Categories: Precious Metals
Topics: General Precious Metals

Gold Mountain Mining (TSX-V: GMTN)(OTCQB: GMTNF) CEO Kevin Smith on Draft Mining Permit, Improved PEA & Aggressive Exploration Drilling at Elk

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Gold Mountain Mining, Mr. Kevin Smith. Kevin, how are you today?

Kevin Smith: I'm great, Gerardo. How are you doing?

Gerardo Del Real: I'm well. I'm excited for the bulk of news that you've had over the past several weeks. You just arranged a $10 million bought deal. You announced that this morning. We'll talk about where that's going in a bit. You also announced a few days ago that you've received your draft mining permit from the Ministry of Mines; a big milestone. Congratulations on that front. Walk me through the mining permit and how significant it is obviously for the company moving forward.

Kevin Smith: Yeah, this is huge, right? When you get the draft mining permit, at that point, all the information requests are completed and the government is starting to show a clear path to issuing our final permits. We anticipate that we're still on time to deliver this by the end of the month and to have the final permit by the end of the month. So, yeah, we're really excited. We'll spend the next couple of days refining a few of the conditions in there with regulators and then send it up for final sign off from the statutory decision maker, with a goal of delivering this by the end of the month.

Gerardo Del Real: Well, you've executed brilliantly. You and the team deserve credit for that. You also executed three MOUs with indigenous community surrounding the Elk Gold Project. We've talked before about the importance of the social license and just making sure that local stakeholders are involved and engaged and respected, right? Tell me the thinking behind the MOUs and what comes next with that.

Kevin Smith: Yeah, these MOUs are really important. They weren't necessary in order for us to get this initial M199 amendment, but we wanted to build a really strong foundation with the communities surrounding our projects. We had a great mine review committee. You know, we had tons of really positive feedback and we worked through any of the perceived concerns around the environmental impacts. And then signing these MOUs just shows that there's a path to establishing our IBAs, which are going to be super important once we get this mine into production, and then start our plan to scale this up into our larger production profile.

So what this was about was, rather than waiting till the last second to get these agreements in place, bringing them into our business plan early, giving them full visibility on what we were planning to do. If they had any feedback or comments, working with them to find comfort in our business plan and showing them that we plan to be responsible operators.

Gerardo Del Real: Excellent. Excellent. This follows the news back on the 27th of May, where you updated the project economics at the Elk Gold Project. The updated PEA now demonstrates an after tax net present value at 5%, I should add, of 231 million. Walk me through the production profile and then let's talk exploration, because I mentioned the $10 million bought deal. I got to assume that you're looking to ramp up exploration expenses and drive towards a million or maybe even a couple of million ounces at Elk.

Kevin Smith: Yeah, absolutely. So first half of your question there, we got beat up pretty bad when we went public saying that our numbers weren't realistic on our PEA that we released in August. We wanted to update our economics, showing all of our locked in pricing that we have with Nhwelmen-Lake, which has our mining contractor, and as well as the ore purchase agreement that we were able to negotiate with New Gold.

Obviously, the bump in the NPV was great, especially given that all these terms are locked in with definitive agreements now. And then on top of that, we dropped our all in sustaining costs from $750 down to around $550, which is huge. And something that's interesting about the tweak that we made in this, is we are going to defer building a mill on site and tailing storage right out of the gate, based off some trade-off studies that we've been completing with JDS, who is working on a pre-feasibility study for us, it looks like it makes more sense to truck the ore to New Afton until we get this project up over 100,000 ounces of production profile.

So what we're going to do is, we're going to continue trucking the ore to New Gold's facility and that dropped out a massive capex. It also reduces our environmental impact on the project. So we're anticipating not having tailings stored onsite, not processing on site. Should also streamline our environmental assessment process, which is the next step for us, if we want to expand our production profile.

So all in all really positive economics, and it's also going to make our business a lot simpler. And we feel there's a potential here to fast track our ambitions to get up to that larger production profile.

Gerardo Del Real: Let's talk about the $10 million bought deal. You're doing it at $2.10 per unit. $1.09 million of that is flow through, obviously, that will be used for exploration expenses. Tell me about that. I know we talked a bit off air. You believe, and correct me if I'm wrong, but you believe that you can get this to a million and maybe even a multimillion ounce deposit.

Kevin Smith: Yeah, absolutely. So firstly, on the financing, we opened it this morning and closed it shortly thereafter. We had a ton of support from previous investors, who wanted to participate. And we had a few institutions, which we've really been lacking in our cap table. We had a few institutions that stepped up and said we're finally ready for them to participate. So that's huge.

We got beat up a little bit about the discount, but we put this price reservation in two days after releasing our PEA. And we wanted to give people an opportunity to come in and participate in the company, build more strong hands. We've had a phenomenal response in our share price and we're trading really strongly today. So it's super encouraging to see the response from the market and the demand. It looks like we'll be closing on 12 million. So the full over allotment was taken as well. So really good response.

The proceeds of this will be going towards putting the mine into production. We're already in construction. As we speak. We anticipate July and August will be waste rock mining. September is ore mining. October is our first delivery of ore, and then in November will be our first metals payable coming from New Gold. So this will give us lots of cash in the treasury for that. As well as we'll take that flow through and we'll really start aggressively drilling, not only the Siwash North where our main resources are, but we have nine other zones on the property that we're really excited to get drills into. So it'll allow us to accelerate those ambitions. One of which is a bulk tonnage style target off in the Nicola Volcanics. That's unique in that it's away from all of the rest of our mineralization that has been intercepted and it's about four kilometers Southwest of Kodiak MPD.

So if we can bolt on a bulk tonnage style target along with our really high grade ore that we have onsite already, pretty exciting times for the company. So we have five holes planned over in the elusive zone, which is at bulk style tonnage target. We're going to continue in-filling and step-out drilling on the Siwash North. I mean, we went 41 for 41 on our last drill program, so that gives us a lot of confidence in our geological model. And there's also a few other zones on either side of the Siwash North that'll start getting dragged into that resource as well, as we continue to expand that open pit and underground scenario.

And then phase three, which may get accelerated into phase two, now that we've closed this financing, that's going to continue drilling out eight other drill tested zones that are already on the project. Most of those are at a phase where we could already estimate initial resources on them, but we're going to do some in-fill drilling and step-out drilling, just so we can try to bolt on as many ounces as possible.

So near term, we're very confident we can get this up over a million ounces. And we really believe there's a potential for multiple million ounce open pits on this project. And then who knows, with what's going on over in the Elusive zone. So lots to be excited about. Lots of data on this project to give us confidence to go out and continue drilling. And yeah, we think we have really special here in the Elk.

Gerardo Del Real: A lot to look forward to. Congratulations. You mentioned getting beat up a bit about the discount on the financing. I think if you would have told any of your shareholders back in January, when the stock traded in the high $0.70s, that they'd be writing a check at $2.10, they would have been ecstatic. And so no, congratulations on the brilliant execution. Keep up the good work and we'll chat again soon, Kevin.

Kevin Smith: Thank you so much, Gerardo. Talk to you soon.

Gerardo Del Real: All right. I'll let you get to it.