Junior gold miners — why now?

#Gold #GoldMining #GoldMiningStocks

EPISODE 6. Anthony Milewski and Christian Purefoy are joined by special guest Victor Cantore, President and founder of Bay Capital Markets, to talk about the high gold price and AMEX Exploration, a gold exploration mining company in Canada.

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Transcript

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I think you know, when you look at everything that's going on in the world, all these geopolitical tensions, you know, inflation, where it's at, all these trade wars, like I think gold's only going higher Hello, everyone. Welcome to Boom Bust and BS. Anthony, you want to introduce everybody ? thanks. Look, today we have a special guest who I've known for a long time, and talked a lot over the years. So excited to have him on the show. Victor, who is the founder and runs Amex Gold. We will talk a little bit about gold today. And then I think we're going to talk a little bit about the project and really talk about a market that's kind of the most exciting it's been in at least a decade. So, Victor, thanks for coming on today. And I got to kick off by asking you what's happening. I mean, why why is gold at 3300? Well, what's the deal here? Well, I think I think you know, when you look at everything that's going on in the world, all these geopolitical tensions, you know, inflation, where it's at all these all these trade wars, like I think gold's only going higher. So I'm looking at some of the stuff that's being printed out there. I mean, it's amazing. Like, you know, there's even this there's a monthly chart that's showing a 40 year cup and handle breakout targets. I was just reading this this morning. So they're looking at an upside to 4000 plus with a longer term technical, you know, targets in excess of $8,000. You know, like when they when I look back a couple of years ago when you had, you know, guys saying that, you know, gold was going to go to 10,000 and 30,000 And, you know, just recently you had Simon Marcotte saying the same thing. And its quite impressive. It looks like, you know, this this gold bull market is finally, you know, getting a hold. Okay, so what does it mean? So you've got the physical at 3300, maybe it's going to 4000, maybe it's going higher. Like I remember in my career, like, we were talking about all in sustaining cash cost of 400, and then we're talking about 600, and then we're talking about 800. I mean, well, you know, what does this mean for the economics of gold projects and in particular your gold project? Because I, I literally cannot remember a single gold project that would have been taken seriously at like $2500 gold. The investors would have said what is your all in sustaining cash cost at 1100. So I mean at 3300, you know, what are your all in sustaining cash cost potentially at your project. I know it's early, but. Well what does that mean for profitability? Yeah, it's quite it's quite impressive when I look when I look at the numbers we published a preliminary economic assessment back in, and it's not that old, we're talking about in November 2024 It was actually November 13th. And we actually put in, you know, we were using we're using $2,000 gold. We have sensitivity analysis. You know, we have sensitivity analysis all the way to $2600 - $3000 gold. But, you know, those numbers,$2000 gold are quite impressive. At some point, we will update we did promise to the market that we will update a resource and a because we've been doing additional drilling. So we'll use a different date. And also, you know, moving forward with with the new PEA and eventually with the feasibility study, as we did in our last press release where we talked about, you know, our path to production. But yeah, when you look at when you look at the numbers, I mean, it's quite incredible. Our our RISC that's in our in our PEA is $807 for the life of the mine where you're looking at$3300 gold and you're producing 100,000 ounces a year. It's quite impressive and hopefully will even be producing more than that down the line I mean, that's hundreds of millions of dollars of free of free cash flow. It's crazy. You know, it's sort of the dream that investors always wanted. You know, we think about a decade ago and the complaint against the management in the industry, no one makes money, but it feels like at these gold prices, people are going to make money. So it's I don't know if you saw it, but this morning in the Globe and Mail, there was an article and it was an op ed. I don't even I didn't even recognize who wrote it. But the op ed basically said, here we are, we're Canada. You know, we've got gold. We know how to finance gold and we've got potential to make gold mines and we're not doing it. And, you know, why don't you tell us a little bit about where AMEX is located, but also, you know, with all the geopolitical things going on in the world and this desire, I think, to sort of bring mining back to Canada. So it feels like there's a kind of this realization that that's a path forward as a country, you know, what do you think the meaning of having a gold project in Canada is going to be, for, not only the valuation in the market, but also for just getting it funded and moving it forward? So we're quite fortunate that we actually have a project that's quite advanced. We have more than 500,000 meters of drilling that's gone into the project. We have an economic study. We're just going to continue