Cora Gold Limited (CORA) Earnings Call Transcript & Summary

And our next guest is Cora Gold.

Hey, Donald. How are you doing?

Bert Monro from Cora Gold. We're off to a good start. And I know you've just put out news, so it doesn't get much better than that. Let me just do a brief introduction for you. Cora Gold as an AIM-listed gold company focused on 2 well-established gold regions, Mali; and its next-door neighbor, Senegal, in West Africa. Cora's primary focus has been on further developing the highly prospective Sanankoro Gold Discovery in Southern Mali. That was until yesterday, of course, when they announced a new drilling program near Hummingbird's Yanfolila Gold Mine. Cora have signed a $21 million term sheet to fully fund the development of Sanankoro, and that's dependent on completing a definitive feasibility study by the end of 2021. Bert Monro is here with us tonight. He's the CEO. Welcome, Bert.

Very well done on all the pronunciations, Donald. Good to hear you saying it so well. Thank you. And thanks, everyone, for listening in this evening and being here. It's great to be able to present to you all. Really exciting time for Cora, as Donald said. I actually just got back from Mali this weekend. I was there for the last week. So it's been great to get out to site. It's been too long really, and it's been great to see all the teams. So let me just share screen. Let me know if you can see that all right, Donald.

Yes, that's following. Thank you. Well done.

