AuMEGA Metals Ltd (AAM) Earnings Call Transcript & Summary

All right. It's probably a good time to kick off, Sam? Good morning, everybody, and thanks for tuning in today for a fireside chat with Sam Pazuki, CEO and MD of Matador Mining. He's joining us on the call from Toronto today in Canada, with an awesome image of Newfoundland in the background there. So today is a pretty interactive session. Sam will just talk through a couple of slides and then we'll start responding to some of the questions that have been e-mailed in. But if you do want to submit any questions on the -- during the discussion, just use the Q&A function down at the bottom. So I'll turn it over to you, Sam. Welcome, and looking forwards to having a chat today.

Yes. Thanks a lot, Alex, and thanks for setting this up. Welcome, everyone. Great to have the opportunity again to get in front of the camera here and engage with investors. This is something that I place a lot of value on, is having interactive engagement with the owners of the business. We did a webcast not too long ago, and I think that went 1.5 hours. So I promise it won't go that long. As Alex said, this is meant to be interactive. I've got -- I do have a few slides, which are all on our website and on the exchange. But I'm not going to spend too much time on any slide in particular. I just want to really get right into questions. There's been some questions that were e-mailed this week once this was announced. But I think there's a Q&A function here for others to ask questions or lob them in by e-mail as well. So we'll -- without further ado, we'll get going so that we could wrap up in half an hour. So yes, so I just wanted to start here just with the financing. Since the last webcast, this is something that we've been very successful, getting an oversubscribed financing in a market that has been quite unfriendly to gold companies, particularly junior exploration companies globally, not just in Australia or Canada, but really globally. It's been a challenging 18 months. I personally see light at the end of the tunnel for the sector. And I do have a slide in here on that. But for us, we -- when I -- I guess, when I set out 18 months ago with Matador, I recognize that we're exploration, we need the capital markets to fund our business. And one of the first things that I thought we needed to do is to ensure that we have the right investors who are going to support us through the long term, who understand exploration, know the risks involved, know the opportunities, obviously, and are there to support us through the discovery phase, and also support us during difficult markets, challenging markets that we're all going through at the moment. And I'm happy to say that our largest shareholders were very supportive of the financing, including B2Gold. And I'm also very happy to say that we had some very strong new shareholders join the register. And so when I look at the shareholder register now that Matador has, other than B2 and Shaw and Partners have, I've left the other names out at the request of the shareholders. But bottom line is that -- and one investor characterized our shareholder register as blue chip, and it absolutely is a blue-chip shareholder register. I was in New York Marketing last week, and I had one investor say, "You've got a better shareholder register than many producers." So we're very appreciative of that support. We're very appreciative to have the shareholder register that we do have. There was very strong support all year, particularly around our strategy to get a TSX listing, a few investors looking to come on board on the back of that. Fortunately, we're not there yet. And those investors weren't there as part of this financing. So that only means that once we get to that point -- there's no timing on it right now. But once we get to that point, we can further enhance the shareholder register. So we look forward to that.

Sam, if I can just jump in at this point because it's actually a great segue to -- the first question that got sent in actually was around this. You've got this lineup of great funds. There's -- I think between them, it's -- between the funds, B2, insurers, you've got about 50% of the register taken up there. I think is that right? There's sort of only 50% for retail and insiders?

Yes.

So you've got a -- it really is a blue chip register and very strong institutional presence on the register. Now a lot of them came in, in the last placement. The question you posed was like what was -- what attracted them, what brought them in?

