Investing in Gold 101 with Stephen Soock

0:08 Hello everyone, and thank you for joining us for this Gold Investing 101 session hosted by The 6. I'm Stephen Suk. I'm an equity research analyst with Stiefel GMP based in Toronto. I cover the junior gold and silver space, junior producers, developers, and a number of exploration companies. I've been on the Bay Street side of the business for about 6 years and before that was a mining engineer at various operations across Canada. With me today is Patrick Donnelly with E79 Resources, Brian Skanderbeg with GFG Resources, David D'Onofrio with White Gold. Thank you so much, gentlemen, for joining me today. I'll pass around the table to start off with to let each of you introduce yourselves and your companies in a little more detail. David, let's start with you. For sure. Thanks, Stephen. Great to be here. Thanks for the invitation.

0:55 I'm the CEO of White Gold Corp. White Gold Corp is a Canadian-based exploration company. Our projects are in the Yukon, Canada, in what's known as the Fondyke or the Dawson district. So this is, we have a very, very large land pack, about 350,000 hectares, and it starts from Dawson and goes about 100km south to the coffee deposit, which is currently being developed or put along the development process by Newmont. Western Copper and Gold's massive porphyry is right there as well. This is the area that was made infamous 125 years ago with the Fondyte Gold Rush. And since that time, they found 20 million ounces of gold at surface. But remarkably, no real modern exploration was done until about 15 years ago. This was a new initiative that Sean Ryan, a great prospecting visionary,

1:50 developed. And we went there to sort of try and figure out why it was that people weren't prospecting. And his findings were that just this area, believe it or not, was not glaciated. So the typical prospecting tools used in many parts of the world just weren't effective there. And I guess people kind of overlooked it, notwithstanding this prolific Gold blaster history, which is continuing to this day, all these great shows on A&E and whatever else. And remarkably, within a couple of years of him starting to try to identify how to find mineral in the systems, working with other companies to test that, there was 2 major gold discoveries that were made. I'll probably talk about a lot of those later, and what led to that type of investment and why people were interested in doing that. And the first one was by a company named Underworld Resources. They developed the Golden Saddle deposit that was acquired by Kinross for $140 million.

2:42 White Gold actually is now the owner of that asset and we've continued to do some work on that and shown it has a tremendous amount of upside. And the other big discovery there was done by, made by Kaminak Resources. This was the coffee deposit, which is now owned by Newmont. That was sold initially to Goldcorp for $500M and now is owned by Newmont after Newmont had him bought Goldberg. So we have a very interesting company in that we have this golden saddle asset, which we've developed up to about 1.8 million ounces, all categories. I think there's a tremendous amount of upside there, which we're working to demonstrate. And we also have this very large grassroots exploration package that we've been working through the same protocol that Sean used to make his first discovery and we kind of really feel in the last 10 years he's cracked the code and we've made a number of very significant new discoveries to date which we are following up with in addition to this really significant pipeline of earlier stage properties, which we're going to work through the same protocol.

3:41 So, a lot going on to have in 1 company, but from a management perspective, we really feel we're fortunate to be able to have good, tangible, high-grade ounce deposit as well as this very exciting upside. And we think that our excitement has been validated by the fact that we've been able to attract 2 major mining companies as our partners, being ECO Eagle and KITROS, who are major shareholders of our company, along with management, Sean Ryan, the Power 1 Group, and some other very notable, sophisticated investors in this industry. Perfect. Thanks. Over to you, Brian, next. Yeah, thank you very much for the introduction, Stephen, and very good to be with yourselves today. I'm the CEO of GFT Resources, Brian Skenderbeg.

4:30 We founded this company back about 6 years ago. And TFT, for anybody that's wondering, is gold for gold or gift from God, and depending on which way you wanna throw that. But we're district scale explorers. We're very much focused on the Abitibi and the Timmins area where we've amassed a very large land position in 3 large blocks over the last 4 years in a series of transactions. We also control a large district scale Google Play down in the US, where we partnered that into a company called Group 11 Technologies. So at a high level, GFG is a district scale explorer. There's a couple of advanced projects in the Timmins area. One of those chiefly called the Montclair Project, where we're actively drilling it now, advancing it towards resource and a large associated land position with it. This

5:14 would be east of Timmins. We also have 2 large blocks west of Timmins, a little earlier stage, one of those would be called Penn and 1 would be called Dore. So combined, they're almost 800 square kilometers and we're second only to Newmont in terms of land, tenement, holdings in the Timmins Belt. And that's where we allocate our capital. Down in the US, unique partnership with, as I said, Group 11. These guys are trying to bring in-situ mining to the gold space. And I think there's a unique angle to be played there. GFG has contributed the asset to this group. They've contributed the technology and we are owners of them as a private company. And I think they're positioning themselves to what could be a very large value unlock in the space and could be quite disruptive to the gold mining space as well.

5:59 So GFG is a unique 20 million market cap explorer, 3 or 4 irons in the fire, very seasoned management. Our team ran previously a company called Clode Resources, and that was a producer here in Saskatchewan, which is where we're based. We sold that into SSR mining back in the 2015-2016 time period. So I think Seasons Group, very successful in the mining and discovery space and focused our capital in the Thames area. That'd be a solid, Thank you. Great, thanks a lot, Brian. And last but certainly not least, Patrick, do you wanna tell us a bit about E79? Thank you, Steven. Thank you for having me on. Yes, my name's Pat Dolly. I'm a geologist and did that for a long time. And then like yourself, Steven, I was also on Bay Street for 6 years covering mostly base metals. I'm in the corporate side now for about 10 years since I moved back to Vancouver, which is my hometown.

