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GoldMining Inc. (TSX-V: GOLD) Chairman Amir Adnani on Updated 43-101 at the Crucero Project & Acquisition of Additional Land at the Yellowknife Project

January 26, 2018

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

Amir Adnani: Hey, Gerardo. Nice to connect. I think this is our first interview in 2018.

Gerardo Del Real: It is. You've now managed, with GoldMining, to accumulate over 21 million ounces of gold across all categories, and you also have some copper and uranium exposure that often times doesn't get talked about. So I want to get into that. But before I do, I know you were at the Vancouver Resource Investment Conference, and I heard it was very well attended. I would love to get your take as to the energy and the feedback that you got at the conference, Amir.

Amir Adnani: I think they were scanning barcodes that everyone had on their name badge entering the conference, and I heard an amazing stat that there was something like 9,000 unique visitors based on those barcodes being scanned. Definitely near record or perhaps record type attendance. Of course, what was – I think – drawing a lot of the interest at the show, it was not necessarily just mineral exploration, but you had many panels discussing the various cryptocurrencies and companies that are involved on the crypto mining side to obviously the interest around the electric vehicles and batteries and battery related metals.

So, despite the fact that the two yellow metals that I'm very involved with, uranium and gold, not actually performing that well in the sense that we continue to still be in a bear market for both. Mind you, gold's picking up a bit. But nonetheless, I think it was just great energy, great attendance, and near record numbers in terms of people in attendance.

Gerardo Del Real: You mentioned cryptocurrencies and I want to get your take in just a bit, but the dollar has sold off. Before we get into that, I want to talk about the dollar selloff and gold. Do you think that gold is ready for a breakout? I know the last time we spoke, near the end of last year, gold was still range bound, we talked about how important it was for it to break through that $1,370 level convincingly. It's at $1,361, I believe, as we speak. Do you think this is a real breakout, Amir?

Amir Adnani: I think we still have to get passed the rate increase or the Fed meeting where I think there was an expectation of a rate increase in March. So maybe between now and then we have just a little bit in terms of headwinds, but I think most of what we're seeing now are tailwinds. You're looking at the combination of geopolitical and economic tailwinds now.

Absent what happens in March, if it's not the first half of the year, I would say the second half of the year for sure, we're going to see the next leg up and we could see $1,500 gold this year. I think it's very constructive right now to see the action since December, right? Since mid-December, there's been this stealth bull market in gold, and overall, the stage looks very constructive right now.

Gerardo Del Real: Excellent. Let's talk about GoldMining Inc. because, as always, you've been very, very busy. You recently published an updated resource estimate for the Crucero project in Peru, and then you also added some additional gold claims at Yellowknife. Few people in this business understand the cyclicality of the commodities sector the way that you do, Amir, and to the benefit of your shareholders you've done an incredible job consolidating assets at way below the cost of discovery, right? Can you talk about the Crucero project and the additional gold claims at Yellowknife?

Amir Adnani: Yeah, so we really hit the ground running this year. Coming out of the gate, first or second week of January, we've announced our first acquisition of 2018 with additional ground and claims, along where we have the Yellowknife gold project. That acquisition really starts to increase the size of the land package. We're over 11,000 hectares now, in an area that is receiving a lot of new exploration attention and dollars.

This greenstone belt up at Yellowknife, in the Northwest territories of Canada. Geopolitically stable region, Gerardo, with incredible history. Sitting right on our claim area, and on our property, is the historic Discovery Mine, which is one of the oldest, highest grade gold mines in Canada. It produced a million ounces of gold at one ounce per tonne.

Gerardo Del Real: Wow.

Amir Adnani: You know, obviously as the old adage goes, the best place to look for a new gold resource is next to where there's been an existing one, so I'm excited about this land package that we're building up in the Northwest territories. Of course, it's not just a land package, because one thing that we will work towards this year in the coming months will be issuing our first 43-101 resource report for the Yellowknife gold project, because that area, as part of our acquisition, there's quite a bit of historic work that has been done, and it should be more than sufficient to culminate to a new resource report.

But speaking of resource reports, to your other point, the second thing that we've done this year is already announced our very first 43-101 report for 2018, for the Crucero project. So again, you can see right off the bat this year, we're announcing new acquisitions, we're putting out new 43-101 reports, so we're sticking to our knitting. And Crucero, for every box that we want to check when we look at an acquisition opportunity, it checks all the boxes, right?

