GoGold Resources (TSX:GGD) - "One of the Best Assets I've Had in My Career" (Transcript)

August 8 2019, 15:07 GMT+01:00

We recently spoke with Bradley Langille, President & CEO of GoGold Resources (TSX:GGD). Previously Brad has created Billion Dollar Gold mines but thinks that this could be the best project he has ever worked on. They have all the cash they need so they can now start to focus on retail investors and help them understand the story.

Interview highlights:

  • Taking advantage of the Mining Cycles.
  • The Los Ricos Project - Finding out what is there and their plans going forward.
  • Shareholders and their expectations.
  • Retail Investment Market and accessing it.
  • Deliverables for the end of this year.

Click here to watch the interview.

Matthew Gordon: We spoke back in April. You gave the introduction to the company then. It was a new story to us. So why don't you kick off, give people who haven't heard the story before a one minute summary.

Brad Langille: GoGold is Mexico centered company. It's really all about the team. The main team players here have been with me, most of them 10-15yrs. Twenty two years in Mexico, building gold mines. Three mines built, plus one that we took over and doubled the production. So we have a lot of experience and open pit gold mining and underground gold mining. A lot of experience with the team in finding and developing gold assets. Recently, we've sold one of our gold assets to Agnico Eagle for $95M in 3 years. It was a great gain for us. And currently we have one operating mine, the Parrall Tailings re-treatment. And we have an exploration development asset, which is our Los Ricos asset.

Matthew Gordon: Tell us about Los Ricos, because I'd like to understand your thinking around timing the mining-cycle and timing an exit.

Brad Langille: LasRicos, in my 27yrs in the mining business, is one of the best undevelopedassets in Mexico. It's exploration drilling, but in a sense it's brownfieldsdrilling. And why I call it brownfields drilling is that the asset has atremendous history. It belonged to a US industrial family called the Daleyfamily. Marcus Daley Sr and Marcus Daley Jr. Marcus Daley Sr was the founder ofAnaconda, a very famous US copper producer. And he was one of the Copperbarons. His son and his brother-in-law went to Mexico in 1908. Thebrother-in-law was the US ambassador to Germany in 1917. Not a very good timeto be ambassador to Germany. But he also had very tight relations with thefederal Mexican government. They were in a civil war from 1910 on. And he wasable to get this gold asset from his connections. So they went in there in1908. They develop the mine. And they mined until 1929. They mined over1,000,000oz of gold. Very high grades. What they left behind was 25m wide orezone and they took 2m-4m of it. And that's what we're developing to a bulkminable open pit. David Duncan is our manager of exploration. And he's a realhistory buff. So when he heard of the Marcus Daley family connection. He wentback into the history books but he couldn't find anything in Anaconda. And hecouldn't find anything in Marcus Daley Jr. But then he researched thebrother-in-law, and there was a whole archive up in Missoula, Montana. In thatarchive, what we found were records that had not been opened for over 70, 80years. And they are the monthly records of this gold mine from 1908 to 1929.That includes all the surveyed assays, over 12,000 in the mine. What they tookout. What they left. What we're doing right now is grid drilling that firstzone. That's about 1km long. 25m wide and goes down about 900m. So that's ourdrilling. We pretty much know where to drill in the main zone. And it's justdefinition. It really is in a unique situation. One that I haven't heardbefore.

Matthew Gordon: What's the scale of this project to think for you? Was it going to be?

Brad Langille: Fromwhat we know from this historical data, plus 65 more recent drill holes and 30holes that we drilled. We know we're onto something that we think is big. Itcan be world class. We think it's multi-million ounce. I feel comfortablesaying that. We were working towards that 43-101 study. We've had a lot ofexperience developing gold mining deposits. I know of other deposits in Mexicothat are multi-million ounce, but they don't have the grade. What we see hereis real good grade. And it's been demonstrated from our drill holes that thishas a tenor of grade that I think will put it into that top 5% or 10% ofdeposits. And always grade is king. There's an expression in the miningindustry, grade will cover a multitude of sins. So that's what we have.

Matthew Gordon: You said before that the real focus has got to remain on Los Ricos because of the sheer scale of this. Is that that's still the thinking?

Brad Langille: That'scorrect. I think the real value that's created in the gold mining industry isfrom the discovery. And here we've gone beyond discovery. We know that therewas a gold mine there. We're drilling off that hill. But from discovery tobuilding into producing. That discovery to development to the point ofproducing. That's where most of the value for the investors is made. And thenthere's the production. And obviously in the production phase, there's a lotmore value made and on the execution.

Matthew Gordon: When we spoke previously your shares were at $0.34 cents. They're now $0.42, almost at the year high. Have you been getting quite good traction, quite a good reaction in the marketplace? I know you guys are big shareholders, between insiders and yourself. You have 40% of the stock. You've got some nice institutional and a bit of retail following you. So what are they saying to you? Are they saying 'You know what you are doing, just crack on', or have they got expectations of you?

