Great Boulder Resources Limited (GBR) Earnings Call Transcript & Summary

Welcome to today's Great Boulder Resources webinar. I'm Lucas Robinson from investor relations consultancy, Corporate Storytime. Great Boulder is a mineral exploration company with a portfolio of highly prospective gold assets in Western Australia. The company's core focus is the Side Well Gold Project at Meekatharra in the Murchison gold field, where exploration has defined a mineral resource of 668,000 ounces of gold at a grade of 2.8 grams per tonne. In today's webinar, Great Boulder Resources' Managing Director, Andrew Paterson, will walk us through the latest company developments, including yesterday's announcement of outstanding metallurgical test work results from the Mulga Bill deposit and the ongoing drilling activities at the Side Well Gold Project. We will then open the floor for an interactive Q&A session. [Operator Instructions] So without further ado, I'll hand over to Andrew to get us started. Andrew, over to you.

Thanks very much, Lucas, and I appreciate you getting this organized at short notice. So firstly, just talking about these met results, metallurgical test work for the Mulga Bill deposit. And firstly, the set of numbers that we put in that announcement, they're obviously really good recoveries. But to step back a bit, the reason that we're really excited about that is because of the copper component within Mulga Bill. So if you go back through our news flow 3, 4 years ago when we first realized that Mulga Bill was, what we call, a type of intrusive-related gold system, now that is -- that means that the gold is injected basically into the ground by a big intrusion somewhere in the region and it tends to bring a whole heap of other metals with it. And so with the gold, in our case, we've got silver, copper, molybdenum, bismuth, some in very trace quantities and sometimes very useful for targeting. But really, the key one there is copper. And the reason that, that was a concern, even though it's generally at fairly low levels, copper can be a problem with gold recoveries in the cyanide leaching process. So I'm not going to go into metallurgy because I'm not a metallurgist. But basically, if you want to use cyanide leaching, which is the most common gold recovery technique in the world, really, if you have cyanide in there, which is soluble by -- copper, that's soluble by cyanide, what happens is the cyanide will gobble up all the copper and leave the gold behind. And that will go straight out to the tailings dam, which is obviously a very bad result. So we were concerned about how to quantify that, and it has taken us a couple of years to get those bits of information together, get the samples together and send them off for testing. And we've now completed that process. And that's the reason that we're really excited, is that this has quantitatively demonstrated that the copper is not a problem. The amount of cyanide-soluble copper within the overall copper zones is actually really, really low. And so what that means is we can mill this material through any standard gold plant, either an existing one using with our neighbors or building our own. So that's a huge box ticked. It's a really big piece of risk removed from the equation. And it means that we can continue with our program, pushing this project towards development without having to worry that there's something wrong with the metallurgy, and there's no gremlins kind of hiding in the data that we don't know about. So that's really the reason that we were pretty pumped about the results. And secondly, if you look at the results themselves, 4 out of the 5 parcels, and I'll talk about why there were 5, returned really high recoveries, well above 95%, up to about 97.8% gold recovery, which is extremely high. Within that, there was a high gravity component, which means when you basically crush and grind the material and run it through a concentrator, you get some gold straightaway before you put it into the cyanide leach. So that's good because it's cheaper. And also, the leach recoveries were quite fast, which means that you can put it through your tanks fairly quickly. And that just informs how fast you can process the ore through the mill. Now touching on that fifth sample, which was met #2. We actually sampled that out of, really, an abundance of caution because it was pretty grubby in the sense that it was oxide material with a lot of copper in it. And because it was oxide, a lot of that copper was malachite, which we knew was cyanide-soluble. So we sampled that just to make sure that we knew everything. But in fact, that domain in the resource is only about 0.1% of the total gold ounces. So it's almost nothing. So really, that's why we emphasized in the announcement the other 4 results, which are