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GoldMining Inc. (TSX-V: GOLD) Chairman Amir Adnani on His Latest Acquisition, the Crucero Gold Project in Peru

September 25, 2017

Gerardo Del Real: Gerardo Del Real with Resource Stock Digest. Joining me today is Chairman of GoldMining Inc. (TSX-V: GOLD)(OTC: GLDLF), Mr. Amir Adnani. Amir, how are you this afternoon?

Amir Adnani: Hi, Gerardo. Good to connect with you. We were just together not too long ago at Beaver Creek.

Gerardo Del Real: It was great briefly catching up with you at Beaver Creek. I thought the conference was very well attended, and more importantly, I thought that the right people were there. I'd love to start by getting your take on the conference, and then of course, I want to talk about the Crucero acquisition in Peru, because it's another very accretive acquisition for GoldMining Inc. with minimal dilution to shareholders. I definitely want to get to that, but first, I'd love to hear your take on the sentiment at the conference. What'd you think?

Amir Adnani: Very active conference. For that conference, it was a record attendance. That's all good, a lot of meetings. For myself, I feel like with GoldMining we were just, from breakfast to dinner, back to back kind of situation. And just lots of meetings and great deal of interest. But I will point out, just to temper that, with the fact that most of the meetings were with resource focused investors or mid-tier or major gold producers. As I'm sure you saw as well, Gerardo, the conference was not necessarily packed with generalist funds or new investors that are maybe taking a new look at gold or investing in precious metals. So that I think speaks to the fact that while there is a bit more of a positive sentiment for the industry, we still haven't captured that wider base of capital that is truly needed to signal that we're entering the early phases of a new bull market. So it was constructive, but I would say the signs and the characteristics of a bull market were not necessarily apparent.

Gerardo Del Real: Do you feel, Amir, as I feel that the smart money per se, the contrarian money, was present at the conference? Because I definitely saw that.

Amir Adnani: Absolutely, yeah. And that's my point is, contrarian money is there when it feels that it's there by a contrarian nature. And I think this was definitely the case for that. And yeah, I would agree with you. It was definitely more about being the countercyclical money than I hate to say the word "fast money,” but you know what I mean. Those investors that like to come into things when it feels like it's really moving and the train has left the station. And I think the current sentiment towards gold is that the train hasn't left the station yet. And it might be that a move in gold above a certain level, and maybe that's $1,350 gold, maybe that's $1,400 dollar gold, will signal that has happened and the train has left the station and it's time to jump on board. But for now, this is a good place to be, Gerardo. It's a good place to be able to really run the business and do things without necessarily being in total of a downturn in the market for gold, but it's not yet, like I said, anywhere near what we all expect this to do for the gold price and the gold market in the coming years.

Gerardo Del Real: Well you did an interview I believe during the conference, I want to say it was with Kitco. And I believe the quote that you had was that you'd be “crazy not to own gold right now.” So the environment that we're in right now has obviously been very beneficial to you and GoldMining Inc. shareholders. I believe there was a research piece put out right after the acquisition of the Crucero project, which puts a target price of $4.50 per share on GoldMining Inc. shares. And obviously a lot of that comes from the leverage that you have to a rise in gold price, but in the meantime you've been very active and very busy behind the scenes, stacking up ounces and properties with attractive exploration targets. Can we talk a bit about why you feel you'd be crazy not to own gold, and then I'd love to segue into this new Crucero acquisition in Peru?

Amir Adnani: Well, first of all the whole "crazy not to own gold" comment. It really for me comes down to two fundamental issues. One is insurance and downside protection, and the other one is growth and the ability to see upside. And so, what do I mean by downside protection and insurance? Well, that's the historic and ongoing quality about gold. I mean, it's the currency of last resort, it's truly an insurance policy in a portfolio. And it has always been and will always be that way.

