Compass Gold Corporation (CVB) Earnings Call Transcript & Summary

Hi, everyone. I'm Taylor Combaluzier, a mining analyst at Red Cloud Securities. This session of our pre-PDAC mining showcase will feature Compass Gold. From the company, we have with us Larry Phillips, President, CEO and Director; as well as Dr. Sandy Archibald, the Technical Director. [Operator Instructions] And the presentation is also available on the conference website. And with that, I'll turn it right over to Larry to guide us through the presentation.

Thank you, Taylor, and good morning, everyone. Thank you to Red Cloud for including us in this conference. It's our first attendance, and we're pleased to be here and have an opportunity to introduce Compass Gold to the attendees and provide a relatively brief overview of the company. So with that, I'll take us through the slides. Compass Gold is exploring in gold-rich Mali, the prolific Southern Gold District of Mali, and we are currently examining 3 main gold trends that we have discovered and drilling is proceeding along all 3 trends in this beginning of 2021. So first slide, our necessary forward-looking statement caution. And on to the next slide. Here, we're really setting out what I believe are the essential components, attributes of any company in this sector, whether you're purchasing a company, joint venturing with a company or investing or operating the company, I think these are the factors that all participants should be focused on. First is the people, the people who are leading the company at the executive and exploration level; second is the place, the property and the place that the company is situated; and thirdly, the performance, not the promise, but the performance, actual results on the table and demonstrated abilities. In the case of the people, I think we have a highly experienced team. Yes, it's a successful group from our past days at IAMGOLD. But most importantly, it's that experience working together in this exact part of the world, Mali, to explore, develop and operate world-class gold mines. The place, well, as I said, that Southern District of Mali, one of the most prolific over the last 5 to 10 years in terms of discovery, investment, all the major investor -- major producers are present, the likes of B2Gold, Endeavour, IAMGOLD, Resolute, AngloGold and Barrick. In the case of Compass Gold, we have over 850 square kilometers of land package that had never before been drilled. And to this point, we've identified 3 major gold trends in extent -- extending greater than 10 kilometers each. And we are currently drilling just specific sections of those trends. So a large package in a great district. In terms of performance, that exploration success by our team and an experienced team has already proven itself. Another aspect of performance for a company of our size, the ability to raise capital. And we've demonstrated that we can raise the right amount as needed so that work can continue effectively and successfully. On the next slide, there's a little more information about our executive team. As I said, we have a group that has a combined background with IAMGOLD that started its history and the discovery of Sadiola in Mali as well as an AngloGold connection through Dr. Madani Diallo, who is directing the exploration in Mali. Beyond the experience of the executive team, the key to our success is really our discovery team. The exploration group includes a team of hand-selected geologists, Malian geologists who worked with all the major producers, major discoveries in this part of the world, and they've been assembled to be part of our team, which we're very proud of. And Dr. Diallo has done an excellent job in directing his group across this large land endowment. So let's take a closer look at the corporate makeup very quickly. It's a company that's held -- very tightly held our top 15 shareholders owning more than 50% of the company. We have institutional shareholding U.S. funds. We have a corporate shareholding, Endeavour Mining owns just a little less than 8% of the company now. But the makeup of our shareholder register consists of industry players, folks familiar with our team, familiar with exploration in this part of the world and providing ongoing support to the capital requirements of the company. And we add to that stable of support, the association with Red Cloud, which just recently commenced, and we look forward to that having an impact on the market appreciation for our company. Currently, we're at a very modest value in terms of market cap, little less than CAD 15 million. We are funded to carry out all of the exploration that we'll be describing today, and we have a demonstrated ability to raise additional funds as required for ongoing drilling. All right. Moving ahead, where we're located. We're in the Southern District of Mali. As I said, you'll see our properties outlined in red, those permitted areas have been specifically located along known greenstone belts and trends. And along those trends, we have some of the successful producers in the area and known gold deposits of significant size, the Kale and deposit over 5 million ounces to the east, the Syama deposit with Resolute north of our Kale property. So we have prime real estate in our true mining district, infrastructure, transportation, communication, water, power, all of those necessary elements are well established in this part of Mali. So where have we been successful? Well, you'll see on this next slide, it's 3 major trends: the Tarabala trend, which we'll be talking about today in the most recent drill results; at the center to the north, the Farabakoura trend, where last year, we set out some incredibly high grades and results on initial drilling. We're going back there to drill at the Dialeke target shortly; and to the south the Samagouela trend, which potentially plays into a forest trend, the Kourou trend, and that's still to be established with additional drilling. This -- along these trends, our objective is to identify at least one gold resource, which could be contained on just 1 kilometer section of these long trends. And we're addressing near surface, open pitable gold resources, the most economic, easiest to identify and expand both in terms of drilling and ultimate production. What you see on the slide to the right is actually an open pit mine and our drilling really extends down to the first 2 levels of a pit like that. So down to 40, 50 meters so far. We'll be doing some deeper drilling following the initial success results that we've had. So turning to the Tarabala trend. Our latest results and along this 10-kilometer trend, we have been focusing on roughly 1 kilometer where we've had the highest levels and concentrations of gold mineralization. That's shown in the slide to the left. Because of the preliminary work, identifying the structure, ground geophysics, structural analysis, you'll see we're exploring this trend with a fairly narrow discrete band of drill holes. Instead of a fence line of 8, 10, 12 holes spaced at 100 meters or more, we're moving up and down this trend in fence lines of 3, perhaps 4 holes, which is very efficient cost wise, but also a testament to the groundwork that was done before we started drilling. In this section, you'll see a cross-section to the right side of the slide, the mineralization from surface, relatively shallow, as I said, within 40 to 50 meters of surface. and the grades there give us both width and grade. So putting it into context, a typical open pit resource might have widths of 15 to 25 meters and mine grades on these deposits typically in that 1.5 grams per tonne once a deposit is setup for mining. They're actually mining less than 1 gram per tonne economically. So based on the initial results and the success of both significant grade and width along this section, we'll be doing some RC drilling deeper to see how far below or at depth, this kind of mineralization extends. So that's that one section of Tarabala that we just announced results. We have RC results expected on that next drilling next week. Just look -- turning to the next slide. And based on those results, we'll set out the remainder of the drill plan for Q2. We have some options to go further north or further south along the Tarabala trend, and we will be doing that with drilling, and we'll come back to this first section of Tarabala and look at the opportunity to establish continuity, basically infill drilling and some at depth based on the results of the RC holes within that 1,000 meter panel. Roughly 6,000 meters has been completed so far, and that will guide us through to the Q2 drilling plan along this target as well as the others that I had mentioned initially. Overall, our objective here -- before I move on to that, the next slide at Samagouela also indicates the strength and prospectivity of these trends. We had done drilling at Samagouela that returned excellent grades and widths, 9 meters at 1.67 -- sorry, 10 meters to 1.67, 14 meters at 2.75 grams. Excellent start on this area, again, finding a section that provides continuity and extension so that we can have a significant resource and start doing infill drilling and calculating. The additional drilling along the Samagouela trend, we'll also take a look at what we call the Old Sam and the Ourou Ourou sections of the trend. And we're also considering whether the trend actually splays out to the northwest and whether we're actually looking for 2 structures controlling mineralization. So a good start to the work here and more results that will come with the Q2 drilling that's planned. So these drill programs along these trends are -- on behalf of our overall objective, we want to come to a point within the first 2 quarters where we can identify an area for infill drilling, moving towards a resource calculation and to be able to do that through the summer months. The past 2 years, we've had a hiatus, if you like, with almost 3 months of the rainy season because we were not able to identify, locate and build drill pads for planned drilling. This year, our objective is to get to at least 1, perhaps 2 areas that we can do that infill drilling, extension drilling and get those pads built and set up before the end of June so that we'll have continuous drilling through the rainy season. And by the end of the year, again, our objective is to identify at least one of these areas to reach a infill calculation for a resource. So that's the planned drill program. I see the time has quickly reached an end here, Taylor. I'd like to know if there are any questions specifically that I can address or that Sandy Archibald, Dr. Archibald, can address.

