General Precious Metals
Mawson Gold (TSX: MAW)(OTC: MWSNF) CEO Ivan Fairhall & Executive Chairman Michael Hudson on Southern Cross Spinout & Drilling at Rajapalot
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Mawson Gold, Mr. Ivan Fairhall and the Executive Chairman of Mawson Gold, Mr. Michael Hudson. Gentlemen, great to have you both on today. How are you?
Ivan Fairhall: Very good. Very good. Nice to speak you again, Gerardo.
Gerardo Del Real: It's been a busy, busy start to 2022 for Mawson Gold. It was a very busy 2021. I want to start with you, Mike, on several news releases that you had here recently, but I want to definitely start with the update from the 16th of February, where you provided an update to the Southern Cross Gold spin out. How is that coming along? Because I understand that you're getting a pretty favorable reception right now to those assets, deservedly so, because the numbers seem to indicate at least early on that you could be on something pretty significant there.
Michael Hudson: Yeah. We'll let Ivan cover the benefits for Mawson and I'll just let you know how we're looking in terms of the spin out down here in Australia, which I am leading and will become the managing director of this new company called Southern Cross on the ASX. We're going to be very soon to submit or lodge our prospectus to the appropriate authorities, the ASX and ASIC, in Australia in early March. That then takes about six to eight weeks, I'm told, for those authorities to review the prospectus and the money to be raised and then you're trading.
So we'll probably be trading, if that's the case, somewhere in May, early May. So we are on a roll absolutely. We're flushing out all the results as quickly as we can from our projects, because even though we'll keep drilling during that process after lodgement, we won't be able to assay or create any material new information. So we're really on a roll here. We've got multiple discoveries and I'm sure we'll talk about in a moment. And this is really being seen by some as one of the better, if not the best, gold float coming to market on the ASX.
Gerardo Del Real: Ivan, I would love to hear your take as to why that is. I mentioned the very favorable reception that you're getting, and Mike just kind of echoed that sentiment, so I'd love to hear your thoughts on it.
Ivan Fairhall: Sure. Yeah, look, Southern Cross is a great example of value creation in our part of the market. Mawson acquired these projects less than two years ago and utilized our in-house resources to incubate them and grow them and now we have an asset of significant value and that gives us the opportunity to take this next step, which is the spinning out of the company and this recent funding round that we've raised down in Australia, we've raised 2.75 million Australian dollars privately into Southern Cross as a precursor to that IPO and that funds us to keep drilling and implement the IPO, at which point we'll raise some more money.
So just the stake, just the money that we raise today, values Mawson's stake in Southern Cross at about Canadian 13.7 million dollars, which I'll point out, and quite remarkably, is one third of Mawson's market cap today for an asset that was effectively hiding in our portfolio and I think not well understood, and here we're seeing it flourish in the market and that's the exact reason that we're IPO-ing it because there's value there that needs to be recognized.
Gerardo Del Real: Anything to add to that, Mike? Because I'm going to touch on Sweden as well, where I think there's significant potential for a re-rating and I want to hear your thoughts on that, Ivan. But anything else to add to that, Michael?
Michael Hudson: Well, in terms of the results just specifically, our flagship is Sunday Creek and we've seen what is arguably one of the best, if not the best discovery to come out of Victoria over the last few years. There's lots of eyes on that project. We put out something like 12 meters at 16 grams gold equivalent in the deepest hole. We've got another hole to come to market over the next few weeks, which will be the deepest hole, so we're anticipating the results there.
What's most important also is that we made another high grade discovery at Whroo. We put out 60 centimeters at just under 50 grams a tonne. That's right in the sweet spot of what they mine just down the road at Costerfield, a thin high grade mine, but the sixth highest grade gold mine on earth. Over a 2 million ounce gold equivalent system at Costerfield. So grade is king, as we all say and so we've got our second project we're drilling out there. And then of course, Mawson has made a decision around holding the stock and Ivan, perhaps, you can just touch on that.