But the second thing is that where I see the gold prices right now, and when I see the various stock markets, the major indices in the US with the S&P and the Dow Jones, again continue to be at new all-time highs it feels every week. I mean I just have a hard time believing or thinking that from these levels we're going to see these indices and the stock market double. But at the same time I have a very easy time from these levels seeing how and why gold prices should double. I mean you just look at where we are in terms of total debt in the world. The amount of total debt that companies and the world has taken on since the 2008 financial crisis is almost two to three times more than it used to be, it's at a record high. I mean, it's just unbelievable how much debt has been taken out by corporate America to do things like support or finance share buyback programs. How is that creating fundamental growth? All it's doing is really fueling higher share prices and higher multiples.

And I look at what's going on right now with the administration in the US and I just feel that this whole Trump rally that started almost a year ago. You know, the honeymoon period on that rally is way over. We're past the honeymoon and it's all about, show me the goods now. And the goods are not coming in, and I'm just not sure how they're going to come in as we hit bigger issues with the debt ceiling, as we have the tax reform that has to happen, which is probably one of the single biggest events that can cause the broader stock market to come off if it's not delivered. I mean, again the market is priced absolute perfection. All these great things that have to be delivered by this administration, I feel are priced in. And the way things are going right now, there's too much in terms of geopolitical uncertainties out there that can really weigh on things. You have very little room as well for the Fed to do anything, they've really backed themselves into a corner here, now they're talking about unwinding at a time when things could get quite rocky and we could have a bumpy road ahead of us.

So I look at all of that, Gerardo, and I just feel very comfortable, very confident in the fact that gold will not only give us all the necessary protection and insurance in our portfolios, but it will also provide that upside and that potential move to go higher from these levels to the extent that other asset classes already trading at all-time highs cannot achieve. I mean it's just crazy to think that these other asset classes from these historic highs can make significant further moves up from here. But it's not hard at all to see gold at least regain its highs from 2011/2012. And if that happens we're talking about 70 or 80 percent higher from these levels. So, those are just some of my thoughts at a high level.

Gerardo Del Real: No, I agree completely and you mentioned the Fed unwinding and I personally happen to believe that that's just the Fed's way of reloading. I think that volatility is a given here in the next few months. I think initially the tightening is going to consist of approximately $10 billion dollars per month. And then if I'm not mistaken it's going to go ahead and increase that every quarter after that for a year by an equal amount. And so I don't see a situation where the broader indices aren't introduced to much higher volatility. Volatility which, by the way, has been very, very suppressed up until now because of QE, so I think a slow reversal of that is definitely a tailwind for the gold price. Now, with that being said, it's been a very favorable environment to go and acquire attractive assets with exploration upside, and I think this latest acquisition in Peru definitely speaks to what you've been able to do with GoldMining Inc. You've once again brought in a historic multimillion ounce asset with lots of exploration upside in a good jurisdiction with very good infrastructure. Can we talk about the Crucero acquisition and what motivated the acquisition, Amir?

Amir Adnani: Yes. So it's a classic acquisition in terms of what fits the bill for GoldMining. We've been doing acquisitions like this really since inception when we IPO'd in 2011. This year, Gerardo, this is now our third acquisition in 2017 so far. Having made three acquisitions in 2017 of resource stage projects, I honestly don't know of another junior gold company that has been as active as we are and has put as many deals together as we've done. So these deals I can tell you take, first of all a long time to research, do due diligence and consummate. I mean, this project and this transaction was started well over a year and a half ago from initial identification of the project to discussions to back and forths, to not only financial negotiations, but getting the lawyers involved and technical due diligence. And it really is time consuming, and every acquisition is like that. I don't think we've had a single deal that's just happened within a few months, all of them take a long period of courtship and then again before the thing can come together.

But this is a classic case of what we continue to talk about. Our whole mantra at GoldMining has been about this concept that we are still in a bear market for the TSX Venture and for gold related stocks and companies. And we're focused on bear market acquisitions. Bear market acquisitions to us means acquiring resource stage projects. So projects that have previously been drilled, there is a 43-101, or independently verified resource report, and we can see that we're buying the project for less than the discovery costs. For less than the cost to go back out there and replicate the drilling, the engineering, the various surface work. All of that stuff that goes in before you can quantify a resource report. And the day is going to come at some point, especially in an uptrend for the gold market, where those types of acquisitions, where you can buy things for less than the discovery costs, will not be possible anymore.