We've maintained and you've seen over the last six or seven years as we've built the company, we want to be in the Americas, we want to be in countries and regions where there's existing mining culture, mining regime, mining code, everything that allows a company to go in and develop projects in the future. Peru is definitely one of the top jurisdictions for mining and a top gold exploration and mining jurisdiction as well.

The area that we cover with the Crucero project is just under 5,000 hectares so we have a nice sized land package, and again, the other thing that we always want to see is we want to see that there's obviously been work done that can support a resource report. In this case, the resource that came out shows that we've got about a million ounces in the measured and indicated category at just over a gram per tonne, and another million ounces in the inferred category, also at just over a gram per tonne, at a 0.4 gram per tonne gold cutoff.

Deposit is open, Gerardo, along strike and at depth. There's at least a number of targets, several targets nearby the deposit that give us the exploration upside potential that we're looking for. It's road accessible and it's nearby grid power. I think the grid power's about six or seven kilometers away from where the project is.

So again, you check those boxes, right? You're starting with a historic resource, you're in a mining friendly jurisdiction, you've got significant exploration upside, you're road accessible, infrastructure nearby, and the total acquisition price I think came in at about 3.5% dilution to GoldMining shareholders. It was a transaction that cost about $6.5 million dollars Canadian, all in. Mainly in stock, but we also paid about $700,000 in cash. So again, in a world where it costs about $45 an ounce to explore for a new gold resource, and by the time, Gerardo, it becomes a reserve, companies have spent on average well over $100 per ounce in the ground, in terms of how exploration and development works these days.

Again, if you can buy for a fraction of that and you can be buying assets for less than $10 an ounce in the ground, well below the unit discovery cost for the industry as an average, I think that's great business, I think that's a great way to create shareholder value, and again, it's sticking to our knitting, right? It's demonstrating year in and year out that as long as we can continue to be in the bear market end of the cycle for gold prices, it's bargain hunting season.

This has turned out to be a longer season, of course, because it's been a prolonged bear market, and some years have been way more painful and excruciating, like 2015 or 2013. Some years have been better, 2016 was a better year, but by any kind of historic standards, this is not a gold bull market or anything like that yet.

In fact, I was looking at an interesting report BMO put out just this morning. This would be an interesting data point for you and for your audience. The last time gold equities traded at this low of an implied premium to spot gold was prior to the rise in the gold prices in 2016, where the premium increased to about 30% of where the gold is.

I mean, this is ultimately the story, right? I mean, gold equities and companies like GoldMining have incredible leverage to the gold price, right? But right now, despite the fact that we've seen an improving gold price environment, we really haven't seen the equities participate in any kind of rally yet. But interesting to note that again, the equities are at a low, in terms of an applied premium to the spot gold price, and very similar looking to where we were in early 2016, and we all know how that year panned out.

Gerardo Del Real: That's very interesting, Amir. Now, you mentioned sticking to your knitting several times there, and frankly, you have $15.7 million dollars in the treasury approximately, the last that I checked. You have zero debt. You've been able to roll in over 21 million ounces of gold across all categories, and again, I mentioned there's also some copper and uranium exposure there. How tough has it been to be disciplined these past five years?

I mean, if I'm not mistaken, Amir, GoldMining is approximately seven years old, right? And five of those years have been absolutely brutal bear markets, but yet you've managed to deliver a pallet of assets that I think in a better gold market are going to provide the kind of leverage that I think shareholders are invested in GoldMining for. How tough has it been to stay disciplined?

Amir Adnani: It has been difficult, just because I think it would be dismissive to not admit that it has been challenging to be active as an entrepreneur. As anyone who's been in the resource business and gold business since gold's downturn starting in 2012, but it's what you make of any cycle. For me, the entrepreneurial attitude that I've brought towards difficult sectors, and for those that are not familiar, as CEO of Uranium Energy Corp, I've also operated in another very difficult environment in uranium.

And operating in uranium at $20 per pound, Gerardo, is the same as probably operating in gold at like $700 an ounce. I mean, imagine that, right? If you were operating in that environment, so maybe things seem like a breeze to me in gold, where things are. But it has been difficult, but it's what you make of the cycles and it's what you make of a bear market.

My attitude always has been that we want to make the absolute most of this opportunity that cycles present, and that we can create significant shareholder value by being able to buy projects for cents on the dollar, avoid exploration risk for the time being, and try to avoid dilution at the bottom of the cycle as well. Because what we have here is a management team with very strong skin in the game. Insiders own about 25% of the company.

