Categories: Precious Metals
Topics: Gold Stocks

Golden Cross Resources (TSX-V: AUX)(OTC: ZCRMD) CEO Matthew Roma on Drilling the “Next Sunday Creek” at Flagship Reedy Creek Gold Project, Victoria, Australia

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Golden Cross Resources (TSX-V: AUX)(OTC: ZCRMD), a new story to our audience, happy to have with me — Mr. Matthew Roma. Matt, it's great to have you on. How are you?

Matthew Roma: I'm very well, Gerardo. Thank you very much for hosting us.

Gerardo Del Real: Well, listen, I love introducing stories to our audience when there’s actually something to talk about. And in the case of Golden Cross, there is a lot to talk about. I have to commend you on your timing. You just commenced a drilling program that is a major catalyst.

Gold is flirting with $3,400… silver has broken out above $35 and looks like it wants to go to $40… and you happen to be neighbors with a company that our audience is very familiar with — Southern Cross Gold Consolidated — which has one of the, if not the most exciting gold discoveries in recent memory.

That’s a billion-and-a-half-dollar company now. It has a shareholder registry that’s top-notch. And when I say neighbors, I mean, ‘the next house over,’ if we want to use the neighborhood analogy.

You have a tiny market cap. I want to start with you and your background and the team — but then let’s talk about how you go from the current market cap, which is in the tens of millions of dollars, to maybe closing that valuation gap… and what you're going to have to prove in order to get there.

But first and foremost — a bit about your background and a bit about Golden Cross Resources.

Matthew Roma: Absolutely, Gerardo. So Golden Cross is a brand-new story. We listed right at the end of April on the TSX Venture Exchange. I’m the CEO of the company — I’m also a director.

I’ve been in this business for a very long time. Most recently, and most notably, I was with Snowline Gold — the original CFO of the company. And that went from a similar market cap to where we are today at Golden Cross… to C$1.4 billion, I believe the company’s capped at now.

I recently stepped down from my position as CFO there to run Golden Cross, and I feel like we’re in a fantastic area — and as you mentioned — with a fantastic neighbor. On the board with myself is Darryl Cardey. He was a co-founder of K92 and co-founder of Northern Empire… both big acquisitions in the gold space.

And also Nick Rowley who is an Australian resident and was head of corporate development for Galaxy Resources when they merged with Alchem, forming a $6 billion company.

All individuals that have been in this space, have made discoveries, have been able to transact — and we’re starting this at the ground floor and looking to build shareholder value here.

Gerardo Del Real: Again, you talk about a team that knows how to monetize assets. That means finding them, advancing them, and selling them. So where is your market cap right now?

Matthew Roma: I think as the market opened today — which is June 5th — we're capped at about C$23 million. We listed this company at about an C$8 million cap. We feel like we have lots of room to grow.

And as you mentioned, this team has done it before and has proven that they’re strong custodians of capital. We’re out here to build shareholder value in, in my opinion, one of the best gold jurisdictions around.

Gerardo Del Real:  Let’s talk about that. Let’s talk about Reedy Creek. It’s a high-grade gold project — literally right next to Sunday Creek.

And look, it’s early days, but you have historic drilling… you’ve got 11 meters of 31.4 grams per tonne gold… you’ve got 2 meters of 174 grams per tonne gold. So you’re not flying into this thing completely blind, right?

Matthew Roma: No, not at all.

Gerardo Del Real: The jurisdiction, of course, is absolutely top-notch. Tell me about the project. Tell me how you ended up with it because I know, behind the scenes, and I won’t say any names, but I know there was a lot of back-and-forth trying to acquire the project because of the proximity to Sunday Creek, because of the rocks, because of the location — clearly.

Matthew Roma: You're exactly right. So first and foremost, I think we got very lucky with timing. We started negotiating this deal almost a year ago. Gold was trading just north of $2,000. Southern Cross was capped at around $300 million at that point. They were only listed in Australia — fairly unknown here in North America.

And then, by the time we actually signed the agreement with Great Pacific Gold — which we acquired the project from — Southern Cross had grown to a $500 million market cap. Still only in Australia and still relatively unknown in North America.

Fast-forward to when we started trading — they hit a billion dollars. They just raised $160 million. They’ve made a fantastic discovery and everything just lined up nicely for us, really. We had a ton of demand for the financing that we did — we were heavily oversubscribed.

We feel that we have very similar geology to Sunday Creek. We’ve got the same geology as the Costerfield Mine to the north and the Fosterville Mine to the north — these high-grade veins with a low-grade halo in between.

