining. And start with one asset and try and build it into four to six assets over time. So we really had the same vision and Ross said he started his career with Equinox Resources back in the 80s and 90s and that was a success and he wouldn’t mind book-ending it with something like this at the end and we suggested the name Equinox Gold and he loved it. He said ‘it’s a great end to my career’.

Matthew Gordon: So it isn’t one of those the-sum-of-the-parts stories? You get some people who are very protective over their assets, they want to do their thing and they don’t need any help. But you guys all seem to have a track record of bringing together assets and building something bigger and, therefore, hopefully, better for shareholders. Is that what happened?

Christian Milau: I absolutely believe that. I mean, to put it in real context we sat in a room together myself, and Greg on our side, Richard Warke from the Newcastle side, and Ross from the Enfield side and we sat in a room for a couple of hours and we said, with no advisers, no lawyers, anything. We said ‘Hey, what is our vision? Is this common? Who could run this, who wants to be the face of it and contribute to the financing of it’. And we actually came up with a board and structure very quickly, and a valuation effectively that at least got it kicked off. And that was all because we had the common vision. Richard Warke again has worked with Ross over the years in building companies like Ventana and other things. And Ross tends to be more of the market-facing person of the group and was very happy to take the chairmanship. And obviously myself and the team are very happy to run the business so there was no stepping on each other’s toes, it really fit together nicely.

Matthew Gordon: So how does something like that work? You’ve got two assets in California and you’ve got one in South America. They’re all Gold. So there’s that in common, but they’re all in slightly different phases of development, so how did you imagine that coming together and how’s that indeed happened?

Christian Milau: It almost worked better because they were in different stages or phases. So we had the one producing asset in California. So that’s kind of our starting point we can actually use that for leveraging off knowledge skills etc. And recording all these different techniques of managing the business and then we had one in construction in Brazil. And then we had a third one which is sort of in that study phase, in the pipeline that could be constructed after we finished Arizona and Brazil. So, when you put them together you actually get a nice runway to becoming a mid-tier producer into the system. Rather than just slamming together three operating mines with different cultures, we are able to actually put them together, build the culture as we go.

Matthew Gordon: Because I actually watched our interview from February this morning, as a run through, remind myself what we talked about. The big theme that came through there was, not only have you got these three assets, but you have access to cash. You’ve got… Both Ross and Richard are very capable individuals, have track records, you are too. But cash wasn’t an issue for you. And where we are in the cycle, we talked about how advantageous that is for you in terms of being able to pick up assets cheap, and perhaps we can get onto M&A in a minute, but just again to remind people on the financial side, you know, where you started. You had these three assets, some assets you offloaded, something on the Copper side. But what did you start with and how did you value those and lets maybe get into where they are today?

Christian Milau: So when we did put this together we had obviously the three Gold assets, which were going to be the core to our business. We had a couple of our columns smaller, one was a processing mill in Peru, one was a small Gold project in B.C. And then we had a bunch of Copper assets. So what we decided was to focus on the core value-creating Gold assets. File out the Copper assets last summer into a separate vehicle which I’m happy to talk about but we’re excited and we still own 40% of Solaris Copper. Then we sold the mill in Peru to a local operator, I would call it. And then we sold the B.C. Gold asset just recently to a local group here because they were too small, not going to create enough value in a company now our size. We’re now $600M-$700M market cap, so we’re focused now on the pure Gold assets of scale.

Matthew Gordon: So do some simple Math for me. So you brought three assets together which were valued at what?

Christian Milau: Oh boy… I guess when we brought them together we bought Mesquite for just over a $150M. Aurizona and Luna Gold when it came in, I can’t remember the exact valuation, but I’m gonna say it was between $150M-$200M. And then Castle, again, was $150M-$175M and we put them together. The nice thing today that we’re excited about is, you see that our market cap is now greater than the sum of those parts.  We’re now $725M.

Matthew Gordon: $725M. You told me this morning.

Christian Milau: There you go.

Matthew Gordon: But how much money have you raised in there as well, which is obviously GNA, CapEx, etc.?

Christian Milau: So we’ve probably, during that process, we probably raised, I’m going to say it’s $50M, maybe it was up to $70M to help finish the funding on Aurizona in Brazil. But what we’ve really done on the funding side that’s more interesting is we’ve restructured the balance sheet completely, which, again, I’m happy to explain.

Matthew Gordon: Tell us about that because obviously we’ve seen mention of Abu Dhabi sovereign wealth fund in there and, obviously, project refinancing as well. So why don’t you give us that before we get into the projects proper?

Christian Milau: So everything over the last 18 months has probably moved faster than we even expected. We’ve had great support from guys like Ross and Richard and some of our core shareholders. And so we originally had a project finance loan from Sprott that was coupon 10%. That was financing the build in Brazil. It’s expensive money but we our single-asset development company was unfunded when that went into place, so it was market. Then we had an acquisition facility from Scotiabank and a group of other lenders that came in to acquire Mesquite. So you’ve had siloed structured financing or debt that sat at the asset level. What we did in, I guess it was February we announced and we’re just completing it right now, is we’ve paid out the actual loan that was project finance in Brazil. Replaced with the MOU Batalha convertible note, which is sitting at the corporate level and paying a 5% coupon, and brings in a partner that has a base of a trillion dollar sovereign wealth fund that is there to help us grow the business into the future. So they’ve replaced an expensive debt with, sort of, half the coupon cost but they’re also there to grow long-term as a shareholder and funding partner. So you bring that up to the corporate level. And the second piece was we took the same banking group that funded Mesquite and repaid and refinanced that acquisition loan and brought it up to the corporate level. And now it’s a corporate revolver that we can borrow and repay. It’s a little bit larger instead of $100M, it’s now $130M. So we now have all of our debt sitting at the corporate level, all of our cash flows are fungible and free to move amongst all of the assets in our organisation and they’re all Growth Partners. So as we grow, they all want to be able to fund us in a bigger way.

Matthew Gordon: Yeah, again we did talk about that last time and I do want to talk about it in a minute, but let’s just quickly go through, I think, a point which is talked about in the chatrooms, etc. And that’s your ability to prove the economics around the Brazilian asset and get that going, bringing that to market. So where are you with that?

Christian Milau: So we finished the construction in, I would say, early May and we were commissioning the asset. It was probably about a quarter behind, so a little disappointed with that.

Matthew Gordon: Why was that?

Christian Milau: Basically, there was no major factor. I mean, the rain was very heavy this year. I think we’ve had 3.5m of rain in the first three or four months, where normally you get 1m-2.5m for the whole year. So it’s a very heavy year. So doing electrical terminations and then the rain is probably at 50% productivity for that work. There’s a bit of extra piping and scheduling work at the very end so nothing that I would say was a major incident, like the mills falling off the trucker that ship or something.

Matthew Gordon: Right. There’s no issues from the Brazilian government? Obviously, a very high profile incident earlier this year but are they more nervous?

Christian Milau: No, the government… I give them their credit. They actually delivered us our operating license the day we poured Gold. Normally it comes about 6 months after you pour gold. So I would say, actually, a real tick to them, a check in that box where they delivered it early. And in terms of inspections on tailings dams, which obviously are a big thing in Brazil right now. That incident happened early in the year. They were inspecting all the dam sites around the country and they did come to ours, of course.  and we were just in final stages of getting it into readiness state of readiness and basically we our design is not an upstream down like Valley had there and had the issues with which is inherently less able. This is downstream in centre line which is inherently much more stable and we’re very happy with the inspections actually.

Matthew Gordon: So what do you think has happened there? Do you think, obviously it can go one of two ways. The government, or the Ministry of Mines can get very very nervous and take longer to get things done. Or, because it’s damaging to the reputation of what is a big mining country. They try and accelerate things to say we’re open for business. What’s your sense of what’s going on there?

Christian Milau: I almost think they’re accelerating things at the moment because of the urgency and the need, with the recent incidents there. And I do think when they’re not happy I I would suspect it was going to take longer to permit. There will be more hurdles to jump. But if you’re doing things on the international standard basis, that is expected of companies like ours, you really shouldn’t have problems. And we haven’t experienced any.

Matthew Gordon: Right and so the team that are down there, they are experience with South America and Brazil in particular. A quarter behind. But unfortunate event is what you’re going with.

Christian Milau: Yeah. And so what we said was ‘all right, sorry we’re a little bit behind a little bit over budget’. We were probably about 10% over budget overall which in the scheme of things, three months and 10% over is not the end of the world’s. It is a bit of a shame. But since May 14th when we did pour Gold, we’ve now gone for about 30 days of production and we are now producing or putting through the mill more than the rate of capacity. So I think we’re at 8,000 tons a day at our capacity and some days we’ve gone up to 9,000 – 10,000 tons. So it’s very nice to see that you’re 10% plus over, the mill is actually capable of performing at the expected levels.

Matthew Gordon: Right. Was there any doubts in your mind as to whether Brazil would work or not? Or has it all going swimmingly?

Christian Milau: I think anyone who would say there isn’t a risk or doubt, would be kind of kidding. But we did feel that we were investing in this project to make it successful. The idea was not to cut corners. Because of the past history here, when they originally built this in 2008 or 2009, they didn’t have a proper crusher at all and they didn’t have a proper milling circuit, it was a fairly old six year Asbestos mill from Quebec. So it was almost setup to have challenges and it still performed okay. So we figured if we spent the money and put in the proper equipment with professional contractors, you were bound to have good success here in due course.

Matthew Gordon: If I may come back on the on the refinancing that you did. I know you’ve got all at   corporate level which is much easier to deal with and you’ve re-financed it. You’ve got a little bit more cash there, a bit more flexibility. Are you happy with the with the terms there. Or is it a case of ‘actually, I like who it’s from’. Because obviously the Abu Dhabi sovereign wealth fund has a lot of cash available and if likes what you’re doing, that bodes well for M&A activity, which we talked about previously. Were you happy with those terms.

Christian Milau: We’re extremely happy. When you look at that convertible bond, we have a partner who is not out there shorting or hedging your stock, like a normal convertible might be with normal hedge funds. They are a long-term investor. They have no short term time horizons. They wanted to work with Ross, and Ross has probably been talking to them on and off for at least 5 or 10 years. I think they were excited to partners someone to build a great Gold mining company that they could trust. So I think we got really good terms. And we looked at various market comps and what we might have been able to do in the market I think for exceeded those.

Matthew Gordon: So why a convert? They could’ve structured it any way. They’ve got the money, they could paper it up anyway, so why convert? Why did that work for you?

Christian Milau: It’s interesting. At this stage of our involvement and growth and development, they would like to be a long term equity holder but they’re used to actually making investments. I’m going to use a big round number, but a half a billion dollars, so it’s a very small investment of $130M for them to come in. There is a debt instrument in place already that could be re-financed and clearly replaced. And even that link ultimately to being an equity investor, which we would like them to be in the long-term because I think there would be a long core stable shareholder along the likes of Richard and Ross. So it almost this hybrid interim instrument that allowed you to solve your current debt, expensive debt situation, but sort of  link them into a long term equity position. And it’s a smaller ticket than they’re used to so it does I guess come in a form that gives them a little more security on day one than it would if it’s pure equity, a small check basis.

Matthew Gordon: Yeah. What is the coupon on that?

Christian Milau: 5%.

Matthew Gordon: 5%. OK. Pretty good. And what are the rest of the terms on then?

Christian Milau: So it’s a five year term. It’s 5% coupon. It converts at a 25% – 27% premium depending what share price you’re using. That’s $1.38 Canadian. Interestingly  when we announced it in February, the share price went up. And we’ve seen so many people announce convertibles that are market oriented, where the actual share price goes down. People are shorting your stock. Ours did the opposite. So we saw that as a nice vote of confidence that we had a long-term partner. And one of the biggest things I had was I was at a conference time, I had a lot of other peers come to us and say ‘can you make an introduction? How can we get access to that capital. It looks like a great partner that’s there to stick with you through the ups and downs of the cycle’. And right now, as you know, we’re towards the bottom end of our cycle and the smaller the company the harder it is to finance. And I think we’ve been well above our weight a little bit there.

Matthew Gordon: Yeah to just stay on that point, you did you did have a bit of a spike and then it kind of came down as his low as $1.01 on a couple of occasions, and your now back up at one $1.31-ish again. What do you think those drops were?

Christian Milau: Well the one thing for sure, Gold had its dip although it’s obviously much more positive, it hit $1350 this morning. So it’s much more positive. We’re in a $1270 to $1280, $1290 range. And below $1500 I see there’s not a lot of conviction from some of the precious metals funds, some of the generalists. They really want to see it pop over $1350 to really get some confidence. The other side was we were right in that crux period of finishing off Aurizona and until you’ve announced you poured Gold or you’re in commercial production, people have their doubts.  I guess rightfully so, they want to see that there’s no hiccups and major issues along the way. And we weren’t able to announce that until May 14th. So we had a double whammy of those two items I think.

Matthew Gordon: MOU Batalha, they are in. They are a partner now, equity and debt. What are there expectations? I see no board seat for them. But they have a big say in what they expect you to do, presumably. Or are they are a passive investor?

Christian Milau: No they do have a board seat.

Matthew Gordon: Oh they do, sorry.

Christian Milau: They are partners with Ross in many ways here and they see themselves on a pro forma basis, they would be an 18% shareholder if you were to convert at all. So we think of them as a core shareholder also, in the long-term. We very much want to work with them and their vision is actually very similar to ours, and they want to grow into a larger-scale Gold mining company. So we will definitely look to them to support us on growth activities, being acquisitions or growth internally.

Matthew Gordon: So if we go back to the first question, which is how do you guys come together and what was it it was and it was a common thought about what you could do. With MOU Batalha on board is that thought changed? Have your horizons expanded?

Christian Milau: I think it gives us maybe a bit more impetus to move quicker or at least it gives us the ability to think a bit more actively about how we can grow this business now because we know there’s availability of capital in the near-term and we don’t have to necessarily go and source it from new sources, if we do find an acquisition opportunity.

Matthew Gordon: Yeah so that so that saves a lot of time. Again just remind people the type of company you are. You are a bulk processor of Gold. You aren’t chasing veins around. So just quickly describe that for people because I want to ask you about that.

Christian Milau: Yeah. Our three, or two operating mines, and our third to come into operation are really are larger open-pit mines. So they’re big dirt moving exercise as you described it. Our goal here is to build scale and to be a growth oriented company and we’re not shying away from growth. A lot of the bigger companies in this part of the cycle have been paying down debt. And I’d say call it right-sizing or making themselves smaller and selling off assets. Where we’re trying to actually do the opposite because as the cycle does turn, we will have already been ahead of that curve and we’ve set a target. And it’s maybe a round number but we’d like to be a 1Moz a year by round the 2023.

Matthew Gordon: What are you today?

Christian Milau: So we’re probably 200,000oz and 230,000oz today. And with the assets we have in our pipeline we could go to 400,000oz to 500,000oz so roughly halfway there. And so the goal, we’ll need to add another at least two assets I think along the way to get to that sort of mark. And it doesn’t have to be a million, but it’s a good target.

Matthew Gordon: Yes. Nice round number as you say. So if I look at the type of company you are, the type of business that you are good at being, this large earth processing business, you’ve got the skill sets there. To find those types of assets globally, at the moment, well I know you’re kind of America’s focus but I guess it’s no restricting you. People don’t sell good assets cheaply. The Gold price is going up. So have you guys found things that you’re looking at or are you constantly evaluating now? What’s the chances of some M&A activity this year?

Christian Milau: We’ve been really inward looking because of finishing off the build in Aurizona and finishing off the integration of Mesquite. So I’d say we hadn’t been looking externally but I would say the last month or so, Gregg and Ross particularly have gotten really active again, thinking about what we could acquire. And so you look at several categories. You’ve got single asset producers out there, you do have a few multi-asset producers that are listed. You also have the major Gold companies who have been merging and there will be some castoff assets or some they’ll sell. They may be good or not good but they also might be just too small for them. And that’s one of the challenges now as a big company. And they might fit us perfectly. There are a few private assets owned by private equity groups that will come available in the next few years. And then there’s the smaller strategic assets that might be earlier stage for us. Maybe they’re not perfect for us today but could fit into our pipeline in a year two. So there’s a bunch of different categories, and we prefer to be in the Americas to start but we aren’t completely closing the door to Europe and Africa and Oceana necessarily.

Matthew Gordon: I think there’s a lot of people with a lot of ideas and I think it’s like when a celebrity turns up in a capital city, people talk about it and Ross has been spied at various locations so people are making assumptions. Not least various parts of South America. So it’ll be interesting to see where that goes and where that leads. But now is the time. From what you said before, now is the time. Now while it’s cheap, the the price of Gold is going up slowly and the confidence is slowly- well would you agree with that? Is it slowly returning?

Christian Milau: I think it’s slowly returning but it’s still… when you talk to our peers out there… it’s still pretty depressing, maybe not the right words, but people are pretty… they’re struggling to find new money, shareholders, people to get invested and interested at the smaller scale. And I’m talking sub a $1Bn of market cap. Interestingly it was two Fridays ago, we had a big block trade for 20M shares.

Matthew Gordon: I saw it, yeah.

Christian Milau: Sandstorm sold their whole position to a new long-term only fund. Who is not a Gold investor. I mean they do invest in a little bit of Gold, but historically they invested it all across different sectors and they have a good 25 year track record. So we’re really excited to see that kind of money coming into our stock, number 1, but also into the sector where there are people who are generalists, who’ve been talking about investing in Gold, who are now taking some action. And I think this last little tweak here where the dollar hasn’t fallen off a cliff, and it has stayed reasonably strong, the markets are a little bit wobbly. People are looking for somewhere else to invest their money and Gold has become a little more popular. And I think getting close to $1,350 and maybe if we can hold it for a little period here, I think there is some conviction that will start coming back, somewhere above $1350. Could we drop back down? Yeah absolutely. But it does feel a little more positive.

Matthew Gordon: Yeah. I think Ross was interviewed recently talking about the Gold price, and he was saying in the end 2017-2018, even though the Gold price went up, the equities fell down. These are some strange times when normal rules don’t seem to apply. And we talked previously about the distractions of Cannabis, Bitcoin and Blockchain before that. Well Bitcoin is coming back again. But do you think those distractions have gone away and this is just about people wanting to see how the geopolitical dust settles, or it’s just more fundamentally about the dollar?

Christian Milau: I think some of that speculative money in cannabis and cryptocurrency has come off the boil. I wouldn’t say it’s gone away. People are still making some money, but it’s not easy money anymore. I do think consolidation in both those sectors will happen. And people lose interest when they can’t make a quick dollar in the first three months of investment. And I think Gold is seen as a now coming to the right point this cycle. And I think what the markets are rolling over I don’t think anything major is happened there. Yes and the dollar maybe is going have a rougher patch with all these trade issues hanging out there, and all that excess debt in the system. Interesting it’s the first time in years, they’re talking about interest rate cuts. And I’m actually surprised they talking about that so quickly and so soon. That seems like to me a little early, but if we’re talking about interest rate cuts that can only be good for Gold, because it will probably impact the dollar ultimately. Right now Gold is seen as one of those bombed out industries and sectors that most other sectors are not in that position. Most other ones have had a good run over the past 9-10yrs at least at some point. So we are maybe going to be one sector that’s seen as having some value today.

Matthew Gordon: Yeah. Well it will be interesting to see how it plays out because I say I don’t think the normal rules have applied over the past couple of years with regard to Gold.

Christian Milau: Yeah that’s the hard part.

Matthew Gordon: Very complicated. It is very very difficult. You said something like a third way at a throwaway line though no one unless you’re over a $1Bn right. You’re at $725M. You know another acquisition you could get to a $1Bn but like you say, a $1Bn company. That’s that’s nothing, really.

Christian Milau: For the US it isn’t.

Matthew Gordon: For the U.S. It isn’t. But also is that how you measure yourself. Is it market cap? Is it to do with shareholder returns? Is it to do with how many assets he got? Is it to do with the potential exit in the future? What are you targeting?

Christian Milau: The thing that really matters is shareholder returns here. And the reason I say that is, Ross owns 12%. Richard owns about 6%. I have my small stake but it’s very meaningful personally. I really don’t care if I’m a $1Bn company, $500M or $3Bn.

Matthew Gordon: You’ve got a 5 year plan. We talked previously about a 5 year plan. You’ve got a 5 year plan. Today doesn’t matter so much. It’s like whereas the end point. And I assume..

Christian Milau: It’s not a quarterly business. We’re trying not to be overly quarterly results focussed. I mean that’s something where the UK I do actually misheard the system or is on a six monthly basis, where in a way it allows management to put their head down for every six months and focus on the business not have to worry about each quarterly reporting period. But we have that 5yrs plan or working hard to get towards that we’ve now put in place to financiers to allow us to deliver it. And interestingly that $1Bn mark I mean that’s not exactly right. But if you’re not in any of the indices the passive funds and I know there’s a big difference between Europe and the UK in particular v North America now. So much of the money over here in North America has moved into the ETF and passive funds.

Matthew Gordon: I was going to ask you. Has that was being distracting for you? Sorry to interrupt. I was going to ask you, how distracting have ETF’s been to you as a company?

Christian Milau: To distract, partly because you can’t talk and right. How do you convince them to buy your shares because they’re have to buy or have to sell. But on the other side of it, we are not in one ETF or indices but we are getting on the cusp and threshold of getting into them. And once you’re in them, and you have to have that buying. I mean I had someone say to me, there’s 30M shares with the buying coming once again GDXJ. And our key stumbling point is liquidity. But with this big block trade last week or the week before and the daily liquidity over the last few weeks is well in excess of a 1M shares we should in due course get a good shot at getting into the indices later in the year. And what we’re going to do to help that along is work hard to list in the US and to move up to the TSX. We have two California assets with a lot of U.S. shareholders and interested parties in the U.S. I gotta believe that both of those events will help us in addition add liquidity and a really good market.

Matthew Gordon: I think what for sure. So what do you think the criteria is to get on the GDXJ?

Christian Milau: I mean you do need to be a certain size in that and I know lots of companies are a lot smaller than us and they’re listed. But it’s roughly $1M a day of trading. That’s the key one. And it’s over an extended period. I can’t hear it’s 30, 60 or 90 days but it’s long enough where you need to keep it up, and you can’t just have these little blips that’s going to get you in there. So our goal really trade for the quarter at least over a 90 day period, $1M a day plus and look to get out it’s why you exchange the indices later in the year. And part of the other benefit to us is we have two operating mines. I mean we haven’t had an operating quarter yet from more has only got two operating quarters or two operating mines for a quarter or two and you’re in various different stock exchanges have greater liquidity and we’ve had this uptick in Gold. Got to believe that momentum is moving us in the right direction.

Matthew Gordon: Right. I agree with you. I think that’s that’s good news that you’re at that point now. Just on the market still we talked about ATX but you know there are people talk about the sector being under invested. Okay. That means that’s going to be a good thing for you hasn’t it. In terms of what you’re trying to create here the scale of what you’re trying to create right now.

Christian Milau: It’s fantastic in a sense because where we’re trying to build something that will be an investment of choice when it’s not under invested when when that generalist money and the allocation of funds that need to have whatever is 5-10% of their money towards something like Gold or harder assets would be one of those investments choice with liquidity that’s high enough to allow them to invest in our stock but also to get out of it. That’s what a lot of investors need to know is they can get out when they need to.

Matthew Gordon: Yeah. So in a case we just come back to the the assets side the side of things and you’re getting a couple assets into production now. The SEC is the exec. You’ve got a. We talked about 18 previously there a ‘been there done it, got the T-Shirt’ kind of guys, but you’re trying to lower the AISC, increase the margins here. How much time and effort are you spending on that because we’ve talked about a lot of M&A now but can we just look where the projects themselves would have been the issue has been this year that you’ve been trying to overcome an Iowa spike of some angst because it suggests margin to mean. Talks about profitability hopefully. So what are the issues that you’ve identified that you were focused on with your team.

Christian Milau: Yeah I mean for Arizona and Brazil you know getting it ramped up and running smoothly is the first thing and then working on actually making sure your costs are nice and steady and where you expect them to be. So the benefits with Brazil’s we now are coming through that period. I mean if all goes well I hope certainly sometime early ideally in Q3 we’re getting into commercial production. Then we start measuring it on a on a ongoing cost basis. And the benefit but the moment we’ve been trying to make sure that all of our inputs and supplies are as cheap as we’d expect in this type of market where I do think it’s not a huge demand. Things like cyanide and power etc. In these remote regions I think Labor has been pretty good to get recently because Brazil hasn’t gone through a great boom recently they’re probably coming off some eyes a few years ago. So we’ve been only piecemeal call it skilled labor in Brazil our supplies have been at reasonable prices. Power rates are pretty good in Brazil right now. We have hydroelectric power plants and then I think we’re setting ourselves up well with a good mining contractor as well that has great experience in Brazil but key components of the costs you’ve got to focus on locking them in getting good contracts getting good supply. So we rely on it. We’ve kind of come through that period now and now if your mill is getting the good throughput you know your cost just sort of fall out of that. And the other benefit that we have no control over obviously is the exchange rate. And in Brazil right now it’s been in that three point eight to four reply to all. You know historically it’s been lower so there’s been obviously the U.S. dollar has been strong so it’s hit kind of other currencies particularly know I know Australia Canada Brazil have been weak which is obviously a benefit to producers like us in that region.

Matthew Gordon: Right. And yeah I mean if you think I think that’s true if the exchange rate does it does hit people different ways. But just on that I mean this is the whole point about you know having multi jurisdictional deals risking your assets. I mean your Americas focused. Will you continue to do that obviously with this access to even more money than women. We lost hope is not a key driver for you in terms you’re risking process.

Christian Milau: Yeah I think having four to six assets is ideal.

Matthew Gordon: Is it Americas focused? Is that where you are going to stay?

Christian Milau: America’s focused. I’m not saying we wouldn’t go east or west of that but I think it’s easier to run where our corporate offices in Vancouver. Time zones are extremely good for South and Central North America. And travel is actually pretty good. I mean to get to the California site you can cover them both in a day for Vancouver effectively and is a bit further on sleep but I think we can manage it fairly well and turn the times on the communication there’s also travel and we prefer to stay in that kind of time zone.

Matthew Gordon: Okay. And I just want to I want to talk about this coming years in general terms and second budget. Just remind people in terms of your remuneration et cetera and he did tell us last time but I thought it was interesting and worth repeating since you got skin in the game etc..

Christian Milau: So the way that we’ve set this up for me myself and for the other guys started out to now four years ago here we made the commitment that we were an investment company so at the time we put in roughly two to half a million dollars with my continual investments and that we’re probably up to four to five as a management team which line up for us on a personal level as a big investment. ROSS I think in the last year put in about 60 million and so in turned the board and management were fully invested and these are not seed shares or cheap shares these are I in the market belong and block trades buying and financings and doing it reasonably regularly. So I’d say we’re investing alongside shareholders and our exit strategy is really long term. There’s no desire to be selling anywhere along the way here and remuneration on the other side of it. Ross is known to be fairly frugal as a shareholder and a chairman and we’ve taken that same sort of stance. We set out compensation to be roughly in that fourth quartile. So the lower end of the scale we’d like to see that performing in terms of share price particularly but also on the assets will give us a bit more return because we actually met goals and expectations. So we’ve we’ve done a little differently and we’ve not also linked at all to options which some people see as sort of free money. So you have your base remuneration which is fourth quartile then you have your own investments and then you have some long term incentives that generally are linked more performance right.

