Stephen Sandusky of Medalist Capital on Why He Likes Revival Gold
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is Partner of Medalist Capital, Mr. Stephen Sandusky. Steve, how are you today?
Stephen Sandusky: I'm very well. Thanks for having me on today.
Gerardo Del Real: Well, thank you for taking the time. You and I recently met at the Revival Gold site visit. It was a visit that I thought was important, definitely on my end, and we'll talk about why I think you probably found it insightful as well, but it was important on my end because I really came away with a very favorable impression of the local support for getting the Beartrack Mine back, going up and running. The locals really are in favor of it. I thought that was an interesting takeaway for a past producing mine such as the Beartrack Project.
Before I get into that, Stephen, if you could give us a little bit about your background. I know that Medalist Capital actually played an important part in raising a portion of the $9 million private placement that Revival just closed, but if you can get into your background a little bit and just what you do and what Medalist does, that would be fantastic.
Stephen Sandusky: Yeah, for sure. I'll keep it short because more important talking about good companies like Revival and such. I started in the institutional sales side shop in 2005, based out of Toronto. Just from my experience in the sales side, I quickly realized the power of the junior mining market, so I've always gravitated toward those financings and the companies involved. If you fast forward just to 2013, pretty much focused on that up until then.
And then, in 2013, my two partners and I founded Medalist Capital. We more or less did so because we wanted to focus more on more of a hybrid approach, where we were both an investment bank, so raising money for companies, but also a merchant bank, where we could go out and, well, I like to say we create our own product. We can fund our product. We help with building management teams and boards, how we fund it internally, so we have our own capital and putting our own skin in the game, as well from outside partners, which are primarily institutions and friends and families.
I'd say our approach, we mainly back management and we also help finding them vehicles and building shells. We like to say we get the right players and we structure them nice and tight. I think you and I spoke about that at length on the trip, structure and management are pretty much the most important part of this game, and then from there, finding a good asset will kind of complete the company.
Gerardo Del Real: Absolutely. You know, I'm a big proponent of share structure. It's the very first thing that I look at when looking at a company and considering a speculation, so I love that you eat your own cooking. I think it's important. You have a lot of groups that raise funds and they, literally, are just collecting warrants, right? They're four-month-and-a-day shareholders and I don't think that's the way to help management's prospects and to help a company actually execute on a strategy that is more long-term than just four months and a day. I think you'd probably agree on that end that that's an important piece of it.
Stephen Sandusky: Oh, 100%. You have to get off to a good start, if you have a nice, really tight share structure. The way we usually do them is we find the right players. Depending on the venture, and if it's a management team that asks us to build them a shell, we'll go out and make sure that all the right people are involved and that not one share would come out upon it being floated. Then, as you raise money and you do it in a responsible way as you build up, it's all the right players and everyone will write checks from the very bottom to the very top.
For instance, Revival. Hugh came to us fairly early, and we helped them pay for some of the due diligence early on when he was looking at different projects. So, we wrote checks at different various levels, and then the check that we wrote on the last financing, just us as partners. It was probably 4x of what we had already invested at earlier rounds. We like to make sure that we put our money where our mouth is at all levels.
Gerardo Del Real: Excellent. Well, obviously, management is an important factor in picking projects that you want to be involved with and companies you want to be involved with. What is it that attracted you to Revival? You mentioned Hugh seeking you out. Obviously, you see a lot of deal flow, Stephen. What attracted you to Revival Gold initially? And then we can talk a bit about the site visit and your takeaways from that. But in the initial stages, what was it about Revival that excited you guys to write checks?
Stephen Sandusky: Well, we knew of Hugh from reputation, but we were actually introduced to him formally through one of our clients who runs Americas Silver, that's Darren Blasutti. He made the introduction. He came in and he was trying to build a company and he came to us with some ideas and some assets and we liked him right away. He ran corporate development at Kinross for a long time and was instrumental in building Kinross, so we knew him by reputation that way. Having sat down with him, he's very thorough, he's not just technical but he understands the capital market side of it as well.
