Clean Energy Transition Inc. (GDO.F) Earnings Call Transcript & Summary

Hi, everyone. This is Sean Samson from Rogue Resources. Thank you very much for dialing in to our update call. We will get started now. It's our 10th call with investors. And after we see a strong feedback from past calls, we want to continue being good, transparent managers to your company. We'll do this by outlining what we plan to do and then keep you posted on our progress as we move forward. That's been our MO for quite some time. And all of these calls are accessible on the website, as will this call after we're done. So we are recording now as well. A bit later in this presentation -- we'll touch on this, but this 10th call is likely our jumping-off point for future calls where we -- now that we have relatively consistent operations, at least from the Rogue Stone part of our business. I think we're going to transition to regular calls on the quarters, as more grown-up companies tend to do, and that's the approach that we'll take. But again, I'll touch on that a little later in today's call. So I'm working off of the slides that were available on the Rogue website. So I'm moving through those. Page 2, if you're hearing my voice, obviously, that worked for you. Page 3, we have on here this e-mail address. [Operator Instructions] On the call is me, Sean Samson. I'm the President, CEO and Director, also the interim CFO, which we should have added on here, me since last call; and then joining me is Paul Davis, my technical colleague, also a Director, who's on the right side of Slide 4. Moving through important message on Slide 5 for all to keep in mind, and I'll get us started with Slide 6. So this is a snapshot of our current ownership structure. Our shares have crept up a bit since the last time we spoke. We still have them at a pretty manageable level. So in terms of shares outstanding, we're at about 35 million. If we add in everything, we're just under 53 million, so still staying at what I think of as a manageable level. And this is something we manage very closely. Dilution is not our thing. And because we, first and foremost, are owners alongside the rest of the investors, we don't want to be blowing that out in terms of how many shares are out in the market. We trade at $0.08. We'll talk about that a little later. But our share chart, we still think it's a pretty compelling value opportunity, which is actually the majority of today's conversation as we walk you through that value. Management still owns a pretty big chunk. And when we think a more broad definition, including friends, family and advisers, we -- around half of the shares are into friendly hands as we think of them. In terms of major shareholders, we don't have huge concentration. We have mainly high net worth investors from across Canada and Europe. For the full ownership structure, it's not just our equity though. But thinking about the dilution, a real focus for us was trying to continue to find opportunities for growth for our company without blowing out our share structure. We moved into, over the past year, non-equity financing, as we list in the bottom here of the table. First and foremost, on that list, we have $1.8 million of corporate debt. That is expensive debt, and it comes due middle of next year. That was the 12-month facility with a Canadian nonbank lender we moved into. We paid 12% interest-only payments on that, guaranteed against all the assets of the company. And that loan was really what led us by the second Rogue Stone asset and get into the cash-flowing operation that we will talk about today's call. Alongside that $1.8 million, we have $700,000 of what we call vendor debt, which is back with the vendor of the Bobcaygeon asset. And that is multiyear, out into 2023. We pay 4.5% interest on that, and we have not yet begun payments on that. Payments will start with profits. That facility also can be closed off on our side, paid out early, and that is actually our plan to do that. And then finally, as I think about non-equity financing, to give a full picture, we have a number of equipment leases to pay for our mobile fleet across the Rogue Stone business. Those range out to 5-year terms. They average around 4% interest. So that gives the whole picture. We have a relatively tight share structure, trading at a very low value. Huge amount of shares are held by friendly folks. And then thinking more broadly across equity, we have these pieces of debt that are being serviced through today's cash flow. And it's all part of our ongoing model that we're able to have positive cash flow on top of costs and servicing this debt, but that is our ownership structure for Rogue Resources. If I think about what Rogue Resources is, the portfolio on the right side of this slide, we have, as we've been talking about for quite some time, the 3 businesses. We have the stone business, the quartz business and the Timmins business. And we'll talk about all 3 of those parts on today's conversation. So Slide 7, I'll jump to. This is the slide we always talk about in terms of what Rogue has been thinking about for its portfolio from the beginning from when Paul and I took this company over in 2016 and began bringing in new investors and resetting the strategy. We look for grade, stage and jurisdiction with any asset we're going to add to the portfolio. And also, this is the way we think about the current portfolio that we have. So importantly, we have -- one of our lenses is that we want to see cash flow. And when we talk about the quartz and the Timmins business later in today's discussion, that is something we are tremendously focused on as well. We want to see cash flow from those assets in our portfolio. So these 3 things continue to be the focus for us, the criteria, as we look at both our existing assets and new assets we want to bring in because we want to become -- we want to be making money as miners. And that's actually a great segue to our Rogue Stone discussion, which, as you'll hear today, we are making positive cash flow from the stone business as operators. So Rogue Stone has 2 producing quarries where we're in limestone for landscape stone business, which we've been talking about since we got involved in these about a year ago. There are 2 quarries. It's our Bobcaygeon quarry, which we own 85%. Our partner is the vendor that sold us the asset for 15%. That is permitted for 20,000 metric tons per year. Metric tons is an important consideration because the permitting -- the regulation in province Ontario is all done in metric, but then the operations of the business, interacting with the customers and the way we manage our teams is all done off of imperial or short terms. So we are permitted at both Bobcaygeon and in Orillia for 20,000 metric tons per year, which works out to 22,000 