Regulus Resources (TSX-V: REG) – A Very Successful Exploration Team, Looking to do it Again in Peru (Transcript)

John Black, CEO of Regulus Resources (TSX-V: REG) sits down with us for an interview. Regulus Resources’s focus is on their Gold / Copper project AntaKori in Northern Peru. They have an experienced and successful exploration team of geologist with Southern American knowledge. $10M in cash will help them continue to drill well into 2019 but they will be looking to raise at the end of the year with a strategic investor.

Click here to watch the interview.


Matthew Gordon: How are you, John?

John Black: I’m doing well, thank you.

Matthew Gordon: Lovely to have you on the show. First time for our viewers. Wondered if you could just start, just give us a quick two-minute elevator pitch, as it were, to help people understand a little bit about the background of the project, please.

John Black: Regulus has the Antakori project and we’re a group of experienced Exploration geologists that specialise in identifying projects like Antakori that have potential to become very large Copper or Copper Gold deposits. And in 2012 at the market bottom, we were fortunate to be cashed up, we identified the project and we acquired it by merging with a company called Southern Legacy. In the last two years, we completed our first major drill program. And recently in March we announced a very exciting new Resource that we consider to be an interim Resource. As we continue to drill this year, we anticipate it will continue to grow.

Matthew Gordon: Quickly run us through the financing component here as well. You’re sitting on a lot of cash, which is great for an Explorer. But talk us through some of the shareholders and the way that that’s been structured.

John Black: As a junior Explorer we depend a lot on a loyal shareholder base. Regulus is a company that was spun out from our predecessor company called Antares Minerals. We made a nice discovery and sold that project to First Quantum in 2011. And the group of shareholders that did well from that fortunately are supporting us to continue as we move forward.

Matthew Gordon: There’s not a lot of retail out there is that at the moment?

John Black: There isn’t. We have, actually, most of our shareholders are fairly aligned with those of us in management and looking towards an endgame where we’re making a discovery, we’d like to drill it out, and then monetise it. We have one large shareholder called RouteOne. It’s a fund based out of San Francisco. They own about 24%, and as management we own a little over 14%. So, the shareholding is quite tight. It’s difficult to get a position, but most of our shareholders are aligned in the endgame. The discovery, the revealing the full value of the project, and then monetising.

Matthew Gordon: Okay so maybe let’s just come on to that in a second. Because I’d like to understand a bit more about the team and the relevant experience and, obviously, with Antares you had a huge success story and I can see why some institutions would continue to back you. So, tell us a bit about Peru, it would seem quite hot. A lot of people are talking about it in PDAC as a good destination for mining. Can you tell us a bit about it?

John Black: Well Peru is… we specialise in Exploring in South America, myself and Kevin. Kevin Heather, who’s our Chief geological officer, the two drivers behind the company really. We’ve had many decades of experience in South America. One of the reasons we really like Peru is that it’s a nice balance between being already established as a mining country, yet still having good potential for additional discoveries. And that mix, that you can Explore in most countries in South America with potential for success. But we always seem to gravitate back towards Peru as being that place where you can find it. And if you find it, you can turn it into mine.

Matthew Gordon: Yeah and you’re also surrounded by some quite large interesting companies as well. You seem to be in the right postcode, I think is what I’m driving to.

John Black: Yeah. Very much so.

Matthew Gordon: Yeah. So now you had a Resource come out recently. So why don’t you tell us about that? You say you want to follow up quite quickly with a second resource. What sort of scale of project are we talking about here?

John Black: When we acquired the project it already had some previous drilling. It was enough to show an Inferred Resource of about 300Mt at about a 0.8% Copper Equivalent. Having both Copper, Gold, and actually a little bit of Silver as well, we completed about 23,000m of drilling in our Phase 1 program in 2017, up to the end of 2018. With that we almost doubled, more than doubled, the existing drill Resource base, the drill database. And it was time for us to do an updated Resource. The resource that we recently announced, it was March 1st right before PDC, it contains 250Mt of 0.48% Copper, 0.29g/t Gold, and about 7.5g/t of Silver as well as 267Mt of Inferred Resource at 0.41% Copper, 0.26g/t Gold and about 7.5g/t of Silver. So, combined over 500Mt, a nice increase from what we started at. And, about half the deposit moving to the Indicated category now. And then we want to emphasise that this is an interim Resource. As we continue to grow, as we continue to drill we anticipate the project will increase substantially.

Matthew Gordon: So, what does that do to things like… we know your market cap is… what’s that do for you NAV numbers or have you any sense of the economics of it? Because those are quite low cut-off points, so I guess, it’s that some indication of the style of project that this potentially could be?

John Black: Well one way to take a look at these type deposits, we’re a little bit early, we’re still in the resource definition stage and we don’t really know how much deposit we’ve identified yet. We anticipate it’ll be substantially larger than it is. So, it’s a bit early to be putting NAV or preliminary economic evaluation (PEA) around the project. But one thing we can do is we can compare the deposit to previous sales of similar type deposits on this. And what we’ve seen over the last couple of decades is that projects that are at the PEA or pre-feasibility stage (PFS) are demonstrated to be large and economically viable Copper deposits, typically are acquired by major mining companies for about $0.04 per pound of Copper or Copper Equivalent in the ground. If we take a look at Regulus currently with our new Resource we’re valued at less than a $0.015 per pound in the ground of Copper.

Matthew Gordon: You’ve been very clear that you are Explorers. You’re there to not get into the build phase or start producing. Your model to sell out to a mid-cap or large producer, is that right?

John Black: Yes, that’s right. But having said that, what we would do in order to define, acquire and define and show the size of a project that might be of interest to a major mining company, it’s very important that we have our eye towards economics and that we do absolutely everything just like we would build the mine. Even though we clearly state that we prefer to be on that steep value-add part of the curve between Discovery and pre-feasibility (PFS) and that our skill set is not the skill set required to take that to become a mine in the future. We do everything exactly like we’ll build it ourselves. That’s the best way to demonstrate the economic viability of a project and attract a buyer.

Matthew Gordon: And also ensure there’s no discount applied by the buyer.

John Black: Absolutely. It’s interesting what we’ve learned over the years is that when you’re on a project like this, a lot of us think it’s simply drill it out and move it up through the stages of a valuation and PEA to Pre-Feas to Feasibility. But what we like to do is, we like to identify the potential weaknesses in the project and really emphasise on those and demonstrate what can be done about those, how to move forward. So, when a project like Antakori, we don’t worry about grade. We have plenty of grade. But we were focusing more on characterising the styles of mineralization. It’s a fairly complex deposit. And working on identifying potential deleterious elements. And showing how we can tackle those as we move forward.

Matthew Gordon: So, you must be quite confident about where the Copper market is going in terms of the future of Copper, Copper as part of battery minerals, because you don’t have the skills today in-house to build this out or get into production. But again, Tantahuatay, you’re being very frank about that. But if the market didn’t go the way you want it, would you make those changes?

John Black: You play your hand out as it goes forward. If we show that the size of this project is an economically viable project, but the market’s not in the right moment for potential buyers to be looking for these type projects, we have a choice of hunkering down, waiting until the market improves, or moving it forward ourselves by retooling the company. What we attempt to do is to identify those projects that almost independent of metal price will be of interest to major companies. However, the major companies tend to buy these type projects when the market’s hot. They buy at the top of the market, it’s generally the case. That’s when they’re cashed up and that’s when they’re encouraged to look for new projects.

Matthew Gordon: Okay. And you alluded there to the fact that you’ve made people aware, or you tried to understand, and make people aware of what the problems were and how to overcome those. You’re again quite frank in your PowerPoint, you talk about three issues that you’ve had to deal with. One being the land ownership position. I think you’ve resolved that with the JV with Southern Legacy Peru. Is that right?

John Black: Yeah. There were three potential challenges on this project when we first started looking at it. The group that had it was called Southern Legacy Peru. And they were working on it. The first was a rather complex land situation and Southern Legacy had done an excellent job to consolidate the district and clean up the title issues and so that issue is largely out of the way and particularly with our joint ventures with the neighbours on this. The second issue was historic rejection from some of the communities for previous exploration activity. And when we took a close look at the situations that had happened there we realised that the previous operators on the project had been working in a way that wasn’t very transparent and wasn’t with full social license. It’s important to point out the two communities that we’re now working well with have allowed the construction of two mines since those incidents happened. So they’re not anti-mining whatsoever at all. They’re just demand to be treated fairly and that’s our motto and how we like to work as we move forward. So, we’re finding it quite easy to work with the communities in the area.

Matthew Gordon: Right. I mean you do talk about the, I mean, this is a slightly technical one. I think it’s worth getting into here because there’s some confusion out there as to how you’re going to tackle it. And that’s with regards to the arsenic content in the ore body. I mean I think there’s number saying that 54% of the ore body is within tolerance and the rest not so much. How do you tackle something like that?

John Black: The first thing that is important understand that the Antakori deposit actually consists of two distinct alteration mineralization styles. There is an earlier scarn and Porphyry related mineralization that is relatively low-arsenic and metallurgically similar to many operating mines and capable of producing a nice clean Concentrate. And then somewhat later and partially overlying the deposit is a high-sulphidation epithermal system that has Copper Gold sulphides as well, but those Copper Gold sulphides are associated with higher levels of arsenic. So approximately 40% of the project right now has high arsenic and approximately 60% of the project has as moderate to low arsenic. What happens is that if we have high levels of arsenic in our ore, when that arsenic is associated with a mineral that also has the Copper, when we make a Copper Concentrate, we capture the arsenic. And arsenic levels make it more difficult to market your Concentrate. The Concentrate buyers have tolerances. Sometimes they charge penalties up to a certain level or if you get very high levels, it can be a Concentrate that’s not attractive for people to buy. And so, it requires extra treatment either at the smelter where you sell it to, or there are a variety of emerging technologies that we can apply to treat the material before we sell it to the smelter as well.

