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

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

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

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

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

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

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

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

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

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

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

We Discuss:

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

CLICK HERE to watch the full interview.

Company Website: https://gogoldresources.com/

Matthew Gordon: Hello Brad. How are you sir?

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

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

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

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

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

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

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

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

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

Matthew Gordon: Right. Okay.

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

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

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

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

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

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

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

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

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

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

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

Bradley Langille: I’m sorry, the contracts?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bradley Langille: Yes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Matthew Gordon: Thanks very much.

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

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

The GoGold Resources company logo

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

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

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

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

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

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

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

We Discuss:

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

Company Website: https://gogoldresources.com/

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

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

The GoGold Resources company logo

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

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

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

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

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

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

We Discuss:

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

Company Website: https://altamiragold.com/

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

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

The Altamira Gold company logo.

First Mining Gold (TSX: FF) – I Sip On 24’s, You Sit On 24’s (Transcript)

The First Mining Gold Logo
First Mining Gold Corp.
  • TSX: FF
  • Shares Outstanding: 629M
  • Share price C$0.15 (17.03.2020)
  • Market Cap: C$94M

Interview with straight-talking Dan Wilton, CEO of First Mining Gold Corp. (TSX: FF).

First Mining Gold Corp. (formed in 2015) is a North American gold development company with a diverse portfolio of gold projects. First Mining Gold Corp. has a large resource base of 7.4Moz gold in the Measured and Indicated categories, and 3.8Moz of gold in the Inferred category. Its assets are in ‘mining-friendly’ jurisdictions: Eastern Canada, Western America and Northern Mexico (one in the south). First Mining Gold Corp. is focussed on advancing its assets towards production. It holds a portfolio of 24 mineral assets. Is 24 too many? Will it look to cash in on some of these soon?

What was the business plan on day one? Wilton says it wanted to find value in projects that companies had given up on. By adopting a roll-up strategy, and trying to excite the market with promising, underdeveloped projects, First Mining Gold Corp. hoped to create something of a PR frenzy via aggressive promotion.

How has it worked out? Investors may be worried, based on market performance. First Mining Gold Corp. had a share price of C$0.41 in March 2019, but sits at C$0.21 today; this from a company that reached C$1.18 in July 2016. The market cap stands at around C$124M today. So, why this decline? Wilton seems to be aware that First Mining Gold Corp. has suffered from its legacy as a promotional entity. As is always the case in mining, investors have long memories, and a full transition to becoming a project development company seems to have gone unnoticed. Wilton remarks that the stock has good liquidity, but this will mean little to investors if the share price continues on its current trajectory. Wilton states that First Mining Gold Corp. needs to find a way to maintain investor enthusiasm throughout the project development phase. The story of project development seems less attractive to the market, but is this because if the way the story has been told?

One worrying stat is the CAPEX needed to get First Mining Gold into production: c. C$800-850M. Wilton states the fundamental value of First Mining Gold Corp. will come by reaching “value milestones” and de-risking the project. Investors will wonder why Wilton is so hell-bent on starting with a portfolio of this size, but Wilton sees the opportunity as too good to pass up. Could First Mining Gold Corp. have started smaller and scaled up? Wilton states that history has shown single asset projects to be risky…

Wilton talks through their two main projects, and the plans for 2020: raising capital and getting permitted. First Mining Gold is currently finalising the second half of its private placement: c. C$5M. Wilton plans to spend the money on conducting a PFS, and edging the two main projects closer to permitting, construction, and eventual production.

We think Wilton needs to give the market more detail in the meantime about what the company is doing to work towards these permits and to further develop these projects. This vacuum of information is being filled by negative sentiment at the moment. Investors need to be made comfortable that this play isn’t set up to fail. Let’s see how First Mining Gold proceeds in 2020. It’s sure to be interesting.

CLICK HERE to watch the full interview.

We Discuss:


2:35
– Company Overview

3:38 – Original Plan: Changes Made Throughout the Years and Options Available

9:21 – Dan Wilton’s Background: What Was He Brought on to do?

12:44 – Legacy Issues and Low Share Price: Re-Modelling the Story

15:29 – Business Strategy: Have They Considered Less-Costly Means Forward?

17:17 – 8 Assets Altogether: What Are the Plans for the 6 Smaller Ones?

24:46 – The 2 Main Projects: Building Value for Shareholders

27:51, 35:29 – Raising Money and Getting Permitted

30:54 – 2020 Milestones: Convincing Investors of Future Success

39:45 – Diversifying the Company and Getting Noticed

Hello Dan, how are you sir?

Dan Wilton: I’m well, thank you. I’m well, thanks for having me here today.

Matthew Gordon:: Good, good. Now I know you’ve hot-footed it back from Bemo, Miami, in the sun, back up to base and then shortly off to PDAC, which is obviously going to be a very different experience for you. Are you are excited about what PDAC is going to bring?

