Aurania Resources Ltd. (ARU) Earnings Call Transcript & Summary

Okay. Let's get started. So this will be a company update for the shareholders. Let me just -- the usual forward-looking statements. I have to show here. Okay. So what to expect in 2024 or 2025? Well, when I started all this stuff, started this company way back when, my beard was black, my hair was dark. I know I've gone great, and it's been a long wait for everyone. But this is, I think, is going to be our year. I really do believe that, and I'll tell you why. So Exploration Ecuador. So we're prepping Kuri-Yawi to be drilled later in 2024. We do have three quotes from various companies to do an IP survey on that property on that project area. Now one of the reasons we're returning back to Kuri-Yawi is because it's right next to the road and it is -- has great access. And so unlike other parts of the property, as you probably know, are only accessible really by helicopter. This will be cheap and cheerful and we'll be able to get going and hopefully, we will produce some stuff that's going to actually move the needle for Aurania. Now here's a couple of things, some specifics. So people remember Crunchy Hill from years past, we're returning there. We have 4 samples that are in the lab right now, pending assay. One sample is coming from a quartz vein, which has found almost right on the border of the property close to Crunchy Hill. If you remember, Crunchy Hills has some epithermal veins, which Outcrop, it's a beautiful, beautiful geochemical anomaly showing all the Pathfinders of the various epithermal types. And this one sample came from a quartz vein which is 30 meters or so outside the property boundary and had, had visible gold in it. So it's not great. So we're chasing these things up and planning to do more work. And so this is a real positive. We're going to complete mapping at Awacha. Just a couple of weeks ago, we signed an agreement with the indigenous community in that area. So we have full access there. And we have only to this date, mapped the southern part of Awacha, we will be mapping at the northern parts and getting that ready for potential drilling in the future. We expect to find some good stuff there. And so onward and upward with that. Now exploration in France. So this is concerning the concession known as Epona, and Epona is in the southern part of Brittany. It's a high-grade gold area. You may remember a press release from last summer where I had a photograph of some gold from a vein. This is a piece of float that was found on surface. This area has never ever been tackled by a company. And God knows what's going to be in the subsurface when we get down to the bedrock. The idea would be to once we get exploration going just in a small way, it doesn't have to be a big, big program, but do some soil geochemistry over the area and getting it ready for bringing in a small backhoe to uncover the actual geology. The area has never been glaciated. So what you find on surface must be very, very close to the actual stuff that's in the bedrock. And in this case, the sample that I had last year had 46% gold in it, 46%. It's incredible bonanza type gold, and that's a great, great excitement. M&A, joint venture discussions. Well, we've had a major in the data room now for 3 weeks. We're still -- we have discussions every couple of days with them, and they're looking through our various geophysics, geochemistry, et cetera, et cetera. They're very interested in the work that we've done with the communities. And let's just see where that leads to. I really can't say more about that at this point. Community, as I said, we have an access agreement we signed to look at the north side of Awacha. And we're doing various community projects, both with the company and with my private foundation, and we'll talk about that in a second. Environment and Water continue to meet or exceed ISO 4000 standards and other opportunities based metals. Well, this is something that kind of fell out of the sky, it hit me in the head. It's very interesting. It's base metals in terms of critical metals. There will be more information about this forthcoming very soon. And it's got me very, very excited. It's a little bit of a departure from what we've done before, but this is just too juicy the pass up. And I'm sure that all the shareholders are going to be very, very intrigued and very pleased with it. So everyone is, I think, aware of where we're working down in Ecuador. It's the red block there. We have kept the block intact, so it's 207,000 hectares, says here a mining-friendly government in place. Well, President, Noboa, took power in December of last year. He has an approval rating of 81%, which is the highest any Ecuadorian President has ever had. He's been tough on crime. He's thrown more than 15,000 miscreants into jail. And it looks very much like he's going to win the next election, which will be coming in, I think, mid or early 2025, and then he'll have another 4 years' term. So we'll have continuity there. The government is in the midst of reforming the mining law. Now we know the mining law and the concession payments are tied to both what they call salarios, monthly salaries in Ecuador, which have been going up due to inflation plus all costs in Ecuador are denominated in American dollars because of Ecuador dollarized in 2000. So what that means is that it's been getting more and more expensive to work in Ecuador. The authorities are very much aware of this. Most of the players in Ecuador right now are Canadian and Australian companies, and it's just been almost cost prohibitive for them to work. So the government is working on new legislation to correct that and bring things more in line with the other Mercosur countries within South America. And okay, recap here. The red block there is where we are, 207,000 hectares. On our southern boundary, Warintza, Solaris, has been raising a lot of money recently and publishing some great drill results. I believe that, that is going to be a major, major force to be reckoned within South America in terms of copper production. It's just a great project. And then Fruta del Norte, which is that, saying that my former company, really in resources found, probably they're going to be producing soon, 0.5 million ounces of gold per year at a very high grade, around 8 to 12 grams per tonne gold. It is an exceptional deposits and certainly, the