Categories: Precious Metals
Topics: General Precious Metals

Midas Gold (TSX: MAX) CEO Stephen Quin on Upcoming Near-Term Catalysts & How to Ensure Your Support of the Stibnite Gold Project is Heard

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 this morning?

Stephen Quin: Very good, Gerardo. Thanks for having me on.

Gerardo Del Real: Thanks for coming on. The inspiration behind the conversation today is I've had multiple subscribers write in asking about Midas. I have to giggle, and I've said this in the past, because they always comment when they write in, they comment how this is the boring period, and what, if any, catalysts are in the works for Midas. Right? Aside from gold at being at $1,925 an ounce, I always go over the many milestones that we should be expecting here soon. 

I thought it'd be a good opportunity to have you on to talk about the multiple near-term catalysts for Midas. That includes the comment period coming to an end here on October 28th, I believe. I want to explain to people how they can get involved and voice their support for what I believe is one of the best undeveloped gold deposits in North America. 

We'll talk feasibility study, and before we get into all of that, I just want to give you an opportunity to set the table there, Stephen, and give us a little overview of everything that's going on. Then let's take it step by step.

Stephen Quin: Sure. I certainly will. Maybe it's a good opportunity to remind listeners that Stibnite is a very large, high-grade open pit with a significant amount of production, in the 350,000 to 380,000 ounces a year over at least a dozen years, making it one of the largest, lowest cost gold development projects out there. We've been in, as I often call it, permitting purgatory for the last four years, waiting to deliver some milestones. But in August, we delivered a major milestone with the Draft Environmental Impact Statement coming out. That really started us down the final track to getting things finally permitted and out the door.

Gerardo Del Real: Well put. Let's talk about the feasibility study. You expect that here in a couple of months, as you mentioned. We also expect to see for the first time in quite some time, I would imagine, the use of some higher gold prices, some scenarios that factor the new environment in. Is that accurate, Stephen?

Stephen Quin: Yeah, for sure. The feasibility study we've announced is scheduled to come out in Q4. Obviously, we're already into Q4, so it's within the next couple of months. Obviously, it will be significantly updated. But primarily in respect to the gold price, as you mentioned, because we're permitting off the pre-feasibility study. The project isn't going to be significantly different to what we're permitting. Otherwise, we'd have to restart permitting, and that wouldn't be good.

Gerardo Del Real: Right.

Stephen Quin: The project, from a 50,000-foot view, will look very similar. It's a 20,000 tonne a day milling operation producing that 340,000, 380,000 ounces of gold a year, sort of a dozen-ish years of life with three pits. Those kinds of key parameters stay the same. 

I think that the two big external differences are, number one, the tax rates in the U.S. When we did the pre-feasibility study, the federal income tax rate was 35%. It's now 21%. That would obviously be a big win. Of course, people immediately come back and said, "Well, what if Biden wins the election?" Well, he's already publicly stated that he would anticipate the tax rate going to 28%. Well, that's still a 7% reduction from where we were at 35%. So it's a win-win in either scenario from a tax rate perspective, that we would see a reduced tax rate, which obviously should be helpful to the economics of the project.

But, as you mentioned, the biggest driver is this is a gold mine, and so a higher gold price will have a significant impact on the economics of the project. We did the pre-feasibility study back in 2014, at $1,350 gold. We did scenarios that took us up to $1,650 gold, which seemed like a really optimistic scenario when we did that.

Gerardo Del Real: Right.

Stephen Quin: Obviously, we're significantly above and have been much higher than that in recent months. The challenge with volatile metal prices is, what do you put the pin on? We have to identify a base case, and we'll do that. Undoubtedly, it'll be higher than the $1,350 we used in the pre-feasibility study. What we'll essentially do is provide a range of gold prices so people can pick their own gold price and then look at the valuation of the company in that gold price environment. Because if you just pick one scenario, well, you're going to be out of date the day after you publish. Giving this broader range that takes us up to high prices like we've seen in the last few months and low prices like we saw back in the PFS days will give people a maximum opportunity to look at the leverage of the project to different gold prices, and, obviously, higher gold prices will have a positive impact on economics.

Gerardo Del Real: One of the reasons why I've always been a strong supporter of Midas is the fact that the project works at much lower prices, and I don't expect lower prices. I'm pretty clear about the fact that I believe this new $1,900 gold price environment is going to be the base case scenario moving forward, and I expect prices to be higher than they are today. But it doesn't necessarily have to play out that way for Midas Gold and Stibnite to be a very, very profitable mine for at least a dozen years. 

I can make a pretty compelling – and I have – argument that there is enough at Stibnite for this to be a project that delivers for decades on end. Can you speak to the cost parameters of the project? Because they're compelling. Everyone talks about higher gold prices and optionality and how great these deposits might be if gold just gets to $3,000. Midas and Stibnite doesn't really need higher prices. They're welcomed, of course, but we don't need it for this to work and to work in a robust fashion.

Stephen Quin: Sure. We did scenarios in our pre-feasibility study that went down to $1,200 an ounce and still provided a good return on the project. Our all-in sustaining costs are in the $600 an ounce range. Even at $1,200 an ounce gold, you've got a 100% margin on your cost of production. So it really illustrates the robustness of the project, and that's really driven by grade. It's going to be up around 1.5 grams, 1.6 grams life of mine. But the early years, we're mining around 2 grams a tonne gold open pit with a pretty modest strip ratio, and really what drives the low operating cost is grade and, obviously, scale as well. It's a sizable deposit, so you get economy of scale with good grade. That's definitely going to give you a pretty robust scenario.

