The Assay Podcast - Where mining meets capital
The Assay Podcast, powered by 121 Group, brings you inside the conversations shaping the mining and investment market. Across the series, you’ll hear from CEOs, investors and sector leaders through company updates, executive interviews and live panel discussions recorded at leading industry events. Often captured in the room, at the centre of the action, the podcast brings you not just what’s being said, but what the market is really thinking. This is where insight, opportunity and capital come together.
Our first episode will go live from 121 Investment London on May 11th.
The Assay Podcast - Where mining meets capital
Midnight Sun Mining: Gaining critical mass at Dumbwa
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Following long awaited assays at Dumbwa, Midnight Sun Mining joins us to discuss the developments behind the headlines. In this special edition of Inside the Investment Case, management shares its perspective on recent events, investor understanding, and the company’s outlook from here.
Guest Host: Lyndsay Malchuk, Global On-camera Reporter, Apaton
Featuring: Adrian O'Brien, VP Business Development & Communications, Midnight Sun Mining
You're listening to the outday podcast where mining needs capital, powered by one-to-one mining investors or today we are coming live to our event on New York City. Please note this podcast is for information and isn't financial advice or recommendation to investors.
SPEAKER_00Welcome back to Inside the Investment Case. I'm your guest host, Lindsay Melchak, right here in New York. Now, every investor loves a discovery story when the market is rewarding it. But the real test of management isn't when the stock is climbing, it's when it's not. A few months ago I sat down with Midnight Sun Mining and the conversation was centered around exploration success, advancing compelling copper story in Zambia, Zambia, and what management believed could be a transformational period for the company. Since then, the market has delivered a very different verdict. The share price has come under pressure. Investors have questions, and the gap between management's vision and the market's valuation has widened considerably. So today we're just going to pull the curtain back. We're going to revisit the pit pitch deck. And it's about understanding what happened, what changed, what didn't, and perhaps most importantly, what management believes investors should be paying closer attention to and what they're m misunderstanding. Joining me is Adrian O'Brien, Vice President of Business Development and Communications with Midnight Sun Mining. Adrian, it is such a pleasure having you here. Welcome back. Yeah, you know, it's it's a it's a fun conversation. So we're going to hit it right out of the park here and just address it all right now. When we sat down in London, there was a genuine optimism around Midnight Sun, and there still is. So but if somebody bought the stock after watching the interview, they're probably very likely going, This was amazing, and then they're going, What happened? So I'm going to give the floor to you here. What happened?
SPEAKER_02Sure. Well, look, let's let's frame it properly. Let's look at Midnight Sun and look at what Midnight Sun is working on. Okay. So what does Midnight Sun have today? What does it look like? What was the market expectation? Where did that all play out? So we started this process three years ago. Okay. This was this is all about Doombwa. Doombwa is the main target we're talking about. And Doombwa is a phenomenal target right in the heart of what they call the domes region of Zambia. Okay. So imagine the top spot for copper exploration globally right now. We happen to have this target in the middle of that camp that is surrounded by majors. So you have First Quantum's Kensanchi mine right next door to us. You have Barracks Lamana mine right next door to us on the other side, Ivanhoe's Kamoa Kakula above us, China Molybdum's tanky fungarume right above us. Like it just goes on and on, right? An amazing camp, amazing place, and we have this incredible target: 20 kilometer soil anomaly, peak grade of 0.73% copper and soil at surface. Um, extraordinary.
SPEAKER_01Yeah.
SPEAKER_02So we started a plan three years ago, put the plan in place, we came up with a target, we knew what we wanted to do, and we went out, we raised $10 million, we subsequently raised another $30 million, and we attacked this target. Now we didn't attack it like a typical junior. Okay. And what I say, or what I mean when I say that, is that often you'll see drill programs come together for junior and they're maybe 3,000 or 5,000 or 10,000 meters at most. Um, and they'll tend to drill big step outs, and you're trying to kind of loosely define a target to be able to arm wave the size of it. We went the exact opposite route. We said, look, total conviction, we believe in this target. It has all the makings of something really incredible. And most importantly, we had a fellow named Kevin Bonnell that joined our team.
