Categories: Precious Metals
Topics: General Precious Metals

Calibre Mining (TSX-V: CXB)(OTC: CXBMF) Senior VP Corporate Development Ryan King on Building a Mid-Tier Gold Producer in a Record Gold Market

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the senior vice president of corporate development for Calibre Mining — Mr. Ryan King. Ryan, interesting times and an interesting couple of days in the markets. Great time to have you on. How are you, sir?

Ryan King: Excellent. Very good, actually. It's very interesting times, as you said.

Gerardo Del Real: Well, listen, let's get right into it. I want to talk about the expanded 100,000-meter resource expansion and discovery drill program at the flagship Valentine Gold Mine property. 

But before we get into that, I have to get your take on what I'm viewing as one of the most bullish setups for gold that I've seen in quite some time. We're at record high gold prices. We just had the single-highest monthly close for the gold price. 

And as far as my eye can see, I see nothing but runway ahead with the potential for some pretty aggressive cuts on the back of some weak economic data here in the US. Are you viewing it in a similar way?

Ryan King: Well, self-interest, as people probably know, is a great motivator. So as a gold company executive, higher gold prices are always favorable to me and to us, obviously, as a producer. But look, I truly believe that we are set for a very robust gold market. 

And primarily because, if you look at history, when rates did go up or stayed higher for longer, it was negative for gold or gold prices. And a stronger US dollar has always been negative for gold prices. So when you look at the bigger picture here, we've been seeing higher and higher gold prices in the face of rising rates or a stronger dollar.

And therefore, when we step back and look at things now, with gold at all-time highs, and we've been in that higher and stronger environment, this sets up incredibly well with the macroeconomic landscape today, given that we continue to hear easing and lowering of rates and wanting a weaker dollar. I think we are absolutely set up for higher gold prices. 

We've seen record purchases from central banks around the world. I believe that that theory and that thesis is setting up very well. And we've hardly seen any investment purchasing into ETFs or new active natural resource or gold funds or precious metals funds. So I think, absolutely, I'm really excited about the future here.

Gerardo Del Real: Yes, again, I'm talking about my own book as someone who writes checks in the resource space. But again, the setup is as good as I've ever seen it in my 15 or 16 years in the market. 

Let's talk Calibre specifically. You had some news here a few weeks back where you expanded the 100,000-meter resource expansion and discovery drill program across the flagship at Valentine. 

And so look, I think with Calibre, you look at the production profile — and we'll talk about that; it's as good as it gets out there — you're moving forward with the Valentine Gold Mine construction. I think you're somewhat like 73% or 74% complete there. And now you have a really, really aggressive resource expansion and discovery drill program. Can you speak to where we're at with that?

Ryan King: Absolutely. Let's talk about Valentine for just a minute. When we look at Valentine and the fault system that is there — and for the audience, it’s a big fault system that provides the plumbing — it provides the opportunity for fluids to flow up, and, therefore, the potential for gold deposits to be discovered in this type of a geological setting. So it's incredibly attractive and prospective. 

When we look at other areas of Canada, let's take, for example, Timmins, and what's known as the Porcupine-Destor fault, which is multiple kilometers long, or the Cadillac fault in Val-d'Or in Quebec: These types of systems have been explored for decades and decades and have delivered multi-million ounce deposits along these types of fault systems. 

For example, there's a well-known past-producing and producing mine Eldorado has now that's produced well over 10 million ounces of gold called Sigma Lamaque. Sigma Lamaque has a very similar geological setting that Calibre has at the Valentine asset in Newfoundland.

But here's the key, and here's the interesting aspect of the whole thing: Valentine has really only been discovered properly since 2011, so we're talking 10-plus years. And in that last 10-year period, a total now of a little over 5 million ounces in all categories have been discovered. But that's only across about six, maybe seven kilometers of what we call the Valentine Lake Fault System where the Valentine Lake Shear Zone travels and has been mapped out 32-km-long. 

So we're incredibly excited about the exploration potential. We've had prospecting drills across the property now for a little while. We're now, as you just said, because of that prospecting drilling, seeing some very good potential. We've now increased our program to commence a 100,000-meter diamond drill program, and we have two rigs actively turning.

Earlier this year, we drilled and identified a zone to the southwest of one of our pits and hit gold mineralization outside the pit, which is already telling us that there's very good potential to expand. So we've decided to turn up the program. It's fully funded. And that's why we're extremely excited, Gerardo; anytime a company is discovering mineralization or expanding resources, that’s where there's a potential for very strong share price performance. 

I'm extremely excited about the outlook here, and the geological land package that we have, and the potential that could roll into this because we are building Atlantic Canada's largest open pit gold mine with the potential to get significantly bigger. It's incredibly exciting.

Gerardo Del Real: It definitely is incredibly exciting. Again, I said this to you before it materialized that I thought that you were going to hit the sweet part of the profit cycle with your production profile and the assets, which is now playing out beautifully. You’ve executed brilliantly on multiple fronts. 

I'm really looking forward to seeing how you close out Q3 and Q4. And it'll be fun to watch the gold price and see what you do with it. How is the balance sheet, how are the margins, and how is the production looking on that front?

Ryan King: Going into the year, we had given the market guidance that our first half of the year — January through the end of June — was going to be higher-cost and lower production. And currently we're sitting at about 42% to 44% of full-year guidance. 

So this is playing out exactly as we had anticipated; higher costs and lower production. Now, getting into Q3, obviously, we're going to see how it goes but it is playing out exactly as expected; higher production and lower costs in the second half of the year.

So things are going to plan, and we're excited about that because of the second half of the year where we should have significantly stronger production profiles. And we remain on track to meet our 275,000 to 300,000 ounce production guidance.

That’s exciting because, as a junior gold producer, and then the build on of Valentine with first gold coming in Q2 of next year, fully-funded, this is going to transition us from a junior producer that generally trades at a lower multiple to a mid-tier gold producer that does trade at a higher multiple. 

It's going to be very exciting in the second half of the year with all of the exploration news and with the developments at Valentine and then transitioning into that mid-tier gold producer — the 400,000 to 500,000 ounce range producer. As it's stated in our Feasibility Study, Valentine is expected to produce about 195,000 ounces a year at $1,000 all-in sustaining costs. So positive for the overall portfolio, for sure.

Gerardo Del Real: Exciting times. Ryan, again, great execution. Congrats on that front and looking forward to catching up in person here soon. I know conference season kicks back up in September, and I suspect we're going to have a busy conference season this year.

Ryan King: I do agree, and I think we're going to see new investors starting to pay attention. We're seeing record earnings from gold companies during the second quarter. I think it's only a matter of time before a flood of new investors and generalist investors start paying attention to this sector.

Gerardo Del Real: Agreed. Chat soon again, Ryan. Thanks again for the time.

Ryan King: Appreciate it, Gerardo. Stay well.

Gerardo Del Real: Alright, cheers.

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