short tons per year. So when we're talking about tons, T-O-N -- and we'll refer to tons through the remaining part of today's presentation. We have the capacity at both of these quarries to produce up to 22,000 of those short tons per year. So Orillia has been in continuous operation for more than 25 years. We acquired that in March of this year and began operations. So we have been stone operators since November of last year with Bobcaygeon, and we added, in March of 2020, the second asset, Orillia. And we have, in our stone business, the potential to produce 44,000 tons per year. Jumping to the next slide, Slide 9. Again, going back to just provide the overview explaining this limestone for landscape supply business. In terms of the stone, there are 3 major products that we talk about. So the products are primarily armour stone, limestone step and then flagstone. And we lay those out here. You get to these photos, the top half of this slide with the armour. On the left is Bobcaygeon, which is our real popular, desert-sunset color, which is that reddish-brown, which is a beautiful stone, very, very hard, and it's loved by the customers. And we are building the demand for that red stone from Bobcaygeon. At Bobcaygeon, we have non-red as well, which actually looks like the stone, top right, with Orillia, which is that gray, more typical gray armour stone. So the limestone step, bottom left, is a photo taken from Orillia. That is a hugely popular product. So that is -- basically, it's at armour level. And we're not going to talk about drill core in today's presentation. We have a lot of that available on our website. But basically, the way to think about these limestone assets that we have, from which we are extracting stone for landscape supply is you have different height benches. And the height of the stone determines which product it is. So stone that comes out at a height between, say, 5 inches and 12 inches and more like 10 inches qualify as limestone step. And that sells at a very nice premium versus the per ton price for the armour stone, the thicker material. And then alongside -- or I should say in between those levels, determining sort of this layered cake of a producing asset with the limestone quarry are at levels that are either thinner than step, and those are flagstone. So basically, we have layers of limestone that we know go down based on the diamond drilling that we did for each asset during the due diligence process and we have modeled out. And we know that we're able to pull these 3 products, and that is what we are pulling out of our producing quarries and selling into the landscape supply business, so armour, step and flag. If I jump to the next page, we have photos from out in the wild of this stone that has been installed. On the left is a new photo. All stone comes from our quarries, and you see the armour stone, the limestone step and then the flagstone installed into a new project. So all the stone on the left on Slide 10 is from our quarries. Those 3 are actually from the Orillia quarry. On the right, you see that -- we've taken the photo that was actually from a past presentation. This just shows you there are stone -- other types. So we have caprock as well, which is a minor product out of our quarries, producing that bench on the right. But you also have cut material on the right side, including step and also flagstone. So those products, we supply producers for those types of products. But importantly, we do not have the saws or the guillotines to be able to make material like that. We supply guys that do that type of material, but our focus is -- as you see on the left, it is bulk. And also, we skid material, but it's straight out of the ground and broken with an excavator to -- in terms of finishing it, but we don't do the fine edges like the cut material on the right on Slide 10. So armour, step and flag, those are our 3 main products, and you see there installed out in the market on Slide 10. Speaking about demand for a moment. The demand for our products where we sell primarily to stone yards, who sell on to landscapers or we sell directly to some large landscapers and end buyers. But there has been tremendous growth in terms of the landscaping business this year 2020, primarily because of COVID. There has been a home improvement boom that I'm sure folks have heard about, a number of reasons for that, including folks who are stuck at home. But also, there's the continued access to cheap credit, and it has led to -- and there's been broad media coverage of the lumber and labor shortages across the construction industry. And one study I was looking at on the Altus Group says of the dollars that are spent in the Canadian market through renovation, upgrades versus expansion. So $3 for every $1 that goes into expansion is going into upgrades, and that really is where the money is coming with folks improving and upgrading their properties. And that's been a big focus with the landscape stone business. So in terms of retail demand, there has been very good market this year for retail on the landscaping side. One company that I keep an eye on, which is one that you're able to attract publicly, is SiteOne. That's a roll-up in the U.S., primarily landscaping businesses, and their stock has doubled over the past calendar year. But they are a good benchmark for how, generally speaking, the landscape business is going, and it's been going great guns. And part of that is the sale of limestone within that business. So there has been strong demand growth this year, and it's been a good market for us to step in and start the sales from these 2 quarries in terms of that general growth with the renovation boom. Alongside that retail business has been general infrastructure business. Now this is a recurring part of our story. There has been significant environmental impact, especially in our part of North America with the radical shifts in the Great Lakes water levels has led to significant infrastructure investment to try to combat that problem. In addition, as you generally think about government especially in times of economic challenge looking to prime the economic pump with infrastructure spending and a recurring theme in the U.S. is this idea of Infrastructure Week, especially with the leadership of the current White House. But we anticipate that with the inevitable government spending that's going to have to occur as North American governments are looking to build back their economies, big parts of that will be infrastructure spending. And with that will come demand for the type of product that we're selling. So that's a touch on the demand side of this limestone for landscape supply. Now I'll hand it off to Paul as he walks us through how we actually get the stone out of the ground and how our operations look like.