Matthew Gordon: Right. That’s interesting. When you say emerging technology, these are well-grounded, well-used or are they emerging?

John Black: They’re actually… it’s a mix on this. We have conventional roasting which has been around for a long time and is one way to treat Concentrates that have deleterious elements like arsenic. It is been modernised in many ways. There’s currently a large roaster in process at the Hena Harles Mines mine that’s owned by Codelco in Central Chile to process these higher-arsenic concentrates. But there are also, what’s a little bit more emerging is the pressure oxidation technique and many companies are trying to tackle this worldwide. Arsenic contents are increasing in Copper Concentrates and people are looking at technology that can be applied by pressure oxidation. It’s essentially an autoclave that allows you to oxidise your material and sequester the arsenic into a stable safe form. And it actually has some benefits that you improve your Copper and your Gold recoveries at the same time.

Matthew Gordon: And I think some people were asking the question, could you blend it?

John Black: Blending is also a common technique that’s used right now, either blending between materials that you have on your own site or selling your Concentrate to a group that has a lot of clean Concentrate it can blend. So, there are specialist third-parties that blend concentrates for you, prior to sending them to smelters. But quite frankly on the project we have right now, we’d like to develop methods that that higher arsenic material is economically valuable. So, we anticipate that we’ll be doing quite a bit of metallurgical testing in this next year in exploring the different avenues. The pressure oxidation technique that I mentioned is highly promising. The challenge really is overcoming the capital cost and the operating cost. But that’s where the higher grades that we have at Antakori come to play and we anticipate we’ll be able to support those higher costs associated with higher grades.

Matthew Gordon: So, I guess your preferred solution is go and discover additional ores which are clean and focus on those initially, in terms of your optimisation of the project.

John Black: That’s really our strategy right now. We naturally want to find all of the mineralization that’s on our properties or properties that we have access to. We anticipate as we move to the North we’ll be finding additional mineralization and that mineralization will be cleaner. So, depending on what we find in the entire centre of gravity of the opportunity might move towards that cleaner mineralization and input the arsenic-bearing material that’s a little bit more metallurgical challenging further down the road.

Matthew Gordon: Right. And so, there’s one question from some of the chat rooms, which no one had an answer to.  So, what’s happening with hole 30?

John Black: Hole 30 we just announced a couple of weeks ago and it’s a very interesting hole. It’s a 500m step out. It’s one of our first holes that moves to the North or Northwest from the main area of our drilling. We had an opportunity that there was a previously existing pad that we could set up on. So, the pad itself was not ideally located but was a nice step out into a new area. And we encountered both high-sulphidisation mineralization in the overlying volcanics, as well as more porphyry or porphyry-scarn style mineralization at depth. The grades were lower than I think some people anticipated we’d have. They’re approximately 0.25% Copper and about 0.15-0.25g/t Gold. But over very long runs. We find it highly encouraging. It’s between 0.3% and 0.5% Copper Equivalent and it’s a 500m step out. And it’s actually between several promising geophysical anomalies. So, we consider it a proof of concept that we’re moving in the right direction. And probably the most important point on hole 30, is the intercepts in the scarn and porphyry-style mineralization are very low arsenic. So it’s confirming the idea that there’s additional low-arsenic mineralization towards the North.

Matthew Gordon: Well thanks for getting into the technicalities of that. Can I come back to the Resource? I’m looking at page 17 of the recent PDAC PowerPoint. I believe it’s the most recent one. You show the Indicated and Inferred numbers on there. You do use quite high numbers for the Copper and the Gold in relation to the spot price today. Are you getting some sense of the economics…? I know you say it’s too early for a PEA and it’s too early to say what precisely you’ve got here today but what is the process that you’re going through to make this attractive to mid-caps or majors?

John Black: On these it’s a little bit of taking a look at volume versus grade on this. And what are appropriate cut-offs for material. So, we use a 0.3& Copper Equivalent cut-off. As our reporting line grade. But you will notice in many of our presentations, we show the size of the deposit at different grade cut-offs. And some of the things that we’re very encouraged about on this initial resource for us, it’s our first Resource that we put out on the deposit, when we see that we have a cut-off grade and the reported grade is more than double what the cut-off grade is, that’s a very good indicator that the project is quite robust. So, in our case, we’re using a 0.3% cut-off grade. And the Indicated category that results in a 0.48% Copper grade, 0.29g/t Gold grade and about 7.5g/t of Silver. So that’s approximately 0.7% Copper equivalent. So, applying a 0.3% cut-off grade results in a 0.7% Resource reported on that. That’s a good indicator that your Resource has substantial zones of relatively high-grade. And the reason that we use the metal prices that we use for this stage is that’s used to drive the pit. And so that’s not necessarily the metal values that we’ll use when we do preliminary economic (PEA). It’s common to see two sets of numbers on that. One is to drive the pit and then once you have a pit, when we get to a PEA stage, we will most likely use values that are closer to current prices or even lower than those.

Matthew Gordon: What permits do you have now and what permits will you need as you move forward?

John Black: We have a portion of a project that extends on to neighbours’ ground and those neighbours are a joint venture that operates the Tantahuatay Mine. So, the Tantahuatay Mine is immediately next door. It’s operated by a joint venture company called Coimolache and Coimolache is a joint venture between BuenaVentura and Southern Copper which is Grupo Mexico’s Peruvian sub, as well as a small third-party group in there. And they’re mining the oxide cap over a very extensive Copper-Gold sulphide deposit that is the same deposit that we’re defining on our ground. So, the neighbours have reported over 450Mt of Indicated Resource at about 0.7% Copper and 0.2g/t Gold and also a little over 480Mt of inferred resource or over 900Mt of combined Resource at relatively high-grade. Immediately adjacent to the mineralization that we’ve just announced. So, the combined deposit is significantly larger than what we’ve shown on our ground alone.

Matthew Gordon: All right. So that whole area is heavily industrialised, in a sense. There’s going to be no issues around the permitting component going forward?

John Black: That’s one of the things we like about this. We’re in essentially a brownfield situation. Where we have an operating mine immediately next door. They’re mining the oxide cap over a large Copper-Gold sulphide deposit. They have about 5yrs-6yrs of mine life left. And they didn’t have the opportunity to make the transition into the underlying Copper-Gold sulphide mineralisation. We have a portion of that deposit. So, it really sets a nice timeline on the project to move forward. And what we’ve done is we’ve established agreements with the mine. They’re best described as collaborative exploration agreements. If we each knew what we had, we’d probably be entering into a joint venture or some sort of a sales negotiation right now. But quite frankly, we each think we have the better part of the deposit and better could be larger, higher-grade, cleaner, in our case, or closer to the surface. So, until we each drill out our mineralization, we aren’t really in a position to enter into negotiations. But the nice thing is that because that oxide mine is progressing and running out of ore in the not-too-distant future, we’re highly motivated to move the project along quickly.

Matthew Gordon: So, I just needed to go down that line of questioning, there was some discussion, again chatrooms and forums, around block caving as a potential option for you if permitting was an issue. So, I think you’ve knocked that on the head.

John Black: Well really, it’s logical to make an expansion of the existing pit. And the mineralization we had, when we floated the pit, much of it reported quite easily to the pit on there. So, it’s fairly…it’s a good indicator. It’s quite robust and it’s very much in a geometry and an occurrence that’s natural to exploit as an open pit on that. It’s interesting to note that the pit that we floated, had a strip ratio of less than 1 to 1, It was 0.85 strip ratio. So, it’s indicating that there are large volumes of mineralization close to the surface. However, some of the people in the chatroom might be pointing out our more recently announced hole 26. And hole 26 was a hole that we drilled farthest to the North. So, the hole that we’ve been able to reach out is as far to the North as possible on this. And we had the good fortune on the bottom of that hole to intercept 473m of 1.16% Copper and 0.2g/t Gold. It’s a Braccia that’s been healed by calpobyrite and bornite. And that style of mineralization is currently outside of the Resource that we’ve reported. Partly because it’s a hole by itself. So, there’s no support around it. It’s also a little deeper. We anticipate as we drill that out that some of that will be captured by the open pit. But those grades also open the possibility of underground mining, if that’s a more viable operation, either in combination with an open pit or by itself.

Matthew Gordon: So just quickly on your team. You’ve been together awhile, you had a big success back in 2010, 2011 was it? When was the…

John Black: 2010, late 2010.

Matthew Gordon: I mean it was… well, tell people. It was significant.

John Black: When we set up as a company, really the company was founded by myself, Kevin Heather who’s our Chief geologic officer and Mark Wayne who’s our CFO. And we were set up by some other gentlemen who were running companies and had the idea that Copper prices might improve in South America. As we set up, we formed a company to do just what we did with Antares, and what we think we’re all well on our pathway to doing with Regulus again, is carefully identify a project that has that potential to be large enough and economically robust enough that a major company would like to acquire it from us. That’s based on decades of experience. Kevin and I have both lived and worked in South America for many decades, more, probably, than we care to admit on this. And we have access, we have language abilities, and we have familiarity with the ground. So, we scour through our contacts and our knowledge of the area to identify these projects. They’re hard to find but once you find them, get on the right one, drill it out with good support from some of our major shareholders, and then ideally sell that. So, with Antares we had the good fortune to discover the Kira deposit. Drilled that out over a number of years, completed a PEA on it. We’re just at the point of deciding to move it to pre-feasibility and First Quantum made a move on us and elected to acquire the project. So, a project that we paid $15M to acquire in stage payments we ended up selling for about $650M at the end of 2010 to First Quantum.

Matthew Gordon: That was a great result for all concerned. I guess that’s why you’ve got the following you have today. So just on that, you’ve got some cash, which will take you through to when, how long will it last?