Dan Wilton: Very excited, you know, having just kind of come back from Miami, I think the one thing, the real takeaway that you get is where we are as an industry and you’re starting to have the largest mining companies in the world talking about how they’re struggling to replace their reserves and they’re going to need to find new projects and add more productive capacity. So that all bodes well for a company that’s holding 6 projects in Canada with a total of about 11Moz of Gold in them.

Matthew Gordon: Okay, we’ll get into it, well, let’s do a one minute summary of the total story there and then we’ll get into some of the details. So why don’t you kick off and do that for us?

Dan Wilton: Yes, so First Mining is a project developer that was originally put together in 2015, 2016 by Keith Neumeyer as kind of a on an acquisition strategy, and put this portfolio of Gold projects together. Six main projects are in Canada, four of them are in the same area of North-western Ontario. Total resource is about 11Moz of Gold, and we’re actively advancing two of our key projects. One of them is Springpole, which is a 5Moz open pit project that we’re advancing through pre-feasibility, which we hope to have done by the end of the year. And getting our environmental impact statement completed and submitted early next year. And our Goldlund project where we’re actively drilling right now, is right now 800,000oz of Measure & Indicated, 875,000oz of Inferred at just off the highway between Dryden and Sioux Lookout. So we’re actively growing and exploring what we think is a very impactful project.

Matthew Gordon: Excellent. Thanks for that. Can we just kick off by talking about what the original plan was; obviously, Keith Neuymeyer, you know, a reasonably well known guy and you know, you start off with a plan in mind. Is that still the plan or have you had to evolve and change?

Dan Wilton: You know?  It’s interesting; we hear a lot about that because the company was started in 2015, and originally the original game plan was they were going to consolidate a bunch of exploration projects in Mexico; Greenfields exploration projects, but at the time, and we all remember how difficult the mining industry was in 2015, they looked around and said, we can spend USD$30 or USD$40 per oz exploring to try and find ounces, but you look in the market and you can buy ounces for less than USD$10 per oz in these really good projects that a lot of people had given up on.

And so, you know, they raised a bit of money and used this company; First Mining Gold to start acquiring projects with the theory of being a land bank. So the original strategy was we’ll acquire it, we’ll do just kind of minimal holding costs, the environment will get better and, you know, then we’ll be able to monetise these projects, retain interests, hold onto royalties, things like that. And so they were very aggressive in the acquisition phase and bought eight companies or projects in 12-months from 2015 to about mid-2016, and that really gave us the portfolio that we have today.

And people really kind of bought into this mineral bank concept, to the point that when they completed the last acquisition, the market cap of First Mining, with the exact same portfolio that we have today was about CAD$630M. You know, today we’re sitting, having raised a bit more money, having done 40,000m of infill drilling at Goldlund, having done two PEAs at Springpole, a really transformational metallurgical program to, I think, unlock a bunch of the recoveries and we’re trading at CAD$150M market cap, you know, four years later. So it continues for us to come to the point that we think that there is real, real value in this portfolio.

Matthew Gordon: Why I’m asking this question, I just want to get an idea of what’s going on in the minds of the management team. So, you know, I do remember that period in 2012 to 2015 when people were coming to us about giving them money to do this land banking, not just mining, but also, you know, oil & gas. And it was not something, I guess we were a little bit more conventional and couldn’t really sort of see the upside there, but some people were able to raise money. So you guys; that was the genesis of this, but you’ve had to pivot at some point. Was there a realisation that the market was not rewarding you as it once did; that must have been a big moment, big discussion?

Dan Wilton: Yes, it was. And listen, that happened before I arrived so it was really late 2017 as they finished up our previous PEA on Springpole that they came to realise, you know, we’re sitting with this world-class asset and we’re not getting the value that we think we can get from it. There’s been an enormous amount of work done already at that point, de-risking it, that we’ve continued doing. But the only way that you’re really going to surface the value from this project is to get it permanent. And it’s because Springpole sits under the deposits; it’s under the bay of a Lake and the development plan is building a couple of small cofferdams and de-watering the bay of this Lake, which all the technical and environmental data that we’ve compiled over 8-years says is entirely possible. And so they embarked on a strategy then and really kind of changed the message; in some senses, maybe a little bit too aggressively, they changed the message that we are going to build Springpole

Matthew Gordon: Okay. So before we get into Springpole, and we do have time to talk about it, so let’s park that for now. I’m just kind of coming back to that moment. So what do you know, I know you weren’t there, but you’ve been brought in for, when did you arrive actually? Let’s start with that.

Dan Wilton: Yes, I started on January 7th of last year, so I’ve been here just a little bit more than a year.

Matthew Gordon: Okay, but in 2017, they started seeing these changes in the markets and they knew they had to do something different to be able to raise capital, to be able to survive and what the market was doing then, which was a whole bunch of nothing, right? So you’re sitting on these cheap assets. So do you know what were the options available?

