General Precious Metals
Revival Gold (TSX-V: RVG)(OTC: RVLGF) CEO Hugh Agro on New Discovery & Upcoming Resource Estimate at Flagship 3 Million Oz Beartrack-Arnett Gold Project, Idaho
Gerardo Del Real: This is Gerardo Del Real at the 2021 Precious Metals Summit in Beaver Creek. Joining me today is the CEO of Revival Gold — Mr. Hugh Agro. Hugh, are we shaking hands!
Hugh Agro: We're shaking hands, Gerardo!
Gerardo Del Real: It's good to see you again.
Hugh Agro: Good to see you!
Gerardo Del Real: How have you been?
Hugh Agro: Been very good, thank you. It's been an exciting fall, a start to the fall, here with Beaver Creek underway, with the meetings we're doing, the drill results we've been getting. All good!
Gerardo Del Real: You touched on a lot of points that I want to get to. You've had an exciting high-grade discovery that the market has paid attention to and is finally waking up to. You already have a resource base of 3 million ounces. I believe that's headed towards 5 million ounces… and we'll get into why here soon.
But before we get into all of that, prior to you coming back to the business as CEO of Revival Gold, you were hugely successful. And so I would love for you to share with us, and the audience that may not be aware, of your prior incarnation in the gold space. And then, what motivated you to come back from that success and take the helm at Revival Gold as CEO.
Hugh Agro: Yeah. So happy to take the question. This is an infectious business. And I love the foundation of the gold industry. It's something tangible… something real. And in these times when so much is in the cloud, literally, gold is something that's tangible and something real.
And I've always had an affinity to gold and gold mining, which is where my background comes from. As you point out, I worked in the senior gold mining industry with Placer Dome and then with Kinross Gold. I retired from the business in late-2009… really just stepped back. It was, for me, a good time to do that… and I took up some other passions in my life.
You know I'm a big cyclist…
Gerardo Del Real: Yes, sir!
Hugh Agro: …and have a winery out west with a few partners.
But I came back to the business because I really did think that the gold price was going to go up. It was sitting at around $1,100 - $1,200 an ounce. I saw a very exciting project… I know we'll come back to… at Beartrack-Arnett in Idaho. And so, for me, it was a revival, it was a revival of my return into the gold business… a revival of a project… the team that we put together and the excitement around what we're developing at Beartrack-Arnett.
Gerardo Del Real: You're incredibly methodical and meticulous about adding high-value ounces, not just ounces, but high-value ounces. You were very clear in explaining that to me a couple of years ago when I first visited the project.
And what stood out to me then was the phenomenal infrastructure, the gold on the pads — which we’ve joked about — and the exploration upside. And all you've done since then is grow that resource base to 3 million ounces, as I mentioned.
You mentioned the gold price; $1,100 - $1,200. Here we are at $1,800… and this 12-month consolidation has really made it to where gold isn't the go-to commodity right now. I believe that will change. I believe that will change soon. And I also believe those 3 million ounces are quickly headed on their way to 5 million ounces.
And the reason I say that, in large part, is this new high-grade discovery at Beartrack-Arnett, which I know is something that you want to get into. Tell me about it.
Hugh Agro: Well, we're very excited about it. I mean, we've got this large, open-pittable resource. And what we want to do is now continue south in the structure to the higher grade potential in that deposit.
We've outlined a kilometer of strike with now 16 drill holes; the last two just released in the last four weeks. And we've got a core of high-grade in there between 4 and 11 grams per tonne over 1 to 5 meters of true thickness.
What that all means for the less technically focused is more gold, more gold production, more value to the project. And so that's an area of focus for us. And as you point out, we are not exploring for ounces. Ounces just for ounces-sake don't do anything. What we want to do is find value.
And through our modeling efforts and through our technical team's work, we know adding this area at Joss — which is this focus area for us — will be catalytic to our mill scenario at Beartrack-Arnett
Gerardo Del Real: Lost in the exploration success that you've had is the fact that you are likely about a year away from making a production decision, right?
Hugh Agro: Yeah.
Gerardo Del Real: Tell me what that process looks like.
Hugh Agro: Yeah, well, there's a lot of background work going on… some of the not so exciting geotechnical studies, metallurgical studies, environmental planning. But the essence of it is to do an updated resource for the first quarter next year and then to let that drive our PFS on the heap leach scenario.
And this is just the first phase of the project. But it's an important phase because it's got a low capital to it. It's something that we can, as you've pointed out earlier, we can leverage the existing ADR infrastructure. We'll save ourselves $40 to $50 million worth of capital in roads, ADR infrastructure, power; all of that's in place.
