How a Strong Gold Market May Impact Juniors in 2024
[Music] all right uh all right everybody let’s get started here my name is Trevor Hall I’m the CEO of the clear commodity Network and also host of The Mining stock daily podcast uh been going at it for a number of years you can find all of our content which we publish almost daily uh anywhere you get your podcast feed at and I’m really grateful to be asked to host this uh this six presentation on how a strong gold market may impact the junior sector in 2024 we’ve got three great individuals here from three different companies working in three mostly different parts of the world uh Luke Alexander of new core gold Jim ainson of advanced gold exploration and Brian skanderberg of GF gfg resources excuse me uh so just for pleasant R I’m going to make sure each of these individuals gets about two minutes of a a quick introduction uh to their companies and then we will start in on the discussion in a hand uh but before we get there just quick housekeeping notes if you do uh look at the platform here in the webinar you are allowed to kind of raise your hand and ask questions uh we will try to get to those questions towards the end of the presentation all right everybody uh Luke why don’t you go first since you’re right next to me on the screen yeah sure thanks um Trevor and thanks everyone for joining yeah so my name is Luke Alexander president and CEO of new core gold new core gold is advancing the eni project in Ghana last week we put out a pea which outlined very robust uh economics for the project at an 18850 gold price after tax npv of us 371 million after tax irr of 58% so fundamentally underpinned by a very robust paa that we think will ultimately rate the stock as the company or as the market starts to recognize the fundamental value that this project has but then we’ve also got huge District scale exploration upside across our project 248 square kilometers we’ve only drilled on nine of 25 targets identified to date and the pits that currently constrain our resource are only down to 75 meters so lots of opportunity at depth as well as Green Field targets across our uh our our project so new cor gold district scale exploration fundamentally underpinned by very robust economics outlined in a uh in a paa and uh very well backed by institutional investors and management and board who own 22% of the company so we’re truly aligned with shareholders from that perspective Jim you want to take the stage here sure yeah Jim Atkinson from Advanced gold exploration we are a little farther down the line from from Luke we are strictly exploration we have gold properties in Ontario and gold properties in South Carolina in Ontario we have four four gold properties including a former gold producer in the Kirkland Lake Camp which we’ve drilled on in the past that’s exemplified by highgrade veay uh with visible gold at surface we’re a little bit more excited that after we’ve done the drilling because we’ve now identified some other targets there that have never been explored we have another project in the bachaana greenstone belt which is basically been compared to hemo by people that discovered hemo and sort of probably know what they’re talking about we have some high-grade gold intersections on that property and it has not been worked on since the 1990s and the reason they stopped working on in the 1990s was because of the price of gold fell to $300 at that time the other properties we have in Ontario are a little farther uh more more uh sort of green fields including a property which sits right beside uh uh right beside the the open pit uh of uh of one of the companies in in the area the property that we’re interested in in South Carolina includes a former producer it has a resource of maybe 70,000 ounces of gold but South Carolina is starting to pick up we’re getting some of our neighbors are intersecting some pretty spectacular intersections in the area and we’re kind of hopeful that the same kind of geology continues onto our property we have two two aspects of this property as I said one is the former gold producer the other one is a highly altered intrusive which has epithermal gold veins around it the one gold vein that’s no in there is only had one drill hole in it it was 28 meters over two and a half or 28 grams over 2 and a half meters so we’re a little bit excited about that so we’re kind of still at the stage of Grassroots exploration although we do have some gold on some of our properties thank you Jim uh Brian go ahead thanks very much Trevor Brian scanderbeg the president CEO of TFT resources uh we’re at Tim’s Focus exploration vehicle and control about 800 square kmers of ground both east and west of Timmons in three large block blocks of ground uh the most advanced project would be our gold arm project it has uh two Targets mon Clair and Alo um one of them being a historic producer namely Alo uh and more and Clair being drilled kind of since the 30s all the way through to the 80s so you know a nice looking system there as well um really the ground and and sort of tenaments we have are are full pipeline of of projects here when we look at the ground west of Timmons this is dor and this is pen project um these are large scale land positions you know 50 60 kilometers in strike length um and really buttress the Holdings of both IM gold numont Evolution panamic these are all our neighbors in the Tim belt and when we think about our philosophy here we really feel Timmons is a great belt to work in from an infrastructure point