Dan Wilton: Well, I think at the time, the options are do nothing; just kind of hold and, you know, wait for better environments. But the company had raised USD$27M in 2016, and you know, even going through the due diligence in acquiring the assets, there were sort of opportunities identified that, you know, whether it’s at Goldlund, you know, firming up the resource or you know, hopefully adding to it, but certainly converting some of the inferred into indicated led to a 40,000m infill program that allowed us to really much better understand the deposit. And you know, the company at the time was reasonably well funded to execute on a couple of these sizeable plants. So they just kind of looked a little bit at the incremental risks and said, okay, well, we’ll fund this program, we’ll fund that program, just to try and answer some of the questions that investors and other potential partners would have about the projects.

Matthew Gordon: Yes, okay, but the cash is also a big driver that, you know, either access to it or whatever you had left after your various programs there. So, okay, well, let’s talk about you – why did they bring you on board? What were you going to do for them?

Dan Wilton: Yes, so I mean my background prior to joining First Mining, I was one of the three executive partners at a private equity fund called Pacific Road Capital, and we had USD$800M under management in two funds: investing in largely late-stage mining projects around the world. And you know, it actually, at Pacific road, looked at most of the projects in the first mining portfolio before they bought them. But I hadn’t really spent a lot of time you know, looking at First Mining as it came together because it was, you know, it was the whole mineral bank strategy, which I thought was kind of interesting, but then it was pretty aggressively promoted at the time and, you know, lots of momentum as they built up this portfolio. But it was targeted away from, not exactly targeted toward institution, it was really targeted towards more of a retail audience.

And so someone had said to me in 2018, after I left Pacific Road, you should really look at some of these assets at First Mining, right? So I did, and sure enough, I recognised that we’d looked at Springpole in 2013, we looked at Goldlund twice you know, down to drill databases and block models, like at a pretty good understanding. And we couldn’t get deals done in 2013, 2014, sort of as the market was rolling over and valuation expectations hadn’t quite adjusted yet. But I really liked these projects and so come late 2018, my predecessor had left as CEO of First Mining, and someone said, ‘Oh, maybe you should talk to Keith.’ So I more or less cold-called Keith. I didn’t know him very well. I’d met him a couple of times and said, you know, I think this is the most interesting portfolio of Gold projects sitting in a development company and in this sector. And I think as much as you need a CEO, part of what you need is someone to help you manage this portfolio.

So that’s kind of what I saw. And then I joined in early 2019. The first thing that we did was look at inside this portfolio, what are the best risk return investments you can make to surface the most value? And as you look at everything you could do to the assets in this portfolio: whether it’s drilling, whether it’s doing economic studies, the single biggest driver of value, if you believe that you can get a permit for Springpole, and we do, the single biggest driver of value is getting a permit for that.

Matthew Gordon: Okay. Again, we’ll come on to that. Again, I’m trying to get a sense of the management team here. So, I get your background, I think I might have actually come across you as well. There seems to be a sort of a, a kind of where two seas meet moment here where you’ve got an extremely, by your words, promotional team previously. I don’t know why the former CFO left, but you are coming along with a much more institutional mindset. And I’m just sort of wondering, you know, where it is today? Because I’m looking at your share price, it’s been falling away and you’re going to tell me it should be worth a lot more and we can have that discussion as well. But you know, NPVs don’t necessarily count for much, but the market cap is the market cap, and the share price is the share price. So do you think you have suffered from that legacy of being perceived as a promotional entity previously? I appreciate your telling me that there is a fine line now, but you’re now having to tell that story to the market that actually you’re bringing us a bit more rigour and process into the company now?

Dan Wilton:  Well, you know, when you go back to the history and how the company was kind of put together, we’re still the beneficiary of a lot of that, right? We have a lot of great long-term shareholders who bought into this idea and the value of this portfolio in 2015, 2016. And the other thing that a lot of people don’t appreciate is that by buying all of these companies and projects, we actually provided a lot of liquidity to the shareholders of these other companies who were kind of stuck in 2015. And the one thing you can say when you look at our stock, it is nothing if not liquid. You know, we still trade a million-ish shares a day in the TSX and another half a million in the US, so we have this great base of shareholders who we kind of acquired or you know, bought into the vision.

The challenge has been when things are, you know, aggressively promoted and they achieve certain values, you know, in enthusiastic times and with great enthusiasm, maintaining that enthusiasm as you get into like doing the real work can be hard sometimes. And so I think that’s where we’ve had, you know, people are sold to dream and I think that dream and the value of this portfolio is absolutely intact. I think the way going to realise that value, just I think comes a bit more from, you know, my background is fundamental value; I’ve spent my whole career trying to understand or, you know, invest in fundamental value in mining.