I think, in this industry, it's the most important thing is that you have both sides. You have capital markets savviness but also you're technical. Hugh's also the type of guy where, I'll take management teams around to institutions and you have to coach them. You bring them in with technical guys of their own. Hugh's a guy that he really pains over the details. He can talk to you about every aspect of the business. He's pretty knowledgeable on everything he gets involved with and he's pretty passionate about it as well. And he's a good guy to sit down and chat with as well. He kind of commands respect and gives you a lot of confidence. He's sort of the guy where, you know, he walks out of the boardroom and you can't wait to write that check.
Gerardo Del Real: Wonderful. Well, let's talk about that check. You wrote a check, Orion Mine Finance also wrote a check, and then several high net worth individuals on the private side wrote checks. The company is now fully funded to complete 13,000 meters of planned drilling this season and next at Beartrack. Drills are turning right now, so I'd love to talk a bit about what you thought were some of the key takeaways from the actual site visit, Steve.
Stephen Sandusky: Sure. We talked structure and we talked management and that's the strong point for sure, but also the team that he put in place in a pretty short period of time. He actually found guys who worked that site and had in-depth knowledge of the assets. That included guys like Wayne Hubert, who came on as a special advisor. And then Pete, who was also on the site, used to run the operation when it was in Meridian in late 1990s. So, right away he's done a good job on bringing in the right guys who have intimate knowledge base, so it's not like you're getting up to speed again. They're more or less going through previous knowledge and then combining that with some of the work that Yamana had done, which is who they are optioning the asset from, and putting it all together so they've a good idea and good picture of what's remaining.
I would say the first thing, once we drove up … It took about an hour to get from Salmon, Idaho up to the site. You literally park beside a power plant that powered the entire operation before. In a remote area, that's pretty key. Also, roads throughout the buildings were immaculate. The core facility was spotless. It was huge and nice and could sustain winter up there. There's tailing ponds, a heap leach, even the former ADR plant was still intact and currently used for wastewater treatment. These are things where it's a huge head start if you're to take it into production again. You have probably tens of millions of dollars of infrastructure already there. I'd say that was number one, just because that's, as soon as you get out of the car, that's what you see.
Number two, I would say having walked the pits, the existing ore. So, at a gram cutoff at about 1.3 million ounces of gold in whether it be oxide or sulfide, you can kind of see where it is. You could visualize. And then they pointed out that different areas, that it was open where there was still oxide ore that you could extract. South side of the south pit, in between the two pits in the Mason Dixon area, as well on the north. We didn't get to travel up there, but we just saw it on the chart where it was open.
And I would say, most importantly, is when we arrived at that drill rig at Ward in between the two pits. They were stepping out about at least 30 meters from that highlight hole, which was at 28 meters of 24 grams. You could see the drill turning. I think the important takeaway there is that the system makes high grade. Before, they were extracting open pittable ore, which is lower grade in nature. I guess what they have kind of tagged into and what they figure out they have is a mesothermal deposit, which more or less means that mineralization can extend to depth. They found a system that seems to be pretty robust and the intercepts were pretty thick, which is characteristic of a mesothermic deposit versus like an epithermal deposit.
More or less, the most important takeaway is that that system makes high grade, and if they can zone in and vector in and find more of that, that's going to be a big, big value driver. And then combine that with the share structure, if they pull at a nice hole what they had pulled out before, look out.
Gerardo Del Real: Absolutely. Yeah, I couldn't agree more. Pre-financing, I believe the market cap was right around $24 or $25 million, and I joked with Pete Blakely, who pointed out that there were a couple of hundred thousand ounces, 200,000 ounces, still on the leach pads there. I said, "Well, your entire market cap prior to this financing is sitting right there on the leach pads, right?" I thought that was interesting as well, the fact that there's 200,000 ounces sitting right on a pad as we speak and that made up the entire market cap for a Revival prior to the financing closing. Now they're well cashed up. What do you see as a future here in the near to mid-term as far as potential catalyst? Obviously, the drilling has to be at the top of the list there, but what else do you see as far as the next six months, maybe?
Stephen Sandusky: I would say to your point, drilling. If you could replicate that hole or even somewhere close to that and focus in there. I think, when we were leaving the site, the resource estimation team was coming in. I'm not too sure on the timeline, I think they're just starting it now, but they're going to be compiling all the data that we saw and all the core that was logged and such. With the new results, with the old results, they're going to be combining that into a resource with a current gold price and they'll play around with the cutoff.