guys who are in the data room right now would like to find another one of these. We've got all the criteria there. It's a case of getting out on the ground and doing the drilling. And I have every confidence that if the budget is there and the money is spent, it will be found. It will be found on our project, but all these things take time. So I'm going to move on to the next one. So everyone is aware, we have four different types of projects here. It's very, very different from really any other junior company that's out there, because we have gold, silver and epithermal systems. We have your conventional copper porphyry, coppermoly, plus or minus gold porphyry. Silver-led zinc systems. These are Mississippi Valley type lead silver-zinc systems. And then sediment-hosted copper-silver, which is very similar to the sort of things that you find in the Zambia copper belt. This is exceptional. So any company that gets embedded with us here is going to have a long runway of potential projects here, which is a wonderful thing. So here's a recap of the company, the project areas. We have two epithermal belts in the South, which are about 30 kilometers long each. That is an exceptional amount of ground. There's all kinds of high-level centers all over the place, hot spring tech deposits, which are the sorts of things that you expect with high level epithermals. Sedimentary hosted copper is continuing through the project area for 22 kilometers. Again, that's exceptional too. Silver lead zinc for 14 kilometers and then the Awacha porphyry up in the Northeast is actually not a porphyry, but is a cluster of porphyries. Very much like, I believe Warintza to the south on the Solaris property, I think we've got a copycat of that. So Kuri-Yawi, a recap of here. Now the two photos you see here, very, very odd looking things. What they are, are literally a splash zone or the area around a hot spring deposit, where the water is bubbling up at geysers and hot spores -- hot springs and pools. And it's drenching the vegetation, the reeds, and any kind of trees in the area or whatever. And they get trenched with water, and that water is heavy in silica. And over time, the vegetation ends up in tuned in silica. So on the top right, you see these things looking like fingers. The core of these things is occupied by what would have been at one time a bull rush stem or something like that. Very, very intriguing kind of thing and the same sort of thing for the one down in the bottom left. You see all these little holes through it. That's where the stems would have been. So certainly, Fruta del Norte has a very, very pronounced center signature, epithermal-type signature. The top of the deposit has these kind of things. And we were just very, very lucky within the Aurelien case that when we drilled the first hole under the center, we hit the ore deposit. It's proving to be more elusive in this case at Kuri-Yawi, but all the components are there. And you can see various alteration types, these are typical of what you get in these epithermal type environments. Now here's another thing. Here, Outcrop results for the metal thallium. Thallium is not a common metal. It resembles arsenic and a little bit of trivia here back in the 19th century. It wasn't arsenic that was used as a poison of -- you've heard the stage play, Arsenic and Old Lace, and there was a movie made about it. They actually used thallium because it was harder to trace and much more poisonous. Now remember, this is not poison that we're entering into the environment. This is perfectly natural. It's been there for millions of years. But this outcrop result of greater than 20 ppm is actually high enough to be fatal to things like earthworms. So the whole area is sterile in terms of wildlife right in the vicinity of this and it's perfectly natural. But what does it indicate in the subsurface? Is there a nice gold deposit underneath this? Possibly so. We have to drill it and find out. Kuri-Yawi again, in terms of airborne geophysics, RTP here is reduced to pull in terms of magnetism and the blue is light is low mag, the red is higher mag, and you can see most of the Kuri-Yawi, the alteration is a green with an area of low magnetism and that usually indicates magnetite destruction from alteration processes. At depth, it looks like on here, the MMT, Mobile Magnetotellurics. We have a higher zone of conductivity, which probably pertains to sulfides in depth. Again, these are things that have to be drilled. We just really touched on them, scratched the surface in the past, got distracted away looking at the silver lead zinc and the copper, silver and sediments over zinc, and now it's time to get back to this, especially with the gold price, which is over USD 2,300 an ounce. Awacha, of course, everybody has been looking at the copper price, and it's been flirting with multi-decade highs. We have the same sort of rocks on surface that they have that we rinse it to the south where Solaris is, we have quartz-sericite-pyrite, QSP. That's quartz-sericite-pyrite alteration. That's standard alteration you get on the top of these systems. Look at the scale here. This is 1,500 meters right here. This area is quite immense. But we've only mapped the southern part of it, the southern part of it. It extends from north to south about 11 kilometers. So now we're going to be tackling the northern part of it, and that is going to be very, very interesting. Stream seds, again, here's a scale here 3 kilometers. This is a big area, folks. Stream seds, we've got lots and lots of copper in the streams, and that pattern is being duplicated by molybdenum, which is here. And that's exactly what we expect to find. Again, this is the Awacha target, soil, moly. We have enrichments in moly all over the zone, and this is only the southern half of the zone that's been mapped. When you compare it with Alpala, which is the so gold target, up near the border with Colombia, that's been getting a lot of press lately. They've just signed an agreement with the Ecuadorian government for exploitation. This is a much bigger area. And why is it a bigger area? It's because it's almost certainly a cluster of porphyries, not just one. Tsenken-Shimpia, as you probably are aware if you've been following the press releases, we found out that this area here in the center is actually what's called the graben. It's a piece of rock that's been dropped