Matthew Gordon: Yes. Okay. I’ll take that as a yes. Fundamental value is a phrase that you use in your PowerPoint, actually. And you know, it stuck out to me and I know you have to throw the word potential in there. But what do you think is missing here in terms of the story? Because you look at the NPV, you look at the AISC, well, I guess the one big number in there is obviously the capex number; you’re going to have to find USD$800M, USD$850M to kind of get this thing going here. Have you guys considered starting smaller? Have you guys considered other strategies which don’t involve the need to go out and raise so much money for a USD$140M company?

Dan Wilton: Yes, listen; we faced this a lot on the concept of potential dilution; people talk about it. Listen, our strategy is advancing the value of this project, getting it through real value milestones and taking real risk out of it. And then in 2023, when we are having a discussion about is, a single asset company the right one to build an USD$800M project on their own? History has shown that to not be an entirely universally constructive exercise. So at that point then I think you have a bunch more options, but you should see the value of the project there. This is one of very few 5Moz projects that, you know, in good jurisdictions you get it permitted, you know, there aren’t that many projects in the world that can produce 400,000oz a year.

Matthew Gordon: Yes. But therein lies the problem; if you can get it permitted, it’s sitting under a Lake. Canada  is a very good jurisdiction mostly, but sometimes things take a little bit longer. And I do appreciate the size and scale of the Springpole project that you’re talking about, and there’s so much to like about it. But as I say, therein lies the problem of the single asset company, which you highlighted, which is if you have to wait around for that thing to be monetised in some way or you know, or give you the bump in the share price, then you could be waiting for an unquantifiable period of time. So what are you doing with the other asset, Goldlund for instance? Where’s that at?

Dan Wilton: Yes. So it’s one thing when you look at this portfolio, you can draw conclusions; this is not a single asset company. We’ve got a lot of really interesting projects and in some senses, honestly, probably a few too many for us to spend money.

Matthew Gordon: I’m glad you said it. I was getting there.

Dan Wilton: Exactly. And that’s been the other part of the recognition that, you know, as we’ve been setting capital budgets and priorities, getting our permits for Springpole, and in part of getting permits, it’s getting the permission to mine and the social license to mine, and that’s really important in us working with our indigenous communities. And we’re in early and active consultation there so that’s an important part of it. But you know, while that is going through a process, we have a lot, you know, a lot of other projects, five other projects that we need to help surface value from. And from our perspective, listen, the market is moving, the Gold industry is moving to a point where there is going to be a lot of capital needing to find homes to try and build productive capacity. People are going to need projects. We have some. So it’s about getting the projects to the position where they are able to attract other capital or attracting other capital now to get them ready for the time when the industry really needs them.

Matthew Gordon: Exactly. But you know, the money controls that conversation. So you do have to put as many things in place as possible. You’ve got your PEA, PFS later this year and hopefully EIA approvals in the first quarter of next year. I get it. So you’re moving that along like everyone’s got to do, right? It’s the usual path. It’s very clear. But what else are you going to be able to do? So you may have too many projects. I suspect you do. Are you looking to cash some of those in and off-load some of them? Are you bringing in strategic partners and how do you bring more cash into the company now? Over the course of this year, to allow you to do the things you’re going to need to do to be able to have meaningful conversations with materials or large caps who are looking at a 5Moz scale operation?

Dan Wilton: Yes, so I think we’re executing on that right now. So, we announced an earn-in deal on our Pickle Crow project in January, with an Australian company called Auteco, which a lot of people don’t appreciate if you haven’t actually done the read through, but it’s the same team that was behind Bellevue Gold, which if you look at what they have done with Bellevue, this is the Australian Explorers of the year, last year, you know, and they surfaced value in Bellevue by going into a past-producing, high-grade Gold camp and applying, you know, good state of the art geo science to delineate.

Matthew Gordon: It’s a great deal but what does that mean for you? What was the deal? Did you get cash out of it?

Dan Wilton: Yes, so the deal is, it’s not much cash up front. We’ll get a few shares up front and then they spend USD$10M over the next five years to earn an 80% interest. We’re carried through to a construction decision, which is pretty important in an underground mine where you know, that delineation of resource towards a mining decision is expensive. But what that project needed was a focus team and probably USD$10M to really outline the opportunity. The look through value on that for us, you know, if they have even a portion of the success that they had at Bellevue, which is now sitting in a USD$350M -odd market cap or something like that. You know, we still own 20% of the project. We have USD$4M of cash payments that would come in as part of the earn-in deal, and we he have 10% ish of the cases.

Matthew Gordon: Okay. So that’s a kind of medium to longer term play, and assuming they hit all the targets that they need to hit and they can continue to fund this thing, that could be something for the future. What else is happening with any of the other assets like Hope Brooke or Cameron for instance?