Yes. So yes, absolutely, Alex. I mean 50% of our shareholders or 50% of the owners of Matador are these top 11 investors here in terms of scale. And you can see how much assets they're currently managing as part of their broader firms. So that also means we've got more firepower to continue to support us over the long term. I mean this is basically it here. I mean we've got a few different slides. Maybe I'll just actually show this slide here because this one really captures who Matador is. I mean each one of these bullet points are reasons for investors being on board with us. This is what drew B2Gold in as a strategic investor a year ago. We've got a massive land package. I mean this land package is district scale. This is what mid-tiers are looking for. They're looking for something that has the potential of not hosting just one economic resource, multimillion-ounce resource, but multiple. In my previous job, this is what we were looking for. We were looking for districts that not only do we have first-mover advantage on, but there was the potential of having a mine life beyond 10 years because we have the exploration potential to make more discoveries. Newfoundland is a top tier jurisdiction. It's relatively new because there hasn't been an investment in gold to the extent that there's been in other provinces in Canada. A big part of that is that there's a lot to cover in Newfoundland. So you have to explore differently. And exploration in Canada has traditionally been around deposits that have outcropped. So if you actually look at the names on this map, they're exploring things or have resources where the resources actually popped up. And where we have a resource, it's no different. And everything else though, 97% of what we have, is under cover, and that's one of the reasons why people have shied away from it. But as we've seen more recently in Central America, with First Quantum, I mean, it's getting tougher, too, to get mining operations in jurisdictions that are outside of, say, Tier 1 jurisdictions. So Newfoundland is a great place to be. And of course, we've got a highly experienced and reputable team. And we use -- we do things in the right way. We've got a systematic approach to exploration, and that resonates with a lot of investors. And I can tell you, right now, the new ones we brought on, I mean, these were -- all these points resonated with them, but they like our approach to how we're trying to explore this ground.

While we've got that image up, actually, that's another good segue, the Marathon Gold Valentine Light Project, which is just, what, 100 kilometers along the Cape Ray Shear from the northern end of your tenements. That's a 5 million ounce deposit, and that was acquired mid-month by Calibre Mining, who's a CAD 0.5 billion TSX-listed gold producer. So that was pretty interesting transaction just up the road from you. So how does -- the question posed was how was -- how does that change things? And do you see potential for more M&A on the island?

Yes. No, absolutely. I mean it's very topical. I was in Europe when this was announced and created some buzz for Newfoundland, for us specifically as well. We -- I guess, the question that people often ask is, is it good for -- is it a good transaction? Is it good for you? It's a great transaction. It's great for the project. It's great for Newfoundland. It's great for us. As you said, the project is on the same structure as we are. Again, when people are looking for district-scale opportunities, we've got 120 kilometers on the same structure that hosts that 5 million-ounce deposit. Calibre is a well-regarded gold miner, having taken assets in Nicaragua, generated free cash flow and used that to expand into the U.S. and now into Canada. So we're -- we welcome them. They're -- interestingly, B2 also owns 30% of Calibre. So 30% of Calibre and 10% of us. And then M&A in --- I mean, M&A is great. I've been a long believer in consolidation. And -- but we have to -- we also have to remember that AuTECO, another ASX-listed company, acquired Rambler assets in the Baie Verte area. So you're starting to see M&A activity in Newfoundland, and I think that's going to increase because there's a lot of companies that are struggling, not just in Newfoundland, but globally. And frankly, this is the time to do M&A., it's when people struggle. And when you start to look at your business and you start reflecting in the mirror, what's in the best interest of shareholders, that's when you start looking at doing these opportunities. Unfortunately, the mining industry has had some terrible M&A experience in the past, doing M&A when gold prices are at all-time highs and valuations are at all-time highs. But now is the time to do it. And I think Newfoundland is just going to heat up. There was actually another transaction announced. It's a much smaller one, with Marathon's neighbors to the north acquiring a bunch of EMS systems. They're called Canterra. So again, we're starting to see some more M&A happening in Newfoundland, which is great.

Well, it's interesting to hear B2 was on the register of Calibre, I didn't realize that. But the -- well, speaking to B2, they've got a $4 billion market cap dual listed on TSX stock exchange, highly regarded mid-cap gold producer with assets in multiple jurisdictions. They've got 9.9% of the register, I believe, maybe a little bit more off the last placement. But the -- how's the -- the question is how is the relationship with those guys going and how do you expect it to evolve? I know they've been on site a lot recently, so just keen to get a bit of a read on that.

Yes. B2 is an excellent...

Sorry, Sam. You've just gone on mute.