6:57 I only joined E79 last May. And what I found really intriguing about East 79, you know, it's early stage, which is what I really enjoy. And we're in the state of Victoria in Australia, specifically the Victorian gold fields, which hosts the world-class Fosterville mine. And this is an area that's been relatively overlooked compared to other gold mining districts globally and in Australia. And I think what it result, what happened was there was a huge discovery at Fosterville at the Swan Zone where they discovered at the time it was Kirkland Lake which discovered

7:31 the Swan Zone which had over 3 million ounces of gold running at over an ounce per ton. And so that kind of opened everything up in the state of Victoria. There are a lot of players in there. We got this company off the ground in 2020. And on our third hole in 2021, we drew 11 meters of 160 grams at our Myrtleford project. And Myrtleford's over 40 kilometers long and has numerous prospects, showings, adits, workings, what have you. What's really interesting about Myrtleford, it's yielded over 5 million ounces of alluvial gold. And so very similar to the White Gold District in Yukon, there's a lot of activity in the late 1800s, and yet there's very little modern systemic exploration activity.

8:16 And so when you look at the property, there are numerous showings of visible gold, coarse gold. So again, we're well-financed, $6 million, our market cap's $10 million, and we're in a very stable, safe jurisdiction in the state of Victoria. We'll leave it at that. Great. Thank you all. So with that, just a little bit of a housekeeping. This session is being recorded and will be available on the SICS website in the coming days, if not later today. If you have any questions, please submit them using the chat function on the platform and I'll review them and pass them along to our panelists. So I'm gonna start today with a question of my own kind of addressing the big picture strategy. The overarching goal of exploration is obviously to find a future mine.

9:02 This happening depends on a variety of factors including scale, grade, location, access to infrastructure, what have you, of the deposit, as well as the risk profile of where you operate and the ability to execute that plan going forward.

9:16 How do you balance these variety of factors when you're determining the best places to start looking for projects? We'll go in reverse order here and start with you, Patrick. Well, obviously, great is king, right? So, you know, if you're an area that's got good infrastructure and, you know, and the cost environment's reasonable and exchange rates are reasonable, and you don't have any metallurgical challenges, then you get away with a low grade. But if you're an area that has challenging infrastructure, metallurgical issues, for example, refactoring ore, or you have a high strip ratio, or you're deep underground, then you need grade. And so it's interesting when I do a quick and dirty evaluation of projects, I always calculate the NSR per ton of production and use a number of assumptions.

10:11 And then when you get that, then you can start thinking about, okay, what kind of environment would this NSR per ton

10:18 be applicable to? Right? So, you know, would it be applicable to narrow vein mining? Would it be applicable to bulk tonnage mining such as block heaving? And so it always gives me, you know, when I do NSR per ton, it gives me a good idea of what kind of mining scenario or operation that we're looking at. Yeah, it makes sense. Great, great. It does go a long way. There's no debating that. Brian, do you want to have anything to add in terms of what's more important to you and that's the factor I recognize too, all 3 of your companies have the benefit of being in relatively stable jurisdictions. So there's a degree of jurisdictional risk that kind of comes out of that. Nevertheless, everyone's evaluating projects all the time. So you've always got to be thinking about the mix of these factors.

11:05 Yeah, you know what? I have a little different view. I'd probably step to a little higher level and just start with endowment. And when I look around the landscape, and you can define endowment a variety of ways, but I just look at millions of ounces. So I look at Timmons as a belt and say there's 140 million ounces there.

11:26 And then I look at what's preserved. And by that, I mean, what's yet to be found and try to give myself a ranking of that as a filter. So are we working in an extensive area to cover how much historic mining has been done? Are we looking sub 500 meters for the next war body? Are we looking in the first 100 meters? So preserved endowment is really where I start. And then I look at the system's ounce per vertical meter. And, you know, not unlike Patrick, you get to a greatest king. And if you can get to an SR per ton, a different way to think about that ounce per vertical meter goes to a really strong economic filter. And if you can get that number relatively early and put it on your graph of comparative deposits, it gives you an idea where you're headed. And so that's really where I head, is getting to reserved endowment ounce per vertical meter. And then thinking about what is critical mass. And critical mass is very different in each belt. So if there's infrastructure, like there is in Timmins or like there is in various belts around here, a filter might be greater than 1 million ounces becomes an economic deposit.

12:34 Whereas if we're dealing with Ring of Fire or we're dealing with somewhere in way off the end of northern Ontario, you need 3456 million ounces to start reading critical mass. So This concept of infrastructure is very key in our filter. Hence the reason to go to Timmins, where we have 4 mills within 25 kilometers.

12:54 So I kind of take this filter and look around and say, you know, preserved endowment, infrastructure, bounce per vertical meter, and then cost of entry, right? So this is the last piece. Is it even achievable to get into a camp like Val d'Or?

13:09 Very, very difficult. Cost is high. So when I look our filters across the Abitibi, across Canada, the ZFG looked at lots of these, And we ended up where we did, as we felt it was the highest area preserved endowment with the lowest economic threshold. And that's driven by presence of infrastructure and natural buyers. So that talks a bit about our strategy and why we go where we go. Right, that makes a lot of sense. And David, I imagine, you know, the concept of preserved endowment is a key important one for the white gold story. Do you want to tell us how you kind of see that and why that's so unique to where White Gold's exploring? Yeah, for sure. I think these guys touched on a lot of the great points in terms of preserved endowments. When you're in, I would call it a new sort of emerging Gold camp, it's a bit of the opposite. We think we're at the very beginning.