But also, Gerardo, what's allowed us to navigate the downturn has really been alignment with like-minded shareholders. You look at people like Marin Katusa or Doug Casey or Rick Rule, some of the backers of the company from day one, going back to 2010. They've seen this before. I mean, Rick who's been a mentor, and Marin, who's been a staunch supporter of the company since day one have said, "Look, this is how people like Ross Beaty and Lumina Copper created tremendous amount of wealth when copper was out of favor, buying out of money copper resources in the ground, not committing to exploration, but committing to accumulation of good quality projects."

Then, really turning that portfolio into, whether it's joint ventures, or monetizing in sales when we see the turnaround in the cycle. I think Lumina Copper, at last count when I looked at it, Gerardo, had done about $100 million dollars worth of acquisitions, and that they turned around and sold everything for about $1.5 billion dollars. GoldMining, as of our latest acquisition, we've now done roughly $72 or $75 million dollars worth of acquisitions during the last five or six years of the bear market.

It's not too far off when you start to look at it that way in terms of historically where some of the other consolidators have been in terms of how much they were able to deploy and how many assets they were able to roll up. It is about size, right? We're on track and I really hope before the sector turns positive that we can really tuck away and have even more substantial resources. But like you say, already to be sitting on 9.5 million ounces of measured and indicated resources, and 11.7 million ounces of global inferred resources definitely puts us into the category of being one of the largest holders of gold resources in that diversified category.

Over $70 million dollars put into acquisitions. I can't think of too many juniors that have done over $70 million dollars of acquisitions over the last few years. Gerardo, it's all been based on share-based accretive acquisitions, meaning we're debt free. We didn't go and raise a bunch of debt to make these acquisitions. It's really incredible to be in a position where you're debt free, you own these assets 100%. You're in the driver's seat as a company, you've got the cash in the treasury to continue to do work. Yes, it's difficult, but at the same time, I think we're in a very strong position with GoldMining.

Gerardo Del Real: You mentioned the depressed prices of the juniors, the equities, relative to the gold price, right?

Amir Adnani: Yep.

Gerardo Del Real: I think it's true in silver and copper and zinc. We just haven't seen the juniors keep up. Do you see a period of increased M&A in the resource space, in the juniors, in 2018?

Amir Adnani: Definitely driven by the gold price, but definitely something that is I think the next phase in the cycle. Because again, if you look at the structural issues in the gold mining sector today, you and I were chatting earlier about the Bloomberg round table where they hosted a handful of CEOs of major gold mining companies, talking to all of them about challenges they face in 2018. One of the key topics that just about every single person touched on was reserve depletion, right? The fact that resources and reserves continue to deplete on an annual basis, because they keep mining them, and the fact that the last five or six years exploration expenditures have been low, because price of commodity was low, and majors had to protect their balance sheet and reduce expenses. And also just the fact that the more money they spend on exploration, the less they find, right?

Because again, we're at that point where the low hanging fruits have been discovered and there's too much geopolitical risk in the world. So ultimately the fact that the gold sector is looking at resources and reserves that are at a decade low leads you to believe that, look, as things turn around and the gold price goes up, and now you're looking at every intermediate gold producer, Gerardo, every major gold producer is going to have to sit there and explain to investors, where is their growth going to come from?

When the sector turns and gold goes over $1,500 an ounce, it's about show me the growth. Growth comes from a solid exploration development pipeline. You need resources in the ground, in addition to grassroots exploration, because you and I both know grassroots exploration takes longer from early stage discoveries to resources. That's five years. So, projects from resources to feasibility will be another five years, so you need the whole spectrum covered.

M&A is obviously how companies in any sector that goes into growth mode, M&A is how companies facilitate acceleration of their growth, and with so many intermediates in the world, so many majors, and so many state-owned companies all basically chasing this same growth opportunities with resources and reserves in the ground, I think that's definitely in the cards. Whether it's this year or next year, I think it will be driven by the gold price.

It will also, Gerardo, be driven by how much capital comes back into the equities by generalist investors. I think generalist investors are still not back in a big way. The equities again have yet to respond to this nice performance we're seeing in the spot gold price, but these things are all about people sitting there and rebalancing their portfolios, right? With the stock market at excessive valuations, everything on earth at a record high, I'm sure many investors are thinking about rebalancing their portfolio, if they were not already in gold, to come back into gold, or to position into gold. Because the valuations are very attractive right now.