Dan Wilton: Yes, so you know, we spent, after we finished our financing in May of last year, we spent a little bit of time and a little bit of money trying to understand a proper game plan and look at a couple of the key risks on each of those projects. And so, as we looked at it, Cameron I think, is a real sleeper in this portfolio. The reality is, it was basically ready for production, or ready for feasibility; they did a Feasibility Study on it in the ‘80s, but there’s a 240m ramp down. It’s been developed into ore on three levels and there’s about a 30,000t bulk sample sitting on surface at the project right now. And it disappointed when they bulk sampled it on grade: so they thought they were going to get 5g/t, they got kind of 3.5g/t, and it has never been identified as big enough to support its own mill. But what’s happened from the 1980s to today is, someone’s built a 25,000tpd mill, 88kms away. So we’re thinking a little bit creatively about how that project could be moved forward. And at Hope Brook, you know, it is similar, there’s kind of one or two really interesting things that you need to understand about, you know, potentially could you be starting moving some waste rock and selling it as aggregate, for example, which some of the producers in Northern Newfoundland are doing. You’re right on tidewater, you’ve got a power line right on site that’s still energised. You’ve got, you know, ship, well, not ship-loading facilities, but you got a roll on roll off barge facility that’s still in great shape. You know, and there’s an almost a 1Moz resource there. So it’s kind of getting just enough information that you can understand what’s a right way to put it forward, whether it’s us or other people. But we haven’t had an environment where you can sell these projects for cash, right? That environment I think is coming. So in order to get them ready for that, it’s about finding partners who can help you move them to the position where they’re then in the right state that you can maximize the value.

Matthew Gordon: Okay. Well at least you’re answering my question; I do feel the whole way through this, you’re being quite straight with me. So you were talking and thinking about ways to monetise the non-core projects. You’ve got one which you’ve done a, what did you call it? A not a joint venture earning – an earn-in, and which may have some monetisation component to it at some point on-going. But today they’re not going to help you move the main story forward with, you know, Springpole or Goldlund. And I think that’s what shareholders, and certainly some of the viewers who have contacted us, are keen for you to start communicating to them; what are the points in this path forward that are going to allow them to, you know, they’re underwater, you know, get back to where they were. Stay around for the upside, hopefully, and stop the rot, as it were, because you’ve got all the right stuff, but you need to tell people how you’re putting it together. So what should they be focused on now? Now we’re very clear about the six non-core assets where you know, where they’re at, what are you doing on the Goldlund and Springpole to maximize that shareholder value?

Dan Wilton: Yes, as we talked about, at Goldlund, we’re drilling right now, and I think we’ve through our drill program last year identified at the Miller target, which is kind of 10 kms away from the Goldlund main zone. And we had some of the better open pit drill results in Canada last year. The challenge with Goldlund is that it sort of, like everything in our portfolio, gets overshadowed by Springpole. And so it’s difficult to get people to pay attention, when you get them to pay attention to, you know, 800,000oz at almost 2g/t of an indicated resource and another 870,000oz of inferred at 1.5g/t, that falls into an open pit with a sub 6:1 strip ratio, located just off the highway. We need to do a better job of highlighting the value of that. But it’s still wide open to continue to grow. But my concern to be honest, is we can put out great drivers; we put out 40m of 4g/t, and an open pit target 80m down last year and no one cared. Like you put out a 150m of 1.5g/t, that’s 10kms from our main deposit.

Matthew Gordon: Tell me what you’re going to do about that. That was the same for a lot of people. They put out stuff, they said this is a catalyst moment. The catalyst moment came and went. No one cared, right? So what do you do this year? You’re not a producer. Those are the people who are seeing the uplift and the benefit of the Gold price today. Gold’s gone up, your share price has gone down. What do you do?

Dan Wilton: So, listen, first of all, we are raising the capital to make sure that we’re funded to get there; we announced that we were raising USD$5M. We’re going to have a second close on that tomorrow, which will be larger than that. And what we’ve found is, you know, for all that we talk about, there are a number of shareholders who are disappointed, we have a number of great long-term committed shareholders. And I think when people look at how those shareholders have shown up to support us here, I mean, it’s been amazing for me and humbling that, you know, there is still a really great core group who are supporting us moving forward. And so that gives us a sense of, you know, we have the capital we need to move the project, particularly Springpole, through some of these catalysts. But you have to find other ways to do it, right? And part of that is our partnership with Asanko who are doing our Pre-Feasibility Study – all for shares, which is a pretty unique structure. But you know, we’re delighted to have that kind of partnership with what I think is the best engineering group we could be working with on this size and scale.

Matthew Gordon: Alright, So let’s come back to these raises; because you did one at the beginning of February, 14th February, and you said that you’re doing the second half of that now. Is that what you are saying?

Dan Wilton: This is, yes, it’s all been kind of been pulled together over the course of the last 5 weeks, yes.

Matthew Gordon: So that’s a total of 5+..?

Dan Wilton: It’ll end up being larger than that.

Matthew Gordon: A little bit more than that. Okay, great. So I guess what people want to hear is that that’s not for GNA and that’s not for director’s salaries. They want to hear what you’re going to do with that money which is going to generate, you know, dollar for dollar, more than that.

