General Precious Metals
Velocity Minerals (TSX-V: VLC)(OTCQB: VLCJF) CEO Keith Henderson on Advancing Multiple Gold Projects & Potential M&A
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Velocity Minerals, Mr. Keith Henderson. Keith, we've been overdue for a catch-up. How are you, sir?
Keith Henderson: I'm very well, thank you. I had a lovely summer. Busy now, getting into the exciting part of the year, so it's really good.
Gerardo Del Real: Well, I can't think of a more perfect setting for a conference. Of course, we're at the 2022 Beaver Creek Precious Metals Summit.
Keith Henderson: Not too bad.
Gerardo Del Real: I know it's been a busy one for you. How are things going? How's sentiment here?
Keith Henderson: Well, I think markets are a little tougher, but never has put off the mining industry in its life. Everyone continues to move forward. We always survive these cycles, and we're looking forward to the next upturn. I think we all know what's coming next year, and it's going to be a good time.
Gerardo Del Real: Let's talk about something that I think is coming next year. You have a project that I think is prime for a takeout, and I know a lot of companies boast about that. You actually do the opposite. You're rather conservative about that, but I think even in public, you've acknowledged that there are some synergies that would make sense for the project to be bought by a potential suitor or suitors. So I would love for you to just provide a brief overview of that project, and then we can talk about why maybe there's some sense to what I'm saying about it possibly being a takeout target.
Keith Henderson: Okay. Let's do it in that order. Rozino was a project that we acquired a number of years ago, three, four years ago. It had some historical resources. We went in there with drill rigs. We spent efficient money drilling. We put together a resource that was three times bigger than what had historically been known there. We took it through resource, PEA, pre-feas. Now it's right in the middle of permitting. We haven't pulled the trigger on a full on feasibility yet, but we're doing lots of that kind of detailed engineering, getting it all ready for the permitting, and I see no reason why we can't permit this project.
Keith Henderson: We've got really excellent relationships with the local municipality, with the local communities. It's all been going really well, and, not to blow our own trumpet, I think we've been doing a really good job. We've been really doing a good job with the communities. We've been pitching the project just right, and these communities can look across the border and they can see what Dundee has done. Dundee didn't have the easiest time permitting Ada Tepe.
Gerardo Del Real: Right.
Keith Henderson: And that's a shame, but they got it permitted. They built it. It's operating beautifully. It's a lovely mine, and the community that lives right there, they're doing really well. People have jobs. People have a nice new car. So where we are working, people don't have to look very far over their hedge and they can see that everyone's having a good time, that the project's been truly, truly beneficial in a meaningful way for the community, so that's really helping us to garner support as well. So we've got a great project, half a million ounces, going through permitting, community support. I think we can get the permitting done, and I couldn't be happier with all of that. It's going really well.
Gerardo Del Real: So just to be absolutely clear, half a million ounces of gold, a very de-risked project, doing a lot of the work that could go into and feed potentially a feasibility study.
Keith Henderson: Oh, yeah. You have to at permitting stage, so there's lots of detailed engineering, and when we are ready, when the permitting is just there, we'll pull the trigger and be able to do the feasibility study as well.
Gerardo Del Real: You mentioned Dundee. Can tell me a bit about your neighbors.
Keith Henderson: My neighbors are 20 kilometers to the west. They've got a beautiful deposit. It's got, at this point, a fairly short mine life. I think it's about three and a half years from here. At the end of that mine life, unless they've been able to find something else that I'm unaware of, they're going to be closing the mine.
Gerardo Del Real: Right.
Keith Henderson: They've got a very well-constructed mine site. They've got a beautiful processing plant, and we believe that adding to that project makes a lot more sense than closing it down. When you look within 50 kilometers of Ada Tepe, there are exactly two deposits drilled to 43-101 standards. One of them is our flagship Rozino project. The other one's a project called Obichnik. Between them, they've got about 650,000 ounces of resources. 460,000 of that is in reserve category, superbly de-risked from the technical point of view, and pretty much the perfect project to add onto something like Ada Tepe so that they can extend the life of that project, further put off the closing of the mine. Who knows, if they were to acquire Rozino, perhaps there's time to find even more and to lengthen that mine even more, so it just looks like a sensible option. It looks like something that would be of interest to them. I can't speak to the future, but sure, it looks like a smart move to me to put these two projects together.
Gerardo Del Real: What is Velocity's market cap right now?
Keith Henderson: Oh, $32 million. We're creating about .2, .3 NAV. That's pretty much consistent with all kind of developer companies like us. We're sitting right where they're all sitting.
Gerardo Del Real: Right.
Keith Henderson: We're sitting within this market. That's just the way it is. There's nothing we can do about that valuation right now, but we know that things will turn around, and we'll be back soon.
Gerardo Del Real: It's a cyclical business.
Keith Henderson: Exactly. Yeah.
Gerardo Del Real: It's buy low/sell high. I say it often. You have to buy low to sell high.
Keith Henderson: That's true.
Gerardo Del Real: It's a two-part equation, and again, I firmly believe that you have a project that makes a lot of sense to your neighbor, and I think that valuation for that project is a tad bit more than the $32 million market cap that you command right now.
Keith Henderson: Yeah. It should be.
Gerardo Del Real: It should be. Keith, an absolute pleasure catching up. Thank you so much for your time.
Keith Henderson: Thanks very much.
Gerardo Del Real: Thank you.