down between two faults. And early in the expiration, we believe that this was the oldest part of the property. We now know that it is the youngest parts and it changes everything because we find that the -- a lot of the anomalies of zinc and silver as well are clustering along the boundary faults of this porphyry this graben system. I might add that Fruta del Norte is actually sitting also in a graben system, and the mineralization seems to have crept up the boundary falls. In this case, we're looking at lead zinc silver. There might be other areas further south in the property where gold silver systems are following these kind of things. Copper silver is embedded sediments. Down here, we have a big cluster of stuff. We are intending to follow up on this, this year. But in a very, very controlled and cost-effective way, essentially paying a bunch of the local people to go out in the field and spend some time looking for outcrops of this stuff. It saves a lot of money. It's a lot cheaper than having geologists do it. And I think that they'll come up with some results very, very quickly. The basin model for all this stuff, this is -- it's a lot to take in, but here are the essentials. Here are the essentials. So, in order to have copper, silver and sediments, and this pertains to things like the Zambia copper belt, the stuff in Congo, at Kamoa-Kakula, that freelands mining, the Kupferschiefer, that the Polish Mining National Mining Company is mining in Europe. You need to have several things here. You need to have an organic, what we call a geochemical reductants. And that can be natural gas, it can be H2S, it can be petroleum. It can be carbon bearing rocks. And we have that in abundance in our area. Second thing that you need is a source of the metals. And this is red beds. Red beds are volcanic and sedimentary rocks that have been oxidized, naturally oxidized, so they were in the surface. You see this in desert areas all around the world, the rocks are red. The rocks are red because the iron in those rocks has gone century to rough. What happens, though, when that happens? The copper-bearing minerals in that rock like Hornblende like pyroxene will be turned into other minerals and the copper becomes labile, meaning that it can be moved around by solutions, okay? That's the #2 thing that's very, very important in this model. The third important thing is salt, and we have an abundance of salt on the property. And what happens here is that salt, when it dissolves in solution will react with this copper to mobilize it and make copper chloride. And the copper chloride can move horizontally in the groundwater, and it will continue to move until it hits a fault, a fracture, whatever, but it hits something that's going to disturb the equilibria and knock it out a solution. And it's usually carbon. And so we have a lot of carbon you see in this thing. The bottom area here is black shales. We even have petroleum in the rocks here. So we've got all the various recipe constituents here to make some large copper deposits. And in fact, the stuff that we're finding continues on the surface for [ 22 case. ] We just haven't had the wherewithal to go ahead and drill it. But we have a lot of targets here. And certainly, this is a great interest to the majors. So just very, very quickly, some of the community things here. I know that shareholders are always very interested in this. Micro emprendimientos, which means kind of entrepreneurial things, microbusiness. Dina here is learning how to make empanadas that she can sell to the local people here. There's all kinds of pictures here. We've been doing various things here. This gentleman up on the top left is actually learning to paint fingernails, if you could believe it. And beauty treatments have seemed to be very, very popular with the Shuar indigenous people in our areas. So we've been teaching people how to cut hair and how to curl it and all of this kind of stuff. This is at very, very minimal cost to the company, of course. And on the bottom of this diagram -- photo layout here, you can see a couple of ladies and mortar boards and there I am on the left-hand side, and I gave them their certificates. They completed the 35-hour course in micro business. So we're working with the church group, also with the national police and some other bodies as well, as well as my foundation, charitable foundation, a step forward foundation. This is coming at minimal cost to Aurania and minimal cost to the shareholders. I want to emphasize that, but it is making -- in terms of CSR and getting license to operate, this is a tremendous thing. Three young ladies here, unfortunately, and very, very sadly this family, they were orphaned by COVID, leaving 7 children. And we've managed to find them a place to live, working with a couple of other charitable groups. And you can see the lovely smiling faces here. This is a real, real -- I'm very, very proud of this personally. They're great kids. Of course, I did my usual stints at Christmas time with the local kids and hosted a number of community parties. This goes far beyond just dressing up in the Santa suit and going around. I always give an address to the local people, tell them what we're doing, what the intentions of the company are. And I don't know of any other CEO does anything like this, but it is extremely well received by the local people. And I can tell you right now, if you do not have the local people on site with you, you do not have a project. And we've been working at this now for many, many years, and we've made a lot of friends. Corporate overview, time of putting this together, our share price was $0.34. We've come off the deck, which is great. We did complete a financing very recently. Basic shares outstanding, almost 93 million. And fully diluted, we're at 134 million, I wish it wasn't that high, but there are certain realities in business. And this company has been around for many, many, many years, and we've tried to keep it as tight as we can. And I think that certainly, the next time we raise money, it's going to be at substantially higher prices than this. So that's about it to wrap up. Anybody who has any questions can get a hold of me personally. You see my e-mail there, [email protected], and I'd be very, very happy to answer any questions, either existing shareholders or perspective shareholders might have. Thank you very much.