Dan Wilton: Yes. Well listen, this all comes down to what I think is pretty simple math. So as a corporate finance guy for 20-years, and a private equity guy for five years, if you look across the cycles, if you get a project permitted that’s of the size and scale that Springpole is, that project with permits should trade at somewhere around a 0.5 times its net asset value. So Springpole today, that’s USD$841M at a USD$1,300 Gold price, that’s USD$1.2Bn at a USD$1,500 Gold price. And you know, everyone used to kind of wring their hands when we’d talk about USD$1500 – does the project need USD$1,500? No it doesn’t. But in the environment we’re in, if we’re talking about a USD$1,500 Gold price and you know, C$0.75, this project is really, really robust.

And so to surface that value by getting the permit, gets you, I think a real opportunity at what is a multiple of our current share price rerating to get there. Now, it’s a lot of work and there’s still a lot of time to that. But getting this PFS done that takes, you know, I think a real demonstration of the technical risk out of it. Getting our environmental impact statements submitted, which we are aiming to do next year, that kicks off what in Ontario has been a pretty reliable two year process. So Ontario has permitted three big open pit mines in the last three years:  Red Lake, Hardrock and Magino: all of them, you know, tend to 35,000tpd open pit mines around a lot of water because there’s a lot of water everywhere in Ontario.

So when we get that permit and we get the project through that de-risking phase, and I don’t think it’s, you know you get no credit for it and then they hand you the permit and all of a sudden it goes up x4. You tend to, as you demonstrate that you are moving the project forward, you tend to see that value accrual.

Matthew Gordon: Talk to me about that because I’m fascinated by that because you know, there’s a line of logic here which says, don’t invest anything until there is certainty: and that’s when the permit has been submitted. There’s some level of certainty that you have got to a point where you think you can get it through, and then to when the other permit, or permits, are awarded. Okay. That’s some time away. But right now you’ve got, you know, you’re trading, but it’s trading down. Okay, so you’ve got 1M shares or so yes, that’s great, but it could be a whole bunch better. So what do you between now and then to say, look, we’re going through the process, putting the permit thing documentation together, but here’s what we can tell you between now and then to give people some comfort that you guys are going to be able to get this thing over the line. Because otherwise, people just sit back and wait, and that’s not good for you, especially when you’re raising money. That’s expensive money, right?

Dan Wilton: It is. And we are at the most difficult point of projects to raise money right now. This is unprecedented in my career; where you can find exploration stories with no resource and two drill holes that will attract x3 our market because everyone’s looking for something new, which is great, but it’s irrational. So what’s going to solve this over time? And it all comes back to, you know, what the titans of the industry are saying about peak Gold, and about how they don’t have any projects. When your senior Gold producers are trading at two times their net asset value, and they’re generating, you know, two to two and a half times the free cash flow that they were three quarters ago because the Gold price has gone up, you know; unprecedented free cash flow and high trading multiples. When they go to look for where those projects are, and it’s not us specifically, but developers generally are trading at 0.1 to 0.2 times your net asset value. So what closes that gap? You start seeing partnerships again. You start seeing investments buying intermediate and large-cap Gold producers and you start seeing M&A deals, and that’s what is going to compress that and get, you know, back to the rational metrics which are; these projects should trade at x0.5, up to x0.7 NAV and get acquired at 1 x NAV by producers trading at x1.5 to x2.

Matthew Gordon: No, I hear you but, and again you’re talking my language, I get it, but again, you’re towards the end, you’re talking towards 2021 – that sort of timeframe. I’m talking about now; for the rest of 2020 – what are you going to be talking to the market about? I know you can’t talk about conversations that you know, that you may be having with strategics, et cetera or M&A, or any of that kind of good stuff. You’re going to have to be like, here’s what we’re doing on a quarter by quarter basis, which is helping bring certainty to those conversations that we’re going to have with those strategics. What are you going to do?

Dan Wilton: So listen, there’s the challenge that you’ve exactly hit on, is that there’s only so much that you can talk about when you’re going through a Pre-Feasibility Study (PFS), right? So what are we doing? We’re doing an enormous amount of work in the next 6-months to understand and really pin down the development potential, economics and permit ability of this project. And so that’s exciting things like hydro-geology and hydrology and waste rock characterization and tailings and ongoing metallurgy. So I think we can talk about some of the milestones and test work of those things that are coming out. Not draw conclusions, because conclusions get drawn in a PFS at the end of the year, and in your environmental impact statement. But until then we can keep in dialogue with our indigenous communities, and in consultation, and we can do everything that we can do to move the project forward. And you know, that might be having discussions with partners. It might be finding a longer term source of financing it, you know, it might be giving people some degree of hope that the company is not just a perpetual ‘dilution machine’, which we hear a lot and is one of the concerns.