advancing the story. Like I said, I think A lot of our viewers are kind of new to mining. Yeah. And they're just discovering it. So when you say you have 500,000 meters of drilling, what does that mean? Is that a lot? Help us understand what I don't know, what's know. I know what a meter is. But like, should it be 100,000? Should be a million. Put that in perspective for someone who maybe is just kind of learning about gold mines and what that might be like. So I'll put it in dollar terms since we've come into the project in, in well, I became president of this company in 2016. We made the discovery in late 2018 and basically we've put in close to $120 million of exploration on this project. That's a lot of money that's gone into the ground, which is which that has enabled us, you know, like we always say, put the money in the ground and that's where you that's where you're going to get the benefits from. And that's exactly what we've done. If I put it in dollar terms, that is that is a lot of drilling for a year, I can call it for a junior exploration company. But we've gone beyond that right now we're actually positioning the company to becoming a near term producer. That's what you want to do. You want to start taking advantage of these of these prices. You know, we're in a good jurisdiction. Like when we start checking the boxes, you're really checking the boxes here. You're in a good jurisdiction. There's mining law, there's a set path on environmental work. Everybody wants to fast track these things right now. So it's really, you know, we're really in a fortunate we're really in a fortunate position right now. And we have great shareholders like, you know, last week, one of our major shareholders, Eric Sprott, purchased it, it was in The Globe and Mail, where he he purchased and, you know, in excess of another $1.4 million worth of stock, which, takes him well over 12%. We also have a producer as one of our major shareholder was also Eldorado, which they have 9.9%. So it's you know, I think we're in a really, really good spot and, you know, and continuing to move this project forward. We have a great team. We're going to continue transitioning over to bringing in more and more mining people. We have we have great geologists, but now we're going to continue bringing in the mining, you know, mining engineers, guys who have done this before. you know, for someone who is kind of new to it, you guys have been fortunate. You've had funding, you've done a great job leading it. You've got the right jurisdiction, you've got great shareholders. Eric Sprott, for those who don't know, is maybe one of the most famous kind of mining investors over the past few decades. I think everyone would agree he's had a really major influence. How long would it take to make a mine like when? I mean, I get that there's permitting and no one really knows. But is it a couple of years away, you know, in Canada, for someone who's thinking about this, who doesn't really know mining, what would you say? How long does that process take from here? So in Quebec, the minute you have your feasibility study, a positive feasibility study, it launches this process called the the BAP. BAP is a is an acronym. It's BAP, it's a it's an acronym. It's in French. That just means it’s a public audience for an environmental work is basically they do they do anytime you have to do permitting it's public forums. So there is a set time on it It's pretty much takes almost two years on it. But, you know, the governments have been very vocal on fast tracking. So we'll have to see, a project like ours, you know, is it one of the ones that could be a fast tracked? Yes. But, you know, at the most you're looking at two years from the date that you that you do your feasibility positive feasibility study. And it's really where we're also located. So we're right beside where a previous mine was built the town that we're in, it was actually, that town was built because of a mine that was next door to us. We have great community relations. We have great First Nations relations. You know, when you go to town, people want to know when is this mine going to actually be built? Like, when are you guys going to go into production? I guess when everybody saw the, you know, the preliminary economic assessment and you're seeing these kind of numbers, it really, you know, this is something where we really want to move forward. We're going to unveil all this in the coming months. We're going to unveil exactly how we're going to do this path But our last press release, we did mention that, you know, it's our path to production. We started some of the environmental work. We hired a, you know, a world renowned firm here in Quebec. So we continue moving forward. I mean, we can go over some of the those economic analysis numbers. They're just fantastic. But, you know, one of the things that's happened in other cycles in commodities is you have the juniors. I mean, you have the senior miners who, you know, they tend to get swept up in and all sorts of things, you know, distracted from the actual mining. And, you know, they leave exploration or their exploration is really giving money to juniors. And now we're sitting here and you're you know, you're one of the big gold producers, and you're years behind the curve on exploration. And you know, your guys in economics are set $2,000 gold or something. I mean, they're set at a fraction of this gold price. Do you foresee a wave of of gold M&A in the coming 18 