14:02 In the White Gold District, the discoveries now are being made literally at surface. Maybe you've seen the video of Sean there with his Tulip Bogger, finding the Gold in the mineralization in the system. It's really all there. Now, the flip side of that is there's less infrastructure than in a more, you know, developed camp. What I like to do about the Whitepool District now is it's kind of a bit of a balance where the camp is starting to evolve, the majors have moved in, Newmont's there, they've done a tremendous amount of work this year, they're advancing that project towards production. So

14:39 hopefully, you know, we as a junior will be the benefactor of this significant infrastructure development that other people are doing. And in terms of checking the box, I like to look at it as checking the box when we're evaluating project opportunities. So these guys touched on a couple of great ones. But sometimes, just to sort of maybe distill this for how, you know, our viewership here can look at things, you know, there's an old expression, the best place to find a mine is near a existing mine. And, you know, a lot of the times what that, you know, means that all those boxes have been checked, You know, this thing was economic, it was there, and it probably

15:18 has the infrastructure, you know, the template for the permitting is there, the relationships with local communities, First Nations, Indigenous people is there. So a lot of that fabric, and you know, certainly in these areas that we're talking about, a lot of that's been done. And I think that's really an important thing. When you have major mining companies making investments in different districts, major mining companies, they're almost like countries now. They're so big and the threshold that the capital markets hold them to is so high. So these guys have to make sure that, you know, they've done all the right things. And so they've done the homework and now they've gone through their checklist, which, you know, they have the benefit of staff and hundreds of people looking through all this. So if it can make it through their process and they're willing to make an investment in an area, I think that for investors and junior mining companies or people that are looking for new areas, that's a really, really great sign.

16:11 And for our personal experience, like I mentioned, we have Newmont there, Western Copper and Gold is there, Rio Tinto put a major investment into them last year. Obviously, our partners are Niko and Kineros are there. So these are something I think people can look to as

16:26 further validation and prospectivities of these different areas. And of course, jurisdictional risk, I think, is always been important. This day and age has been identified and highlighted even more so, especially with public companies, you have to make sure that everything's being done totally to the law of the code of the different countries and exchanges and whatever else. So that gives us additional security into that things are being done properly.

16:54 But yeah, this endowment concept you touched on, I think that's critically important. I think as junior miners, we all are thinking big. We're looking for major successes. I think that's what our investors want to see. So they want to see that you have an opportunity to make a very significant multi-million ounce type discovery that's going to turn the needle for the market, for majors, et cetera, as opposed to maybe just looking for rinky dinky little things that may not sort of guard that type of attention. I think this group here, that's where everyone's

17:28 doing. Certainly the size of the prize is an important consideration, but good point about having that external validation as well and neighbors that can help provide infrastructure in some of these slightly more remote places.

17:45 So kind of moving along the discovery process, everyone on this panel has more than 1 target on their portfolio. How do you think about allocating time and money to a more predictable flagship target, deposit versus building out that pipeline?

18:03 And kind of to follow up on that, how do you gauge when enough work has been done on these earlier stage targets in the background to present it to the market and or take that big swing for a, you know, big discovery hole or a big push through a field season?

18:18 So again, maybe we'll just go in reciprocating order here. So David, we'll start with you. Yeah, that's a great question. And different investors, I think, look to different companies to do different things. And so part of it is, how are you presenting yourself to the market? Wyco Corp, we look at ourselves as a project generator. We wanna be there, we wanna make these discoveries. I think That historically has shown to be the best opportunity for significant value creation in a junior company. There's this concept of the Lausanne curve. 6 actually just recently has done a panel on that, but for people that weren't there,

19:00 It outlines the value creation of a junior mining company and it starts off very low when you're in your concept and thesis phase. Once you have that initial validation of your thesis, you make the discovery, valuations will shoot way up. At that point in time, it's sort of uncapped value creation opportunities. As you do the more work, as you sort of put your resources on, you start to bring some constraints around. I think that might be something we're going to talk about in a bit. And then, to the extent that's validated, now you're in project permitting, financing, et cetera, it gets a little bit quiet and sometimes the market maybe wants

19:36 something a little bit sooner, gratification, or at least maybe more so the retail community, that's kind of when the institutions step in that have different investment parameters. So from our perspective, I think we look to be able to optimize the value of the company. You can look to the skill set of the people involved. Different companies are built for different reasons. Our team is all explorationists. We look to divest at the time where we think there's peak value for the shareholders.

20:02 That's why all these companies are in existence, create value for shareholders. And we'd ideally be looking to be doing that on that first leg of the song curve. We do have a project that does have a resource on it. That's a little bit unique in our situation just because we, you know, Kinross rolled that in after they made the acquisition of Underworld Resources. And so you might ask why is a project generator taking in a project? The reason for that was it's actually our team that made that discovery.

20:35 And Kinross, once we've had our discussion with them, they knew that these guys knew this deposit better than anyone on the planet. And the ability for them to show that there was incremental value that could be identified quickly and inexpensively, it would be sort of best in our hands. And We've been able to do that. When we acquired the asset, when Kinras merged it in, it was 1Moz. Now we're over 1.8Moz. We're hoping to get it well over 2Moz very soon. It really made sense. We started with something but we still felt there was that very immediate opportunity to create a lot of value.

21:09 You touched on something there. I want to pick up on the milestone that is a resource

21:15 in the development of a deposit, a stated third party validated resource. Obviously at a certain point, once you understand the deposit and start to get a critical mass there, that starts to be on the horizon. And while that provides a validation of the geologic model and the endowment, it's sometimes also seen as putting a pin in it. So how do you navigate achieving that milestone while still preserving very real geologic upside across the rest of the pipeline? Maybe Patrick, I'll kick it over to you to speak to that. Yeah, I mean,

21:53 I like to think of myself also as kind of a observer of other companies and I always see what other companies do and how the market reacts to them. And obviously that depends on what kind of environment you're in. And if you're putting out drill results

22:13 that are good and the market's reacting, then you just keep working on that formula, right? And I've seen companies where they keep drilling and drilling and drilling and keep putting out splash results. And then eventually I think the market starts to bake in that there's going to be a resource there. And so the question is, at one point, do you want to cut that off and come up with a resource? I think, you know, if you got the money

22:41 and you're comfortable with, you know, the continuity of mineralization and you see that continue on, then you keep drilling and you keep drilling as much as you want. And obviously, you know, and you also internally, you know, have some sort of basic estimate of what the resource is going to look like, right? So, you know, and you've got to balance that on your cash position and also the markets, right? So, you know, it depends on the type of deposit you have, it depends on the markets. But you know, I'm a big believer in just keep the drill bit going. And if you keep, If the results keep coming,

23:17 then you just keep going down that road until it gets to the point where either you got the scale that you want in terms of ounces or simply you've drilled the deposit out. So I think that would be my answer.