But we’re in that point where there is a natural wait and see tendency and you’ve absolutely hit the nail on the head. But one of the things with having all the other sort of opportunities and leverage in the value of these other projects in our pipeline is that we hope that there will be a bunch of other catalysts: whether it’s our partners at Auteco who are putting out new drill results at Pickle Crow, or who are putting out a new resource to Pickle Crow, demonstrating that there is value in these projects and we’re going to be able to surface meaningful value. Yes, it might not be in 2020, but I think with this financing getting closed, we’re going to have enough money and line of sight and runway to demonstrate. We can get to some of these real value.

Matthew Gordon: Okay. So the money you’re in the money of raising now is going to get you through to when? A few months, maybe?

Dan Wilton: The money we are raising now, and we’ll see what the final number is, but the goal is that it gets us through to the end of this year. And then again, we’re talking about if there is some other sources of financing, we can sort of put on top of that with a longer time horizon to see us through. Ultimately, listen, where I would like to get to, is to be able to say this company is funded to get Springpole from where we are today to our EIA approvals in hand, which is 2023 by our timeframes right now. So the challenge with this portfolio is that there are, you know, there are G&A costs and there are holding costs of 6 projects; some of which you can offset by doing asset deals like we have done at Pickle Crow. So that takes all of the costs and, and you know, we bring a partner in to help us to do that. So there’s lots of different ways that I think we can look at that. And it’s not all just dilution, right? So we’re actively in discussions with a bunch of other sources of capital that might look more at the project.

Matthew Gordon: I think that’s what people need to hear because like I say, you have got a lot of eight assets growing out of that: there’s a lot of costs, a lot of time, effort, distraction, et cetera. You know what your number one asset is, you know what your number two asset is. And I think people would want you to say, stop this ‘dilatory machine’, to use the phrase that you used a second ago, and give them a sense or an idea of how you’re going to stop that from happening. And you know, because once you’ve done a PFS, guess what happens next? We need an FS, we need a DFS. So, you know, it keeps going. And this question of, again, people want to know are you going to be financing that? Or is that the time to bring in strategic partners to help you with that? Those are the sorts of clues I think people are looking for.

Dan Wilton: I can tell you that the discussions we are having with potential strategic partners today are markedly different than the discussions we had a year ago. Right? And we have just come from a great forum to have a bunch of those discussions. And the world is changing and what a lot of people don’t appreciate, investors particularly, they don’t appreciate that the free cash flow to the Gold sector in the last 6-months has doubled. Right? You work on the assumption that all in sustaining costs in the sector is about USD$1,000 p/oz. We were trading at USD$1,250 and the Gold price was trading at USD$1,250, and the Gold price goes up to USD$1,500; that doubles the free cashflow to the sector. But we’ve only had that for two quarters. And in the first quarter, no one believes it. And in the second quarter, they’re still kind of setting their budgets for next year, but money is pouring into the coffers of producers right now. And at the same time, just watch the year-end results announcements from all of them; they’re talking about reserve reductions, they’re talking about not having been able to replace the reserves because of eight years of, you know, systemic and systematic underinvestment in productive capacity, or exploration or development or whatever. So yes.

Matthew Gordon: Again, I got it. I mean: well told story, well-trodden, you know, story. Again, it comes back to, because I see so much that is right with this, you know? And I do appreciate your honesty and forthrightness about what you’ve got and what you’re trying to do. So I do like that. What I’m not hearing yet and, but you’re telling me it’s coming, is how you’re going to explain how you get a seat at the table when these newly moneyed-up producers, because the Gold price has been, as you say, only for 2 quarters, let’s remember that producing cash where perhaps they were once struggling. And there’s a few of the big boys who have struggled until recently – let’s be clear, right? They need this to continue just to make right some of the wrongs of the past couple of years, quite frankly. But assuming some of them do come to the table, like some of these Australian guys who are cashed up, how do you get them to listen to you? We’ve heard some fantastic South American stories, you know, some other Canadian stories; it’s a very competitive environment. You know, you are sitting in a lot of ounces, but so are a lot of other people. So how do you get to the front of the queue?

Dan Wilton: Well, listen, much as I’d like to say it’s my charm and ability to tell a story, it’s not. It’s the fact that we have a great portfolio of projects, and when you look around the world, let alone in Canada, but look around the world and where you can scope out projects capable of producing in excess of 400,000oz a year, that is a very small list. And when you look at those projects, and then there is a calculation I would encourage you to look at and encourage investors to look at: what’s the percentage of the capital. So how many of those could you conceivably build for less than $1Bn? The answer is almost none. And in those other projects of this size and scale, what’s the infrastructure build requirement to get there? So everyone looks at Springpole because we don’t have a road up to the project today and says, ‘Oh it’s remote.’  We are 30kms from a class one logging road that I drove last week, and we’re 30kms from a power line. The actual infrastructure component of this is minimal relative to the size and scale the operation. But listen, it has its own challenges. And the challenges are that the deposit sits under the bay of the lake, but you know, that’s been known since they discovered it, it’s been known that it sits under the bay of a lake and there’s been an enormous amount of environmental baseline work done, like 8-years of environmental baseline work, and a 380 page report that their conclusion of which is there’s no species at risk and there’s no unique fish habitat here that can’t be compensated for.