I think what I mentioned earlier, which was important, was that it was a gram cutoff that they had used and that was because gold prices were $300. Now, with especially open pit mining, like a gram cutoff seems a little rich. If you adjust that, it'll be very interesting to find out how many ounces are there and what's the mix of oxide, sulfide, and then combine that with some of the sniffs and some of the hits that they're getting at depth, I think that, over the next little while, that that should be a big catalyst, although they're just starting that. I think drilling, as of right now, and I'd say just because it's cheap on a per ounce base, that will be driving the valuation going forward.
Gerardo Del Real: Excellent. So, you like the infrastructure. You obviously love the management. The management is as solid as it gets. Having a historic resource that I think will be pretty easy to duplicate here in the next little bit, it bodes well for the near and mid-term future. Nick Hodge and myself will be at the New Orleans Investment Conference here that runs from Wednesday through Saturday, if I'm not mistaken. We're actually doing a presentation called The Good, The Bad, and The Ugly of The Junior Mining Sector. I know that there's a lot of both, obviously, in the sector, and frankly, there's more bad than good in this space, but for the purposes of this conversation, Stephen, I'd love your take on some other companies out there that you might be following or that you have your eye on that you think are doing things the right way. What do you like out there?
Stephen Sandusky: Well, we tend to, like I said, back management teams. Some of the guys that we've been involved with in the past and helping them along the way are, like the old Integra guys, Steve de Jong and George Salamis, who also have a mine now in Idaho. They have DeLamar, which is just getting funded as well, which also speaks to the jurisdiction. Idaho is now being, again, put into the spotlight. I think it really speaks to the jurisdiction. They're a group that we got involved with. We quite like that.
And guys like Jon Awde, who are at Gold Standard. He's done a lot to further their project, Pinion and Railroad in Nevada on the Carlin Trend. The stock's come off quite a bit recently, so I think looking at that now it looks to be pretty cheap at these levels and, as you know, Nevada ounces definitely come at a premium and they have a lot of majors looking at that one. They have Gold Corp, Oceana in there, and other majors as well looking or invested. That one is one, we like management, we like Jon a lot, and like the company.
Recently, we bought an asset in Wyoming called Rattlesnake Hills, just privately, and we put into a public vehicle and hired the old Claude Resource management team. That's Brian Skanderbeg and again, it's just backing management. They're now running with that one. That's one we quite like as well. And the guys at Probe, Dave Palmer, we helped them along the way. They have a new discovery in Val-d'Or and, again, that's good jurisdiction. That's a good company and a tight share structure.
The most recent one that we actually were pretty instrumental on finding the asset and getting up and running, it's brand new. We just closed the financing. It's called Barksdale Capital. That'll be its interim name. We'll be renaming it shortly. It's ticker symbol BRO, so the bro. Most interestingly is their land package is right beside, like literally on the boarder of Arizona Mining's Taylor deposit. We hired Peter Megaw as a consulting geologist to evaluate the property. He actually wrote a little report on the Street site, Gold Report.
Gerardo Del Real: Yep, Gordon Holmes.
Stephen Sandusky: Yep, that's it. He's fairly favorable on the asset. What we think we have is the extension of the Taylor deposit, which Arizona Mining has a billion dollar market cap on that deposit alone, and that team has done an incredible job of drilling that deposit out. What we think is that that deposit goes onto our land. We just closed a $6 million placement with some pretty key individuals and we are maybe a $15 million market cap or so. Not to say you can make a direct comparison between that property and ours, but if we drilled out and fund it, it should get pretty interesting pretty quickly. That's one we're pretty excited about.
Gerardo Del Real: Excellent. Excellent. Well, definitely some names to keep an eye on. Stephen, how can people get ahold of you?
Stephen Sandusky: They could call me, 416-307-1035, or email me as well.
Gerardo Del Real: Excellent. Well, thank you so much for your time. Let's talk again here in the next month or two. Obviously, we're hoping for the kind of assays that will grab the rest of the market's attention. I happen to think that we're going to get some pretty good numbers from the Revival Gold drill program, and I'd love to have you back on and talk about some other companies that you have your eye on, Stephen.
Stephen Sandusky: A hundred percent. It was a pleasure. Thanks for having me on.
Gerardo Del Real: Thank you.
Stephen Sandusky: All right, take care.
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