Yes. Sorry. I'm not sure how that happened. Gremlins. Yes -- no B2 is an excellent gold miner. I mean they got a track record that has existed for 30 years, creating shareholder value for investors during that time. They're excellent from top down. And from an exploration perspective, it's one of the premier exploration teams I've ever seen, and I've looked at a number of different exploration teams globally. Their conviction in us continues to be strong. We had a month's worth of B2 personnel on-site through our -- during our summer. And these are the most senior people at B2 that took time out of their busy schedules, and they've been very busy because they've been quite active this year with M&A and exploration, they took time out of their busy schedules to come to visit and actually spend valuable time on site, looking at the rocks, engaging with our team, looking at our plans, looking at geological data and coming up with insights, valuable information in terms of what we can be doing, what we should be doing. And it's just been an interactive relationship with them. They were a very strong supporter of the financing that we just did. And again, their conviction in us is very strong. So we look forward to continuing to engage with B2. Again, they're a fantastic partner. They're building a new mine in Nunavut. So after us, they invested in -- they bought a development mine which they're building. B2 is well known for developing. They build their own projects. And yes, we'll continue to foster that relationship and see where it goes.

Cool. I know that they [indiscernible] knows a consultant, Brett Davis, as well, kind of had a -- looked at a lot of the existing data with fresh eyes, and that seems to have changed how you're thinking about the central [ borehole ] or the resource corridor more generally, I guess, and thinking about different geological time lines for the gold and that sort of thing. So just keen to see how that's changed your thinking and strategy there.

Yes -- no. So yes, in addition to B2, as you pointed out, we had Brett Davis who's world renowned for structural geology. He's a freelancer. He's a free agent. He doesn't typically stick to one company. He provides these services to many, and many want his services. So we are very fortunate to have Brett on site for a couple of weeks looking at the rocks, looking at the geology. And it's really a fresh set of eyes to -- from someone who's looked at so many different structures globally. And the work that he's done has been invaluable. And we do plan on sharing his report with the market as well too. And I think it's important for the market to realize the complexity of the structure, but also the significant opportunity that exists on the Cape Ray Shear. He didn't get a chance to look at Hermitage, because there's only so much you can do in a couple of weeks. But we're already planning for his next visit, where he's going to spend more time on Cape Ray, but also on Hermitage. And for him being an Australian based in Perth, and Hermitage, that structure there, looks a lot like what you see in Victoria. So the Bendigo in Fosterville, it's the same age mineralization, it's the same pathfinder association with antimony and arsenic. So that one is much, I guess, closer near and dear to someone like Brett, who's from Australia. But the Cape Ray Shear -- Cape Ray and Valentine Lake Shear certainly provides significant opportunities, and his theories have basically challenged 30 years of geological theory on that structure. And what that means for us is we've got a bunch of new targets back within the resource corridor in the greenfield setting, all along the belt from top to down. So that's -- right now, as we speak, we are going through the ranking and prioritization in terms of what we're going to actually drill first. But again, the insights from B2 and from Brett, along with the work that we've done, and it's been quite extensive, is all information that we're going to be -- we've consolidated and it's going to come out to a 2024 plan, which is coming together nicely.

Cool. Well, you touched on Hermitage before, which is pretty exciting. We've had a few questions come in on that. Graham asks, what do you think is the earliest drilling can begin at Hermitage? And one that came in by another [ caller ], what do you like about it specifically to warrant your enthusiasm on it? And you kind of likened it to the Victorian staff and your firm talked about antimony before, so I guess it's something to do with that?

Yes. No, absolutely. I mean Hermitage is massive. It's 27 kilometers strike. It's 10 kilometers wide. It's just a massive area. And there's been very little in terms of exploration work. We had first boots on the ground in 2022, and that led to the 7.3-gram outcropping sample in a quartz vein. We followed that up this year with more prospecting work. And the way that we've approached it is because it's so massive, and we've got some data, but most of what you see on the map here is just not ever been explored, we've got to cast a wide net. And it's basically go out there, cover as much ground as you can cover, grab what you can carry on that day and just let's see what comes back. So I think we collected something like 700 samples, which is quite extensive in 2023. And we've published those results now. So everything is out in the open. The results of the top and -- sorry, to the west and to the east are listed there. And we're seeing significant quartz veining. We're seeing multi-gram samples. We're seeing anomalous gold. That 7.3 sample from last year was a follow-up to an anomalous sample that we had a month before. So we needed to follow up, and that's where we found that vein. We found the outcropping sample. So there's a lot happening at Hermitage. There's -- again, the work we've done doesn't even scratch the surface, no pun intended. But we're collecting all the data. We're looking at what we do next year. I'm hopeful, and I'm not making a promise here, but I'm hopeful that we'll be in a position through the work that we're doing, with the work we've done, the work we plan on doing, that at some point next year, in 2024, we'll have some drilling at a target at Hermitage.