23:31 You mentioned an interesting concept there of market expectations, you know, in terms of a resource, because there's often a momentum that comes behind continued high-grade results or, you know, good success, which is great, but sometimes the market gets a little bit ahead of itself. So how do you think about managing those expectations while still having success

23:57 and preserving that kind of upside and being able to daylight that? I know it's a bit of a balancing act, but how do you kind of square that circle in your head?

24:07 That's a great question. And it's funny, you know, before I became a CEO, I was doing investor relations for quite a while. And I thought of my role as to manage expectations. And so, which is very, very, you know, you got to be very careful because, you know, you don't want to cause select disclosure and also, you know, and also put yourself in the spot. So, you know, I think, I think you got to talk to all, you got to talk to all your shareholders.

24:34 You gotta talk to the markets, you gotta talk to the analysts and you tell them this is the goal we're having. This is the goal that we would like. And I never give an absolute number, I would give a range, right? So, you know, we're looking at 500,000 to 1 million ounces, you know, so you're kind of giving yourself a little bit of leverage, but at the same time, you're not setting yourself up for disappointment because, you know, In the end, I heard someone say this, you're dealing with nature and mineral deposits. There's no mineral deposit that's alike.

25:10 Especially if you're dealing with something that's nuggety, for example, Valley of the Kings or Pretium, that's a very challenging one as opposed to a porphyry. So I always give ranges, I make sure I'm out there talking to people and making sure that I'm consistent in my message as well. So I think that's how, again, you manage expectations when you're dealing with shareholders and investors. Yeah, that communication is definitely a key ingredient to the whole

25:41 infrastructure of the industry. Brian, do you have anything to add on that balance between keeping the dream alive in terms of exploration upside and achieving those milestones and advancing and de-risking a deposit?

25:55 Yeah, look, I think it's different for every company too. We're generally explorers here, the 3 of us, but as you move up the pipeline, obviously a developer or a junior producer or a materials can have very different filters in terms of what they choose to disclose. I've always been a guy that believes you need to allocate capital where the best payback is and to me that's growing the resource and that's your lower risk meterage. So if we can look at our budget of say 5 million bucks and throw 75% of that into what we think is bona fide resource-based

26:28 drilling, and we're not always gonna have a target that's at that level, but that's the ideal situation because I think that's where the best value is. So we look at budgeting within even somebody like GFG, we're taking 70 or 80% of our meters and we're putting it into something that I think is defining likely resources. We're taking 20 to 30% of our meterage, so we're taking that and allocating it into the next phase of targets down further on the pipeline and saying, where's the next target that's gonna grow to a resource or become something that's relevant? And I think that's an appropriate balance where you continue to move targets through your pipeline and you grow a resource which is ultimately the anchor of your valuation.

27:08 So I kind of really like that weighting, you know, in terms of the decision to put out a resource. I think Patrick's point on, you know, continue with what's working is a very good path and Great Bear was a great example. Never had to put one out. Other companies have put one out and it was beneficial to them. So it's really dependent on market fundamentals where the company is, what's working for you,

27:33 and I would generally lean on the side of putting a resource out until you really feel that it moves the needle in the market's context, or it moves the needles in a corporate's context. So there needs to be a really strong driver to put that out because, you know, even as David talked about this, well, it's on curve valuation drop is often triggered by the resource being published or an economic analysis being published to it and then the news slow changing. So it's a critical point in a company's journey of when they choose to do that, try to put the pin in. So I think you have to be very careful about why you're doing what you're doing. And it's very dependent on the dynamics of individual companies. And I think the dynamic of the market is also as a great backdrop to that, as you mentioned, that not all markets reward the same type of news flow. And depending on where we are in the cycle, that can be very different in terms of what you said you're getting rewarded for.

28:28 That's actually a good segue into my next question here, that the Gold market has obviously been quite difficult through the second half of this year. There's a balance to be struck between maintaining a defensive Treasury position and being active in advancing your projects, especially from a de-risking your treasury perspective, it's either side of a coin. Can you give us some insight into what shapes these types of capital allocation decisions behind the scenes, how you think about how much and how fast you wanna spend versus how much you wanna keep for a potentially more rewarding market? And maybe Brian, I'll start with you. Yeah, this is capital allocation 101, right? So do we really want to be aggressive or not? And so much of this hinges on, yes, can we raise market? What moves the needle in the market? But in the end, we all have to stay relevant as a base case.

29:24 And so if we looked at a budget of how much it takes GFG to be relevant in a year, it's 2, 3, $4 million in the ground. That's the minimal level that we feel it is in terms to be relevant. And so from my perspective, being irrelevant is not a choice. And so that's your base level. And then if you can raise more and you find that the market's there to support a program that is 5, 10 million, 10, 20 million, then why shouldn't you take that path? So to me, base level relevance at a minimum, then dictated by results, market fundamentals being as aggressive as you can. And we all want to preserve value, value being now per share, ounces per share, things of the sort. So that's my general view of it and how we operate with TFT is push to be as aggressive as we can and always maintaining relevance.