Great. Thanks, Sean. We're on to Slide 12 now. The limestone for landscape quarries are a simple extraction business that does not require any drilling or blasting. Natural layers within the limestone allows layers to be popped out with an excavator or a loader with forks. The photo on the top left shows a specific or specialized bucket we recently bought for the Bobcaygeon quarry, not the actual bucket in that photo and not our quarry but it's for representation. And it does a great job of sliding right under the limestone unit, chopping the layer, and a really heavy-duty bucket that can withstand all of the pulling and forces generated during this process. Large pieces that are pulled out are broken apart into the desired size and shape depending on the customer requirements, as depicted in the photo on the top right. You can see a large metal cylinder weight that the operator uses to drop onto the stone and break it along its preferred seams to the size that clients like. All of the anticipated production will come from limestone beds within a few meters of the current quarry floor. They are not very deep operations and it's all very surface. All of our quarries currently are permitted only to extract material above the water table. So we have limited requirements for doing any type of water management as well. Remediation of quarries in Ontario is straightforward, and a royalty is paid into a reserve fund managed by the TOARC. Progressive rehabilitation of the site is required as sections of the quarry are depleted. As Sean mentioned before, the different products and the types of packaging, these different products are found at different horizons, and a single layer will generally produce the same style of product across the entire quarry. In combination with the drill data we have, that's how I modeled up their operations in the future production by product for each of our quarries. Once sized and placed on a skid, if required, the product is lowered directly on a Rogue truck and off to customers for delivery. It really does eliminate much of the handling and middlemen that I've seen in other extraction processes throughout the mining industry. So let's move on to Slide 13, which is the discussion of the operations. This gives you an idea specifically what we have at each quarry. Since both have the same volume license, we think about resourcing each very similarly. Each quarry includes a midsize excavator. For Orillia, we have a 30-ton excavator. For Bobcaygeon, we have a 20-ton. Both have a mini excavator for pulling, shaping and sizing and loading to pallets. In terms of loader, each quarry has a midsize unit with a smaller-sized unit, each used for loading flatbed, general site cleanup and moving around of our inventory. For manpower, we require operators for each of these more important pieces of equipment. Plus, there are 2 different laborers per site for packaging the skidded products and general support. We purposely resource each quarry with a plan to ramp up to the permitted rate. We think we're on track for that as we improve our internal systems and practices. There are a couple of specialized additions to what we show here. As I mentioned, we bought a slab bucket attachment for Bobcaygeon, and we also have a new dump trailer that -- really that will help us manage our waste. Plus, we rent a skid-steer to help laborers through the summer at Orillia. Other than those add-ons, it's pretty straightforward setup in each quarry. I know this was a focus of the February call, but I'll repeat it now. This standardization is worthwhile for being able to swap between sites, parts, men and even just ideas. And also, it's part of having a very predictable business. We modeled it out and do all of our preventative maintenance. We have some redundancy here with the site. For example, we can still load trucks if one motor or tire fails or has a breakdown. Trying to get this as predictable as possible not only makes it less stressful for me, managing -- to manage the operations but also sets up for being able to bolt on more sites and apply our practices across the entire operations. So what have our experiences been so far? If you want to move on to Slide 14. Now we'll talk about it. As Sean mentioned, we got into Bobcaygeon last November and operated mostly straight throughout the winter. We were into it really in March, making sales almost immediately after we closed the transaction. I was just talking about predictability, but all the predictability in the world didn't have us predicting how hard the pandemic would hit Ontario, and we chose to suspend both quarries in late March. I say chose because based on our aggregate permit, we could have kept going as an essential business, but it was -- just wasn't the right thing to do. Our operation -- operators need to focus on their families, and we paused for what ended up being a month. Through this period, we were in regular and consistent contact with our customers and our suppliers. We needed to keep everything warm to be able to hit the restart when we thought we were ready. Sean had his hands full with the various creditors, negotiating a release in the case of the corporate debt just a couple of weeks after it had finally all been agreed and we used their money to buy the Orillia quarry. Some government funding helped. We were able to tap into the CEBA loan from the Canadian government and the CEWS to help with payroll. At the corporate level, we canceled our lease in February, knowing we would be spending more time at the quarries and working from home. But during the temporary closure, we seemed to be working harder than ever, trying to keep the bus rolling. By late April, we have developed a detailed set of guidelines for the operators. And when we brought the teams back, we all discussed and agreed this pandemic protocol, which we use at both sites straight through to today. Since April, we've been back into phased, steady and continuous production, and we completed our full punch list of outstanding issues with the Bobcaygeon permit. And at summer's end, we qualified for commercial production as of September 1. I'm pleased with how our teams have worked together through this period, and they're focused now on continuing to grow our phased production. I really do think that this business can be a consistent and predictable cash flow generator. Now I'll hand it back to Sean, who will walk us through some of the details.