months as the gold price stabilizes or continues to rise as all these projects, the profitability on them becomes insane. Like, you know, you guys are going to literally print hundreds of millions of dollars at this gold price a year from free cash flow basis. I mean, do you see that that majors will come and pay up for for projects like yours? Absolutely. This is a period where the M&A with the M&A cycle should be starting. We've seen a little bit that has started. I do believe that they're, you know, for the quality projects, especially the most advanced ones and the high grade projects. Absolutely. You know, the the producers are continuously depleting their reserves. So they're going to have to start moving, moving around and looking for deposits that are, you know, that that can benefit them, that can then, you know, fill in fill in the ounces that are being depleted. And definitely, you know, when you look at the Abitibi Greenstone Belt, I mean, we're sitting right in the middle of it. And that's where I believe that there's going to be a lot of there should be a lot of transactions within the Abitibi Greenstone Belt and that's all of it from you know, from Val d'Or all the way to Timmins, from north to south, there's five different, you know, greenstone belts that within the Abitibi greenstone belt. Absolutely. I do believe that there's going to be there's going to be a lot of M&A coming forward. And you know what? You know, gold at the price it is, We're all talking about it going higher and higher. It's incredible because even at these prices, you know, when you look at how much gold has gone up, all these producers, their costs have not gone up at the same level where, you know, at the same percentage where gold has gone up. So it's quite profitable right now for all the companies. So I'm pretty sure that the majors are going to be looking for or the producers, not just the majors, even the mid-tier are going to be looking for acquisitions. I think we should be looking looking for that. A lot of the M&A is going to pick up, in my opinion, I think you're right. I mean, are you going to be a Beaver Creek this fall? I think it's going to be absolutely crazy this fall with everything going on. I, I just I rarely get excited. It has been so long. I've been beaten up. Right. You know, it's been a hard decade for all of us. If gold price holds up. How can this how can people not make money in this in the sector? I think and, you know, and a lot of our a lot of our viewers are new. Like I said, they're new to mining. And, you know, it's pretty amazing to see these prices and the economics of these projects. So that's exciting. Yeah. No, no, absolutely. I mean when you look at, so for people who are new the AISC, is the all in sustaining costs. I mean a lot of the all in sustaining costs right now where you know in the 1200 or 1300 some of them are below 1000. We're fortunate enough because it's high grade gold where we're we're right next to infrastructure. We're right near city, not far from an airport. We have a workforce. So our all in sustaining costs, you're looking at 800 and change for this project. And you know, we're not unique to that. There's other projects also, but even projects that are 1200 - 1300 when gold's trading at 3000, the way it is It's a lot of profits, especially ... What I haven't seen yet. I mean is your opinion on as you know in these cycles and this kind of makes me think we're at the very beginning of the cycle. You know, eventually how it ends up is, you know, you and I are at a cocktail party and someone turns up and says, Hey, I just staked this ground and raise$20 million to drill holes, you know, like ... Yes... I mean, if you had an early stage, which I don't think you do, but if you had an early stage project in a different vehicle, is there money for $5 million of exploration? Are we there in the cycle where people are raising kind of greenfield exploration dollars or is it still kind of too early for people to be out there looking for new stuff? It's not there yet. I don't see it there yet. I'm still from what I'm hearing, it's still very tough for the early stage But it's going to it's going to flow. It's going to flow down. If you look at the big movement in stocks, you know, you've had had the majors have moved like, well, all the producers have moved. And I think now it's coming down to the near term producers, you know, the advanced exploration projects. And it's eventually is going to filter down. It's going to filter down to the greenfield projects. I mean, you and I both have seen these cycles in the past that it does it does filter down. And it's usually the tail end you know, the tail end, meaning, it could last a couple of years after that. But yeah, exactly. We'd be at a cocktail party and somebody said they just raised $20 million for a you know, for some ground that they just staked. I've seen that. Yes. And you have also for sure. Christian, we’ve kinda boxed you out here. Yeah, two old buddies going at it. There's still seems to be quite a big disconnect between, you know, if gold prices stay this high, Victor, between that and the valuations of the gold miners. Yes. I mean, it still offers what could be an incredible opportunity. What's holding it back? And, when and why will it break? Okay. What's your market cap today, Victor? A ballpark. It's around $145 million. If we did the what was the top end of the range? What was the top end of the range in your PEA 2600 you