Awesome. Could you say what -- guessing, would it be RC or diamond? Or what would you like to say?

Yes. So one thing with -- the way we're kind of thinking of how we tackle the problem of having such an extensive land package, which is -- I call it a problem, but I mean it's such a positive thing to have, is we can't just rush up with the diamond drill rig. We'll do diamond drilling, but we can't just rush into diamond drilling. We do have to work up the targets. The RC drill, we could also drill deep holes with the RC rig. So it doesn't have to be a diamond hole. We can use the RC rig for deeper holes. But the point of the RC right now is to do bottom hole base-of-till so we can vector in on where we do, we follow up with diamond drilling. So diamond drilling is of advanced targets. So things that we've worked up to the point that we're ready to come in with the diamond drill rig and have a higher chance of success. Alex, there's been vast amounts of -- whoever asked the question, there's been vast amounts of capital that has been wasted in exploration because people have gone in prematurely and drilled. Frankly, there's been things that have been missed because they've gone in too early with a diamond drill rig, drilled nothing and sterilized an area that could never have been sterilized. There's been too many examples of that. So I'm not here to weigh shareholder capital. I'm also not here to walk away from something that could be potentially massive. And Hermitage, we believe, has the potential, significant potential to be or to host a massive deposit. So even B2 has told us, "Don't rush this one." So that's -- we'll drill. I'm hopeful we'll drill next year. What type of drilling will depend on how successful we are with the work that we're doing to build this -- build up targets.

Awesome. On the subject of drilling, Graham's asked, winter drilling seem to be happening in various districts. Do you think that could lead to drilling all year round at Matador? Another question on the same vein, why is winter drilling so important for Matador and its shareholders?

Yes. So one of the things that we've been working towards, I guess, basically 18 months ago, but really this year, was let's get ourselves into a position where we can be drilling all year round, to the extent that we can drill all year round. We learned from last year's drilling, there are certain periods that you don't want to be out there in the field. It's just the weather is too inclement and the costs end up being a lot higher than what you would like. So it's not very efficient. So November, December, you typically don't want to be out there in the field because of the transition from the fall to the winter. And then, say, mid-March to mid-May, you want to let the snow melt, runoff and things to dry up. Outside of that, we're -- we've got to be out in the field. So we're -- again, we're working out the 2024 plan. We're working out the targets and doing -- going through the motions in terms of prioritization. We should have a plan together, I'd say, in the next few weeks or so. But the one thing I can almost guarantee is we'll be doing field work in January, and that field work would involve drilling. My guess at this stage, just given where we are and what we can do and what we're thinking we can do, is we bring that RC drill rig in, but we could potentially be doing diamond drilling. But to answer your question, we expect to do drilling in winter, Canada winter. Why that's important is we need to ensure that our business is operating pretty much all year round. And we're in a position when the field season is more ideal, spring and summer for us, that we've already done a bunch of work in the winter, worked up a bunch of new targets and we're ready to go hit the ground running when we -- when the weather gets even more favorable. Plus, we'll have news flow. Assuming we've got results, we'll have news flow all year round, and that's the position we want to be in. We're super excited about what we're looking to do for the winter and, frankly, what we're looking to do for 2024. And again, assuming that there's positive results there, we will ensure that there will be a regular stream of news flow.

Well, we'll look out for that 2024 plan. Sounds good. There's so many targets, it'll be interesting to see how that's prioritized. And one of them that's kind of been a standout is Malachite. I mean that's -- there's a gold grain analysis which showed that there's a very large area of -- prospective area, almost too large. So one of the questions was, can you explain why you're drawn to this target? And what are the plans there, if you can talk to that at this stage?

