Calibre Mining (TSX: CXB)(OTC: CXBMF) VP Ryan King on Record Production, Marathon Merger & a Golden 2024


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, it's great to have you on. It's been a few months. We have $2,000 gold. How are you doing, sir?

Ryan King: Excellent, Gerardo. Thanks for having us back on and happy New Year.

Gerardo Del Real: Well, happy New Year to you as well. Listen, it's been a busy couple of months. You are in the middle of a lot. There's a lot going on with Calibre. You just announced record full year 2023 gold production of 283,000 ounces. You exceeded, and this is rare in the mining industry, you exceeded the high end of the guidance. And you're guiding for an even better 2024 with guidance of 275,000 to 300,000 ounces. If history is any indicator, you're probably likely to exceed that and you're also going ahead and merging and combining with Marathon. I wanted to just catch up and provide everybody with a roadmap of what 2024 is going to look like because it seems to be a pretty, pretty inflection point for Calibre Mining.

Ryan King: A hundred percent correct. It's a transformational deal and it's all through 2024. Because the exciting aspect here is, as you mentioned, yes, we exceeded the high end of 2023 gold production. We set the goalposts for a larger 2024, and based on our four year history, we have delivered, met or beat production and costs on every quarter since we acquired the Nicaraguan gold assets. And we were able to do that because the expertise and experience of our Chief Executive Officer, Darren Hall, that has 30 years in the mining business, 30 years with Newmont, where he optimized assets within their portfolio and at one point in time oversaw 60% of their EBITDA. This is a gentleman that can recognize value, recognize opportunities, and unlock value for shareholders. We've been doing that quarter over quarter in Central America and Nevada. And now we have an opportunity in front of us upon the successful completion of this merger with Marathon Gold, in their Valentine Gold project in Newfoundland, which will be Atlantic Canada's largest open-pit gold mine.

And fortunately, this asset is through permitting. They're 50% through construction of the project. Putting the project in a fantastic position to be able to deliver its first gold production in the first half of 2025. A very near term gold producer. Whereas when you look at the landscape, it takes 5, 10, 15 years for development stage gold projects to get through all of the economic studies, the feasibility studies, the financial capital raises, and different aspects of how they're going to finance the project, as well as of course the permitting process. We're in a great position to go and to become a mid-tier gold producer, which is a 500,000 ounce a year gold producer.

And what's exciting about that, Gerardo, is a number of things. The fact is is that Marathon, as it stood by itself, they had some options, but there was a funding gap. With the merger with Calibre, we completely fulfill any need for additional funding. We are completely self-funded now to finish this project. As we reported here just the other day, we've got $86 million US in cash, which of course was a 52% increase over end of year 2022. But that also included a $40 million private placement into Marathon Gold to help advance the Valentine Project. We would've had $115 to $120 million of cash on the balance sheet. Our assets today are robust. They're generating excellent operating cashflow. And it really puts the company in a fantastic position to develop, complete this project and then re-rate going from a junior gold producer to a mid-tier gold producer. But really importantly, and I think one of the things that may be putting a heavier discount on the company is the fact that yes, 90% of our NAV is coming from Central America. With this transaction, 60% of our NAV will be coming from tier one mining jurisdictions, Canada and Nevada. I think there's a tremendous opportunity for a re-rate here. And if you look at our peers at that 500,000 ounce a year range, they're trading at 1.5 to 5 billion US dollars, and out of the gate Calibre will have about a 650 pro forma, 650 million US market capitalization. I think right then and there presents tremendous opportunity. Given the fact that you've seen Calibre deliver quarter over quarter, and we will deliver on the Valentine Project.

Gerardo Del Real: Can you talk about the leverage that Calibre provides as gold continues higher? I am in the camp that believes that gold is going to see new all time highs here in 2024. How important is that for Calibre as far as profitability goes? Can you speak a little bit to the all in sustaining cost of the ounces that you are mining right now?