So any questions from the room here? Tony?

Okay. We have a lot of hard work you've managed to raise three tranches, private placement. How much running room does that provide you and your team in terms of doing the kind of things that need to be done to really heighten ARU into a much greater value? In other words, what is in the realm of possibilities in terms of the money that you've raised? How much drilling?

Sure. Sure. Probably, the money is going to get us 3 holes at Kuri-Yawi. It's not going to get us any holes at Awacha. Work in Ecuador is expensive. We had a situation. We had to change the management because things got very, very expensive very quickly. And it looked like Ecuador was no longer the destination of choice, perhaps for exploration money. And we had really a 1 year, 1.5 years of hard times in the company.

[indiscernible] in Ecuador, who is Jean Paul Pallier.

Jean Paul Pallier, is still very much with the company. Yes. Yes. Yes. So we've made some changes. And one of the things that we've done is pivot towards Europe. And you will see more news coming out of Europe this year and not just the gold thing, but I did allude to a base metal possibility as well. The various bodies in Europe don't charge us any money for patent fees. So it's a huge expense to carry in Ecuador, and it's not there in Europe. So that's one of the reasons for that. But what we're having to, most of the project being accessible by helicopter. It's just very, very expensive for us to do, which is why we kind of pulled back. We can only do so much, right? Because the shareholders won't give us the money. The -- we need -- what are we going to need to drill this project properly probably in the order of $10 million, $20 million, maybe even more than that. And that's one of the reasons why we have a major in the data room right now, because it's going to take deeper pockets than we have.

Can you say roughly, what percent of your time is spent on the ground in Ecuador?

Mine?

Yes.

Not a lot until recently. Not -- I don't really have a big, big reason for being there. I'm not involved in the field work, but certainly, I review everything that comes in. My role has been more dealing with the politicians and especially in this last year because we've been in a negotiation over the patent fees. So -- and that's ongoing. It's not concluded yet. But I've met with various people in the government with the Deputy, the Vice Minister of Mines. I haven't met with a new Minister of Mines who's quite recent, but the former Minister of Mines, certainly, the Minister of Industry, the Secretary of -- the Private Secretary to Noboa himself, Noboa is certainly very, very much aware of who I am and who the company is and what we've been doing. Any other questions?

So by the time our Canadian Santa rolls around for the shareholders. Is there something that the shareholders could expect?

