Categories: Precious Metals
Topics: General Precious Metals

Midas Gold (TSX: MAX) CEO Stephen Quin on the Latest Release Schedule of the Draft EIS for the Stibnite Gold Proejct in Idaho

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Midas Gold (TSX: MAX)(OTC: MDRPF), Mr. Stephen Quin. Stephen, how are you? It's been a bit since we chatted.

Stephen Quin: Yeah, we're doing well. Fortunately in British Columbia, Canada, where I am the situation has improved significantly and things are settling down. So we're fortunate up here.

Gerardo Del Real: That's good to hear. I'm glad that you and your loved ones are in good health and that things are somewhat stabilized, or it sounds like it's very stabilized where you're at, which is in stark contrast to myself here in Austin, Texas, which has gone in the wrong direction unfortunately.

Fortunately, we're as busy as ever. We have gold flirting with $1,800. I don't think it'll be much longer before we break through that and go challenge all-time highs in U.S. dollars. To that end, you had some good news today when you announced that the Draft EIS on the Stibnite Gold Project is set for release. This is the first time, I believe, over many updates that we're still on track for what we hoped for. Can you give us some color to today's release?

Stephen Quin: Sure. The next big milestone for the company is to get a Draft Environmental Impact Statement, or EIS, out. It is prepared and published by the primary regulator, the U.S. Forest Service, with input from other regulators. That was supposed to happen back in January, but there were some significant deficiencies in the document draft back in January. So they stepped back, brought in some additional resources, additional expertise, and have essentially reworked the entire document to make it more readable to readers and address omissions, correct information, et cetera.

Then it was scheduled to come out in Q3 and they just put out yesterday on July 1st, an updated schedule, which said that they anticipate publishing it in August. So that's on track with where we expected it to be, hoped it would be, but we're pretty hopeful and confident that it will come out on that timeframe.

Gerardo Del Real: For those that are not familiar with the permitting process, can you explain what happens once that Draft EIS is released?

Stephen Quin: Certainly. So the next steps that happened is once the Draft EIS is published, it becomes available, is put on the web, et cetera, and made available to everybody. Then there is a mandated minimum 45-day c. We wouldn't be surprised if it does get extended. But they'll define a comment period, somewhere north of 45 days we would expect. That provides the public, stakeholders, anybody else, including Midas ourselves, can send in comments on that Draft EIS to the Forest Service, the lead regulator.

Once comment period is closed, or even during it, they compile and analyze all of those comments and there could be comments that are just factually not correct or wrong. "Why didn't you evaluate African elephants for being on site,” being somewhat facetious. But obviously they don't exist on site so that one can get ignored.

Gerardo Del Real: Right.

Stephen Quin: They just have to tick the box and say, "Look, there are no African elephants at site. So that comment is not valid." And they tick the box, "Yes, we've addressed it." But then there can be other comments that are obviously more reasonable and sensible, ones that we didn't see any information on something. The answer from the regulator could just be, "Look, yes, it's a 3,000 page document. It's on page 2,328. That information is there." But again, they tick the box and say, "Yes, it has been addressed." Then there can be comments along the lines of, "You didn't address something that is real." And the Forest Service could say, "Oh, that's a valid point. We'll address it in the final when it comes out."

The point of this commentary is to make sure that everybody's had the opportunity to make sure everything is properly assessed. So there's a whole range and variety of comments. This is not a, call it a popularity process where you get to write in and say, "I hate mining and oppose it," or, "I love mining, so I support it." That really doesn't factor into the decision making process. The intent of this comment period is specific to this project and specific to the environmental review of this project. It doesn't mean people won't write in and say they love or hate mining, but that really doesn't factor into the overall equation. 

So once the comment period is finished, then they take all of those comments they see and address them. They prepare a final EIS, essentially an updated document that addresses all the comments and they have it separately to the final EIS. They'll have a comment tracking document which says, "This is how we addressed each of the comments that came in." If there are comments that are similar in nature, they'll lump them into one category and respond to them collectively. 

So that leads to final EIS, which is currently scheduled to be published in Q2 '21. Then that goes out as a final EIS with a draft of the decision that they're proposing to make. Then that leads to another comment period. And then a final decision, which is scheduled to come out in Q3 '21.

Gerardo Del Real: And what I believe will be the sweet spot of a historic gold bull market. You have several catalysts between now and then. One that I think is going to be of critical importance to the people in the markets that don't go where the hockey puck is going as Wayne Gretzky once said, but actually need it in writing before they consider. I'm talking about institutions and funds that oftentimes lag in their speculative and investment endeavors. 

The feasibility study that's coming up later this year, I think, will crystallize just how rare the Stibnite Gold Project is because it truly is a world-class asset with world-class exploration upside that, frankly, I don't believe the company is getting credit for what's there. It sure in the heck is not getting credit for the exploration upside. 

To that end, how are things coming along with the feasibility study? I think that's going to be an important milestone for the company.