John Black: We have a little over $10M in the account right now. We’re projecting 25,000m of drilling in calendar year 2019 on this as well as additional metallurgical work and acquisition of surface. So, we will need to do some type of financing before the end of 2019. It’s not immediately urgent and we have some very exciting targets we’d like to test before we get to that point. But we will seek alternatives to do an additional financing sometime before the end of the year.

Matthew Gordon: And would you expect that from the current institutional shareholders you have, or you’re going to go to the retail market?

John Black: Well it’s kind of an interesting market for juniors like ourselves right now. It’s increasingly difficult and uncommon to see more traditional private placements that we’ve all been accustomed to for quite some time on this. And almost all of the serious financing, the larger financing for groups like ourselves that have a good project, they’ve really come with the benefit of a strategic partner. Many times, recently those have been mining companies that come in and supported to take a 9.9% or 19.9% position. We have the benefit of having Route One, our major shareholder, is kind of being our cornerstone investor on that. So, we’ll explore various combinations on that where, even though it’s a difficult market, we have established large investors to support us, as well as a number of new friends that are curious about watching how we move the project along and there are potential alliances that could emerge from those.

Matthew Gordon: Right. And I think it’s well known, well understood that the retail market is the thing which drives the share price and clearly the better the liquidity, the better with the volume on the retail, the cheaper the money is for you. Not necessarily what your institutional partners want to hear, but that’s good for you and it should ultimately be good for them. So, what are you doing to drive that understanding in the marketplace at the moment?

John Black: Well as we move through stages in the projects, when you really early on want to make those early discovery holes, you see increased volume on that. Now we have a lot of shareholders who position themselves pretty well and are kind of happy to watch their position. So, we need to develop an additional wave of shareholders to come in. And we’re doing that through increased interviews and increased marketing awareness to get the story out. Quite frankly I think one of the main drivers that will be for this, is that if we see the Copper price really take off on this. Where I think …I just came out of the Osisko meeting and in Santiago and there, like many other places, there is a strong anticipation that there’ll be a demand-supply gap in the not-too-distant future and, most likely, a subsequent rise in Copper. I think everybody realises that’s on the way. It’s driven by electrification of vehicles and a number of other increased uses of Copper, at the same time Copper production is declining. So, I think everybody thinks it’s happening but everybody’s a little bit nervous to jump in. And my experience on this is that when we see prices move on that then there’ll be a sudden turn and we’ll see more likely increased liquidity, increased interest in opportunities just like we have.

Matthew Gordon: It will be interesting see how that turns out this year. I think as most commentators always say, ‘they’re right, they just don’t know when they’re going to be right’. So, we shall see. John, thank you very much for your time today. That was very interesting and thank you for sharing that with our viewers. Appreciate it.

John Black: OK great. Thank you very much.


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

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Superior Gold (TSX-V: SGI) – Getting Back to Basics, Chasing a New System for Improved Grade (Transcript)

We interviewed Superior Gold’s CEO Chris Bradbrook. He says that they are getting back to basics which will help them deliver a lower All In Sustaining Cost (AISC), and they are chasing a new system to make Superior Gold cash positive again.

Click here to watch the interview.


Matthew Gordon: Hello Chris, how are you?

Chris Bradbrook: Morning. I’m good, thank you and yourself?

Matthew Gordon: Not too bad. Where have you come in from?

Chris Bradbrook: Where have I come from? I was coming from Perth. I’ve been in London since Saturday.

Matthew Gordon: Jet setting life you lead. You’re going to tell us a little bit about Superior Gold. Why don’t you give us a two-minute elevator pitch on the story just to set things up and we can, perhaps, dive into it.

Chris Bradbrook: Well we bought this asset in October 2016. And essentially what we saw, what I saw, was an asset that’s been in continuous production for almost 30yrs. So, it’s not like we were showing up and saying, ‘we’re the smart boys in the room that know how to run it’. It obviously was a stable mine. It had been in Barrick for a number of years and they’d sold it to Northern Star, so it had kind of been buried within a bigger portfolio. The price was right. It was only AUD $40M. The infrastructure to replace would probably cost you about US $2.5Bn in today’s dollars. So, anything you did to grow it, it was all we could be quick, low capital intensity, had a large resource base. It was a sixth or is the sixth largest historic gold producer in Western Australia. So, I saw a tremendous asset with great opportunity that basically had been unloved. There’re so many examples where companies have taken an asset like that, and that’s what matters to them, and they work, and they make it into a success. So that, fundamentally, was why I like the asset, and a first-world location.

Matthew Gordon: You bought into a producer with existing assets in place. At a price you felt was reasonable.

Chris Bradbrook: Correct.

Matthew Gordon: Yeah, fine. Let’s deal with last year first. So, what happened? Almost a year ago today your price is about three times what it is today. There’re a few things that happened, why don’t you talk us through that?

Chris Bradbrook: Well, if I may, I’ll go back to the year before, first – 2017. So, our first 15mths of operation, we were putting about US $2M into the bank every month. So, we were running it as a business, making money. That was the philosophy. That’s what we wanted to do. And then in 2018, we started hitting a bit of a wall and we really struggled with the operations. And the grade dropped. We were trying to figure out what it was. And ultimately what it turned out to be is that the previous management had been essentially harvesting what Northern Star had left us, but not replacing it. So, there was no ability once we used up what was already planned out to… with flexibility.

Matthew Gordon: This must have been part of the data set which you inherited?

Chris Bradbrook: Yeah it was but, of course, you assume your management are replacing what they mined, but they weren’t. So basically, we had to pull everything apart last year to figure out what it took to do it. We changed over management. We put in more technical people.

Matthew Gordon: You’ve got a new COO.

Chris Bradbrook: Yes. So that, I would say, that was the final piece of the puzzle. Even with those changes it still wasn’t happening. So, we sent Keith Boyle, who is now our COO, down there for three months. So, I said ‘look, tell me what is going on?’

Matthew Gordon: What did you discover?

Chris Bradbrook: Well first question I asked him was ‘is it the ore body?’ Because if it’s the ore body then you’re out, game over. He said, ‘categorically it is not the ore body’. He said, ‘you’ve got the right people’. He said there’s…. you need to basically focus on a basic operational thing, it is absolutely fixable. And as a result of that, he spent six weeks, three months and he liked what he saw. So, when I offered him the job, he’d done his due diligence and said, ‘Yeah I want the job’, so I think that’s really a testament to the asset. And the deal is he’s based out of Toronto but for the next six months he’s living on site. He’s not coming home until he’s got it back on the track.

Matthew Gordon: So, let’s come on to him specifically in a minute and get back to what he discovered and what he thinks he sees in this. He’s looked at the operations. Your costs are quite high, the AISC is quite high. Certainly the 2019 numbers look quite high. I mean, is he looking at optimising that or is that something you think needs addressing or is it something more fundamental than that?

Chris Bradbrook: Well I mean in terms of the cost it’s all about grade. Because for the first 15mths we all running an AISC at about a US $1,000. So, we were making $200-$300 an ounce margin.

Matthew Gordon: But still, you know, mid-level rather than what …

Chris Bradbrook: It’s not the cheapest mine, but it’s not the most expensive. But really what drives it for us, is our unit costs are already low. So, it’s all about grade. You get the grade back to more like a 4g/t stope grade. That’s when you’re going to make money.

Matthew Gordon: So, when you said the unit cost, what do you mean by that?

Chris Bradbrook: Well, you know, what it costs you to move a ton of rock. We’ve got a very stable handle on those. We’ve got them low. So, what then drives it is how many ounces per gram are you going to get per tonne.

Matthew Gordon: But you can move volume of dirt efficiently and with the equipment you’ve got, and no need to change that. You just need to get higher grades.

Chris Bradbrook: Correct. And if you look at the ore, what I can say for the first 15 months we had a good solid plan and we were mining around 4g/t grade and making money. When that plan, the long-term plan kind of evaporated, for want of a better word, we basically had …go to the easy stuff, which is like 2.5g/t to 3g/t. And there’s loads of that. But it’s not making you the money. So basically, one of the first things Keith has done, is he’s gone ‘OK, let’s put together a life of mine plan (LOM). Where are the gaps?’ So, you actually now can… don’t mine that grade, mine that grade, because that’s going to make us money. So, it all sounds probably very simple but often these fixes are. You just need someone to come in with a fresh set of eyes and say… and I was just down there for five weeks. So, between me and him, we were basically worrying everyone to death. Just saying ‘look this is what we got to do, let’s get it back’. And it’s not like we’ve not done it, that’s the point. It’s not like we’ve had this for 2.5yrs and we’ve never made it work. We did. We did make it work. We just have to go back to what we did. And we’re already beginning to see the changes and it’s that’s simple.

Matthew Gordon: So, tell me about those, so you’ve made some quick fixes.

Chris Bradbrook: You know a quick fix is really getting people focused on the plan and maximising grade.

Matthew Gordon: So, what were they doing before?

Chris Bradbrook: Well as I said it was because they were, I think, they were so frantically trying to get stuff through the mill, they just go to the easy stuff. So there never was that long-term planning going on. And so, we’ve instituted that. For example, one of the things you want in an underground mine, you want three months of developed stopes laid out ahead of you. So, if something goes wrong with your plan, you’ve got an option. We didn’t have that. In the time Keith’s been there, we’ve already gone from no stocks, to a month’s worth of stocks. So, we’re already seeing that change. Then we found out that because they were being a bit, I guess, frantic with their efforts, they were diluting the ore. That was amplifying the grade issue. So, all these things we’ve been put in… just basically forcing the guys to basically run to a higher standard. And I guess you’d always like to think that people just do that. And initially I kind of wanted to run the company lean. And for a single asset, I was thinking ‘well why do I need a COO?’ Well it turns out, you know, when things aren’t working you do need someone like that, that can step in and say, ‘okay this is what needs to be done’. And at some point, when we’ve got this back on the track, we will be looking at other assets and you need a COO for multiple assets.