SPEAKER_01Right.
SPEAKER_02Now, we talked about this last time. Kevin was the geologist that Baric hired four years ago to transform their Limoana deposit into what became a tier one. Now, Limoana was 900 million tons. Okay. Kevin comes in and joins the team, and they transform Lamoana from 900 million tons to 1.62 billion tons in 24 months. Now, in our world, that's extraordinary, right? Like when do you see a target come to fruition that quickly? Exactly. So Kevin comes to us through some pretty interesting circumstances. Barrett comes to the table. We don't do anything with Barrick, but Kevin leaves Barrick and joins us.
SPEAKER_01Okay.
SPEAKER_02So now Kevin wants to duplicate what he did at Lamwana with us at Doomboa. The reason being they are geologically analogous. Okay, they're identical. They're virtually identical geologically.
SPEAKER_01Okay.
SPEAKER_02But we still don't know what Doomboa is. It's a brand new target. So Kevin puts a plan together, and the plan is really simple. You split the target in half, okay? 20 kilometers. Like, how do you tackle a 20-kilometer long target? So you split the target in half, and we go in with a plan to definitively address the southern half of the target to drill it enough to give us a bulletproof data set to show us what it actually is, and that's exactly what we did.
SPEAKER_01Okay.
SPEAKER_02So we put Kevin on the ground, he put his team together, he attacked the target, and they're drilling at a rate of six to ten thousand meters a month.
SPEAKER_01A month.
SPEAKER_02A month. So that again is pretty incredible. It generates a lot of data, it generates a lot of drill cord, right? It generates a lot of information that you need to process. So we go out, we start drilling, we hit on hole number three. That's our discovery hole. It's 007. That was the title of the hole. So I know there's a million different jokes around that.
SPEAKER_01Absolutely.
SPEAKER_02So we go in, Kevin starts drilling, they hit, and our hit rate is is really high. I mean, it's it's maybe not 100%, but it's pretty close. Okay. So to date, we have defined about six and a half kilometers of continuous mineralization out of the 11.2 we are currently looking to define.
SPEAKER_01Right.
SPEAKER_02Um it's it's extraordinary. Unto itself, it's amazing, right? But at the end of the day, you need to get those drill results, you need to see what it looks like. So first batch of drill results came in January, um, was around 29 holes. Um, great results, mixed bag, some lower grade, some medium grade, some high grade, some really nice intercepts. But at the end of the day, it started to show what Doomwell really was. And we on May 13th announced 100 holes, or 99, I think, total.
SPEAKER_03Okay.
SPEAKER_02Um, that is an immense amount of data. Um, and we had been waiting a long time for it. So there was uh about 99 holes that were stuck in a lab delay at SGS due to some QAQC issues. And and we've addressed this a lot in different interviews and that. But QAQC is a is a set of protocols put together that make sure that your assays are accurate, right? You put blanks in there, you put quality control uh blanks in there that tell you what the assays should be, what they should come in at. So if you see a deviation, your team can catch it. Okay. Um, so we caught those, created a delay, and we caught up. They fixed the issues, it took a few months, and we put those holes out. Now we can finally see over four kilometers of mineralized strike. So when I say we have six and a half kilometers of mineralized strike that's drilled, we see visuals. And the mineralization that we're drilling is predominantly calcopyrate and boronite. Um, for anybody that's not geological, think of that boronite as your highest grade copper mineral. It's the best. Um, it's typically really pretty, purple, peacock colored, uh, really great stuff. Calcopyrate's a little lower grade copper, but still great. It's one of the main copper minerals you see. And then calcosite would be the third, which is a really great copper mineral. That's what we see in our system. A lot of bornite, a lot of calcopyrate. And the beauty of that is we can dictate our drilling based on visuals. Like we don't need assays to know that we're hitting. You hit the mineralization, you can see that you hit the mineralization, right? So you can guide the drilling on that basis. So we're at six and a half kilometers when we can see that that's what we have, and we now have four kilometers worth of actual assays to know what it looks like. And what Doomwa looks like today is very clearly a high variability, very large tonnage deposit. Right. It's real. We can say definitively it's real. It's a big deposit, okay? Six and a half kilometers of strike is massive. Um, we know that it is the geological analog to Lamwana that we thought it was. They are virtually identical geologically. There's some differences. Um geometry of them are a little bit different. Our mineralized horizon is a lot thicker. It's about 200 meters thick. Limoana averages 40 to 60 meters thick. Um, there's a lot less overburden at Dimbois. Yeah. It's a bit narrower, but it's a bit longer strike length. Um, you know, these are things we find out. But the variability is what we're gonna have to get a handle on as time goes on and we continue to drill the system.