Perfect. So let me just take you through, obviously, a bit of background to Cora. But just to kick you off, obviously, as Donald said, I'm Bert Monro. I'm the CEO. I started in January of this year as CEO. I spent the previous 11 years of my career at Hummingbird Resources. I was with Hummingbird through both being private to public, making the 4 million-ounce discovery in Liberia and through the acquisition and development of Yanfolila into production. So very much West African focused, very much focused taking exploration projects through into production. Cora Gold is a fantastic company. It's got a great set of permits. It's got over 1,100 square kilometers of ground in West Africa, predominantly in Mali, but also in Senegal. We've got our primary project, Sanankoro, significant gold discovery, which I'll talk a lot about later. But it's got lots of nice deep oxide material, which is free digging with high recoveries, which should make mining amenable and cost effective. We've got a great team which has been together far longer than I've been at the company. They've been together as a team making discoveries in West Africa for a number of decades now. And the scoping study itself has got very high return, high IRR, 107% IRR at a $1,500 gold price. So we feel we're well set and in a great place. Our cash position's $5 million in the bank as we stand, so extremely well financed to deliver a very large drill program, which has just been commencing over the last few weeks. And obviously, come the end of next year, assuming we deliver what we plan to do, a positive feasibility study. We have the funding lined up based on our scoping study economics. So I think it's worth talking about that a little bit. It's pretty rare for junior at our stage to have essentially a fully financed solution in place this early with a very strong partner. Lionhead is a family office investment fund. It's linked to the Quirk family, our largest shareholder. The Quirks are a multigenerational African mining family. They were the largest shareholders in LionOre, which sold out for over $6 billion to Norilsk, and obviously being involved in a number of other successful ventures. So I think there are a lot of juniors out there with good assets and exciting projects, but I think finding juniors who have those good assets as well as funding in the shareholders in place already, it is obviously an exciting position to be in. And I'm very fortunate and very lucky to have been asked to take over as CEO to drive forward the next page. So our strategy is to try and deliver Sanankoro into production as quickly as possible fundamentally. Sanankoro, we believe, is a straightforward project. As I mentioned, it's got a nice deep oxide profile. It's up to 100 meters of oxide depth, so free digging material. We believe it will lend itself to a very straightforward processing route with high recoveries, low strip ratio, which should lead us to high-margin gold production and also, importantly, hopefully, low capital cost to build it. Additionally, as a secondary strategy, we've got a large land package in amongst some big mines and big operating mines. So we also carry out continuous, ongoing regional exploration in the hope of making a big discovery, which could be transformational. Listening to our last presentation, we heard Paul talking about the value of making a discovery. So I think it's important for us to not only concentrate on delivering Sanankoro, which is our bread and butter, but I think leaving that optionality and we're leaving that option value of going out there and drilling holes in new permits and new areas. Particularly near to mines in prolific gold belts gives us the opportunity to make significant advances in that side as well. A little bit on the team. I think important on this slide, I would just highlight Norm Bailie. I just brought him in as our Head of Exploration to replace Jon Foster. He was the outgoing CEO before me and then Head of Exploration as well. Norm has been involved in over 30 million ounces of discovery and development in West Africa in the last 30 years. I mean, that is a massive achievement. He was involved with Red Back through Chirano and Tasiast, 20 million ounces there. More recently, he's been working in Sudan, and he's been with -- sorry, he's been with Centamin for the last 3 years. So Norm is a great asset. He's a great arm. Just been with him in Mali the last week. He flew out and is spending 2 months straight on the ground driving the drill rig and really getting on top of all the programs. So it's great to have him on board and obviously supported by many other experienced guys, Siaka Koumare, Country Director's been with the company since its inception in 2012. He worked with the previous management team, Jon Foster and Craig Banfield in their previous companies as well. He speaks 4 languages, was trained in Russia and is a Malian national. So a great guy to have as our Country Manager in-country. This is an overview of our land package. On the left-hand side of your page, you can see the Kenieba window, West Mali project. You've got 4 permits there down the Mali-Senegal border. This arguably is the most prolific gold belt in West Africa or even in Africa at the moment. You can see the likes of Sadiola very close to our permits. You obviously go down the Mako mine obviously bought from -- bought by Resolute of Toro Gold recently. So we are -- in terms of postcode, we're in a great postcode. We started drilling within a full way earlier this year. Unfortunately, due to COVID, that was paused, that drilling program. We're hoping to start drilling again relatively soon. We opened up the field camp again very recently doing further field work. On the right-hand side of your page, this is our -- I guess, our main focus in the middle of the permits block there, you can see the Sanankoro block of permits. It's made up of 4 -- or 5 permits, sorry, including Sanankoro as one of them. Obviously, directly to our west, you can see the Kobada asset, which is owned by a group called African Gold Group, a TSX-listed company. And then obviously, directly to our south, you've got Yanfolila, obviously owned by Hummingbird Resources, one of our shareholders and, obviously, my previous employer. I'm now going to dig into for a few slides, the Sanankoro project and then obviously step away and go on some of our regional projects. So this is just zooming a little bit on Sanankoro and the 5 permits, highlighting a lot of things I've been mentioning already. Close to 400 square kilometers of ground, up to 100 meters depths of oxidization. SRK, obviously, a world-renowned resource company, have given us an exploration target of 1 million to 2 million ounces of gold, limited to a vertical depth of 100 meters. Just to put that in context, we've drilled mineralization down to depths of 170 meters to date. So that SRK exploration target is no mean -- is by no means the total potential gold discovery there. That's just limited to 100 meters. Of that 1 million to 2 million ounces, we brought 260,000 ounces into inferred resources on which we did our scoping study on and, obviously, over the next 6 months, are looking to expand that significantly. Quick overview on our scoping study. We'll get into more details on the next page. As you can see, at a $1,500 gold price, so a fair bit below where we are today, extremely high IRR, a nice low CapEx, generating good free cash flow generation. I think it's worth pointing one of the benefits of an oxide operation is ultimately our sustaining capital should remain lower. I think we've seen it all in the past. You have companies which are relatively EBITDA rich, but they're very, very cash focused. A lot of their money goes into reinvesting in sustaining capital. So one of the benefits we're hoping for with an oxide operation like this is that we can drive, I guess, true free cash flow into the business. Obviously, significant shareholders and directors and management own a large chunk of this business, So we are very focused on shareholder return. Digging into a little bit more detail on the scoping study itself. I think probably useful to highlight here, from a defensive perspective, if you get down to a $1,300 gold price, which is close to $500 or so away from where we are now per ounce, you're still looking at a 60% IRR project. So I think in anyone's normal estimation extremely high return. As you say, I guess a few pictures there as well. You can see from this operating nice picture of the drill rig and then some of the old historical artisanal pits where you can see this oxide material. Just to say our resource statements have been depleted to 15 meters, so it takes into account that top chunk, which has been taken out by artisanal miners, which are pretty good exploration range there to help us find even more gold. This is a zoom in on our permit area. The red blobs are essentially the resources, and that's essentially limited by drilling. So at the moment, we're expecting to be able to join up a lot of these red dots and blobs and continue the growth of the resources. I think it's important to say we've literally drilled less than 20% of the surface mineralization to date. And we've also ended a significant number of our holes in the mineralization. So not only do we expect to increase our resources at depth, but we're also expecting to find significant structural extensions to our existing resources as well. So plenty of upside from where