Matthew Gordon: This is actually I think it’s worth pointing that out and the read the reason is because you know people in Science Forums are subscribers that they go through the accusation. Well yeah they got some money in the game but they’re pulling pulling these big salaries down. So they kind of don’t care they can they. It doesn’t matter to them whether it works or doesn’t work. They are not truly aligned with us. But what you are saying is a significant part of your wealth is invested in this business you are directly lying because you’re buying in the market not options and people need to understand that.

Christian Milau: And probably on a personal level for me I guess a third to a half of my investable net worth is in this stock. Anything that I’m involved in as a manager or a board member I put my own money in because I believe. Why would you get involved in something and expect others to invest it if you told yourself. So right we take it personally in that sense.

Matthew Gordon: Right. So say I say the management’s interest to make the right decisions. You’ve also got Ross Richard also because lending is still in.

Christian Milau: Yeah. Yeah. He’s still own one percent anyway is that right.

Matthew Gordon: See you got some guys who know what they’re doing. I opened a few doors and you’ve got the capital to be able to deliver the strategy which you’re working towards. I suspect that will that’ll change as we find new assets or not. And you look you’ll adapt accordingly but. Thanks for the update. I think that’s been really interesting to hear. There’s a lot happened the refinancing is sounds fantastic. The new ambassador involved sounds. Well I think a lot of people would be very jealous of that. We look forward to seeing the you know the assets come on and the answers start coming. Being port.

Christian Milau: Yeah. No. Appreciate you talking again and maybe do it again in six months and we’ll keep keep moving forward.

Matthew Gordon: Thanks Christian, appreciate your time today. Good luck.

Christian Milau: Thank you.


Company page: https://www.equinoxgold.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.

Bellevue Gold (ASX: BGL) – What Makes This the ASX’s Best Performing Gold Company? (Transcript)

Interview with Steve Parson, MD, Bellevue Gold (ASX:BGL). 9 Reasons why Bellevue is the best Gold performer:

  • Bellevue Gold is very much about adding ounces.
  • Globally it’s one of the highest-grade ore bodies and discoveries that has happened in recent times.
  • Growing Gold ounces very rapidly: “18 months ago they were zero Gold ounces, and here they are at 1.5Moz”
  • Cashed up for this years drilling.
  • Have good financial backing, “so we’re not scared to go and drill those holes. And at the moment those holes, if we keep on stepping out, are continually adding more Gold ounces”.
  • It’s efficient. It’s high-grade ounces and “we’ll keep stepping out on that”.
  • West Australia is without a doubt one of the premier jurisdictions in the world to be in. “We’re in the Goldfields region of Western Australia. There are Gold mines all around us”.
  • They have been granted mining tenure. So to get it up and running, is going to be very straightforward.
  • The Gold price is looking fantastic in Australian dollar terms. Highest it’s ever been.

In the next year there will be a very good growth on the Resource space and hopefully for shareholder appreciation as well. Everything you want in a Gold Explorer. High-grade. Open. Opportunity to build a large Resource quickly.

Click here to watch the interview.


Matthew Gordon: Good morning Steve. How are you?

Steve Parsons: Yeah I’m good thanks. Yeah thanks very much.

Matthew Gordon: Good to have you. Thanks for making the time going to get to in your own words gives a two minute summary of Bellevue Gold.

Steve Parsons: Yeah. Bellevue Gold we’re fairly new company. We’ve only been around for a couple of years now. We’re an Exploration company based in Western Australia, in the Goldfields region. So very prolific Gold discovery area. Lots of Gold mines in the area. And we’re exploring the old Bellevue Gold mine and the old mine itself produced nearly a 1Moz of Gold at high rate of 15g/t. And they mined it from 1996 to 1997. A very very profitable mine. However mining stopped back then. And then it was owned by Nickel companies since then, and so we are now drilling our first holes in the last year and a half. And a very good discovery. The latest Resources is 1.5Moz of Gold and it’s soon to grow even bigger than that.

Matthew Gordon: Well there we go. Thanks a lot summary. And before we get into the questions proper. Can you give us a bit of your background or your Geo?

Steve Parsons: Yeah. So look my background is that geology expression geology I studied at Canterbury University in New Zealand and came across to Australia after then I worked for a number of mining companies and Gold companies and then you’re being involved in an expression pretty much my whole time over again.

Matthew Gordon: And have you seen anything like this before? Have you worked on anything like this?

Steve Parsons: I said pretty amazing deposit. I have worked in a couple of amazing deposits in the past though. But for the grade it’s just a real standout. And I certainly haven’t seen anything like this before.

Matthew Gordon: You’ve had a great year. Share prices has trebled. You’ve got a 1.5Moz Resource. You continue to drill. Very high-grade. It’s all good isn’t it? Pretty easy work?

Steve Parsons: If only it was easy like that. It all rolls off the tongue very easily, doesn’t it, when you say it like that? Look the thing was that the project was an outstanding project in it’s day. And that was one of the reasons why me and the Exploration team decided to jump on board on this project. And it had certainly been unloved for 20yrs and we saw the opportunity. And the fact that there was always this thought that the mineralization could continue, but no one ever knew where. And geological called into it and if you’re having success and things are going well, you obviously get the opportunity to raise a bit of funds. And grade and the rate of growth has been so rapid, we certainly had our hits and capturing that market and being able to raise funds and those funds raised. The dollars all go back into the ground and we’re discovering Gold at AUS$15 an ounce which is incredible in itself. So 5 drill rigs on site and the more rigs you have, the more chance you have of adding further ounces. So we sort of back ourselves to continue finding Gold.

Matthew Gordon: So again before we get into the strategy. Your shareholders have got to be pleased. Well first of all, the type of shareholder over the last year changed. You’ve got a lot more institutional on board. And where are they? Are they mainly Aussie or from further afield?

Steve Parsons: The shareholder base has changed a lot over the last 12 to 18 months. We’re very much a retail company. What you’d call a shell company down in Australia, with all Mum and Dad retail investors. And over the last probably 12mths  we’ve grown to be much more institutional. We’d probably be about 40% institutional now. And that institutional register is probably made up by about 50% from the Northern hemisphere, and 50% in Australia.

Matthew Gordon: Are they getting involved? I mean clearly the results have been great. So you’re probably not getting much pushback from them, but what are the conversations that you’re having with the institutional shareholders, with your monthly or quarterly calls?

Steve Parsons: Yeah. Look you know it’s not just institutions that we speak to. I mean I’m regularly be standing on stage and speaking to the retail shareholders as well. And we’v e got a number of outlets we use to get out to those retail shareholders. And of course analysts as well which we update. And look everyone seems to be very happy with the way things are going. I mean over the moon. The share price has been reflecting how well we’ve been going and discovery. And I think people are looking for us to continue on the aggressive step out drilling that we’ve been doing. It certainly looks like the ore bodies are still open North, South, West and East and at depth. So why wouldn’t we continue to step out. I think there is definitely the thought that people want us to add more rigs if we can. And we’ve certainly added rigs as we’ve gone, and had more confidence in the Resources. And so we’re up to 4 drill rigs now on site. And in fact we’ll probably be more than that I’d say very, very soon as well. And then we sort of weighing that sort of step out discovery drilling. Weighing that up versus should we be doing a little bit of infill drilling as well and increasing confidence level of the Resource. And of course that’s something we’ll be doing as well this year.

Matthew Gordon: So you said earlier you’ve not seen anything like this before in your work experience. So how much of this is down to luck? How much of it is down to planning? How much of it is down to delivery through a rigorous process? If you look at what you acquired.. the old .. it was Draig that was the former company.

Steve Parsons: That’s right.

Matthew Gordon: So Bellevue as is now. So did you know what you were getting into? How much data did you have? How much confidence did you have that there was this much Gold down there?

Steve Parsons: Yeah well, after the last company that we were running which was in West Africa. And that was taken over by a North American company, which they’re looking to produce Gold at the moment on. We very much made the team make a  decision, conscious decision, to look down in Australia and to look for a brownfields project and to look for a higher-grade brownfields project. And this was a real standout for us in the fact that, as I said before had been previously owned by Nickel company. The last company to own it was Xstrata, and they exited out of Australia. So the project became available. And for us when you want to find an ore body, I guess you can look either at grassroots, and in time the brand new area. And we’ve had success with that in the past. That that’s a good way of finding Gold, but it takes a lot longer. The other way is to look for Brownfield type project. And for us this was a real standout, because it had historically produced a lot of Gold at a very, very high-grade. That there was a lot of data there in the past. It was all known down the mines department. The previous companies had made a lot of money on it in the past. However geologically there was a fault that had come through, and everyone has said that there’s nothing on the other side of this fault. So that for us that was a real standout, because geologically we thought well that was a 20yrs old geological interpretation. And hey just because somebody says there’s something not on the other side of something, doesn’t mean it might not be there. So we we spent a fair bit of time in those first 6-8mths, before we drill the holes to understand what the mineralization was.

Matthew Gordon: What about that decision you made before you made the acquisition? What made you go for it. You can’t just go ‘Oh let’s give it a go. It’ll be fine’. You must have had some intelligence behind that? What was the thinking?

Steve Parsons: Ah No. I mean you sort of weight these things up. I guess in a sort of risk-reward basis. You can look at it as a sort of a percentage of success. What the chances of success are. And as I was saying before grassroots exploration, it normally takes a very long time. And then of course in a grassroots Exploration in certain countries and jurisdictions is a lot more difficult than others. So if you want to find something in the middle of nowhere grassroots, you’ve got realistically a 5-10% chance of something happening over a very long period of time. And for us literally all our view was that, it had produced a lot of Gold. It hadn’t been looked at for 20yrs which was just incredible in itself. It was a very, very highly profitable mine. And so the chances of finding something we viewed as you know 70-80% chance even though geologically, everyone said nothing or you never find anything geologically there again. But Brownfields exploration, we’d be prepared to back ourselves and thought there would chances of being much higher than in grassroots.

Matthew Gordon: So you’ve thought OK. It’s produced quite a high-grade before.. say 800,000oz-1Moz produced. Has sat around for 20yrs and done nothing. So we’re you a field of one looking at this. Was this geological fault putting everyone off, or was there a bidding process? I mean how hard did you have to try to get this?

Steve Parsons: So the project has actually been bought by Draig Resources. And Draig didn’t have a technical team at the time. They didn’t really know what they had. They knew that they obviously had something good. But their view of it at the time was very much, ‘Oh well its a property. It’s an asset. How are we going to move ahead on it?’. And the thinking back then was from the previous people that were running it, was well maybe some Gold in the old tailings dam, or maybe Nickel nearby. Or who knows what else. But the view was very much because this fault had come through, you’ll never find anything on the other side of the fault. And that has always been the thinking by everyone who’s ever looked at this project in the past.

Matthew Gordon: So how much did you guys pay for it?

Steve Parsons: I have to go back and have a look at what’s on the ASX platform. But I think it was about a $1M, shares bits and pieces as well.  We own the project 100% now. Sorry it’s not on the top of my head.

Matthew Gordon: So you’ve got you’ve got this project. You spend the first 6 months trying to work out what you had. And at that period, were you thinking this could be something significant. Or are you just hoping for a good project something which might stroke the interest of investors, enough to get some more funding to work this out? I mean what we thinking it was.

Steve Parsons: Well our view was very much, Expression is what we’re about. And we’re looking for world class deposits. Somewhere around the world, and this is in Australia obviously, but the view much was, let’s look on the other side of fault. Let’s get this right. Let’s look around it and see if we can find another you know 1,2,3,5Moz of high-grade Gold. That that was without a doubt in the back of our minds. However we also had the view that, worst case scenario we should be able to cobble together a few thousand ounces here, there and everywhere, and hopefully maybe turn it into a small West Australian high-grade Gold mine. Some of the lines of you know 100,ooo or 200,000 300,000 ounces of Gold. It’s a start. And then from there leverage up and look for something else. But we right from the very start backed ourselves and the fact where can we find the next big discovery, below or adjacent to the old mine.

Matthew Gordon: So it’s a well told story in the market. I think you’re well on your way to creating something significant. But what I just want to talk about something, again for new investors thinking of coming in, because there’s still a kind of reasonable retail component to this. And the question is, how do you and your team get that balance between driving the business and appeasing shareholders, in terms of shareholder value, and shareholder value creation? And you’ve obviously done that in the last year. But it’s going get more and more difficult to do that. So what’s the process internally for looking at those things?

Steve Parsons: Oh I mean it’s for us it’s very simple you know. All we’re trying to do is create value at a project level. And if we create value at the project level, then that should in theory come back to create value for shareholders and the share price appreciation. And creating value at project level is.. it’s adding further ounces and more discovery ounces. It’s an converting into a high category as well. So more valuable ounces. That’s drilling deeper, adding, seeing where those Resources continue on to. That’s the sort of thing we try and do, and we try and do it very efficiently, for less than $15 dollars an ounce.

Matthew Gordon: Okay. So the strategy is drill, drill, drill?

Steve Parsons: Yep without a doubt.

Matthew Gordon: Keep it nice and simple.

Steve Parsons: Going back to when the very first started. We literally only had a few hundred thousand dollars in the bank, and so the first drill program was very, very much, ‘where we’re going go. We’ve got a limited amount of money. Best bang for our buck’. We want to make sure that we’re hitting our highest priority targets, as quickly as possible and proving our theories right. We did that with the 1 drill rig and made it made it work. And we ramp it up 2 drill rigs in early 2018. And then we got to 4 drill rigs towards the end of 2018. And here we are now with 5. So it was certainly very happy to keep on adding drill rigs, if the deposits keeps on growing.

Matthew Gordon: So to answer my question of earlier, how much of this was luck and how much of it was planning?

Steve Parsons: You have to ask the Exploration team.

Matthew Gordon: I think they would say it was all planning. Well they should shouldn’t they?

Steve Parsons: Without a doubt I mean look there’s always been luck on this thing, but you’ve got to have a good team that comes up with the right strategy on where to drill. And there’s it’s got have backing from the board to say, ‘hey we back these guys let’s give it a go’.

Matthew Gordon: Well as long as the grades and the ounces keep coming, they’re going to continue to back you because some something’s something’s going right, obviously. So to that point, let’s assume the next 18-24 months continues the same way. You’ve got a big Resource number at the end of that. What’s your endgame here? What’s your business model? There’s got to be a point where you kind of go, ‘okay. I think we’re good now. let’s talk to people about either making acquisitions or being acquired.’ Or do you get into production? What are you thinking?

Steve Parsons: Yeah. Look I mean obviously you’re and you’re in control of your own destiny with things that you can control obviously. And for us right now, that control for us is really about the drill rigs, and the geological understanding, and adding ounces. So very much about just keep on adding ounces for the time being, and then converting those ounces into high confidence ounces. Creating value on the project level. At some point in the near future, it’ll be a point where we go right this this is going be a mine. It’s gonna be a highly profitable mine. This is what it looks like. So that’s sort of the game plan. So this is very much about just that adding ounces.

Matthew Gordon: So you’re not setting any targets for yourselves yet? It’s early days, you are less than two years into this. Things have gone quite well. And you want to continue repeating that.

Steve Parsons: One of the one of the problems, I think with a lot of junior companies like ourselves is, we try and put ourselves in boxes  too early on. And sure, great to get up and running as a mine without a doubt. Fantastic, however that is not our strategy. Our strategy at the moment is very much, the resource is still open in every direction, North South, West, East and at depth. We’re back in to keep on drilling, so we might as well keep doing that. Keep on adding ounces. And then we sort of can get to a point where we realize, well what’s the scale this going to be. And it’s just too early to do that right now.

Matthew Gordon: I accept that, it’s fair enough. So if I may…because this is for investors retail, high-net-worth, family office investors to understand. So we haven’t talked about the project, because I think a lot of information out there. But if you could maybe give us a quick summary that the five key points as to why investors should come into Bellevue Gold now. And perhaps talk about where you think the Gold market’s going as well. If you can cover all of that off for me.

Steve Parsons: Yeah look, I guess the real key thing is, we are a very simple investment proposition. We try not to over complicate things at the moment. So Bellevue Gold is very much about adding ounces. It’s adding very high-grade ounces. It’s globally one of the highest-grade ore bodies and discoveries that’s happened at the moment. We’re growing ounces very rapidly. 18 months ago we were zero ounces, and here we are at 1.5Moz. We are cashed up. We continue to have good financial backing, so we’re not scared to go and drill those holes. And at the moment those holes, if we keep on stepping out on a continually adding ounces. So that’s us in a nutshell. It’s efficient. It’s high-grade ounces and we’ll keep stepping out on that. And look for me personally, West Australia is without a doubt one of the premier jurisdictions in the world to be in. We’re in the Goldfields region of Western Australia. There are mines all around us. We’ve got granted mining tenure. So to get it up and running, it’s going to be very straightforward. And look the Gold price is looking fantastic. And especially in Aussie dollar terms, it’s looking incredible. So all those things are lining up for us and I will certainly see it for the rest of this year. And next year we think to be a very good growth on the Resource space and hopefully for shareholder appreciation that as well.

Matthew Gordon: Thank you. Thank you for that. I forgot, obviously with the the Gold in Aussie dollar terms is the highest it’s been for a while for a long time, if not ever. And you pay for everything an Aussie dollar. So for you, it’s good. So the US dollar has no bearing on your business.

Steve Parsons: Well at the moment the trend in the Aussie dollar versus US dollar has been negative. So Aussie dollar’s going down US dollar going up, which means that US dollar Gold price going up is a very good thing for us in Australia. So we’re pretty much at all time highs in the Australian dollar Gold context at the moment.

Matthew Gordon: Well, look Steve, thanks very much for that summary. It’s nice introduction to your company. We’d love a chance to catch up and maybe get into the weeds of it at a later date. So again thank you for your time. And I’ve had a long day. You ready to go home I imagine.

Steve Parsons: That’s all good. Thanks very much for your time.


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

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

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

Roxgold (TSX: ROXG) – Some Gold Mining Business Models are Just Smarter Than Others (Transcript)

CRUX sat down with Roxgold (TSX: ROXG) CEO John Dorward. 350,000oz in 3 years @13.5g/t. The freedom of cashflow.

  • A business model geared towards growth.
  • An advanced project at Séguéla Gold Project.
  • More drilling confirmed and Resource drill out targets. Séguéla should offer investors a steady stream of drill results.
  • An increasing Resource base.
  • A Preliminary Economic Assessment (PEA) is due in the 4th quarter of this year.
  • Permitting due early next year, with construction in 2020 and production in 2020. Aiming for a quick timeline without issuing new shares.
  • With the Yaramoko Gold Mine, a continuation of very strong operating metrics and margins. They continue to focus on costs, to make sure that they future proof that business.
  • Strong drill results for the underground drilling at Yaramoko Gold Mine.
  • Potential to make another acquisition, in a similar vein to Séguéla.
  • John sees in 12 months them finishing with a very different company. They’ve got a very strong balance sheet and a lot of runway in terms of cash flow ahead. They are building a new African mine with a proven development team.

Click here to watch the interview


Matthew Gordon: Thanks for joining us today. Where are you today?

John Dorward: I’m in Toronto. In our head office in Toronto.

Matthew Gordon: Excellent, excellent. Well I always start off and I get people to give us a two minute overview of the business then we’ll get stuck into some questions.

John Dorward: Sure. So at Roxgold, we’re a Gold mining company. We operate the Yaramoko Gold project in Burkina Faso. So we’re listed on the TSX. We discovered Yaramoko. Put it into production in 2016. And have been operating it ever since. And we just acquired our first sort of growth projects. We acquired the Séguéla project in Cote d’Ivoire from Newcrest. And we closed that a month ago.

Matthew Gordon: Very good. Well done. So tell us a little bit about the Burkina Faso asset and what you’ve got going on there at the moment?

John Dorward: Certainly so Roxgold discovered and developed the Yaramoko Gold projects. It was discovered in 2011, and brought into production in 2016. So 5yrs from the first discovery hole, to first bar of Gold which I think really speaks highly of the jurisdiction of Burkina Faso. The project itself is technically very straightforward. It’s a high-grade underground mine. To date over the last 3yrs, we’ve mined approximately 350,000oz at a grade of 13.5g/t. So a genuinely high-grade operation. Very high recoveries. And it’s been very low cost, very low operating costs, and very low All In Sustaining Costs (AISC) which have allowed us to really deliver some really impressive financial results and build up a really strong treasury.

Matthew Gordon: Just tell me about that, that’s kind of interesting. It’s an underground operation, yet you’ve got relatively low cost of production. How have you managed that?

John Dorward: But really it’s all about the… first and foremost the grade. The second is the geometry. And then third is probably the mineralization style. So the first point you start off with very high-grade. 1. So the insitu value of each ton of rock that we mine is very high. I mean approximately, I guess, around the $400-$500 per ton of rock for the grade of Gold. We have a cash operating cost in the vicinity of around $150 per ton. So that can give you a feel for the very high operating margins that we enjoy. 2. In terms of geometry, the ore body’s very steeply dipping, which lends itself very nicely to mining underground. It’s quite difficult sometimes to mine flat line ore bodies but when they steeply dipping, you tend to blast them, they fall exactly where you want them to fall, so that you can mine it out. 3. And then third really is the mineralization is hosted in a very competent Granite. The genesis of the ore body was really.. a big granite, was torqued and it sort of twisted. And granite whilst very competent, is very brittle. So it cracks open, you get a crack opening up and then sort of the mineralised fluids sort of oozing through that, depositing a Gold project. So we’re sitting in very competent rock where we mine the ore body.

Matthew Gordon: Let’s come back to that in a second. What I want to start with, is tell us a little bit about you? What have you trained as and what do you do within the organisation?

John Dorward: I’m the President and CEO of Roxgold. And have been here for about 6yrs. I have a finance background… my background has been in finance. I was the CFO of a couple of companies. A corporate development background as well. And also prior to that I was a project finance lender, before I joined the White Hats and got on the good side.

Matthew Gordon: So who is the technical guy on the team?

John Dorward: So my partner in crime is probably Paul Criddle. He is our Chief Development Officer. Paul and I have been together for about 12yrs now and built several Gold mines in West Africa. Paul’s a very experienced deliverer of projects. He’s got a really core strength at that. And he and I have, I think, formed a pretty good team.

Matthew Gordon: So what are the projects you’ve worked on together?

John Dorward: So we worked on the Sabodala projects in the mid 2000s. So we built Sabodala and brought that into production. That’s now the flagship operation of Terranga Gold, also listed here on the TSX. And then he and I built Yaramoko together which is 55 Zone and Bagassi South mine.

Matthew Gordon: Okay. Interesting. And any other notable individuals on the team that we should be aware of in terms of West African experience.

John Dorward: And we’ve got a very strong roster, I think and certainly in the senior management ranks. Paul Weedon is our Vice President of Exploration. Paul joined us last year, after 8yrs as is the 2iC of Geology for Newmont in West Africa. With 5yrs experience prior to that with AngloGold Ashanti. So Paul’s 13yrs living in West Africa, looking at all the projects, working on some of the really world class projects that AngloGold and Newmont own over there. So deep experience. Vince Sapuppo, he’s our Chief Financial Officer (CFO). He joined us. He’s a lot of experience working with BHP and Newcrest. So far flung parts of the world with those two large organizations. And Iain Cox is our Chief Operating Officer and he’s spent a lot of time on the project. He also comes out of Newmont in Ghana and a range of other projects around the world.

Matthew Gordon: I’m seeing a lot of West African names here. Is Vince the reason that you went into Cote D’Ivoire?

John Dorward: So Cote D’Ivoire is an interesting project. So we’ve been sort of looking at that property for a long time. The company that originally owned it before Newcrest, was run by a former colleague of mine. Nick Houseman, we worked together in NPI mines. He enticed Newcrest into a joint venture, that joint venture made the discovery of the Antenna deposit at Séguéla. So we’d been keeping an eye on it, but it certainly didn’t hurt that the former General Manager of mergers & acquisitions for Newcrest was working for Roxgold at the time.

Matthew Gordon: Yeah I bet, I bet. So if I look at what you’ve got, you’re a $300M market cap, so you’re doing something right. Clearly. And it was a tough year in the market for lots of people, but Gold particularly. And you seem to be a bit below where you were a year ago, but not not far off the mark. So if you’re looking back over the last year, what were your challenges? And did you see them coming?

John Dorward: No. Well, you try and anticipate problems which are not always successful. And I think like many challenges they catch people and have a significant impact, they are hard to anticipate. Probably one of the most significant challenges we faced, was there was a sort of a dislocation of our share registry. And I take your point about the share trading. If you go back about 12 months to June of 2018. M&G, which is a large fund manager out of the UK, part of Prudential Group, was our second largest shareholder in their precious metal fund. I woke up one morning to say that they’d announced that they had lost the mandate for the majority of that fund, and they were shifting it to Wellington. And subsequently that fund turned into a, from a precious metals fund, into a global cyclical fund. I’m still wondering what that means, but you didn’t sound like it was very positive for us. And not making light of the situation, really from that point in June to February this year, that was overweighing our stock sitting above us. Because you had approximately I think 26M to 27M shares, that I think most market participants, and correctly in the end, assumed would be would be hitting the market at some point. They subsequently were traded in February, as a big block. And we’ve seen that block find its way I think to more natural owners. So I think that’s been helpful for us. We have I think bounced off our bottoms earlier this year. Those those shares have gone to a lot of really strong hands. A lot of people who are household names, who are comfortable with the story. And I think where we’re feeling a lot better. But that was that that was a big challenge for us.

Matthew Gordon: You bought some yourself obviously?

John Dorward: We did too so we actually, back in last year, we actually approached Wellington in concert with some of our large shareholders, and actually bid them for the stock directly. It took while to get an answer out unfortunately, but eventually they told us that they were holders. And looking to buy more which I must admit I didn’t really believe. And sure enough they actually ended up selling the stock a few months later. And selling us quite a bit lower than what we were offering them. So maybe it all works itself out in the end. But today after about 8-9mths of sort of a bit of dislocation, I think that’s finally sorted out.

Matthew Gordon: So that was some of is some of the financial challenges you faced. Talk to me about the some of the more technical components here, because obviously your resource is…it’s not huge but it’s very, very high-grade, like you say low AISC, low cash costs. So what are the technical challenges you’ve identified, and said look we got to get after this, to change the shape of the company, because if we don’t, we can see a problem coming down the line.

John Dorward: Look no, I think that’s a very good question. I think for us, and I go back to my earlier point, one of the one of the attributes of the deposit is it’s geometry and it’s very steeply dipping nature. That in turn provides challenges about drilling it out. So we actually have a challenge to maintain mine life at least 55 Zone in particularly, which is a very deep deposit. So we’ve actually traced the 55 Zone, which expresses almost at surface, down as deep as 1.1km from the surface. And we’ve done some surface drilling earlier this year which was about hitting the ore body down at 1.1km. It’s very difficult to infill drill that and add reserves at the appropriate spacing to do that. So we’ve mined down our Reserves at 55 Zone. But fortunately in the intervening period, we’ve discovered Bagassi South and drilled that out. Put reserves on that. Put it into production. So if you look at it from a whole project basis, whilst we’ve mined 55 Zone down, we’ve brought Bagassi South in. And I think we’ll be in basically in the same ballpark as when we started, even though we have mined significant amount of ounces.

