Categories: Precious Metals
Topics: General Precious Metals

Austin Gold (NYSE: AUST): New NYSE Gold IPO Hunting for Elephants

Nick Hodge: Nick Hodge with Resource Stock Digest. I'm sitting down with some of the executive team from Austin Gold (NYSE-American: AUST), Joe Ovsenek, executive chairman, and Ken McNaughton, vice president of exploration. 

This is a new issue… recently IPO’d on the NYSE-American… so I wanted to talk to you both about the team and the project. So thanks for being here at Beaver Creek.

Joe Ovsenek: I appreciate that.

Nick Hodge: Joe, I guess I'll start with you. You guys both have an extensive history in the mining sector and had a very successful exit — a multi-billion dollar exit — with Pretium a couple of years ago. So why don't you talk about the team a little bit and why you're lending your skills to Austin Gold.

Joe Ovsenek: Well, Ken and I have worked together since back in '96 with Silver Standard. At that point, we were just starting to build up the premier silver resource company. Between 1996 and 2010, we took Silver Standard from a market cap of $50 to $60 million back then?

Ken McNaughton: Yep.

Joe Ovsenek: We left in 2010 to start up Pretium. We were at a couple billion [in market cap] with 2 billion ounces of silver resources in the ground and had taken the company from an explorer to a silver producer listed on the NASDAQ and the TSX. 

And then, while at Silver Standard, Ken's team discovered the Brucejack mine. Formed up Pretium; sold the asset to Pretium. We moved over to Pretium, and we took Brucejack from discovery to production in under eight years. So it was a big push for us, and we had a great time and accomplished a lot there.

We've done a lot together. And coming out of Pretium, we've known Dennis and Darcy Higgs for quite some time. And Dennis has a great background, most recently in the energy side with uranium, with Energy Fuels. But before that, Uranerz. 

So we've all worked together at times, and we all have experience in bringing projects from discovery and advancing them. And that's what we feel lends things with Austin. Our view with Austin is… let's go looking in the best jurisdiction for gold in the world — which is Nevada. 

We're looking for elephants because we want to discover them, advance them, and sell them off to a major. And that's the way we see things happening at Austin.

Nick Hodge: You mentioned Dennis Higgs who you said is quarterbacking this deal. And he's got expertise and experience with major US exchanges. I wonder if you could talk about the raise you guys just did — the US$13 million you raised in the IPO — and why the NYSE listing is so important?

Joe Ovsenek: Well, NYSE, the US market — that's where the liquidity is. And so it's just the place to be. Both of our previous companies; at Pretium, we had an NYSE listing, and at Silver Standard, we had an AMEX listing. 

Dennis had experience with the NYSE-AMEX and so it's the place to go for raising money for Nevada — deep market, lots of liquidity. And it's a financial capital. So if you're going to be anywhere, if you can be in New York, it's the place to be.

And so a tough market for an IPO and yet Dennis did a great job; IPO'd at US$4, raised US$13 million dollars. So nice funds in the treasury… and allows the company to kick off and start doing that exploration. That really is the first step for discovery.

Nick Hodge: Well, that's what we're going to talk about next. Exploration is where you get the most bang for your buck in the market. When you come up out of the ground with a nice hit — you can really see share prices move. 

So Ken, maybe talk to me a little bit about the projects. You mentioned you were elephant hunting in Nevada. You've also got a project in Oregon. Let's talk about the holes you just drilled and the holes you want to drill at the various projects.

Ken McNaughton: Well, Kelly Creek is sitting there with Mary Gold and Lone Tree. So there are big deposits… Rabbit Creek and Twin Creeks… they're all up at the north end of this trend. It's a great spot to be. There's some historical drilling. 

And so what we’re sited on now is in and around that area looking at the favorable geology, having done the groundwater survey, which pointed to some newer trends and then said, ‘Okay, well let's go down and test those.’ But really, the philosophy now is what we've done over the years is get into good projects with good geology and then do your best to advance. And if it doesn't get over the hurdle — get rid of it and move on to the next one. 

And so you just have the conveyor going… you have the projects in the pipeline, and if at any point they stall — well it's too bad. We all hate for that to happen. So that's Kelly Creek, the first one we've drilled.

Nick Hodge: Four holes done. Is that correct?

Ken McNaughton: Four holes done. Everything is waiting. We're out waiting for assays now. So based on some other companies, we're going to say 6 to 8 weeks for assays, depending. And then, we're permitting at Fourmile. There, we're dealing with the Forest Service, which is a little slower process than BLM. It is what it is. 

It's a very interesting project. It's a geologic concept but the guys that brought it to us — Bud Hillemyer and Perry Durning; great explorationists, award-winning — we dealt with them in Mexico with Silver Standard and Canplats with Camino Rojo. So these guys, when they say here's a project… you have a hard look at it! So that's one we're permitting. 

And then, the second one that they brought in was Stockade Mountain, which is up in Oregon. And it's a very interesting project. There's some historical work; there's some historical drilling all pointing to a bulk tonnage near-surface. 

But we think the main potential is looking more down at-depth, looking at higher grade. Because it's Oregon, it's not that you can't permit there, but it's a process. So you're going to have an easier time with a high-grade underground than you are with a bulk tonnage.

Joe Ovsenek: But Oregon is heating up on the exploration side.