of view from a Discovery Point of View and uh obviously a long history of mining so Advanced Explorer focused in Timmons we’re about a 25 million market cap company our management uh formerly of clo resources has been involved in relevant discoveries before in Saskatchewan taking Cloe through to a successful transaction and a pretty good track record in both Discovery and production side of things we have a secondary asset in the US called rattlesnake Hills which We Own 100% of haven’t been active on that for a few years but we’re hoping to come to the market here in the next uh short term with uh with a strategic path and and really finding the right path to advance rattlesnake so um Tim and focused exploration vehicle um small cap exploration consolidator would be the the main theme Here good backers Alamos and and the lundine family are our largest shareholders all right thanks everybody let’s kind of get into the topic at hand here and really talk about how this gold market is affecting uh the junior exploring equities here we’ve seen a very meaningful move and the gold price Unfortunately today is kind of taking it on the chin were’re down 2% about just over $2,300 per ounce in the Futures basis front month Futures basis looks like we might be heading down to that uh 50-day moving average but there was a huge spread we were completely overbought here in the in the gold market as far as the physical metal goes uh but you know with at least from our screens it necessarily wasn’t the RIS tie that lifted every single boat especially the Juniors uh so I guess my my basic question for uh for the three of you is you know kind of what you’re seeing from your desk as far as interest in Precious Metals expiration equities or are you starting to Garner a few more uh insights and phone calls from people that maybe had been absent the last couple of years are these investors moving back into gold expiration yet and I guess uh Brian you’ve been around this block a few times here in a couple different Cycles couple different companies give us maybe a sense of what you’re saying yeah I think it’s uh still yet to move down to the exploration space gfg has completed a financing here just a couple weeks back and we closed on about $2.6 million um look that went well we had good backers from the Alamos and and and our long-term supporters but if I if I had to say is their new money coming into the space uh I would say it hasn’t quite filtered down to the the the Explorers yet um one of the graphs I like to talk about is is the gap between um explorers developers producers and the other one is between equities and the metals and those two Trends really show that the sector hasn’t really moved yet at the Explorer level um so I would say it’s coming yet uh it’s I’m also involved in a company called West home at the producer side and you know at that level of the space you do see uh the multiples improving you see improved liquidity you see the share price performance on most of the mid- tier graphs um and that’s a very strong portion of the sector but developers and explorers I I think have a lot of room yet to move and I would argue um particularly in Explorer space we haven’t moved far yet Luke you’ve seen uh some uh good volume into your Equity after that pea and what are you seeing the last few days here yeah I mean specifically for us obviously the the paa that we put out was um was very well received by the market I mean stocks been up uh every day since on big volume and there’s you know lots of big bids in the market today so you know I think ultimately when you deliver a study like we did um you know that can be a real Catalyst and and a game Cher for for companies you on the exploration side similar if you deliver great results then that can be uh a real Catalyst and uh and game changer for for a company so I mean over the last few days days we’ve seen you know a huge number of inbound calls from different groups and you know investors investment Banks corporates just really wanting to get a more fome update on on what um you know on on on the economics of the paa and get into a lot more detail on it I mean yesterday I was in meeting with one of the investment Banks and there was a dozen people around the table and that’s more than we’ve seen in that uh with that same group in the last couple of years so you know I think we are starting to see more um more interest uh you know coming into the sector as gold ultimately you know holds in around the $2,300 level and uh and I think that’s uh that that’s a good sign from that perspective Jim do you have any feedback or insights on what you’ve seen the last couple weeks or months yeah we I mean even in our small little market cap where we are we actually are starting to get some trading I’m I’m I’m agreeing with Brian I think it still hasn’t filtered down to our level yet I think it will and I’m sort of hoping and waiting that Pomo will kick in and people will start to realize that they’re missing the boat here you know certainly there are a lot of letter writers a lot of people that you read you know that are actually talking about this this gold price I heard it for the first time you know a couple weeks ago on Bloomberg News and that that just blew me away they don’t talk about that stuff they talk about meta and all that so to me I think it’s starting to filter down to our level I think what’s going to have to happen is you know once once the the big guys take up the ones that they can and then the next level takes up you know it’ll