Matthew Gordon: So what’s what’s that in terms of life of mine, what? 7-8yrs.

John Dorward: 7yr mine life. We have a very good record of converting Inferred Resources to Measured & Indicated. And so I think we’ll be able to continue. And going forward I think, and this is one of the things we spend a lot of time talking to our investors about is, next year, we’ll be about 700m underground a 55 Zone. And we’ve had one drilling platform about 350m below surface, which we’ve drilled out some of that.. a little bit of that Inferred, but mainly conversions for production drilling. When we get to that 700m drill platform next year, around the middle of the year. We’re planning a very significant drill program, in the order of about 25,000m. We probably have four rigs going. And that we designed to keep pushing our Measured & Indicated down. We’ll be looking to convert Inferred and we’ll also be looking to push that Inferred envelope below 1.1kms. So you need a little bit of patience. It’s difficult for us to put it on paper, just because of the depth. It’s something that’s that’s on a two year cycle. And I think we’ll look really good next year. But in the interim, Bagassi South has picked up the slack for us, and enables us to maintain and increase production.

Matthew Gordon: Right. So that’s that’s picked up the slack in terms of the Resource Measured, Inferred etcetera. But in terms of the grades, are you going to be able to sustain the same high-grade content here, or I guess that’s an unknown. So that’s a difficult question, but that’s something you’ve got to be driving for right?

John Dorward: Well if you look at our current technical report. The grade distribution is higher in the early years of the mine. We have mined some of that. If you look at our most recently quarterlies, you can see the grade has actually come down. But again fortunately, what’s happened, is our cost structure has come down markedly. I mentioned earlier that our cost per tonne is around $150 a tonne. That compares to about 12mths ago of over $200 a tonne. So as we’ve increased the production tonnage, we’ve actually radically decreased our costs. And we’ve got some slides in our current presentation that show this. As that grade is moderated towards our Life of Mine (LOM) grade which is anticipated in our technical report. Our cost structure has come down and our margin per ton, per ounce has pretty much stayed consistent.

Matthew Gordon: Yeah I think that bit is impressive. And you’ve make quite a good point of it in the presentation where you’ve driven down your cash costs, operating costs. But there’s only so far you can go with that. But at some point, you’re going to need to get more ounces in the ground. You’ve got a bit of cash in the bank at the moment. I know you’ve just acquired Cote D’Ivoire. And we can talk about that a second, but… you can’t control grades but you can maybe acquire them. You can’t control Resources but maybe you can acquire it. So what are you doing to… we talked earlier about the ability to maintain the company’s position. If the Resource is dwindling… obviously that’s going to have an impact on people’s perception, share price, all that sort of stuff. So what are the things that you’re doing to keep this going beyond Mine life?

John Dorward: Well I mean and that’s it’s certainly it’s a topic that we spend a lot of time on. So we actually have stepped out. We had a strategy session with our board. Months ago here in Toronto. And we sort of set out what we wanted to do as a company, and we’ve been starting to make those steps, working towards that. In a nutshell, we wanted to show growth, and we wanted diversification of production. We realized that Yaramoko, while it is an incredible cash machine, is a relatively compact operation. I think we will continue to make discoveries there. But for a planning perspective, we need to step out beyond Yaramoko to offer growth. Growth is a word that is spinned around a lot within mining circles and Gold companies in particular. And we’ve thought about this very carefully. Because it’s very easy to go out and issue shares or spend money in the pursuit in growth, and actually end up wasting that and sort of losing your way. So we have set ourselves the target of being able to do this in a very, very careful sort of considered fashion. And our goal is to offer our shareholders, growing Resources, growing Reserves, growing cash flow and growing earnings on a per share basis. So we, actually, we haven’t issue in shares for finance or acquisitions in the last 4yrs. We’ve actually bought some of our shares back. But when a shareholder in Roxgold, as an owner of the business, I want their entitlement to those key metrics, whether it be Gold, or earnings or cash flow, to actually increase over time. Not be battling a continual increase in the share count as more and more shares were issued to fund the growth. Our business Yaramoko in the last 2yrs has actually generated enough cash, that we could go out and buy our first growth asset for cash. On top of that, the exploration of Séguéla will be paid for with cash. And I’m fully confident that we can put that project into production without issuing a share from Roxgold. It’ll be all done on retained earnings.

Matthew Gordon: Yeah and that was what? $20M?

John Dorward: So yes. $20M paid to Newcrest. And then there is $10M paid upon first production. So that’s really good example to your question about how do we grow resources. I think we’re looking… we’re maintaining the line I think at Yaramoko. And we’ll continue to roll that forward. And there’s very strong cash flows in the next 5-6yrs, but we will actually put out our new Reserves & Resource statement. As a company, and that’s the way we look at it, as a company, we’ll be in the best shape we’ve ever been.

Matthew Gordon: I got that. And I think you know going off and acquiring an asset is, especially so close by, in terms of optimising the team there. You get the de-risking of the country risk component without necessarily going to the other side of the world to do it. So it’s very good. But at the same time, how many ounces were you buying in the ground there for $20M?

John Dorward: So first and foremost, it’s a 3,300km2 land package. It had been carefully curated by Newcrest over a number of years. They actually originally held about 20,000km2 in Cote d’Ivoire. And they basically worked their way through the ground that’s not prospective. So they’ve given us 3,300km2. For context, in Burkina at Yaramoko, we have 270km2. So it’s a much larger canvas for us to go looking over. We don’t characterize ourselves as greenfields early stage Explorers. We explore where we have assets in the ground. I think it’s a big canvas that’s enabled us to start looking at things on a bigger scale than what we have at Yaramoko. The actual asset of real interest is the Séguéla package of ground and that’s anchored by the Antenna deposit. Newcrest has a JORC compliant Resource out of a couple of years ago at 430,000oz at 2.3g/t Inferred. They subsequently did some infill drilling at Antenna. They never published an updated Resource, so we haven’t been able to publish that. But what we have done in the period in the last few months, is update that to 43-101 compliance standards. And so basically we’ve drawn into a group of new holes, and we will be issuing that in early July, as part of our overall update. And what we’ve seen, or what we believe we’ll see, is a very high conversion of Inferred to Indicated. An increase in the overall ounces, and a bump in grade. So I think what we’re going forward, is we’ve got a package of ground at Séguéla, which is anchored by let’s call it at this stage, call it 500,000oz. It’ll be in probably in a minable shape, we believe at between 2.5g/t – 3g/t, at a modest strip ratio. And then the wider story is really the satellite deposits that we have around Séguéla. So within 5km-10km of the Antenna deposit, probably 20 targets that Newcrest has confirmed. And we’re in the process of drilling those now. So we started up the drill rigs a few weeks ago. The plan is that we will complete a Preliminary Economic Assessment (PEA) on Séguéla with Antenna providing the bulk of the feed. And then look to add some of these satellite pits in as additional feed for either increased production or additional mine life. So we’re very excited. I think this is really the sleeper in our portfolio. It’s going to get bigger, and it’s going to be I think a lot more attractive than what people might have in their minds today.

Matthew Gordon: So doing M&A is important. Obviously you understand the restrictions of your primary asset at the moment, in terms of its longevity. Did you want to pay $20M upfront or was that the asking price? Or was it’s one of those case of you take it when you can get it scenarios? Do you think you’ve got good value for money?

John Dorward: Yes I mean we wanted to pay…we absolutely have great great value for money. I think Newcrest, they know us pretty well, and I think we probably could have made a case to them to take at least some of the acquisition in shares. We didn’t really want to do that, because we had, at time our shares, and I think still to this day, our shares are deeply undervalued, so we prefer to use cash and keep that share count tight. So I think the $20M with the $10M on production, for what is going to be our next Gold mine. I think it’s a great deal. I think we will be able to deliver a Preliminary Economic Assessment (PEA) later this year, so Q4 2019. I believe the project will be in the realms of 80,000oz to 100,000oz for up to 8-10yrs. That’s our goal. So that should be a very valuable asset for us and be worth multiple times the $20M that we’ve invested todate.

Matthew Gordon: Obviously you’re producing at the moment. Your margins are great. You want the volumes to be higher. I get it. So how much cash are you producing on a quarterly basis or annualised basis?

John Dorward: So at the moment so this first half of this year 2019, we’ve been finishing up the Bagassi South construction. We had about $12M worth of Pre-commercial Production CapEx to get through. We’ve got through that now. So we did a $20M acquisition. We’re anticipating having at the end of this year there are about $50M in the bank. We will pay our debt down a bit more. So net cash should be in the region of about $20M-$25M.

Matthew Gordon: So Burkina Faso, that’s self funding at the moment, and will continue to be self-funding?

John Dorward: Absolutely. So Burkino Faso is strongly cash in generative.

Matthew Gordon: Okay. I was just thinking, in terms of the exploration program and any CapEx requirements ongoing, that will be self-funded in Burkina Faso?

John Dorward: We can generate enough cash to pay our debt back, to fund our exploration, fund our sustaining capital, and also put cash on the balance sheet.

Matthew Gordon: What’s your total debt position at the moment John?

John Dorward: Just over $30M.

Matthew Gordon: $30M. So it’s negligible in the scheme of things. And with Cote d’Ivoire obviously you just… well actually on that point, how much data did you inherit? You said that Newcrest and done extensive work. I mean you must be sitting on a very large data set, these five identified targets. So what’s that worth?

John Dorward: Well so Newcrest had spend $21M on the project to date. So basically from their perspective, they had a project, you have to remember that Newcrest is the third largest Gold mining company in the world. And they have a target where they are looking for projects that have 3Moz-5Moz. So they didn’t see that at Séguéla. And I understand that. What they’ve been able to do is explore project and move it up, and move it out but that’s the problem we could handle, as far as they could see. So they’ve got there money back from us and they get another $10M on production. So I think a pretty reasonable deal all round for us. It’s very meaningful for us. I mean we’re looking at increasing our production by around 60%-70%, organically funded. So very meaningful for us. So I think it’s really an example of where the right owner has emerged from this situation.

John Dorward: So I have got to ask you a question. You guys are… your market cap is $300M which is great.  You mean meaningful. But if I look at a company, I won’t name names, a company around the corner. In Ghana, market cap of $200M. They’ve got a +5Moz Resources but no production. It’s a different business model from you. So you guys chose to get into production, rather than try and scope out the region as it were. Trying to understand what you’ve got. So can you just tell us about that thinking? That strategy? Why did you employ that?

John Dorward: To be honest, there’s a little bit of the destiny’s preset by the asset base. So if you have a high-grade underground goldmine, that you can put into production for $110M on a +45% IRR. You are tempted to go for it. I think with projects that are very sizable, in the hands of junior companies that don’t have production, the issue that they face, and I’ve lived this dream myself in the past, is that you really are staring a lot of dilution in the face. And if the market conditions are conducive to that, then you can end up with a much larger share count. And whilst the project might be very large and in production profile very attractive. Your shareholders can end up owning a diminishing part of that Resource, and ultimately the price. So I think that’s that’s a consideration for us. Whilst we still have external events which could still impact upon us. We have a fair bit more, a much higher degree of control over our destiny because we do have that cash in the bank. We have a good balance sheet and we have cash flowing in the door every month. We can go and deploy it. And I think in West Africa, the opportunities are very good because it’s under explored. You can build your projects quickly as we’ve demonstrated. But also the competitive landscape is, I think, a little more favorable to companies like us, because you’re not necessarily competing with some of the larger companies, because of the jurisdiction. Now we think it’s a very good jurisdiction to work in, but I do realize that there are investors who don’t like companies that are in West Africa. But I mean it does provide opportunities, and I think you can see that B2’s acquisition of Fekola a few years ago. I mean, a world class asset bought by an intermediate. I mean if that was anywhere else that project would be probably in most stable of one of the majors. So I think that’s a good example of what you can achieve in West Africa.

Matthew Gordon: Well its an interesting point, probably conversation for another day in terms of the premiums in the sort of nominally safer jurisdictions, the premiums that they get. But I’m interested in the strategy, because if I look at.. as you are saying Newcrest, this project in Cote D’Ivoire was too small for them. They’re targeting people with +3Moz-5Moz. Are you forever therefore going to stay under that that radar. So are you a takeover target or are you trying to avoid being a takeover target?

John Dorward: No look I think, I do get the feeling from time to time that we have a target painted on our back. For sure. I mean I’ve been taken out of it three times in my career. Most recently was at Frontier Gold, where I work with Oliver Lennox-King, our Chairman. Newmont came in and bought Frontier in 2011, for $2.3Bn. Now I think that project, was a very good project. But that was a good time in the market to sell. And in previous times, I’ve also had other opportunities where it’s the right time to sell, and I think the investors have done very well. So being taken over holds no fears for me. I’ve actually always you know gotten into a better job each time I’ve been taken over. So I don’t worry about that too much. I don’t worry about Monday morning effects.

Matthew Gordon: But it doesn’t but it does affect your strategy in terms of the assets that you look for. For instance, this asset you bought, in Cote d’Ivoire, from Newcrest. It has a very specific profile. You think you’ve gone and got yourself a deal. You’ve got yourself a bargain there. And you’re going to take your time to develop that out. Yourself funding because of your cash flow from Burkina. So that bodes well. But is this company going to be just a cash generative business, in which case what are the investors get out of it? Are you a dishing out dividends at some point? Or are you going to at some point build yourself up for a takeover. By building up the Resource number which is a traditional indicator?

John Dorward: Well I think that the guiding principle that we have Roxgold is that what’s attractive to a potential acquirer should be attractive to a potential investor. So the path is not bifurcated. We can travel along the road of sensible growth and not prejudice any outcome, is our belief. Now some investors talk to the Gold price, so they want a big Resource, a big low-grade deposit that has sensitivity to the rising Gold price. That’s not our model. That’s not what we’re looking to do. We’re looking to look at assets where we can invest capital and achieve a high return. Now investors generally like that. And we need to be able to demonstrate… I think if we can continue to do that on an ever increasing platform, then investors should be hopefully supportive of that.

Matthew Gordon: There’s a question then, is if you do your monthly or quarterly phone calls in to shareholders, and what are they asking you? What are they worried about? Are they are they reading articles, like I’m reading, ‘Germany sending $51M over to deal with jihadists in the North of Burkina’. Is that a real thing? I mean what what are your investors concerned about?

John Dorward: Oh look I think that probably would be the number one concern. And yes the security situation in Burkina is a real thing. It’s something that we take very seriously. We are fortunate in terms of geography that we are more towards the middle of the country. And a fair distance from the Northern border areas with Niger and Mali.

Matthew Gordon: How far?

John Dorward: We’re sort of 700km from there. The French embassy puts out a security map. And I have a red zone really hugging the border. Then I have an orange and then a yellow zone. And we’re in the yellow zone. We are still operating the environment where we need to be very careful. We have increased our security on site. We’ve increased the security that accompanies our vehicle movements. We’re looking we’re going to put an airstrip in, so that we can fly people in and out on roster. So there are real impacts on the security situation. I think the Burkina government recently  last year decided to become a little bit more engaged with the regional efforts, led by the French and the US, and some of the other countries. And I think that’s assisted to be honest. But it’s certainly a very real concern. It’s something that we are very mindful of. We haven’t had any disruption or impacts on the security front to our business, but we do remain very vigilant about it.

Matthew Gordon: Thank you for that. But what are the other concerns? Your investors are speaking to you. You’ve got a bit of jurisdictional risk in terms of jihadists. The government themselves, or the Ministry for Mines & Energy presumably, you say they’re being a little bit more engaged on a regional basis, but do they make your life easy to do business? Or is it, you just need to know your way around the system. How does it work?

John Dorward: Look you need to you definitely need to have the right people in the right spots in country. And we have a very experienced general manager external relations. We have a large bilingual team so we have a lot of Francophiles in our business so we can engage with the government on their own terms, as is appropriate for a company operating in a foreign jurisdiction. So we have to be respectful. We have I think a very positive relationship with the Ministry of Mines, all the way through to the President. I’ve met the President a number of times, and he’s a former economist, so he understands business. I think he understands the impact. Certainly appreciates the impact of foreign direct investment. So I think we found it to be a good jurisdiction to work in. The impact that we have as a business on the economy, is very large compared to what our impact would be if we’re operating in Canada or Australia. Despite size, relative size of the economies. And then I think always come back to the point that we discovered Roxgold discovered Yaramoko in 2011, and it was pouring Gold bars in 2016. I think that comes back to your earlier question, a point about companies operating in jurisdictions that are perceived as being safer. The timeline for production in some of the more developed countries, is so long, I think investors lose sight of that. You can have a project in Canada that is 10yrs away from even starting construction. So and that’s not that’s not an issue that we face. So if you are a growing company, even a larger company, looking to add production, then I think West Africa is a jurisdiction that should be very close to the top of your list.

Matthew Gordon: So given that, I’m sorry to labour the point. So how would you describe your strategy for growth? Are you going to consolidate what you’ve got now? Obviously self funding, less dilutory. Or will you keep an eye open for other opportunities along the West African coastline?

John Dorward: No absolutely. So we have, I’ve danced around the topic I think. But we have a very strong focus on growth. I would think for growth….

Matthew Gordon: But what’s it mean John. You said yourself, it means lots of things to different people, and ‘we’re undervalued’, ‘we’re a growth company’,  ‘shareholder value’… all these phrases which companies use. What’s it actually mean for you?

John Dorward: So we approach it, try to project like a real business and compound our earnings at an increasing rate. So for us, the Séguéla model is what we’d like to follow. So we would like to find another asset in similar, no two assets are the same, but the same asset or similar asset, would be very attractive to us. One where we can buy it. Preferably for cash. For a relatively modest price. Invest money into that… taking that project forward ultimately into production. Use a modest level of gearing. So at Roxgold. Yaramoko was $110M to build. We borrowed $75M in project finance. We’ve repaid that. Generated cash. That’s now $30M. We’ve taken $20M of those earnings and used that to buy Séguéla. We think we’ll have a CapEx initial, and these are initial estimates, of between $100M-$110M. So very similar to what we’ve had a Yaramoko. We will be able to put $40M-$50M of our own cash in, that we’ve generated via our balance sheet. Borrowed the balance and then we’ve got two mines in production. If we could find a third cab off the rank effectively, in a similar vein, and for us it doesn’t have to be a monster deposit to have a meaningful impact. So we would like to roll forward that strategy. That strategy may also like maybe potentially a joint venture farm-in agreement, where you have a junior company that’s finding it difficult to finance their project going forward. I can come in and carry the freight on a drill out or a Feasibility Study and earn a majority interest. So I think they’re the sort of things that we’re looking at. What we’re not looking to do generally is acquire a well valued development project with a Feasibility Study attached to it, because we just believe the transfer of wealth to the target shareholders, especially if you’re paying a premium, is just too tough on our existing shareholders. And I think we have a path to a much larger and much more profitable company. Again whilst maintaining that share count, without going and doing something heroic or company changing.

Matthew Gordon: I get that. I’m a buyer of that strategy. It helps position where you sit in the mix in terms of relation to the peers, not just on a market cap basis, ounces in the ground basis, but in terms of why you will stand out and maybe why you can make some acquisitions where others can’t. Especially with your cash flow, fantastic. So let’s just in terms of finishing off. Let’s talk about the next 12 months. What are you going to do? Why should investors get excited about what Roxgold is doing, and perhaps think about investing in Roxgold? Maybe your top five reasons.

John Dorward: The top five reasons are, I think that we have a growth engine now which is something we haven’t had for 2-3yrs. At Séguéla, we have.. if you think of the common Exploration pyramid. We have a fully stocked pyramid at Séguéla, with an advanced project at Antenna. And then a whole bunch of drill confirmed and Resource drill out targets. So I think what investors should see from Séguéla, our first growth project, is a steady stream of drill results. And I’m hoping that they’ll be very attractive. They’ll see an increasing Resource base. They’ll see Preliminary Economic Assessment (PEA) in the 4th of this year. And I think they’ll probably see permitting early next year and ultimately as I mentioned construction in 2020, for production in 2021. So that’s a quick timeline all of which we do without issuing a new share. I think a Yaramoko, they’ll see continued very strong operating metrics, very strong margins. A continue to focus on costs, to make sure that we future proof that business. If they are patient and they wait until the second half of next year, I think they’ll see some very strong drill results from our second underground drilling platform. So that’s sort of on the operational basis. I think and then we will continue, and I wouldn’t be surprised if we maybe do get to make another acquisition hopefully in a similar vein to what we saw it’s Séguéla. And then I think in 12 months, we finish with a very different company. We’ve got a very strong balance sheet. We’ve got a lot of runway in terms of cash flow in front of us. We’re building a new African mine with a proven development team. And hopefully we’d have we’d have our third project getting towards Feasibility Study (FS) as well. And then pointing to 300,000oz-350,000oz of extremely profitable production, all of which we’ve done with a similar share count with what we have today. And I think if we can deliver that, I think we’ve delivered something of a different Gold company to what people may be experienced with. And I think that hopefully, if I was a shareholder, and I am, that would resonate with me. And I think that’s what we’re going to deliver. And I think we need to be very clear that that’s what we’re trying to work on. If you want 20Moz of low-grade marginal Gold in the ground, Roxgold is not your company. If you want self-funding growing company that executes well, then maybe consider Roxgold.

Matthew Gordon: That’s that’s a great summary and I think it’s unique. So that’s great. I’m going to ask you about the market now. I’ve got to. It’s been a crazy year, for all commodities not just Gold. But let’s talk about Gold. What’s been happening? The usual rules don’t seem to be applying. We’ve seen a little bump in the last week or so in the Gold price, maybe tensions with China. Who knows? Where do you see it going?

John Dorward: Well I’m an optimist by nature, so I wouldn’t do this to myself if I wasn’t. So I do see upside with Gold. I think often a lot is made of the geopolitical aspects and the safe haven nature for Gold. I don’t tend to really to think that they are the ones that drive the long-term Gold prices. Good for blips, but it doesn’t really have a lasting impact. I think if you look at the inversion of the yield curve in the US for foreshadowing potential recessions, really taking the discussion of rate rises off the table, is positive. I mean I think really the Gold price is driven essentially by US interest rates, as far as I can tell.

Matthew Gordon: US interest rate rather than U.S. dollar?

John Dorward: Well it’s a bit the same? I mean there’s a relationship between interest rates and the dollar as well. But I think we’ll start to see that rollover. So I think if we start to see some of those highs being tested. Having said that for us, we’ve tried to insulate ourselves a bit. So we make extremely good money with $800 dollars. We make very good money at $1,200. We make even more money if Gold’s $1,500.

Matthew Gordon: Are you going to stick your neck out and give me where you think gold’s going to finish the year at?

John Dorward: It will finish at a Gold price that will be determined by the market.

Matthew Gordon: Good man. You should’ve been a politician and a diplomat.

John Dorward: I’m usually happy to give a timeframe or price target, but I don’t usually give both. So it’ll be higher toward at the end of the year. But I’ve have been wrong so many times.

Matthew Gordon: Well at least you are not going for the cliche,  ‘I’ll be alright. I just don’t know when’. Well John thanks very much. I’ve really enjoyed this conversation and thanks for opening up and sharing with us your strategy. I think it’s very interesting one. Especially with what’s going on in West Africa. I think there’s going to be a lot of Juniors who perhaps would welcome a conversation from you. So you know we wish you well with that. Please stay in touch and keep us up to date with what’s going on. Thanks again for your time.


Company page: https://www.roxgold.com/home/default.aspx

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.

RNC Minerals (TSX: RNX) – 1,000oz Gold From Just 2 Cuts. Only 40m into Mining Programme (Transcript)

In our latest interview with Mark Selby, CEO of RNC Minerals (TSX: RNX), he gives us an update on their latest drilling. “To us this confirms strategy and model is working.”

Mark is keen to add a note of caution saying this may not happen again imminently (it could), however this is the third time they’ve hit +1,000 ounce. And (laughably) it happened just 40m in to the current mining programme while they were on their way to a ‘higher probability area’. Beta Hunt just keeps giving.

Click here to watch the interview.


Matthew Gordon: Good morning Mark.

Mark Selby: Morning Matthew. How are you?

Matthew Gordon: Very good. Now you’re in New York, but you called us and you got some news!

Mark Selby: Yeah. We’re quite excited. Earlier this week, we resumed mining in the area… to target the area below the Father’s Day Vein.

Matthew Gordon: So we’re in Beta Hunt right?

Mark Selby: We’re in Beta Hunt Gold mine. Yep. We resumed mining, and we talked about getting underneath towards the Father’s Day Vein. And so now as we’re approaching that area, we intersected another one of these extensional veins and pulled out a 1,000oz from two cuts. And again we still have some some distance to go in that area that has some potential. So the most exciting thing for us is really confirmation of the model. So we first bumped into this structure in… well over a year ago, on our 14 Level. We hit the Father’s Day Vein (FDV) on our 15 Level, last fall. And now in the past month we’ve been able to developed low enough, and are able to now just start mining in this area and hit another one of these essential veins. So it’s a real confirmation that our model around why this course gold pops up, works, has worked again.

Matthew Gordon: We’ve talked previously, I think last last time, about the drill program 5,000m  plan coming up. That’s separate from this. This is part of the mining process on, as you say, Level 14, 15 Father’s Day Vein. This is where? Underneath it? Near it?

Mark Selby: Yeah this is underneath the projection of those same structures again. It’s where the sediment hits our sheer zones, where the gold sits that has the potential for these veins to pop up. Again I would love to say we can hit one each week for the next week or next month right. But these are intermittent structures, we know once we get into this area, we have the potential for one of these veins to pop up. And just in mining on the 16 Level here, just over the past month, we’ve hit another one of these veins and we still have some distance to go on this level. And then as well we’ve just had the development drives in place. We still have all the stoping blocks, over several hundred meters, that we’ll mine over the coming year. And hopefully we’ll have more of this high-grade course Gold pop out.

Matthew Gordon: So how far into the mining Level 16, have you got? I mean are you just started? Or you know several weeks into this thing?

Mark Selby: Yeah. So we had to spend some time driving a ramp down through the winter, to get down to that level. We’ve come in and we’ve mined probably a bit on this level, for just over 40m or 50m, and entered sort of this high-probability area, just last week.

Matthew Gordon: So you are literally only 40m or 50m into the plan, and you’ve hit this +1,000oz. I mean a +1,000oz in itself isn’t huge, but I guess like you say, it’s what it signifies.

Mark Selby: Yes. And again people shouldn’t think that these things are 25m and directly below each other. These are structures that plunge slowly, so we literally have hundreds of metres of areas to go mine, in between what we just found, the Father’s Day Vein, from the Father’s Day Vein back up to the 14 Level. And again once we’ve got the updated Resource model, and the mine plan going, will be mining those over the coming year.

Matthew Gordon: Right. And so this was part of a vein structure which you’ve been chasing or you plan to chase?

Mark Selby: What we target is the intersection of the sediment, where it intersects the sheer. And where those things happen… When it was formed the Gold fluids come up they hit the sediment layer and the Gold has to chemically drop out and physically drop out in to something. So it just fills up a little void with a lot of Gold in it. So the Father’s Day Vein happened to be a very large one of these. But we we’ve hit thousand ounce ones now, this is sort of the third time that we’ve pulled a thousand ounces of location.

