Compass Gold Corporation (CVB) Earnings Call Transcript & Summary

to Greg Taylor or myself, and we'll be happy to get back to you as quickly as we can. I guess, first and foremost, we have a number of shareholders in Compass Gold that are scattered across the world, across Canada, North America as well as Australia and the U.K. and Europe. And to all of those shareholders, although we're not able to get out to see each and everyone face to face through this webinar, we are able to express our wishes that people are managing to navigate their new normal in a way that is safe and healthy for them and their family. This COVID pandemic has, I guess, touched all of us in one way or another, and we'll hear a little bit more about operations and our team in West Africa and Mali as we go through. And with that, I think we'll just move through the presentation, which should be available to everyone. It's on our website and will be recorded as part of the webinar. So Sandy, if you could take us through the next slide. So we have a forward-looking statement, cautionary statement here for everyone's benefit, and we'll move past that to Slide 2. And here on Slide 2, we are just capturing the context of all of our operations, all of our permits for exploration outlined in red in Southern Mali. The key takeaway here, number one, this region continues to prosper, ongoing investment, ongoing exploration and operational success by international mining companies, really continuing through the circumstances of the pandemic. This truly is one of the preeminent gold regions in the world. Secondly, you'll note that Endeavour is noted just below our Yanfolila South prospects with their Endeavour mine. And now Endeavour, through the completion of the SEMAFO acquisition, is actually one of our largest shareholders, 10.8% shareholding. So whereas SEMAFO, Canadian company interested in moving from Burkina Faso into Mali, we now have a shareholder who is right on our doorstep, at least on some of our most interesting prospects. So that map continues to present a compelling picture for why Compass is in this region and why these properties totaling about 850 square kilometers, have continued to show their prospectivity and gained our confidence in terms of results to come. Before we get into the details of our work and what's coming up, because we do have Madani Diallo, Dr. Diallo on the line, I'm going to just invite him to touch on a little bit of his perspective about Mali, both from an operational point of view for Compass, the fact that we've been able to operate safely and effectively, and perhaps a little bit about where Mali stands in relation to this pandemic and some of the, I guess, domestic trends and issues that Mali is dealing with at the moment. So Madani, would you want to take a moment and just touch on some of that for our listeners.

Thank you, Larry, and hello to all our investors across the world. As you know, Mali has been a dominant region for gold exploration during the last 30 years. And on the same time, the country keeps improving in terms of political changes. The mining operations in Mali has been ongoing safely without any major conflict with the states and everybody is getting benefit of that. As far as Compass Gold is concerned, this is our third year of thorough exploration in South Mali, and we are well located in the close proximity of some gold mines, in which we have a pleasure and the honor to have been working in the past. In general, Mali has been a good mining district, mine region. Although it has not been political, it has seen political changes for the better. The first political change was the Mali in 1991, which saw a general uprising of the people against the military dictatorship that happened in March 1991. While the Syama Gold Mine operated at that time by BHP Minerals International was ongoing, and there was no disruption to operations. The next major changes in Mali political situation was in 2012 when a military coup happened. There has been a change of power. But again, there have been no impact on the 11 gold mines operating at the time. Right now, Mali is facing from a political standpoint of view, some instability with people -- the majority of people asking for a better governance. I would say that the first time in the region, in the whole West Africa region that people are not looking for good governance, better governance. And that movement will -- is ongoing for the last few months. It may end up in either a change of government or a change of policy. Today, there is an ongoing mutiny. We don't know how it's going to end. But the history in Mali is, Mali has seen 4 military coups, and each of the coup has been conducted with loss -- without loss of life. And any changes now will be for the better, as a major request will be better governance. Better governance, in most of areas, that mining has been one of the -- one area where we have always had good governance. Just because the mines have been operated by big companies and hope -- and Mali has been very lucky to have companies like IAMGOLD, AngloGold, now Barrick, and both companies are, I would say, straightforward companies. And mining has been very lucky to not have suffered any of the usual African countries corruptions and mismanagements.