Matthew Gordon: Again, let’s come back to M&A as an option in a bit. So again, what are the other kind of quick fixes? He’s looked at the plan and he said, ‘here’s what we need to focus on’, is there anything else?

Chris Bradbrook: No. I mean when you say it out loud, it always surprised me how basic it sounds but often things in life are like that. But it is all about having the plan, stick into the plan, having the flexibility, so if something doesn’t work… So, in other words, you say ‘OK if this goes wrong, how are we getting it back on track?’

Matthew Gordon: Right. Any other new hires that you’re thinking about, having learnt that a COO is quite important to you?

Chris Bradbrook: Well no, not really. Because we’ve got all the people we need at site. Keith has made a difference, a big difference, no doubt about it. And we’re looking at the… what I was saying, the dilution. I mean that’s a big thing. But that…

Matthew Gordon: Dilution of?

Chris Bradbrook: …basically we’ve taken too much of the waste. So, we’re mining it more efficiently, see you mine to the grade you planned. Because that’s, you know, obviously, if you mine… if you’ve got 5g/t stope plan and you dilute it to 2.5g/t. I mean you’re not going to make… you might take more ounces out, but you’re not going to make as much money.

Matthew Gordon: So, you haven’t been sold a dud in this instance?

Chris Bradbrook: Oh no, not all. I mean, like I say I think one of the things to remember is, this is an asset that’s always been in production. Some assets…

Matthew Gordon: But have they mined the good stuff out of it? I guess that’s the question people are asking.

Chris Bradbrook: They’ve mined the easy stuff. But I think also part of the thesis was that we could make money with what we know is there. But there’s something else there. I mean I’m absolutely convinced of it. There’s got to be another…. it’s a big system. So, we will find more.

Matthew Gordon: So, what are you doing in terms of identifying this new system or potential new system?

Chris Bradbrook: Well I think part of it is really pulling apart what the asset is. I mean you’ve got a drill database that’s all digitised. And if you were to drill those holes today it would cost you a US $1Bn. So, it’s an incredible exploration tool. So big a big part of that is pulling that apart, figuring out.

Matthew Gordon: Who’s doing that?

Chris Bradbrook: Well we got our geologist at site and consulting geologists. And we are probably going to give the database to, there’s a group in Toronto called Gold Spot. And they do big data mining. And I think ours is a big-enough set, they’ll probably be useful for that approach. And so, we’re doing what we can because that absolutely is our best exploration tool.

Matthew Gordon: So, let’s talk about some of those longer-term strategies. You mentioned M&A as a potential, but do you feel that you’ve got to sweat this answer first, or can you concurrently look at potential M&A activity?

Chris Bradbrook: Well you need the currency right. I mean we’re so beat up we just don’t have the wherewithal to look at things.

Matthew Gordon: Can I ask how much cash you’ve got?

Chris Bradbrook: Well we got US $15M. Our enterprise value is US $20M. It’s insane. So, I mean the bet anyone would have to make is, OK if you believe what I’m telling you, that the fix is there. We are so ridiculously cheap that it is a really good opportunity. Right now, the market’s pricing is as though we’re going out of business, which just is not going to happen.

Matthew Gordon: Well I guess that’s why you’re here today, to answer those questions about what the future looks like. So maybe talk to some of those things. So, you’re going to sweat the existing data and try and see what you’ve got there and optimise all that activity. M&A is that a realistic opportunity for you, got US $15M of cash, where I guess it’s allocated towards current activities.

Chris Bradbrook: Yes, we’re very focused on the asset. However, when people show us stuff, I mean, you’ve got to be prepared. So, you’ve got to learn about what’s around so that when you are ready, you’re ready in terms of your knowledge. So, we definitely look at things and turn stones over. But our focus is the mine. But absolutely, I mean one of the things we learnt from this is, if we’ve been a multi asset company and we started hitting these issues, we could have pulled people from other operations to help us out. So that has showed us, just from that point alone, having multiple operations is a good thing. And investors are obviously asking for it. They don’t like… you know, you live and die by what happens at your one asset. And investors generally get uncomfortable with that.

Matthew Gordon: Would it make you nervous, I mean given you’re, you say, undervalued, that’s a claim I think most people make.

Chris Bradbrook: If a CEO doesn’t think his company is undervalued, he shouldn’t get out of bed in the morning. But we are.

Matthew Gordon: You are the one? Great. Does it worry you or make you nervous about the cost of raising capital in this market with your current situation to do M&A activity, would you feel that you would look at optioning stuff, deferred payments. I mean, how would you tackle an M&A process?

Chris Bradbrook: Yeah, I mean you’re right. I mean, where we are right now our cost of capital is high. But like I said we’re really viewing M&A more now as we just want to know what’s out there, so that when we are in a position to do it, we’ve already done our background work. We’ve already talked to potential partners. But the first thing is we’ve got to get this sorted out. Get the market believing it. Get a share price that reflects it and allows us to actually go do stuff.

Matthew Gordon: Okay. Right. So, you’re looking at optimising the current processes, operations, hope for higher grades. Being able to identify higher-grades. Reduce that AISC down. You feel with this new COO, you’ve got the right leader for the technical team in the country. And we should be positive about the future. Is that the correct message?

Chris Bradbrook: Correct. Absolutely. But yes, totally focused on fixing the operation right now.

Matthew Gordon: Let’s talk about the team. Just tell me a bit about you. What’s your background, relevant to the operation?

Chris Bradbrook: My background?  Well technically I’m a geologist by training. It’s been a while since I’ve actually done geology, so I worked in the industry from 1980 to 1995 and then I was an analyst for about six or seven years. And then I went back into industry. I was V.P. Corporate Development for Goldcorp, but this was when all they were was the high-grade Red Lake Mine. And then when I left there, I formed New Gold. Which was a very different company to what it is now. It was just the New Afton Mine or deposit at the time. So, we raised the money to build that. And when I left there I started up a company called Crocodile Gold. Which really kind of led me to all my knowledge base in Australia. But that became Newmarket Gold, now part of Kirkland Lake Gold and the Fosterville Asset, which drives their valuation, was part of Crocodile Gold. And then when I left there, I was looking for something else to do. And ultimately this was what came out, Superior Gold.

Matthew Gordon: So, you don’t sound very Canadian.

Chris Bradbrook: No, well, I’m a Canadian technically because I’ve got my citizenship there.

Matthew Gordon: Okay. So, you’re based over there. From the U.K. originally. But with an asset in Australia.

Chris Bradbrook: Correct. Yeah, I like first-world assets. I really like Canada, Australia and certain parts of the States. So that is really our strategic focus.

Matthew Gordon: There’s a new COO on board. You told us a little bit about him in terms of what he’s done, so what is his background?

Chris Bradbrook: Well, the press release outlines this. He’s worked for small and large companies. North America, internationally.  He’s done everything from operating as an underground manager, to a general manager, to a COO to feasibility studies, raise money. So, he’s got an MBA too, he’s is a mining engineer. So, he’s got lots of strings to his bow. He understands all the various parts that matter to a public company.

Matthew Gordon: But you’ve got him focused on cutting costs and finding ore?

Chris Bradbrook: Well you just look at the problem in front of you and say this is what we need to do. So, and again like I say, he spent six weeks at site knowing full well what I needed and still said ‘you know there’s a tremendous opportunity, I want to be part of it’.

Matthew Gordon: Okay. And so, who else is on the team? If we look at these constituent parts for companies of your size. Technically you need to know what you’ve got. Whose looking after the financing and finances of the business?

Chris Bradbrook: One of the financiers is our CFO, Paul Armstead.

Matthew Gordon: What’s he’s charged with doing? What have you asked him to do?

Chris Bradbrook: Well quite simply, is make sure you know where the money is. Don’t do anything stupid with it. And if we are in a situation where we need money, give me the heads up well in advance. In terms of actually raising money, we’ve had to do it, that typically will fall to me.

Matthew Gordon: Tell us a bit about that. So, your shareholders are what, institutional at the moment?

Chris Bradbrook: Largely institutional. Canadian, some US. One or two in Europe but basically, it’s a North American shareholder base.

Matthew Gordon: Any names in there that we’d recognise?

Chris Bradbrook: Yeah, I mean well, Northern Star, our biggest shareholder.

Matthew Gordon: That’s presumably part of the deal?

Chris Bradbrook: Part of the deal it was. Century Select which is now CI Investments. They are a large shareholder. Donald Smith.

Matthew Gordon: They’re a Canadian promoter.

Chris Bradbrook: Donald Smith’s out in New York.

Matthew Gordon: Sorry, I meant the CI guys…

Chris Bradbrook: Well I wouldn’t say a promoter. I mean they’re a big blue-chip Canadian fund. I’m sure they be a bit worried that you called them a promoter. So those would be some of the big shareholders. We had BlackRock at one time. RBIM. So, we’ve had actually a pretty good list.

Matthew Gordon: How big is your retail following?

Chris Bradbrook: I would say it’s reasonably big. I would say we’re probably about 10%-20% retail.

Matthew Gordon: Again, mainly Canadian?

Chris Bradbrook: And North American and Canadian. Yeah, I mean every now and again I’ll meet someone from Europe who has picked the story up.

Matthew Gordon: Is there much liquidity in the stock at the moment?

Chris Bradbrook: It’s better. When we first start out, I mean, we were, because of those bigger shareholders, there wasn’t a lot of big float. So, liquidity early on was tough, but it’s better now. I mean we’re not trading millions of shares every day but a few hundred thousand usually and then every now and again you’ll see some blocks.

Matthew Gordon: And those are clearly the institutions trading in and out. But what’re the retail guys doing for you in terms of… do you think people understand the story?

Chris Bradbrook: Yeah, I would. I mean because, I’ve done this a few times, I’ve always valued retail. I mean, one of the challenges of retail is making sure they understand what you are by. I think from the questions I get from retail investors, they do actually understand.