Matthew Gordon: So I guess it comes back to what you told me in I think in one of our first interviews, you were saying that these are nice to haves, they’re not essential to the economics of the project. But they certainly help when you come across them, and there seems to be some regularity that to it. I guess you hope that continues?

Mark Selby: Yes. Very much so. So they are intermittent. I don’t want investors to think OK now that we’ve hit it again, we’re gonna be hitting one next week and the week after. It might happen next week, or it might not happen for a month or another three months on this area.

Matthew Gordon: But it’s not critical?

Mark Selby: It’s not critical. No, we’re running the base business and this is just very nice to have cash flow, because as you can imagine those are very, very low cost ounces.

Matthew Gordon: Yeah for sure. I mean what was sort of grade? I mean you talk about a thousand ounces, but what sort of grade do you suspect…

Mark Selby: Came out of basically just two cuts, and a few hundred kilos of rocks that were picked.

Matthew Gordon: Right. OK so that’s great news. That is great news indeed. You’re 40m or 50m in, and you’ve discovered this and you will continue to mine along the planned …

Mark Selby: Yeah. Sorry… we still high-potential area to continue to develop through. So we’ll see how things go over over the coming months.

Matthew Gordon: Ok. Great news. Can I just ask you, one other thing you talked about last week and we’ve had a lot of kind of people asking questions about that. And that’s with regard to, ‘this is one of the best times, given the exchange rate. The Australian dollar to US. Australian dollar gold price hit $1,900 this week. That’s good for you. Can you just remind people why that is the case?

Mark Selby: Yeah. So again the bulk of our costs are denominated in Australian dollars and again most people are focused on the US dollar Gold price, but the Aussie dollar Gold price overnight hit an all time high, and its well over $1,900 an ounce early this morning.

Matthew Gordon: So it all helps. Ok just just lots of small but good stories. And Mark while I’ve got you on the line, could you just give us an update on Higginsville. Is that still closing next week?

Mark Selby: Yes. As at this point everything’s on track to to be able to close on Monday.

Matthew Gordon: It’s fantastic. Because I know people are interested in that. You’ve talked about it as a mechanism for reducing the AISC numbers. What are the other things that are coming up this year. If you can just remind us some of the other things that we should be looking out for later this year.

Mark Selby: Yeah. So sort of looking over the balance of the year, you’re going to get further drilling updates. And again we’re now moving out of the Resource drilling phase, into the Exploration drilling phase, where we really want to start to show the potential of what the size the Resource… the potential Resource could look like.

Matthew Gordon: Right. That’s chasing the sheers that you’ve talked about.

Mark Selby: Yeah. The four sheers that are four kilometer strike length. So we’ll have the Higginsville mill, which we’ll be very focused on integrating with the with the mine. And then lastly, we’ll have the Resource update, coming out at the end of June, which will then lead into an updated mine plan in Q3. And then look to restart mining before Year End.

Matthew Gordon: And finally, what’s the feedback been with regards to the Dumont announcement last week? I know we’ve had a lot of positive feedback. People hadn’t been looking at it. Beta Hunt was the golden child, literally. But now people understand what you’ve been working towards with the Feasibility. I mean what’s the feedback you’ve been getting?

Mark Selby: Yeah. It’s exactly that. With an updated Feasibility Study, with numbers that we’re very happy with. People see… you know it really is demonstrable value for that asset, that’s not really reflected in our share price today. You can see we got a slide in our presentation, if you look at the comps. And even on the lowest value comp our interest in Dumont is worth $0.22 a share.

Matthew Gordon: I guess not too much more you can say about Dumont. You said you’re going to reignite or continue conversations with potential strategic investors there. That has not changed?

Mark Selby: The plan has not changed.

Matthew Gordon: But have you had a few more phone calls?

Mark Selby: We’ve had discussions with people that were on hold pending a Feasibility Study. So those discussions are continuing.

Matthew Gordon: Okay. Great news. Well I appreciate the phone call. We were pleased to get it. That’s great news, and we look forward to hearing more from you in the next few weeks.

Mark Selby: That’s sounds great.


Company page: www.rncminerals.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.

RNC Minerals (TSX: RNX) – Additional +$300M NAV Exceeds Expectations. Time to Invest? (Transcript)

Interview with Mark Selby, CEO of RNC Minerals (TSX: RNX) the Gold and Nickel miner – “There are very few billion dollars NAV projects, in low risk jurisdictions, sitting on a pile of infrastructure, that are fully permitted and ready to go today.”, says Mark Selby.

De-risked capital and operating costs, updated mine design, engineering on tailing management and storage for the Beta Hunt Gold project in Australia.

  • Increased electrification of trolly assist on main ramps.
  • Inclusion of concentrate roasting and conversion to FerroNickel analysis.
  • Mining footprint and production rates significantly reduced.
  • Mining rates maintained at double mill capacity.
  • Tailing Storage Facility improved

And some future upside (+$300M NAV) with:

  • Autonomous Fleet Operation (NPV8 – $75M-$115M)
  • Alternative Development Scenario – (NPV8 – $155M-$210M)
  • Iron Ore (Magnetite) Concentrate (NPV8 – $95M-$140M)

Click here to watch the interview.


Matthew Gordon: Good morning Mark. How are you?

Mark Selby: Morning Matthew. How are you?

Matthew Gordon: Very well, thanks for joining us. We’re making this a habit now.

Mark Selby: Exactly. Well we’ve got lots of news happening.

Matthew Gordon: Fantastic. Well you did say that you were going to be providing more news, more often, so that’s great. Now you’ve got a press release that’s come out today. Talking about Dumont.

Mark Selby: Yeah that’s correct.

Matthew Gordon: So it’s been sort of taking the back seat to Beta Hunt for a while. But why don’t you talk us through what is in that Feasibility Study and why investors should be excited?

Mark Selby: Sure. Yeah. I mean obviously again we’re in a very fortunate position to be a junior company with two great assets. One the most exciting gold discovery of Beta Hunt. And now with Dumont, the Feasibility Study basically confirms we are where we were before. This is over USD$900M NAV. It’ll be one of the largest base metal mines in Canada, up there with Highland Valley, which is Teck’s big Copper mine in Canada. Or Voiseys Bay. It’ll be one of the largest Nickel Sulphide operations globally, just behind Norilsk massive Russian operations. Jinshan’s Chinese operations. Then Dumont will now be comparable in size to where  Sudbury’s operating today in terms of Nickel output. And then most importantly with today’s market, it is one of the largest battery metal projects that’s ready to go to be able to meet the needs of the demand coming from electric vehicles.

Matthew Gordon: Fantastic. So there was a Feasibility Study done in 2013, and I think you then also did the 2015 EPC report. Obviously people been waiting for this Dumont update. They’re very excited to see what we got. I think everyone’s got a sense of the scale of it, which is great. But why did you go through that process? What did you need to discover?

Mark Selby: Sure. The key thing was we had done the Feasibility Study in 2013. But the fundamental change really is around the macro-assumptions. The Canadian dollar is no longer $0.95 to the US dollar, it’s down at $0.75. Nickel prices, weren’t at the level, we’re at $9 right now. So we updated the price deck. We updated the currency. The key piece that we added on was the roasting path to market. We had worked, if you go through our news flow through 2011 and 2014-15, worked with Tsingshan, who is now the largest stainless steel producer, largest Nickel producer in the world, to demonstrate that roasting Nickel Concentrate is a very low-cost, high-value way to get Nickel units into the stainless steel chain. So that’s what we’ve incorporated into the Feasibility Study there.

Matthew Gordon: So in terms of value creation for the business.

Mark Selby: Yeah.

Matthew Gordon: What are the what are the key outputs? What is this new Feasibility Study told you which you didn’t already know in terms of the economics?

Mark Selby: This is really demonstrating for Dumont, the value of Concentrate roasting as a path to market. And then updating the macro-environment in terms of currency, oil prices and metal prices, for where we are now versus where we were in 2013. And the nice thing is, it’s a low second-quartile cash cost producer. We’re actually under $3 a pound or $6,600 a ton cash cost for the first phase of operation. We’re under $4 on all in sustaining cash cost (AISC) basis across the life of the project. And I think you’ll find very few Nickel operations that have that kind of all in sustaining cash cash costs (AISC). And so we’re very, very happy with having something that’s a very long-life, low-cost, very robust mining operation.

Matthew Gordon: So tell us about some of this. Because I’m looking at the release and it just it talks about electrification of the mine, incorporating trolley assist. It talks about obviously the concentrate roasting and conversion to FerroNickel etc can you talk specifically to some of those components, if you don’t mind?

Mark Selby: Sure. Yeah. In terms of trolly. This is something we’d looked at in 2013. And the pit design at the time wasn’t optimal for it. So we’ve now optimized that… we’ve tweaked the mine design, so that it’s better set up to use trolly. And so what trolly does is, basically just like a street car, it has overhead wires that allows you to drive a truck up a ramp on electricity and then allows the trucks to go up much faster. And you obviously don’t use nearly as much diesel, which generates a lot less CO2 emissions. So we’re very fortunate to be in Quebec, where the power rates there are roughly just over USD$0.03 a kilowatt hour, which are among the most competitive power rates globally. And so it makes sense to try and take advantage of as much power as we can in the region.

Matthew Gordon: Fantastic. And then the convergence of FerroNickel, that whole process. Again the piece is says it gives you options as to what you want to do, rather than actually giving you a definitive answer.

Mark Selby: Yeah. One of the difficulty with Nickel Sulphide operations globally, is that it’s been a pretty almost oligopolistic market, in terms of the smelters. There’s basically a half a dozen smelters that treat Nickel concentrates. And the pricing for those has been very much in favour of the smelters, and not so much in favour of the miners. And so we came up with this path to market. Once we roast off the Sulfur, which is done in lots of different operations globally, it then looks like a high-grade laterite ore feed, so we can then go to any Nickel Pig Iron plant, any FerroNickel smelter. And we work with several large stainless steel companies back in 2014-15 to prove it could go directly into their flow sheet. So with more options, and with a much lower cost path to market, we increase the value very dramatically, in terms of what we get paid for the concentrate.

Matthew Gordon: And I guess that means that… you’re looking for a strategic partner to come in here. That gives them information which I guess they make a decision based on what’s going on in the market at that time.

Mark Selby: Yeah exactly. And the nice thing is we have complete flexibility in terms of… right now that path to market just pays for the Nickel. It doesn’t pay for the Cobalt and PGM’s, but those Cobalt and PGM’s are in the concentrate. So if somebody wants the value of those, or if the market price is high enough, or in an area where the content of that Cobalt or PGM’s is high enough, we can easily send that concentrate to a smelter to recover that Cobalt or Palladium and Platinum.

Matthew Gordon: Yeah. So lots of optionality there, which I guess is exciting. And you think again in the release there’s some numbers which you put against that, which people should look at. You also talk about employing a smaller more maneuverable equipment in terms of reducing the overburden. That’s an interesting thought.

Mark Selby: Yeah, one of the key pieces again with as we went through all the various Feasibility Studies that we’ve done on the project. Was really about making it a much more reliable to construct and reliable to operate mining operation. We have the intent, we’ll sell it to the right person, but we are also positioning to be able to build it ourselves. So we want to make sure it starts up properly, and ramps up properly. And so one of the things that we’ve done as we’ve gone through through this engineering study is look for ways to eliminate some of that risk. So by starting with a smaller footprint, by having two pieces of equipment, rather than one larger one, operating. It just gives you that much more flexibility to make sure you can deal with unforeseen issues that always pop up.

Matthew Gordon: Right. And again just going to finish off with the two points which you make. Tailings Storage Facility design improvements. That is, again a hot topic at the moment, but you’ve looked at optimising that as well have you?

Mark Selby: Yeah, what we did there is, the project is fully permitted. We have permitted tailings design there. Again we’re just looking for ways to do things better. So we’ve just have a new tailings design that’s easier and simpler to construct. And then basically results in and less water being… not as high off the ground which is what ultimately causes issues. So we have good design before we think we have an even better design now.

Matthew Gordon: Right. Right. Okay. And then you kept the mining rate the same… twice the capacity of the mill. Yeah I guess that’s for obvious reasons.

Mark Selby:  No no we basically put the highest-grade highest recovery material through the mill first. And then stockpile by the lower-grade, lower recovery material. It has a couple of benefits. One obviously it brings forward cash flow. Having stockpiles of material allow you to deal with issues that may pop up at the mine or the mill and so forth. So it gives you a lot more operating flexibility to have that stockpile that you can then work with.

Matthew Gordon: Right. Okay. Generally I guess this is an optimising process you’ve been through, and you’ve looked at the project design, risk mitigation, operational liabilities and the usual… How do we save save money throughout? But you’ve also got a couple things in there which.. well three things which kind of caught my eye around the automating of the fleets. An additional operational scenario and potential set of Magnetite, and you’ve put some numbers there but they’re not in the base case, as it says here. So why have you done that?

Mark Selby: Yeah. So there are different things that we were unable to get to a Full Feasibility Study level. And again we were very keen to make sure we sort of stayed focused on the scope that we define in 2015. But there are a number of things that have emerged in the market that we think can add real value to the project. I think combined those almost $300M more NAV. So first off the easiest one is in terms of the Magnetite concentrate. We have magnetite in our ore body. We have it effectively now a stream that goes out to tailings, that contains a significant amount of Iron and at the right price it adds a significant amount of value. So that’s something we’re going to continue to look look at. The second thing is in terms of autonomous trucks, those are rapidly becoming sort of the standard in a lot of large open pits. They’re not quite there yet. So you know we didn’t want to put that in the base case per-se. But as the project moves forward, that is that is a real option for us. And that’s something that we’re definitely exploring further. And then the third piece is really around… in our discussions with various battery market participants. They want a lot more Nickel sooner. That’s something that’s that’s comes through loud and clear, so in order to address that we’ve looked at options of producing significantly more Nickel upfront, with not too much incremental CapEx. And again that’s an option with the right partner. We could move forward on quite quickly.

Matthew Gordon: Well I mean that’s really interesting. And I guess it gives people like investors like us a site of what the future could look like, without it necessarily being in this Feasibility Study. So thanks for that. We’ll probably some work on that to come back to some questions, if we may.

Mark Selby: Yes.

Matthew Gordon: Can I just talk about the overall project. Obviously you’re looking for a partner. I mean you’ve been very clear about that. Now you’re at a point where you’re saying it’s fully funded to this point. You’re going to have discussions or continue discussions with strategic partners. And by strategic you mean operating partners. They will operate this and pay for it.

Mark Selby: Yeah. More importantly they’ll pay for it. We can be the operating team to operate the asset. Again if it is somebody who has more operating expertise than we do, more than glad to work with them.  We did that with Read Mine and Hud Bay. But we’re building the team to build and operate it, if we need to. But it’s really around a funding partner. Again we want to put this forward with the least dilution possible to RNC shareholders. And again it’s not uncommon with projects of this scale to be able to bring somebody in where the capital requirement for the current project owners is relatively de minimis.

Matthew Gordon: So I mean talking of that. What does a JV like this typically look like? I know you can’t get into it. You’re at early stage discussions, but give us a sense of what know the the RNC shareholders could end up with.

Mark Selby: Yeah. There’s there’s typically, there’s what I sort of call the more Asian project model where you have an Asian off-taker. They own anywhere between 20% and 40%  of the project. Typically their buy in premium helps fund a big chunk of the required equity for the entire project. And then they bring access to lower-cost Asian debt alongside it. That’s sort of one bucket. Then on the other bucket you have large mining companies, who may want anywhere from 50% to 100% of the asset. So and again I think what’s encouraging there is, if there was news last week that BHP said they’re going to keep their Nickel West business. They see significant optionality upside, given the growth that’s happening in the EV space. Glencore put out a great presentation the week before last. The conference really sort of spelling out what that Nickel growth looks like. So we have had talks with various companies in the past, and we’ve all been waiting for the right Nickel market, which I think we’re now getting into to be able to advance this further.

Matthew Gordon: Well I think that’s true. I was just looking at the LME numbers. I mean they’re forecast to grow…well they’re suggesting that in 2030 Nickel prices be at $23,000 Quite a nice quite a nice day for everyone if that happens.

Mark Selby: Yeah, very much so.

Matthew Gordon: Do those sorts of numbers affect your thinking? Clearly you’ve got $1Bn worth of CapEx. You’re not going to do that. You’re going to bring a partner in but I guess that goes towards your negotiations with them, as the price rises, in terms of what percentage you get.

Mark Selby: Yeah. Know at the end of the day, I mean we’ll… we’ve got our 28% interest today and as the operator. Again we want to keep as much of that as possible through the process. And there are a number of paths that allow us to be able to keep that entirely. I think from our perspective, we’re in a position where the Nickel market is really set to improve, structurally improve. But it’s in a great place right now, with went multi-year deficits. I think we’re going to continue to get that through  the next several years here. And so I think… and when Nickel markets turn they tend to turn very quickly. So obviously as Nickel starts to realize its potential that the value of Dumont is only going to climb from here. And you can see in the Feasibility Study results what kind of leverage we have to the Nickel price.

Matthew Gordon: Yeah I think that our reading of this suggests that people should be quite pleased with this Feasibility. Well are you pleased with this Feasibility?

Mark Selby: Oh no. Extremely pleased. There are very few billion dollars NAV projects, in low risk jurisdictions, sitting in a pile of infrastructure, that are fully permitted and ready to go today.

Matthew Gordon: Just help me on some numbers here Mark. How much has been spent by you on Dumont to date and as part of your negotiations, do you get to recover that earlier or is that just part of you recoup that over the period of the term of the agreement?

Mark Selby: Yeah. We just recoup that over the period of the investment. But again in this…the developing stage markets we’ve been in. What you’ve paid in is what you’ve paid in. But it’s really about focused on the value going forward. And again having a billion dollar project value as you know helps, make sure that more than get our money’s back on it. So.

Matthew Gordon: Right. Let me. It’s really early in the morning. So I do appreciate this. I think we got lucky hitting you at this time. Do you mind if we just park Dumont. I mean congratulations by the way. Great, great, great announcement. One of the best we’ve seen for a while. I think something people will take notes of as well, or should do. Can I just ask you a few questions on it’s sister company, sister asset, Beta Hunt.

Mark Selby: Yes.

Matthew Gordon: If you don’t mind. So I want to talk specifically about the drilling there. Okay. Obviously the Resource Estimate you’ve used 35,000m worth of drilling, but there’s plans for additional drilling to, as I understand it from our previous conversation, to get a sense of what these sheers are doing. Can you just talk to that a little bit.

Mark Selby: Yeah. We’re doing a 40,000m campaign. 35,000m was focused on really just expanding and upgrading the Resource that we have. And we’re taking a final 5,000m and really focus on those meters on showing investors the scale of the exploration potential that’s there. We believe we have four separate sheers. There’s over 4km of strike length that have been indicated within the first 10m of these sheers from the historic Nickel drilling. So in terms of highlighting some of the strike, and some of the depth potential of this at this Resource, is what we’re going to be targeting to the final phase of this drilling program.

Matthew Gordon: Well that’s interesting. So I mean talk to me about that. So there’s going to be some drilling at depth, is there? And if so why?

Mark Selby: Yeah. The key is again, as I said, we think there’s four sheers with at least 4km strike length. And given the geology there we think these structures continue for a significant distance. And so we’ve really focused our drilling on a tiny fraction of that overall potential today. So it’s really sort of highlighting the fact, well OK if we’re getting this much resource in 10% to 15% of that overall potential, what could it look like if we find more more gold, in more places to be able to take that same amount of Resource and extrapolate it over a much, much larger set of structures.

Matthew Gordon: Right. And so tell me about that. You’ve obviously got 35,000m done. Where is this 5,000m going to be drilled? Are you going to be doing a lot of in-filling and step out et cetera, but where specific? Is it anywhere near the Father Day Vein (FDV)?

Mark Selby: We’ll be targeting that the sediment horizon along the sheers or on some of the other sheers, just to see if… we believe it will be there. And just to highlight the fact that we do see it. And the bulk of it is more just to show what that base Resource looks like. And how it can extend well beyond, where the very relatively small area that we focused most of the drilling to date.

Matthew Gordon: Right. Is there a plan to look around the Father’s Day Vein (FDV) and see where you had that magnificent find. Trying to identify…or do these sheers sit elsewhere?

Mark Selby:  The Father’s Day is one very small piece of where the sediment and sheer intersect. We’re hoping show that that exists in a bunch of other places, and in the mine.

Matthew Gordon: Ok. OK. Interesting. OK. Well I guess as that develops you’ll tell that story. Just quickly on Higginsville. Obviously thank you very much for last week for clearing up you know the thinking and the logic behind that. And I guess it’s early days, but have the team, your team, looked at the data around how they’re going to develop the Exploration components of that?

Mark Selby: Right now we’ve been really focused just on near-term production there, which will be coming from the Baloo pit. That’s again I think a lot of the option value that’s there. That’s a massive land package in one of the great coal producing regions, which hasn’t seen much exploration for the last few years. So obviously right now the focus on exploration will be Beta Hunt. But we’ve just purchased a massive amount of optionality with that Higginsville land package, and that’s something that we’ll sort through once we’ve got the integration done. And make sure that’s executing well, and then we’ll start to explore that optionality on a pace that makes sense.

Matthew Gordon: Right. So just said two things there. I guess you mentioned last time that Baloo had a sort of softer rock, which in terms of feeding into Higginsville could actually be quite beneficial to you. Is that beneficial in terms of another means of reducing the AISC, which again we talked about last week?

Mark Selby: Yeah for sure. Because the feed for most of the last period of time has been you know very hard ore. That’s 85km away that that achieves much lower recoveries than what we get with with Beta Hunt. Baloo is softer. It’s only 10km away and recovers similarly to the kind of recoveries that we get a Beta Hunt.

Matthew Gordon: Okay. So more news to come out about that, as and when you work that out. But one big question, which kind of people have been asking, and we’re interested in, I should have asked before, which was the mill itself, is 1.3Mtpa. Any thoughts about upgrading that, increasing? Are you able to do that? 

Mark Selby: Yeah I know they were.. Westgold was actually looking at scenarios where they could expand that mill further, to feed it with lower-grade ore from some of the other properties, other other mines on their property. So yeah they’ve actually done a bunch of work to just show that that mill can be expanded by another 20% or 30%. So again as we go forward here, if we have Resource that’s profitable to put through that mill, that’s an option that we’ll look at at some point in the future.

Matthew Gordon: Right. So you know 20%, 30%. OK. So you could be potentially getting up towards the 2Mtpa mark.

Mark Selby: Yeah. Yeah.

Matthew Gordon: OK. Okay. But more work to be done before you make that decision.

Mark Selby: Most definitely.

Matthew Gordon: Ok. And part of that is, working out if you’ve got enough to feed the mill and keep keep that going. Okay. And again one final point with regards to funding of Beta Hunt. Royalty stream which you’ve done with Dumont. Is that part of the equation or is that part of the thinking?

Mark Selby: No Beta Hunt already has a fairly hefty royalty on it. So that’s not an option that we would look at with that with Beta Hunt going forward.

Matthew Gordon: Okay. That’s fantastic. Mark appreciate, it’s early. I know you’ve got quite a big day ahead of you. So thank you very much for updating us. We look forward speaking to you again and continue this talking to the market giving us guidance is is much appreciated. Thank you.

Mark Selby: All right thank you Matthew. Take care. Have a good day.

Matthew Gordon: Okay. Thank you.


Company page: www.rncminerals.com

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Gran Columbia Gold (TSX: GCM) – 11% Bond Secured by Physical Gold. New Bond Being Issued (Transcript)

CRUX interviewed Executive Chairman of Gran Columbia Gold (TSX: GCM), Serafino Iacono. One of the smartest, financially literate Gold teams we’ve interviewed. See what Serafino had to say.

Click here to watch the interview.


Matthew Gordon: Hello. How are you?

Serafino Iacono: Very well thank you. Thank you for inviting us. I’ll give you a little bit overview of the company. Great Colombia is a company, is the largest producer of Gold in Colombia. We produce 250,000oz of Gold at the end of this year. It’s a company that was founded in 2009 by the combination of a company called Midora Resources that had the Marmato Project and Gran Colombia Gold that had the Segovia project. It’s a company that has gone through, since the foundation of this company, has come through some incredible growth. It’s a company that started with 65,000oz of Gold. Through the years, we have reorganized the company, and we invested in a total of about $400M in the combined company. And they have very large Reserves basis, and as we stand, the company has probably one of the best grades in the world. I think its top three on grade, 17g/t and very low cost of production (AISC) which is $540 an ounce.

Matthew Gordon: Fantastic. Thanks for that summary. So essentially there are two projects that you’ve got. One is…

Serafino Iacono: Segovia.

Matthew Gordon: Segovia. Now that that’s the one with the high-grades at the moment, and obviously producing somewhere in the region of 193,000oz. That’s a significant producer. You’ve also got Marmato. Tell me about that because that a bit early in the process?

Serafino Iacono: Segovia is very much developed. It’s one of, we operate three of 23 mines in a concession, that is truly a private property in Colombia. A rarity. We own the mineral rights and the land. So we don’t pay any royalties. And the property, it’s not mature but it’s fairly mature, much more mature than Marmato. As you said we produce over 190,000oz at a very low cost. Marmato is our next project. Marmato is a project that started actually before Segovia. We started by developing a low-grade, open pit mine and then in 2011. Unfortunately with the prices of Gold going down, the project became very expensive to build. It was over $1Bn so we changed the design of the mine by going underground, and by developing the underground part. Today we have a project that is in the development stage. We produce 30,000oz there. Now we’re going to go into an expansion phase. The expansion phase is going to be to take the production to 180,000oz.

Matthew Gordon: Right. I want to talk quickly about your board if we may. Because it leads on to the next area I want to talk about which is how you structure the financing around this. Because you’ve got some very interesting structures in there I’d love to talk about. So looking at the Directors it seems to be very legal and financial focused. The management team is very technical. And how does that work? How do you work that?

Serafino Iacono: Well the way we’d like to arrange our board, we’re mostly financial. That’s where we come from, but we come with an experience of almost 35yrs in the mining industry. So we understand.

Matthew Gordon: And outside, as well.

Serafino Iacono: Yes.

Matthew Gordon: We should talk about it in another conversation.

Serafino Iacono: Okay. So our board it’s usually a board that gives strength on the financial side, that gives strength on the legal side and mostly on the compliance side.

Matthew Gordon: Why have you done that? Is that is it because Colombia is difficult to operate in?

Serafino Iacono: Columbia is a very challenging place. Like all South American plays. We, as a management, choose to live in the country. So we live… myself and most of my board with the exception of three of the board members, or two of the board members, that live in Canada and the US, the rest all live in the South America. They all live in Columbia. So we have… we’re very hands on management team and Board. One of our Directors is an ex-Minister of Mines. You know he knows…

Matthew Gordon: Mr. Martinez.

Serafino Iacono: Mr. Martinez. My partner and Founder of this company Miguel De La Campa has been in Latin America, involved in natural resources for 40yrs and so have I. So for us the separation… the management team it’s very important that has the know how, and has to know who. That’s the most important thing in Latin America.

Matthew Gordon: That’s a great phrase. The know who.

Serafino Iacono: The know who is just as important.

Matthew Gordon: I think so, I think so. Tell me a little bit about them because I see a lot of years of experience here.