That’s what we’re looking to get onto — and that’s why Sunday Creek has been such a success story. As you mentioned earlier, we announced yesterday a 6,000-meter drill campaign. I think as of last night, we’re into hole three. We listed in April and we’re drilling a month later.

Gerardo Del Real: Tell me about “testing the ladder.” That’s the approach, right? That’s the point — the methodical way.

Matthew Roma: The turning point.

Gerardo Del Real: Absolutely. Explain that to the audience.

Matthew Roma: Kudos to Mike Hudson and the team at Southern Cross — they really introduced this ladder methodology where these high-grade veins are spaced 40 to 50 and even 60 meters apart. And in between those ladders is this low-halo gold.

Really, the initial drilling is meant to intersect the ladders near surface to get an understanding of the grade and geometry of the veins and then step back and drill a deeper, more narrow hole where you’re intersecting multiple veins at once. These high-grade veins can deliver extremely long intercepts at fantastic grades.

When that methodology was really put out there by Southern Cross, it was a turning point — it shot up their market cap. It opened everyone’s eyes to the type of grade in these systems and the ultimate economics. In a bulk-tonnage situation, these deposits can be fantastic.

Gerardo Del Real: Tell me about your target. You mentioned bulk tonnage but also grade. And the one thing Southern Cross and Sunday Creek have in spades is grade — right? 

Matthew Roma: I think 10.6 grams per tonne is their resource forecast right now — 3.6 million ounces at 10.6 grams per tonne. Just a fantastic deposit. The grades are extremely high here. And as you get deeper, the grades just continue to pick up.

So if you can get onto these high-grade veins — and the proxy for Sunday Creek, the reason they started exploring there — it all goes back to these old workings from the late 1800s. The old-timers would get in there, and with their limited tech and equipment, they would dig into these high-grade veins. If they were onto it, they’d keep going. If not, they’d move on.

And I believe there were about six old workings at the surface of Sunday Creek — and that’s why they started drilling underneath. The results speak for themselves.

What we’ve done is flown LiDAR over our entire project and picked up all of these old gold workings. That surface work that you’d normally spend time on — the LIDAR has done it for us. So we can see where all those workings are.

And across the project to date — keeping with that ladder methodology — we’ve identified about 55 different ladders. For perspective, Sunday Creek is the equivalent of two ladders, about 600 meters each. A total of 1,400 meters makes up the current Sunday Creek deposit.

One of our slides in the deck does a fantastic job showing the blue-sky potential of the project. But taking that same ladder approach, we’ve identified 55 ladders so far with the highest concentration at Reedy Creek — which is our initial drill focus.

So we’ve announced a 6,000-meter drill campaign. The first 2,000 meters is testing three ladders within Reedy Creek — again, where we see the highest concentration of those old gold workings.

We expect results by early August and hopefully steady news flow through the rest of the year. We’re drilling with one rig right now, and we’ll go to two in September. The 6,000 meters will take us right up to Christmas.

Gerardo Del Real: Excellent. How’s the share structure? Who owns the shares? How does that look?

Matthew Roma: We’ve got about 60 million shares outstanding. We raised C$4.7 million at C$0.15 — no warrant. About 33% of the company is owned by insiders. Seven percent is owned by Great Pacific, the company we acquired the project from. And then about 50% is retail with the remaining portion institutionally held.

Gerardo Del Real: It’s a good structure. There’s a lot riding on this program. I love that you got right to deploying capital into the drill bit and into the ground.

And I said this to you off-air when we chatted before this conversation: You either have it or you don’t. You’re going to have to prove that you have it — but if you do, that C$20-something million market cap could hit triple-digits really, really quick.

And look, I get excited about drilling. It’s my favorite way to see value added — whether I own a company or am simply participating in the story. I cannot wait to see what you hit when those results start coming back. I suspect you and I are going to be chatting frequently, Matt.

Anything else to add that I may have missed?

Matthew Roma: I think just to really highlight the area. We spoke about the grade and the types of deposits — but it’s also a very pro-mining jurisdiction. It’s cheap to drill. Our all-in drill costs right now are about C$230 per meter. It’s a world-class area to explore, and we’re super happy to be there.

Gerardo Del Real: Listen, you have yourself a heck of a story. Let’s see if you have a heck of a project. We’re going to know soon — and I can’t wait to have you back on to chat about it. Thank you so much for your time today.

Matthew Roma:  Absolutely. Thank you, Gerardo.

 

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