we're at now, which we're obviously looking to exploit over the coming months. I don't want to get too technical right now. And at best -- a bit like Paul, I'm not a geologist by background, although I guess having lived and worked in West Africa with Hummingbird, now Cora, for 11, 12 years, you get to learn a little bit. But I think what you can see here, just pulling out a few drill holes, you've got some really good grade and some really good widths of mineralization as well. It's saline in particular, I mean 46 meters at 4.5 grams a tonne from 50 meters of depth and 70 meters at 5 grams a tonne. those are a really good drill holes, frankly. What you want is nice, wide widths of mineralization as near to surface as possible, frankly, which means that you can, frankly, dig it up cheaper and get to it more quickly. So that's what I want to see more of as we drill further is nice big wide mineralization and some decent grade as near the surface service as possible. So fingers crossed for a lot more of that to come with future drilling programs. Current time line. It's pretty aggressive, which we're pleased about. We started our ESIA early this year on the basis that we're looking to really fast track this project. We brought out the scoping study in Q1. We've been drilling, and we're looking to complete a feasibility study by the end of next year. So in terms of keeping that time line, we need to get in a ground running with drilling. We kicked off a program at Dako and, obviously, recently at Tagan as well, which has been announced. looking to be drilling right through pretty hard till April time next year. And hopefully, we're bring out an updated resource statement in the middle of next year and then, obviously, following up with the feasibility study as well, be meeting with relevant consultants and varying engineering firms and other people to make sure we're right on track with that. But hoping to be in construction of the mine in 2022, following completion of the feasibility study with permitting and financing in place. Donald mentioned it, and I talked about it briefly, but I think it's significant to cover off. Again, the financing package we put in place with Lionhead. This is due to kick in on completion of feasibility study at the end of next year. And on the basis of our scoping study economics and capital requirement. It would fully finance the project. Essentially, half debt, half equity. The convertible loan note though is at a 30% premium to the equity and the debt is at a flat 10% interest rate. So very competitive financing. I think when you look at Sangatta juniors in Africa test, we did probably somewhere in the sort of mid-teens. So this is a very positive financing package put in place with the group linked with our major shareholders. So they have a vested interest in their own holding well. So really pleased to have this partnership, and looking forward to helping us deliver the project in the future. Moving away from Sanankoro. I'm just looking at my clock there to see how long I've been going on for. Moving away from Sanankoro to the Yanfolila area. This is where we've just commenced drilling yesterday. We just come out drilling on the Tagan permit and obviously then looking to move down further south and drill Tekeledougou and Farassaba as well. We've essentially created a bit of a ring of permits around the Yanfolila gold mine. I think the really exciting thing about this is, I guess, twofold. One is you've got existing discovery holes, which is significant, which we're looking to be following up on. And I think, secondly, when you have such proximity to an operating gold mine, any discovery has increased its potential by that. I think we all know that building mines is an expensive business. And ultimately, if you've got good discoveries near an existing mine, particularly if the mine's in operation. And obviously, all mines have a limited mine life to a degree, that could increase the value of any discovery you make. And also, if you were to make a slightly smaller discovery, which may not be economic on a stand-alone basis, it increases the chances of its economic benefit. So for me, it's great to get the drill going again down there and to get kicking on with drilling. Just to highlight, yes, I mean, Tekeledougou is within 8 kilometers of the Yanfolila gold plant. It's actually within 2 kilometers of the mine infrastructure. So it's extremely close. It's extremely close the Yanfolila. So Kenieba window West Mali and Senegal, right on the border. As I mentioned, we were drilling within the full earlier this year. Unfortunately, we had to pause that because of COVID. Looking to get back now. We've just reopened a field camp. What we've had at Madina Fulbe today is some nice, big, wide chunks of mineralization from the near surface. The grades had been a little bit lower than we would have hoped so far. But it's a big-size permit. Madina Fulbe's 250 square kilometers, and we've only drilled 4 or 5 holes. So nothing, really. So it'd be great to see the mineralized structure there. We're in amongst some significant major gold mines for Africa. So we are right in the right location. And our team has got great experience of making discoveries. Some of our team were involved in the Mako discovery back before it was owned by Toro. So they really know this area and are looking to get stuck right back into it. A quick overview of Mali and Senegal. I think they're both extremely prospective regions -- countries in the region. They've had commercial gold mining industries for over 25, 30 years. That's great for a number of reasons. You've got a really skilled local workforce. So we were touch-word, unaffected by COVID, as all of our employees are Malian bar Norm Bailie, who's out on site now. So you've got a team on the ground who can run operations without the need to have lots of expats. In terms of infrastructure, power, roads, driving to our site at Sanankoro, you're on a tarmac road to -- within an hour site. So relatively easy to get to which is great, and obviously, established mining codes and other things. So I think it's fair to say, whilst the southern part of Mali where we're based has been obviously safe, I think. There's obviously -- there has been some turmoil in the very north of Mali, but it's well over 1,000 kilometers from us. And I think it's just worth noting that obviously, no operating gold mine has lost a day's production for any issues, civil unrest or such worse things in the last 25 years in Mali. So for us, we're happy where we're located in very prolific regions in the great countries to be operating in. Community development's extremely important. I probably won't dwell on it for long in this presentation, but welcome to take any phone calls from people in the coming days if they want to speak more about it. It's extremely important to operate in a best practice as you can. And we've engaged predominantly around health care, education and alternative livelihoods to date. Just catching up with the team last week on site about some of the projects we're doing. Market guidance, some small full-profit businesses we've helped them set up as well as other things around health care as well. So it's great to see the work we're doing on the ground, and it's great to have good local communities to be working in and amongst. Quick overview. Obviously, as you know, AIM-listed company, listed back towards the end of 2017. I think a very strong share register, tightly held. The Quirk family, Lord Farmer is a Co-Founder of Red Kite, which is a mine finance and commodity trading business and obviously Hummingbird, up there as well. So you've got a very tight register. Directors hold around 8% of the business. So again, like Power Metal, strong director holdings. So I think on this basis, we're well set up for shareholders who've been supported when we have had to raise money, and obviously, some of the shareholders are behind the terms sheet to define assets in the future. But always keen to grow the share register and meeting shareholders. So hopefully, a few of you might be interested to join a share register after this evening, and obviously, always open to take calls or emails from anyone if you've got any questions. Just last couple of slides here. Look, we feel we've got huge amounts of upside. I'm looking forward to over, obviously, tonight and obviously in the coming weeks, getting out there and then telling everyone about my site visit and updating existing holders and speaking to plenty of people about what's been going on, on the ground, because we're starting to make some really good strides. And we think there's a huge amount of upside from where we start today. And just finally, look, I've talked about it already. So I'll just overview it. Sanankoro is our major project. It's got a great high, high-return projects, even at a more conservative gold price right now. We've got a large footprint, which gives us great opportunity to make big discoveries in the highly prospective region. And significantly, we've got a great cash position, $5 million in the bank and a $21 million funding term sheet to help us deliver the Sanankoro project on completion of the feasibility study. We feel a really strong team on the ground delivering the work. So we feel we're in a really good place, well set up to drive the company forward with the projects we've got. So thanks very much for listening, guys, and I'll look forward to taking any questions.