Serafino Iacono: Lombardo Peredes is the CEO of the company on the management side. Lombardo was, actually comes from the…he’s an engineer, he is a mechanical engineer, but he was the head of the largest oil refinery in Venezuela. Managed 7 million barrels of oil a day in refineries, all over the world. Although his experience also comes in mining because in Venezuela, when he was in Venezuela they dealt with oil, oil and mining was very much related with iron ore and things. So he understands the business. He is really the driving force in the company to taking the company into to the development, that we’ve had in the last four years. The CFO is a guy with 25 years experience, worked for major mining companies. Mike Davis, financial guy, that understands what needs to be done, that has great controls.

Matthew Gordon: How long has he been with you?

Serafino Iacono: He’s been with us for 20yrs almost.

Matthew Gordon: Okay. Wow okay. Like a lot of people who have been with you a long time.

Serafino Iacono: All the people are local people. I would say the youngest is Jose Ignacio Noguera has 12yrs working for us.

Matthew Gordon: A youngster. I want to talk about Mike Davis and your experience. Because if I look at some of the structures you mentioned in your PowerPoints, it’s pretty interesting. It’s unconventional, but it’s allowed you to get into production and start throwing off cash, which you’re doing, and you’re now in the process of paying down debt. Explain how you gone about your thinking? Why have you structured things this way?

Serafino Iacono: Well we went through the good times, when mining was very easy to raise money. There were a lot of funds in the world and everything. In the last six years has become very challenging and very difficult to develop projects. Through ourselves, our management team, Mike Davis especially, that is fantastic on the financial side, we had to reinvent ourself in ways of creating liquidity in the company to build the projects. But at the same time maintain the structure of the company of not getting super diluted.

Matthew Gordon: Right. And that’s tough. Because a lot of people just happy to survive when it gets tough. You’ve actually been able to build this out and get into production. Significant production. You’re mid-tier producer now.

Serafino Iacono: Absolutely. And on our way to become a large producer. Because with the Marmato development which is our latest financing that we’re going to be doing. We are going to go to 400,000oz. So then it becomes a completely different company. How do we do it? We started looking at the possibilities of doing things. These days when you go into Streaming, the Streaming is a very expensive way to finance yourself. It’s dilutive to the investors. It’s very punitive to the investors. And our group, my partner and myself are probably the largest shareholders in this company. We are very much aligned with the rest of the shareholders. So for us, it’s important that we don’t do steps that prejudice to the investors. So we started looking at what’s the best way to finance this thing. We have a very solid company. I mean if you look at Gran Columbia Gold, we put out our financials yesterday that were fantastic. We’ve been growing for the last 4yrs, every quarter 15%-20%.

Matthew Gordon: Which is great. That’s PE type returns.

Serafino Iacono: So the company has taken the cost of production, when we started taking the mine over, of over $1,100 ounce and now we’re down to $540.

Matthew Gordon: Fantastic, $1,100 down to $500.

Serafino Iacono: So we’ve been very successful in establishing parameters, and that’s been through the financial thing. So the next step was, how do we finance our project and how we finance ourself. The most important thing that we’ve done, we are as investors and as funders of this company, put our money where our mouth is. So every time…

Matthew Gordon: What does that mean? How much money?

Serafino Iacono: Well 20% of the debt, that was $150M debt, that was management. It still is management. So management believes in this company and its assets. We have to find ways since the banks don’t lend money, since the Streaming is very expensive and everything. We started thinking of what’s the best way for us to finance. We were actually were the first one in Canada that created this kind of bond that we had.

Matthew Gordon: Tell me about that? I’ve marked them on here. I want to know.

Serafino Iacono: It’s a fantastic piece of paper. I mean we own it. We love it. We do it in such a way that it’s beneficial, instead of giving the money to a bank, or giving the money to a Streaming. We give it to our investors, because most of our shareholders are the guys that own the bond.

Matthew Gordon: What are the terms on that?

Serafino Iacono: The terms of the bond that we have, the only bond that we have, it’s an 8.5% coupon. We cover the downside which is $1,250 Gold. So we guarantee that you will get $1,250 Gold. You get all the upside on the amount of money that was lent to us. So in the case of this case, when we started the bond, was a $100M. We’re down to $68M in the first year. We already paid a very large amount.

Matthew Gordon: So what’s the term? When is this going to be paid off?

Serafino Iacono: It’s going to be paid.. the terms is 2024, but we going to finish paying in 2023.

Matthew Gordon: No early redemption, no penalties?

Serafino Iacono: No penalties and not because it’s on the end of 2023. But the paper is a fantastic paper, because it gives you the coupon, steady coupon. Interest get paid on a monthly basis, so it keeps that discipline. And principle gets paid on a quarterly basis. Plus on the quarterly basis, you get a kicker, if it’s above $1,250. And so it’s a paper that gives you 11% return. Every month, we set an amount of Gold aside in Scotia Bank and at the end of every three months, we cash in the Gold. We pay the principal.

Matthew Gordon: So you got some Gold set against the the balance.

Serafino Iacono: It’s guaranteed.

Matthew Gordon: That’s physical Gold?

Serafino Iacono: Physical Gold.

Matthew Gordon: And so when you say your investors. Are these institutional guys, it’s a lot of money, so that’s going to be mainly institutional guys.

Serafino Iacono: Yes it’s mostly institutional guys.

Matthew Gordon: So dividend paying… sorry yield paying bond in this market. That must have taken no time? Or did people struggle with the concept?

Serafino Iacono: No they didn’t. At first they were looking at this. It was a very nice piece of paper. At the beginning was, ‘What’s the catch?’. The catch was that if we put together a financing from the bank, or we put a financing from a Streamer, we would have paid probably a lot more and gave up a lot more on the project. By the way this came with a warrant attached.

Matthew Gordon: Yes I see that.

Serafino Iacono: That gives us $35M additional dollars, if it gets exercised. When we did the warrants of $2.20. Today they’re in the money by $1.60  So that’s an additional kicker that you have in there.

Matthew Gordon: So that’s happening.

Serafino Iacono: But we gave it to our… the bond was placed in the hands of large institutional investors. They’re very happy. And with this kind of system, now we created a situation that we are going to be financing, the next step is to finance the Marmoto Mine. And the Marmoto Mine is going to be financing that same category of bonds. And the same shareholders and the same bond holders are very happy to participate into this thing again. Because they see that it’s a very profitable and very secure.

Matthew Gordon: It’s definitely profitable. I guess the question is, do you need to do it that way, can you go conventional? What are you going to do with money to develop Marmoto?

Serafino Iacono: Marmoto is going to go for developing, literally the expansion of the mine. We’re going to take the mine from 30,000oz to 180,000oz so it’s construction of a plant. We’re going to be mining the upper portion of Marmoto, conventional and we’re going to go underground and at some level stoping type, very large, 4g/t material, to be mined.

Matthew Gordon: Yeah. And we’ll talk about that in a bit. I just want to stay on the finances, if we can. So conventional would be a debt type product.

Serafino Iacono: Correct.

Matthew Gordon: But with a lot security require probably?

Serafino Iacono: Restraints, security and hedging, all sorts of things.

Matthew Gordon: So this note, replication of this note, could be a much quicker way to expedite getting the money, with people you’ve already made happy.

Serafino Iacono: Correct. And management will be a participant in that note also. So that gives a confidence to investors that management believes in its own company.

Matthew Gordon: With a note like that you can come borrow money I think. 8% huh?

Serafino Iacono: A lot of people… I think a lot of people especially the Europeans, funny enough… I know that there is European funds that they can borrow at 1% and 0.5%. So they hedge.

Matthew Gordon: For sure.

Serafino Iacono: It’s fantastic paper.

Matthew Gordon: Call me. Right. They get a couple of things on here. So we will get into the detail about the two projects in a second. But you’ve also got some blue sky potential here. You bothered to put it in the presentation. It means that you’re thinking and doing something with that. So what is the thinking around those? Is that JV. Is it.. explore a little bit more? Work out what you’ve got? Sell it. What are you thinking?

Serafino Iacono: We have three projects in the pipeline, as a company that we have to grow. Once we have Marmato going, we have to think of what’s next. One of the projects is very well advanced, but it’s in the hands of a major. IAMGOLD has the Sacoor project. They have two more years of exploration. And they’re spending $10M right now in drilling. It’s a beautiful project, very much like Segovia. High-grade Gold. Lots of Silver, probably more Silver than Gold, but about 15g/t, 16g/t grams per ton.

Matthew Gordon: Really. Okay. Well Steve Letwin’s here next Thursday, I’ll ask him.

Serafino Iacono: Ask him. It will be nice to know what they are doing.

Matthew Gordon: Sounds like a nice project. 15g/t, 16g/t

Serafino Iacono: It’s a very very good project right. It is actually the oldest mine in Colombia. It’s the mine that financed the independence of Colombia. There used to be a currency….

Matthew Gordon: Off of the Gold?

Serafino Iacono: They used to be listed in the London Stock Exchange in the eighteen hundreds. So it’s a very historical mine. That’s a great story. That’s the mine. But it’s in the hands of somebody. The other thing that we did we wanted to have a little bit diversification. We wanted to go in Venezuela. Well Venezuela we’ve been there. Gran Colombia owned, before the government confiscated or nationalized all mines. We have a claim against the government. We’re hoping that the new government comes in, which we believe that they will eventually and get rid of these people. I don’t want to go in to the politics.

Matthew Gordon: No I don’t… Well a little bit. Let’s do a little bit. We see a picture that is painted by the press, North American press, UK press of Venezuela being in a state of disorganisation and chaos, and obviously a new government looking to come in, when they finally make that decision. For you as South Americans, is the picture clearer?

Serafino Iacono: It’s a lot more clearer than people think. I mean it’s still very challenging but a solution has to come in because the country has gone in a spiral that has no bottom. Eventually there will be an an opening and an agreement. We as a company have an investment of $110M in project of its. It’s Increible 4A & 4B. It was part of our assets. We were ready to build a facility and a mine. It’s got 4Moz of Gold, open pittable. The reason that it’s still intact because it’s low-grade so we’re talking about 2.5g/t. Illegal miners don’t of minego buying those kind of grades. So we believe that it’s an asset that will be easy to recover. That’s what we announced that we were going to do a spinoff for our company of Gran Colombia, finance partially by Gran Colombia and other investors. And that’s going to be done in the next 60 days. We’re going to put our assets over there, waiting for a change or waiting for us to have an opportunity. It’s a very, very inexpensive project. When we left it in 2012 that the government started talking about nationalization. This project was ready to work on $250 an ounce cost of production all in sustainable cost (AISC). It’s going to be a very profitable project but we’ll see. It’s a ‘we will see thing’.

Matthew Gordon: Let’s come back to what you have got today. So once again just to get some numbers around the company. So you have very few shares out, very tightly held.

Serafino Iacono: Correct.

Matthew Gordon: So management, how much has management got?

Serafino Iacono: Management is somewhere around 19%-20%. So if you look at the warrants also. 22% would like a with the warrants.

Matthew Gordon: Fully dilated right. Okay. And I guess a lot of it sitting with institutional, just the way that you structure this.

Serafino Iacono: I would say the rest. It’s outside of us. Probably another 50%  an institution and the rest retail.

Matthew Gordon: Okay so meaningful retail. Because the retail component is obviously what kind of tends to move these things in terms of liquidity.

Serafino Iacono: Yes. And the problem is that when we… actually we were a lot tighter than that. We had 21 million shares about a year and a half ago. We issued ….what we did and we got rid of some of that debt of a Silver note and we converted it. Most of it, a lot of it was our management and the same institutional investors. We felt that at the time the stock at $2.20, it was a good idea to convert and create some liquidity in the stock, because it had zero liquidity. Unfortunately it backfired on us. Everybody converted, the stock went to $3.50 and then went to $4.50 and it’s now in the $3.60 range. And nobody wants to sell.

Matthew Gordon: Yeah. That’s the thing…

Serafino Iacono: Were back to the same but we’re very happy with what we have.

Matthew Gordon: Yeah. I mean you’re throwing off cash and you’re paying down debt, which is great.

Serafino Iacono: The company the companies was putting out a lot of cash. We’re sitting right now, end of July we’re going to be sitting with $50M in cash. We already paid $15M in taxes. So we have no taxes until next year.

Matthew Gordon: Okay. So talk to me about that. So you’ve got until 2023, but let’s say going to pay, in terms of the debt, sorry current note. But you’re going to pay that down probably quicker than that. You’ve got $50M. Is that all going towards paying down the debt? Or is it going to be any dividends. Any cash buybacks, sorry share buybacks?

Serafino Iacono: For the next year…I’m not a big fan of shares buyback. Share buyback has to be done at the right time. You buy shares when you are in a position that you say alright our excess cash so much that we might as well. But if I take liquidity out of the stock. It gets even worse. It’s going to be at a much more illiquid stock.

Matthew Gordon: That’s true. That’s a good point.

Serafino Iacono: What are we going to do with the cash. The cash is going to stay in the bank as a security. You never know what happens with prices of Gold and commodities. So we’re very comfortable building up for a good cash position.

Matthew Gordon: So you’ve got physical Gold secured? Cash? So you’ve got a lot of options?

Serafino Iacono: We got lots of options. The other thing is, we only use to repay… we owe $69M of last month right. By July we’re going to be down to almost $59M, I believe that it’s going to be. The $59M that is owed, only represents 7% of our production a year to year to repay that.

Matthew Gordon: So less than 10% in here. So it’s even less..

Serafino Iacono: It’s insignificant. So we would rather go to the process of repaying that debt. The new bond that we’re planning to do is going to be done strictly not on the corporate level, it’s going to be done on the project level.

Matthew Gordon: So to that point with this bond, taken up predominately by institutions last time. We just talked about liquidity as a thing which is important for a company’s of your size right. So is some of that bond going to be opened up to the retail market?

Serafino Iacono: Yes I would have to be a very specialized retail market. But yes we would. But unfortunately with some of these bonds because it becomes complicated, especially when you go into a monthly interest payments and things like that. You want to limit to maybe 200,000-300,000 minimum investment. And that’s what makes it difficult sometimes for the retail public to put in, because even the exchange puts a limit.

Matthew Gordon: Well whether or not it’s through the bond, or whether it’s another mechanism to allow retail to get hold of more shares.

Serafino Iacono: Correct. But you know what’s interesting? After we issued… our bond this publicly listed, retail has come in to the bond bought in small amounts. Initially you have to go and buy a certain amount. I think it’s $200,000 minimum at that the Exchange gives you. But after that and then once it’s listed it becomes an instrument. I know people that had bought that 20,000, 30,000 of the bond. 10,000.

Matthew Gordon: Your balance sheet. I mean some of these things that you’ve touched upon here, in terms of the paying down of the debt. Your EBITDA from 2015 to today is literally that’s a nice a nice chart.

Serafino Iacono: It’s a fantastic little chart. Yeah we’re very happy with it. Well we’re not happy with the price of the stock.

Matthew Gordon: Just don’t tell me you are undervalued. Everyone tells me about that. But tell me. You’ve had this kind of very fast rapid ascension to where you are today. What’s next? What builds it up? I know you are going to develop the second asset. But is there more M&A planned? Or is it as case of focus on these other exploration assets that you’ve got? And keep that projection going?

Serafino Iacono: Well you know, obviously the Marmoto project is going to be significant, because we just doubled our production. We already started the path of the M&A. We’re looking at new areas in Colombia.

Matthew Gordon: You’re comfortable in Colombia?

Serafino Iacono: We’re very comfortable.

Matthew Gordon: Are you able to find good assets, you’re able to assess good  assets?

Serafino Iacono: There’s still very big amount of assets to be discovered there. But as part of our plan, obviously the next step is, we already started with Sandspring (Resources) by taking a 19% position in Sandspring (Resources). We believe it’s a good jurisdiction.

Matthew Gordon: That’s a non-operational position right?

Serafino Iacono: It’s non operational, but we are giving some directions to management on how to proceed to build it through the experience of our management team.

Matthew Gordon: And I assume that’s the same with the IAMGOLD situation potentially.

Serafino Iacono: With IAMGOLD, we probably will end up with about a 40% or the carry position into the company

Matthew Gordon: And they would operate?

Serafino Iacono: And they would operate.

Matthew Gordon: Is this the picture you’re building. Is this the way forward in terms of your M&A. You bring in joint venture operating partners?

Serafino Iacono: In these two cases it would be that. But we are opening ourselves to look at operations to go and expand our operation. Possibly Venezuela possibly other South America. Our focus is always going to be in South America, because that’s where we operate. We know best right.

Matthew Gordon: Okay. Okay. So anyone wanting to understand the finance a bit, p.7 presentation.

Serafino Iacono: You’re not going to find us in Africa that I can tell you.

Matthew Gordon: We use a phrase over her, ‘You  stick to your knitting’. Okay let’s continue talking about some of the some of the results that I’m looking at page nine of the Presentation, in terms of your production. You’re saying you can potentially go from 225,000oz to 400,000oz by the end of …

Serafino Iacono: 2023.

Matthew Gordon: With the AISC you’re looking, that should be generating a lot of cash. So what’s the end game here? Is this just a cash cow and keep running it? Do you sell it?

Serafino Iacono: At that point, that’s when the decision’s going to come in. One decision that we made, is we were looking at one point for strategic investors, strategic partners to grow. People came to look at us, to see because they were very intrigued with our growth and everything. Our decision now is, instead of being acquired, I mean if somebody comes, we are a publicly held company, somebody gives us the right offer that’s good for our investors, we are there to see it and if it makes sense…

Matthew Gordon: Yes.

Serafino Iacono: We’re not here because we need a job. We’re here because we want to make money. So if that happens… But right now the strategy that we’ve taken in the next few years, it’s going to be growth, and eventually acquisition of other properties. And we are very much considering of one point from we feel comfortable in the next few years, a dividend payment because this is going to be great. Putting a lot of money out.

Matthew Gordon: You use a phrase in your presentation, just gonna finish off, using a phrase, ‘stay disciplined’. Now you’re a businessman with lots of interests outside of mining. So how do how are you going to maintain discipline for this company?

Serafino Iacono: The discipline comes from the management team. That’s why my partner and I choose always to be in the chairman position. And although we are executive, we look at the big picture. We bring good management, strong management that have the capability of executing. And when we see that the execution gets a little bit wild, we have the strength and we have the position in the company to come back and bring everybody to Earth

Matthew Gordon: And move quickly?

Serafino Iacono: And move very quickly. That’s what we do.

Matthew Gordon: Hands on management. I’ve enjoyed hearing that story. It’s the first time I’ve heard this. You’ve done exceptional work in the last few years to bring it up to where it is today. Look forward to hearing more about it seems like if you make something through London please come and see us.

Serafino Iacono: Thank you very much.

Matthew Gordon: Thank you very much indeed.


Company page: http://www.grancolombiagold.com/Home/default.aspx

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Margaux Resources (TSX-V: MRL) – Investors Love Multiple Liquidity Events, Short-Cycle Focus Strategy (Transcript)

We had the opportunity to interview Steve Letwin of IAMGOLD, Advisor & Shareholder of Margaux Resources (TSX-V: MRL) joins us to discuss their assets, team and their new look strategy.

  • Short-cycle focused – no wasting money on elephant hunts, just steady returns after 2-3 years.
  • Concentrated, shallow deposit – No over burden, practically zero strip ratio.
  • Immediate Resource +1Moz Gold 43-101.
  • Close to all infrastructure required.
  • Own Gold processing Mill.
  • All permits in place on 60,000 hectares.
  • No First Nations issues.
  • Pre-Feasibility can start by end of year.
  • Minimal risk, short-payback, small capital.
  • Will get the Canadian valuation premium.

“You’re going to get your money back very quickly. That’s what Margaux Resources Is”.

Click here to watch the interview.


Matthew Gordon: We are joined today by Steve Letwin. How are you?

Steve Letwin: I’m extremely good Matt. How are you?

Matthew Gordon: Not bad. Not bad. You’re over here. You’re busy with IAMGOLD and also you’re telling the Margaux Resources story.

Steve Letwin: I am.

Matthew Gordon: Why don’t we start off and get a little back drop for people new to the Margaux story. Why don’t you give us a 2 min overview.

Steve Letwin: Sure well Margaux really originated… it was a shell company in the oil and gas side. And just a little background about myself. In the 90s, I sold an oil and gas company to a group of Hong Kong billionaires, five in fact. And that sale went extremely well and they did extremely well. Made a lot of money. I was in about 1992 to 1995. And I stayed in touch with them after that, and when I left Enbridge. I was with the Enbridge companies for 12 years. I ran their international and US. They reached out to me. So these same billionaires who had had this positive experience, said look at we’re looking for some Tungsten, Zinc opportunities. And we wondered if you could give us a hand. I just moved into the mining space with IAMGOLD. And we found this opportunity in Southern BC. near Nelson. A property that had Zinc. It was former Tungsten producer, and we looked at it and we decided to use this old oil & gas shell and created the company called Margaux. And the idea was, these billionaires out of Hong Kong, were looking for supply other than China for some of the South Korean computer companies. So the genesis of Margaux was really tied to Tungsten /Lead /Zinc play. The Tungsten… a couple of years later crashed. The prices dropped from $600 to $200. and the interest in Tungsten waned but the Hong Kong investors had been very supportive had kept the company alive. And we started to look around the property for opportunities to get into precious metals, because it was a very prolific Gold area. So Sheep Creek, as an example, had produced somewhere around 800,000 ounces of high-grade Gold. And so I’d been with IAMGOLD. My brother Jim is the chairman of Margaux. I’m not on the board of directors but I’m a significant investor, have been since day one. In total I think our family now owns around 11% of the company. And the Hong Kong China connection has always been very important to us. They’ve always been extremely supportive. They probably in total own about 38% of the company. And as we developed our properties down in southern BC. We came across this, what I would call extremely attractive opportunity to put the Cassiar property which is located in the North East part of BC., together with Margau. And coincidentally, or not so coincidentally, this property had been driven by real estate investors out of Hong Kong, who had put a lot of money into the drilling in the middle of the Gold bull cycle. So 2007 /2009, they put a lot of money into drilling, had produced a 43-101 and we’re looking obviously forward to probably bringing it into production. Because it was over 1Moz of identifiable Resource  both low-grade bulk tonnage, and high-grade narrow vein, Oregenic formation. So when you look at when you looked at this, and we looked at it, and the fact that post 2012, we went into a bear market for Gold. The investors in Cassiar said, it would probably make a lot of sense to put these two together. And we had pitched this to them. So very fortunately for them, and for us, we now have an extensive land package between the Northern part of BC, the Southern part of BC, with a lot of Gold prospectively. My brother runs a very good organization. He’s a very successful entrepreneur. He ran his own company for 40 years. He’s got a very strong board. He has a very strong technical advisory group including Chris Stewart, who was formerly Kirkland Lake and now with is now with Rob McEwen. So this company is very well managed. Tyler Rice, Linda Caron. Strong technical support. Strong investor support, out of Asia and Canada /US. And when you look at it, it’s in my opinion, it’s got fantastic upside.

Matthew Gordon: So why do you say that?

Steve Letwin: When you look at our Resource compared to some others, and the location. It’s not in a remote area. It’s very accessible by car. It’s right off the highway. Whether you’re looking in the Southern part of BC., or Northern part of B.C.. The infrastructure surrounds it. It had a mill on the property on the Cassiar property. It’s got tailings, which are worth quite a bit of money. They’re running at about 1.2g/t in terms of recoverable Gold. So we’re in this market and you know it well, where it’s very, very difficult to get investor interest in Gold. I just happen to believe that when the US. dollar starts to weaken, because it’s been on a run for like 10yrs and the Gold price starts to move, and we start to see generalist investors coming back into this space, like they were between 2009 and 2012. I think this particular investment, $0.07 a share right now has the opportunity to move up exponentially.

Matthew Gordon: Ok. Thanks for that summary. I’m gonna go step back a bit though.

Steve Letwin: Sure.

Matthew Gordon: You ran a very successful large oil & gas business.

Steve Letwin: I did.

Matthew Gordon: Sold to the Chinese. Right. You retired effectively. I’m told. Maybe not. You’re here.

Steve Letwin: Everybody in the family became better off.

Matthew Gordon: Let’s put it that way.

Steve Letwin: My daughter’s and my son…

Matthew Gordon: Well put. So you need to work again. You then got in IAMGOLD, back in 2011 that sort of timeframe right. That’s a huge Company, a billion dollar.

Steve Letwin: Two.

Matthew Gordon: Two Billion dollar plus company. That’s a very different environment to small cap. So what I’m intrigued by, because with your vast experience of, not only the energy side running big companies, but now IAMGOLD, running big companies. What’s attracted you into the junior mining space? And then why specifically this deal, at this time? I mean surely you’ve done enough?

Steve Letwin: I’ve always been attracted to the… what I would call the entrepreneurial side. And let me be perfectly clear here. There is no greater priority to me than IAMGOLD. Ok. I am the largest independent shareholder of IAMGOLD. I hold 1.4M shares of IAMGOLD. And so I don’t want to mislead anybody. The most important thing to me are IAMGold shareholders. But Margaux is, and will be a huge priority for me. A) My brother is chairman of the Company. B) It’s been an investment with my partners in Hong Kong for about 9yrs now, since I’ve been with IAMGOLD. So this relationship I have with these Hong Kong investors is very important to me. And when they asked me to find these opportunities, and I won’t bore you with details, but this is one of probably 5 things that I’ve done since I did the oil & gas venture. And they have hit home runs with every one of them. So we had an Internet site that.

Matthew Gordon: They being the Hong Kong group.

Steve Letwin: So you know we had an Internet based company. We’ve had investments in infrastructure. We’ve had investments in the hotel business. These individuals have done extremely well. And so have I. When I went to the IAMGOLD board of directors I got approval to basically go out and do other things. They think it’s a good thing. It’s good for self-development. It’d be no different for you Matt, if you had other interests. So I’m very attentive to this. I’m a huge supporter of it. I think it has huge upside. And I put time into it, which I have approval to do so. But I never let it interfere with the objectives of IAMGOLD. I have a lot of skin in the game with IAMGOLD.

Matthew Gordon: That’s well understood and a point well made. And that’s fair enough. What I’d like to get at with regards to Margaux, is you’ve made an intellectual commitment to Margaux. You think this is.. this could be something quite special right?

Steve Letwin: Yes.

Matthew Gordon: And that’s based on what? Feedback from your technical advisors?

Steve Letwin: Well I’m a commercial guy. But let me just describe this for you. You have a huge land package. Where you have a 2009 43-101 Certified Resource. The only reason we have to recertify it, is because we’ve changed the name. So we twin 2-4 holes. We spend probably in total $1M. And we have on the books, probably around 1.2Moz @ 1g/t. Near infrastructure. You compare that to other Resources around the world. Africa, which you said you’ve had some experience with. I have a lot of experience with Africa. This Resource is worth in the hundreds of millions of dollars. So it’s one of those things where I don’t need to be a geologist. I don’t need to be an engineer. I can do the math and say to you, this is territory that’s completely free of any kind of burden. We have no First Nations issues. We are next to infrastructure. We’re next to power and all we have to do right now with new investors, and we’re getting new investors as we speak, is recertify the Resource and we can go to a previous Pre-Feasibility Study (PFS) quickly.

Matthew Gordon: What’s quickly mean?

Steve Letwin: Well I would say as soon as we have the Resource identified here, and recertify in July, we would move to do that in the next three months. So it’s a very attractive opportunity.

