Goldshore Resources (TSX-V: GSHR) CEO Brett Richards on Commencement of Trading & 100,000 Meters of Drilling On-Tap for Flagship Moss Lake Gold Project, Ontario, Canada
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Goldshore Resources — Mr. Brett Richards. Brett, great to have you on. Congrats on trading! How are you?
Brett Richards: I'm great, Gerardo. Yeah, it's a great day! This is a historic day for us opening trading today.
Gerardo Del Real: Big milestone. We talked a bit off air about the process and everything that it took to get here. And I often joke with the audience that the better stories in this space tend to be, it's not always the rule, but they tend to be exceptionally simple stories.
And with Goldshore, you have a great jurisdiction; you have nearly 4 million ounces across all categories; gold ounces. We'll talk more about that. You have a top notch quality team, a ton of exploration upside, and you're looking to drill over 100,000 meters in 2021 and 2022.
That's as straightforward and simple as it gets. So before we get into all of the details, tell me a bit about Goldshore and the team and just what attracted you here.
Brett Richards: Yeah, you know what… I got in touch with a couple of guys who are now with the party here. Galen McNamara and one of our investors contacted me and David Garofalo. And we had a lunch… we started talking about our philosophies on gold.
And I had been working in Africa for the last 8 to 10 years, and a lot of my clients were saying, "You know what… you gotta go find me some big projects, big-swing, stuff that moves the needle, 5 million ounces plus!"
And I'm like, "You know what… you don't see them in Africa!" But these are the types of projects that are highly levered to the gold price. And I said, "I believe gold is going to trade between $1,800 and $2,200.”
And, quite frankly, that's kind of where we're looking for projects that are economic. And again, they're really geared to every $100 movement in the gold price, these NPVs go up by C$150 or C$200 million.
David and Galen basically said, "Hey, you know what… we're doing the same thing but we're doing it here in Canada and the US. And, quite frankly, we share the same mantra. We've got something a-cooking. Do you want to get involved?"
And I said, "Absolutely!"
So I'm from Canada… I'm from Toronto. It was a really good fit for me to move back from London, England, back to Toronto. So I said, "Hey, I'm jumping in with both feet. Where do I sign my check? How do I get involved?" And away we go!
But along that way, we started to bring in other guys who are like-minded guys who agree with this ideology… who believe in this mantra, at the end of the day, of gold trajectory and gold trading. And some of these guys aren't even gold guys, although, they're CEOs of base metal companies or precious metal companies in their own right.
So we brought in Doug Ramshaw and Brandon Macdonald and Shawn Khunkhun and Victor Cantore. And these guys are all CEOs and business guys of their own right; bit of youth, bit of gray hair — and it all kind of fell together. And then, Galen and I kind of ran with this to the finish line.
Gerardo Del Real: No, look, you should be commended because there are few teams in this space as qualified as the Goldshore team. I mean, people I have a lot of respect for. You mentioned Shawn Khunkhun and Brandon Macdonald, Doug Ramshaw.
You also have Bryan Slusarchuk, who I'm familiar with, on the strategic advisory board. Of course, you mentioned David Garofalo and the network he brings. So… impressive group! I could keep going, right? Adrian Rothwell, and on and on… Joanna Pearson. You have a team of high-level executives that I think is going to bode well here for 2021 and 2022 which is going to be a very, very, very busy time for the company.
Walk me through the asset base and what the plan is there. I mentioned the 100,000 meters of drilling and, obviously, what that looks like. But how quick do you plan on moving, given the cash position, which is pretty substantial?
Brett Richards: It is. We were very successful putting together the first raise. We raised C$25 million; C$15 million hard dollar at C$0.65 and C$10 million flow-through at C$0.75. Some of that went out the door to Wesdome on this transaction, which we'll speak to. But yeah, we're well cashed up and we can execute on our 100,000 meter program over the next, say, 12 to 18 months without too much difficulty.
And it's going to be a bit of a balance where we are. We are in western Ontario through this Red Lake, Timmins, Abitibi camp area in northern Ontario and northern Quebec. We're right in the heart of it in Canada about 130 kilometers northwest of Thunder Bay.
And so yeah, we're well cashed up… we've got a great team… we're hitting the ground. But now, you asked a question about the sequencing of drilling… how fast this is going to happen. It's happening as fast as we can make it happen. There are processes we have to go through. I don't like to temper the excitement — but these things take time.
You've got COVID issues so turnarounds on essays are going to be a little slower than normal. But we’re going to have such a substantial program when we start to get news flow… and drilling news flow will probably start in September. We plan on drilling in July once we get our permit approved. So I expect that we're going to probably really crank over results on a regular basis for some time to come.
And if I'm looking at our 4 million ounce resource, we have about 1.5 million ounces in the Indicated category and 2.5 million ounces Inferred. And when I look at the actual deposit, this is a massive land package. Over 30 kilometers corner to corner; one kilometer away from Highway 11, which is Yonge Street in Toronto — the highest, longest street in the world. I can start here at home and drive 1,800 kilometers and be at work the next day or whatever.
Gerardo Del Real: Right.
Brett Richards: But we are in a really good spot. There are topographical issues; there's weather issues; there's seasonal issues. But I want to spend a little bit more than half my time, energy, value and meters into expanding the Moss Lake resource; infilling it and expanding it. And then, also stepping out and doing some scout drilling.