filter down that way because all the even the mid- tier producers they need they need resources so they’re going to be looking around for resources and I think the really intelligent ones will get in very early into some of the explorers and you know like Luke’s company or even some of the ground that Brian has you know this is stuff that you know the companies can get into relatively inexpensively and and and promote and develop it and I think you know that’s that’s where it’s going to happen I think what’s going to be the next big investor in the in the junior mining space is going to have to be other big bigger mining companies because I agree there’s not a whole lot of interest amongst amongst the investors that I see anyway at this level and I think that’s where we’re going to have to start looking for help is from the other bigger the bigger companies just as a as a note I you know every day during the Prospectors and developers conention the price of gold hit a record every single day and nobody was talking about it and that really surprised surprised the heck out of me because I’ve been at many conventions in the past and that’s usually one of the things that’s the top top of the topic so there’s a I think there’s still a bit of a gap there before people start to come into come into our space it was a rare occurrence that usually we get the Pak curse where the gold price gets slammed during Pak this was a different year and uh yeah it was it was really interesting you know I had a similar um uh kind of feel when I was in Zurich a couple weeks ago for the European gold forum and at the same time gold was hitting a record high and uh you know there wasn’t a whole lot of new people or new investors there it seemed like a lot of the the same group but maybe this you know maybe this turns around Jim you did mention something pretty interesting you mentioned um the big producers perhaps coming in and uh providing support and and strategic Investments for exploration development companies here uh and maybe for the three of you there’s an open-ended question if if isn’t it pretty relatively cheap right now for those uh because the speculative money hasn’t necessarily trickled down into the exploration sector isn’t it pretty cheap for those uh for those big producers to maybe allocate capital and acquire those ounces than it is for them to just go out and explore for it themselves well it certainly is and and you know I’m been in the business long enough to remember when that was the case when you had techs and nandas and inos and those guys supporting Junior exploration companies and I think that’s something that should come back and may may in fact come back because I think you know it is a hell of a lot cheaper to support five Junior companies than it is to support five exploration Departments of your own and I think that I think it’s I’m I’m really I’m really hopeful and and and and pretty optimistic that that’s going to start to come back and you know it already is a little bit as Brian says he’s got Alamos and and line these are you know these are people that understand that you have to get in at early stages all right uh Brian ask me see I’ll ask you a little bit about kind of what you’re seeing I mentioned before you’ve seen a number of Cycles in in gold with a number of different companies um have you ever seen a gold price rise $600 and then it was still crickets on house Street yeah I mean it’s uh no is the answer um but the driver the gold price is different this time right so I think we have to look at you know what’s what’s really moving gold price and why those investors are moving to the metal and why they’re not moving the equities and and I think we all understand maybe the Delta this time is Central Bank versus ETS and and that’s a that’s a key distinguishment in terms of the gold price move maybe now versus the historic two cycles and so you know when I think about that it hasn’t filtered yet to equi so then what does Drive the filteration down to equities and I think it’s when you see um the balance sheets really moving the big guys you see the free cash flow move of those and you know that’s the trigger point to me so when you think about a producer right now making $3,200 Canadian gold on a on a budget that might have been ran at400 and I’m just using an example that’s close to me but that’s a that’s a huge Delta and the free cash flow of those will start showing up in Q q1 here and Q2 Q3 so the big guys financials in q1 look pretty strong most of them are outperforms so I think that’s that’s a Tipping Point here to start driving um the corporate participation and and moving the investors bringing in more investors because the reality is the central banks never going to buy the equities it’s going to buy the it’s been showing to buy the metals so what has to happen is we have to show the yields we have to generate the financials to drive the generalist into space so it’s a little different path I think than historical cycles and that’s why I think it’s a little different um results in terms of how quickly it’s translating through to a new core or a you know an advanced or a gfg even right yeah let me stick with you Brian if I may and we had talked about kind of we have seen that speculative money com into the expiration uh I’m actually really I’m highly anticipating to see what the big gold producers financials look like for Q2 when they’re published you know August uh August time frame um or Late July uh anyways and I’m wondering if that I’m I am