Okay, Bert. Well done, you. That was very interesting. You've already answered the play Yanfolila question which has come in. But how much will the Yanfolila drilling program cost? It has already begun. And what's the strategic thinking behind it? Why not simply focus on Sanankoro, which you know is highly prospective?

Well, I think -- I guess, well, in terms of the drilling program, it's about a 5,000-meter program once we've gone through the various permits. In terms of our regional exploration budget, we've given it around $0.5 million to be drilled over the course of the next 6 months. So that's covering both the Yanfolila area, but it's also covering Madina Fulbe as well. These holes are relatively shallow initially, and they're also into soft oxides. So the rate you get is pretty affordable. So we're looking to be drilling -- looking to drill out Madina Fulbe as well as the Yanfolila area and other regional exploration and early stage predrilling for $4.5 million. In terms of the strategy of why we're doing it. I mean, I think, ultimately, it's an important facet of Cora. We are an exploration business. We aren't just a project development business. I think as we've seen, a single exploration hole can completely transform our company. I mean one exploration hole could make your share price move by an absolute magnitude if it was an absolute amazing hole. And I think to do our portfolio justice, you need to get boots on the ground and get out there and explore. Obviously, we have got a very strong cash position at the moment, and we feel comfortable in engaging and doing that work and hopefully giving our shareholders that optionality and that opportunity to make new discoveries and push forward in that way as well as carry on and do all the necessary work at Sanankoro. And I think the final part about, obviously, Hummingbird and Yanfolila, I mean, ultimately, it's a strategic positioning. Those permits, they're very close on operating mine. So it's always useful. I mean, you've seen historically it going well. I mean there's a company called Birimian, for example, which then turned into Mali Lithium, and it's now called Firefinch and they had a permit which was around the Morila Mine, and they found a very small resource but ultimately got a very good pole treatment deal with it and actually ended up self-funding a huge amount of their exploration work and even feasibility studies on one of their other projects. So I think a relatively modest investment could give us a great reward and a great return on money.