Thanks, Paul. So I'm on Slide 15, which is probably the framework that future calls will be following. So this summarizes where we're at and also shows you where we're going in terms of our -- especially in terms of our disclosure. So we produced, until the end of April, almost 1,800 tons -- I should say we sold. We produced more than that. This doesn't incorporate the inventory we had sitting at the end of that specific period. But that was, as you see across the top Slide 15, the reporting period for fiscal 2020, where end of April, at that point, we had sold almost 1,800 tons. Now for that, we averaged $63 in terms of revenue per ton. And we subsequently disclosed the costs related to those tons, and those were negative up until that point. And that was really where we stood after the COVID shutdown. So after the COVID pause, we have the May to July period. So that was our Q1 2021, where we sold a little over 5,400 tons, averaging $82 per ton, top line. And against those, we had direct expenses of $42 and then additional site prep and rehab, which is a cumbersome term, but it kind of relates to the CapEx applicable to those tons, but that was an extra $11. So the full cost, if we could think about it, would be something in the range of $55 per ton for the tons that came out in the period, May through July. So our top line was $82 and our costs were between $50 and $55, which is really the business. So that's low volume in terms of what we want to have 3 months in the spring/summer look like for future years. And also, as a focus on unit costs with a higher denominator, the unit costs will come down because there's a component of those costs, which is fixed. But that is a good representation of where things stood for that period of time. So since that end of Q1, we have announced our monthly volume, so tonnage, and also our sales receipts, so how much we were paid by customers or tons for the period August and September. So I'm being very detailed because we're leading to something here. So for August, we sold a little over 2,400 and we averaged $85 for that month. And in September, a little higher than that, a little just under 2,700, and we averaged $80 coming in top line for that. So what we also disclosed in our press release last week was with those numbers, we have reached commercial production, meaning that we have, across the stone business, produced more than 2/3 of our 2 quarries' worth of permitted production for a 3-month period, which means we're able to publicly disclose commercial production. But importantly, for investors and from the accounting side and speaking now as the interim CFO, we have an income -- we will have an income statement from the stone business in our future quarterly reporting. So we can begin talking about revenue and cost of goods sold. So for September, our revenue was $213,000. For future months, so October, when this month is done, I anticipate we will release what our tons sold is and also our revenue for the month in advance of us coming out with the quarter, so the Q2 2021. We will announce the month and then we'll be into regular quarters. And in this upcoming quarterly disclosure, we will have for 2 months in the 3-month period -- we're almost there, steady-state, a proper income statement that investors will be able to look at, where we will disclose what our revenue per ton and our cost of goods sold per ton. So a few things from this slide. One, we have been increasing the tons we're selling over each one of the months, again, since the COVID pause. And we're pleased with that momentum. And as Paul mentioned, we are gunning to have, on an annual basis, the permitted amount of tons sold from the business. Secondly, our -- we can see it here. Our sales receipts per ton has been greater than the expenses per ton. So we are from this business into a cash flow positive world, which is a great place to be. And this is really where we wanted to be, and we will continue to improve how much cash flow we earn per ton but also importantly increase the number of tons to have more units. So we will be reporting on this, again, like more grown-up companies about our quarterly results, and I anticipate that future calls with investors will be done on a regular basis each 3 months after we disclose our quarter. Then thinking about the future for us. Rogue modeled the business as annually averaging $75 per ton in revenue and then something around $40 per ton in cost of goods sold. And we anticipate that there will be minimal extra CapEx applied. I say that because the spending that we have done for site prep and rehab -- and again, this is sort of a Frankenstein slide because it's not an income statement, but it's trying to give investors the clearest idea possible of where we stand with dollars coming in and all the dollars coming out. We anticipate minimal CapEx ahead. Investors have heard from us before, explain that this stone business, once you step into the quarry and you get it up and running, there is minimal capital investment as you go along because it's a flat pancake at both of the quarries. We don't have large stripping campaigns that we need to do for pushbacks, or it's definitely not like a mining company would have, for example, operating underground where you've got a huge development spend. So in this business, there's pretty minimal CapEx required. The lumpy site prep and rehab that you see on the top right on Slide 15 primarily relates back to, one, upfront payments for us getting our fleet up and running on those fleet leases. Most of them included an upfront 10% of principal balloon, which was pretty big to manage. And then secondly, we had a large, for us, spend on Bobcaygeon, getting the permit back in line. We had, as we disclosed to the market, a punch list. We are working through an agreement with the ministry to get the permit back online, which we did. And everything is copacetic there in terms of what the permit -- what the ministry wanted us to do to bring that back on board. But going forward, we think of minimal CapEx in this stone business. So for investors, across a 12-month average of the calendar year, $75 per ton should be in the range for our average revenue and then $40 per ton should be in the range for our cost of goods sold. And we plan to ramp up those tons, as you've heard us say, to the full permitted value of 44,000 tons per calendar year. And again, that's 2 quarries, each with annual production permits that lets them produce 20,000 metric tons each. So for investors, if there isn't a clear forecast guidance for coming quarters, this is giving you an idea of how we think this thing is on an annual basis. So as we say here at the bottom of the slide, we do expect some variance across months and then also across seasons as well. So -- but everything is moving along in line with our acquisition model and the way we are forecasting at the business. And the numbers that you see there on Slide 15 give you a pretty good handle of how we think both the top line and then our expenses. So that's stone. Let's move on to the