Matthew Gordon: It’s an interesting model you’re employing. You know because you’re saying, ‘Okay we’ve got an historic Resource, just over 1Moz at a cut-off grade of 0.5g/t.

Steve Letwin: 0.5g/t.

Matthew Gordon: That’s right. So, and you’ve also got this tailings project which is about 600,000 tonnes of 1.2g/t. You can do the maths on that too. You can work out the potential Nett cash flow contribution could be from that. So there’s some exciting things there, but it’s your view of this district wide asset which interests me. So I know you’ve got commercial acumen. You got it in spades. But who’s the technical adviser saying, ‘well actually I think you’re right. You got 60,000 hectares. It’s a lot of land, in that area well known for producing Gold. Mixture of bulk, low-grade and chasing high-grade veins throughout the properties as well. So who’s telling you that what you think is correct technically.

Steve Letwin: Well we have on our advisory board, Chris Stewart.

Matthew Gordon: Tell me about it bit about him. Obviously some big names there.

Steve Letwin: Chris has had a huge amount of experience, more underground, but certainly open pit experience, which we’d have a combination of here. Table Mountain would be more the underground high-grade mineral vein and then the bulk tonnage would be a Taurus. But Chris has superb technical experience 30yrs of experience. Latest being at Kirkland, now is with Robert McEwan. And then Linda Caron, who is with Kinross for over a decade, is probably one of the strongest technical people that I’ve experienced. And below her, are a number of geologists and engineering types that bring with them probably cumulatively over 100yrs of technical experience. So and we’ve I like to what I call stress test things. So and I trust these people. Totally.

Matthew Gordon: Tell me about a stress test?

Steve Letwin: Stress test means I’ll bring others in to look at it. And so I’ve had some of my own, and not to name names, but they’ve come in and looked at it. And they’ve invested. So and again, they’re quiet investors, so they’re not people that want to see their names in neon-lights. But I would tell you that we’ve done our technical due diligence and this opportunity is one… and I see hundreds.

Matthew Gordon: I bet.

Steve Letwin: Hundreds. This is a phenomenal opportunity for people to get in and  you’re seeing right now, and you see it as well Matt, you see it in the environment right now where people want to believe that that US dollar can’t continue to keep rising. And when it turns, I think you’re going to see a rush of investors coming into this space. And when that happens, and you have a 43-101 compliant Resource,  sitting in a friendly jurisdiction, surrounded by infrastructure, you’re going to see some significant movement in the share price.

Matthew Gordon: You’re obviously bringing connections. The Hong Kongese. Are they following their money?

Steve Letwin: Oh absolutely.

Matthew Gordon: Are you following your money.

Steve Letwin: Absolutely.

Matthew Gordon: OK. Great endorsement.

Steve Letwin: Every raise.

Matthew Gordon: I’ve been there. Right. Okay.

Steve Letwin: And in a significant way.

Matthew Gordon: Right. OK. So if we look at the assets. You mentioned Cassiar which is a recent acquisition… that that’s closed now isn’t it?

Steve Letwin: That’s closes June 20th. So it’s all been approved.

Matthew Gordon: All but for the ink drying on the paper.

Steve Letwin: It’s the TSX.

Matthew Gordon: Got it. Okay. And Sheep Creek. So what’s the focus going to be?Because I don’t know how much cash you’ve got at the moment, but you probably probably got a day some kind of raise to be able to see out the rest of the year?

Steve Letwin: Well we have that on the Cassiar side,we have Shijin which is a large operator.

Matthew Gordon: Well known. So why don’t you tell people about them, because that’s quite a big name.

Steve Letwin: I know Shijin and well. They not only have a fund that they operate out of Hong Kong right. They’re one of the best Chinese operators of Copper and Gold in the world. I’ve known them for as long as I’ve been at IAMGOLD. So they’ve been part and parcel of this Cassiar here. So to ask you where were we sequencing. Well logically the first thing to do is to re-certify the 43-101. So Shijin in has committed to this raise. And I would tell you that it’s a significant participation. We were just in Hong Kong a week ago. Linda Caron was there and they committed. We have another party in Beijing that’s significantly committed. So we have enough funding right now to move to the 43-101 recertification. Once we’ve completed that, then we would move to the next phase of developing the tailings. The tailings have a $22M-$25M top line revenue number. We don’t have enough information Matt to say, what is the $25M.

Matthew Gordon: What’s the net?

Steve Letwin: Right. But let’s just let’s assume that it’s a 20% recovery. OK. So call it $5M Canadian

Matthew Gordon: You’d take that. Right.

Steve Letwin: That will fully fund additional exploration on Taurus, on Table Mountain, on Sheep Creek. And you know go blue sky for a minute. You could easily see somewhere around 3Moz in this region. That we could identify, that we could put through a mill.

Matthew Gordon: Which you have?

Steve Letwin: Well we have a small mill.

Matthew Gordon: But that’s not the right type of mill.

Steve Letwin: It’s not the right size. And it was there to produce cashflow.

Matthew Gordon: Is there any value to that? Book value or otherwise?

Steve Letwin: Honestly transparently I would say very little.  But it’s there, and more importantly, once you’ve produced.. and you know this. Your ability to get permits is much easier. So we’ve had the exploitation permits. We have the exploration permits. We need to do some work to get back to exploitation and to be a producer. But once you’ve done it, and everything’s in place, it’s far easier to get it through than if you were starting greenfield.

Matthew Gordon: I understand that. So just finish off the tailings quickly for me. So is that something that you would do? Or you would outsource? Or JV? How does how do you process that?

Steve Letwin: We have no expertise.

Matthew Gordon: So you bring someone in?

Steve Letwin: We would go outside.

Matthew Gordon: So you’re you’re going to take a revenue share off the back of whatever.

Steve Letwin: Here’s the challenge and here’s the question. We have a third party who has put an offer on the table to develop the tailings. Are we better off going to a third party contractor to do that ourselves with an outsource body. Or are we better off lay the capital associated with the tailings, and let them take most of the profit.

Matthew Gordon: Discussion, discuss.

Steve Letwin: Discussion. But our first priority has to be the 43-101 and again you have 300 juniors out, there that don’t have anything close to having a certified, 1Moz deposit, in friendly jurisdiction, that’s close to infrastructure. So once we have that, our view with a little luck on the Gold price, which may or may not occur, that our ability to raise money at a higher share price, which is obviously less dilutive, will give us the ability A) to explore more there and B) to move ahead of the tailings, which will be a self-funding model, where we don’t have to go out and dilute our current shareholders. We sell the recoverable Gold. We use that to fund the exploration. The G&A for both our sites.

Matthew Gordon: So is if I look examples of other companies that started where you guys are now, Canadian focus. I will look at something like a Osisko. Same place as you, early 2000s. They’ve gone through a process, but as time it’s taken them a long time to get to where they are. I can’t remember what it sold for?

Steve Letwin: Malartic. Four billion!

Matthew Gordon: A big number right. It’s a good day at the office when that happens.

Steve Letwin: Who cares if it was 10yrs, I mean $4Bn, from $0.03.

Matthew Gordon: So you’ve got an understanding of what, you clearly know them, of the strategy that they followed. Is yours literally a cookie cutter approach to that. You say well we can replicate that, because it’s a similar Oregenic ore, it’s in a similar district.. type district, it was Timmins. Are you just following that model, it’s already well established and well done, or have you had to think about how you go about managing and developing this asset, with the cash restrictions that it has on it now. I mean how do you go about that? What’s the thinking?

Steve Letwin: Well Sean Roosen, who I know extremely well, and I’m a huge fan of, is a master after 40 years in the business of being able to raise money and then turn that money into great returns. And I would tell you his focus and it’s the same focus I had in the oil & gas side, it doesn’t matter. I would call it a short-cycle focus.

Matthew Gordon: What does that mean?

Steve Letwin: It means that you’re going to look at paybacks that are in the 2-3yrs range. You’re not out there looking for pachyderms. You’re not elephant hunting. We have an identifiable Resource close to infrastructure. We’re not spending $200M in Argentina, building a road and a power line, like Barrick has to do. We’re looking at a very concentrated, very shallow deposit, 100m to 150m.

Matthew Gordon: So very shallow. Wow. Strip ratio. Fabulous.

Steve Letwin: Close to zero. So boom, boom, boom. Investors don’t want to hear, at least today, about pachyderms. They want to hear, ‘how quickly can you turn this?’

Matthew Gordon: So you’re saying, ‘We’re going to identify a series of baby steps’. It may be in 10 or 15 year, but you say we’re gonna do some baby steps to get to where we need to be. At those points people can make decisions obviously whether they stay in.

Steve Letwin: Yes.

Matthew Gordon: Or cash in.

Steve Letwin: Yeah right. I’m a huge believer in liquidity events. And we want to create, not one liquidity event, we want to create multiple liquidity events. So that Matt as the investor will look at this and say, ‘I’m put in at $0.07…

Matthew Gordon: I got options right. That’s what I want.

Steve Letwin: I put in $0.07 cents at 21 cents during one out. Or do I want to harvest a little bit and leave some in. Get my capital back and take a free ride on that option, given more I think this might go. So that’s the strategy.

Matthew Gordon: Okay. So that you’re clearly a commercial guy, because that’s very much focused on what’s dear to shareholders wants, which is share appreciation. That’s the business right. You just have to be mining.

Steve Letwin: Right.

Matthew Gordon: Now if I look at some other Canadian players who are sitting on large numbers, in terms of Resource and Reserve. And they’ve spent tens, hundreds of millions of bucks, drilling to get those numbers up, but … and they’ve got some cash. You know they’re not strapped for cash, there’s no fire sale imminent. But I don’t see the next step for them. But they’re in the sitting on 5Moz-7Moz. I mean, you’re talk about these people these baby steps, these catalyst events, have you have you thought about what you need to be?

Steve Letwin: Absolutely right. It’s what I outlined. Look you don’t want to have to be sitting waiting for the next bull cycle. And these guys that have these large deposits, with huge capital commitments in front of them, have to wait for the next bull cycle. And if they don’t get the bull cycle, they will…their cash erodes. And right now you know the market better than anybody. Go try and raise equity right now. Unless you’re a cannabis player or a tech player. Nobody’s interested in giving mining guys any kind of money right now. Mean we’re very fortunate because we have Asian investors. When I go to Hong Kong, let me tell you the difference. OK. I go to Toronto. You can’t buy people coming to the conference. You go to the Scotia main conference. And I know it’s a great conference..

Matthew Gordon: Good people.

Steve Letwin: Three people show up. You’re looking through the lights to see who’s in the audience.

Matthew Gordon: But what’s happened? Have people got exhausted or they’ve been burnt too many times? Or is it just as simple as there’s nicer shiny and more profitable projects cannabis etc. out there right now. But what’s what’s gone on?

Steve Letwin: Ten the ten top Gold companies total market cap $121Bn. The top five cannabis companies after two years, $88Bn. You tell me what happened. All the risk capital in Canada has gone into cannabis. Look you can’t find capital… if you put a cannabis play out there right now. Before this used to be like this in Gold, before you walk in the room…

Matthew Gordon: You’re done.

Steve Letwin: They’ve written cheques.

Matthew Gordon: Well I kind of hope so. I’ve an investment myself in the space, but you know asset as a blended portfolio approach to investing, if you’re lucky enough to have some cast invest, you need to kind of look at different options. You can’t put all your eggs in the Gold basket, or necessarily the mining basket. You spread it around bit. And I get the cannabis story in any blockchain and Bitcoin et cetera, and and then will come off a bit. There’s some sanity has prevailed. Do you think that mining is still a relevant investment class? Let’s start with Canada, because you know Canada. So are people still thinking about it, or anything coming back into it?

Steve Letwin: Not yet.

Matthew Gordon: Not yet, still away.

Steve Letwin: Which means it’s a good opportunity. I don’t have a phone here. It’s over there.  I’ll hold my phone up and say there’s Gold in this phone. There’s Tungsten in this phone. There’s didymium in this phone. You name it.. it’s in this phone. What people are not connecting the dots to is, mining is here forever. And the valuations in mining are so attractive right now. You have PNAV’s price. 0.3, 0.2, 0.5

Matthew Gordon: It’s a tough time.

Steve Letwin: You’ve got a cannabis company trading at x800 revenue. I think, I think, to your point do I want a balance here. Because I think I want to hedge. A) I want to hedge against the U.S. dollar. B) I want to hedge against a cannabis investment / a crypto investment. And you can do it pretty easily.

Matthew Gordon: Yeah I think that’s right.

Steve Letwin: That’s the logic to me.

Matthew Gordon: And I would agree with that. And we advocate to our subscribers that they need a blended approach to this because you know the stories aren’t always true, and things don’t always turn out the way that people say they’re going to, so you need to… a bit of hedging is a smart. We’ll bring it back to Margaux if we can. Margaux is a small company. You’ve seen a lot of deals, but you approximately that Hong Kong guys and they said right… And this is the one you picked. And this is the one, I get IAMGOLD is your number one priority, as it should be, it’s a big company, and you hold a lot of stock. But this project is, as far as you’re concerned, is one of the better junior projects that you’ve seen all of its kind in Canada? That’s why you’ve gone for it?

Steve Letwin: Absolutely. And I’m not going to sit here and throw a bunch of hubris. We’ve had five, extremely successful investments with these investors. And they’re very private people. And they don’t come back unless you’re successful. And there’s an old military saying always reinforce success. And what I’m a huge believer in, and I’m a huge believer in Margaux and the people, and the technical support, my brother, who is a fantastic leader, is reinforce success. We will have success here. And this is not like, you’re at the craps table rolling the dice. We have a certified 1Moz deposit. that just needs to be re-enforced. That’s it. And that’s why I think, when you compare it to hundreds of investments out there that require, I would say a challenging permitting, that are far from a 43-101 certificate. This stands out. This stands out.

Matthew Gordon: Yeah. I’d agree because, we finalize this right here. We’ve looked at a lot of moving parts. You, Chris Stewart, Shijin. The fact you’ve got historical Resouerce… it’s not even that historic, it’s 2009 right. Quick, cheap to get that back up. You’ve got the tailings.

Steve Letwin: Correct.

Matthew Gordon: You’ve got a lot of infrastructure sitting there. You’ve got water, power, road you got… in a safe jurisdiction. There’s a lot to like about it. $5M market cap though. Is that just a factor of the spot price for Gold? Or is it just you’ve only just started telling the story? I mean what what do you think’s….

Steve Letwin: What was the market cap of Gold Corp in 2000?

Matthew Gordon: I have no idea.

Steve Letwin: $62Bn.

Matthew Gordon: $62Bn.

Steve Letwin: What was was the market cap when it sold?

Matthew Gordon: Don’t know.

Steve Letwin: $15Bn

Matthew Gordon: $15Bn

Steve Letwin: Ok look.. look this ravaging which has gone on, and is consistent across the board. It doesn’t matter what company you look at. It’s been completely destroyed. And it’s been destroyed, and we haven’t helped as an industry, because there’s been a lot of missteps. We’ve seen value destruction with big projects that have gone South.

Matthew Gordon: What you mean by value destruction… shareholder value …?

Steve Letwin: Yes fair shareholder value because a mine hasn’t been what they thought it was going to be. And big bets were made when the bull market was at its peak. You had a lot of money going after, what I would call stupid things. And you had that happen in the oil business. You’re having it happen in the cannabis business.

Matthew Gordon: It’s been a reset in Canada.

Steve Letwin: And we all remember dot com. So all I’m saying to you Matt is look, we are now being punished for the sins that we committed and we committed sins. And that usually means there are opportunities, and you learn from those mistakes. What did I learn from my 28yrs in oil & gas and 10yrs in mining. Focus on short-cycle economics. Stay away from long-cycle investments that take 10yrs to pay back, huge capital commitments, and as a result of being out there over time, high-risk. Minimize your risk. Short and short-time, short-payback, small capital. And if you do happen to have that bull-cycle start and you’re gonna get your money back very, very quickly. That’s what Margaux is.

Matthew Gordon: That’s I think that’s a fantastic way to end this, because it’s not just the money and the connections you’re bringing that kind of thinking.

Steve Letwin: Right.

Matthew Gordon: I appreciate that summary. Thanks for telling us the story. Next time you through town come on update us.

Steve Letwin: Thanks.


Company page: https://www.margauxresources.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. We provide paid for consultancy services for Margaux Resources. 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.

Corvus Gold (TSX: KOR) – 121 London Mining Conference (Transcript)

We were joined by Jeff Pontius, CEO of Corvus Gold (TSX: KOR) at the London 121 Mining Conference. See what he had to say.

Click here to watch the interview.


Matthew Gordon: We’re here today with Jeff Pontius. He’s the CEO of Corvus Gold. How are you?

Jeff Pontius: Good.

Matthew Gordon: And welcome to London.

Jeff Pontius: Thanks.

Matthew Gordon: So you’re attending the 121 conference. How’s it going?

Jeff Pontius: Really good. It’s a good investor base here and we’re having lots and lots of interaction with the investors.

Matthew Gordon: Why don’t we start off with the two-three minute version of the story and then we’ll kind of get into some questions and we’ll take it from there

Jeff Pontius: Right. Corvus is really driven around a new discovery that we have north of Las Vegas about a two hour drive north of Las Vegas an area called The Walker Lane. We did a P.E.A. in November that popped in pit resource of about 3.6Moz in four different open pits that are all centrally located. That creates a production profile of about 2.6Moz. And most importantly over the first four years it produces at about 350.000oz a year. So this is a significant deposit for Nevada. It’s the kind of thing major mining companies really want to get involved in.

Matthew Gordon: Right. Nevada was a prolific Yeah. I mean who are the neighbours.

Jeff Pontius: Well this area of the Walker Lane has produced about 100Moz. Ken Ross is the nearest neighbour to us with the Brown Mountain project to the north produces about a 0.5Moz a year. And of course in northern Nevada we have Newmont and Barrick. Now the Newmont Barrick JV

Matthew Gordon: Okay. So tell us a little bit about the numbers around this year and actually a bit more useful conversation.

Jeff Pontius: Yeah really for us it’s one of these projects that have a relatively low cash cost associated with it. The first four years are running under $600 an ounce. Life of mine project everything included is about six eighty. What’s really most important for us is we have some very important neighbours around us. Just to the south of us is core mining who just bought our neighbour for about $100M. And that’s very encouraging for us. It was really about a $120 an ounce of contained and then most importantly to the north of us is Anglo Gold, who have a brand new discovery of the silicone deposit and Anglo actually now has moved their ownership of Corvus up to 19.9%.

Matthew Gordon: Okay. And what about the numbers, the market cap today?

Jeff Pontius: Market cap today we’re trading at about $120M US. And then if you look at the share price it’s probably about $1.25 US.

Matthew Gordon: What’s that done in the last year?

Jeff Pontius: Actually it’s done quite well, it’s gone up quite a bit although over the last four or five months we had a big investor that sold a block of stock and that traded through and so we are seeing a bit of a depressed price right now. So it’s a great opportunity time.

Matthew Gordon: It is, and the cash?

Jeff Pontius: Cash we are about $5.5M, which fully funds our exploration program for the next 12 months.

Matthew Gordon: Right. And then what was it looked like after that?

Jeff Pontius: After that we’ll probably end up in a process of raising money again. Typically Corvus is unique. We’ve never done a bank deal never done a brokered deal. We’ve never issued a warrant. So we’ve raised all the money for Corpus with key shareholders under private placement. And actually right now we have Anglo at 19.9%, we’ve got Tocqueville who’ve now moved their position up to 19.3% top the gold fund out of New York. Vanek is now up at 9.8%. That’s Joe Foster’s managed accounts. Our management group we bought those same deals in the market and we have about a little over 7% of the deals.

Matthew Gordon: Why are you on the road?

Jeff Pontius: We’re really out there communicating our story. Since we’ve never done bank deals or broker dealers, we don’t get a lot of coverage. So Corvus continually goes out and meet shareholders. We have a big shareholder here in London rougher the rougher group who’ve been adding to their position recently. So for us it’s important to get out meet those shareholders keep them up to speed and try and communicate with new shareholders.

Matthew Gordon: Right. So you’ve come to the one to one conference, I think is a great conference one of the better ones for sure. What type of investors you mean… You’ve got a bunch of institutional guy rough, we know, family office. But you’re talking to retail?

Jeff Pontius: Yeah. We have a big retail holding predominantly in the US. About 75% of our shareholders are US. And we do reach out to as many retail shareholders as we can. And those are important guys for us because they come in and follow the company closely and and watch as we progress the company along.

Matthew Gordon: And drives a bit of liquidity and volume but it’s about driving that share price. Because it’s been a rocky ride for gold this year.

Jeff Pontius: Yeah it’s been tough for juniors in particular and very difficult to raise money but you know Corvus is lucky in the fact that we’ve we’ve had it probably easier than most as we’ve gone along.

Matthew Gordon: Yeah I think that’s for sure. I think, have you seen in North America the lot of the  institutions are kind of pulling away from juniors because they’ve sort of, they need the liquidity. You’re $120M which I guess gets you over that $100M hurdle.

Jeff Pontius: Yeah that’s true. We’re lucky we don’t have a lot of Canadian ownership. We’ve seen the funds in Canada be suffered from a lot of redemption driven selling. So you know we’re fortunate in the fact that we’ve got some pretty solid funds behind the company that aren’t facing those challenges like the typical Resource Investor would be in Canada

Matthew Gordon: And do you see the issues that you face with regards to this fluctuation of your share price is that, well first of all is that a fair description? But secondly I mean, do you put that down entirely to price, or would you put that down to your actions of 2018?

Jeff Pontius: Well, I think that a lot of it is driven purely by the overall dynamics in the gold sector. We’ve certainly seen a pullback in the junior sector in gold. Even though gold price is quite good from our project that’s all modelled at 12.50 and produces 580M after tax 5% discount NPV at 38% IRR, gold price seems to be a bit of a labour on the junior sector and I think until we see gold move up to the $1,400-$1,500 level, we won’t get back in that bull gold market again. So I think it comes part and parcel with the overall sector.

Matthew Gordon: So where’s that sit with your strategy? I mean what are you planning? I mean you’re fully priced at 12.50, that’s fully priced right? So, $1,400-$1,500, when’s that coming down the line?

Jeff Pontius: Well see I don’t predict gold price anymore so it’s one of those things that I try not to reach out for. Corvus is probably going to be a transaction. Our big shareholder AngloGold has a new discovery just north of us. They look like district consolidators. They’ve said some very favourable things about Corvus in the press and so I have a feeling that the Corvus shareholders are probably going to, even if gold price stays fairly stagnant, now benefit from a premium takeout deal probably within the next 12-18 months.

Matthew Gordon: So but someone like AngloGold they’ve got options. They’ve probably got options on a bunch of different companies right?

Jeff Pontius: They do. They they have said publicly they really want to re-enter North America. And I used to be the North American exploration manager for Anglo, in fact most of our players are ex-Anglo. And so we know that these guys really would like to come back to North America. When they sold Cripple Creek that was not something they really wanted to do they sort of had to do it. So I think that you’re going to see those guys re-enter and the current CEO is very experienced with Nevada. Kelvin to Shinseki and Kelvin is a big fan of Nevada. So this is their Nevada play.

Matthew Gordon: This is the one?

Jeff Pontius: This well this is the only one they have.

Matthew Gordon: Right okay. Because you’re saying there has been recently someone say well known one. A lot of consolidation in this market. There’s more to come.

Jeff Pontius: Probably yeah

Matthew Gordon: So if Anglo don’t step in for whatever reason, what are your options? What are you planning for?

Jeff Pontius: Well what we’re doing right now is developing a project that could be developed in stages. We put out the P.E.A. built around what an Anglo Gold or Newmont would want. And so what we’re doing right now is we have an oxide option that would be phase one and that would be a lower capital project somewhere around 100M as opposed to the 450M that this project is right now.Produce about 120,000oz a year. But high margin. So there’s a lot of groups that are interested in that scale of project and so I think that’s… we’re doing a lot of exploration work right now on new discovery targets. They look very encouraging to me. We should be seeing some news come out this summer on several of those. We’ll see how that goes. But I think that we’ll create a project that could be an early start type oxide project that would be probably more suitable for the mid tiers.

Matthew Gordon: Right, but if you’re building this thing out for AngloGold, you know the way they want it. So you’re preparing it that way. Don’t you get the Anglo Gold discount?

Jeff Pontius: Well we’ll see. Right now it would be an Anglo Gold Premium for us. So, because remember our market has a NAV on it right now of about 550M and our market cap is about 120M. So there is opportunity for us here to have definitely… it would translate into a premium for us I think.

Matthew Gordon: That’s interesting. So do you think there’s room for people like well for retail high net worth family offices to step in here,or is it… you guys are building this for Anglo. You’ve got a bunch of institutional money. I mean why should they pay attention to you?

Jeff Pontius: Well I think it’s a great opportunity for investors that want to be involved in the gold sector to buy in to a more leverage deal than buying say a Newmont or a Barrick or something like that, that would give them certainly more leverage and give them an opportunity for more exploration growth down the road. So I do think it’s a good opportunity. And the share price right now is at a very favourable level compared to what it’s been over the last say six or eight months.

Matthew Gordon: Well that’s an interesting point you’re making. You say “if people want to get into the gold space”, is mining still a relevant investment class?

Jeff Pontius: You know I think so but I’m an American and I see a lot of risk associated with the current market. We’re in the broader market.

Matthew Gordon: What do you mean by that?

Jeff Pontius: That you know the general stock market looks to be highly valued to me. And it looks like there could be an opportunity for a major correction not a 10% but more like a 20%, 30% maybe even 40% correction. And in those times as we’ve seen in the past you want to be holding things like gold. And so I think it’s a smart investment for certainly high net worth types and groups that are looking to diversify their exposure to the overall market.

Matthew Gordon: Do you think that that idea of you know safe haven, gold was safe, do you think that concept is understood by millennials or younger investors perhaps haven’t seen a few of these cycles. Is the Western investors, is that a thing anymore?

Jeff Pontius: You know I think it is because in my day when I was the millennial I didn’t understand it either. I didn’t invest in it and so I think when you look at the more strategic investor that looks further down the road – there’s always those people in the market. They represent most of the value in the overall market right now. So I think, yeah, there is an understanding that you need to have diversification in your assets.

Matthew Gordon: And essentially there’s a bigger discussion there.

Jeff Pontius: Yeah, probably

Matthew Gordon: I think I’m not sure if I’ve heard an answer which works but generally of the conversations that we’ve got, it’s a difficult one. And so do you think mining needs to do a better job in terms of trying to tell that story?

Jeff Pontius: You know I think mining companies are doing a better job right now running their business and that’s going to translate in to better dividends and better delivery for the shareholders that own their shares. And I think that’s what we have to have in the future. Certainly if you’re developing a project in a place like Nevada where we are it’s much lower risk and greater opportunity you have as far as being able to generate significant cash from that mining opportunity as opposed to maybe some riskier places in Africa and places like that. So I think we are going to fix that in our sector and we’re going to deliver value. If gold price goes up a couple hundred bucks, there’s going to be some very substantial dividends paid and I think this time around, hopefully, the mining companies don’t go blow all that money and they actually give it back to the shareholders which is what they should be doing.