Matthew Gordon: What questions do they ask?

Chris Bradbrook: Well they ask the same things you’re asking, which says to me they’re not off in some strange place asking questions that aren’t relevant. They absolutely understand what matters to us. They ask the same questions institutions do. Which is the same questions you’re asking, because it all boils down – there really are two or three key questions for our story.

Matthew Gordon: Absolutely and that people need to believe you can deliver against those.

Chris Bradbrook: Oh absolutely. I think I’ve got a decent track record of doing what I say. And I am actually totally confident that we are fixing this.

Matthew Gordon: Fantastic. So, who else is on the board that we need to know about in terms of active members of the board.

Chris Bradbrook: It’s a very small board and it was done deliberately. We’ve only got five people on the board. And I think with… you know at this basic level the board’s job is based and make sure I do my job. Or management does their job. But I think with a smaller company you kind of want people on who are willing to roll their sleeves up and help you. Because we just don’t have the numbers of people. So, our chairman is Marc Wellings who is former investment banker at GMP. He ran the London office for a few years as well. We’ve got Tamara Brown who is a V.P. Investor Relations at corporate development for Newcrest in the Americas. There’s myself. There’s Rene Marion who was chairman of Richmond. He was former Barrick and Erico. Really good mining engineer understands capital markets. Well, he was the chairman of Richmond when it got sold. It went from $30M to a billion dollars. So, he’s seen this movie before. And he worked for Barrick on this asset. So, he knows the asset.

Matthew Gordon: So, but is he an active participant?

Chris Bradbrook: Yes. Yeah, I talk to all of them regularly because I use their expertise, like Rene. I mean very important for us as an operator. So early on when I was trying to figure out what was going on, I said well, what would you do? And actually, Keith Boyle came through a recommendation by Rene, when I said well ‘who you know out there who would be a good person to take a look at this’. And then we’ve got one nominee from Northern Star.

Matthew Gordon: Yeah. And are they, I mean, they obviously must know a lot about this asset. And the fact they’ve stayed in says something.

Chris Bradbrook: I think they’d like to see us grow.

Matthew Gordon: Right. And it wasn’t just like option money … we’ll just do a deal, take a piece of shares.

Chris Bradbrook: We could have raised… we raised enough money, we could have just paid them out cash. There were a couple of things. I think they like the opportunity in the business model. They thought they could make more money. They saw that we could be a building block, I believe. And selfishly for us, I knew that the number one question I get asked was, well why would Northern Star sell it. So, having them in with someone in the Board.

Matthew Gordon: So, go on then. What’s the answer?

Chris Bradbrook: What’s the answer to that? Well I mean, you got to look at… because this what we’re doing here is really kind of what they built their business model on. But within about three months they bought four mines. They bought this one. A mine called Jundee in Australia, a mine called Canonabell in Australia, and mine called Candana. The three of them they got running the way they wanted them very quickly, so this became a bit of a head-scratcher for them. So, they decided to run a process…

Matthew Gordon: In the sense of what?

Chris Bradbrook: It just wasn’t going where they wanted as quick as they wanted to. But they actually gave us the entire operating team that we needed. So, the team that made a success for us when we took it over were the people that had been working for them previously. So, they were very important to us in getting it working.

Matthew Gordon: Thanks for that. So, let’s talk about last year in the context of, how do you think it went? What would you have done differently? I think you’ve answered some of these questions already. Can you try and summarise that for us?

Chris Bradbrook: Well look, I gave you the reasons why it didn’t go the way we wanted. So, what would I have changed? Well I guess like, as in all these things, you say well you know, early when it first started going wrong, we probably should have been more dramatic in trying to fix it immediately. But you sort of think the next quarter wasn’t bad. Okay maybe now we’re back on track and then late last year, you could see it was beginning to go off the rails again. So yeah, I think, if I really knew what I know now, I would definitely have moved faster.

Matthew Gordon: Hindsight mining…

Chris Bradbrook: Well yeah but, you know, we were asking all the right questions. I had the board involved. And we were, ‘well what is this, what do you need’. And yeah, you know that really is hindsight. I mean it’s just like you’re peeling away layers of what it takes to get there.

Matthew Gordon: Okay. And again, you’ve dealt with this slightly, this year what should shareholders be looking out for in terms of what you’re doing?

Chris Bradbrook: Well quite simply, on a quarter by quarter basis, they just need to see that we’re improving how we’re operating. We’re back to making money. That is simple as that.

Matthew Gordon: So, making money or cash flowing?

Chris Bradbrook: No, making money because, I am all about free cash flow. And like I said when we had the asset going the way we wanted, we were making money, and I mean making into the bank US £2M a month.

Matthew Gordon: Get back to that as quickly as possible….

Chris Bradbrook: Yeah. And you know we built a second mine, an open pit mine, all internally generated. We’ve never raised money since we went public. So, we must be doing something right.

Matthew Gordon: Debt free. So, there’s no kind of funky financing, sitting in the background, looking to clobber you?

Chris Bradbrook: No, and if you look on the balance sheet, you’ll see a small number for debt. It’s because we’ve leased financed the equipment. And then it just shows up as an ongoing cost.

Matthew Gordon: Very normal. So, give us your five reasons why you think investors should be looking at you and investing?

Chris Bradbrook: Well look. First world, that’s a start. Your first world location. A substantial asset where there’s tremendous exploration potential. 100,000oz producer with an enterprise value of US $20M. We will be going back to free cash flow. We’re one drill hole away from a discovery. At some point we will…. we’ve already expanded the Reserves and the Resource. But if we find something new high-grade. I mean there was an ore body there at one time. That’s part of our mineralization called Timaur. And it was a 1Moz of 0.5g/t. So, if we found another one of those. Yeah, we’d be happy. But that’s…but this is what happens with these assets. I mean Fosterville, I mentioned before, Kirkland Lake Gold. That was 3yrs ago a refractory ore body at 4g/t and everybody ‘knew’ it was rubbish. They drilled some holes and now they’re mining 50g/t. I’m not saying we’re going to find 50g/t but I’m just saying that’s what happens to these systems. If you try and understand them, you drill in the right place, there will be extensions. They don’t just end. And then this system, this is an immense system. It really is.

Matthew Gordon: Okay. I appreciate your candour and honesty in dealing with these issues. To put your hand up and say ‘we’ve had issues. We acknowledge that, and we know what they are. And we’ve put things in place to fix those. The investors should bear with us and look forward to what we’re gonna try and do this year.’ I think that’s quite a positive message.

Chris Bradbrook: Yeah. We’re telling them they should do something, clearly, it’s up to them. But I look at our share price and it’s been a downward trend since last April (2018).

Matthew Gordon: You think there is some upside there?

Chris Bradbrook: Well US $20M enterprise value for the story I’ve just told you, usually you get those valuations because people think you’re going out of business.

Matthew Gordon: You’d get that for the equipment, wouldn’t you?

Chris Bradbrook: Oh yeah. I mean look. You’d sell it… if we sold the asset today, you’d sell it for more than that.

Matthew Gordon: Right. Well look Chris, thanks for your time. I appreciate that. Do come back and keep us abreast of the story as it develops with the new plans, especially with the data mining element. That sounds very, very exciting to me. Thank you very much.

Chris Bradbrook: All right. Thanks a lot.

Matthew Gordon: Appreciate it.


Company page: https://www.superior-gold.com/

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Margaux Resources (TSX-V: MRL) – Parallels to an Early Osisko? (Transcript)

CRUXinvestor interviews Margaux Resources (TSX-V: MRL) President & CEO Tyler Rice, and Linda Caron, the Vice President of Exploration. Lots of near term deliverables with a huge project. Speaking to Linda Caron, who is currently in the field, she seems very excited about what they are seeing: “Everyday we are coming back with new finds. We could be working on this for the next 10 years and we’d still be making new discoveries. This is a very big project”. IAMGOLD’s Steve Letwin himself said in a recent interview with CRUX that “This is Osisko in the early days, it’s that good”.

Click here to watch the interview.


Matthew Gordon: Good morning Linda. How are you?

Linda Caron: I am very well, thank you.

Matthew Gordon: Wonderful. We haven’t spoken for a few weeks. What are you up to the moment? I know you’re out in the field which is why we’re speaking by phone. What’s happening?

Linda Caron: I’m up in camp. I’ve been here for about a week this stint and the crews…we’re on our second rotation of crew. Making great progress. Seeing a ton of stuff. Really exciting times. Every day, people are coming back with new finds. We’re doing mapping and sampling. Just trying to get our head wrapped around this project. It’s a very big project and it’s something with a lot of historic work. But it was focused in a very narrow area. We’re trying to just do a first pass visit to some of the other areas, to look and see what’s there. A lot of the historic work was on the Table Mountain side where there’s the high-grade veins. That’s not our primary focus right now. We’re really more interested in the bulk tonnage target. So just re-looking at known areas where people had been. They noticed something interesting but they maybe didn’t evaluate it from the point of view of the bulk tonnage mineralisation.

Matthew Gordon: We interviewed Steve Letwin recently. He was very excited by what you guys have got. So that’s Steve Letwin of IAMGOLD, CEO. He obviously has a position in your company. You’ll have been talking and when he talked to us 2-3 weeks ago, he seemed to feel that this was the equivalent of Osisko in the early days. Which is high praise indeed. What are you seeing there whilst you’ve been up in camp?

