General Precious Metals
Mawson Gold (TSX: MAW)(OTC: MWSNF) CEO Ivan Fairhall on One of the Most Undervalued Gold Plays in the Space
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO for Mawson Gold, Mr. Ivan Fairhall. Ivan, it is great to have you back on how are you today?
Ivan Fairhall: I'm very well Gerardo, very well. Great to be back on. Thank you.
Gerardo Del Real: Ivan, I always joke that I consider myself, and I'm serious, I consider myself a pretty simple guy. So over the weekend, you and I had an off the record chat where I was doing some math and we were comparing some numbers and I'm looking at Mawson's share price and it's at 14 cents right now, you have a market cap of roughly $41 million Canadian.
Now, before I get to my next comment, mind you, I was doing all this before today's news where Southern Cross Gold, which Mawson Gold owns 60% of, just drilled another 42 meters of 4.8 grams per tonne gold equivalent at Sunday Creek in Victoria, Australia. So this is all prior to today's results, which highlight the second and fourth best holes ever drilled into Sunday Creek. And I want to get into that a bit, but when I was doing over the weekend and when the numbers that you and I were comparing, I was looking at Mawson's steak in Southern Cross Gold, which has arguably one of, if not, the most exciting discoveries in this part of the world in recent time.
I came up with a number of roughly 14 to 15 cents per share is what Mawson's interest in Southern Cross Gold is worth. So what struck me, and again, this is prior to the phenomenal numbers that were just announced, is I'm looking at the assets that Mawson has in its portfolio. And we can argue about whether one day this will be a 3 million gold ounce asset that's a mine or a 5 million gold ounce asset that becomes a mine. Or if you never find another ounce, you have a million gold ounce equivalent right now that's sitting there. We could argue about that valuation, which by the way, has a PEA upcoming in the next couple of months, if I'm not mistaken, but whatever that value is, that's essentially then being given away. Not only is that being given away, but a part of Mawson's interest in Southern Cross Gold is also thrown in for free because of the valuation. Am I wrong in any of my numbers or any of what I'm perceiving here?
Ivan Fairhall: No, your eyes do not deceive you, that's all, the mathematics is correct. Our stake in Southern Cross is worth more than our entire market cap. That means you are getting assets, a million ounces in Finland. It's going to grow, and it's a project you're getting those effectively for free. So you're right, there's a lot of value potential here in the stock that is... We don't have to go and find anything, a lot of stocks you invest in and you hope that they're going to deploy the capital to make further discoveries and do work that creates value.
The value's been created here in Mawson. We just need to get that reflected in our share price. The assets are already there, and we'll continue to grow those assets, both us and Southern Cross has still got plenty to do as well. And we'll share in that, but just based on what we've got today, there's significant potential within the stock, absolutely.
Gerardo Del Real: Let's get into the news that Southern Cross just reported 42 meters of 4.8 grams per tonne gold equivalent. The widths of the mineralization, the grades are excellent. Can you provide some more context on what Sunday Creek looks like it's shaping to be?
Ivan Fairhall: Sure. Absolutely. So, yeah. Look, Sunday Creek is the flagship project of Southern Cross, which is the company that Mawson spun out in May with its assets in Australia, and Mawson retained 60% of Southern Cross. So the results that Southern Cross released today are, as you mentioned, two of the four best holes on the project, 42 meters at 4.8 grams a tonne gold equivalent, that's gold and antimony, 15 meters of 4.2 grams a tonne. That's a follow up to its stellar Hole 33, which was announced a few weeks ago of 119 meters at 3.9 grams a tonne gold equivalent. So you got a project here that has 10,000, 15,000 meters of drilling in it. And it's already got 15 greater than 100 gram 10 meter intercept holes. That's a very good metric for the sort of scale of mineralization that makes this a really quality discovery that we obviously believe we've got here with 15 already on the board.
So these holes, what they're demonstrating and why the market really likes them and why Southern Cross is the value it is today and should be more is that it's... What we're seeing is we've got these high grade and wide zones of mineralization, but they're really starting to hang together. That means that you're getting drill holes with closer density, and you're not finding gaps, what you're doing is you're finding more mineralization and you're starting to see a deposit emerge and something that is mineable, and that's what people are really seeing here. So this Apollo shoot, these three holes cover a hundred meters of it. And the third best hole is still 200 meters down plunge, the third best hole on the project.
So there's a lot more drilling to do, absolutely. There's two rigs working, but we're hopeful that Southern Cross are going to continue to release more results like this, keep their market happy and therefore Mawson, as its major shareholder, very happy indeed.
Gerardo Del Real: Two drill rigs are now active at Sunday Creek. Is that accurate?
Ivan Fairhall: Yep. Two rigs are drilling. Absolutely.
Gerardo Del Real: And we still have five holes pending?
Ivan Fairhall: Yep. There's five holes pending, couple of holes being drilled, three in the lab. So the news results are going to continue to flow from Southern Cross and as I mentioned, Mawson, very happy shareholders sitting here, reading the news releases as you guys are as well.
Gerardo Del Real: Well, I suspect over the coming days and weeks, once the market really kind of digests what Southern Cross is onto that Mawson 60% stake is going to be worth closer to 20 cents then the 15 cents that it's worth right now. And again, just to remind everybody Mawson's current share price is sitting at 14 cents.