remainder of the portfolio, and I'll just touch on a bit for both Timmins and stone -- Timmins and quartz. Starting with Timmins, which is a couple of noncore assets which are currently out of the money at the metal prices. We have Langmuir, the nickel project; and Radio Hill for iron ore. So moving to Slide 17, talking a bit about Langmuir. So again, Langmuir is a close to 15 million pound nickel sulfide with indicated resource at 1% nickel across almost a 14,000-hectare land package for which we're less than 10 kilometers from a nickel mill, a mill that can process this rock. That's Langmuir. That is our asset. We had this on the books since Paul and I arrived. We have both, especially Paul, spent significant time in the nickel business. We know the nickel business, plus we know the North Ontario nickel assets, especially Paul, and the Timmins camp well. Today, if we look at the electric vehicle excitement, this has definitely begun to change things in terms of what's happening in nickel markets. And I talk about markets from 2 perspectives. From the commodity, this year since April, the nickel price has gone up over 1/3. So we're beginning to have these tailwinds for the strength of the actual underlying commodity nickel price. If we look at individual companies, there are a couple of regional comps that have really exploded in value. First and foremost is one called Class 1 Nickel, which trades on the CNSX, which is now valued at close to $75 million. This is a single-asset company. And it's very interesting to take a closer look at the asset of Class 1 Nickel, which trades as NICO. They have the Alexo-Dundonald Project, which is 45 kilometers east of Timmins, but that has, like us, an indicated resource, but it actually has less than 10 million pounds of nickel in indicated resource with a 0.77% average grade, so 2/3 size in terms of pounds of our resource and 3/4 of the head grade of ours. They also do not have a mill themselves and frankly are far -- are much further from a mill versus the Langmuir project. So again, the public market valuing this company at $74 million and there are additional parts of the resource with the secondary metals, but it is very surprising to think that the market values this company at roughly $7 per nickel pound in resource. So that's Class 1 Nickel. A second one that we keep an eye on is our friends at Canada Nickel Company. So they are CNC on the Venture. They are a broadly marketed company, where they are valued at $133 million. Many of them are front of the team that used to manage the Dumont project for many years, especially when Paul and I were -- used to be in the nickel business. But CNC is a single-asset company whose asset is a project that looks a lot like Dumont, one that's called Crawford, and it has a large nickel resource, 3.4 billion pounds but at a head grade at 0.25% nickel. Now CNC's play is that they are continuing to explore to get an even bigger resource. They intend to invest themselves in the processing part of the business. But as it stands, they have a grade of 0.25%, which is a very challenging head grade to bring in the production as a single-asset junior mining company, but the market is valuing them at more than $130 million. So it's very interesting to think about what's going on in the markets pertaining to Langmuir both from the commodity perspective, the nickel price beginning to really run, and also from the perspective of company -- individual company evaluation. So both have increased significantly. And very clearly, as we note here on Slide 17, there is investor interest in potential nickel investment stories, as you can see from the valuation of these 2 examples. So that's Langmuir, where there's a lot happening in the nickel business, especially in Northern Ontario. If we think of our other asset up in Timmins, Radio Hill, as you see on Slide 18, we're really watching the neighbor on this one. And again, Radio Hill is -- has been our iron ore project, but we think of it now as one that has very interesting gold exploration potential. It's importantly a 1,800-hectare land package, and it's on the western extension of the Destor-Porcupine Fault. So based on our interpretation and our mapping, it goes -- that fault goes straight through our property package, and it's southwest of the Timmins gold district of Timmins. And the project is surrounded, as investors have heard from us now, on 3 sides by a company called GFG Resources, which trades on the Venture. So GFG, they have consolidated what they call their West Timmins Project over the past 3 years. Part of that consolidation included the acquisition of Rapier Gold, which used to be a sister company. It was created out of the same -- the assets of Rogue Resources, and it was our geographic neighbor. Now it's GFG. They paid -- GFG did for those -- Rapier -- for Rapier, which had 16,500 hectares. So if you do the math on what was paid for Rapier back in the day on a per-hectare basis, they paid in February 2018 about $500 per hectare. So they are -- surround us and they've been actively drilling. As investors who have followed us or importantly followed GFG know, they drilled out, spinning in April of this year. They had a very nice hit from across their West Timmins Project. So that was a little over 71 grams of gold over 8.5 meters, and that was -- we looked at their map, right beside, in relative terms -- so within 4 kilometers, by our interpretation, of Radio Hill, again, on -- very near our interpretation of this Destor-Porcupine Fault. So if I think about what's happened since, GFG bought Rapier that had this success, hit with -- the gold hit right beside the Radio Hill property, and gold has been up 50% since they bought out Rapier in February of 2018. So again, we believe that our land package with Radio Hill is in the right spot. And this gold bull market, as it continues to develop, should be good news in terms of what value Radio Hill is for shareholders of Rogue Resources. Very clearly, we have our eyes open that based off of today's valuation for Rogue Resources, there is very little value ascribed to both Timmins assets, Langmuir and Radio Hill. So these are interesting ones to watch as things begin to heat up both with metal prices and in terms of Radio Hill, specifically with the success of our neighbor drilling on our edge. So the quartz business, jumping into Slide 19. So this, again, is our high-quality silicon dioxide for commodity to sell into the silicon metal business and also specialty, which goes into the fillers, primarily the countertops. And we have 2 assets there. We have the Snow White project in Ontario, and we have a very large, very interesting Silicon Ridge project in Quebec. So Slide 20 helps to summarize where things stand on this. The silicon metal market remains soft globally. And also in Quebec, things remain silent. But we hope that they are going to begin to move, as we'll talk about now. So this silicon metal pricing continues to be very low price for the actual silicon metal product, really complicates both plant expansion for