Yes. No, absolutely. I mean Malachite, when I joined 18 months ago, this is what we pivoted to. This map looked very different at that point. It was green and red. That's all -- it was just a Cape Ray Shear bending and it was green and red. We published some gold grain analysis work that you had mentioned, showing that there's gold everywhere in soils. Basically, the gold was oozing out of the soils across this massive area. Again, a reminder, Malachite is 15 kilometers by 4 kilometers. So it's actually a footprint larger than Marathon Gold. And it's 1 of 9 names we've got on our map, right? It just shows again the potential and the scale of what we have. One junior could have Malachite and spend the next 5 to 7 years doing exploration work here. You can see from the structures, it is incredibly complex. You've got the main share, the Cape Ray Shear, it's bending, and then you've got a bunch of structures that are splaying off of it, and then you've got a bunch of structures that are splaying off of that. We've done the prospecting, which has yielded very positive results. We've found the first-ever golden outcrop through that work. Drilling, we've begun is confirmed gold in basement. But again, these are massive areas that we're looking to explore. The area that we're targeting, first and foremost, is this big breakout structure. I don't know if you can see in my mouse. But we've talked about this through our recent news releases. So imagine gold, it travels across -- it's traveling down a highway, where you find big deposits is where you actually have off-ramps. And so the Cape Ray shear is your main highway. And so the gold is traveling down the highway, and you can see the highway starts to bend, and it bends quite sharply down here. And the gold wants to -- you know inertia, gold wants to continue going in the direction that it was going. So it's looking for an outlet. And guess what, right at the structural bend, there's this massive breakout structure, right? So the gold theoretically has then traveled up this breakout structure and what we need to find is where did it actually pool up and deposit, right? And again, this breakout structure is 12 kilometers long. So it's a massive area. It's a massive structure. And then you've got a bunch of other structures that are splaying off of that as well, too. The -- we've mentioned it before, but this breakout structure and the structural setting of it, we had B2Gold. The most senior exploration person at B2 looked at that area and said this looks like Obuasi. And his experience is actually West Africa and he's familiar with projects there, and Obuasi is a 60 million-ounce deposit. We had Brett come, stand in the exact same position and, again, independent of Victor from B2, he said, hey, this looks like Obuasi. So 2 people, independent of each other, who are familiar with massive structures and projects globally, have said that this thing looks like Obuasi.

So when you said that -- when you say Brett, Sam, you're talking about Brett Davis, the consultant?

That's right. Brett Davis, yes. And truthfully, there was a third geologist who we had a meeting with, who followed up with us afterwards. She's a geo from another mid-tier. She e-mailed me after and say, "Hey, have you ever looked at Obuasi? It's the same structural setting as what you have there at Malachite in that breakout structure." So yes, we've had multiple geos, independent of each other, say this thing looks like a 60 million-ounce deposit. Now we've got to do the work and prove that up. But again, we wouldn't know exactly where this thing pools up, and that's why the RC rig would actually be very helpful.

Is this -- you're going to use the RC rig up here in the winter, hopefully?

That's one of the -- yes, I mean, when we're looking at what we could be doing in the winter time, that's one of the options. It's to do the RC drilling through that bend and up the breakout structure in the wintertime.

There's -- you've got Mal 1, 2, 3, 4 and a bunch of other targets. Do you know -- it's probably too early to ask which ones you might be able to get a chance to drill in? But what's the preference?

Yes, right now, it's that bend and the breakout structure. That's where the focus is. When you have 3 people tell you that this thing could be a 60 million -- or looks like a 60 million-ounce deposit, it's -- you got to listen. And again, looking at the complexity of the structures there, it's -- we've got to be targeting that. That's our #1 target.

So is that Mal 3?

Mal 3 is nearby and the work we did is nearby. So it's -- well, it's in the same vicinity, but we're actually looking at the intersection of the bend and the breakout structure as our primary focus. But we will be -- the plans that I've seen anyways, we're going to be going up sort of that structure. And where you see a third-order structure coming off of that, that's another place of interest for us.

Great. We're kind of half an hour already, but there's a few more questions that came in by e-mail. And please, if anyone wanted to lob in any more questions by Q&A, please do that. We've probably got time for a couple more. But the standard -- well, there are criticisms I've heard here and there and someone e-mailed it in as well, is the drill results, they're not sort of the big splashy, exciting intersections, but they are showing the golds in the system. Why are they enough to get -- what about them is worth getting excited about?