SPEAKER_00Right.
SPEAKER_02Um, and I know this is a ramble-on answer, but I'm giving you the full. Okay, that's okay.
SPEAKER_00The floor is yours.
SPEAKER_02So what you can see when we look at it now is very distinctly there are areas where you have a sort of medium to high grade footprint, so a larger area that's higher grade, and then areas where the grade drops down and comes back out into another higher grade section. And so if you can imagine at Lamoana, they have three or four different pits. They have uh Lubway, Camaranda, Chimewungu, these are all separate deposits. Right. And they're now spending $2 billion to create a super pit. That super pit takes out all of that material, including the waste. If you think of uh Dumbua as the same kind of thing with multiple deposits or pits or higher grade sections, if you will, but they're linear, they're in a row, they're north to south and they're stacked end to end. So now what our job is to let the drill results speak for themselves, to go out and do the work. I mean, we raised our money, we raised $40 million. Okay. We have the funding, we have $25 million in the bank.
SPEAKER_01Okay.
SPEAKER_02We put our head down, we do the drilling, we're still drilling 10,000 meters a month. We're gonna finish the 11.2 kilometers we set out to within 11 months of our start date. That's insane. I mean, it's 100,000 meters of drilling.
SPEAKER_01That's wild.
SPEAKER_02And then we're gonna deliver a resource.
SPEAKER_01Absolutely.
SPEAKER_02And the resource will be in the fall, and that will show the world what Doombo actually is. It'll demonstrate that variability, it'll show it clearly. Um, but look, we we know what we have, we know it's real, we know it's exciting, so we've got to keep our head down, we do the work, and we show the world what we have.
SPEAKER_00Well, do you think that that that the market sort of you know overreacted to the delays? Like what do you what do you think?
SPEAKER_01Because you're sitting with it.
SPEAKER_00So you sit with a lot of investors and you're speaking to a lot of them right now. Out of all of it, what has been the toughest question that you're being asked right now?
SPEAKER_02Well, I think there's two things that you have to think about. One is grade. So what is the expectation of grade? Well, we're surrounded by five massive mines. I mean, these are these are really absolutely top-tier mines. Um, lamoana's 1.62 billion tons, Consanchi's a billion tons, Kamoa's a billion four. Um, and the grade is variable across of those deposits, right? So Lamoana is an average of 0.5, uh, Consanchi is 0.66. Uh, but you really have to dig deeper to understand how those deposits work. They're not all high grade and not every portion of those deposits is high grade. Right. There's grade variability. Um, so the market sets an expectation, you set up a target, but a target is only as good as your idea. It's a hypothesis, it's a plan. You have to go out and turn it into reality, which is exactly what we're doing now. Um, but certainly if there's a grade expectation of 0.5 and you come out with 0.35 or 0.4 or whatever um the average would be, um, there's some disappointment. So there's some people that are going to look at that and go, well, geez, that's it's only 0.35 instead of 0.5. Um, and that's totally understandable. But at the end of the day, when you really get to the finish line at a project like Limwana, uh, they have a cutoff grade of around 0.13. So when you think about a grade of 0.3 or 0.4, and you're looking at something that might have a cutoff of around 0.1 or 0.15 or somewhere in that range, right? You you can see that there's really uh amazing opportunity there. And but, you know, back to your question, how does it impact the market? Well, sure, certainly some people might be let down. Um, but at the same time, if you're showing six and a half kilometers of continuous strike and you're demonstrating that it's you're right, your model works, everything hangs together. Now you just have to stay the course and get to the finish line.