So that, you know, I think in the end anyone who has not looked at this project in 8-years, which is most of the world, when they come back to see all of the work that has been done and the money that’s been spent to understand the key risks, they actually really get it. So that’s where I think we can have a different discussion around, jurisdictionally if you’re going to try and pick one or two projects that you’re going to back,  do you want a project that’s at 5,000m in the Andes that needs a diesel plant on the coast and a pipeline? Or do you want a project 100kms east of Red Lake, just off a logging road.

Matthew Gordon: Thanks very much. I’m just sort of running out of time here, but I do appreciate you running through that story with us. Like I say, there’s lots to like I want to hear more from you, definitely, because this sounds like some good things coming up this year. And you know, I wish you well for PDAC next week.

Dan Wilton: Thank you very much. It’s going to be a busy time, a really interesting time in the industry, so we’re all pretty excited.

Matthew Gordon: Yes, yes. Okay. Well thank you very much for your time and we’ll speak to you again soon.

Dan Wilton: Okay, great. Thanks very much.

Company Website: https://firstmininggold.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.

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

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Intercontinental Gold and Metals
  • TSX-V: ICAU
  • Shares Outstanding: 18M
  • Share price C$0.28 (17.03.2020)
  • Market Cap: C$5M

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

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

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

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

We Discuss:

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

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

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

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

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First Mining Gold (TSX: FF) – Eggs In 24 Baskets

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First Mining Gold Corp.
  • TSX: FF
  • Shares Outstanding: 629M
  • Share price C$0.15 (17.03.2020)
  • Market Cap: C$94M

We recently sat down for an intriguing interview with Dan Wilton, CEO of First Mining Gold Corp. First Mining Gold is a North American gold development company with a diverse portfolio of gold projects.

Why not read one of our informative gold-related articles while you’re here? Or maybe just watch another gold mining interview?

How does Wilton plan to monetise 24 mineral assets in total? Does First Mining Gold have exciting potential for gold investors?

We Discuss:

  1. The Gold Market Outlook For 2020
  2. 24 Mineral Assets: What Are They? How To Monetise?
  3. Raising Money And Getting Permitted
  4. 2020 Milestones: Convincing Investors Of Future Success

Company Website: https://firstmininggold.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.

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RNC Minerals (TSX:RNX) – 9,620oz Gold In Dec/19! Movin’ On Up.

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RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 607.8M
  • Share price C$0.43 (06.03.2020)
  • Market Cap: C$258M

We recently received an update from Paul Huet. He’s the CEO of RNC Minerals, overseeing perhaps our favourite turnaround story in 2019. RNC Minerals has turned from an unfocussed nickel explorer into a consistent, reliable gold producer.

We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

RNC Minerals delivered 9,620oz of gold in December 2019. This is a remarkable turnaround considering what Huet inherited.

We were interested in how Huet and his management team plan to keep this momentum going into 2020. Gold shows no signs of slowing down, but does RNC Minerals?

We Discuss:

  1. RNC’s Big Turnaround
  2. When Will The Share Price Follow?
  3. Keeping The Pedal To The Floor – What Is The Plan?
  4. Looking Forward To 2020
  5. The Gold Market

Company Website: http://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.

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RNC Minerals (TSX:RNX) – Phase 2 Of This Impressive Turnaround Story

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RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 607.8M
  • Share price C$0.43 (06.03.2020)
  • Market Cap: C$258M

We recently sat down for another interview with Paul Huet. He’s the CEO of RNC Minerals, and he orchestrated one of our favourite turnaround stories of 2019, transforming RNC minerals from an unfocussed nickel explorer to a consistent gold producer.

We’ve written several articles regarding RNC Minerals. We have been keenly following the story for the last year.

A steady 8,000oz+ gold production per month has changed the company and de-risked the operation, but what it the outlook for 2020? How is RNC Minerals’ royalty arrangement with Maverix going to evolve, and what is the next stage in boosting the share price? Exploration?

We Discuss:

  1. The Gold Market – Moving Forward
  2. The Maverix Royalty Situation
  3. RNC’s “Option On Nickel” At Dumont
  4. Exploration Plans
  5. Financing Plans

Company Website: http://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.

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

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Vizsla Resources Corp.
  • TSX-V: VZLA
  • Shares Outstanding: 49M
  • Share price C$0.55 (06.03.2020)
  • Market Cap: C$27M

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

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

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

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

We Discuss:

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

Company Website: https://vizslaresources.com/

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

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

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

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

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

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

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

We discuss:

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

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

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

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

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