Calibre Mining (TSX: CXB)(OTC: CXBMF) Senior VP Corporate Development Ryan King on Increasing Free Cash Flow From a Fourth Consecutive Quarter of Record Gold Production


Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Senior VP of Corporate Development for Calibre Mining, Mr. Ryan King. Ryan, how are you today?

Ryan King: I'm great, Gerardo. Thanks very much for having us back on and look forward to the conversation.

Gerardo Del Real: Well, no, listen, let's get right into it. The last time that you and I spoke, we chatted about the gold bull market that we think we are on the cusp of, and I firmly believe that's definitely going to be the case here by the end of Q4 and Q1 of 2024. In the meantime, Calibre just reported some really, really strong third quarter financial results, and I wanted to go ahead and get into some of the details, so thanks for coming on. I would love for you to provide the context there.

Ryan King: Yeah, no, sure. As you said, again strong results. This is coming from actually a fourth consecutive record production quarter for us. So over 73,000 ounces, which is significantly up year-over-year. It's obviously up from Q2, and we generated a little over 60 million of free cash after investing in exploration, which was roughly $7 million and after investing over $25 million back into the assets. In terms of new development, we've been developing on Eastern Borosi open pit, Pavon Central, acquiring land and doing additional mine development to really set us up for the future. So we are adding cash quarter-over-quarter and not at the expense of reinvesting back into the assets for sustainability.

Gerardo Del Real: A 72 increase in cash on hand to $97 million is an impressive, impressive feat for a company that is trading at a severe discount compared to its peers. Even in this market where we know market sentiment isn't the strongest right now, you're still trading at a pretty substantial discount. Do you want to get into that at all?

Ryan King: Yeah, I mean, you pointed out 72% increase in cash from January of this year, and it's a good point. This was a grade-driven production growth year. I mean, year-over-year, since we acquired the assets in Q4 of 2019, we've evolved our operating strategy such that it's a very effective, responsible hub and spoke approach. We have 2.7 million tonnes of processing capacity. We have our Libertad Mill, which is a 2.2 million tonne per annum mill, 70% utilized. And so there's a significant opportunity for us, I should say 70% across both plants. So we've got 70% utilized now, 30% available. That's over 1 million tonnes of availability for low cost, no capital in terms of the process plant's growth. And so it's a tremendous opportunity for additional growth.

And when you look at what we've done since acquiring the assets, it's really impressive from my perspective as well. Fortunately, we've got a very experienced CEO that has worked in this business for 30 years as an operator. And from in Q4 2019 net of obligations, we've gone from $4 million of cash to roughly, as you said, $97 million in cash. We've grown production year-over-year approximately 20%. And importantly, after almost 750,000 ounces of production, we've increased reserves to 1 million ounces or 280% in Central America.

And you bring up a good point when we look at our peers, Orla operating in Mexico, Panama, as well as Nevada. We look at K92, Papua New Guinea. Wesdome, Canada. Karora, Australia. Dundee Precious Metals, Victoria. All peers in various different jurisdictions. Torex, Mexico. Calibre trades at about $1,650 enterprise value to ounce of annual production going into 2024, whereas the peer average is trading at 3,300.

So this is what I believe and we believe presents a value proposition to our investors and shareholders. Yet at the same time when we look at analyst consensus operating cash flow, we are at the top quartile of those peers. We're at the top quartile of gold production.

And what I find exciting about our businesses is, as I mentioned on the reserve, we continually reinvest back into exploration, and now we've demonstrated the effectiveness of our hub and spoke approach. And so any new deposits that 50, 100,000 ounces can be material that we can bring into our facilities. And this is all self-funded. It's very exciting. Not only self-funded, as you've know, we've grown the cash.

So it's a very exciting place for us to be, and it demonstrates a value opportunity as we head into what we believe could be a very exciting bull market for gold given the macro landscape right now.

Gerardo Del Real: You're a production story, you are a development story, you're an exploration story. It's all-in-one. Impressive stuff, Ryan. Again, kudos to you and the team. Looking forward to having you back on. I know there's a lot in the fire there for Q4. Thank you again for your time.

Ryan King: Thanks very much. Look forward to the future discussions.

Gerardo Del Real: All right, chat soon.

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