expecting an improved margin for the producers but I’m wondering if that kind of brings people back into the gold equities and by back do we start seeing more speculative Capital come down into the developers and expiration socks and I just want to ask you you know based on your experience what you’ve seen is there is there usually like a catalyst or a time where it’s like the rest of the rest of the street realizes that they’ve they’ they’ve missed this and there there there’s your opportunity and then it actually brings money back down into exploration stocks yeah I mean it’s the to me it is the translation of the financials um so if you’re not going to move on the metal price you’re going to wait for the translation to financials and see if inflationary pressures have been appeased and in them and that if we can actually translate it through to aisc margins of 40 plus percent which is what we where we hope things go um within the producer side of it um so that to me that Q2 is critical uh you’re seeing a bit in q1 um but I think the metal price move only impacted about half the quarter um from the Big Move of metal price here in q1 uh yeah so I’m optimistic that it will come with those and let’s say it doesn’t come and and then you’re forced with an equity that hasn’t moved but a full bank account so you’re going to buy your stock right so I I think a normal course bid or you know other sorts sorts of shareholder return from the big guys will become even more prominent than they are now if you don’t see the equities move uh I want to move the conversation over to financings and raising Capital now um I I when Luke tells me that he was in a room with 12 Bankers I can only assume the conversations of what was happening on that term sheet negotiation uh as a shareholder of to to be clear Trevor it’s 12 uh 12 investors who work for an investment bank so okay elic clarification we we’re not paying the street enough money to have 12 Bankers in a room so these are uh the these are high net worth uh investors but uh yeah those 12 Bankers are sitting in the BHP uh room at the moment trying to figure out how to uh you know go hostile on Ango but okay yeah no these are uh these are portfolio managers within an investment Bank all well we can talk about that big mer merger news here potential here later in the discussion but I do want the only bigger news last week Trevor was the uh paa out by new that’s absolutely correct I couldn’t more with you Luke uh but let’s talk about financing listen the the market the the the bare Market we were in and perhaps me arguably maybe still could be trying to climb out of currently it was really tough I mean there was a lack of ability to finance if you were able to finance it really wasn’t uh I guess you can arguably say poor terms for the companies needing the capital uh incredibly dilutive uh many times but uh costly and necessary uh for the LA I mean that’s just kind of you know it was it was a tough time it was a tough Market to need capital and raise in are we getting to a point where we can you at companies can go in and talk to those dealers and maybe improve the terms where you can for bringing in capital for your work Luke let’s start with you because you you had a tough financing at 15 sense uh about a year ago you know you had to do it and it turns out those people that participated are doing okay now yeah I mean so so we benefit from the fact that we’ve got 45% institutional o ownership deep pocketed long-term focused investors who recognize the you know District scale upside of our of our project so you know we’re fortunate in that sense that you know we’ve got backing that you know takes a five to 10 year View and and regardless of where the Market is uh they see the value and and look through the the Peaks and troughs of uh you know of the market um in some ways I actually hope the floodgates don’t open again from a financing perspective because the issue is that as soon as they do all these PowerPoint presentations get dusted off and you know dozens of companies are showing up raising Capital hundreds of millions of dollars are are raised and then you know the market rolls over again investors lose a ton of money and ultimately you know have a negative view towards the sector so I think you know yes having the market open from a financing perspective is helpful but I think limited opening I think would be ideal because you know there’s still too many companies overall in the sector and projects that shouldn’t be getting financed in a you know in a in a bull market ultimately do get financed and invested Bankers are you know looking to clip fees so um yes I think there is opportunity for for projects to um you know to get Finance but the reality is is you know public companies investors can go buy the stock in the market so it isn’t necessarily that you need to have you know uh for for investors to invest through placements you know the best thing for a company is for them to go buy the stock in the market because that rates the stock and pushes it higher so I mean there’s a balance there yes we’re in an environment where you know money is going to be more available I just don’t hope it becomes easy money because you know that has adverse effects for the overall industry yeah I agree I think the other thing that we have to avoid and this happens you know we’ve been through a few Cycles what happens is everything goes crazy and you can’t get Workers you can’t get Drillers you can’t get geologists and so the money that’s raised