All right. Well, thank you, Madani. And for everyone, I think that is important context in a few short minutes to summarize essentially 3 decades of mining history in Mali, is important for all of us to understand. And through our IAMGOLD team, we were there for those full 30 years, as has Madani been there. And we've seen our way through all those various stages. And we're very fortunate to have Madani and his team on the ground, our eyes and ears and feet on the ground in Mali, giving us the best information and really having excellent insight in terms of how mining progresses and will continue to progress, both at the exploration and production level in this mining district. All right. Let's move on to the next slide then. We're looking at an objective for this coming year. As Madani said, we've been working now 3 years trying to get our arms around more than 850 square kilometers of ground. All of it prospective in our view, multiple permits and obligations to work. And from this time last year, where we had a single -- we're relatively small target, albeit rich and high grade. We have been -- we've made the strategic choice to extend out, cover multiple target areas and opportunities. And our team and Madani's team, more specifically, have been successful in putting multiple large trend, drill-tested targets that bring us to what we would describe as the brink of resource definition. This work and these budgets and these plans are designed to get us to the stage where we can begin to define resources through drilling, closely spaced drilling before the end of next year. So that's our objective. As I've said somewhat jokingly to Sandy and Madani, we're not in the exploration business, we're in the discovery business. And that's what's going to return value to our shareholders, and we have our eyes firmly on that prize in the coming year. So multiple targets and high quality, well understood, clearly defined targets. If we move on to the next slide. As we said, these are trends. Some of them as long as 10, 15 kilometers in the original trend at Farabakoura to the north. We branched out in the early part of '20 of this year, from Farabakoura down to Tarabala, also an extensive trend. Our third trend, the Samagouela Trend, really, it's a potential play into an additional trend of Kourou there. But these yellow lines signify our understanding of trends based on multiple exploration tools, multiple overlay of drilling, surface anomalies, visible artisanal workings, all of which has been reported over the last several months as we've slowly put these pieces together. If we move on to the next slide. Now with respect to the 2 largest and most advanced trends where we plan to commence drilling, we're going to touch on the overall picture that we've derived from the existing work, why we're interested and excited about them and then specifically what we're going to do. Again, our objective is near surface, large open pitable targets, resources that can be quickly identified, drilled. And once we get to that stage, targets that have the potential to extend in terms of strike length and to go deeper, because most of the drilling is this campaign has been and will be in the order of 50 meters from surface. So for the first -- or sorry, for the highest priority trends, the most advanced trends and work, I'm going to turn to Sandy just to capture the results to date and more importantly, explain what we have coming up as soon as the rainy season comes to an end. Sandy?