30:16 Yeah, we definitely have to stay active enough and keep that news flow. David, maybe I'll go over to you now. You have a bit of a different model with 2 kind of marquee seniors as key strategic investors. So, you know, how does that change how capital is allocated or budgets are decided between both internally and I imagine also the input of those key shareholders? Yeah, we've been really fortunate to have a great relationship with our partners and we keep a very open dialogue and we look to leverage their expertise to help us advance the value creation and maybe guide some of our decision making. That was actually a very big part of our decision making process when we selected Agnico very early on to be our partner. When the company was put together in 2016, we acquired this incredibly large land package, it was right on the back of Goldcorp acquiring Caminac, so there was a lot of interest.

31:16 We just felt that Agnico had such a strong technical team, they had experience working in Northern Canada, so they would be able to add that into our capabilities in addition to obviously the capital that they put forward. And 1 specific example I can get to that is we have this Gold Saddle deposit, it was a little bit over 1 million ounces at the time, and where do we sort of spend our time trying to grow it like we thought we had. We did a little bit of drilling directly onto the deposit once we acquired it. But then through these discussions, through the combined technical interpretations, we came to the conclusion that the best return on investment for us as a company, for the objectives that our partners want to have, which is to see continued significant resource growth, was to start looking for new zones of mineralization within a fairly close proximity to the core of the flagship deposit.

32:18 I think the thinking is, deposits are there, you pound away on them enough, usually they'll continue to grow, but what is the incremental value you're creating there versus you find another zone of mineralization, you can establish a deposit there, assuming that it's part of the same project, those types of incremental discoveries will be at 200,000,500,000, 1 million ounces at a time, as opposed to just step over delineation. We were really grateful to have that perspective, and it's actually worked out incredibly well. 2 years ago we made a discovery just 2 kilometers to the west called the Orion Surprise and now after working on it a couple of years we think that's going to be highly accretive to the size of our deposit. Visually it looks very similar to the type of mineralization.

33:04 And it's also really opened up our eyes to a significant amount of blue sky opportunities in the area as it sits on this big 6km trend, it's a kilometre wide, that's seen a very limited amount of historic testing, which was really successful. But once the Golden Saddle was discovered, all the attention went there. And now it's like, guys, don't forget about this. You've done a little bit of drilling, you've hit this new zone, it's really coming together well. You have all these new targets. Let's spend some time looking at that as well. So that's one example I have of how managing our perspective, I think that helps our partners see this thing has continued upside, we've moved to a scale that should be going to development. And it also shows our shareholders that, you know, this is a lot of blue sky opportunity on these projects as well.

33:52 And back to my earlier point, the best place to, you know, make a discovery is near mine or near an existing deposit for all these other reasons we discussed earlier. Yeah, certainly a lot of considerations and trying to bring all that together. Patrick, do you have anything to add on capital allocation decisions the way you see them within E79? Yeah, and it's a great question. And, you know, I joined a company in May, and I had my first board meeting in July. And when I got in front of the board, I came up with A369 and 12 month budget, work closely with my CFO. And I also came up with a 2 year budget. So, you know, we're sitting with $6 million in cash.

34:40 And so you gotta be cognizant, you know, what if there's no financing windows? And so basically, you know, when I said to the board, you know, this is, you know, this is what we want to spend to, you know, up to December. And this is what we want to spend up to next June, and so forth. And then here are the priorities we want to drill. So I think it's just having a plan in terms of what you're spending and understanding where your costs are, and then focusing that spending as Brian and David stated on what areas are going to get you the bang for the buck, right? Is it infill? Is it resource expansion? Is it exploration? In our case, it was exploration and focusing on the areas of our project at Myrtleford that's going to get us bang for the buck.

35:28 Right. And kind of like David was saying as well that, you know, incremental ounces are often the ones most rewarded in the market, those outside of those expectations of around the edges of a deposit. So as explorers, certainly that's the business that you want to keep exploring, but with what sort of, you said, market expectations and access to capital considerations baked in as well. I'm gonna switch tracks a little bit here and talk kind of about the current market dynamics. We've seen multiple valuation multiples compressed across the board in the Gold space over the past 2.5 years, but the magnitude of contraction in the exploration space has dramatically outpaced that of the producers, at least the ones that we cover here at Stiefel anyway.

36:16 So we have average spot PNAVs of our Explorer codes at about 0.17 times. This is less than a third of the relative valuation we saw at the peak in July 2020 and just under half of the five-year average of about 0.4. So certainly depressed valuations, lots of opportunities. However, senior and intermediate producers sit at just 20% below their 5-year average spot PNAV at 0.85% and 0.55% respectively, so a very large and widening valuation gap over the past 24 months or so. This seems like an obvious opportunity for creative M&A for some of the bigger players, even if they do pay a substantial premium over the current market price for smaller companies.

37:04 That being said, why do you think we haven't seen more of this kind of M&A through the current part of the cycle with for the most part majors and intermediate producers in a fairly strong paper and cash position and discount valuations at the smaller end of the space. Maybe Patrick, I'll start with you on this one. Yeah, I don't think there's a single answer to that. Obviously, there's a lot of market headwinds right now and there's a lot of worry what's going on there, what the Fed's going to do, are we going to go into a major recession? I think those factors come in. If you look at all the big players, some of them, they're dealing with their own problems, right? You look at IM Gold, they're dealing with problems at Cote Lake.

37:51 You look at Kinross, you know, they got their heads handed to them in Russia and then they did this deal for Great Bears. So, I think they're dealing with that right now. And I think also just, you know, right now it's risk off right now for the majors, right? And we've seen in the past where they've done flurries of M&A deals and then they've been punished. And so I think now they're a little bit more hesitant and a little bit more selective and disciplined, especially in an environment where we're entering some significant headwinds. So that would be my belief why we haven't seen as much M&A. Hey, also, it's still early, right?