the bigger domains, the higher-grade domains and 99.9% of the ounces. So that's the metallurgy, really. So now moving forward, having ticked that box and reflecting on results through 2024, particularly towards the end of the year, we started to put out a lot more really positive information about Mulga Bill North. And we actually think we've only kind of half tested that Mulga Bill deposit. We've got 568,000 ounces at Mulga Bill up to the dike, which is roughly in the middle of the strike extent. It's about 2.5 kilometers overall. We don't even know how far it goes north of that. And so that's why we've said for a while now, we think there's easily 1 million ounces at Mulga Bill. And that again reflects why we're excited about the metallurgy, because now we can proceed to smash Mulga Bill fairly quickly and build that resource as quickly as we can. Now the other thing is, in terms of the program going forward, it's not all about drilling. We're really sharpening our focus this year on pushing the project towards development. And there's a number of things going on there, which have been in the pipeline for a while. And the first of those or perhaps the most important of those in the short term is the mining agreement negotiation with the Aboriginal group, the Yugunga Nya. Now we've had some really good meetings with them just in the last month or two, and we expect to be sitting down in Meekatharra with a community meeting hopefully in February as soon as they come back from the kind of summer lull period. And that will be good. We'll also get some more heritage surveys underway, but that's just part of the normal kind of administrative process. It's really sitting down and working out what does the mining agreement look like, get a deal agreed verbally, put that in writing and get it signed and sealed, send that to the mines department so right now we can get these tenements granted. And the first one obviously is Ironbark. So Ironbark, it's been sitting there for a year now, 100,000 ounces at surface. Very attractive asset. I often get asked, can we monetize Ironbark? Can you sell it? Can you mine it? So the answer to both of those questions is no, not yet, but all options are on the table. So really, the key thing with Ironbark is I wouldn't want to sell it if it devalued the rest of the project. So it is quite a strategic asset in the sense that it gives us near-term cash flow once we start mining. So the ideal scenario would be to be mining high-grade ore at Ironbark and generating cash flow. At the same time, you have a big mining fleet up to the Northwest doing the pre-strip on Mulga Bill not generating any cash flow. So you'd be using Ironbark to pay for that. You might do that for 6 months and then get into ore. And really, I don't know the time frames, we haven't done the modeling on it. But I'd say, 6 to 12 months get into ore at Mulga Bill, and then you'd be away and hopefully generating some serious returns. Now obviously, there's a lot depending on that. Given that we don't have an ore reserve, I'm really hypothesizing here. But one of the other key things is infrastructure and whether we do toll treatment or some sort of mine sale agreement or build our own plant. And we just -- at the moment, we don't have enough information to answer that question. Have expanded their mine plans to increase the throughput at the Andy Well mill when it gets into operation, so that may become a useful asset for us to consider. And obviously, Catalyst have 2 big mills up at Plutonic, which is 200 kilometers away by road. But if you've got high-grade material, if you're trucking ore at about $0.25 per tonne per kilometer, and you consider that a gram of gold is worth over $100, you can truck high-grade ore a long way without really devaluing it too much. So all those options are on the table. And I've spoken to all 3 of those companies at various times, not kind of at a corporate level, but just to establish relationships with all 3 groups so that I can bring them up and talk about these things. So it's all really all options open. The other thing going forward this year, we'll start to talk about mining skills. Obviously, the company is run by geologists, which is completely appropriate for an exploration company. As we move towards development though, we do need mining engineering skills. We need environmental skills, boots on the ground, really doing that sort of stuff, but at a higher level, mine planning and advisory skills. And so, what we've had in the background for a long time that we don't talk about too much is kind of a technical advisory panel which, for a long time, has been Scott Halley for geochemistry, John Beeson for structural geology, Tony Crawford for petrology, guys like that who are known throughout Australia for being experts in