Thank you, Larry. So I'll summarize with each of these trends. And then as Larry said, we'll move on to the exploration program. The first thing I'd like to highlight here on the Tarabala trend, which is in Sankarani permit, is in the bottom right-hand corner here. This is a typical size of a Malian open pit. So we're looking at 650 meters, 700 meters in length, about 400, 450 meters in width. So that's giving you an appreciation of the target size that we are looking for on a trend like the Tarabala trend. As Larry said, the trends are defined on geochemical results: Gold, geochemistry, geophysics, which is identifying faults, artisanal workings, and the rock types that are associated in that area. So pretty quickly, we identified the Tarabala trend here. We focused in -- earlier this year, January, where we did our first drilling on this permit and first-ever drilling on the permit. And you can see the sort of grades and wins we're getting. What we are looking for are wide structure 15 meters plus, and we're really looking for grades in excess of 1 gram a tonne. That's the typical grade of Malian gold system. 1, 1.5, something more than 3 grams per tonne really in Mali that we can set up high grade in this part of Mali. So we can see that we've got wins that we expect on the structure. We can see we have grades on the structure. And most importantly, we have defined what the structure is, the target. And the target is shown by this red line on Slide 6. And that is a fault zone cutting a particular rock type. That is conducive for the deposition of gold mineralization. Where we redrilled the structure. That's where we got the good results. Yes, we drilled other potential structures in January. They did not work out. So we now know what the primary focus is. The primary focus is the red structure. And our first period of drilling, which will start in late November, once the pads have been prepared in October, November, there's a 30-hole program shown by blue, relatively wide space lines, 200 meters, all of the rest 2.3 kilometer in length. The purpose of that is to determine if the whole structure mineralized, or is it a bit lumpy. Is there particular areas on the structure we should concentrate on. And the upshot of that is that after we get these results, we expect these first results before Christmas. After -- in the new year in Q1, then we will start second phase of drilling program, second phase of drilling. The program in green, we are reducing the drill spacing to 100 meters. And that's giving us the confidence that we do have a potential resource there. And in the next phase, the contingent drilling you see on Slide 6, is RC drilling. So the air core gives us near surface that RC gets us to that extent. So we're going to see that in the next permit as well. So Tarabala, that's definitely one of our priorities. Moving ahead to the Samagouela trend. If you remember, that's in the true repairment in this year here. That there were artisanal workings in this location. There are some -- here we had some reasonable geochemistry in this general area, soil geochemistry. When we drilled these areas in January 2020, we found bedrock mineralization associated with the workings. Good mineralization, 10-meter structures, good grades in a blind area, head area, we got these 10 to 15 meters. You'll notice the grade is higher. And there the typical grades and depth. So again, we're in the near surface environment. We've got potential for what we're looking for, which is an open-pitable resource. The next stage is then to go in like Tarabala and drill the blue lines, you ought to determine which is the dominant or predominant structure. Is it this Eastern contact, or is it the main branch that we saw in the Samagouela pits. So again, we've got the initial blue drilling that gives us the confidence. It shows us the big picture, what's the extent to the mineralization, do we see similar grades. Do we see some more widths. Are we -- what's the main structure, the edge of the shear zone or this parallel shear zone cutting this unit here. If things are positive, then we will focus -- We'll move over to the green infill drilling, again, air core, and that tightens up the spacing. So this is a 1, 1.5 kilometer long zone. We believe there's potential along strike as well. There's showings, workings on the fall, with soil anomalism, heading towards zero, which is about 8 to 10 kilometers away. So -- The primary focus is Samagouela, but we've also got an open mind for the strike extent to the Southwest. Now we've also got other properties that are a bit less advanced. Although they're drilled already, we haven't drilled this area before. This is Dialéké. It's part of the 15-kilometer Farabakoura trend. It's just north of Farabakoura. Our drilling, December 2019, was in this area here. So like 2 kilometers north of that. We have identified a highly prospective area based on soil geochemistry, pit sampling from artisanal workings, mapping. There's a lot of coincident information that is leading us to believe that we've got 2 drill targets in this area. That drilling will take place in Q1. But it will be limited, 15-hole program, 750 meters. Now we got the crew -- the Tarabala trend to the west and the -- 3 kilometers to the west. This is the Sodala are of potential trend on the Sankarani East permit. We've done some drilling here. We've identified a shear zone. We've got extremely high soil anomalism in this area just at the edge of this shear zone. We've got encouraging structures from satellite studies from geological mapping. And we would like to do some additional geophysics here in Q4 2020 with a view of performing bedrock and air core drilling in Q1. Again, this is the target size. Though the permit is smaller than all our other permits, we believe it's got the potential to host gold mineralization. And it's got the size to host an open pitable near surface resource. In summary, so this is the work program for each of the properties. We will start in the Tarabala trend, we're at Tarabala. We will move to Samagouela, the first 2 areas I showed you. And then Dialéké, is on the Farabakoura trend, and it's very close to our area of our center, our field office here. So the logistics are very good. And the fourth area is Sodala. If things go according to plan, we've identified near surface. We've got the grades. We've got the wins. What we would like to do is determine the depth, continuation of the mineralization. And the depth of about 100 meters, we would move to the RC drilling technique. And that will get us down there, will get us into the bedrock, and we will use a thing called a televiewer, which is a downhole camera. It is going to provide structural information that would normally only get from diamond drilling. But RC drilling is cheaper, it's faster. We have a faster turnaround time for RCs. And we feel that, that is the correct technique to quickly give us the results and quickly identify an area that we can advance to the next stage. So in terms of getting to the next wet season, which is June, we're looking at about 17,000 meters of drilling. The important thing that we want to be in a possession at the end of Q2 is to have clearly identified an area that we will -- the resource potential area, this will allow us to prepare drilling pads. Once the pads are prepared, it means we can drill through the wet season. And that's important that we can do some exploration work using light vehicles, soil sampling and geophysics in the wet seasons. Not ideal, but really, in terms of safety getting on to site, we cannot drill at the wet season if the pads are not prepared, access roads are not prepared. So that's where we are. We're getting ready for the Q4 2020 drilling. We've got the targets. We know where we're going. And we know what we're looking for, more importantly. As Larry said, it's a huge package of ground. You can see the small areas we're looking at on that package. So yes, we've looked at Farabakoura. We're investigating the Tarabala trend. We've started on the Samagouela trend. And as well as the drilling, we will be proving up the potential for the likes of the Kourou trend and perhaps other areas that are also present on the property.