Ivan Fairhall: Sure. Look, the spin out is actually what creates the value. We've taken the assets, we shine a light on them, we give them a fit for purpose, capital market strategy, investor base, dedicated board of management team, and this funding, dedicated funding, through the pre-IPO and the IPO for which to go and execute on that strategy. So the IPO in fact is just the beginning and there's quality discoveries and when we compare them to the peers down there, as Mike mentioned, one of the best gold discoveries and one of the nicest gold IPOs being said by some, we see huge upside following that and as the story takes hold down under and those people who are hungry for a piece of the Victorian Renaissance, which in fact it was the Canadians who carved out originally.
So it was that actually led us to look at our portfolio and make the decision to hold onto the shares and that provides huge optionality for Mawson as part of its sort of portfolio of assets. We have this asset of significant value that we can use to fund Rajapalot in the future in a non-dilutive way. It provides look through value in the intervening period, and it'll strengthen Mawson's market cap to help attract and hold those important institutional investors who we already have on our register. And your future distribution is possible post the hold period, which is 24 months from the IPO. We can distribute all or a partial stake to shareholders and again, it just adds to that optionality.
And of course, having a tight structure down at Southern Cross, reducing that overhanging of certain shareholders who might look to just sell those shares when they get them distributed, that'll be really important for Southern Cross in its formative years to really hit its straps and therefore, by holding those shares together, we will in fact, help generate more value for all shareholders to keep Southern Cross capital structure tight, of which obviously we will own a 58% shareholding in. Approximately 58%, depending on how much is raised at the IPO.
And finally, not to want to list too many reasons really, but it will be a strategic stake. And we all know that if Southern Cross does what we hope it will, holding onto a large stake in that provides real additional value in terms of having some sort of control type premium associated, so that should hopefully generate additional value again, for Mawson shareholders.
Gerardo Del Real: You said the word value several times there. I have to ask about Sweden. You commenced an 8,000 meter regional diamond drill program back in mid-January. How is that coming along?
Ivan Fairhall: Yeah, yeah. Great. We're up there drilling at the moment and we're looking for results to sort of flow in as they tend to over the winter period and we're super busy up there in our preparations for our economic studies as well. We're just kicking off metallurgical test work programs and speaking to various consultants and looking how we deliver that over this year. I won't be too disputative on timing, but yeah, certainly things are heading in the right direction, moving that project forward.
Gerardo Del Real: Mr. Hudson, anything to add to that?
Michael Hudson: Well, just you ask the question and the Swedish asset specifically, Ivan, will be drilled over the coming months, right? Which is very exciting.
Ivan Fairhall: Yeah, yeah, yeah.
Gerardo Del Real: Absolutely. And look, let me be absolutely clear. I'm a biased supporter of the stock and the company. I think the current valuation is a gift. I think we're entering a period where we're going to have a very, very exciting gold market and one that we haven't seen for at least a year and a half during this long, and let's be frank, painful consolidation, which kind of coincided with tax loss selling here at the end of December. That I think is behind us and I think that's the opportunity here. Gentlemen, thank you so much for your time. Anything to add to that from either of you?
Michael Hudson: It's just crazy, right, where our valuation is. We've got a million ounces up in Finland, we're drilling regional targets, we've got a brand new virgin discovery in the shadow of headframes in Sweden. Mawson will be the major strategic holder of what will be one of the hottest gold floats on the ASX and will provide amazing look through value that you'll see come to the table and we're in a great gold market. So we're having fun.
Ivan Fairhall: Absolutely yeah, lots of value catalysts to come this year.
Gerardo Del Real: Excited for 2022. A lot to get done. I'll let you gentlemen get to it. Thank you so much for the time today. Love the enthusiasm and again, look forward to chatting soon.
Ivan Fairhall: Thanks, Gerardo.Click here to see more from Mawson Gold Ltd.