potential silicon metal companies and even the current operations, so the silicon metal guys with whom we are in regular communication. It's been a very challenging time with soft silicon metal markets. But in those times, there are interesting opportunities. I spoke this week with a banker who is looking at both packaging up a sales foundry which had shut its doors and another one which is permitted and ready to go with an expansion and they're looking at actually growing a new silicon metal business. And importantly, they don't want to get slapped with their go-forward silicon metal business, and they're looking at potentially partnering upstream and becoming a vertically integrated, to some extent, company with their most important input for the silicon metal business with the quality of quartz. So it's a tough time for those silicon metal guys, but things are moving along and people are trying to move around the public leases to try to make something set. If I think in terms of the macro situation for silicon metal prices, a potential increase in global protectionism, especially if it has an anti-China focus with -- as you see with a lot of the dialogue especially with politicians in terms of potential blowback for the impact of the pandemic. If protectionism increases, in particular with an anti-China focus, that should help the projects we've been trying to sell quartz to, where they've been looking to produce either at existing facilities or produce new facilities for silicon metal outside of China. That could be good news. But again, that's all just going to influence sort of how the puzzle pieces fit in. So again, we continue to be in regular communication with potential buyers of this stuff. I've spent a lot of time talking about the silicon metal side. We also, of course, continue in conversations with the countertops and the other fillers. But frankly, for our 2 businesses, the primary demand is going to be the large-volume silicon metal. So we can't make sense of turning on Snow White, for example, with just specialty orders. So to talk about Snow White, that's our asset in Northern Ontario. That has been tested. It has very low impurities, especially around one in particular where it's one of the lowest in the world. And again, this is all part of the calculus of silicon metal producers where they look at different silicon feeds based on what their potential buyers of silicon metal require. And it's good news to have very low impurity quartz because that helps with the recipe that potential silicon metal makers want where they want the lowest impurity in, which gives them the most flexibility for potential sales downstream from them. So that's the impurity side. And then importantly, the Snow White quartz has good thermal strength, which means that physically, when you put the stone -- when you put the crushed quartz into the furnace, it doesn't clump up and it allows the required chemical reaction to occur. So Snow White has good low impurity and good thermal strength. We have a good-sized resource and even bigger potential expansion that we don't have 43-101 on. It's fully permitted, which is important, and it's basically ready to go. We have our contract partners up in Northern Ontario ready, and it's frankly turnkey once we get those sales in place. The other asset in our portfolio is Silicon Ridge. That's a very large land package. And importantly, it's right beside a quarry that has produced and sold into the business for more than 50 years. We have a PEA on that with frankly home-run economics. And that will be a very good cash flow operation, but the main thing there has been that the permits have been delayed. And frankly, the timing has been unclear because we have not had good communication with the province to understand how things are moving along. We announced a new Board member for Rogue about a month ago, and his focus has really been to work with me to try to unlock value. We've already begun to have meetings with government and market participants in Quebec that we really weren't getting access to before. So stay tuned. We hope things move along on that one. And again, Rogue thinks we have good quality quartz assets. We've got Snow White with very nice silica, and we've got Silicon Ridge, which has great economics on a proven trend. So again, the message here is we think it has more value than 0, as it's currently ascribed by the market. Slide 21. If I think about really what ties the 3 parts of Rogue together, other than them being good grade deposits with hopefully close path to cash flow in good jurisdictions other than our 3 main criteria when we think about assets, all 3 of them are actually well positioned for climate change. So on the stone business, we talked about the water fluctuations. There have been very interesting studies by the Army Corps of Engineers in the U.S., which have linked that directly to climate change. And that is all just good news for demand particularly around armour for buttressing shores, and that's a climate change thing. If I look at Timmins, we have the nickel asset. We have sulfide resource, nickel underground, less than 10 kilometers to a mill. And if you believe we are part of that EV demand, which we have on the right there, if you believe even a smidge of what folks are saying in terms of EV growth, it's great news for nickel, and it should be great news for people who know they have nickel on the ground. And that's part of our Timmins business. That's why we're in there. And finally, if I think about the Rogue Quartz business, you take quartz like ours, you make silicon metal, the thing for silicon metal is it's put into aluminum and it's used in car bodies. And then the upgraded really good quality stuff goes into every single solar panel. So if solar is part of the world's future power generation, they're going to need silicon metal. And to make the good quality silicon metal, you need nice quartz like the stuff we have. So if I think about what ties together the parts of our portfolio, frankly, you can say, you would have created this type of business if you set out to create a small exploration and development mining company focused primarily on climate change. Slide 21, that's sort of the good news part. Slide 22 is the one that keeps me up at night. This shows you what's happened with the share price for Rogue that are -- since, frankly, we took over in 2016. So each of those parts -- and I won't run through them in detail, but each of these steps, I think we have strengthened our portfolio and especially with the recent stone addition over the past 12 months, but the market just hasn't woken up to that. This is -- a big part of this is on me. I need to be telling this story that we've run through today regularly and more broadly and get it out there. But in terms of where we sit today, I think of RRS as being a pretty deep value opportunity. So that's the run-through. We have questions -- additional questions have come through while we've been on today's call. But now I will move into the Q&A portion of the call.