Yes. And it's a fair question. I mean Newfound is getting 1,000-gram meter drill intercepts, right? There's a lot of sizzle there. We're looking for steak, and we're looking for a lot of it. And apologies to any vegans and vegetarians for that comment. But we are -- our drilling -- our diamond drilling that we've done is reconnaissance style. The prospecting is reconnaissance. We've got this massive land package. And we've worked up some targets, and we've gone in to test structures and confirm whether there's gold in basement. And when you look at sort of the broader map, I mean, look at, again, 120 kilometers, think about where you are today, and we're 120 kilometers from where you are, plus Hermitage. So the great news is that we've actually delineated gold in basement from Long Range to Malachite. That's a 60-kilometer stretch. We've got gold in basement over a 60-kilometer stretch, plus the resource that's in between. And that's the amount of ground that's just never been tested, never been explored. And yes, the results -- everyone's -- and we're hoping for big splashy drill intercepts on hole one, but you need to be lucky. You need to get really lucky to be able to do that. What we're looking for is there gold in basement, is there gold below surface and bedrock. And then when you actually looked at some of the big discoveries in Western Australia, but also globally, if you look at early results, if you go back and look at the early drill results that they had and what they reported, our results are actually technically better. But that's -- the point of it isn't to get a big, splashy drill intercept right away. Again, you're looking for gold in basement. [ ECRI ], their discovery hole was 22 ppm gold. And [ ECRI ] today is a 4 million-ounce deposit and growing. They haven't even delineated how big that is. In the context of Western Australia, you got Hemi and Gruyere as more recent examples. Look at Gruyere, they had 0.01 grams to 0.1 grams as the early start for the work that -- or the drilling they did at Gruyere. And that is now an 8 million- to 10 million-ounce deposit. Tropicana, same thing. [ I'm not sure if ] Sunrise Dam is blank there. But the point is, is that -- this is what we're trying to do. We're trying to [ vector in ] on these massive deposits. And this is exactly how these guys did it, and their results were actually of a lower tenor than ours and has led eventually to these big deposits that they currently have.

It's exciting. It's -- yes, looking forward to following the exploration next year, Sam. It's -- we've probably just got one last question to knock off. But just moving away from the exploration side of things back to corporate for a second. Just backtracking, there was a talk of a TSX listing, which hasn't happened yet. Can you please comment on the strategy of the listing and potential timing? I don't know if you can talk to that.

Yes. I think it's a big enabler for us to have that listing in place. We try different things to be able to achieve it. You could just go and get a listing with it. That's not really that helpful. You get no liquidity. You have no shareholders on the back of it. Unfortunately -- and it's a long story, so I won't get into it. But we weren't able to move forward with what we initially had planned, which was an RTO with a Canadian shell. Just wasn't understood by the ASX, and we weren't able to move forward with it, unfortunately. So we have no irons in the fire right now. We are looking at sort of getting the plan together from an exploration perspective, first and foremost, and getting out there into the field as soon as possible having just completed the financing. But the TSX listing, we'll look at it at the right time to see what makes the most sense and how we can get that in place, and again, I believe, unlock further value. Because there are shareholders in North America and in Europe that want to -- they like what we have, they want to invest in it, but prefer to buy the stock on the TSX. I had countless investors in Europe actually last week say, "I love the story. Once you get a TSX listing, I'll be there." That hasn't stopped a lot of these new investors. So we still have a ton of interest from those who can buy globally, and there are a number of them that can. But we can certainly unlock and tap into another capital market once that's in place. But we've got to do it in the right way.

Cool. Yes, cognizant, you've got quite a few of the [ instos ] funds based in the U.K. and U.S. and North America, and that might make sense for them as well.

Sure.

Well, unless there's any more questions, we're probably at time, Sam. So we can wrap it up there and just say -- extend my thanks from the investors for your time today, this evening over in Toronto, for running through that. And thanks to everyone for dialing in today and for submitting questions before and during. And yes, thanks once again, Sam. And...

Yes. Well, thanks a lot, Alex. Thanks a lot, Alex, for setting up, and I appreciate everyone dialing in. I think there's a replay on this that we'll put on our website. And we've got -- yes, we'll come out with plans for 2024. We also still have the SPP that's open, that closes on December 4 for any investors interested in participating in that. That's -- I guess that's a reminder to invest alongside the [ instos ] that we had mentioned earlier. So I appreciate everyone's time. We want to do more of these, these engagements, maybe every quarter. But you can always reach out to me outside of that. So thank you.

Thank you.