Great. Thanks for that overview, Larry. So starting off, there's a couple of questions more on the corporate side. Maybe you can make a quick comment on the political stability situation in Mali right now and kind of what the outlook you have is for the next couple of years?

Sure. Well, as I said, with IAMGOLD, we started in Mali in 1990, so we have well over 30 years of experience. In the course of that 30 years, one of the things that's worked well, very well is the mining industry. Tax rates, mining codes, logistics basically has been stable throughout that time. Right now, there are 2 issues on overall security and stability. There is an election coming up, coming out of a transitional government that's in place. There's a committee there that's been put in place on a transitional basis that seems to be operating on time and on schedule. The country has done very well, for instance, in the COVID, literally hundreds of cases in total and a very modest number of deaths. So it operates well on the health side. To the very north of the country, there still is occasional issues of security, ideological groups. I think it's important to note that that's roughly 700 kilometers away from our property, and we're south of the capital city of Bamako. So we're well insulated. And all of these operations have had no disruption on account of any of that sort of security issue. And so we don't foresee that as an issue for us. And that within the next 2 years, 18 months, there will be democratic elections, and we'll be on to a next administration.

Perfect. Another quick question. Are there any plans to list shares on the OTC in the U.S.?

It's something that we are examining. Because we're such a tightly held company, less than -- really less than 20% of our float trades, and even in that, there is modest trading. So the question is, is the expense and the administration of that likely to produce more effective trading, which I think is a positive thing for a company of our size and increase volume and liquidity of that float. We'll take a closer examination over the next few months with the addition of Red Cloud as a market adviser and developing interest and awareness on a broader basis, and probably come to some conclusion before the end of May.