Gerardo Del Real: Absolutely. Now, we also chatted off the air, you had a poll that you took on Twitter and I think the sample size was just over 200 people, and the question basically asked, "Which is a bigger challenge to major gold producers? Bitcoin or resource depletion." To my surprise, 27% of the people that participated said Bitcoin. Now, everybody says that Bitcoin and the cryptos, and the cannabis stocks as well, have really taken gold's luster and really taken away from the speculative dollars that would otherwise come into the juniors. Do you see a rotation, Amir, from those sectors into the juniors, as people start to take profits?

Amir Adnani: Well, I was having some fun when I took that poll because I was curious about how the CEOs of the major gold producers all talked about resource and reserve depletion, but when I'm at investment conferences like at this Cambridge House conference, I hear a lot of individual investors talk about how perhaps Bitcoin is stealing gold's thunder, right?

So, that's why I ran the poll, but I just think at the end of the day, again, it goes back to two separate issues. I think structurally speaking, the number one issue facing the industry is resource and reserve depletion, resources being at a decade low. And the fact that the timeline and the cycle from early stage exploration to mines that can come online is a 10 year cycle, it takes a 10 year time horizon, so it just takes time, and that's a real issue.

But I think when it comes to speculative dollars that typically would play in exploration plays. Exploration is high risk, high reward, and that definitely fits the profile of the speculative investor. A lot of that speculative capital has been having too much fun, perhaps, and making money in cryptocurrencies, in cannabis and other sectors that have really flourished in 2017.

But speculative capital, it's not stupid capital. It's still reasonable, there's people at the end of it that I think are going to take gains off the table and say, "Hey, I've made two times, three times my money in some of these things." And oh by the way, at excessive valuations, can things still double or triple in value from where they are? Or do I rotate back into things like gold and companies in the gold sector and gold equities that haven't responded and where you have those opportunities to see stocks rise 300-400%?

There aren't too many sectors in the world where you can look at, whether you're a speculative investor or even a value investor, and see the upside potential that we see in the gold sector right now, where again, things are not trading at their 52 week highs. They're trading at their 52 week lows, most of these gold stocks, right?

I think at the end of the day, we're going to see a nice rotation back into the sector because capital's always looking for performance and upside, and the risk/reward profile of the gold sector and gold equities looks very promising and very attractive right now.

Gerardo Del Real: Absolutely. You mentioned Rick Rule earlier. He has his famous throwaway line, "You're either a contrarian or you're a victim." I encourage anybody that is interested in speculating in this space, if you're not positioned yet, get positioned now, because I think the bull market that is on its way is going to run for many, many years and it's going to make a lot of people a lot of money. Amir, what can we expect from GoldMining Inc. in 2018?

Amir Adnani: It should be a very exciting year for us. I think just with what we've done already, hit the ground running this year with announcing our first acquisition, announcing our first 43-101 resource report. We expect to do more of that throughout 2018. We expect to continue to look for acquisition opportunities. We're very busy with that right now and our team has got some exciting opportunities in front of us that we're doing work on, due diligence, assessments.

We expect also to have at least one more 43-101 resource report come out in the first half of the year on our Yellowknife gold project in Canada's Northwest territories. Again, guaranteed to be able to add resources to our total resource inventory and continue to grow.

We're currently listed on the TSX Venture. I'd really like to see us do an uplisting to the TSX, the big board in Canada, this year and hopefully we're on track to achieve that in the coming months. We've been working on submitting an application and moving that forward. If that happens, our ticker symbol GOLD in Canada will just carry over from TSX Venture to TSX on the same ticker symbol. We want to make sure that we are, from a corporate point of view, raising the profile of the company.

From a capital markets point of view, from a standpoint of assets, we want to continue to make acquisitions. And if and when, and it's not necessarily an if but a when, we see that breakout in the gold price, we see that flow of equity and equity prices and everything come back into the gold sector, we are absolutely ready, Gerardo, with a very extensive portfolio of drill ready projects, projects ready for updating Preliminary Economic Assessments or developing new ones.

We've got a really exciting portfolio of projects that we can really sink our teeth into, really go from being an acquisition and consolidation focused company, which we have been, into becoming a very aggressive developer of the asset base that we've put together. Either way, you've got a company that's very much in the driver's seat and can create and extract value one way or other, based on how this market goes. That's what gives me a good sense of balance when it comes to how we do things at GoldMining.

Gerardo Del Real Amir, thank you so much for your time. I must say that it turns out you are one of the more insightful people in the gold space, as well.

Amir Adnani: Thank you, Gerardo. Always great to connect with you.

Gerardo Del Real: Great catching up. Thanks again.

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