General Precious Metals
Mawson Gold (TSX: MAW)(OTC: MWSNF) CEO Ivan Fairhall on Delivering a US$211 Million NPV5 (post-tax) from Rajapalot PEA
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Mawson Gold, Mr. Ivan Fairhall.
Ivan, how are you? Great to have you back on.
Ivan Fairhall: I am very good. Very good to be here today, given the news we've just put out.
Gerardo Del Real: Well, let's get right into it. Look, we know the markets overall are challenging right now. The Venture Exchange is hitting lows. The TSX is following it. The overall indices in the US are following that as well. And so that aside, I got to tell you, well, first off, congratulations. Anytime I look at a PEA, I come into it with a critical and skeptical eye. And so I'm looking at all in sustaining costs. I'm looking at post tax IRR, not before tax. I'm looking at a modest initial CapEx. I'm looking at scalability. Good gracious. I mean, this checks all the boxes. Congratulations, Ivan. Let's get into the details.
Ivan Fairhall: Yeah, look, thank you. Thank you, Gerardo. Certainly very pleased to have been getting these results out. It's a fantastic result for Mawson. We've got US $211 million after tax NPV. In Canadian dollars, that's almost exactly a dollar a share per Mawson share today, just for the project. So 27% IRR as you referred to, after tax IRR. Great return on capital. And we've got an asset that is very, very interesting and right in the heart of Europe.
Gerardo Del Real: If you never discover another ounce of either gold or cobalt, this would be the EU's third largest cobalt mine and the sixth largest gold mine. We've talked about the exploration upside and how substantial it is. I think the last time we chatted, we talked about 30 new gold targets that you're looking to explore. Can we talk about the exploration upside and how you plan on prioritizing that?
Ivan Fairhall: Absolutely. Yeah. Look, the PEA is very important for our exploration strategy. We've now got the opportunity to put a value on finding more. You add mine life, you can increase the NPV, you don't have to do almost anything with the CapEx. So we're certainly very focused on taking this result and working out how best to add value through the project, through exploration. And that's twofold, like you mentioned. First of all, finding more, another Rajapalot. So you mentioned the 30 targets. That's because we've got a very large land package here at Rajapalot. We've got over 18,000 hectares of contiguous claims. And it's not just Rajapalot that's on the property. We've got a million ounces at Rajapalot over there on the eastern side of the property.
People may not be aware, but over on the west, eight, nine kilometers to the west, there's a prospect called Rompas and it's over there, we've got six meters at 617 grams a tonne of gold, nuggety, intense gold mineralization. And that's a system that's moved through this entire area. And the 30 targets you reference, that's an area of the property that we've identified. It's never seen a drill hole, a four by four kilometer area, very structurally intense, and it's got the signature of where the big discoveries are being made in Finland. And we've never really explored in there. We've been so busy with Rajapalot. So plenty of opportunity to find another Rajapalot. And then even at Rajapalot, this is really just the start of this asset. All the deposits are open down dip. It's a matter of drilling more, extending those deposits, finding more, adding to the mine life. That's how these underground mines are developed in practice.
You've got Agnico, it's a good example up the road, Agnico's Kittila mine. They started that project with 2 million ounces in resources. They put it into production, 150,000 ounces a year, and they've gone on to discover 10 million ounces. They've expanded it to 250,000 ounces a year, and it's now Agnico's longest life asset in their portfolio. That's the kind of system we're in here. It's a matter of drilling and finding more, but when you're onto something, you just continue looking.
Gerardo Del Real: The one aspect of this PEA that is very, very critical, and I didn't mention along with the other items that you checked off beautifully, was the very, very strong recoveries. It's great to have gold there. It's another thing to be able to recover the bulk of it. Can you speak to the recoveries a bit?
Ivan Fairhall: Yeah. The recovery from the project globally is fantastic. It's twofold. Plenty of people will tell you about their metallurgical recovery. We're very lucky to have very simple metallurgy. On the gold we're getting 95% gold recovery. That's up there. That's probably some of the best results you can expect out of the project, particularly just using conventional low cost process. But the other element of our recovery, which I think is particularly interesting and not something people regularly talk about, is people like to put ounces in resources. But when you go and run a mine plan over them, particularly for underground resources, you find that all of a sudden they don't necessarily work quite as well, and you lose some ounces through the process of converting a resource into a mine plan. At Rajapalot here, what we've seen is 85% of the ounces that we defined in the resource, made it into a mine plan. We recovered 95% of those. So every ounce that we found, 81% of those end up as cash flow, which is a really fantastic result, and it just speaks to the qualities of the deposit.
Gerardo Del Real: Fantastic work. I am looking forward to the exploration. I know this is but a snapshot of what this asset will ultimately end up being. Great work, Ivan. Congrats. Anything to add to that?
Ivan Fairhall: Look, I just think the value proposition here, we've got an asset here that we've proven is of significant value. But given what's been going on with Southern Cross, the subsidiary, our share holding in that is worth over $30 million, so there's never been a better opportunity. Mawson's never been cheaper for Rajapalot and Rajapalot's never looked better as it does now with this PEA wrapped around it.
Gerardo Del Real: Wonderful. Ivan, great catching up. I suspect we'll be chatting again soon.
Ivan Fairhall: Thanks a lot, Gerardo.
Gerardo Del Real: Cheers.