Brad Langille: Thereare institutional investors that have been with us for many years from Gammon,Mex Gold, Nitrate to GoGold. And they know what to expect. We're realdevelopers. We do build gold mines. And I know, and I think our shareholdersknow, that ultimately the real value is in having real assets and bringingthose assets along to the point, where either they become gold mines or you'rebought by somebody else. And it's the same roadmap. So those investors arereally quite supportive and they're saying, 'do what you've done before'. Andthat's what we're doing.

Matthew Gordon: I quite like some of the structures that you have created previously, Santa Fortudis for instance. That was quite exciting. And you've got a track record of being quite creative with the way that you exit. You're seeing a big project. You've got the capability and we talked previously, you've got to be prepared to build it out. But have you got a better sense now from when we last talked about what it is that you have here and what you might do in terms of that exit? You just need to drill a bunch more holes.

Brad Langille: Fromdoing several of these, we know that there's a checklist. For everybody whetherit's a major mining company or mid-tier. There's a big technical checklist. Andwe go through that checklist and we know the steps that you have to take totick the boxes.

Matthew Gordon: The question I'm asking is, is it like management consultancy? You pretty much work out the answer real quick. It's just how you then pad out that report. How quickly do management in mining work out what it is that they've got and have some sense of where they need to go? Not just the checklist. At what point do you work out what this could be for you to say, 'We're going to maybe just navigate that path slightly differently because I think I know where this goes'. How early on do you come up with that?

Brad Langille: Awhile ago on this one. This one is a very, very unique situation. One that Ihave not had in my career before. There is enough historical data here. And wehave a strong team that when we look at this, we take that historical data andwe model it internally. We already have a number. And that's a very goodnumber. And like I said, grade is king. So we built enough mines and wedeveloped enough mines. We have one of the top percentile projects right now.We have a process we have to go through so that we can display what we have tothe investment community and the regulatory community. I see that we havesomething that is superior. I think maybe one of the best I've had in mycareer. We're now going through that process so that we can display it to theworld. The Denver Gold Show, for example, will be very important, that we'repreparing a lot for that gold show and is big institutional show. That's inSeptember. And we want to roll this thing out.

Matthew Gordon: That's where I was getting to Brad. It's just as fascinating to me that some companies can go through this process... You're still a small company, $70M market cap. Probably some of that's due the gold price going up since we last spoke and some of it due to your storytelling. Who knows what that split is. Some companies will go through a journey 2-3yrs without actually knowing where they're going to end up or working to a plan which says, we know what we've got. We know what we've got to do here, specifically. And we know what the end point is. Everyone's working towards the same plan. And that's what intrigues me about you guys.

Brad Langille: Webeen here before. And, yes, our market cap is only $70M Canadian right now.Since the first of the year we've doubled our market cap. And we doubled ourmarket cap because at the first of the year, we had sold our development assetto Agnico. We bought it for $9M. We sold it for $95M in 3yrs. So we're veryhappy with that. And at that point, we had $46M in debt. Because we have anoperating mine and that's what it costs to develop and build it. So now we haveno debt. We have a strong balance sheet and we're on to one of the best goldassets I think I've had in my career. And we also have we have a lot ofexperience in developing this. This is a unique situation. And we're talkingabout 1km that we're drilling off in the zone right now. It's a 3.2km. We haveanother area called CR Colorado. That's your traditional kind of drilling overthere, your of discovery drilling. And it's 1km of this, I would call itbrownfields delineation drilling on something because of this mass of data thatwe discovered. We are already basically know what's there and now we're griddrilling it off. So this is such a unique situation. I can see the value thatcreate $70M today. I've been here before with with Gammon. We were at $70M andwe went into Ocampo. Seven years later, we were at $2.1Bn. So we have a greatopportunity here. And a great team.

Matthew Gordon: I buy the track record. I buy the team. Cash generative. Los Ricos is a massive opportunity. I think what you just said about timing it, is really, really fascinating because we talked previously about where the market was. Your share price has doubled since the beginning of the year. I guess you can tell me it's got a long ways to go. You're good for cash for now?

Brad Langille: Youwere very good cash. We're not going to raise cash. We are in a cyclicalbusiness. Timing's important. I'll go with what I what I've said for years. Ourtiming is perfect. If you're there all the time, eventually it will be perfect.We're mining guys, we have to go with the down-cycle. We have to go with theup-cycle. Right now, I think we're coming out of the down-cycle. I think we'rebeautifully positioned, with one of the best assets I've had in my career toride into that up-cycle, which I believe is going to come in the next 12- 18months. We're gonna be solid into the up-cycle. This asset will have superiorgrade and bulk mining and it's really going to be one of the assets out there.We couldn't be in a better place and we're not we're not on our knees. We havea strong balance sheet. We have an operating mine. That operating mine is isdoing great right now. We just put out a press release a couple days ago. We'reat best production that we've had in the mines history.