their field. We're now expanding that to include metallurgy and mining engineering. And I've already signed up a company to provide environmental advice for approvals. So we'll talk more about that and we'll actually -- we'll put out an announcement saying who's on that panel, and they will form an Advisory Committee informing the Board, certainly not just me, but the whole Board and the company as to the best way forward. And then we'll look to bring those skills in-house in terms of employees as we get closer. So really, that's kind of all part of the thinking this year, is to start moving down that path towards development, to have the skills onboard, to make sure we're doing the right thing. And it's certainly not just about drilling and growing the resource. Now the other thing I've been talking about a bit just in the last few months, for a long time, I've said we think Mulga Bill is a 1 million ounce target and 1 million ounce prize. Obviously, we've kind of quantified a lot of that already. That's why we think that we're now aiming kind of beyond that, the light on the hill for us is 1.5 million ounces. And the reason for that number is so that we can distill from that 1 million ounce reserve by applying a rough conversion factor of about 2/3. So 2/3 of 1.5 million is 1 million. If you then aim to establish an operation producing 100,000 ounces per year with 1 million ounce reserve, you've got a 10-year mine life. And you can actually finance infrastructure over a 10-year mine much easier than you can if you went to the banks, for example, and said, "Look, we want to build a 1 million tonne plant. We've got a 5-year mine life." Then they'd just say no. So these are the kind of things that we need to have in mind as we move forward. Really, in terms of what we will actually be doing on the ground, well, specifically we'll be drilling again on Saturday Side Well South. We'll have some news out about that. We just finished a geophysical survey down there in December, doing some more gravity work. So those are the kind of short-term news items that will be coming through. A lot of the work inevitably during this calendar year will be at Mulga Bill North because we've really fine-tuned our targets out there and we'll be hitting that. So you will see a lot of news flow throughout the year about Mulga Bill North. At the same time, we'll be working on these other targets like Saltbush, Side Well South and anything new that falls out of that. And as we get through the calendar year into autumn, we'll start doing environmental surveys. We won't really talk about that. It's not necessarily newsworthy. But we'll have people out on the ground doing flora, fauna work and all this approval stuff, so heritage surveys, just all the nuts and bolts of running an exploration company. So what you'll see as investors is ongoing news flow about discoveries, resources. We'll be updating the resource. Actually, I'll get on to that in a second. And then moving everything towards development, and we'll certainly be talking about the mining agreement and mining leases as soon as they happen. So getting back to the resource. We were previously aiming to update the resource in December. That plan fell through partly because our independent consultant wasn't available in December. So we kind of reset our expectations on that and we decided to do a bit more drilling and try and push that resource through to around 1 million ounces before we update the whole thing. So we'd like to do that in the first half of the year. I will provide more guidance on timing as we get closer. But at the same time, I would like to update the Mulga Bill resource specifically because we've obviously done a lot of work on that during 2024. And we need to update that resource so we can start doing some mine planning on it. So that's in the mix at the moment. And considering updating Mulga Bill on its own, we need to be careful with messaging because if we bring out Mulga Bill, currently 568,000 ounces and we bringing -- we update it and say it's 700,000 or something, I'm just making up a number because I don't know, I don't want the market to be disappointed because I think I'm going to have 1 million ounces straightaway just at Mulga Bill because that's unrealistic. So people need to bear in mind that the holistic milestone for resource ounces is 1 million, and we're still pushing towards 1.5 million. But that's not just Mulga Bill, that's everything. So these are all kind of the messaging things that I need to keep in mind so as not to disappoint the market. And I really want to underpromise and overdeliver but also hit these milestones as we go forward. And that's really it, I guess, in a nutshell. So probably best now to move on to the Q&A part of it, and I can answer people's specific concerns.