So starting with the first one from a European investor. How do you think you'll update the market going forward? Okay. I'll take that. So as I touched on, I anticipate we will have regularly short calls on the quarter to talk about how we've done. And we'll come back to that slide where we will talk about how our costs look, so our cost of goods sold, which will be in our quarterly filings as it compared to the sales receipts, which we may or may not be disclosing monthly sales numbers as they go along. And again, this is about the stone business. I hope as we move along, we have some meat on the bones to talk about on a regular basis for the Timmins and quartz business as well. But as we stand, we will have quarterly calls to talk about the filings primarily from the stone business. And in addition, we'll, of course, be publicly disclosing any and all news on all 3 parts of our business. And we could potentially be jumping on calls like this if something large happens across any of our businesses. So that's how we think about reporting going forward. Second one from a North American investor. So on quartz, I understand roadblocks for Silicon Ridge, but there seems to be no process -- no progress on the Snow White sales. Can you give us any details on what's happening there? Well, I'll take this one. Again, on Snow White, we are permitted. And as I mentioned, it's a turnkey asset where we could be ready to go as soon as sales orders come in. Those sales orders are really predicated on the largest volume, which, the way we think of the business, will be for silicon metal. And silicon metal, as I mentioned, has been very soft globally. Things are still moving along. We do know that silicon metal guys like the quartz that we have in the ground at Snow White, but we just haven't been able to tip over into a sale yet. So it is something we're talking about. In terms of the macro, what's happening in the silicon metal business, we hope that it improves. And with improvement, we anticipate that something will happen on that quartz business. Next question from a North American investor. Is Rogue looking at any new stone acquisitions to complement really on Bobcaygeon? Paul, do you want to take that?

Sure. We are always looking for quality assets. And since we looked into the stone business as a whole from the top-down, we developed a database from active and inactive quarries that also contain the 2 quarries that we now own. We still maintain and update this database of all the A and B class quarry permits and licenses in the province. Currently, we review the database, knowing the opportunities that are available and potentially entering the market in the near term. We have CAs signed with a couple of groups, but that's not unusual. We always look at far more than we buy, and any transaction takes a lot of time to work through our process. One thing which is new versus the pre-work we did on the initial 2 quarries is that we are looking at the next ones along with our customers. Ideally, we buy assets that are already supplying our major customers and/or are ones that they want access to the stone.

Thanks, Paul. Next question from a North American investor also about stone. Do you have any plans to expand production beyond your current permits? And if so, what does that process look like? Paul, let's -- yes, why don't you talk about that permitting?

Okay. Thanks, Sean. We actually have thought about this question a fair bit as it seems like an obvious direction, but we've had initial conversations with the ministry and understand the process that would be required. It would be a multiyear effort alongside not immaterial costs related to acquired studies and fees. This was never a part of our base investment case for stone though we have not been counting on increasing the permit side to make the business work. Job 1, as we said, is to get safe production up to the current permit volume, then we'll see where we go from there.

Okay. Hopefully, that answered the question. Next one, North American investor on stone. How will you handle the winter? A few people asked this. There's another one. Will operations continue after quarries during the winter months this year? And what about seasonal restrictions on the road laws? Paul, why don't you do that?

Okay. Thanks, Sean. Winter does complicate things, of course. We operated Bobcaygeon last winter with good success in production. This year, we plan to work as long and as hard as we can, making sure it's still efficient and that our customers are still taking stone. I suspect and our model reflects that we'll have a short break around Christmas and then perhaps be off during the most difficult weather weeks of January and February, but we plan to operate as much and sell as much as we can. Regarding the restricted road laws, yes, there are spring restrictions specifically on the access road to Bobcaygeon but not at Orillia. We work -- we'll work around this and plan for it in our model. There are also challenges on the customer's end for receiving loads at yards and projects across our part of Canada and into the U.S. in -- during that time of year. We are finalizing our plans, and we'll work around any of these restrictions to ensure that production is not impacted.