And where does the funding come from that relatively modest investment?

Well, our existing cash, sorry. So I mean our cash of $5 million in the bank. So that was -- I mean ultimately, we had a fundraise earlier in the year back in March time. And then also, we also had some warrants outstanding, which we no longer have any warrants outstanding. But we had some warrants which were in the money and were cashed in through August and September of this year. So that's why we have $5 million in the bank.

Okay. In terms of management stretch, the classic small AIM-listed company, you're trying to deliver the Sanankoro feasibility study, which -- without which, you don't get your term sheet funding of $21 million. So might you be overstretching yourself?

I mean in terms of trying to manage regional programs as well as Sanankoro or in terms of my time?

In terms of everybody's time. At the end of the day, it's a relatively small team, and you're adding more and more work into it. Is it...

Yes. I think -- I guess it's worth mentioning. I mean, ultimately, we were COVID compliant before COVID happened. We've got no head office in the U.K., which is great from an overhead perspective, just myself and a CFO. We have a Head of Exploration is now predominantly based at site Within Mali, we've got a team of 12 geologists. They're allocated by projects. So we've always had a regional team. It's made up of a senior geologist and a couple of junior geologists. So essentially, you've got a regional exploration team which manages those programs, and they're essentially siloed off Sanankoro. So 80%, 90% of our team is focused at Sanankoro, and that is the focus of, really, all of our work. The drilling is contracted out to external drilling companies. And essentially, you have an isolated unit, which travels around and manages these regional programs. So they're essentially a separate silo. So I don't see that being any conflict or any distraction is a pretty better expression to use there. But obviously, it's obviously worth noting, I've brought in some additional help. As we've moved Sanankoro forward, you might have seen on the contacts page, Russell Bradford was there as an adviser. He's a very experienced mine builder in Africa. So he's been helping advise me and support me in terms of moving the project from an exploration business into a development business as we're looking to do. I've also got a couple of other guys in the background who I know from my Hummingbird days, who have been helping various aspects of specific bits, whether it's the environmental and social element, which is obviously a specific skill set and such like. So no, I feel we're well set up, and we've got the team to deliver what we need to.

Okay. That was a good answer. Paul Sapsford asks, "Bert, an environmental question. Once any open mine exploration or exploitation is complete, what plans do you have to repair or recover the land?"

I mean that would all obviously come in as part of our environmental permit, which we'll need to get alongside a mining permit. So currently, we've engaged Digby Wells, an international organization who's currently doing our environmental social impact assessment. Part of that will be building a framework for rehabilitation at the end of the mine life or even during the mine life and the end of the mine life. Ultimately, for different areas of the mine, it comes in different ways. Obviously, there's reforestation, which needs to go on. There's pit rehabilitation, which needs to go on. So it's all interlinked. Ultimately, for me, it's actually really interesting and I find fascinating about this business. I think people often say, "What's great about being in the mining world?" And I think when you get to go to amazing places in the world, you get to work with lots of interesting people that are so multifaceted. And I think this is how the environment and the social element of this industry engages with the mine itself is massively important. I spend quite a lot of time on it. I certainly had -- I mean I had to call on it today, for example, with the team engaging around the social and environmental side of things. So -- but obviously, it will all come out as part of that environmental permit and out of that environmental report over the course of the next year, really.