So I think the infill program to demonstrate Moss Lake as a real project will be about 60% of my drilling. 40% of my drilling will be kind of step-outs and showing how big and how scalable this could potentially be.
But there's also seasonal issues here. I'm not going to be able to balance it like that all the time. I'm going to have to start with some drilling on dry land and then mobilize to drilling on top of the lake later on in the winter time of next year — but all good!
We're going to ramp up to probably 6 or 7 rigs as soon as we can. By the wintertime, we'll be hitting on all cylinders… we run right through the wintertime.
Gerardo Del Real: That's a lot of news flow. Let's get into the share structure, which I really like. You have, I believe, 63.8 million common shares issued; another 36.2 [million] that you mentioned at C$0.65 and C$0.75 of flow-through shares… so right around 100 million. Is that accurate… with zero warrants and zero options?
Brett Richards: Yeah, that's right. So we have 100 [million] out right now. We'll probably issue some options to our team. And I think that will happen; that's probably a normal course-of-business thing. But we just started… so we haven't been able to formalize that yet.
But here's the takeaway, Gerardo. Out of the 63 million shares, they are all held in escrow. That's the Wesdome shares; that's the Goldshore shares; that's the Sierra Madre shares. Nothing free trading today. They start to release from escrow in six months' time. And then in 12 months, some more come out; 18 months, 24, 30, 36… almost like a drip feed of releasing of escrow to the market.
Of the 36 million of the sub receipts we raised, only the 15 million hard dollar are free trading today. The flow-through have a four-month hold. So we have a very, very tight cap structure right now and very, very tight trading. I'm looking at trading right now; we'll probably do a couple of million shares today, which is about 9% of our overall structure of available free trading shares today. That's a pretty nice turnover.
Gerardo Del Real: No, absolutely! And again, the fact that you have a resource base of right around 4 million ounces across all categories and the cash position, the partners, the team, and zero warrants and zero options — you should be commended for that.
And I think it speaks well to the structure of not just the company but the way you structured the deal with Wesdome. Do you want to get into that a bit?
Brett Richards: Yeah, absolutely. I think, and I hate to be so cliche, but this deal was really a win-win. Win for Wesdome, win for Goldshore; also a win for the stakeholders involved in our property up in Moss Lake.
For Wesdome, they are going to realize a headline number of about C$57 million. C$12.5 million cash went out the door this week to them. Thirty million shares out of the 100 [million] are theirs. And they got those on Monday, as well, on the close of the transaction. And they're held in escrow as I stated earlier.
Over the next four years, we're going to, again, drip feed more shares to them; C$20 million worth of shares over four years. Year one, C$5 [million]. Year two, C$7.5 [million]. And up to year four, C$7.5 [million]. And they're on milestones of development, completion of studies, etc. So this is a nice structure so that we don't blast the market with somebody who's going to acquire a whole bunch of shares and then flip them and blow them out.
Wesdome is very, I like to say, they're ‘a little sticky.’ They're strategic and they see this as a strategic investment. And they want to see how this plays down the road. And I think they're in this for a long, long haul here. They want to see what the outcome is. They want to see success.
But also, this investment for them — C$57 million headline number — that could very well be north of well over C$100 million or C$150 million if you start to look at the potential for the movement in our share price relative to our peers. That alone could make this a C$150 million deal notwithstanding the value that we're going to add along the way with our drilling, etc.
So this was very good for Wesdome. I also think, now, it gives them exposure to a project that was sitting on the back shelf. They weren't getting good value for it in the sum of the parts of their own share price. Now, they are getting exposure to it; to the development of it but also to the gold price.
And if you believe in this ideology of gold trading between $1,800 and $2,200 [an ounce] — they're in the backseat of this ride with us. And I think for Goldshore shareholders, the entry point was very, very attractive to our peers. And I can see where there's going to be lots of scope and upside for our own shareholders.
Gerardo Del Real: I think you crystallized the opportunity really well there. Let's take the rosy scenario and say — because I do believe that we're in a new environment where $1,800, $1,900, $2,000 [an ounce] is the new floor and we're headed much higher towards new all-time highs — but with that being said, you mentioned the deal could be worth north of C$150 million to Wesdome, right, which they're a 30% shareholder.
Your entire market cap, right now, is right around C$80 - C$81 million the last I checked the ticker here. So again, the upside, I think, is substantial. The leverage to the gold price is substantial. And you've got the team to do it. So I'm looking forward to keeping up. And I get the sense that we'll be chatting frequently given the news flow that's coming.
Brett Richards: I can't wait, Gerardo! I think this is a dynamic time for us… this is a dynamic time for our shareholders. We're out of the gate today up 20% on lots of volume. I'm really excited about how this performed today. And it was steady. It was not radical; it was not volatile; it was a steady turn today — really happy with it!
So I look forward to speaking with you again… I look forward to talking to your audience… and I'll keep them informed along the way of how Goldshore performs.
Gerardo Del Real: It's appreciated. I'm sure you've got the phone ringing. Congratulations again! I'll let you get to it. Thanks again, Brett.
Brett Richards: Great, thanks, Gerardo!