But I'm thrilled about the fact that here today, and for most of the last 6 years since we become a public company with GoldMining, we have had this window, this prolonged window in the market where things have generally been more bearish than bullish, and we've managed to put together today, Gerardo, one of the largest global gold resources portfolios in the Americas, of any company our size.

And we're a small company at the end of the day, but you look at this latest acquisition of Crucero that we announced recently for basically 3.5 million shares issued, and $750,000 dollars in cash. The shares issued translate to about 3% dilution. The total value of the deal comes in at around just over $6 million dollars Canadian. And you're picking up gold resources which we’re treating as historic right now until we complete our own 43-101, indicated gold resources of over a million ounces at over a gram per tonne of gold. Inferred gold resources of another million ounces at over a gram per tonne gold. This is a pit-constrained resource, so it's got some more parameters around how it was calculated that make it a more rigid calculation. Over 72 holes drilled and 10 targets for follow up. And it's a road accessible project with grid power, 8 kilometers nearby to the property.

I mean you add all of that up, and to pick all of that up for $6 million dollars, or 3% dilution, not only are you saving time, not only are you minimizing exploration risk, but it's a great way to acquire and build our total inventory of resources in Peru, which is an excellent mining jurisdiction. I mean you talk about outstanding mineral endowment and exploration potential, a government supportive of resource development and exporting their commodities, and it's home to world class gold deposits. I mean Peru is by far one of the top ranked jurisdictions in the world for mining, for silver, for copper and of course, gold. There is a culture of mining.

So we're really excited about the fact that again, this prolonged downturn in the market for gold and for gold equities has given us the window to make these types of acquisitions. And again, this is a classic example of the type of deals that we've done. You look at the last acquisition that we did of the Yellowknife Gold Project, very similar kind of profile. Resource stage project. That one had been drilled to the stage of having even had a historic feasibility study and again I think that one came in at under $7 million dollars cash, and in and around 3.5% dilution. So very, very similar, very predictable in terms of seeing the kind of deals that we do. On this one the next steps would be to produce a new 43-101 report. And when we do that we would be able to add these resources, and the one from the Yellowknife project which we're currently also working on a 43-101 report there, to our total inventory of global resources.

So right now, not including these two latest acquisitions Gerardo, we have about 8.5 million ounces of gold in our global measured and indicated category of gold resources and 10.6 million ounces of gold global resource in our inferred category. So that’s 8.5 million and 10.6 million in measured and indicated and inferred, respectively. That does not include the Crucero acquisitions resources and Yellowknife Gold Project's gold resources, which will be coming up in the next few months.

Gerardo Del Real: Excellent. Now you mentioned the 72 holes at the Crucero project and I think it's important to note that those 72 holes came from 23,000 meters of diamond drilling, so I imagine that the database that you acquired with the project has to be pretty substantial?

Amir Adnani: It is. You're exactly right, it works out to approximately 23,000 meters of diamond drilling. All the information is in the transaction and so again we get a very complete look at what's going on. We see based on the data and the work that was done that the project is open downdip and along strike. Again, as we mentioned there's about 10 targets for follow up exploration activity. Actually I'm quite excited about the exploration upside of this project because again the last time the company did any kind of regional exploration, after making the discovery of the original gold resource, was almost a decade ago. The last decade we've seen quite a bit of advancements with exploration tools and techniques for just smarter and more efficient ways of exploring and applying technology to that.

And so this project really in a way was developed very quickly and had a great profile, but has been dormant for the last almost 10 years. So much so that coming now, looking at it with a fresh set of eyes, applying new exploration tools and technologies, and to build from a very complete set of data to work from with the resources and with the 10 targets that were already identified, this would be a very exciting project to sink our teeth into and develop once we turn our attention from acquisitions to development. And that to us is when we see that the window to make new acquisitions is really closed. And that to me is the next pivot or revolution of the GoldMining story, is the essential transition from acquisition mode to development and eventually production mode.

Gerardo Del Real: Excellent. Now you've obviously diversified the portfolio very, very well. You now have projects in Columbia, you have projects in Brazil, you have the Whistler Gold Project, which of course is a gold-copper project in Alaska. You also have a uranium project, and now the new venture into Peru. Are you still in acquisition mode, Amir, are you still looking for more deals?