Yes, we'll do that now, Andrew. Thanks for that summary.

First question is, what is the current intention regarding capturing the value in the copper mineralization at Mulga Bill? Does it make sense to have two value streams in both gold and copper?

That's a really -- it's a good question and it's a really interesting one. And so in order to capture the value from the copper, this is the tricky bit and one of the reasons we were concerned about the metallurgy, if you're leaching your ore with cyanide, you don't capture the copper at all. It goes -- it hopefully goes through the tailings. Some of it ends up in your gold bar. That's no problem. But the rest goes out to tail, so you don't capture any of it. In order to capture it, you need a second stage of treatment, which is flotation, which is a different style of metallurgy where the sulfide minerals basically attach themselves to bubbles and literally bubble up through the liquid and get collected at the surface as a froth and treated there. That's kind of my very simplistic explanation of what metallurgists do other than stare at their shoes. But what that means -- that's right. No, but in all seriousness, the thing is a flotation plant costs money. So if you spend, say, $50 million building a medium-sized CIL plant, cyanide leach plant, then you have to add a flotation circuit on the back. That might be another $20 million or $30 million of capital. So you need to make sure that you've got enough copper there to pay that capital back and obviously make a profit. The best example in the region is Deflector mine, which is a copper gold mine. They've got quite good copper grades and very good gold grades, and they're making a heap of money. They just sell a concentrate to an offtake partner who separates all the goodies and pays them handsomely for that. Another example is millennium -- sorry, Medallion Minerals (sic) [ Medallion Metals ], which is a very good company down in the Southern Wheatbelt. Now, they're kind of at the same stage as us so they're looking at options -- or slightly more advanced. They've recently done an agreement to use an existing flotation plant and haul ore to that. So the reason that Medallion have struggled a bit in the last couple of years is simply that question of how to maximize the value of the copper. What we need to do though before that process is actually quantify how much copper we've got. We do a lot of copper assaying, but it's not currently in the resource model. We are -- our plan A is to continue going down the path of standard cyanide leach recovery, which would mean not recovering any copper. But we will consider that as kind of a plan B, if you like. And the strategic value of that is that, there's a lot of copper mineralization in the Meekatharra area regionally and even down as far as [ Koo ], which has been ignored for years and years because nobody has built a flotation plant. So there would be power in having a float plant in the region that you could capture a lot of tonnes that are otherwise sitting idle.

Our next question is Great Boulder is on the record as targeting a 1.5 million ounce gold mineral resource, which you've talked about. How long do you think this will take to achieve?

Yes. I'm kind of hesitant to put a time line around that because I'm not sure yet. But from what we've seen at Mulga Bill North, that is another, say, 1 to 1.5 kilometers of strike. That may take us a couple of years to fully quantify all of that and then other things that we don't know about yet through our discovery work. Yes, I'd say give me 2 years. Don't beat me up on that time line. I'll try and do it faster.

Okay. Do you expect that the strong metallurgical results announced yesterday will lead to Great Boulder receiving greater recognition from resources research analysts?

Yes, absolutely. And the reason I say that is they're kind of a key audience for this type of technical information. And specifically, there are some very smart gold analysts around Australia who have been sitting on the sidelines who say to me, "Love the story, but I'm not going to have another look at it until we get metallurgy so that we know that copper is not a problem." And I have literally gone back to one of them already and said, "Look, here it is, let's talk." So I think there should be a lot more recognition of the value and the derisking in Mulga Bill and particularly amongst the people who know more about the technical side of gold treatment. And yes, I have to admit I'm kind of disappointed by the result yesterday in the sense that the market didn't respond to what I thought was just an absolutely belter of an announcement and it was kind of a flat day. So that was unfortunate. But I think in the medium to longer term, there will be a lot of value recognition in that news flow.

I think so, too. When will the company consider conducting a pre-feasibility study on mining scenarios at Ironbark and/or Mulga Bill?

Yes. It's -- the reason that we've kind of hung back a little bit is, well, firstly that we wanted to get the indicated component up to 75% of each resource, which is sort of the magic number for being able to talk about these things publicly. You can do scoping studies on an inferred resource, if you want, but we're actually not allowed to announce them because of the higher level of uncertainty in inferred material. So that's one thing. The other thing is, if you look at the track record of companies coming out with scoping studies, in particular in pre-feasibility, they tend to get really treated quite harshly in the market. And I honestly don't know why that is. But I think it can cap in people's minds the upside on a company. So as an example, given that we're aiming, for want of a better phrase, 1 million ounce reserve as our aspirational target, if I were to come out today with an ore reserve just based on Mulga Bill of, say, 300,000, 400,000 ounces, then that would tend to cap the number in people's minds of what we can achieve. So we kind of want to make sure that we sort of maximize the value of the feasibility study once we do it. Yes, that's really it in a nutshell.