38:39 It's only been a year or so since things got kind of crummy. If this continues on for another 1 or 2 years, then they might start licking their chops. But right now, I think it's simply they're just being disciplined because they haven't been disciplined in the past. And that's certainly something the market has punished some of these larger transactions, especially the kind of bet the farm M&A style transactions over the past decade or 2. So, it makes sense that they are gonna be a little more cautious, but they say the cheapest ounces are the ones that you find, but these sorts of valuations, there's a real argument to be made that they're not, they're the ones that you could acquire. So, I'm a little surprised that there's not more of this going on, so maybe, Brian, I'll go over to you if you've got any thoughts on if this is something that's upcoming or why we might have not seen it just yet in any sort of major way?

39:35 Yeah, you know, I think Patrick touched on some good points. I mean, I always go back and default, it's who has the mandate to act and the ability to act. So lots of groups may or may not have 1 or both of those. And in this type of market, you might ask yourselves, why aren't the producers acquiring more which growers or developers are present right now because of the gap that we see. The other way to think about this is also, as there is more consolidation in the space, everybody's filter grows. So Agnico 3 years ago would have had a filter that they may have looked at 100,000 ounce producer and fit it in their portfolio. Agnico today will not have that in their mandate, right? So as the whole space grows, the B2s, the Kinrosses, you know, and the size threshold of an individual organization grows.

40:25 So the number of targets that are relevant size for them are smaller and smaller. And this goes back to the whole thesis of discovery efficiency and discoveries of relevance are exceedingly rare. When they're becoming rare because the size filters are becoming larger. And so this I think is a feedback where those with the cash have a good filter and their filter is getting bigger. And that doesn't make their basket of producer or explorers any bigger, it makes it quite a bit smaller. There's not many great bears out there in these days. So I think that's a theme that has came out of consolidation and it's a very disciplined approach from those with the cash, the producers, and then large scale producers as to why we may see this value disconnect.

41:13 And then the flip side of it is that the whole risk reward portion of the capital markets is really struggling for juniors. And so in many ways we are facing liquidity challenges, investor appetite challenges, because people want something less risk. As Patrick said, it's risk off these days. And what that means is a preferential, or a disconnect between the juniors and the developers. We will certainly weigh our prices and how we trade in this market versus developers and the producers. And that's just what we're seeing. So I think it's understandable. And I think it's probably a theme that you'll continue to see play out. Good deposits that are sizable will get bought, no doubt about it.

42:04 We all need to reach that critical mass to be relevant. I definitely agree. David, lastly, have your thoughts. You said White Gold identifies as a project generator, so M&A or transactions are a core part of that strategy and mandate. How do you view trying to reach those meaningful thresholds for M&A or carve-outs or attracting kind of a takeover bid from a major? Yeah, I think, as Brian mentioned, you wanna be, and we touched on earlier, looking for projects of merit, right? And then, it's a great point, as the majors get bigger, their threshold is going higher. But at the same time, there are new entrants that are emerging. I think we see a lot of different groups from different parts of the world start to hone in even more closely on Canada, just because of the jurisdictional issues that are going on other places in the world. These Australians, for example, especially with premium valuations compared to Canadians, I know that they're starting to emerge as interested parties.

43:20 So, it's a little bit of, you have to, this is why I think another reason you have to keep yourself relevant, you have to continue to show that you're building value because if and when, and it's not an if, but it's when sort of things change, you wanna be able to take advantage of those opportunities to optimize your value for the shareholders. And I think that the lack of potential activity that will come out of these sort of times where access to capital is more difficult is really going to only exacerbate an opportunity that investing in junior explorer codes, I think will be just provided. The flip side is if things are depressed, the optimistic side is the opportunities for returns are more significant.

44:06 And the world is not gonna stop needing all these different commodities, gold and whatever else. And to the extent that exploration is diminished, when the time is that people need to be making acquisitions to increase their production pipelines, there's gonna be less opportunity to go and make these acquisitions, which is fine demand that leads to better valuations. So that's a good point. The demand for ounces kind of at every level. And I think Brian, you touched on this as well. There's almost this newly minted group of super major Gold producers with the Nevada Gold mine level, Agnico taking over Kirkland, the pending Yamana deal, those sorts of groups. For every extra ounce they produce in a year, they've got to put one more or at least one more into their pipeline to be able to fill that production profile.

44:59 I agree that it's important to be in the right position to maintain a position where you can execute on that. Following along that, when there is an offer on the table or you are, there is a transaction to be had, the goal is obviously to maximize the shareholder value. So how do you decide when you've daily did enough value out of your project, you know, touched enough of the exploration prospects versus when it's time to sell and kind of crystallize that value? How do you think about that balance between not leaving too much on the table from that exploration and being able to provide your shareholders with attractive valuation in the current market context?

45:45 Maybe Patrick, I'll start with you. That's a really good question because, you know, I've seen a number of companies that, you know, they go through the discovery phase, they go through the resource definition, PEAs, feasibilities, and even into permitting. The market's not stupid. If you've got a market cap of $100 million and your CapEx is $1 billion and no one's biting, you're in a tough spot. And even companies will start, hey, we're going to go permanent now. And yet there's no suitors coming around for the company. So it's a tough spot.

46:35 And so all you can do really is to keep optimizing, maybe de-risking the project or expanding the resource or the reserve. But in the end, it's really, it depends on the markets as well. If majors are cash flowing and they generate a lot of free cash flow, then they're more amenable. Or if a case like Pan American, they're doing that deal for Yamana because they need, they're gonna pipeline shortfall coming up and they need to continue ounces, right? But like I said, it's not, I don't think a junior can dictate when they need to sell, right? They'll sell if they get the right price, but it depends on the environment. Sometimes you're a price maker and sometimes you're a price taker, and we've seen that before as well. So I think it's just you got to, You know, you can't, let me just give you an example. You know, I've been with other companies where, you know, people ask you, what's your end game?