Good. Thanks, Paul. Next question from a North American investor also on stone. You developed a market buildup for -- based off of -- can you just talk about overall demand based off of stone and with your customers? I'll take this. We have a good handle on the size of the market, and it's much, much larger for us -- much less larger than us, I can say, with very good confidence. So again, that limestone into landscape supply, if I think about our part of Canada and into our export markets in the U.S., we are a very, very small fraction especially when we focus on the small permitted quarries like we are now. So as Paul mentioned, we have an overall database of all the permitted assets in Ontario that we are churning through and analyzing. So the potential volume out of those is many, many, many times larger than what we are currently producing. So we are a small wedge in that, and we're trying to grow that wedge based, as Paul said, off of what type of stone our customers want to buy from us. And also, there's a component of this, which is how can we fill out our stone shelf. So for example, our largest stone from both of our quarries topped out at roughly a 26-inch level for our quarries that have much deeper stone than that. And the deeper stone is really what drives large infrastructure projects. So if I think about, in my mind, where -- who'd be actually buying, it's, as Paul said, what our customers be -- want to be buying, but then also, I think we do have a gap on our project -- product shelf of the much larger stone, in particular, for those infrastructure, large projects. With that comes -- and I think we've talked about this on our last call with investors. With that comes a bit of a shift in the model though where you can't be showing up at a quarry that has benches that are that deep and be operating with the equipment that we've currently geared up at our 2 existing quarries. So that's part of the trade-off. So that's a bit on how we think about the market. Next question from a North American investor. On cash -- this is -- almost sounds like from my wife. On cash flow, is management able to pay itself, pay management from the business? The answer is great news, yes. Management is being paid. We did go a period of time where Paul and I did not get compensated by the company. But now with the cash flow, we are paying management. And it all -- when we talk about us being cash flow positive, it's above and beyond covering all the costs, all the expenses of the business, including paying management. Next question from an Asian investor. Can you blue-sky where you think the company is going to go from here with the cash? I'll take that. Sure. As I think about the business, our focus over the past year has been get the stone business up and running and into that predictable model, delivering the cash flow. And we're beginning to see that, and we're excited to be able to talk publicly to the market about what those actual results look like. If I think about from here, the next big thing on the horizon is our large corporate term debt coming due middle of next year. We have the potential to extend that. But obviously and no surprise, at those rates, we would like to be able to transition that into a potential cheaper vehicle. So what I see for the business is continuing to deliver on the model and that being able to go. And folks who follow the company closely know that we were in touch with the Canadian banks about potentially financing these, who weren't comfortable with how much principal they're willing to offer to us because back when we did the Orillia transaction earlier in 2020, we didn't have the track record. So we continue to be in touch with the Canadian banks, and we're talking to them about our track record. And frankly, what they told us then was deliver on the model over a few months and what we can offer with changes. So blue-sky, I want to be in a position middle of next year to refinance that currently quite expensive debt with cheaper potentially bank debt and with potentially a higher principal value than what we need to repay that debt, which would allow us dry powder to go out and pick up additional potential assets. As Paul said, we already have our eye on additional quarries plus the potential to go into other parts of the stone value chain, particularly processing. So we're looking at potential small opportunities for us to invest and be able to go after not necessarily the sawn stone that we talked about earlier but maybe guillotined stone. And we have at least one company we're also under CA, like we are with other quarries where we're analyzing whether it makes sense for potentially getting into that guillotine business. So again, if I blue-sky, I'm focusing on continuing to deliver the stone business then refinancing next year, lowering our cost of borrowing, potentially getting new dry powder, moving on additional assets which could include additional stone in the ground, processing capacity, maybe a combination, and then growing that stone business. That's for Rogue Stone. If I think blue-sky across Timmins and the quartz business, on Timmins, I want to unlock some value there. Again, we want to see cash flow out of our assets. Those have been sitting dormant for quite some time. As I mentioned earlier today in our -- this discussion, I think things are moving on both the nickel and also on the gold exploration potential at Radio Hill. I'd like something to happen there. So blue-sky, I'd like those assets to be realizing some value for the Rogue shareholder. Similarly, over -- on the quartz side, I would like to see something advanced on the quartz business, whether it's we've got orders and Snow White gets moving, whether it's we get permitted on Silicon Ridge, Silicon Ridge gets moving, or whether it's in combination, we're able to extract value for Rogue shareholders in some other manner. I'd like to sort of unlock things and get them moving. So a big, long response. Blue-sky, the way I see things, is us trying to lever up more return out of the stone business by improving our financing and moving things along in those other noncore assets across Timmins and quartz. So I think that answers most everything and we've gone over an hour with today's call. So it looks like many people are still with us. So I appreciate people taking their time today to listen to what's happening. We tried to be as transparent as possible. We're running your company. We've unloaded a lot of information here on you but -- and we're always available. That e-mail works even between calls. So if you have any questions, please get in touch direct with management and we can help sort of fill in the blanks, on which there -- I suspect there are many because we covered a lot of material. But again, I'd like to thank you all for participating. And I was remiss to not include in the preamble, to pass along at this -- it has been a crazy time with the pandemic. We've seen it with managing our business, and I'm sure that folks are seeing it both in their business and also in their personal lives. It's a tremendously sort of -- it's filled with lots of chaos and turmoil, which I know everybody has to be dealing with. So our focus has been on our teams, our customers, our suppliers, our creditors and our investors. And that has been a huge focus this year. I don't think we talk or think enough about sort of the personal toll, the personal cost that comes with all the challenges of the pandemic, but I want to have everybody at the end of the line know that we're thinking of you. We are completely focused on getting a return. And I promise that, that stock chart that we showed earlier, that needs to improve. We will begin seeing returns. Our focus is where we know we can develop the value that's on the business. It is a criticism that we don't play this external investor game or at least the game part of the external investor outreach. We're going to start telling our story more regularly and more broadly, not necessarily playing the game, but you're going to see either something's changed, whether the share price is going to start going up and we'll begin to get valued or -- and I should have included this in the blue-sky, we'll begin to hand back a portion of these proceeds once things have stabilized and we're comfortable with our creditors, all of our creditors, and things are moving along with the cash flow. Something's got to change. So if the share price is going to go up, we'll begin handing things back to our investors. But I do know you're partnered with us. We've got your interest in mind each and every day with the moves we make, and we're here to talk about your company. So please do let us know. Well, thank you very much for participating in today's call.