is basically sort of wasted and I’ve seen that happen a couple of times in massive bull markets where like you said tremendous amounts of money gets gets raised and basically gets wasted and that does hurt the industry in the end you know i’ I’ve been through a few of these in the past and I’ve seen them I think the one thing that’s the other just to point just a little bit on your point you know we were having trouble in during the bare Market because you know why why would you go out and and try to sell somebody’s stock at 5 cents or 10 cense when they can go in the market like you said and buy it for five or three or whatever and that that was a big a real big problem if you’re not getting any kind of volume I think volumes are starting to pick up people I know ours is starting to pick up and like you said that’s really where at this point in time I think you want the support is in the market to get your price up get it rated so that when you decide that it’s time to do a financing it can be done at a reasonable level I think that you know that’s the thing that I think we’re we’re all looking for I I’m pretty sure it’s going to turn over it’s turned over many times in the past and you know you know the four most dangerous words in the investment business this time is different I don’t think this time is different it’s going to happen again and we just have to be sure that we don’t like you said Luke that we don’t destroy the whole thing by being silly about it Brian do you have any feedback or anything on finan ing terms right now yeah it’s still pretty tough I mean to me it’s you started it off you said accept the delution and my my flip side of that is or accept irrelevance right so we might not like a term of8 cents or 10 cents or 15 cents for whichever group we are um but we’re certainly not not going to like and our shareholders won’t like irrelevance um you know so yeah it’s it’s kind of tough to find find the the capital in these but those companies that have strong backers that have done good work through this cycle continue to get financed and and I think Luke’s comment’s absolutely right that there’s still far too many stories out here and um there needs to be a rationalization of of the community of um those effective parties that can access capital or have quality access assets that need to need to move together and hopefully that can happen and you you’re you’re seeing pieces of that where companies are choosing strategic paths that uh include consolidation at Market Market neutral premiums um things like this that you you you’ll take an off Alamos recently bought Orford and you know that was a you know right at the bottom of the cycle and and it provided shareholders some liquidity that probably really really desired it and from an animals perspective they got a a great district for for a relatively Co low cost so you know I think you’re seeing the pieces of the sector that indicate you know people are needing to make decisions to move forward some of them will include consolidation some of them include doing the dilutive deals and accepting that’s what it is to go forward but those are all still signs you’re pretty low low in terms of valuation in the in the sector norms and where we are in the cycle yeah and then I I also think Trevor just to add to that and and Brian makes good good points there is that you know through the downturn or or the lows in the cycle you know managing the am that’s raised is also important obviously in terms of you know work programs and how you move a project forward so you know for us for instance over the last two years we you know we managed the amount we raised and we raised less than than we had uh historically but contined to work on the project move it forward so that as we see you know the market starting to come back the companies that have you know been doing work through those downtimes should be the ones to ultimately rate the quickest because that work that had been done over that period starts to get reflected into the stock whereas you know the if you’ve been Irrelevant for two or three years well there’s nothing really to you know rate the stock so I would agree with that point that yes you need to be continuing to move projects forward and and managing you know Ma managing the value that’s being added um according to you know dilution and where the where the company sits let me ask you uh somewhat of a um no maybe rub people the wrong way but I can see it because I’m American and not affected by it and Luke Luke can’t uh maybe he can comment but since his Project’s based in Ghana he couldn’t benefit from this but I want to ask you uh Brian and Jim about the charity flow through financing opportunities for Canadian projects in the last two years um was it the benefit uh to keep projects uh going and put exploration dollars into the ground or was it did you see it overused and perhaps um the flip side not killing projects that the market itself would have liked to see him go away go ahead Jim well he’s taking breath that is that is an interesting question because you know the driving force behind flow through or charity flow charity flow through is not the exploration in some respects the driving force behind it is actually the tax benefits and that may not be the proper driver for for let’s call it efficient exploration I know that there have been cases you know where I think money has been not properly spent I think that’s less common than it was when it first started but I agree with you there may have been