47:36 And I'm like, oh, we're gonna sell the company. And they ask, well, what if you can't sell it, then what? And then, you know, do you tell them that, oh, we're gonna build it when, like I said, you got 1 billion dollar CapEx, your market cap's not 1 million, you're in a tough spot. So, and I think every company deals with that when they get to that point. And it's just about trying to, again, put out news that moves the needle. And until then, you're almost playing cat and mouse with the majors. Yeah, it's always a bit of a game that as a junior being acquired, you want as much value as possible. And of course, any potential acquirer wants to pay as little as possible and capture that value upside without paying for it.

48:23 So, Brian, how do you kind of come at that thinking process around timing and how much value's in hand versus left to kind of the blue sky? Yeah, look, it's something I have experience with, with Clode. We transacted with SSR and ran a process and sold our company into a mid-tier. It was a very learning curve for myself and my career. I think there's 2 ways to look at this. You know, what are we good at? What do we do? How do we compete as a company, right? So are we explorers? Are we developers? Are we mind builders? Are we mind operators? So where's our capacity in our organization at the executive, the management team, at the board level? And I think many of the failures that you see in this space are when people try to do things they're not good at.

49:08 And if you're an explorer, recognize you're an explorer. If you're a developer, you know, Patrick Downey, my board's chair, built lots of mines. He's a builder. You know, if you're an operator, operate. And so to me, that's the overarching things, what you're good at. And then you have to look at, you know, what can we do internally versus externally? So a good example of this was with Clove, we recognized we brought ourselves to a healthy position of where we weren't playing defensively. We actually had enough strength and balance sheet. We had enough time in front of us. We had enough shareholder support to feel like things were firmly in our control. And then it was understanding the landscape and understanding the sewers. And often, if you look hard externally, you can find a better value build externally than you can maybe internally.

49:57 And that's a really good sign as an organization. If you can pair up with somebody that can outpace your value build and or compliment it and de-risk it. So in our case, we just de-risked the organization, single asset producer went into a basket of mid-tiers. We brought somebody in that can provide capital and develop the mine more quickly. And we received a premium, and we took that premium in paper, and their paper was exceptionally cheap. And via that, they could outpace us. So it's quite a complex decision, both viewing these things internally and externally. And it's very event specific or company specific in terms of going on it. But that's a bit of my experience. Now, that's an interesting perspective having with you having been through it before and actually had to have those discussions where the rubber meets the road, so to speak.

50:50 David, I'll just kick it over to you. Again, just coming back to the model as a project generator, there's obviously lots of options where you don't necessarily have to sell the whole company. You could carve out portions, you could keep a deposit, you could come in with a partner. How do you start to think about when certain parts of the portfolio are ready for those sorts of discussions and who to start calling when they are? Yeah, I think at the end of the day, it's all gonna boil down to risk versus reward, right? Just where can you build the most values for your shareholders? Obviously a lot of variables outside of everyone's control and part of this process can be as much of an art as it is a science. But you want to be able to look for opportunities where you're making good use of the capital and you're doing stuff that will be value-creative. And I think just part of the way to ensure that that's being done is looking for situations where there's close alignment between management and shareholders by their own share interests, right? Then you sort of know that that management is aligned with the shareholders.

52:00 And, you know, I think it's, you want to keep active, you want to keep relevant, but at the same time, you know, maybe you don't want to do too much at one time and delude yourself. So maybe those are opportunities where you can look to partner a lot of companies with a big land package to lancer into option agreements. And depending on the timing of the market and different commodity prices, that may or may not make a lot of sense. The idea of divesting of an asset, are you leaving upside on the table? Potentially, but I think a lot of opportunities, if you are taking back equity, then you can continue to participate in that upside. Or sometimes you'll see more of a joint venture type arrangement where again, you are sort of losing some of the upside, but you are maintaining an interest. So if it's a situation where you think, this is not the value I want, well, then let's kind of keep some economic interest so we can continue to realize the value as it's created if you believe that it's still there. So it's a good point you bring up. There's a lot of ways to make these sort of decisions and to unlock the value. And there's a lot of different reasons to do it.

53:07 Why would you sort of have something sitting on a shelf when you can be working with someone else to be unlocking value sort of in a more near term? Because at the end of the day, from an investor's perspective, they're going to look at their IRR and maybe that leads to decisions that this has been worked on for X number of years. Maybe it's time to capitalize it and start to redeploy that capital to something that's a little bit earlier on on the Lassonde curve where you can generate these more all-sized value creation opportunities. I think you touched on something interesting there as well that it's not so binary. There's a bunch of different structures where you can have those value creation opportunities still or give your shareholders exposure to those value creation opportunities in another entity or through some sort of structured agreement, not necessarily cash for projects, sort of 1 for 1 swap. So I think That's also important and can certainly be a good source of value creation for shareholders.

54:06 As we're coming up on the hour here, I'm going to switch gears just a little bit and talk a bit about our macro backdrop here. The Fed's been raising benchmark rates at one of the most rapid paces in history. It's been a tough market for gold companies as rising real yields compete with gold as a safe haven asset. That being said, overall, the price of gold has actually held in fairly well, all things considered given all those factors I just listed. The conversation now seems to be shifting to at what point and what magnitude the Fed starts to pivot, with discussions really centering around when in the coming months, not coming years. At that point, the gold space and junior gold space in particular could take off rather quickly.

54:52 So, you know, kind of a two-part question here. How do you think about being positioned for that turnaround? And given that pending Fed pivot, where do you see the gold price being 1 year for now and why? So maybe Brian, I'll start with you. Sure. Yeah, I think it's an interesting thesis as we talk about macro theme of gold price where it ends. So I might go about this in different way. I'll start with where gold price might go. I think there's both supply side, demand side fundamentals that will drive gold on a go forward in the next 12 to 24 months through all-time highs. And I think that that's very much a reality that we may see in the medium term.