Gerardo Del Real: The other way that we mitigate risk here is through the designation of the project. I believe it's been designated a high-priority infrastructure project. I've been pretty expressive about the bipartisan support that the project has received. I believe that's what will lead to a favorable permitting decision. 

Can you speak to the antimony aspect of the project? It's a gold project. That is the dominant metal here, but the antimony absolutely has helped move forward and expedite, I believe, the permitting process, despite the many delays. Right?

Stephen Quin: Yeah, absolutely. Antimony has been declared a critical mineral by the Department of Interior. It's definitely attracted more interest than just its economic clout would suggest. It's a byproduct that produces about 5-ish percent of our cash flow, but we would be the only domestic mining producer of antimony in the United States. There's basically none in North America. It's a Chinese-Russian dominated commodity. 

But it's essential for the defense sector, energy sector, many other sectors as well. That's why it was designated as a critical mineral. Because antimony was designated as a critical mineral, we are the only project out there that has a reasonable prospect of production in anything like a reasonable time frame. It ended up, as you mentioned, the project being designated a high-priority infrastructure project.

What does that mean? Essentially, it means improved coordination and collaboration between the federal agencies to get the project through the permitting process. You look back, and permitting in the U.S. seems to take forever and is much more time consuming than in other jurisdictions. But we're definitely seeing a lot of attention to the project from significant levels of the agencies because of the critical minerals aspect. It brings another layer of attention to it because of its potential to address a strategic interest in the United States. I think that's a positive viewpoint that helps the overall project move forward.

Gerardo Del Real: The public comment period concludes on October the 28th, and it's incredibly important for everyone in the space that wants to support responsible mining and a project and a team that actually will leave the site in better condition than when you found it. Right, Stephen? This is, frankly, a unique project in that sense. How can people take the five minutes that it takes to comment and opine in support of this project? How can people get there?

Stephen Quin: Sure. It's worth reiterating. We often talk about economics, Gerardo, but this is an environmental good works project. This site was the largest antimony-tungsten mine in the United States during the Second World War/Korean War, but it left a huge amount of mess and impact behind. Our project is designed to remediate and address all of that impact. It's not just economically a good project with lots of jobs and taxes and benefits to investors, but it's also environmentally a good project. 

It's therefore important that the public comment during this comment period. We're about 70 days into that comment period. There's roughly a week left to go till October 28th. It's really important that investors, whether they be investors directly in Midas or just in the mining sector, that regulators hear the voices of investors. They want to see mineral production in the U.S. They want to see projects permitted. They want to see strategic metals produced. They want to see a site cleaned up.

We've made it very easy. We have what we call a comment letter starter. You just go to Count Idaho In, and a draft letter will pop up. Every time anybody logs in, a different letter pops up. If you don't like that letter, just sign in again to that same website, Count Idaho In, and a different letter will pop up. Then every letter can be individualized. You can edit the text, you can add your own text, you can add other points in that you believe the regulators should hear from you. Then you just press send, and it goes through to the regulators.

The whole process from logging in to pressing send will take you three to five minutes. If you go do the minimum and just like the letter that you see and you want to press send, three minutes and you're done. Couple more minutes to say, "Hey, I'm from Idaho," "I'm from Nevada," or, "I'm from Alaska." Whatever. "I support the mining industry, I want to see critical minerals produced, I want to see a site cleaned up." You can add that kind of text in, and maybe you'd spend five minutes on it. 

But it's really important, because opposition-type groups are and will mobilize their membership to go out there and say negative things. It's important that regulators hear both sides of the story. It's often hard to mobilize people who are supportive of something. It's much easier to mobilize people who are against something.

So I just strongly encourage people, if you have any interest in the mining sector, and given that you're listening to this broadcast, you must do, to take five minutes, go to countidahoin.com, and submit a letter. It will be good for your investment. It will be good for the mining sector, good for the economy in the U.S., and good for the environment.

Gerardo Del Real: I'm always very critical of companies that do things the wrong way and try to make it a point to, one, not support them and, two, point them out. It's great to be behind a project that not only will be incredibly profitable for myself and subscribers and the state of Idaho but also will actually make a site that's been long abandoned lively once again. I couldn't be happier to support your team, Stephen, and the project. We'll put a link up. Again, that's Count Idaho In. Stephen, anything else that you'd like to add to that?

Stephen Quin: No, I think I really appreciate the opportunity to say that. I'll just reiterate that it's worth spending three to five minutes on that comment letter and getting it in there, because getting this project permitted will be the big driver for value. Projects that are unpermitted tend to trade at a 50% to 70% discount to the value of the project. Projects that are fully permitted tend to trade at least around the value of the project. There's a significant upside in seeing us through that final steps of permitting. The comment period is a critical part of that process. The regulators need to hear it.

Gerardo Del Real: Again, final day to get that letter in is October the 28th, correct?

Stephen Quin: That's correct. So I'd try and get it in no later than the 27th to make sure it's in there.

Gerardo Del Real: Fantastic. Stephen, thank you so much for your time. I appreciate it.

Stephen Quin: Thanks very much, Gerardo, and thanks for the support.