Linda Caron: It just blows my mind at the size of this system. The Taurus area which is where we have the 1Moz Inferred Resource. That’s about a 2km x 1km footprint. And not all of that is part of the Resource, but you can see the alterations continue. But if you go a kilometre away there’s another system that’s the same size, that’s really had…there’s no Resource for it. Had very little drilling. And right now, we’re working up on a target called The Lucky which has a similar footprint size. All the same things we’re seeing. We visited another one yesterday, totally different area. I’m just seeing big legs to this system. I think that the focus has been on Taurus and I’m confident that’s real. There’s Gold there. But I think that there’s a whole number of other Taurus’ out there just waiting for us to develop them. And obviously that’s a long-term plan and it takes a lot of drilling. I was saying to Tyler last week, I think we could be working here for the next 10 years and we’d still be making new discoveries. It’s just that big of a system.

Matthew Gordon: That’s really interesting. My guess, if it’s the size and scale that you think it is, you’re going to need some help sometime down the line in terms of partnerships, joint ventures. Is that part of the consideration? Or are we just focused on trying to identify what’s there now?

Linda Caron: I think for now we’re just trying to get boots on the ground and get a really good understanding of what’s going on. And then, obviously it’s going to take it’s going to take a bunch of money, to really fully test this area. And it’s a long-term proposition.

Matthew Gordon: Well I mean talking of which, and we’re going to speak to Tyler in a bit. You guys have just raised the next tranche of money and you’re doing it in small amounts, steady, and spending that frugally as you told me last time. What are you planning on doing with that money?

Linda Caron: I Think for now, we don’t want to be too dilutive and we really think the shares are undervalued. They’re trading at $0.11 today. So things are starting to move in the right direction. But I think for this season, what we’ll be doing is updating the 43-101 Resource for The Taurus. We’re going to be doing a lot of mapping and rock sampling, just to identify other targets that we may want to drill next year. And we’re taking care of some of the outstanding reclamation issues that the previous operators, of which there have been many, really didn’t do a great job of cleaning up after themselves and that’s become a problem with the ministry. And we wanted to come in and do things right from day one.

Matthew Gordon: And take the hit on the cost of that. Are we talking a lot of money? Or are we going to make sure that the most the money’s going into the ground?

Linda Caron: One of the things is there’s a whole bunch of old equipment. There are some assets that are really no value to us. The specific tyres for a specific piece of machinery that we don’t own anymore, that are probably worth a couple of grand apiece. And the idea is just to sell some of that stuff and that should cover the cost of a lot of the reclamation.

Matthew Gordon: Okay. You really are being quite frugal. And obviously-

Linda Caron: We really are! We’ve got an accountant as a President!

Matthew Gordon: I’m going to have to ask Tyler about this – his possible Scottish roots. So when we last spoke the shares were at $0.07 and they’re now at $0.11. Obviously, that’s very positive. Is that factor of the Gold Spot price going up or is that a factor of people starting to listen to your message?

Linda Caron: I think it’s a messaging issue. I still think we’re tremendously undervalued but I think we’re starting to get recognition. People didn’t know who we are. It’s a new project for us. And you can talk all you want but until you’re on the ground, it’s just talk. A lot of people were waiting for that June 20th shareholder vote from Wildsky Resources because that was sort of the final piece we needed to say that the deal was done. So since that day, we’ve had that news release you saw which had some of the historic drill results. And we just searched the database and we were looking for anything that was bigger than, thicker than 100 meters and better than a gram. And there are a whole bunch of those. And that’s a really good quality intercept and it’s a sign that the system is robust. It’s not just little veins with mineralisation spread over a big interval. We’re talking long continuous mineralised intercepts. And that’s what you need in these bulk tonnage systems. We’ve been waiting on that news release until we knew we had the property for sure. After that June 20th shareholder vote went through, we put that news release out. And I just think we’re starting to get attention. People are watching now, people are listening.

Matthew Gordon: I think that’s right actually. We’ve certainly had a few questions thrown at us with regards to what you’ve done after the last interview we did with you. People are keen to know more and we should arrange to speak when you are perhaps you back from the field with more of a view of what’s going on. But let me ask you about the announcement from last week, which was the Cassiar Drill data review. What were you trying to achieve and what picture has that been able to paint for you?

Linda Caron: What we were trying to achieve is to show people that this is a big robust system. And I think that those intercepts do that. Now the first one in the list, and I don’t have it in front of me, but we did two columns of data. One is actual assays, composited assays over the interval. And then sometimes there are very high-grade values because there is coarse Gold in this. If you happen to get a flake of coarse Gold in the core sample, the value is very high. If you don’t, the value is lower. One of the things that the industry typically does, is take that very high value and cut it way back to a more appropriate number. So we chose 30 grams to cut it back. And you can see the first interval in that table, the grade just about goes in half because it’s being weighted by a couple of really high-grade intervals. But the second one in the table doesn’t change at all. We’re quite confident that the Gold is there. The average grade is right and we may actually get an upgrade in values. One of the things we want to do when we drill it, is to use a larger core size. If we use HQ core, which is quite a large diameter, you capture a bigger sample. You have more of a chance of capturing those Gold flakes so getting a better representative estimate of the Gold’s value. All the previous drilling was much smaller. I think that by using bigger drilling we’ll actually see the Gold grade go up in that in that Resource.

Matthew Gordon: Well that’s exciting. That infers additional costs. Is that part of your planning in terms of your cost going forward?

Linda Caron: It’s not that big a deal. We’ve put out some tenders for drilling. We just told the guys what we wanted for core size and we got some really competitive bids in. I think the industry is a little slow right now. Drillers are hungry and people want to get in on the first program with us, on a project that’s going to go on for many years.

Matthew Gordon: Can we just talk about James Maxwell? Obviously, we know him from Sabina Gold & Silver. How did he get introduced? Why we brought him on board? What’s he going to do? What’s the value that he’s going to bring to the table?

Linda Caron: So that’s probably a better question for Tyler. I can speak briefly about it. But he and Tyler have a relationship. He’s certainly somebody that is known to our  technical team. We’ve all followed the successes in his career. He’s a technical guy. He’s very experienced in the junior sector. Sometimes we get complaints from shareholders that we’re not as tuned into the junior markets. We’ve got the big guys that can help us develop the deposit. But the process to get there is lacking and I think James is going to be a tremendous asset. He’s well connected in the industry. He’s well-respected and he’s got experience on this style of deposit.

Matthew Gordon: A note from the press releases, he’s responsible for finding 5Moz with Sabina which obviously helps. And of course, it’s quite easy to forget your ex-Kinross. You’ve got Kirkland Lake there and you’ve got IAMGOLD. It is big boy experience which I guess is very useful. But as you say, no bad thing to have someone like James come in and help at this stage. Okay Linda. Well thanks for the update. Let’s try and get something in the diary for when you’re back from your field trip and maybe have a proper chat then, and you can tell us about what you found.

Linda Caron: Sure. Let me give you one little anecdote before we close. So visible Gold in rocks is hard to find. And many geologists would go their career and not find samples with visible Gold. So yesterday, we’ve got a young fellow working with us and we’ve had him on some of these reclamation tasks. He’s just been here for a week now. And yesterday was his first day out with one of the geologists mapping. And they’re up at this new prospect, never been drilled and they come back at the end of the day, his first day in the field, and they found visible Gold. So super exciting. And it’s just every day is like that. Every day somebody is coming back with a new discovery, new alteration, new veining, new area. It’s just a really, really upbeat camp because it’s just so exciting.

Matthew Gordon: Well that’s genuinely fantastic. I’m very pleased for you. Long may that continue. We look forward to hearing more about it when we speak to you next.

Linda Caron: Yeah sounds great.

Matthew Gordon: Linda thanks very much. We’ll let you get back, I know it’s the start of your day there and you’re about to go and discover more Gold by the sounds of it today. We’ll let you do that. Thanks again for your time. Appreciate it.

Linda Caron: Thanks Matt.


Matthew Gordon: Morning Tyler. How are you?

Tyler Rice: Great thanks, and yourself Matthew?

Matthew Gordon: Not bad. It’s been a while. Good to catch up.

Tyler Rice: It has, lots of going on here.

Matthew Gordon: You’ve had some exciting news since we spoke. You’ve had James Maxwell join you, the Sabina Exploration Manager. That’s a great addition to the team. So why has he come on board? How do you know him? Who put you together?

Tyler Rice: I’ve known James for a number of years through mutual contacts. I connected with him at a number of mining conferences and as I got to know him in greater depth, and realising that he was a significant contributor to the growing of over 5Moz of Resource for Sabina and other properties that he’s been involved in. And having 20 years of experience as a manager and a professional geologist, he just really tweaked one of the gaps that we have within our organisation, from the junior mining perspective. Given that we’ve got Kirkland Lake, we’ve got IAMGOLD. We’ve got some great, big, strong names associated with our organisation, so we were able to fortunately invite James Maxwell to our special Advisory Committee, and he joins us Steve Letwin on that. And then rounds it out with Chris Stewart who is on our Board of Directors, who is the President of McEwen Mining.

Matthew Gordon: Pretty punchy Board and Committee you’ve got there now. I spoke with Linda earlier. She seems very excited with what she’s seeing in the field. Anecdotal at this point but she said she’ll come back on and tell us a little bit more about that in the next couple of weeks when she gets back. But to that point, you’ve raised a bit of money recently, for the next phase. Can you tell us how much you’ve raised? What are you allocating that to?

Tyler Rice: The second tranche that we’ve just recently closed of $550,000, Canadian of hard and $160,000 of flow-through is going towards mostly field work, mapping and getting our geos up to speed with the property, prior to dropping drill bits in. In addition to that, we’ll be updating our historic Resource that’s on the property for a million ounces of Resource. And we’ll also be working on a number of the reclamation matters that we inherited with the property. And that’s some low hanging fruit that we can clean up and move forward to build stronger community relationships, but also to demonstrate to the ministry that we are attending to the matters that were left behind by our predecessors.

Matthew Gordon: You’re having to stump up the cost for that. Are we talking significant money? We talking tens of thousands, hundreds of thousands, how much?