Ken McNaughton: It's getting better and the state… we just talked with someone with Grassy Mountain… they're coming along. Everyone's looking for revenue now. They've legalized cannabis. So now, where's the next revenue coming from? So mining in the right area and, certainly, the east part of the state is the place to be in Oregon.

Nick Hodge: Sometimes you read the news stories… they're trying to secede and become a part of Idaho.

Ken McNaughton: The east, yeah.

Joe Ovsenek: The state of Jefferson. Love it!

Ken McNaughton: It makes more sense quite honestly. But at any rate, we won't go into US politics.

Nick Hodge: So what do timelines look like for those two other projects you just mentioned; Fourmile and Stockade?

Ken McNaughton: Well, I think Stockade, they can probably get their permits within the next few months. I don't know exactly where Bob is. Bob Hatch is doing the filing on that. But those will move, and because they're BLM, they'll move relatively quickly. And honestly, I have no experience with the Forest Service so I can't predict.

Joe Ovsenek: But Forest Service tends to be nine months to a year. And so it's in the works. And part of Fourmile is BLM land.

Ken McNaughton: Yeah.

Joe Ovsenek: We have some experience permitting with BLM. And at this stage for initial grassroots drilling, it goes quickly. So I expect that'll come fast.

Nick Hodge: You guys have a super tight share structure so I would assume that any results could see the shares move quite quickly and to the upside. And so I want to ask you, Joe, what does the next 12 months look like? 

Ken mentioned ‘drill-to-kill,’ and if the project is not working out, moving on. So maybe frame up the next 12 months for us and what the vision is for Austin Gold with maybe other projects in the pipeline.

Joe Ovsenek: Well look, as Ken mentioned, we’ve got to get on the ground; we’ve got to drill them. As much as it's drill-to-kill, we've got property in a great spot on the Carlin Trend. We're on the Jerritt Canyon with Fourmile not far from Round Mountain; same rocks. 

These properties have a lot of potential so we just need to get on the ground to drill. So it's that startup, getting the permits in place. But as we get the permits in, we'll start drilling them. Can't really give you a timeline on some of them… but we'll be drilling this year. And we'll be looking for more projects.

Ken McNaughton: We're always looking for more.

Joe Ovsenek: We see something that's attractive to us, we'll look to pick it up. Because, really, you get one big discovery — that's where the value is created in mining. It's that discovery phase which sends the price higher.

Nick Hodge: Absolutely. That Lassonde Curve.

Joe Ovsenek: If you discover something with a couple hundred million of value with a tight share structure, that value is there and people recognize it right away. And if you really luck into an elephant, you're looking at pretty fast $500 million of value if you come into a nice gold property.

Nick Hodge: And what would be your goal to exit? Would it be to sell that to another company or would it be to continue down the road? I know we're getting a bit ahead of ourselves.

Joe Ovsenek: We have different philosophies, and we’ve got to talk a little more strategically at the company. Our experience has always been you keep driving a project forward… and that way, it shows the value and brings people in to look at it. 

With Pretium, we were advancing it and the market tanked… if you remember, sort of 2012 through ‘16, ‘17 was not pretty. So we built Brucejack because that's where the market was. If the market had been different, somebody would've come in and taken that from us. 

Because we look at what creates the best value, we're not married to a project where we're going to be the guys building this. It's, ‘Okay, what creates the best value for shareholders?’

Ken McNaughton: But if we need to build it — we will. And that's the bottom line. Other companies will say, ‘Oh well, we're going to build it.’ But if you haven't built a mine, you've got some credibility issues. But we've all done it so we can do that if that's the way the project goes.

Nick Hodge: Well that goes back to the team and the experience that you have. We've seen some failed projects here in recent memory that, for whatever reason, there's cost overruns or they just don't have the experience to build a mine.

Joe Ovsenek: Mining is a tough business.

Nick Hodge: Absolutely.

Joe Ovsenek: So you need to have some gray hair.

Nick Hodge: Last question on the cycle, which you guys have seen… just your thoughts on the macro picture. Where are we in the cycle and what are your thoughts on the precious metals here?

Joe Ovsenek: On the current cycle… say analogously, going back to 2007-08, we had the Great Financial Crisis. Gold actually came off; I think we were about a thousand bucks down about US$750 [per ounce] or less. And then, from there it built up to 2012 where it hit US$1,900. So really, there's a lag between the inflation and the economic crisis… and then it takes off. 

So I think we're not that far away from gold starting to move up. It's just a question of where do we start seeing the bottom on things. In the general market, you're starting to get down closer to what Morgan Stanley and others are saying is getting to that bottom.

Nick Hodge: Sure, it's bounced off the high-US$1,600s a couple times. I think it has found its support there. And so… see if we can't make another run at US$1,800, Joe?

Joe Ovsenek: We're looking for a run at US$2,000-plus, I think, is reasonable in this next runup getting north of US$2,000.

Ken McNaughton: Especially if inflation stays sticky… then the fundamentals have to drive gold eventually.

Nick Hodge: It's been a relative safe haven… held up more than the market has so far, at least when you look at the S&P and the NASDAQ.

Joe Ovsenek: Look, it's solid. Gold is. We're preaching to the choir here… but we're believers.

Nick Hodge: Good. Well, Joe and Ken, thanks for taking the time to tell us about Austin Gold (NYSE-American: AUST). We look forward to following the story as you get those first assays out from Kelly Creek and as you start to drill these other projects here. Really appreciate it!

Ken McNaughton: Very good, thanks.

Joe Ovsenek: Thank you very much, Nick.