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Headwater Gold (CSE: HWG)(OTC: HWAUF) CEO Caleb Stroup on $30 Million Earn in with Newmont
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Headwater Gold (CSE: HWG)(OTC: HWAUF), Mr. Caleb Strop. Caleb, congratulations. Once again, you have now again put another $30 million shot on goal for a major discovery with a major partner on the board. Congrats. I would love for you to go over the details of the just announced earn-in agreement with Newmont.
Caleb Stroup: Well, thank you, Gerardo. Yeah, no, this is a really exciting one. This is, in my mind, a perfect proof of our execution on our business model where we go out and do the generative work required to identify big high upside assets, acquire the land positions, do the technical work to show the potential, and ultimately bring them into a deal that allows the exploration capital to go into these assets that's required to have a chance at a big meaningful discovery. And so this one with Newmont is just firmly in line with our overall strategy on the partner-funded side of the business where there's a three-stage earn-in, just like all of our other deals, a big minimum commitment, two and a half million dollars US upfront guaranteed into the ground. That includes actually a $250,000 US cash reimbursement of our sunk costs into the project. And that's part of a $10 million US stage one for them to ultimately get to a 51% interest if they complete that $10 million.
Following that, an additional 20 million coming into the asset for them to get to 65%. But ultimately, at the end of the day, they'll have to deliver a pre-feasibility study and grant us a 2% NSR over the entire project to get up to a 75% interest. So a ton of retained upside for our shareholders, especially considering what we're really looking for is a carried 25% interest plus a 2% royalty in a Newmont-sized discovery in Nevada. So this is exactly the sort of thing we built this company to execute on.
Gerardo Del Real: I love that you said Newmont-sized because Newmont-sized is different than what the average mid-tier or junior looks for. Can you speak to that? Jupiter, which is the name of the project, is a large, large system that has a lot of gold. We know there's gold on it, right? It's a matter of vectoring into a meaningful deposit that is Newmont-sized. Can you explain what that means to the folks that may hear that phrase and not really quite understand or translate it?
Caleb Stroup: Yeah, so I mean really the identification of this project and this opportunity came out of a Western US-wide search that we did, specifically targeting projects that have similarities and are analogs to the big Silicon-Merlin discovery that AngloGold made in the Walker lane a few years ago. So that's still an emerging story down there near Beatty, Nevada, but it looks like that's going to be approaching 20 million ounces fairly quick, all of which was discovered just in the last few years. So that sort of discovery trajectory really shows what sort of potential is left in Nevada. And that motivated us to do a thorough search for the sorts of surface indicators that were constructive in vectoring towards Silicon and Merlin, but do it across the entire Western US. And so this Jupiter project is one of the things that emerged. So in our mind, this really is a truly high upside target.
And it's no surprise, Newmont, one of the biggest gold mining companies in the world is looking for high upside assets to devote their exploration capital to. They wouldn't be exploring for something if they didn't think the upside outcome would have a meaningful impact to a company the size of Newmont. So that really is the way I frame this. And how big is that? How many millions of ounces? I don't really know what the best number is, but they're in the business of building multi-billion dollar mines, not small mines. So look around at their portfolio to see what sort of things that they're interested in, but they're big, big long-term assets, and that's the sort of thing we're looking for here.
Gerardo Del Real: You have several of these earn-in agreements with several major partners. Can you speak to what the second half of the... Or I should say the rest of the year, we're in the second half, right, but what the rest of the year is going to look like because it's catalyst rich.
Caleb Stroup: Yeah, no. So I mean, stepping back a little bit more broadly in the portfolio, we've got, I think, 12 or 13 projects in the portfolio right now, seven of which are in partnership with major producers, three now with Newmont, three with OceanaGold in Northern Nevada, and one with Centerra Gold in Idaho. And we're currently drilling as we speak on two of those projects, one funded by Centerra, one funded by Oceana, and looking to do some more drilling in the second half of this year in addition to the work that we have planned at this newly announced Jupiter project where we have ambitions to get on the ground drilling there relatively soon as well.
So the ongoing drilling at our Jake Creek and Crane Creek projects will supply some steady news flow through the fall. And on top of that, additional drill announcements, additional plans for Jupiter, and potential new acquisitions and advancement of the rest of our portfolio, which is always happening as well. We have a big generative program going on across the Western US that is bearing fruit, and we'll see what ultimately ends up in the portfolio, but there's lots of opportunities that make us pretty excited about the future here.
Gerardo Del Real: Look, I think that deposits and discoveries of significance in North America and in good jurisdictions are going to command a significant premium here over the next several years, especially given the metals market that I see coming. And frankly, the metals market that we have now with gold above $4,300, silver right around that $65 level, copper making record highs seemingly every month for the last several months. I don't think you can ask for a better macro backdrop in relation to the metals.
Caleb Stroup: No, I think that's right. I think everything is really set up well for the gold juniors and especially the US-focused gold juniors like us. And I'm expecting a really exciting second half of the year with the backdrop that you just laid out. And I think over the summer, the market really has been fairly sleepy despite that backdrop and teams like us that continue to execute, but I think that will all change fairly soon.
Gerardo Del Real: Yeah, I think the re-rate's going to be fun to watch. I couldn't agree with you more. Second half is going to be, I think, a great time for all of us in the space. Caleb, congrats. Great work by you and the team. Let's chat again soon. I suspect it's not the last one you have up your sleeve there.
Caleb Stroup: Okay. Thank you very much. I appreciate it.
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