Tyler Rice: This year our budget is going to be around $78,000. Environmental costs associated with water monitoring and policy preparation with regards to some of the matters that were left behind. And the reason why we were able to get the property so cheap is because we have an ability to demonstrate our attention to dealing with these matters. And that’s part and parcel to the tailings remediation work that we’ve done in the past as well.

Matthew Gordon: Is that all going to come out of this current raise or whatever cash flow you’ve got left? Or is that going to maybe move over into the next raise, whenever that is?

Tyler Rice: That’s coming out of our current raise.

Matthew Gordon: And what else are you planning to do? Where’s the value coming from in terms of the next spend as it were?

Tyler Rice: The value for the next spend is really the lift on going from not having a Resource to having to a compliant 43-101 Resource. And that’s been engaged and kicked-off so that we can start the requisite QA/QC to move that forward so we can exit this calendar year with a compliant 43-101. And that’s to me the biggest value. We’re supplementing that with having our geos in the field doing the mapping, cataloguing historic information and going through some of the equipment on site that has substantial value but not necessarily to us. For example, there’s a number of wheels on site but we don’t even have the unit that is correlated to said tyres. So we’re looking at liquidating some of the assets on site that doesn’t have immediate value to our organisation. And that cash can then be turned around and utilised to create further shareholder value.

Matthew Gordon: It’s all small stuff in the scheme of things. The core focus has got to be the identifying where you’re going to drill. A bit more sense of what you’ve got. Obviously, you’ve been doing a little bit of this, a little bit of storytelling in the marketplace. Share price went from $0.07 from when we last spoke to $0.11 at the moment. Where do you think that’s come from? Do you think that’s just because the price of Gold has gone up or do you think it is because you’re better at telling the story in the marketplace? What’s happening?

Tyler Rice: June 20th was a strategic day for Margaux Resources as that was the day when the shareholders of Wildsky voted and approved the transaction. A lot of our ability to tell the story and get our message was subject to that approval. And now that we’ve bypassed that, we’re seeing Gold back into the spotlight it’s a combination of both. But given our ability to now state that we unequivocally have the Cassiar property, that gives us a stronger message.

Matthew Gordon: I think since we’ve been talking, you have always done what you said you were going to do. Which is great. We have talked in the past about identifying other M&A activity, and targets. Are those sorts of conversations happening?

Tyler Rice: Right now we’re looking at our current acquisition at the Cassiar and triaging the properties that were inherent with that acquisition. And as you’ll note from Linda, every day we’re coming back with new opportunities within the 60 ,000 hectares of land that we just inherited with the transaction. And so yes, we keep our eyes open for other alternatives in British Columbia. But we do have a bit of a blinder until we have fully triaged our recent acquisition.

Matthew Gordon: What have got, you’ve got 60,000 acres, or is it hectares?

Tyler Rice: Hectares.

Matthew Gordon: My goodness, that’s a small country. I guess you’ve got a lot on your plate as it is. But that would be interesting to see how that develops out. So what are you excited about for the next quarter?

Tyler Rice: For the next quarter, getting everything ground truth. Having our geos continue their mapping. When we have geos coming back with visible Gold, it’s exciting every day. And identifying where we’re going to plunk down that first drill hole. And then ultimately, looking at our 43-101 complaint Resource. I truly believe that’s the ultimate piece that’s going to move our needle more strongly.

Matthew Gordon: Tyler thanks for the update. Appreciate it. I look forward to getting the next piece of news from you. Let’s catch up in the next few weeks when things have moved long a bit.

Tyler Rice: Absolutely. Thank you for your time Matthew.

Company page: 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.

RNC Minerals (TSX: RNX) – 390% Increase in M&I Resource. News Release 27th June 2019 (Transcript)

CRUX investor sat down once again with Mark Selby, CEO of RNC Minerals (TSX: RNX). We ask Mark Selby about the latest drill results, Zone A, exploration, mining plans, resource update timing, Higginsville Mill plans, GDXJ Index, Dumont conversations, share price and the news of the recent Cobalt 27 acquisition by Pala Investments.

Click here to watch the interview.


Matthew Gordon: We will be speaking in a second to Mark Selby. He’s the CEO of RNC Minerals. We spoke to him a month ago and he’s going to give us an update as to what’s been going on since then. They had a press release out this morning about their drill results in the Western Flanks of their Beta Hunt project. But we’re also going to be asking about Zone A, exploration drilling, his mining program, the resource update due in Q3. Higginsville, the GDXJ listing, Dumont and his opinion about the recent Cobalt 27 acquisition. So Mark, hi how are you?

Mark Selby: Great sir. How are you?

Matthew Gordon: Not too bad. Now you’re doing the rounds in Toronto. I know you were in New York also recently.

Mark Selby: Obviously with today’s release, it’s getting lots of attention and lots of investor enquiry. So it’s been a good day.

Matthew Gordon: Well that’s why we called. So obviously we’ve been through the press release. Do you want to give us the highlights in your own words?

Mark Selby: The key thing there is when we bought this asset two years ago, we wanted to drill out the Resource, get a mill in place. And today’s Resource is a vindication of what we saw as the massive Resource potential for the mine itself. So what we announced today is just for Western Flanks. 710,000oz M&I Resource and another 250,000oz of Inferred. Almost a 1Moz combined. At a discovery cost of less than $5/oz. And Western Flanks remains open up along strike and at depth as well. And again we think these structures can continue for many hundred metres, so we’re very happy with the results today. And now we’re entering a phase the exploration we’re going to start to step out… Now we’ve proven what the potential of one of these shears looks like, we’re going to step out and start to highlight where the Gold that we think exists is in some of the other shears on the property.

Matthew Gordon: That’s a great point to bring out. So this was just along 1km of one shear and you’ve got another three shears of aggregate 4km.

Mark Selby: Exactly. So lots of room to go find a lot more ounces.

Matthew Gordon: I’ve got to talk about the cut-off grade. Now that’s shifted from 1.8g/t Au to 1.6g/t Au. You’ve got a grade tonnage curve diagram in the press release, we can see that. But maybe it’s worth just explaining that for people, why you’ve done that. In fact why couldn’t you go lower?

Figure 1: Grade tonnage curve for Western Flanks Resource – Measured and Indicated Resource only (CNW Group/RNC Minerals)

Mark Selby: I think with our own mill and with the mining costs that we think we’ll be incurring on a go forward basis, we think that’s the appropriate cut-off grade. I think you highlighted the grade tonnage curve there, and the point we made in the release is that there’s 450,000oz of that 750,000oz is at 4g/t. So where we’ll end up in a mining plan, which will be out by the end of third quarter, was likely somewhere between that 3 and 4 grams. And it gives us lots of ounces to work with.

Matthew Gordon: And I’ve noticed you are also quite careful in the release to talk about, and focus on, the bulk tonnage and not the High-Grade ‘nuggety’, I think is the word of the day, Coarse Gold. Why was that?

Mark Selby: We can’t put a Resource around it, so it will be bonus ounces and bonus grade on top of whatever we have in the base Resource today. So that’s the way that investors should think about that going forward.

Matthew Gordon: I think it’s quite a well-written press release so perhaps people should have a look at and there’s a few diagrams that are definitely worth looking at. You’ve also got a lot going on. And we haven’t spoken for a month so I want to take advantage of you today. There’s a lot going on. There’s obviously Zone A. You may be making an announcement on that. When is that due?

Mark Selby: Yeah. So the way we’ve done it, we’ve got the Western Flanks Resource out first. We’ll get the A Zone out probably sometime in the first half of August. And we’ll, in one technical report file, 45 days from now, we’ll have the report for both of those Resources. So it’s not as big…it’s not as thick as a Resource as Western Flanks. So we’re not going to see the same total ounces. But we should see a good bump in the Resource from what we had in 2017.

Matthew Gordon: And between now and then you continue to drill?

Mark Selby: So we’ve got to the one drill left that’s working on the exploration holes. Again the diagram in the release shows where the Fletcher Zone is. In 2016 we put one hole out there and hit 25m at over 2.5g. Mineralisation looked very similar to what we had a Western Flanks. We have our East Alpha, which is on the other side of the A Zone. And from the historic Nickel drilling, we literally have hundreds, if not thousands, of historical intersections from the Nickel drilling that highlighted where the where the Gold was. So we’ve got lots of targets to go after. And in this phase of the drilling we’ll be able to start to do that.

Figure 2: Long section of the Western Flanks (looking east) Mineral Resource colour-coded for 2019 resource classification and compared to December 31, 2017 mineral resource estimate. Note that all material mined has been depleted from resource. (CNW Group/RNC Minerals)

Matthew Gordon: When we last spoke you made a fabulous announcement in terms of the mining component. You’ve continued to mine. And you continue to make discoveries. When do you expect to be able to talk about that?

Mark Selby: We’ve been mining along that 16 level. So we pulled out initially 1,000oz. We pulled out a little bit more. From there we’ll end up seeing what the final number is once we get that Gold processed in the next week or two. But the key thing there is we’ve gone at the intersection of the set of shears three times, and we’ve hit it three times on the 14 level, 15 level and now the 16 level. We still have all of those stoping blocks left in between. And we’ve been pulling off a 1,000oz to 2,000oz per 5m level. You can do the math to see what the potential High-Grade coarse Gold that we might find once we stope those areas out. And that’s stuff that we’ll be doing between now and the end of this year.

Matthew Gordon: Okay. I think we spoke previously about a Resource update in Q3. That’s still on schedule?

Mark Selby: Yeah. That’s correct. It will be a Reserve update.

Matthew Gordon: A Reserve update.

Mark Selby: So we’ll have the first Reserve for Beta Hunt Gold in the mine’s history.

Matthew Gordon: Which is obviously great news. I think everyone is expecting great things because they have done the maths as you just asked. So the planning for the mine. That continues to evolve at the moment. Have your plans changed in terms of the kind of rigour and planning that you’ve put out so far?