SPEAKER_00Well, I think you and I both know that investors are very emotional beings. We're very, very emotional. And so whether that emotion is good, bad, pretty, ugly, that's where it all starts. And when you get a little bit of a sting, yeah, you're a little bit more hesitant. So I'm gonna bring up, you know, and and just sort of circle around credibility right now because assumptions are everything. Because exploration companies trade as much on confidence in management as they do on geology, when shareholders compare where expectations were, say, six months ago, to where the company is today, why should they remain confident right now after just a little tiny bit of a sing? Whether it's good, it's right or not right.
SPEAKER_02Sure. Well, I'll flip the question on its head. Little let's look at execution from the standpoint of what Midnight Sun set out to do. Okay. So we have a system, we had a target a year ago. Um, talked about this three years ago, what we wanted to do at Doomboa. Um, we raised, as I said, $40 million. And we raised the first bunch at 22 cents, said we weren't gonna raise money until $1.50. Right. When we hit $1.50, we raised $30 million at $1.35. Exactly what we said we were gonna do on exactly the time frame. We started drilling 11 months ago, 10 months ago, not even 11 months ago, 10 months ago. And we have already drilled, I don't know, 50,000, 60,000 meters, whatever it totals out to. We're gonna drill 100,000 meters by the one year anniversary of the start date of our drill program. Right. I actually cannot list you a single junior in the market that has done that in the last year. 100,000 meters is incredible. And we've done that. We've executed. We've drilled off six and a half kilometers of mineralization, we've shown four kilometers of assay um copper mineralization. We've shown that we have a brand new deposit, we've made a massive discovery. First discovery in 22 years in this belt. Um we've unraveled a target that confused two majors along the way. Wow. They couldn't unlock it, they couldn't figure it out. Kevin Bonnell did. So I love actually talking about execution because when I look at the Midnight Sun story today, um, you know, I think this is a time for quiet confidence. I think we need to just keep our head down, do our job, show everybody what we have. And I think at the end of the day, this deposit is going to speak for itself. The resource is where you're gonna see a re-rate. Showing the world what it is and publishing a resource is a critical step for us. Um, I think it's a starting point. I think that's where now you put out the first resource. You can always upgrade that. You can always come back with another one. We can do more work. Um, keeping in mind that at Doomboa, we've only drilled somewhere around a quarter of this system. This is 20 kilometers long.
SPEAKER_01Yeah.
SPEAKER_02So we're at six and uh call it six and a half, six point three, six and a half kilometers. So, what sits between us and the northern boundary of the property, right? There's a lot of mineralization, there's a lot of geoclan geochem, we've got this massive target. Um there's a lot of room for all kinds of surprises. You know, we don't know what they're gonna be. The there's gonna be twists and turns. Um, there's lots of room for upside, there's lots of room for higher grade pockets if we get lucky and find something that really lends itself to a higher grade profile. But even if we continue on the same trajectory and continue to advance Doombo along that exact same um size, geometry, scale, grade profile, um, this is an incredible discovery. And I think that's the key that people need to take home. This is Doombo's real, um, and we've done it in record time.
SPEAKER_00So well, we know that projects, they're not always gonna go like rainbows and butterflies for sure. There's gonna be blips along the way.
SPEAKER_02Sure.
SPEAKER_00How are you how are you allocating your capital you do have right now?
SPEAKER_02Yeah. So well, one of the things to look at, I think, is that Doom was incredibly inexpensive, right? Like we're doing $160 a meter all in on our drilling, assays included. Um, so very inexpensive. So, yes, we're doing 100,000 meters of drilling, but our cost is actually very, very reasonable. Um, so we had the 40 million we raised. When we raised the first 10 million, uh, we were very judicious with our capital. We went out, we started the program, but we did the inexpensive pieces first. Right. When we raised our 30 million, we still had the 10 million in the bank. We're very close to it, um, thanks to some warrant exercises and things like that. We kept our cash level right about there. Um, today, this far into the program, we have 25 million in the bank. So we have a lot of capital. By the end of the 11.2 kilometers, we'll have call it 14, 15 million in the bank. Okay. Um, so we're still well cashed up. But don't forget about Kazeba Maine, which is our non-dilutive path to funding. That's our oxide copper deposit that sits in the northwest corner of our property. We have a process underway. Um, we're selling Kazeba Maine, and that capital, which you know we expect to be significant, will be the future funding for Doombo, and it's non-dilutive.