And so this is a quick restart scenario… something that will allow us to generate — at the current gold price — is $50 million a year of free cash flow. And it's deliverable by Revival Gold. We have the team, we have the project, we have the shareholders to support us through that step. And it's an exciting first phase to our next journey.
Gerardo Del Real: I have to stop you there… and I want you to say it again. You have the ability, and you see, how much cash flow?
Hugh Agro: Yeah, $50 million a year!
Gerardo Del Real: $50 million per year! What is your current market cap?
Hugh Agro: Our current market cap is got to be US$35 million, yeah.
Gerardo Del Real: So that's a discount of about $15 million to what you see you'll be generating in cash flow in year one.
Hugh Agro: Yeah… but look, to be fair, we've got a few steps to go through. So the discount is not entirely out of line with what's appropriate. But we can see the steps right in front of us:
Updated resource, PFS. We'll make a decision on the project; take it forward. We'll finish off the permitting. We'll do the construction financing. And we'll be in production potentially as soon as 2025.
Gerardo Del Real: In a time where jurisdictional risk is increasing and it's becoming a lot more obvious to mid-tiers and majors, alike, that are looking to replenish their reserves that are dwindling, and they're going to have to very soon — and by the way, they're cash-rich because $1,800 for those producers is very lucrative, right — how do you prioritize the next steps to make sure that you maximize shareholder value before a mid-tier or major comes and says,
"Hugh, $50 million in cash flow per year? How about we take it for a couple of dollars per share,” right?
Hugh Agro: That's right. Well, first thing is we make sure that we're communicating with our shareholders and they understand the game plan for delivering value. And I think we've got a supportive shareholder base. And management owns 11% of the company. So we're right there, lockstep, alongside our shareholders. And we will do what's best for shareholders.
We're not in this for the game of being managers. We want to create something that really makes you proud, makes our shareholders proud. And we do that by surfacing the value, by de-risking the project, by taking it forward, by getting closer and closer to being able to deliver free cash flow. And, ultimately, by handing that cash back to shareholders. We do that through dividends. We do that through share buybacks. And those are the steps along the way.
And if somebody says, "Hey, we want to take this off your hand," and they make an offer to our shareholders that our independent board feels is justified… well, we'll go that route too. I mean, we're not going to stand in the way of progress. What we want to do is surface the full value of the project. We do that by being communicative. We do that by de-risking. We do that through the drill bit. The recent results are an illustration of that.
We see the very nice reaction to the drill results we've put out in the market this week. And that's because people are starting to get it. They're seeing how these things all kind of come together and the vision that we have for this project and the value that we can create for shareholders.
Gerardo Del Real: Assays are pending?
Hugh Agro: Yeah, we have more essays pending. We're drilling right now in the Haidee area, which is oxide; all close to surface. And that has immediate value in the heap leach plan because we add — even just a year or two to that heap leach plan — and that goes right to the bottom line because we've already paid for the capital in the plan. So adding mine life has a direct impact on NAV.
So we'll have drill results out of Haidee. We'll have an update on our work with the metallurgy and test work there. And then, we'll get into our resource update beginning of next year.
Gerardo Del Real: I mentioned jurisdiction. And before I let you go, I have to ask you because the other thing that stood out outside of the infrastructure and the team when I visited the project was the strong community support.
This, at the time, is a community that was asking me, "Do you think this will happen? Do you think this will happen? We want it to happen. This has produced in the past. We want the jobs!" Is that still the case?
Hugh Agro: It is. We take that responsibility seriously… responsibility to be a good corporate citizen, to provide jobs, to employ locally, to use local service providers. We do a lot of communication with folks. We do an annual open house with the community at Salmon.
But yes, we're in a good jurisdiction. Listen, Fraser Institute puts Idaho number one — in terms of policy — in the world in terms of mining and exploration. And it's not that these guys are solely focused on the mining industry. What they're focused on is the well-being of communities.
And in these rural communities, a project like Beartrack-Arnett can have a significant impact; create jobs, create training, create educational experiences. And we return the property and land to the community for future generations to use… and we do that responsibly.
Gerardo Del Real: Three million ounces of gold. I believe you're headed to 5 million ounces. You have assays pending that, hopefully, justify some of that. You have a PEA. You have a plan. You have a great team. You have a great jurisdiction. It's a lot of boxes that you've already checked… pretty compelling opportunity!
Hugh Agro: Thank you, Gerardo.
Gerardo Del Real: Thank you for your time. Appreciate it!Click here to see more from Revival Gold Inc.