Ryan King: Yeah, it is important because every dollar higher creates more free cashflow for the business, which creates more value for all of our shareholders. Q4, we haven't come out with the financial metrics yet, but Q4 will end up being a very strong free cashflow quarter for the company. And when we look back, for example, throughout 2023, I would say we generated probably in excess of 70 million US dollars of free cash from where we started the year, producing 283,000 ounces of gold. But recall, we also reinvest heavily back into the assets. Every year since we have acquired these assets in 2019, we've invested between 20 and 30 million US dollars into exploration, which is really important for our audience and our stakeholders and shareholders because every time we are successful, we incrementally add NAV and add share price value to our assets.

We have discovered new high grade zones. For example, at our Limon asset in Central America, we've discovered a new high grade zone called Pantheon North, which at the end of 2022 was a discovery of 250,000 ounces, at 9.5 grams per tonne gold. We are finding high grade gold discoveries that add to our value because we have the mills in place. And now it's just about finding incremental gold. And obviously at nine grams per tonne gold, that's very economic. Any discovery of those sizes and bigger adds a lot of value to the company. We've produced over 750,000 ounces of gold since we became a gold producer in 2019. We started at 200,000 ounces of reserves. We're now as of the end of 2022, we haven't come out with a new resource and reserve yet, we've got 1.1 million ounces of gold in Central America.

A tremendous uptick, almost 300% uptick in reserves in Central America after the production. You see the value of reinvesting back into the business. And at the same time, not only have we put a bunch of capital back into exploration, we've also done so through what we call growth capital. Bringing on these new satellite deposits in Central America because we have surplus mill capacity and we still have surplus, we have over a million tonnes of surplus mill capacity, so that could lead to further growth. But we've been investing 40 to $50 million a year on that growth capital as well. I think in 2023 it's probably close to 80 plus million dollars of growth capital, bringing on Pavon Central and Eastern Borosi. And we still added $70 million of free cash to the balance sheet. And I think the average gold price last year was high 1,800’s.

As you said, going into this year, it's just stronger free cashflow. Our total spend for 2024, aside from the Marathon Project, will be similar to 2023. Very profitable. And if we see higher gold prices, well that's just going to lead to higher free cashflow for the business.

Gerardo Del Real: It sounds like 2024 is going to be one for the books in the gold space. And as far as Calibre goes, look, Calibre is in my opinion, very undervalued relative to peer comps. You have exploration upside, you have production upside, you have all of the technical acumen, and that's been proven year in and year out to continue to move forward with the assets that you've been able to develop. And again, I think it's as good a play in the gold space as I've seen anywhere for people that are looking for leverage to this rising gold price. And frankly, you were doing this with lower gold prices. And I think that point shouldn't be lost on people.

Ryan King: No, exactly. And coming back to the leverage point to your aspect there is through 2024, we're building the Valentine Project. We're going to see an 80% production growth rate upon delivering Valentine, the tier one asset in Newfoundland, Canada in Q1, Q2 of 2025, we're going to see an 80% production growth rate. Think about that from a leverage exposure to the gold price that you're talking about in 2024 and 2025, which I would agree with you, I think we're probably going to see higher gold prices. But to be honest with you, a lot of equities, not just Calibre, but a lot of gold equities are not seeing the value being translated into their share prices. It's almost as if gold is trading at $1,500 or less an ounce. That's where these gold equities are trading at. And with us upticking 80% in growth and currently only having a 650, $700 million market capitalization versus the peers that are anywhere from two to five billion, I think that presents a very tremendous opportunity for all of our stake and shareholders.

Gerardo Del Real: I agree. Ryan, this was overdue. Looking forward to having you back on soon. Looking forward to an exciting 2024.

Ryan King: Yeah, tremendous to be on. I appreciate it. And there will be a lot of catalysts coming up even over the next few weeks and months. Very exciting time for Calibre and I look forward to updating the audience shortly.

Gerardo Del Real: All right. Thanks for your time as always. Take care.

Ryan King: Thank you.

Click here to see more from Calibre Mining