55:39 And how do we prepare ourselves? So, I always think about it as a CEO and we're allocating capital. And we think about, well, where are we thinking and talking about in 6 months is really what we're doing now. So the holes we're drilling now will be seeing marketing Q1, you know, ensuring we have enough news flow to be relevant, ensuring we're allocating our strategy and our dollars appropriately to be Newsy coming into 2023. I do think it's gonna be a window and that the window will open as the gold price moves strongly next year. I think technically there's a good bottom end. I think sentiments have been very low for the last sort of 6 to 12 months since last April. And it's encouraging to see the technicals kind of balance out, base that in. Let's turn back up.

56:28 And I think you're absolutely right that the junior space at our 0.17 peanut multiple, which is what you had us at, is a great place that should see a value unlock as we move into 2023. So for us, it's getting our ducks in a row, drilling the holes, getting the programs in place now, having the capital in place and the permitting in place and be executed such that we are prepared for a rising gold mark, which I think we're already actually in. So that's how I say THC would be handling it on the Velcro side and how it impacts our programs. Great. Thanks. David, we'll come back to you. What's your gold price prediction and what is White Gold doing to take advantage of where you see that being in 1 year?

57:15 Yeah, I think this is, you know, from an investor's perspective, you know, this is the time you want to be really positioning yourself, right? You know, it's great to have analysts like yourself that could quantitatively, you know, highlight what these sort of multiples are today versus what they used to be, how they compare to the highs, how they compare to the norms, that is statistical data, right? So I think we're seeing that these are some pretty attractive times. There's these other sort of larger scale events that are, I think, looming on the horizon, which will continue to drive the value creation. My part of why I'm optimistic about the rising gold price here is the relation to the US dollar, obviously. With gold being priced in US dollars, the US dollar, because of the interest rate hikes, is incredibly strong right now. So as these hikes plateau or indication of them starting to plateau eventually go down and whenever that may be, if that even happens, I think that's gonna sort of put a big drag on the US dollar, which will probably, you know, contribute to the increase in the price of gold, right? And even just recently, I was at an economic forum with a notoriously bearish economist speaking. And he said, you know, these are cycles. This business is cyclical.

58:39 At some point, you know, the US dollar is gonna come off and it's gonna be the riskiest assets. The first things that sort of went down with the increase in the interest rates when the risk came off, those are going to be the first things to come back. And the US dollar coming off is going to have a very significant impact on the gold price. And with our junior subsector being so significantly depressed because of that, that just shows a potential great opportunity for a very quick and significant re-rating. So and to, you know, I think someone made the point, you know, the gold is actually held in quite well if you look at other currencies other than the US dollar, right? So you're only going to be building on that. And when you're in jurisdictions like Canada or Australia where you're spending in those dollars of being paid in US dollars with a higher gold price coming up, I think there's opportunities for very significant return.

59:26 So I also agree. I think gold is going much higher. I think we go to all-time highs here. And I think it's next year sometime. We look forward to that and how do we position ourselves? We're doing lots of great work. We're creating value. We're showing that we have a world-class asset, very economically robust and ready to move through the production cycle. Great. Yeah. It makes sense. We've got a lot of exploration going on in the meantime to fill that pipeline with everyone else. Perfect. Patrick, over to you. How do you view the macro backdrop and gold price, where gold price will be in a year and E79's position? Yeah, I've been on the road last 2 weeks and I've been taking time. Usually, I've been at the one-to-one, I was at the Red Cloud, I was at the precious metals, and I always try to look at some of these technical presentations put on by economists, and actually I saw Pierre Lassonde in the precious metals in Zurich.

1:00:28 But we keep going through these unprecedented times, and specifically, the controversy with the US Fed is, you know, usually you hike up rates to curtail excess demand. But the inflation we're dealing with has nothing to do with demand, it's supply and it's supply disruptions. And, you know, you've seen that, you know, there's lockdown in China, you've seen supply chains really screw it up, you've seen global climate change impact food prices, and then obviously the war in Ukraine's impacted oil prices. And yet the Fed feels it has to get really, really aggressive with these rate hikes. And I think what's going to happen is, you know, I think it's going to put us into a recession. I hate to say it. And I think, again, we're going to go into uncharted waters, and that's going to create a lot of volatility.

1:01:16 And so when you see volatility and you see fear, then I think that gets people into gold. The other thing I know it is, and I hate to say this, but I'm taking a little bit of glee into it, is the imminent collapse of the cryptos, which I've always thought were garbage. And people say that those are former currency, and yet here we are, gold is the hero. Gold's holding together nicely. And so, you know, as we get more uncertainty, as we get more turbulence going forward, gold's going to do its job. And, you know, even if, you know, the Fed, you know, stops these rate hikes, it's still going to put us into a tough spot. And again, all these governments are up their eyeballs in debt, so they're hurting, they're screwing themselves these high rates as well, and that's going to cause a lot of turbulence. So you know what? Gold's doing its job, and it's going to keep doing its job, and I think we're going into actually a new era of gold. And I'm not saying we're going to have $5,000 gold, but certainly I don't see any downside whatsoever.

1:02:22 I just see upside. So yeah, I'm pretty optimistic on gold just based on global economic and financial situations. I realize I'm preaching to the choir here, but I would have to tend to agree that we're reaching pretty close to peak rate expectations, if not peak rates, which tend to drive the market and see as real yields start to roll over gold, which can really be thought of as a currency coming back in US dollar terms with quite the vengeance. I do see a good setup here for new all-time highs, or to at least meet new all-time highs in the next 12 months. And I think that'll bring a lot of eyes to the gold space and the junior gold space in particular. So with that, that just about wraps it up for today.

1:03:15 I want to thank each of our panelists for joining me today and for the excellent discussion over the past hour. As a reminder, a replay of this panel will be available on the SICKS website in short order. I also want to thank everyone who tuned in today to watch our discussion and have a great day everyone.