Mark Selby: No. The first step in that was always getting a comprehensive Resource in place which we’ve got for Western Flanks and we’ll have shortly for the A Zone. And using that base we’ll look at the mine plan. Fundamentally, because of the scale, the thickness, Western Flanks that 10 to 40 meters wide. It provides us lots of opportunities to look at different ways to mine it. Potentially a lower cost way to mine it. We’ll see when the mine plan comes out. But we’re quite excited to have this much Resource to work with. Which should deliver a multi-year Reserve for the mine, which is ultimately where we wanted it to get to when we acquired it back in 2016.

Matthew Gordon: Well talking of which, obviously the recent acquisition, and you did touch upon it earlier, Higginsville. That obviously comes with a few ounces in the ground too. I think some people are curious as to what you’ve done in the last month since that deal closed. And do you have any sense of what the mix between Beta Hunt ore and Baloo ore will need to look like or could look like? Or is that still a work in progress?

Mark Selby: So it’s a work in progress. But with Higginsville, whenever you acquire an asset, the key thing is to get the people right. So our team there has been actively managing that integration. That’s gone well. We’ve ran our first batch of ore through. We don’t have the final numbers yet but based on the amount of Gold we’ve poured. We think that the mill performed quite well. We’re doing one of the last third-party tolls from there, and then the remainder of July, August and September is going to be focused on Beta Hunt and Higginsville material. By September we should be having quantities of ore from Baloo to feed the mill. And we’re looking forward to a decent Q3 and then a good Q4. Which hopefully we’ll be ramping back up Beta Hunt to whatever we think the optimal level is from the Reserve. Mine plan and Reserve update, that’ll be done at the end of Q3.

Matthew Gordon: Two questions that come out of again from listeners and viewers, is obviously you continue to do work there. What’s your expectation in terms of the All In Sustaining Cost (AISC). You had a number previously. You’re going to be doing this work to optimise that. What do those savings mean in the new environment we’re in today?

Mark Selby: I think in terms of All In Sustaining Cash Cost, we should come out somewhere in the range of $900oz to $1000oz. We can do better than that. Certainly will. And that assumes the zero High-Grade Gold. So any of that will help increase the denominator and help bring that number down.

Matthew Gordon: You used the word earlier ‘vindicated’. So you feel that this… you’re on the way to vindicating the decision to acquire this. Because you had a few critics at the time. I think the chat rooms would bear out that perhaps people think that’s now quite a smart call of yours, especially with Gold having done what is done in the last couple of weeks.

Mark Selby: With Gold at $2000 an ounce.

Matthew Gordon: Australian dollars.

Mark Selby: $2000 Australian dollars an ounce. Yes. With Australian dollar. With Australian Gold at that level. Having done that mill deal when we did, was very fortuitous because there’s lots of low-grade open pits scattered throughout the Kalgoorlie region. And with Gold at these levels there’s going to be a new surge of ore. Looking for a mill to process it, to take advantage of these high Gold prices. So we are in the position over the next six months here, that as people who are looking for capacity to process, we are one of the few people who have it.

Matthew Gordon: Remind me what the mill capacity is?

Mark Selby: Basically, it’s about 1.2Mt per annum.

Matthew Gordon: And what does that work out a day?

Mark Selby: That’s about 3,500 tons a day.

Matthew Gordon: And you think that’s the limit?

Mark Selby: No I mean there’s potential to expand it further. Westgold Resources was looking at options to make it a larger mill. So for the right opportunity, if someone’s looking for a capacity to mill a sizable Resource, if it makes sense for our shareholders and creates value for shareholders that it’s something we’ll take a look at.

Matthew Gordon: I don’t quite understand the process for optimising or upgrading it, but is that a quick to market process?

Mark Selby: It depends on how much you would want to expand it. Right now we want to focus on filling what we have. But there’s a number of different projects in the area and if there’s an opportunity that makes sense we’ll it will definitely take a look at it.

Matthew Gordon: And you have made a statement previously that you believe that the grades will improve at depth. Do you still feel that’s the case with a new data that you’ve got?

Mark Selby: I think that’s one of the things and we highlighted it in the release, was the final hole of that Western Flank’s campaign, which is sort of the deepest northern most hole. It had a fairly consistent grade across the intersection at over 6g/t. So we’ll see when we continue to drill further north and further down and see what happens. But if the grades continue at those levels then that gets too a pretty exciting grade going forward.

Figure 3: 3D View of Beta Hunt gold resources and Exploration Targets (CNW Group/RNC Minerals)

Matthew Gordon: Okay. Well let’s step back and we’ll wait and see. What is the focus between now and December then for you? You’ve got a lot of moving parts here. And I’m looking at the share price today, hasn’t really moved on what is now reasonably good news. I think maybe a few people taking the chance to cash in. Which is fair enough. Name of the game. But for you, what’s important?

Mark Selby: We’ve been focused on getting a multi-year Reserve mine plan in place for Beta Hunt. And so that remains on track. And we will look to have that in place by the end of the third quarter. Based on that we will then look to ramp up the mine to the level that that mine plans suggests, makes the most sense and creates the most value. At Higginsville, we will be looking to get Baloo into production by September. And then between the optimisation between the Higginsville property and Beta Hunt, in terms of feed for that mill. And then on the Dumont front, we’ll be continuing to resume discussions with a number of people around partnering and financing on the Dumont project.

Matthew Gordon: Well that’s great. That was one of my questions actually, have those conversations started up again or are they about to resume?

Mark Selby:. They’ve been ongoing. One of our team was just in Korea last week, so those discussions continue in earnest.

Matthew Gordon: Also by the way, congratulations on getting on the GDXJ Index. I think people perhaps haven’t given you enough credit for that. I was talking to the CEO of a $700m market cap company who is very keen to get on the Index. You’re obviously a lot smaller than that but you’ve a very enthusiastic following and trading which I think has got you on that. So congratulations.

Mark Selby: Thanks. And that’s the thing too is, liquidity in the stock is something that’s important to join an index. And so that consistently good volume that we’ve shown through September is what allowed us to join it. And obviously we were quite happy with the response post the index listing last week.

Matthew Gordon: I think it’s important to note that, the importance of it. Obviously again, looking back to from September to now, shares 9x higher than they were then. Which is great. But you just turned the corner. So getting back to where you were. Are you feeling confident with the news coming through that people should start reacting to that in the marketplace? And if so is it going to be institutional or retail?

Mark Selby: I think that one of the big things about this Resource update and then the A Zone Resource update to come, and then a Reserve, is I think for some institutional investors relative to the Resource base that we had at the time, valuations look pretty rich. So the fact now that we’re getting some pretty robust Resource and hopefully robust Reserves in place, we will make it a lot easier for them to step into the story and step in a meaningful way. Fundamentally for investors today, yes the share price is up quite dramatically. But my beliefs always been is that we acquired this asset because there’s a 5km ramp system sitting above what we think is 4 shears across +4km. And so once we start demonstrating the Resource potential of those shears, which I think today’s announcement is a major step forward on that, the reality is there’s very few multi-million ounce Resources available in low-risk jurisdictions around the world. You have a bunch of Aussie mid-tiers that are cashed up with well valued paper. You saw some transactions that occurred during the last month. I think over the next 6 to 12 months, if we continue to do what we’re doing, we may start getting a few knocks on the door. Or maybe more than a few knocks on the door.

Matthew Gordon: Well you’d hope. Just to finish off because I know your time is tight, you’re running around the city at the moment. We got into this because we appreciated the rigour and the planning and the thought and the strategy to this, and you’ve always said from the start this is going to be big. Question is how big. You’re now telling that story to the institutional brokers, the Haywood’s, the Cantor Fitzgerald guys. How are they reacting to what’s going on over the last couple of months?

Mark Selby: I think getting the mill, milling solution in place took a big question mark around the asset away. I think it’s one thing for a CEO to say, ‘oh we’ve got a massive Resource potential’. It’s another thing to deliver 700,000oz of incremental Resource at a discovery cost of less than $5oz. I think it ticks the question mark around what the potential could be now that we’ve demonstrated for one shear. This next round of drilling is really going to step out and test some of the other shears. And I think really start to show what the potential of this asset could ultimately be.

Matthew Gordon: And you think technically things are going as expected, as you planned? There haven’t been any hiccups since when we spoke last?

Mark Selby: No. Beta Hunt’s working well. Higginsville, the integration is going well. We’ve got a great team in Australia in place. And with the Dumont update as well, we’re firing on all cylinders on Dumont as well.

Matthew Gordon: Well talking of which. Cobalt 27. They just did quite an enormous deal with Pala Investments. Do you think that’s been a good deal for Cobalt 27? For investors? For Pala?

Mark Selby: Well I think with Cobalt 27, now becoming Nickel 28, I think it highlights what some of the potential is in the Nickel space. I think the portfolio of assets they had, between royalties and mining assets and stuff that is more Nickel and less cobalt, or more Cobalt and less Nickel. It helps to separate the assets and bring some clarity and focus to each of the portfolios. I think they’ve got a very fundamental belief in where Cobalt is going and it’s a transaction they’re paying a premium for.

Matthew Gordon: It’s interesting, I think congratulations due to Anthony. We’re speaking to him shortly actually. And by inference yourself with Dumont. Don’t forget Dumont, it’s a big part of this story. Well congratulations by the way. I just want to say that. It’s been a good month, been good month for shareholders I think. You’ve got to keep it going. The hard work has just begun. But also please pass my congratulations on to Russell Starr, he did a great presentation recently. I think anyone watching this, should maybe look at Russell’s presentation as well that he did. I think last week.

Mark Selby: Yeah. At the conference in the US there.

Matthew Gordon: Yeah, perfect. Okay well I’ve taken enough of your time. I know you were you were rushing off.

Mark Selby: Okay. Thanks Matt. It’s great to catch up and we’ll be catching up again soon. 


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.