Matthew Gordon: Great news. Let's talk about the things that you need to do. Great technical team. You've got access to capital of markets. You know how to run mining. What are you doing in terms of talking to the marketplace? You've got Denver coming up for institutional guys. But what are you doing for the retail market? How are you getting out there and telling the story to them?

Brad Langille: Wedo have a lot of roadshows ourselves. We just put them together to talk topeople that we know because over the last 20yrs we've raised over $1Bn inequity. So we know a lot of people. But Beaver Creek, Denver, Gold Show. Wewere over in London recently at the 121 Conference. We're working with Verify,which is a good visualization of what we're doing. I'm trying to get the datavisualized, so I can show our institutional and retail investors to try to getacross point of what I see.

Matthew Gordon: Verify is a very good tool. It helps visualise what's under the ground. But what are you doing to talk to retail? How are you telling this story to that audience, which is going to affect your liquidity? Because the institutions, they come in big money, they sit on it. The retail is going to drive the liquidity here and a bit more volume too. And that's what's going to drive the share price up. You've seen that work with companies like, RNC is one that springs to mind. But what are you going to do similar to those sorts of companies?

Brad Langille: We'regoing to push a lot more media. The newsletter writers obviously are as far asthe tie into retail are important that we get the newsletter writers. I'm a I'ma big institutional guy. I raised a lot of money institutionally. But I have astrong team behind me, not just on the technical side. Guys like Steve, who arevery good at  newsletter writers, drivingsome of the social media on the retail side. But we're on the pink sheets,which we never we want to be on something a little bit better received in theU.S.. And I'm not getting a full listing in the US right now, but we want tomake it easier for our US investors to trade in the US. We're driving a lot ofthose points and more in the development stage of that program right now. Thesummertime is is not a great time for a lot of marketing, but we're we're doingas much as we can. And into the Fall, we plan on pushing a big program that theretail investor can identify and  getvisibility.

Matthew Gordon: We will look out for that. What are the actual deliverables that we should be looking out for between now and the end of the year?

Brad Langille: Soas far as the operating mine. What we have been delivering, which is a betterand better quarters. It's a heap leach. So all heap leeches in Mexico areseasonally affected by the monsoon season, which started at the end of June andgoes until the 15th of September. We're in the monsoon and the mine is doinggreat. We've had 5yrs of experience now and our operating procedures, it'sdoing really, really well right now. So not much of a hurdle there. The SARTPlant at the operating mine will extract a whole bunch of Copper that we havein our system and give us back a whole bunch of cyanide. It's not an accountinginventory, but there's a big inventory over there of cyanide and copper when weturn that SART on. And that'll be ready by the 1st of January 2020. And whenthat turns on or payback and six months. On Los Ricos, we're drilling holenumber 31 right now. We have two drill rigs doing that brownfields drilling.And we're gonna step out a little bit too, and throw in a few discovery holes.And we'll been talking about some of those. We think there's potential thatwe're on to maybe another ore shoot which hadn't been developed in the past. Sowe're looking at the first quarter of 2020 to publish a Resource. We're leaninga lot on this data that we acquired. And a lot of that data is not justsampling data. There's a ton of metallurgical data. And that's one of the boxesyou want to tick. You can have a great grade and if you can't recover it, it'swaste. We got a lot of information on that as well. So we're gonna come with alot of comments as we compile this and then we say, 'OK, this is what themetallurgical shows. Now we'll do testing to demonstrate that'. But we alreadyknow the answer. I can't say that enough. Where we're drilling right now. We basicallyknow the answer before we're asking the question.

Matthew Gordon: So that's that's my sense of of this. It feels like what you're doing is just you've got to go through a process which is understood to be able to go, 'I told you so'.

Brad Langille: That'swhere we are. We're leaning along in history of this project. And I thinkthat's the theme on the wall behind me today. I'm in the the Lodge, a veryhistorical lodge. So I'm on vacation today. I'm off to the mine on Sunday.History has a lot to do with what we're doing right now.

Matthew Gordon: It's historical data. Some people lean on history, others lean on historical data to inform the future.

Brad Langille: Thisis historical data which was done very well.

Matthew Gordon: And well found. Brad I think that's a fantastic update. I really appreciate it. You've got to keep us up to date, especially around September time when you're coming back out to market. I think a lot of our investors have been chasing us for information about you. So it's been great to have you on today. But keep that information coming.

Brad Langille: We'll be doing that. We're very excited about the Fall. We're a little bit in the summer doldrums. It's very quiet, but we're getting our ducks in a row and it feels good.

Matthew Gordon: It's very exciting. I think the share prices reflect that. Let's see if you can keep that going.

Company page: https://gogoldresources.com/

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