Thank you, Sandy. Just leaving it on this slide for a moment. Over the past several months as we put exploration results out, essentially as they've come in, we appreciate that each piece is a piece of a puzzle. And it's not readily apparent to our shareholders into the market, how those pieces fit together, what the overall significance is of each set of drill-outs in each press release. And I think it's really when we put it all together in this form, that it's easier to understand our strategy of moving from one single narrow target to stepping out and basically establishing the value and the opportunity on this endowment of property as a whole. We said all along that Madani and his team scouted these areas, handpicked these areas, used structural data, airborne geophysics to pinpoint the exact parcels that they wanted to, pull together and bring into Compass Gold. And what we're seeing now, as we step out, is that, yes, pretty much every target zone that we choose to drill, that we choose to advance our exploration on, is returning mineralization. So this is an endowment that's rich with gold. And we have the rare opportunity of being able to focus on the type of mineralization that's going to be the easiest to identify and extend, that is near surface and open pitable. So it's the easiest, cheapest and, therefore, most profitable generally in the type of deposit that's been successful in Mali. So all of those things are now starting to come together in terms of a full picture. And not only do we have a full plate now with all of this work that's been put together. But essentially, due to the success of Madani and his team, we've established a full year of work and set the table now with all of these targets for drilling for a full year of work to come. Moving on to the next slide. Just a couple of things I want to stress. You'd have seen in the previous slides that our work is fully funded through to the end of the year. So those first stages of drilling will occur. This time last year, we were looking at commencing drilling over the month towards the end of November. That would be November 2019 at Farabakoura. I guess in a similar way, we'd like to see if we can put the company in a position to work continuously. So rather than finishing Q4, pausing and adding additional capital for the ensuing year, we'll look at opportunities to essentially fund that work continuously through to the end of Q2. And as I mentioned, our SEMAFO/Endeavour team have been apprised of the work. And essentially, it's the SEMAFO exploration group that's been brought forward and continues on with Endeavour. So we have every reason to believe that they will be supported both technically and financially with the ongoing work here at all of these exciting prospects. Just to reiterate, we continue to be a very tightly held company in a time where no drilling is occurring through the rainy season, that tends to show or result in a quiet period for our share trading. But roughly 70% of the shares are tightly held between management board and our top 25 shareholders, perhaps moving up a little bit beyond that percentage over the last few months. So it's well capitalized through to the end of the year. And we foresee an exciting fall coming up. We have a couple of questions. Maybe, Greg, you can just confirm the questions before we decide who's going to answer and where they're directed.

One question -- I'm hoping you can hear me. One question is what determines a gold trend? In other words, when we're looking at a trend, and we're trying to confirm it, Sandy, what determines a gold trend?

Okay. So it's our definition. But it's -- to me, it is a conduit that has got the potential for gold mineralization. So on this figure, you can see in the legend it says artisanal gold workings, off permit. For example, this area here running up to here, all the way through and up here, over 40 kilometers to the south offers, there are numerous artisanal gold workings. That is coincident with a major cross-cutting fault. So we've got workings. We've got soil anomalism associated with it, that we've got workings with it. The geophysics is identifying perspective rock types. So all of these things come together to make a trend here. We're seeing workings associated with the fault. For example, this fault here, there are no gold working method at this location. So I would be reluctant to call it a trend unless there are workings associated with the fault. Not every fault is good gold workings with it. Other areas like Farabakoura, we've got 18 workings intimately associated with this fault. So that would be a trend in our view. There's no geological description, definition for it, but there's compelling evidence from what we are looking for, gold -- presence of gold being the main one and lining up along the fault zone.

Okay. Another question, Greg?