Let's talk about the PEA and the asset in Finland. There's a million gold equivalent ounces. You are working on a PEA. I am not an economic geologist, but I've been around long enough and have people that are much smarter than I that consult for me that don't see this PEA coming any lower than $100 million. So if that is the case, then we're talking another 40 to 50 cents in value there, without me putting you in a position, Ivan, where you have to comment on the valuation that you hope to get, how is the PEA coming along?
Ivan Fairhall: Yeah. Look, it's going very well. We're right in the thick of it at the moment. We're very busy up in Finland. What the PEA is really aiming to do is to explain why this deposit is, it already looks like a mine, we don't need to find a lot more to demonstrate that there's a mine here. I think we will, and we'll come onto that in a minute. But the reasons for that and the message we're trying to get out in the PEA is look at the ore body geometry. We've got fixed zones of mineralization it's amenable to pretty productive and relatively low cost mining, which is what they're very good at in that part of the world. You've got excellent gold metallurgy, so good recoveries, we're seeing that reinforced in the test work that we've done.
That means simple, low cost processing. You've also got excellent access to infrastructure. So that reduces the capital burden on the project. We're 30 minutes from the capital of Lapland, they've got an international airport, a big skilled workforce, there's power nearby. So you don't have expensive camps and infrastructure solutions that drive up the capital as you see in a lot of other, more remote projects, particularly in the north, that's really not the case here in Finland. So that PEA is looking to be out in the next couple of months and we're really excited to be able to articulate what we've already found. But the benefit of having that PEA as well is what it's going to mean for what we're yet to find.
Gerardo Del Real: It's funny that you went there because that's the part I was going to ask you about next. Let me lowball it, let me say that PEA comes in with a net present value of $100 million, Mawson's market cap again is roughly $42 million today. The stake in Southern Cross, we already went over what that is worth. Even if the PEA comes on the low end of $100 million dollars, there is still substantial upside, and the reason for that is you have a humongous land package that is largely unexplored. Can you explain that part of the asset and just how you plan on unlocking some of that value here, moving forward?
Ivan Fairhall: Sure. Yeah, like I mentioned, I think we're going to find a lot more when you look at the property, there's a couple of reasons that made me say that. First of all, all of our ore bodies are open at depth, completely open. There's a hole, that's the deepest hole in Palokas, the Palokas ore body, 30 meters at 5 grams a tonne, completely open. So it's a function of more drilling into the deposit down dip, and we're confident we are going to find more and the PEA in a real immediate sense, the PEA will allow us to value that exploration upside. You can very easily run scenarios around mine life extension and see what that does to the project valuations.
You've got no additional capital to spend, you just keep running the mine life for longer. We're going to size it to be so that mine life extension has maximum value in the PEA. So it's going to provide a way to value that exploration upside, which I think is going to be probably the most important takeaway, in fact, from the PEA.
Stepping back, like you mentioned, we got a very large land package, 18,000 hectares in the Peräpohja Belt there in Finland. It's been some great discoveries recently in Finland, Rupert Resources for guys that follow the TSX companies, 4 million ounce man made resource, billion dollar market cap. So we got a very similar land package, mostly undrilled, we found our million ounces. On the other side of the property, when we first started looking, we hit six meters at 617 grams a tonne. Really we've done no exploration in the middle and we've been doing works and magnetic surveys. We are looking to update the market soon on the plans, but what I can say is that we've really got some great targets there in the middle of the property. And we plan to be back on the ground in the fall, grooming those targets and getting more drill targets ready so that we can go and find some more deposits.
Gerardo Del Real: You also have a very important cobalt kicker that I know has attracted a lot of community and political support around the asset due to, obviously, the sources that a lot of the world's cobalt comes from not being the most stable or ethical way to source cobalt. Can you speak to that aspect of the project before I let you go, Ivan?
Ivan Fairhall: Yeah, sure. So the cobalt is an important part of our story, I believe. But interestingly, it's not a huge, important economic driver of the project. Rajapalot is really a gold mine, the highest grades of gold is where we are going to mine. And that's where we are going to get the most economic benefit. But the cobalt, we take along the way as we mine, and we believe we can produce a product that's saleable and it has incremental value to the project, but it has significant incremental value to Finland and the EU and clearly they have sourcing issues, 99% of the cobalt is imported into the EU from places like the DRC. And they're looking to secure the supply chain for their automotive industry in particular. That is why we're seeing government support, community support, funding for the project in the form of technical studies and assistance with how to find more cobalt and how to extract that cobalt and how to sustainably build a project to extract it. So that's sort of why you're seeing that political support, because they're very keen to see cobalt resources exploited in Europe.
Gerardo Del Real: Free gold, free cobalt, exposure to one of the most exciting gold discoveries in Australia. If that doesn't make the case, I don't know what does, folks. I joke about buying winter coats in the summertime. If you're going to be a contrarian in the space, which is how I've been fortunate enough to make the bulk of my money, you have to buy when no one cares. Again, I don't think I can present a more compelling case. Ivan, thank you for your time. Anything to add to that, sir?
Ivan Fairhall: No, I think we've covered it. There's a lot going on, and that's a really great time for people to be taking a lot a look at Mawson.
Gerardo Del Real: Excellent. Thank you so much, Ivan. Appreciate it.
Ivan Fairhall: Thank you, Gerardo, bye.Click here to see more from Mawson Gold Ltd.