said. Yeah. So on 2600 our if, if I give you the even the after tax the after tax NPV 5% at 2600 is $914 million. my gosh. So that means at 3300 gold, it's going to be like 1.4 billion But you know, this is so fascinating. So, you know, for those watching, I spent most of my career at a private equity fund and a hedge fund. And one of the big problems that we always faced, we were financing mines was you have a negative NPV. So someone would come to you and say, our NPV net present value. So you discount the cash flows at a discount rate, right? Is 300 million. Well, that's fine, except that the CapEx, the amount it cost to build the project was 400 million. So you want me to spend 400 million for an NPV of 300 million and it just didn't work and it was a huge problem. But this is actually so exciting. I mean, what Victor, for you guys are saying is, you know, the cost to build this would be a few hundred million. How much is it? Our CapEx is $229 million. It was just to pick a number. 200 million bucks. Yeah. And at 3300 gold, I mean, I'm saying this, not Victor, but just I just offhand, it looks like you'd have a discounted NPV of $1.2, $1.3 billion or something. I mean, you know, we got to do our work here. But that's exciting because in mining, it hasn't been that way since. I think, you know, like ‘06 ’07. I mean, that's pretty spectacular. Absolutely. There is definitely there is definitely a disconnect between the prices, especially for advanced projects that actually have economic studies. There's definitely a disconnect here Now, let me ask you a question. Victor, with copper, with copper or uranium or any of these metals, right. We would sit here and say, well, the copper prices high, and if we build these seven mines, all of a sudden we're going to over flood the market, you know, like that whole commodity circle of high prices, a cure for high price, low prices, a cure for low price. I don't think gold really works like that, right? Like if if all these mines get built, I don't think it really doesn't really even have any impact on the supply and demand dynamic of gold. No, you're right. I don't think I don't think it does, because as the monetary supply increases worldwide, that's really getting all these central banks. If you know, if you want to back it with gold, you're going to need more and more gold to back all that all excess or that increase in monetary supply. So it's a yeah, no, it's I think we're in a great space and yeah, I agree with you, it doesn't, it doesn't affect it the same way where you know, you've got a couple of mines that come online and all of a sudden, you know, the market is oversupplied and I think the easy ounces are pretty much found everywhere like this is this is where you need you need to be in an advanced stage project going forward. And you know, there's going to be there's going to be other discoveries with with the greenfields projects also, right. I know when we're getting into the peak, when I hear that fill in the entrepreneur's name blank, just raise $300 million to build a gold mine in the Congo. Yeah, I remember it was at that Bannerman? Banra was the name of it, right? Yeah. When I hear that someone has raised$400 million to build the gold mine in the Congo, that's what I'm a seller. That's like. That's the one I know Because. Because. Because why is that, everyone? And the reason is because you've got Victor and you've got these projects in Canada in a safe jurisdiction where you have the rule of law, where you can get funded, you know, where you're listed in North America, we have all these factors that make building a mine in Canada more attractive. Now there are great projects in the Congo. I don't want to. Yes, but but, but it's just if you're an investor thinking about allocating money, it's a hell of a lot safer to send it into Canada at this point in the cycle. absolutely. And again, we're looking at a project that we've talked about, NPV and, you know, and the CapEx. But look at the pretax payback period is 0.5. It's half a year. That's at $2600 gold. So, you know, you know what market. Yeah, what, what and you know, there's going to be there's going to be other as gold goes up, that's what's going to happen. You're going to just going to have all these all these all these great numbers that are going to be showing up. And I think as as long as a small CapExes, I think I think you're going to be able to finance most of these projects that are going to be coming online. I think Christian and I will looking for a job. You need one over there at AMEX? Absolutely. Well, look, Victor, I don't have much else. I mean, this is amazing. I think I think everyone watching, you know, you got to have a look at these names. You got to go have a look at Victor's name. Obviously, you know, really, really successful entrepreneur and executive in the space. And he's done a fantastic job. But on these numbers and do your own research like there's just going to be some massive winners in the space. And, you know, obviously we like Victor. I think that he's done a fantastic job and his company has the potential to be one of them. So appreciate you coming on and sharing a little bit about your thoughts about the space and the story. Well, thanks. Thanks for having me on. And I hope I’ll be on, We'll come on soon again, as we as we put out more and more news and love to talk about the, you know, the market in general and the gold spaces. This is really great. Thanks. Victor, thank you.