Amir Adnani: Yes, we are. And that's very much again consistent with the opportunities set. If the opportunities are there where for minimal, very minimal dilution, we're talking about 3%, 4%, I mean, like the kind of deals that we've done this year. If the opportunity is there to make these types of acquisitions, again resource stage gold projects for less than their discovery costs, then we would be very much focused on those.

We still see some great opportunities, we're working on opportunities now. And look, we hope to get these opportunities over the line. And if we don't, like you say, we've spent six years putting together a portfolio, that honestly would be very difficult to match today for any company out there. I can't think of a single company, at our size and our market cap, I mean we're a small cap company at the end of the day, but we are in five different jurisdictions, a very diversified portfolio as you say, and when these resource reports come out on the Yellowknife Gold Project and on Crucero.

And of course there should be no surprises because we've indicated in the news releases, in terms of what the historic numbers were, which we expect our numbers will come in inline with the historic numbers because we're basically replicating the reports based upon the work that was done. And when you add all of that up, Gerardo, you see truly one of the largest gold portfolio in terms of total gold resources amongst juniors out there. I mean this is now in the realm of what you see mid-tier gold producers control in terms of total gold resources.

So it's a very sizeable portfolio, especially in an uptrend I believe size matters, and size matters in mining. Big projects or large projects take the same amount of time to develop. I think here we've got not only a sizeable portfolio, but as you point out, a diversified portfolio. And in every jurisdiction we're in there's regional activity, there's other companies developing projects in and around us, there's mines going into production, there's mines under construction, there's ones operating. So in every jurisdiction that we're in, we see an active and thriving mining industry that we're a part of. We're not the lone ranger in any one of these places, taking on too much risk on our own in terms of regional risk. And so again, very well diversified, very large.

And I think the leverage that it ultimately provides to investors in a better gold market is truly unparalleled. And it doesn't need to necessarily be a bull market in my opinion to see performance because, you and I have talked about this, when you look at our acquisition model at work and you look at it over six years since we IPO'd in May 2011, from May 2011 to now, our share price is up 162%. During this exact same timeframe, the TSX Venture, where we do most of our shopping, is down 61%. Even the GDXJ is down 74 % from May 2011 or Summer 2011. So, we actually now have enough track record where we can demonstrate that, look the acquisition model as executed by our company over a six year timeframe, where it wasn't exactly a bull market over these six years, I mean in a bull market, everyone looks smart, right? So, it's one thing to talk about track record during a bull market ...

Gerardo Del Real: Right.

Amir Adnani: But to be able to show a six year track record, most of which during some very difficult times in the junior resource business, and show that relative out performance, and then sticking to our knitting, right, not deviating and just sticking to the fact that we're focused on these bear market acquisitions, the discipline, the execution, all of that culminates into a six year track record of performance and delivering value on a per share basis. And to that point, to go back to your question, we're going to stick to the knitting, because it works, and we have a six year track record that shows it can create outsized returns. And we want to stick to that.

Gerardo Del Real: Well, it's a six year track record in one of the most brutal bear markets that I've seen, and so it appears that we're on the cusp of a new gold bull market. I agree with you, I don't think we're there yet. I don't think gold and silver have proven themselves to be ready for prime time, but I think we're very, very close. And I think 2018 should be a heck of a year. I'm excited for it. Amir, thank you very much. Is there anything else that you'd like to add?

Amir Adnani: No, Gerardo. I appreciate your time. Like I've said, I think just in terms of steps coming up, we should see the balance of this year with some news flow around completing 43-101 reports on our latest two acquisitions. And continue to keep an eye on new acquisition opportunities. And I look forward to connecting with you again soon, either on the road, or through a call like this. And thanks for your ongoing coverage of the company, Gerardo.

Gerardo Del Real: Well thank you for your time. Keep making accretive deals and we'll definitely keep having you back on, Amir. I appreciate it. In the meantime everybody can get more familiar with the portfolio, it's a diversified portfolio, a lot of leverage to the gold price. The website is GoldMining.com. Amir Adnani everybody. Thank you very much, Amir.

Amir Adnani: Thanks, Gerardo.

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