SPEAKER_00Okay.
SPEAKER_02Um, so we're in great shape cash-wise right now, and we'll be in an even better cash uh position when that's done.
SPEAKER_00So you're hitting all the targets that you want to hit, you know, ahead or on date.
SPEAKER_02For sure.
SPEAKER_00What's next then? Well, we're gonna say, you know, even the next two quarters from now, what's next?
SPEAKER_02For sure. Well, look, we can line up the catalyst kind of end to end. The first thing is drilling, right? Yeah. So we've straightened out that issue that took place around QAQC. Yeah. Um, we have moved to Intertech, which is a lab based in Perth. Okay. So Intertech's doing a lot of our assaying now. SGS is still doing some of our assaying. So by having more than one company, that really helps. Intertech's got a great reputation, they do really good work. Um, so we think we've really tackled that issue. Um, so assays, you're looking at kind of a call it a once-a-month turnaround or something along those lines. Getting assays out, continually drilling, continuing to stay on that trajectory of sort of eight to 10,000 meters a month. So that's a lot of assays to come. Um, moving towards that resource in the fall. So as soon as we reach that, call it 11.2 or 11.3 kilometer strike length, we're gonna publish that first resource. Right. So that's a big catalyst for us. Um, the sale of Kazeba Main when that comes around. So sale of Kazeba Main is gonna be a key thing. And just keeping that trajectory going. And as soon as we finish the 11.2 kilometers, punch out the resource straight into the northern section. So more geochem, more dipole dipole IP, and get the drills turning and duplicate what we did in the south to the north. Um, so at the end of the day, you know, we've got a target of a billion tons in that first 11.2 kilometers, and uh, we have a northern 10 kilometers to go and attack too. So, and it, you know, from our work so far, it just continues on, and now we're gonna go and explore and find out.
SPEAKER_00You just make it sound so simple.
SPEAKER_02It's so simple.
SPEAKER_00Like Mary Poppins, just a spoonful of sugar.
SPEAKER_02That's it.
SPEAKER_00Well, thank you so much for sitting with us and really clearing the air there, too. And for all those investors out there, what is the one piece of advice you're gonna give them right now to flip their narrative?
SPEAKER_02You know what? I think just focus on what really matters at the end of the day. Um, what what's the key objective? Do you do you want to uh create a promotional situation where your stock flies, or do you want to build something real, right? We're building something real. Um, we're attacking a system that is large, we've shown our conviction. Um, as I said earlier, we've done what a lot of companies don't do. We've we've really put our money where our mouth is and drilled an incredible amount of uh meters in just a very short period of time. Right. Um, so focus on that, focus on the reality, focus on what you're you're actually putting on the table. Um, and if Midnight Sun can deliver what we set out to uh in the fall, I mean this is uh it's a pretty incredible turning point.
SPEAKER_00So perfect. Well, thank you again for sitting with us, and I look forward to our next conversation.
SPEAKER_02For sure, you and me both.
SPEAKER_00Absolutely. I've been speaking with Adrian O'Brien, Vice President of Business Development and Communications at Midnight Sun Mining. The company trades on the venture under the symbol MMA and on the OTCQX under the symbol MDNGF. To learn more, visit Midnight Sun MidnightSunmining.com. That's what it is. The reality is that great discoveries don't always travel without challenges. Sometimes the market rewards progress immediately, and sometimes it demands proof. For investors following Midnight Sign, the next chapter isn't defined by potential, it's defined by execution, and they're doing just that. I'm Lindsay Melchick, your guest host, right here in New York City. We will see you next time.
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