Matthew Gordon: Yeah I mean that’s a tough one there’s no ifs and buts. If it goes up $200, it applies to lots of different things, but if it doesn’t do that, you guys see yourself best placed to maximise these assets that you’ve got in Nevada… safe jurisdiction you kinda got the American premium here as it were with the potential bar sitting on the shareholder register. it’s a question of between now and then delivering. So what are you going to be delivering this year and next?

Jeff Pontius: So what we’re delivering right now is continuing our new discovery exploration work. we’ve just done a resource expansion drilling program on our motherlode deposit which is actually the largest…

Matthew Gordon: Great name.

Jeff Pontius: Great name. its our largest deposit we have. So we will update that resource base it looks like it’s gonna be a significant addition to that. But what we can really do is we’re in an under-explored district. And so what we’re doing right now is testing some of these new discovery ideas and there are significant surface anomalies that we’re testing. We start delivering on those assets, like we have over the past five years on the other discoveries that we found in this district, then I think we’re going to continue to put the pressure on and keep moving the value up for our shareholders. At the end of the day I mean our Management Group owns a little over 7% of the stock. We bought that out of the market. We participated in the financing. We’re shareholders like everyone else. And that’s why we don’t give warrants that we get our value out of the share price at the end of the day going out the door at the highest possible price.

Matthew Gordon: So who on your team is managing this balance between looking after the company, driving the company forward, managing those risks. A lot of moving parts, a lot of risk, and actually driving the share price. Those are two very different skill sets. How do you manage that? How do you balance that?

Jeff Pontius: We have a pretty good team. We have our technical team that’s driving the asset value and bringing it along and crafting the actual project that is going to be of the highest possible value is a good team. I’ve worked with for years from AngloGold. We just brought our new chairman and who was the chief operating officer for AngloGold Ashanti until just about a little over a year and a half ago. Ron Largent a great guy. And our actual marketing team we have two guys that do that and they stay fully engaged with our shareholder base on a regular time so that we keep everybody apprised of what’s going on on the project and what we’re doing and how we’re spending their money. Remember the shareholders buy our stock that… they give us money and we have this, then spend it.

Matthew Gordon: You’ve got to spend it. But you’ve also got to drive the share price and that’s how they make money right. if shares go up, they’ve made money.

Jeff Pontius: Exactly. And that is the only measure that we have at the end of the day. There’s lots of other measurements you can do for these resource companies but really at the end of the day the key measure is: is that shareholder being able to sell his shares for more money that he bought them for? And can you give him that extra special value that comes during a transaction or a boom gold market?

Matthew Gordon: Can you?

Jeff Pontius: Yep I’m pretty sure we’re going to be able to do it.

Matthew Gordon: Great I’ll believe it. All right. Thanks for your time appreciate it. Do come back and see us.

Jeff Pontius: All right. Will do.


Company page: http://www.corvusgold.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.

IAMGOLD (TSX: IMG) – How to Think Like a CEO of a Billion Dollar Company. Steve Letwin Shares His Insights (Transcript)

Short-cycle wins, acting quickly, cost cutting, listening to investors, learning from your mistakes, $1,500 Gold.

Interview with IAMGOLD (NYSE:IAG), (TSX:IMG), President and CEO Steve Letwin. Gold Producer IAMGOLD has four producing gold mines, on three continents delivering an average annual production rate of 800,000 attributable ounces of gold. Over 13Moz of Reserves. Hear what he has to say.

Click here to watch the interview.


Matthew Gordon: Hello and welcome to our viewers on CruxInvestor.com and also our listeners on CruxCasts, our new podcast series. We’re here today with Steve Letwin. He’s the CEO of IAMGOLD. Hi Steve. How are you?

Steve Letwin: I’m great Matt.

Matthew Gordon: Fantastic.

Steve Letwin: Thanks for having me.

Matthew Gordon: Well it’s good to have you here in London right. You’re a world tour…you’re off to Africa shortly.

Steve Letwin: I’m off to Africa. I just came from our mine Suriname. I was there for a week.

Matthew Gordon: Well must be great.

Steve Letwin: It’s great. It’s a 300,000 ounce producer and growing. And no, things are very good there.

Matthew Gordon: And then where else you off to next?

Steve Letwin: I’m in West Africa. Then I’m back to Canada.

Matthew Gordon: You spend a lot of time on sites.

Steve Letwin: I spent a lot of time at the sites. I go to the sites at least four times a year. Every site.

Matthew Gordon: That’s interesting. You’re not one of these.. remote, do it on a spreadsheet kind of guys? You like to go and actually see what’s happening on the ground?

Steve Letwin: You don’t make money in Toronto. You make money at the sites. And my view is if we’re going to ask people who live at these sites, then we should be at the site. So I stay at the site. I spend up to a week at the site. I eat in the cafeteria. I drink the coffee and I listen to our employees.

Matthew Gordon: Well that’s great. You must pick up a thing or two there? You’re a big employer there I’m guessing.

Steve Letwin: Yeah. We have, with contractors, we have 2,000 people.

Matthew Gordon: Right. So I imagine the tax as well must contribute to the community.

Steve Letwin: We had we’ve been an operator there Matt for 15 years. When you consider the payroll tax, when you consider the royalties taxes from the mine. And the spin off, it’s $4Bn.

Matthew Gordon: Wow. Net contribution?

Steve Letwin: Yeah. For a country that has 500,000 people.

Matthew Gordon: That’s phenomenal.

Steve Letwin: It is.

Matthew Gordon: I didn’t realise it was that big. Well look Steve, if you don’t mind. What I usually did the start of these, we interviewed recently when talking about Margaux. Can you give us a two minute summary of IAMGOLD. I know it’s a huge company but see if you can encapsulate what it is that you’ve got there.

Steve Letwin: Well the best way to describe IAMGOLD is that it’s reinvented itself. So when I joined the company almost nine years ago, low-grade mines, in what I would call higher-risk districts. And I got headhunted out of Enbridge, where I was in oil & gas running the US operations, and international. So they liked the commercial success I had at Enbridge. So they brought me to IAMGOLD, to quote unquote reinvent it. It was struggling and we have…

Matthew Gordon: What did you come in as? Was it operational?

Steve Letwin: President & CEO.  We have a fantastic chief operating officer (COO) Gord Stothart. We have a first class, world class CFO, Carol Banducci. Jeff Snow… all these people have significant mining experience. I was the one with the Resource experience, not the mining experience. But what I think I brought, and I think demonstrated, is more the commercial side.

Matthew Gordon: Well I guessed that because one of the numbers I saw that stood out on your Web site, was the cost cutting exercise that you’ve been through. I mean it’s a big number.

Steve Letwin: It is.

Matthew Gordon: Tell people how much you cut back.

Steve Letwin: Well we were running are all in sustaining costs (AISC) The accountants use short form it to AISC, was running upwards towards $1,600 an ounce. You know when Gold was $1,800 -$2,000. We were making money. Our stock was …

Matthew Gordon: However, however…

Steve Letwin: Right. So when it turned and went south towards $1,000, we were the first movers in cutting costs. And we brought our overall AISC down to $1,050. And this was off forecasted costs growth, that as I say would have obliterated our balance sheet, our shareholders. We sold assets. We have historically carried somewhere between $700M-$800M in cash on the balance sheet. We have no bank debt.

Matthew Gordon: That’s today’s number?

Steve Letwin: Yes.

Matthew Gordon: Right. Okay. That’s a lot of cash.

Steve Letwin: Yes it is.

Matthew Gordon: A lot of dry powder.

Steve Letwin: When you look at our company, compared to any mid-tier, other 16 mid-tiers, our net cash position is the strongest.

Matthew Gordon: Why?

Steve Letwin: Well I’m 63 years old, and I say to people, I’ve been to Vietnam. And what I mean by that is I went through six down cycles in the oil business. When I had success at Enbridge, and they decided to send me to charm school. So they sent me… They sent me to Harvard.

Matthew Gordon: It worked. That’s the good news.

Steve Letwin: Nor according to other people. Thank you for saying that. So I went to Harvard for four months. I was 50yrs old and I took one thing away, which I probably already knew, but it was reinforced. Never, never run out of cash. And when you’re in a commodity business, you don’t want to even look like you’re going to run a cash, because the mezzanine financing that comes with it, the cost of it, is so destructive. The equity raises are so dilutive. You lose your company. And so when I got to IAMGOLD. And again with the help of Carol Banducci, who is a world class CFO. We’ve built that balance sheet up.

Matthew Gordon: And that mentality?

Steve Letwin: Yes. We do not…

Matthew Gordon: Because I remember back in 2012-13. Those were difficult times, when the price of Gold changed. But the mentality was, there so much money around, it didn’t matter about the little stuff. Your attitude was, well actually it really does?

Steve Letwin: I went into the Montreal office. We cut 76% of our staff.

Matthew Gordon: Quick, real quick.

Steve Letwin: Two days. Terrible times. Toronto 33% cuts, sites 26%. Brought down our costs. No one… unless you’re traveling to these remote places, you travel economy.

Matthew Gordon: So I think that’s fascinating, because when I look at large multi-nationals, or a billion billion dollar plus type companies, I know you’re a couple Billion bucks, it’s got to come from the top. That mentality of… travel economy, you don’t need to spend that. Or I’ve often heard the phrase is, if it was your money would you spend it? And quite often the answer is No. But the big company mentality… is a kind of curse, in a way. And so you came in, day one, and said right something’s going to change here.

Steve Letwin: So 2016, we were the best performing stock on the TSX. 2017 were the third best. And we started that that voyage in 2013, when we started to cut costs. Our stock went up 486%.

Matthew Gordon: Well I can I can remind you of the number. The number on your website is $175M, from 2013 onwards.

Steve Letwin: So we had a lot of people make a lot of money. You know we’ve seen a lot of Asian interest in the stock, so these same shareholders that are investors that I had an oil & gas, I would say 11% of our shareholding in IAMGOLD are these investors. So when you look at the support we have and the belief in the commitment it’s there and this is money that doesn’t turn over every day, and doesn’t turn over every month. They’re are long-term investors.

Matthew Gordon: Well I mean… maybe we can come onto that …we’ll ask about shareholders later in terms of behavior et cetera. But I just want to stick with the thinking. That’s the fascinating bit to me, and you know a lot of people. We don’t normally get access to that the thought process. So you come in, you realize that Gold price is on the way down. You’re AISC is too high. Something’s got to change. You’re making big swathing cuts. So how do you go into a large organization like yours, I mean because I think at the time… I don’t know how many billion it was, but there’s a lot of different moving parts. So how do you compartmentalize that?

Steve Letwin: Probably the best example I can give you, is when I first came to the company our administrative staff was looking to move out of the building we’re in. We’re in the old Simpson Tower in Bay and Queen Street (Toronto). And the h-vac is terrible. The offices are old. And so… and this is no criticism of who was there, because they’re gone now but they had us scheduled to move in to the TD Square. And I said that’s not happening, because we’re going to increase our corporate costs by a factor of four, by moving into these taller buildings, that have glass, more glass, and look pretty. And there was a sort of a shock. And I said look, I was born and raised on a farm in Southern Ontario. And I lived with two brothers and three sisters in a farmhouse. And when beef prices fell, you cut costs. And so it’s no different…

Matthew Gordon: Same rules apply.

Steve Letwin: Cut. And you lead by example. I flew economy. Where we could we doubled up in the hotels. We spent as much time at the camp as possible, so we weren’t paying hotel bills. If you wanted to go to dinner, you pay for the wine. I’m not signing expense reports for $400 bottles of wine, which they had gotten used to. And so all of those things…and again this was caused by the fact that Gold had gone up so quickly. People started to party and we had to stop the party.

Matthew Gordon: They lose their minds.

Steve Letwin: Yes, we have the lowest G&A per ounce of any Gold company.

Matthew Gordon: I interview a lot of junior companies. Right. And I ask them, have you got a business plan? And nine times out of ten. No. We’re going to drill holes. That’s the that’s the business plan, right there. OK. With a large corporation with thousands of employees there needs to be some rigour, organization, process. So with these departments, different apartments, and you’re going around cutting costs. Were you setting targets? I mean how do you target people? How do you make them accountable?

Steve Letwin: I learned a lesson from a fellow named Howard McDonald in the oil & gas business, when Dome Petroleum got into trouble. I was 25 years old and I got hired to be his assistant. He came from Scotland. He said to me, Steve, the first thing I want you to do is have all the expense reports audited. So when I came to IAMGOLD, I had every expense report audited.

Matthew Gordon: A few nervous people?

Steve Letwin: A lot of people that were not weren’t there a month later. The abuse that had grown into the system.

Matthew Gordon: A systematic abuse. Not unusual at that time.

Steve Letwin: No not unusual. These are these are human beings. Dental work. Trips.

Matthew Gordon: My best my best one on a set of expenses, a scuba outfit. Which was a good one. And it was an inland project. So that’s pretty good.

Steve Letwin: And we’ve carried that practice so every quarter, the expense reports of the top 10 officers are published for everybody to see. And my expense report is public information. And so the costs of the hotels, the costs of the meals, the cost of the limos, taxis. I’m not going to ask people to do something I’m not willing to do. That was the culture we started. And you know, there are good people, it’s just that bad behavior had developed, in frothy times. So when we caught all that back, we still lifted that mantra. And you have to watch it Matt because it’ll creep back too.

Matthew Gordon: It will. It’s just human nature, as you said earlier.

Steve Letwin: I’m no different than anybody. I have to check myself, and say, ‘Hey wait a minute now’.

Matthew Gordon: So that’s the cost cutting side. And as General Motors will tell you there’s only so much that you can do before goes it goes wrong. So what about the… you said to me  previously,  I you like the entrepreneurial spirit. OK. That’s a great phrase. It’s also something severely lacking in large institutions. So do you try and encourage that within your your people too, in terms of you give them some rope.  But then you obviously need to measure or set them targets, success targets. So you I mean what is the culture there in terms of what you want…we understand cost cutting. What about growth? How do they go about that?

Steve Letwin: On our Web site you will say, ‘Empowering people leads to extraordinary performance.’.

Matthew Gordon: I hadn’t seen that. That’s a great line.

Steve Letwin: And so that was the line I brought in. You know people say Well where did you get that from. I’ll say I got it from my mother and father. Because when I was 15 years old my father went back to school. We lived on a farm, had six kids. And my father had no choice but to turn the farm over to my brothers and my sisters. And we had to run this farm for 3-4yrs while he went back and got his university degree. So he empowered us. And so when I was in the oil & gas business, came in the mining business, we empower people to do… we never compromise safety, and you never abdicate responsibility. But we say to people look if you see a better way of doing things, that don’t doesn’t compromise safety. Do it. And that has been extraordinary. And the other thing that was… you you talked about cost. The other thing that was happening at IAMGOLD because of the run in the Gold price, was that we were 95% long cycle focused. So we were out.. we spent in 2012, $167M looking for Pachyderms. Looking for the deposit that was going to eliminate our depletion. It was insanity. And so we took a flamethrower to that number.

Matthew Gordon: But what was the ‘check moment’, you’re like, ‘Hey guys wait a minute. This is not working.’ I mean hundreds… That’s a lot of money? Right?

Steve Letwin: Yeah.

Matthew Gordon: So you must have just gone, ‘We need to change.’ I mean what what was that conversation? Who was that between?

Steve Letwin: It starts with the change in leadership. Where if they don’t come on side, and I was lucky that people came onside pretty quickly. We were blessed with smart, hardworking people. But we had some pockets, where people believed that they had to keep rolling the dice, or we would die. And we went to a short-cycle focus, so around Rosebel in Suriname, we started to do near mining exploration. We expanded our concession. Essakane, same thing. Westwood. And we had some focus on long-cycle, which was Cotê. And you have to have some long-cycle, but we turned it around completely. I went for a much, much more emphasis on the short-cycle.

Matthew Gordon: So I’m liking this this short-cycle idea, because it’s a small controllable steps in your evolution as it were. And clearly working. You’re sitting on a lot of cash today. You’re not spending it. Okay if I… we’ve got to bring this back to IAMGOLD regularly, but I do want to talk more about your thinking, because that’s fascinating. So IAMGOLD last year, compared to this year?

Steve Letwin: Very, very tough.

Matthew Gordon: It’s been a tough year.

Steve Letwin: We’re skating through… first quarter last year, best quarter in the company’s history. We were trading an CAD$8.50. We won the finance deal of the year at PDAC with Sumitomo. I won, which is always a curse I think, CEO of the year, highest returns for pay of any CEO in Canada, 100 CEOs.

Matthew Gordon: All good. So you are at the top of this mountain, looking down and then it hits you.

Steve Letwin: Oh God. And then we started to get headwinds at Rosebel. Third quarter was tough.

Matthew Gordon: Headwinds were caused by?

Steve Letwin: By labor issue. The guys saw how well the company was doing. And then wanted a piece of it.

Matthew Gordon: The curse of money.

Steve Letwin: Oh yeah. And the other headwind was, Gold price fell from $1,350 to $1,180.

Matthew Gordon: And that makes a difference. People need to remember, that’s a large percentage of your margin, just going there…

Steve Letwin: We are a very high-cost producer, relative to others.

Matthew Gordon: So as a percentage of your margin, that $200, that pretty much wipes out a lot.

Steve Letwin: Here’s the other thing that affects us. 35% of our shares are held by passive investors.

Matthew Gordon: So they’re sitting there, holding these things. Which affects liquidity, volume, trading et cetera. Okay.

Steve Letwin: Don’t vote. Don’t send in proxy. Don’t take meetings. High frequency traders that look at your quarterly results, and either buy or sell on it. And by the third quarter, we got hit hard. Our quarter was…

Matthew Gordon: You know who by?

Steve Letwin: Pardon.

Matthew Gordon: Do you know who by?

Steve Letwin: Oh I do. And I don’t want to mention.

Matthew Gordon: Sure, sure, sure.

Steve Letwin: But there are still shareholders.

Matthew Gordon: But you did you have a conversation?

Steve Letwin: They don’t talk to you.

Matthew Gordon: They don’t have to.

Steve Letwin: They don’t. And it’s very simple.

Matthew Gordon: You know the rules.

Steve Letwin: Yeah, they show their shareholdings. And as I say, they don’t take meetings. So they look at… we behave very well. Whether it’s high Gold prices, or low Gold prices. We have a very high volume of trading. And they love us. They model us. And if we’re not in that zone, they’ll sell us.

Matthew Gordon: And that’s what happened?

Steve Letwin: That’s what happened right. We had one quant-fund at the end of the third quarter, sell in total 12M shares, literally in a week. And oh yeah. And we dropped 21%.

Matthew Gordon: Yeah I bet. Because someone thought someone knew something.

Steve Letwin: And then you write off a circuit breaker. And you’ve been in the game.

Matthew Gordon: Been there, done it. But then the retail go, ‘what’s happening?’.

Steve Letwin: Yeah the retail say, ‘Nothing’s changed. Why is this happening?’

Matthew Gordon: Yes they don’t understand why, but it sets off a series of events.

Steve Letwin: Set off panic. Because you’re a retail investor, who has made a lot of money with the company and all of a sudden you know you’re losing.

Matthew Gordon: But anyway, those things happened so late last year. Coming through this year, you are where you are today. So how would you grade yourself in terms of last year? Was it all out of your control? Could you have done something? What would you have done differently?

Steve Letwin: It’s never out of, totally under your control.

Matthew Gordon: There are things you can control, things you can’t. So what are those things?

Steve Letwin: I’m just saying that yeah, the Gold prices under our control. Should we have been more proactive? Yes. Was that my responsibility? Yes. Did I drop the football? Yes. So what I should have done, at the third quarter is reacted quicker. And the market was sending signals around self-funding. The market was sending signals about short-cycle. More reinforced short-cycle.

Matthew Gordon: Was that behaviour than new to you or had you seen that before?

Steve Letwin: It was completely new.

Matthew Gordon: So hence the, ‘well what’s going on?’

Steve Letwin: We had a guy come in…

Matthew Gordon: So what if happens next quarter. What do you do?  You’re going to do something?

Steve Letwin: Well right now, we had a guy come in hard. On the long-cycle side of the equation. With Cotê. So he came in hard. And we put out the Feasibility Study. We have Sumitomo come in. This is a coup. Nobody’s ever done this. We have Sumitomo come in for 30%  of the project, put up USD$200M. People were applauding. People we’re standing up an ovation.

Matthew Gordon: Let’s do the deal.

Steve Letwin: Yeah. Oh my God. That was in the first quarter last year, by the third quarter and the Gold price falling, and the margin squeezed. And the fact that our cash might be drawn on the balance sheet. They got scared. And they started to send us messages. Don’t build Cotê. Which was completely opposite to why they bought the shares.

Matthew Gordon: So tell people quickly about Cotê because it’s a pretty big Resource.

Steve Letwin: 13Moz. 6km off the highway. Low-grade, 1g/t bulk tonnage. But literally…

Matthew Gordon: Shifting dirt.

Steve Letwin: Beautiful. Yeah.

Matthew Gordon: Simple process.

Steve Letwin: Beautiful deposit. Unfortunately we haven’t got a good set of examples in Canada to say.. successful. Rainy River, Detour and even Malartic in the beginning you know stumbled. That’s a great mine now. But I mean they stumbled. So Canadian history doesn’t reinforce. There was no success to reinforce. So shareholders looked at it. Analysts looked at it, and said, ‘Go to the sidelines, keep your cash. Go to 100% percent short-cycle. Free cash flow is everything. Nobody’s interested in giving you money to build this, if you have an overrun. And put it on the shelf.’

Matthew Gordon: What was the CapEx?

Steve Letwin: A billion.

Matthew Gordon: A billion bucks.

Steve Letwin: Okay. That’s not nothing. But it was a bit of you that said, ‘Well actually maybe that makes sense’, or your like thinking ‘oh come on guys, 13Moz here.’.

Matthew Gordon: So if you built it, how long would you be… when would you be in production?

Steve Letwin: Two years.

Matthew Gordon: Okay.

Steve Letwin: It’s not bad.  It’s human emotion Matt. You were working on this. We bought this in 2012. Well we have a team. We have seven people from Sumitomo sitting in our Montreal office, seconded on the project. We’ve made commitments to our partners. Sumitomo is a tremendous partner. High, high skilled partners, who have a huge positive reputation, who love this project.

Matthew Gordon: So where is it now?

Steve Letwin: It’s on the shelf.

Matthew Gordon: So you have to listen to these guys?

Steve Letwin: Or they punish you. And they punished us.

Matthew Gordon: You listened to them and they still punished you?

Steve Letwin: No listen to what happened. So it was it was kind of unique. Their messaging me, and us. They’re saying don’t build it. We don’t make any commitment. But because of our low-margin situation, during the Christmas holidays, Gold ran up above $1,300. Remember? We had the chance to put on a hedge for 150,000oz of production. It was called a ‘pre-pay’. So we put on a hedge for a 150,000oz; costless, between, at that time, $1,350 and $1,500. So anything below $1,300, we got paid. Anything in the middle. Nothing happens, we get paid spot. Anything above $1,500, we pay. Which god if we went to $1,500, it would be the least of my worries.

Matthew Gordon: You want to pay it. That’s good.

Steve Letwin: So we will receive USD$175M for production that doesn’t have to be delivered till 2022. Cost is 5.38%, very low.

Matthew Gordon: Take that.

Steve Letwin: All that is great. Board approves it. And we think we have $700M in cash. We add another $200M, we have a cushion. Our shareholders are going to embrace this. And let’s go ahead with Cotê. We don’t announce Cotê, but we do this financing deal. The market sees it as a catalyst. We’re going to announce Cotê. Our stock dropped 22% in two days.

Matthew Gordon: That’s a hit. That’s a big hit.

Steve Letwin: Every major shareholder phoned me and said, ‘You’re going ahead with Cotê. I said, ‘We haven’t decided. We’re not deciding till March’. They said, ‘Well why did you do this?’ I said, ‘Because we could. And it gives us insurance’. And they said, ‘Don’t go ahead with Cotê. Two weeks later we announced we’re going to put Cotê on the shelf, stock recovered everything it lost, everything.

Matthew Gordon: Same guys? Same guy?

Steve Letwin: Yes.

Matthew Gordon: That’s that’s a heck of a message. Again just finishing off on Cotê. You’d have done that differently?

Steve Letwin: Yeah.

Matthew Gordon: Anything else? Any other learnings?

Steve Letwin: I would say the major learning is listen to your shareholders. I mean they’re not always going to be right, but they’re the ones putting up the money. And don’t surprise. And I think I wasn’t insightful enough to realize I was going to surprise them. And maybe that sounds a little bit stupid. But I honestly thought, and our management team and board honestly thought, that this fantastic deal we did, one of a kind deal, was going to be something that would allow us to move ahead. And we didn’t bounce it off anybody because we had to act so quickly. The window was so short. To get it executed wasn’t easy and we got it executed. We are actually so proud of ourselves, that when we did it and announced that we thought our stock was going up 10%…

Matthew Gordon: You thought it would work?

Steve Letwin: And it dropped 22%. So talk about misreading.

Matthew Gordon: Big lesson. You don’t make that mistake twice.

Steve Letwin: Yeah.

Matthew Gordon: Okay. So that’s fascinating by the way. That’s a real insight. Now I’ve had the words workaholic. … and similar thrown at you, when I asked someone what you’re like. So you travel a lot. You’re on a plane a lot. What’s a typical day for you?

Steve Letwin: I’m up at 05.30 and I work hard. And I’ve always worked hard and I’m in the office every weekend. And I love what I do.

Matthew Gordon: You enjoy it?

Steve Letwin: I love my job. So yeah I love what I do. This is a very tough business right now. It’s lost its luster and it will come back. It’s cyclical. I asked this fellow who I knew extremely well in New York, who eventually passed away at the age of 77, worked all his life. So when he had cancer and I went to the hospice in New York. And I said any advice in terms of your success. He said to me, ‘Steve stay at the table as long as you can’. He said, ‘because we’re in a business’, and he was in the resource business, there will come a point where you can harvest all of that hard work. But you’ve got to be at the table. So a strong balance sheet, which we have. Good reserves, which we have, which we can monetize. And the ability to stay at the table as long as you can. Now we become vulnerable, which is where these rumors come from. We have such a powerful inventory of Reserves now. 18Moz at that are very low costs, from you know…

Matthew Gordon: They’re all similar ore bodies, are they? Or do you have different things going?

Steve Letwin: At Rosebel over 2g/t, 20 kilometres from the mill. I mean it’s 2Moz Resource. Cotê 13Moz as I said.

Matthew Gordon: But in terms the skill sets required to… you’ve got all the necessary skill sets?

Steve Letwin: I’m not going to call it easy, but it isn’t anything we haven’t done before. So when you look at the fact that world Reserves, Gold Reserves are dropping exponentially. We’re replacing 20% of what we produce. Gold production is still very high, but Reserves have dropped tremendously. We become vulnerable. And people ask me all the time. Are you a target? Absolutely we’re a target. Absolutely people are looking at us. Absolutely things could happen. We don’t comment on it. But obviously when you have that kind of Reserve base. 850,000oz of production and the skill sets that we have and land package that we’ve built now. That it’s all short-cycle driven in most respects. This is very attractive… And people aren’t interested in Gold now, but the smart players, the long-term players, will look at this and say, ‘Wow, this doesn’t happen every day. So that’s how a lot of these rumours start.

Matthew Gordon: Yeah I see 800,000oz…  so Cotê would maybe potential to take you over a million?

Steve Letwin: Cotê would definitely do that.