There's going to be a lot. Yes. And I can't directly address it today, but you will see a flurry of activity coming soon. That's about all I can say about that, right? Or the regulators are going to come after me. But none of this is completely definite, but we have been working very, very hard behind the scenes. Yes. As I said at the beginning here, I've gone gray while this company has been around, I don't want to drop in the reigns here, not having accomplished another win like a Brillion. I think that's certainly in the realms of possibility for the company. And I can tell you, I myself have been working very hard, so as Jean Paul and the rest of the staff to make it happen. I think if we get some sort of a JV or an accretive agreement with a major on Ecuador as well as getting a couple of things off the ground in Europe, then we've potentially got a home run.

You were going to mention or as you before touched on the hiding off of the Peruvian properties, [ that's basically copper properties. ]

Yes. Well, that was costing us. We had to maintain not an office, but a couple of staff in the legal sense in Peru. And it was just -- we're just spread out too far. It made a lot of sense at the time to make that acquisition. But if things were rosy like they were a few years ago in junior mining, we could have potentially split that off into a standalone subsidiary of Aurania. Unfortunately, that didn't happen. We do retain a royalty interest from Palamina, and we've got Palamina shares, and I think really considering that the -- we would have been presented with quite a large bill at the end of June to keep that property intact. This was really the best scenario for us.

Is their management well known to you?

Very well known. Yes. And they've had some home runs in the past. Yes. Yes. So that's -- any other questions? Sure.

I don't know if you can respond to this. [indiscernible]

Well, I know the President quite well. I knew Lukas Lundin quite well. And I met with him in Switzerland where he was living and, of course, he sadly, he's no longer with us. I think the company was not in a position to do anything because they did have quite considerable debt to do with the building of the mine. They bought back their streams, and I believe that they're now debt-free and throwing off cash. So it is -- and that's only happened very recently. So I'm waiting to see what is happening with the people who are in the data room right now, and I expect I'm going to get a decision from them very soon. As I said, they've already been in there for 3 weeks. So I think that's forthcoming. And then I -- if nothing happens there, they would be people that I would approach. There's other ones as well. Things have really changed in the last year because of the copper and the gold and silver prices. So the guys who are in the data room right now are very interested, because we got all the smoke and we have ostensibly the largest land package that's unexplored in the whole career of South America or under explored, rather. And we were the first people ever to tackle this thing, and we found just a boatload of things. I've tried very, very hard to keep the whole property intact, because absolutely as a great surprise to us, we find that the whole damn thing is mineralized, right? So what do you do in this case? Do you let half of it go? Do you let 3/4 of it go? It could be a gold company is interested in one part and not the copper asset or a silver company is interested only in silver, right? But I've always said that this gives us a lot of opportunity to potentially please a whole bunch of different people here. So we're waiting to see what the interest level is from these guys. They haven't done a site visit yet. Let's hope that's in the offing soon. And I'll go down there with Jean Paul and the rest of the crew. The crew has been mobilized, they are starting -- they are -- they have started work on the property again. So everyone's kind of been reactivated. And we're certainly ready to get somebody charged up there.

When do you expect to get the real permit from France?

Good question. So it's going out for public comments right now, and that will be between June 24 and July 15. So that's the period for about 3 weeks, I guess. Public consultation. We have engaged with a CSR company in Brittany to help us out with the message. You know what it's like when any company goes into a new area and wants to or they start engaging an expiration. There's a -- there's immediately a lot of questions from the community on what are your intentions, what do you want to do, how long are you going to do it, how many people are you going to hire, all this kind of stuff. And we need help with this kind of things. And unfortunately, it is very unfortunate that there are various NGO groups that don't play by the rules and try to get everyone riled up. And you want to give the correct message to the local people. When we started our work in Ecuador, every community was against us. And it was a question of winning hearts and minds. And now I would say, if not all of them, certainly 99% of them are in favor of what we do. And over time, we've hired more than 4,000 individuals from the indigenous groups. So this makes a real difference on the ground. And anybody out there can look at the track record of the company and seeing what we've done in places like Ecuador and early on in Switzerland, right? We worked in Switzerland. We drilled a couple of holes. We spent a bunch of money there doing an expiration. We didn't find anything that was economic and we returned the area to the states. We did all the reclamation that we needed to do, end of story. And no negativity from any government officials, nothing hanging over us or anything else. We did things in absolutely the correct way, and that's the way we always operate. So any other questions? No. Well, I guess we'll shut her down.