Categories: Precious Metals
Topics: General Precious Metals

GoldMining Inc. (TSX: GOLD)(NYSE-American: GLDG) CEO Alastair Still on La Mina PEA & Advancing 32 Million Ounce Gold-Equivalent Portfolio

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is GoldMining CEO — Mr. Alastair Still. Alastair, how are you today?

Alastair Still: I am doing just great. Thanks very much for having me on today.

Gerardo Del Real: Thanks for coming on. Listen, I want to talk GoldMining. I want to talk the PEA for the La Mina project, which you announced here recently. But before I get into that, 2022 is already shaping up to be volatile in the broader indices and, I think, net positive for the precious metal space. 

Given your background — before we get into GoldMining and how GoldMining is positioned to take advantage of a better precious metals environment — I would love for you to give us your take on the precious metals space going into 2022.

Alastair Still: Yeah, absolutely. Happy to do that. And as you say, it's a great start to the year, especially for GoldMining, showing that it's nice to see the market recognizing us as to some of our positive advancements. 

But through a career that spans some 25 years working for the major gold producers, such as Newmont and Gold Corp., we've seen cycles before. So we're used to this bit of chop in the water. We might see some more choppiness coming up but I think we've really established a strong baseline here around US$1,800 [per ounce], which is a great price for us. 

We do see some upward potential on that. But certainly, at US$1,800, our projects work very well as we've demonstrated in the recent announcement of our PEA study at La Mina. And in that study, we use much lower gold prices at US$1,600 per ounce… so already US$200 below spot prices, and, we think, plenty of room for upside on that.

Gerardo Del Real: Let's talk about La Mina and that PEA. This is a project that would produce over one million gold-equivalent ounces for at least a 10.4-year mine life. You're looking to produce an average of 102,000 gold-equivalent ounces. 

Let's go through the numbers, right? After-tax NPV of US$232 million. If I was going to play devil's advocate, I would pick on the IRR of 14.5%. And you already answered the question that you used a metal price of US$1,600 per ounce gold, US$21 per ounce silver, and US$3.39 per pound copper. But can you speak to the leverage and the multiple opportunities to enhance those economics because this is just a first-pass PEA, correct?

Alastair Still: Absolutely. I think that's the key for La Mina. What we've shown is that we have a solid foundation for building upon. That's exactly what we're doing. That's why we came out with a new resource model for it in 2021. 

We're building upon that as a foundation for the PEA. But what the PEA has told us is that we have a solid deposit there. It's got a good low strip ratio; 3.6-to-1 strip ratio. The capital cost, the operating cost, at an all-in sustaining cost of US$698 per gold ounce. That's a positive number; lots of margin to play with there. And really, what it shows us is those basic economics are foundational for building on.

That's why we're targeting this La Garrucha deposit, which is immediately adjacent to the main resources right now. Previous operators had done some very positive drilling on La Garrucha. It has the potential to be even bigger than the existing resource. We're very excited by it, and that's why we're so keen to get drilling on it later this year. 

What's important for us is that the previous operators drilled holes such as 271 meters of over a gram per tonne gold and over 0.13% copper. None of that is in the current resources right now. None of that is captured in the PEA. And we see tremendous upside to build upon that foundational element of the PEA. We’ve just gotten started.

Gerardo Del Real: You mentioned the momentum in the stock post-tax loss selling season and going into 2022. The company owns 20 million shares of Gold Royalty Corp. [NYSE-American: GROY]. You also have a phenomenal resource base. Can you speak to that for people that may be new to the stock? 

And then, I'd love for you to talk about what the rest of 2022 looks like because you have such a robust resource base. How do you prioritize those things? But first off, can we talk about the resource base and where that stands now?

Alastair Still: Yes, and we've emphasized this in the past, and I think it's really starting to come home, and hopefully the investors are starting to realize that this year. We have one of the largest resource bases of any of our peers. In fact, a resource base that's comparable to intermediates or even major size companies with over 16 million gold-equivalent Measured & Indicated resources on a further 16 million gold-equivalent Inferred ounces.

That's a big resource base in itself, and that gives us great leverage to the price of gold. But what we have that also separates us from any of our peers and makes us unique is we have over US$100 million of liquid assets on the balance sheet. The majority of that comes from the 20 million shares we have in Gold Royalty Corp., and that's trading on the New York Stock Exchange. We're the largest shareholder there. 

That price is approaching US$5 per share. So that liquidity on our balance sheet combined with 32 million gold-equivalent ounces really sets us apart and really gives us a great leverage and a runway here for taking off and moving forward throughout 2022.

Gerardo Del Real: Let's talk priorities for 2022. Can you walk me through that briefly?

Alastair Still: Yeah, absolutely. We have announced we've started our PEA studies, and we've made the first announcement on La Mina. We're doing considerable work also on our São Jorge property in Brazil. We're excited by what we're seeing there. 

We've identified a whole series of opportunities as we've started the PEA, and we've gone back in and we have commenced a resampling program on core that was previously drilled but not completely sampled. And what we're seeing is we're finding mineralization that was not identified previously. 

We'll be able to incorporate that information into our new models as we move forward with the PEA, and we'd also like to probably test a few new targets we're identifying on São Jorge. So I think São Jorge… trying to move it forward with some additional information, potentially drilling as well, a great target that we talked about — La Garrucha — are two ways we're advancing on the PEAs directly.

But one other asset I'll just bring to your attention within our portfolio — and it's not a focus because it's not a gold project for us right now — but it's another example of what strength and optionality we have in our portfolio. We also have a uranium property, our Rea Project, which is located in the Athabasca Basin, which really means it's in the location of some of the highest-grade uranium mines on the planet. We have 125,000 hectares there — so a very large land package.

Uranium prices are very strong but they're still only about a third of their all-time high. So we see a tremendous opportunity there to unlock further value from the portfolio, perhaps similar to what we did last year by creating the Gold Royalty entity and the IPO of that. 

So if we can unlock a junior mining exploration company with a strong uranium project, those types of junior miners are C$50 - C$100 million market caps on much smaller land packages in that same basin. So we're pretty excited about some of the optionality in our portfolio as well.

Gerardo Del Real: A lot to like! I'm excited for 2022. It sounds like you are as well. Anything else to add to that?

Alastair Still: Absolutely, I think the momentum we have at the start of this year — we'd love to keep it going. And again, on a valuation basis, you take out that strong balance sheet we have on an enterprise value per ounce, we're still trading below US$5 per resource ounce, which is unheard of. 

I'm not talking about an increase of US$5 to US$7 or up to US$8 per ounce. Our peer benchmarks are trading at US$20, US$30, US$40, US$50 per resource ounce. 

So we think there's a huge leverage, a huge gain, that can be made once the market starts recognizing our projects. And that's what we're moving forward with this year; unlocking value in those, showing that we have solid resources, and trying and capture a significant upside on the enterprise value per ounce in our portfolio.

Gerardo Del Real: Looking forward to it! Alastair, always a pleasure. Thank you so much for coming on.

Alastair Still: Great to be here. Have a great day and looking forward to speaking with you again, Gerardo.

Gerardo Del Real: Chat soon.