Matthew Gordon: Just finished off. I got to ask. You’ve been told to park it.

Steve Letwin: Yeah

Matthew Gordon: Till when?

Steve Letwin: Till they tell us not to.

Matthew Gordon: Oh boy. You know I’d be really intrigued to understand that more, but we’ve got more to talk about. I’ve got you here today, and we’re really pleased to have you here today. What are you measured on?

Steve Letwin: Share price.

Matthew Gordon: That’s it? That’s your thing? Be remunerated the same way?

Steve Letwin: Yeah. And when we were in the doldrums I took.. I qualify for cash bonuses. I took every cash bonus in shares. I never took any cash out of the company. I never sold a share, ever. And so I’m the largest independent shareholder of the company after 8.5yrs.

Matthew Gordon: Ok do you think there’s any kind of credence in this thought that, for investors, not institutional. I’m retail, high net worth, family office… Those are the guys we’re talking to, and listening to you today. OK. For for them, do they invest into producers?

Steve Letwin: Oh absolutely.

Matthew Gordon: You think it’s money to be made?

Steve Letwin: Oh absolutely. Well when you look at the metrics right now. I mean there’s good money that can be made. And again it’s all about sentiment. It’s all about momentum. And our share price performance in 2016, 2017 and most of 2018 was stellar.

Matthew Gordon: You’re going going to get back there?

Steve Letwin: If we don’t get taken out and we will be. We will. And we’ve already initiated cost cutting. We reduced our workforce at Westwood by 300 people, you know 25% of workforce. And we’re  initiating productivity and improvements…we’re going back I say ‘back to the future’ a bit, to 2013 -2014 when we did all the cuts and lessons learned. So we need to get to a self funding model. You can’t rely on the market.

Matthew Gordon: To a large degree you can’t. But you’re setting on a lot of cash. Any debt in there?

Steve Letwin: We have $400M due in 2025. But net cash, we’re $400M.  So we’re strong.

Matthew Gordon: Yeah yeah for sure that’s not a bad ratio. So if I think about investors coming in… new investors coming in today. Not guys that have been that while, today. Do you think that you, or generically if you want to, producing companies are more focused on paying down debt, rather than paying dividends? Or what are the options for companies like yourself, to look after investors when times are good? You’re sitting on a lot of cash… but you know what sentiments like, ‘well can we have some of that’?

Steve Letwin: Oh every day. Why aren’t you buying your shares back?

Matthew Gordon: What’s the answer?

Steve Letwin: The answer is you’re right. We probably should be buying our shares back. Because we’re here at a 0.3 PNAV, the math says buy your shares back.

Matthew Gordon: So you’re going to?

Steve Letwin: We’re going to look hard at it.

Matthew Gordon: Okay.

Steve Letwin: No it hasn’t escaped us. But you know the problem with being a high-cost producer, even though we’ve brought our costs down, is that you covet that cash. And so I don’t want to be buying shares back and then having to go back to the market, and use equity to raise cash again. It doesn’t make much sense. But mathematically when shareholders say you should be buying your share shares back, they’re absolutely right. I mean there’s no argument to that.

Matthew Gordon: Why is the AISC so high? If I look at other large scale, which you are, low-grade bulk producers, we’ve seen quite some quite low numbers. Is it entirely down to the ore, the geography. What are the things that drive that and why can’t you drive it down more?

Steve Letwin: Well we were on the path of driving it down significantly with Cotê coming on, Saramacca and Rosebel. We’re a low-grade. We run anywhere from 0.8g/t to 1g/t. And we have historically been and our mines are old. So that’s why Cotê was such a big contributor. That’s why Westwood, which had some challenges and was supposed to be a big contributor. And then our big discovery in Suriname will help tremendously at Rosebel. So we were projected to drop from $1,050 down to $850 ish. So huge leverage. Now I will tell you that, yes we are high-cost, but a lot of the peers are catching up to us. So some of these bigger companies are running into the same kind of challenges… hard rock, low-grade. And I’m not saying that we’re counting on that to happen, but it is happening.  We need to get our costs down. There’s no question about it. We’re going to continue to do what we’re doing. We’re hoping that Cotê when we move that into the mix, $700 AISC. Our basic our net was 325,000 ounces. You’d throw it into a base at $850. You’re got to bring your average down. Rosebel with Saramacca. You’re bringing in 2g/t, soft-rock into a mill that paid for itself 8yrs ago. So your AISC comes down dramatically. We had 100,000 ounces of production from Saramacca into Rosebel. On a 300,000oz producer, at AISC that’s $700-$750. And so that was the strategy. Boto in Senegal. Same idea. Essakane with discoveries around Essakane in Burkina Faso. So there was a plan to bring it down dramatically, but we just got…we ran into a bit of a detour just around market sentiment. And again, we stumbled with Westwood. We had some seismicity challenges there. And Matt, it’s like anything. Whether it’s a business relationship. A marriage, whatever. If somebody loses confidence, it costs you. And with the seismicity issue of Westwood that we had in the first quarter, we had some confidence issues in the market.

Matthew Gordon: I understand that, this is cyclical business, always has been. It’s just we can’t quite ride the cycles right now. It’s a strange market for sure. So you’ve got to get this balance between running the business. All those things you’ve just talked about, and the thing you’re measured on, which is share price appreciation. You must have a pretty good team around you. I think you mentioned some of them early earlier, and you’ve got a dependence on them. If I was to say, “what would your message be to investors about what the next couple of years looked like? And I also want to come back to… you mentioned something a second ago, that there will be people knocking on your door? I suspect I know the answer. Any M&A activity going on?

Steve Letwin: Well you know we’ve always looked at opportunities and I’ve never been able to… we made a number of offers to companies to acquire them. And it’s never really worked out because the premium they were looking for was beyond our reach. But we’ve never been able to find anything that really did much for us. And that’s not to say they aren’t out there. But when you hear Mark Bristow, who I have a huge amount of respect for, or Gary Goldberg, who I also have a huge amount of respect for, talk about selling assets. These are very smart guys. They’re not going to sell their best assets. What are they going to sell you? They’re going to sell you their seconds or thirds. So you see a lot of roadkill. And unless you’re a miracle worker, to take that dead carcass and rejuvenated it…you’re really not going to want to buy that. So it sounds good. Oh we have shareholders that say, ‘keep your cash and save it for when the markets good.’.

Matthew Gordon: You’re good for a while. You’ve got a reserve, a huge reserve. But at some point?

Steve Letwin: There’s no panic.

Matthew Gordon: There’s no panic. Right okay. You’re good for a while. Anyone knocking on your door?

Steve Letwin: We always have people knocking on our door. There’s always people looking. And as I say, how could they not. But we never comment on it. And it’s a little bit like, it’s one of these things where people will be seemingly interested, but again it’s hard to get over all the barriers that seem to be in front of them.

Matthew Gordon: Like what do you mean? Like what?

Steve Letwin: When Randgold and Barrick did their no-premium deal. They set a standard at the Denver Gold Show a year ago. Randgold and Barrick did no-premium deal… so let’s do a new no premium deal. Wow, I’m sorry but…

Matthew Gordon: What’s that look like?

Steve Letwin: That doesn’t work, right. And the market punishes high-premium deals. So it’s not quite as easy as people might lead you to believe. Right. You’re trading at 0.3 – 0.4 PNAV. It’s very hard for you to use your paper to buy an asset. It’s very dilutive. You become very attractive to a high PNAV company, that’s saying I don’t want to pay you a premium, because Mark didn’t do that. Mark and John didn’t do it. Well he did it for different reasons. And there was a great deal that they did, and they were extremely clever. The way they structured it. My hat’s off to them. It really was a very clever deal. But that doesn’t mean that sitting with IAMGOLD shareholders that we’re going to accept…

Matthew Gordon: Subpar deal.

Steve Letwin: Yeah. Why did you do that? Why would you do that?

Matthew Gordon: Well hopefully you won’t.

Steve Letwin: No. But there are…I mean again if Gold does start moving, and there is momentum.

Matthew Gordon: Have you any sense of that? Because if I talk to Uranium guys, I talk to Copper guys, Nickel guys. So everyone’s got… all commodities have got their problems right. It’s woe is me. It’s the price. It’s not me. Have you got a sense of what the Gold market’s doing?

Steve Letwin: I think the Gold market has more upside. And you if you follow, and I know you do, I’ve been watching it, especially even over the last couple of days. Gold dropped down around $1,270. It seems to have a floor between $1,250-$1,270. And today, last time I looked, it was up $10.

Matthew Gordon: You don’t think anyone’s controlling that?

Steve Letwin: There are of conspiracy theorists.

Matthew Gordon: Well that’s what I’m getting at.

Steve Letwin: Who knows. It seems when it goes above $1,300 someone wingnut sells it in somewhere in a draw. Somebody sells a billion dollars worth of Gold. All the conspiracy theorists come out. And I mean I have no idea. This much I do know. That the only thing that matters, is the dollar, US dollar. It’s the only thing that matters. I mean you can have a warship show up in the Straits of Hormuz and with Iran. And nothing happens. But if the US dollar drops. Gold moves up. And if there’s any sense of the US economy is going to weaken, and that the US dollar is no longer the Haven. Gold will move up.

Matthew Gordon: So if… you’re Canadian right?

Steve Letwin: Yes.

Matthew Gordon: OK. So I can ask you this without fear of retribution. In the US, you’ve got polarizing politics at the moment. You’ve got the Republicans, who are very sure that Donald Trump is changing the nature of business. He’s freeing people up to do good business, especially mining. And he got the Democrats who are fearful that some of his policies will lead to more debt. It’s an extraordinary number at the moment, and has his policies internationally as well. So given that arena, that political arena, and what it looks like today what’s the call you’re going to make on the American dollar and where it’s going? You’ve got one guy… because we’re going great guns. Trump’s doing things for our market. And you’ve got Democrats with their view?. What do you think’s going to happen with the dollar?

Steve Letwin: So I spent 10yrs in Texas and I had the same style of management. I spent a lot of time in the field. And I remember sitting in Louisiana. And we had some issues and this guy said, ‘Mr.Letwin, put the alligator on the table and let’s talk about it!’ And I said, ‘OK. So here’s the alligator on the table”.

Matthew Gordon: That’s a good one.

Steve Letwin: Here’s the alligator on the table. $22Trn in US debt. Worldwide debt at $250Trn. Every man woman and child on the planet, $88,000 worth of the debt. OK. No one seems to notice. No one seems to talk about it. You hear conspiracy theorists on the Gold side. The Gold Bug saying, there’s another $22Trn that’s not even on the books. Our Canadian government is spending like drunken sailors.  Highest debt in history. And the US doesn’t seem to care. I believe, in my heart of hearts, that someone will wake up one morning and say, ‘There is too much debt’. And with Trump using the US dollar as a weapon. You see Russia, China de-dollarising.

Matthew Gordon: Yep, a lot of that.

Steve Letwin: Yes. And if you’ve got the shit kicked out of you, on a regular basis by Trump, which he likes to do, then you will find a way to hit him between the eyes. And these countries, smaller than than the US are gonna hit him back. I worked a lot in China and Hong Kong. I worked for five Hong Kong billionaires. There’s one thing you don’t do. You do not cause them to lose face. You do that, similar to the Japanese, they will pay you back. And he’s going to have.

Matthew Gordon: And they’ll wait.

Steve Letwin: He’s going to have his comeuppance. He’s got some great business ideas, but this bold, brash, kick the shit of my friends attitude, which got him the hated, most hated guy in New York State. They hate him. It’s going to come back. Now when does that happen. I don’t know. But if the US dollar does start to turn, just like Gold did, the Gold price will move through $1,400 & $1,500 and it will do it quickly.

Matthew Gordon: That’s a great, great interview. Thank you very much for your time. I know we didn’t spend much time on the company, but I think it’s a very well told story in the marketplace. But I think people will appreciate an insight, just a small insight, into your thinking, your logic and your management style. So I appreciate that.

Steve Letwin: Thank you.


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SilverCrest Metals (TSX-V: SIL) – 121 London Mining Conference (Transcript)

President of SilverCrest Metals (TSX-V: SIL) joins us at the London 121 Mining Conference for a chat.

Click here to watch the interview.


Matthew Gordon: I’m here today with Chris Ritchie of SilverCrest Metals. How are you?

Chris Ritchie: Doing well, thanks for having me.

Matthew Gordon: You’re in London. You were here last year as well obviously. But tell us why you’re here this year?

Chris Ritchie: So we just put out a new economic study for our project. So definitely something we get on the get on the radar for people. We been to a few these conferences before. We don’t have many shareholders over in this part of the world. We’ve got a very tight shareholder base with my old clients from a previous life of being on the sell side. And getting some new faces and names to exposure would be would be great for us.

Matthew Gordon: Yeah I mean we’re hearing that a lot. So I mean tell us a little bit what’s happening in the North American market with regards to mining natural resources.

Chris Ritchie: In a broader sense, what you’re seeing is people chasing performance. And the mining industry has as anything but performance for a decade. So what you’re seeing is funds looking elsewhere, and money being pulled out of those funds. So forced selling at lower and lower levels, and selling begets selling. And now we’re at an issue with mining where we’re at multi decade lows in terms of mine life. My favourite chart it was given to me by one of our holders, Donald Smith who was trained by Benjamin Graham. And if you look at a ratio of a basket of commodities to the S&P, it hasn’t been this divergent since 1970. So the opportunity sets interesting, but who can survive this time frame is the issue.

Matthew Gordon: Why don’t we start off, acquaint some of our viewers with your company. Why not give us a two three minute review. We’ll get into some questions.

Chris Ritchie: Very quick and dirty would be three things. One is that we are in Sonora Mexico, Northwest Mexico, and we discovered, permitted, financed, built on-time under-budget and operated the mine next door. And we sold that in late 2015 and this assets 25km away. So the first part of that story is that we’ve done it before, on-time under-budget. We know the people, the community, we’ve got a license to operate. Part two is that we’ve got the third highest-grade primary Silver deposit in the world. So when Silver prices aren’t doing that well, and you’ve got economics that’s.

Matthew Gordon: Lowest quartile.

Chris Ritchie: Exactly so that that’s there. 3. The third part is what’s left on the upside. We’ve been able to hit on about 70% of our drill holes. And are finding cost per ounce to date is $0.25. So those are the three main things. I did mention that we have our preliminary economic study (PEA) that came out last week. It shows that in the first four years of production, we’ll be able to produce an ounce of Silver at less than $5. So here we are with half the industry struggling to make any money we’re gonna have roughly $10 margins at today’s prices.

Matthew Gordon: Which is incredible.

Chris Ritchie: We’ve had a payback period of nine months.

Matthew Gordon: So let’s put that leads on quite nicely to finance. Why don’t we cover some of the basic numbers for the company?

Chris Ritchie: Sure. So I mean one great thing is we have CAD$33M in cash. We’ve got about $4M in warrants coming in. That covers covers us for about a year, in terms of our budget. In that economic study, we need USD$100M of capital. And again at today’s prices that’s roughly a nine month payback. So again a big majority of that’s going to be in debt. So it’s not much equity or any equity left, on that point. Alongside that my spending 13 years on the sell side, we have a very strong shareholder base. So insiders on 16%, SSR Mining, which I’ll touch on, they bought 9.9% of us. They’re a major it’s about five times our market cap. I was in New York for seven years. There’s a big chunk of institutional investors who are in the story on that standpoint. So again looking at the economics and why those people have been interested and are supportive, is again in and around today’s prices, we should have a 78% IRR, in a nine month payback. So one of the beautiful things for people who are not really trying to pick their timing on the market, is we did a downside scenario case in that study. And if you use $1,110 Gold and £14 Silver we still have a 64% IRR and our nine month payback, goes to 11 months.

Matthew Gordon: Right. Okay. So there’s some some pretty impressive numbers there. So what’s the problem you’re trying to address? I mean you’re over here in London, you talked about exposing yourself to more investors. I’m assuming you want retail investors because of the ability to drive well liquidity, bit of volume?

Chris Ritchie: Yeah I think it is interesting. Professional money managers are very challenged, they have to make money monthly. They’re competing with other funds that are having performance in other sectors, and that’s how they get capital. So they’re very short term in nature, and they wish they could be longer term. Whereas if you’re able to look at a longer time horizon pictures tend to get more clear. So again if you look at where we are as an industry and where the cycle is, and if you look at our ability to withstand that downturn, and then look to what the upside is, a retail investor knowing that you still have an 11 month payback at $1,100 Gold, you can buy this stock. And again there’s still risk related to mining, I’m not trying to downplay that at all. But you have a much better resilience to how long this cycle changes. And then your upside is something you get with the drill bit, commodity prices changing. And then potentially many people would say that we’re a potential takeover target given our robust economic sense and defensive characteristics.

Matthew Gordon: I mean clearly when you are talking to institutions, they’ve got a whole bunch of different concerns. What do those phone calls sound like at the end of each month?

Chris Ritchie: Broader based, I mean you can look at time zones. I mean a lot of people in Europe tend to look sort of in through Africa and places. A lot of people in North America kind of go Canada, U.S. Mexico and whatnot. People ask about Mexico, and they’re certainly good parts of Mexico and bad parts of Mexico. But I mean we’ve been in this area for 13 years. The largest political organisation in Sonora is the Cattle Association. They have an export agreement with US for beef. We’re in the cattle association. We have our own ranch. Now there was a spill in 2014 by another mining company that didn’t clean it up. We spent $50,000 of our money buying fresh drinking water for the people, the horses, the cattle. Our CEO’s son and daughter live on site, and they have lived on site for a long time. So it’s a question we get asked, but it’s not something we’re overly concerned about. Again industry wide, Why do I need to invest in the space? Which kind of applies to anyone on that front. Permitting, people asking about permitting.

Matthew Gordon: But can I ask what is the answer to that question?

Chris Ritchie: Which one?

Matthew Gordon: Why should I be investing in this space? I mean is mining still relevant?

Chris Ritchie: Well again I was on the sell-side. I quit to take this job. And mines take on average about 7yrs to come online. So when you talk about 50%-60% of mines not making money today. That also means that the next asset most companies have in their portfolio, don’t make economic sense today. So no one’s spending. A lot of people are doing this waiting for that commodity price to turn. And it’s interesting for a lot of people, if and when that happens. But they don’t really have many strategic decisions to make today.  So if you have an asset that can withstand the downturn, and then participate with the upside, that’s pretty significant. Because you’re not going to see new supply coming online until the price moves. Then the investment cycle starts and then you’ve got the 7yrs.

Matthew Gordon: Yeah I mean there’s 7-10 years people people use different different numbers but the net result is the same. It’s takes a while from when you start when you get into production.

Chris Ritchie: We’re in a multi decade lows in terms of my life right now.

Matthew Gordon: For sure. So given that what are the challenges that you faced last year through to this year? You’re sitting on a bunch cash gives you lots of optionality. You’re the bottom quartile in terms of cost. Fantastic. So quite a you’re quite attractive for lots and lots of reasons. But what’s happening next? Where’s the value come from for new investors coming into the story?

Chris Ritchie: The best analogy for that is our one key area within our mine is extremely high-grade. It’s the first ore we’re going to access in production. Our first drill hole into that area was 3.5m wide @ 8kgs. And obviously we got excited. We threw four drill rigs at it. And 4mths later we had 40Moz at over a kilo. So you know if you look at the PEA that assumes 13.7Moz of production each of the first 4yrs, if you assumed roughly 15-16Moz are needed to get 13.7Moz. If you can find 30-40Moz of high-grade, in a short period of time. I mean that conversion to free cash flow. Again 13.7Moz in the first 4yrs. That’s $115M of free cash flow per year. And our market cap today is $270M. So the speed of finding high-grade can drive the can move the needle very very quickly on the drill bit.

Matthew Gordon: Of course. But that’s you know, ifs and buts. So what are you guys doing to ensure that, as much as you can?

Chris Ritchie: Well we’ve had 15 drill rigs on the property today, and that’s one of the bigger drill programs out there. Half of those drill rigs are trying to convert the Resources to Reserves just to increase the confidence, and remove some of that risk of having a more tangible belief that it’s there. And we can control it and understand that. And then again the other 7 are looking for new new ounces. The beauty with us, we’re actually a small mine. It’s only 3.8Mt are in our PEA. So even if we find some lower-grade ounces. Maybe there’s the potential to go from 1,250t per day to 1,500tpd, 1,750tpd. And see how it plays out. So it’s any ounces we find now that our economic, add some leverage, get some economies of scale. So the first thing we’re doing, is drilling aggressively. In terms of also mitigating risk, within our PEA we used very prudent, I won’t say conservative because you don’t know until you’re actually producing. I’ll say very prudent inputs. So the recoveries that we are seeing in the studies. We used 4%  lower than that in our PEA. The mining method we used in our studies, was all cut & fill, which is the more expensive method. And there is a good chance that part of the Resource we could use is long haul, which would cut costs. Grade capping, conservative on that front. And again we didn’t assume any upside on the throughput. Maybe we can get lucky with building a power line, which would have significant lower power costs. So we made sure that it was given a 78% IRR. If people don’t believe your inputs, the thing goes in the garbage. So we want to make sure we started out so people can go here’s a snapshot in time. Here’s what it’s worth. We believe you or we’re gonna make our own adjustments and come up with a number and everything is kind of gravy hopefully. And that number today is trading at about 0.65% NAV net asset value.

Matthew Gordon: Ok. So yeah I agree there is a conservative assumptions.

Chris Ritchie: That was the attempt.

Matthew Gordon: Which is great but yet the IRR is definitely up there. We’ve been talking to people with much be lower IRR’s this week, who have the slow and steady approach. So in that context, how do you get the balance between running the company, mitigating all of this risk, all these moving parts, where things something goes wrong it affects everything down the food chain and creating shareholder value? Those are two very different skill sets.

Chris Ritchie: So our CEO is a geologist and a mining engineer. He’s built six mines, and again including the one next door. Part of my role of coming on was to sort of spend more time in the capital markets and whatnot. So that the people who are onsite adding the value, can spend more time on site adding value. We recently added a COO, who designed and built Canada’s largest Gold mine. He joined the company, on the board last year, but officially a COO at the end of last year. And threw in about $300,000 of his own money on day one. So again adding some more bench strength to the technical team, is a significant part. You know we’ve got a good cash balance. I mean December of 2017 we had $3M on the balance sheet. So we’ve been slowly making sure we pick up that cash balance. You know what we’re doing in the asset again, doing infill drilling to make sure we have confidence in what we have in place. Making sure we’re communicating with shareholders all the time. And we’ve got a very strong shareholder base. I mean most of the shareholders are my clients from the old days. So just making sure that communication and trust and transparency is there.

Matthew Gordon: Right. But those are institutional guys because in presumably, the big guys right. And you know their very technical and knowledgeable in terms of what they want, but at the end of the day they still need share appreciation. That’s the key driver here. Are they telling you what to do? Or do they sit back, in terms of strategy I’m talking about, not technically. Are they talking to you about what they think you should be doing in terms of creating a bigger entity, because you market cap is goods, it’s like $300M. That’s pretty impressive. But I think from what you’re saying, you feel it could be more.  Are you frustrated with the performance or you think it’s OK.

Chris Ritchie: Like no,  if you look at our performance versus the GDXJ which is an ETF for junior miners. I think last year that GDXJ was probably down about 20% percent, while we were up 100-150%. I don’t know the exact number. So it just shows that again while the Gold and Silver prices are low, we’ve we’ve shown that we’re a vehicle that can add value. And that’s mostly been via the drill bit. So what we’re getting from our investors is, we’ll give you the latitude to go out there and drill like crazy. Because again that’s what’s been driving share performance. So the big bigger and broader we can just make this asset, in terms of again leverage tonnes or high-grade. That can move the needle very, very quickly, on that front. So that’s their main push on that, and continue to de-risk. Get that permit, which again where we’ve started a long time ago. We’ve got one major permit left. Hopefully that’s something that happens this year. And they’re also telling us to hurry up and drill, because again with an asset like this, there’s been a huge wave of consolidation been taking place. If you can’t get growth and upside in the commodity prices and working, you’ve got to manage costs.

Matthew Gordon: That’s the next question which is, I mean the other way this works is if Silver price goes up. Right. And what’s your expectation in the marketplace at the moment, because it’s been a very confusing year for a lot of commodities.  People have catalyst events happening, where normally it would have an impact. It’s not. What’s happening in the world of Silver?

Chris Ritchie: I’ll answer it two fold. And I would say the way to answer that is very dependent on if you’re talking to a retail investor, institutional investor or a management team trying to run a business. And I’ll start with the management team trying to run a business. If you’re a management team trying to run a business, your assumptions on Silver is that it’s going to be here or lower for the next five years. Because if you’re not doing that, you’re not being very responsible. So looking for low-cost, low capital intensive assets that can give you more margin to wait it out, is a prudent approach. If you’re buying something top of cycle and the market rolls, your head’s on the line. If you buy something and the market rolls but you’ve actually increased your margins and you’ve bought defense you get a pat on the back. So again that’s the uniqueness of our asset. Now if I was to tell an institutional investor, ‘hey look how good we are at $1,100 Gold or $14 Silver’,  they’ll say ‘great why am I buying if it’s going down’. So that that’s part of it. And the same as the retail investor, I would say same thing. If you don’t have the monthly pressures, but you think it’s interesting long-term. Having something that is more defensive while you wait. Now we might not move as much as another name that’s got $13 cost and Silver goes up $2 and those on the margins go up 200%. But it doesn’t mean you solved the problem but what assets next in your portfolio. Doesn’t mean you’ve all of a sudden got cash on the balance sheet. It’s one might have short-term share price performance, but again how to manage a business is very different and under all those scenarios. That’s why I wanted to answer in those ways.

Matthew Gordon: Yeah I think that’s fair enough. You’d need to look at it like that. Okay.  Investors are always going to be looking for share appreciation. Okay so you can do that by drill bit, by expanding out, building out your Resource.  Fantastic.  You did through M&A, any M&A planned? Ot have you got enough on the books?

Chris Ritchie: I think our shareholders would be very happy if we just put our head down, and focused on this asset, and did not get distracted. Any M&A things that we’d be interested in, are very much, things in the neighborhood to $2M-$4M that might be something close by that we can truck to our existing….

Matthew Gordon: Bolt ons?

Chris Ritchie: Yeah and get that economies of scale sort of thing. And again we’ve been in the neighbourhood for 13yrs. So knowing knowing that all those things are available, and  everything very low-cost but very potentially high-return. Where longer term if you said 5yrs from now, you’re in production, you’ve got a bunch of cash on the balance sheet. If the market was still soft, maybe we’ve had a vehicle that could re-rate, cash and we could be able to self-finance future development, and grow this company while other people weren’t necessarily in that position. And if the market turns 5yrs from now, maybe we’ve actually enjoyed that downturn to accumulate those assets and build a bigger, better stronger company.

Matthew Gordon: That’s interesting Chris. I’m going to wrap up there. We’ve run out of time. You need to get back to the 121 conference. How are you funding it?

Chris Ritchie: It’s great. It’s good. Like I said we have most of our shareholders over North America. So just be able to tell the story and get people’s feedback over here is a good use of time.

Matthew Gordon: Yeah, it’s a very good conference I think you’ll enjoy yourself. Thanks very much for your time.

Chris Ritchie: Thank you.


Company page: http://silvercrestmetals.com/

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