Okay. Let me ask you a final question here. How would you think your all-in cost of production -- the gentleman says $950 and as compared with other locations, Australia, Asia, Americas, et cetera.?

To be honest, I was actually pretty disappointed with our all-in cost of production. I think -- and I'll be looking to improve it. I think the nature of the scoping study that you...

How Can you improve it? That was one of my other questions. How can you improve your all-in production costs and extend the mine life at Sanankoro?

Yes. Exactly. So I think, one, the conservatism, which is in our scoping study, which I would be looking to move forward is, one is the pit slopes. So the pit slopes, in my mind, are very shallow. If you look at some mines near us, they're mining at 40-degree pit slopes. Our scoping study is estimating 34-degree pit slopes. So as you increase your pit slopes, you reduce then have a waste you need to move. So our strip ratio is currently forecast to be 5.5 to 6:1 strip ratio, so 5.5 to 6 bits of waste every bit of ore. If you tied it up to 40-degree pit slopes, it'd probably reduce to somewhere around 4:1. So you'd reduce the amount of waste you're moving, reduce your mining cost. Mining costs are normally the most significant single operating cost. So my hope would be to, through geotechnical test work, to prove that we could mine like similar mines in the region out of steeper pit slope, steeper than 34 degrees and hopefully up towards 40 degrees. The other one is, as you say, scale. At the moment, the mine life is relatively short. As you can show a longer mine life, you get the benefit of the economies of scale, whether it's the cost of power being spread over a longer period of time, other factors around that. So for me, that's a big area we can improve on, and I hope we can improve. I think to answer the first part of the gentleman's question, the global average all-in sustaining cost for the gold mining sector is around $1,000 to $1,050 an ounce is my understanding. But obviously, that takes into account probably older mines, which are much deeper or at a higher cost. For us with we're doing, we're mining shallow oxides. We should have a really low all-in sustaining cost because the mining contractor should be giving you a really good rate because you're digging up ore from surface, and it's free digging. You don't have to blast it. It's light. It should be easy. So that's a big area I'm going to be focusing on.

If I could quickly interject with a question, which fits perfectly in, from [ Glans ] Hammond. He asks, "What's the cost of producing an ounce of gold in Mali?"

Well, it depends. Well, it depends which mine you are. I mean, I think, there are examples, I think, Fekola, for example, owned by B2, I think the all-in sustaining cost is around $600 to $650 an ounce. And there are obviously examples of mines, which have all-in sustaining cost of over $1,000 an ounce. If we can be below $800 -- if we can be below $850 to $800 an ounce production, if you're making, in this gold price environment, $1,000 an ounce margin, and you're doing 50,000 ounces of production a year conservatively, you're making a hell of a lot of money, which will be great.

Okay. Let me be cheeky and ask you a final, final question.

Final, final. How many final questions do you get?

I'm bad. I accept that.

That's all right.

Has the recent change of government in Mali made a difference to you?

I actually met the new Minister last week. He is a very nice guy. I actually just had a great meeting with him. To be honest, you've got your exploration permits. There's -- it hasn't made a difference to us in a sense. I mean everyone's generally been saying good things about the new government. Hasn't made a big difference to us for us. The big thing for me will be Q4 next year when we're delivering a feasibility study, and we'll be looking to convert exploration permits into a mining permit and locking in your 25-year, 10-year mining agreement. So to me, that will be the big time when we need to engage with the government really, really actively and make sure we're moving forward with those -- with the permitting as well as we can.

Bert Monro, thank you very much, indeed. You were very patient with us. Thank you so much for sparing the time.

Not at all. Thanks a lot for having me. Good to be here. And I hopefully look forward to meeting some of you when we return to some form of normality, hopefully, in 2021.

Lots of great questions, not all of whom we managed to get to despite them being good questions. So apologies to everyone that we didn't quite get to.

Anyone I didn't answer, feel free to e-mail me if you want or give me a call.

We have literally run out of time there, Bert. Thank you so much.