cases where the project and there may still be cases where the projects should actually die and you know we’re geologists one of the bad things that happens is we fall in love with our projects and you know we have to get to the point where we can say listen this is a dead project let’s go spend our money somewhere else and with flow through you know the and the ability to have that money there I think that’s that becomes a real challenge it becomes a challenge because your flow through subscribers expect you to spend the money and you know they expect you to spend the money you know quickly in the years that that you get it and so it doesn’t really necessarily you know allow you for for deep thought about what you’re actually going to try to do you know theoretically you’re supposed to have your plans in place before you get the money but we all know that that doesn’t necessarily happen so I I think I think you could you could make a negative case for for flow through although you know it certainly has helped a lot of companies make discoveries and and move ahead so like like anything I think it has good sides and bad sides and and you know that would that would be sort of my my quick take on it it can be good or bad yeah I would I would maybe add a bit it’s for us it’s it’s almost like how you choose to use it and we use both traditional flowr and charity flowthrough in our last three or four financings um and there’s utilization of a charity flow through into a corporate structure where from a corporate standpoint there’s a there’s a strong net benefit um to the company and so in this tough Market where capitals maybe a little more difficult to come from the additional component that charity flow through and I would add the life exemption to that as well um and even traditional flow through does in terms of the delution side I think is a huge benefit so you know there’s there’s definitely commentary around the the change of tax legislation of Charity flow through and traditional flow through that it’s eroding the benefit and I I personally think that will be have quite a negative impact on on the exploration dollars going into the ground and uh that’s just the feedback I’ve had from the charity flow through providers but you also see it in the effect of even a traditional flow through participant where Alternative Minimum Tax starts impacting a traditional flow through participant and it it erodes their motivation now if you’re going to put a a flowthrough investor in that only wants to hold your stock for four months yeah I think the argument is there’s not not a big benefit but if you’re going to sell uh a charity flowr to an Alamos or to a line family like that’s just makes good sense from a from a delution standpoint so that’s that’s a different yeah that’s a different thing I think there’s two sides to that um but I I personally think for us as tfd both of those uh structures are very useful and beneficial and and they’re being eroded under the current C legislation okay well just as a quick aside from that you know that the fact that they’re they’re changing the capital gains we all know that our investors they’re looking for 10 Baggers they’re looking for make big Mark big bucks so if you say well we’re going to take two-thirds of that away from you know that’s going to that’s going to make people think twice about if they want to be in this space or not yeah okay uh that question was maybe a little bit off topic to the to the point of hand but I did think it was a pertinent to be asked uh so I appreciate yeah and Trevor I just add to that I mean if you look at you know Canada consistently you know it ranks at the top of the board in terms of the amount of exploration dollars spent on an annual basis and I think that big part of that is because again regardless of what the cycle is the Canadian government is supporting the industry through you know those um those FL flow flow through um tax credit so you know as a it kind of it means that the industry can survive you know through the cycles and and that’s why Canada ranks consistently at the top of the board um my last big topic I have for this uh this discussion gentlemen is about economics um and and not just not just Luke’s eni economics that he published but uh really about General economics on the back of inflationary pressures uh the rising gold price it’s improved uh the economics of many projects but the lesson of the past years has been if companies can manage inflationary pressures those expectations and capex overruns as they move into more uh pref feasibility definitive feasibility type of studies what effects has this had on Explorer messaging in the market has this Rising gold price subdued those expectations uh has it cleared the pathway uh for companies to show positive economics uh when the market is still kind of questioning what is feasible to get built and what is not I think in terms of if it it goes back to the discussion as well about you know we’ve got gold prices hitting all-time Highs but the equities haven’t necessarily uh responded the way you would have expected them to and I think that’s part a result of margin uh compression so we’ve had all ins sustaining costs going up in line with the gold price obviously we’ve had you know a big move in the last um three or four months in the gold price so you’d expect that to help from a um margin expansion perspective but we’ve started to hear a number of the senior companies talking about how you know they’re expecting cost to flatten and in