Stephen Quin: Sure. You're absolutely correct. We did a pre-feasibility study back in 2014. Obviously, that's quite a long time ago. We've done a substantial amount of work since then, which is targeted at updating the information, the new resource, the new metallurgy, new metal prices, all of those kinds of things factoring into that. That study has reached a point of being very advanced. It's best not to complete until we see the Draft EIS come out and likely most of the comments, because what we want to make sure is the feasibility is aligned with what the regulators are proposing. We don't want to say the feasibility's heading in one direction and the permit is heading in another direction, because then we have to redo the feasibility study.

So essentially we've taken a pause at the moment waiting for the Draft EIS to come out. We'll obviously evaluate that and see if there's any tweaks we need to make to the feasibility study based on that. We'll also be reviewing the comments which are publicly available. We'll be reviewing those comments as they come in. Again, are there any tweaks we need to make to that feasibility study? Then we'll look to publish the feasibility once that process is completed. But as we said, it should be out in Q4 of this year, so just a few months away. So those are definitely the two big milestones this year, Draft EIS coming out and feasibility study coming out after that. 

You're correct. This project is rare on a scale. I often call it the Goldilocks-type scenario. It's big and significant on a global scale but it's not too big. So the capital is manageable for either ourselves, assuming there's a reasonable equity market out there, or other parties to come in and team up with us or something like that. But coming out at 340,000 ounces in our PFS that we did, 340,000 ounces of annual production for 12 years, it is a significant mine on a global scale. 

Just to put it into perspective, there's only 18 mines in first-world countries – so Canada, Australia, US, et cetera – that are producing more than 300,000 ounces a year. There's only 18 of them out there. So it's a pretty rare asset to be independently owned by a junior mining company.

Gerardo Del Real: Agreed. You have a fully diluted market cap of, I want to say, just a tad bit over $400 million Canadian. Have you done a sensitivity study recently, privately, Stephen, that gives you a US dollar value plugging in $1,800 gold? Because I'm looking at your current presentation and I know at $1,650 gold it's $1.4 billion, that's US, so just a tad over $2 billion Canadian. What's that look like at $1,800?

Stephen Quin: We didn't evaluate scenarios higher than that, but essentially the way these sensitivities are done is just a straight line. So anybody can extrapolate that and schedule out what the difference is to $1,800. So there's a fairly even jump of about $300 million for every $150 an ounce to gold. So it would push it up, and call it a simplistic basis, that's mining the same number of ounces just at a higher gold price. Obviously what would happen at a higher gold price is more ounces would be economic. So you would have a higher gold price and more ounces, which would actually torque that curve more to the upside.

We're going to try and show that in the feasibility study, because the pre-feasibility we just took one mine plan and changed the gold price. This time we're going to show sensitivity. It's primarily internal waste becoming ore because of the higher gold price. So it doesn't change the size of the project. It doesn't change the permitting aspects of it. You just get to process more of those tonnes as ore. It would increase that value based on the higher gold price.

Gerardo Del Real: Excellent. Steven, I want to thank you very, very much for the update. I was happy to see that we're finally back on track as far as the timing moving forward. I know it's an important time for the company with everything that's coming up. Is there anything else that you'd like to add?

Stephen Quin: No. We were talking about it before we started recording, Gerardo, but I think the other aspect is the direction of gold price. I think it's an important underlying fundamental that I think will drive people back to this market. You can definitely see that it's benefited the bigger companies. But it's working it's way down the value chain, the size chain, from the majors to the intermediate, to the smaller producers. But it definitely has not hit the developers yet, companies like Midas. As that filters down these kinds of companies have significant opportunities to be re-rated and revalued.

Gerardo Del Real: I think that's an important point, Stephen. And to that point, you're all-in sustaining costs in that pre-feasibility study from 2014, I believe came in at just over $600. I believe it was something like $616 US dollars an ounce. This project never needed $1,800 gold or $2,000 gold. It was profitable back in 2014 when we were talking about much lower gold prices. But the leverage that a higher gold price provides is I think unique in this space. 

Again, we didn't even touch on the exploration upside, which as you know, I've been to the property a couple of times, and we joke that we believe there's 15 to 20 million ounces on the property and it's not something that's said lightly. I believe anybody that understands the geology and the targets on the property can make a reasonable assumption, but again, we don't need 15 or 20 million ounces. We don't need $2,000 gold. If nothing else changed moving forward, you'd still be undervalued using today's prices and using the 2014 PFS. I think that's an important point.

Stephen Quin: Yeah, absolutely. It is a very low cost, all-in sustaining cost production profile. We're right at the bottom end of the global curve, not just North America, but right across the globe. So that makes it a very attractive asset. Large long life, low cost with tremendous exploration upside I think is a pretty unique combination.

Gerardo Del Real: As I told subscribers recently, you can buy it at today's prices or you can wait and buy it at higher prices. Either way what's happening is happening. Stephen, thank you so much for your time today.

Stephen Quin: Thanks very much, Gerardo. Take care. Be safe.

Gerardo Del Real: Same to you.