some cases even come come off as you know we start to hit Peak inflation from a cost perspective so I think that’s one of the big things we need from a market perspective is to actually see margin expansion um and that flow through to the bottom line for a lot of these companies because I mean you know $2,000 gold and $1,500 um all-in sustaining cost is the same as $2500 gold in $2,000 there’s $500 of margin so if we actually look at you know a lot of these companies and the way generalists do they look at these as businesses and what is your margin you know what’s your eida all those metrics that you know once you get into certain areas of the mining sector aren’t AR aren’t a focus but for the big senior companies and the generalist investors to really see that wave of money flow in we need to see consistent margins for the seniors and I think we’re starting to ultimately see that with with a lot of them in terms of the benefit obviously for development stage projects well I mean that’s you know that that’s pretty clear that when you start to run your you know your studies at a 1850 versus a 2050 versus a spot price of 2350 you know the economics that come out of those um studies are huge I mean for us we go from 370 million at 1850 to 600 30 million at 2350 our irr goes from 58 to 92% so the impact there is obviously uh significant and then from a you know project development perspective when you then go to the banks to you know borrow money they’re obviously looking at you know the various metrics of um you know coverage ratios and payback periods and all those things so all of that obviously helps in terms of the uh uh the development of a project Luke how did your capex get affected uh from the previous PA compared to this one so our capex went from 97 million to 10 or sorry upfront capex went from 97 million to 106 million what we were specifically able to do was move um our crushing and the and the capital for that into years four and five because we have very soft oxide uh transitional material in the first four years so if you look at an Apples to Apples life of mind capex we went from 142 million to 216 um we did increase the overall size of the project so we went from 89 to 122,000 ounces so it’s not Apples to Apples because we’re you know looking at 8.1 million tons versus 6.6 but you know roughly speaking um um you know roughly speaking that that that that’s the increase we’ve seen interestingly from 2021 to 2024 we’ve actually seen some costs that have been the same or in some cases actually gone down so again I think that’s positive for the sector as a whole that you know some of that Peak inflation that will lead to that margin expansion that I’m referring to for the seniors the numbers we’re looking at some of that should be flowing through into Q2 which Brian obviously highlighted as an important quarter for the sector rer Jim how is this uh inflationary expectations how have they affected exploration or do you think the well they certainly they certainly have affected exploration because you know costs are going up although it is interesting to sort of just go on with what Luke said you know drilling costs for instance right now are pretty similar to what they’ve been for the last few years so there there is some inflation going on in the expiration side of things but I think not not as much as one would expect and it uh you know mainly because well one of the reasons was there wasn’t a lot of work so that that helped kept the that helped kept the prices down but as far as that I think you know I’m I’m interested what Luke says about that that when when bigger mining companies or even the intermediate guys start making money then you know people look at look at the whole sector and say wait a second this is a sector that can make money maybe this is a sector I need to be involved in you know and it would be the same as looking at a shoe manufacturer or something you know this this company makes money this this sector makes money and I should be in that and rather than the speculative um you know mining investors you know they would be the more generalist people that are in it looking it like like Luke says looking at like a business looking at it like a business and saying is this does these business business is make money is this somewhere where I can make money not withstanding the you know 10 bagger or something and I think that’s going to be a slightly different uh a slightly different perspective it’s going to be brought onto the sector yeah I would add a couple points maybe one around the gold price so when we think about where consensus is which is where Pro projects are modeled on so consensus is still hugely lagging spot and most consensus models are r at 17 1750 1800 most Reserve resources are still ran at 15 and 1600 in this space so that takes time to catch up and and and as the market gets more comfortable with long-term prices of gold being higher that will be reflected into the economics of the projects where it currently isn’t yet so there’s still a lot of margin yet to be adopted or adjusted yet as consensus evolves upwards the other piece of this is still about you know to me when we think about jurisdictions where we want to develop projects and conduct our exploration and the market is still very much Capital off you know definitely Capital restricted so I think from a jurisdictional point of view our view and and I think many is still working in belts where there’s relevant infrastructure existing gives you a shorter path and a broader exit strategy within the exploration space so I would to take you know why do we explore in Timmons we explore in Timmons because there’s 5 Ms within 25 kilm or 50 km which is Trucking and they’re going to be anywhere from 3,000 to 36,000 tons a day and that filter and that capital investment Dr risks the belt and so I think when I view the challenge of margin compression inflationary pressure it’s reflected in the capital investment piece of the space and finding an area to work where there’s lots of capital that’s been invested already makes exploration more like to be successful because your size thresholds are smaller and the returns likely to be better because there’s probably three or four people that might be interested you if they have a mill that’s within Trucking distance of your Discovery so that’s the other piece so I think both consensus and this jurisdictional focus of back to infrastructure rich areas is is valid still at this point of the cycle okay uh we’re going to be wrapping things up here anybody in attendance who has a question or anything you can feel free to to type that into the chat box uh for any of our guests or for the collective just make sure to do that here as uh we’re kind of uh getting here uh you know it has been a pretty exciting uh late winter into a spring here but we have the old adage as investors that uh you sell in May and go away here we are in late April approaching May um it is pretty interesting here does that old adage uh kind of hold up in this SE and I know I I know you don’t want to say yes but if you could put on that investor cap do you think uh uh it might be something some seasonality to this yeah there’s definitely that theme there um that’s historically I I don’t think that people would use a lingo if there wasn’t you know didn’t happen a number of cases um I think you have to ask yourself is this year stack out modestly maybe different are the driver’s different in the end I still go back to some of the real key graphics and and and ratios that show when investors should be paying attention to a space and those are all really screaming boys um right now so yeah I think they sell and May and go away and or you know thesis may may be there buy and May and you know whatever it is but I think the fundamentals of where the space is right now would argue against that yeah I think I think because there hasn’t been a lot of work going on and there hasn’t been a lot of opportunity to actually sell and made go away people may hang on a little bit longer you know I think your point about what’s going to be coming out hopefully in the second third quarter as far as as far as uh you know earnings and stuff that’s going to keep people interested I think even throughout the summer yeah I guess Trevor if you look at that as a generalist comment sell and may go away and you actually want to you know you’re you’re most likely doing that from a portfolio protection perspective then instead of sitting in cash sitting in gold or sitting in Gold equities is something that I think a number of generalist investors will look at as opposed to just selling and sitting on cash so from a portfolio protection perspective you know it could be good for the uh for the gold sector if I were to tr if I were to put a positive spin on it yep I think I think the other thing in the past I think people made enough money that they could afford to sell a May and go away think I don’t think there’s been a lot of money made in the last little while so people may not have the money to go away you know after the last couple years I think I’d welcome a much a typical seasonality of this Market because you kind of know how to play it rather than just seeing more and more selling for 18 to 24 months is what kind of what we we did experience so uh um let’s see we did have um Mike says to Brian I’d rather be irrelevant with gfg at 15 cents than relevant with gfg at 5 cents I think that’s compliment so um well it’s an interesting point because you know Mike’s a you know not a small shareholder and he’s an investor that’s came into the story over time and there’s an example where somebody might prefer of us not to d a done a financing eight eight or 10 cents or you know at least take a more um modest approach to your financing strategy and pull back on your exploration expenditures right so there’s this tradeoff of trying to manage relevance versus irrelevance and and I think Luke’s comment is you know valid where you might choose to pull back on your exploration expenditure at this point of the cycle to not end up at 5 cents because You’ granted up 25% of your equity and maybe you want to Grant 10% of your equity and keep your head above water at 10 cents and I those are the discussions we have but you know I think Mike’s Point is quite valid okay uh Luke Jim Brian thanks so much for your time uh no questions rolling in uh best of luck as you roll into uh the season of expiration and um best of luck we’ll catch up with you again uh shortly and everybody in attendance thanks so much for tuning in have a great rest of your day [Music]
Apr 30, 2024
Join Trevor Hall of Mining Stock Daily, alongside three gold exploration executives, to discuss the recent upward move in the gold price and the potential impacts of a surging gold market. Discover what opportunities may be presented by the growing gold market strength in 2024, and how that growth may translate to the junior gold equities segment of the mining sector.
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