Japan Gold Corp. (JG) Earnings Call Transcript & Summary

Welcome to Japan Gold. I'm John Proust, Chairman and CEO. My short presentation today will cover a brief introduction to Japan Gold. But primarily focus on the Barrick Alliance activities in Japan and our independent project activities. I will be making some forward-looking statements today. So Japan Gold was formed on the basis of a change in the Japan mining law that occurred in 2012 that allowed foreign companies to come into Japan for the first time in the country's history and hold prospecting rights, mining rights or own mines. Japan Gold is the first company in the world to go to Japan on that basis. There have been a rich history of hybrid gold mining in Japan, starting right back in the 1500s. But that history had been interrupted by the Second World War. And in 1943, the government closed all 76 active gold mines and reallocated the miners to base metal mines and factories to support the war effort. After the war, only a handful of the mines reopened and 64 of the mines are still closed today. In the ensuing decades, mining companies were incented to go abroad, bring natural resources back to Japan and gold mining and exploration really went by the wayside. There's been limited exploration and production for many, many decades. Things changed in 1981 when the only party looking in Japan, the Metal Mining Agency was doing an exploration drill hole on the southern island of Japan, Kyushu, on ground held by Sumitomo Metal Mining. And there, they discovered what is now the highest grade Tier 1 gold mine in the world, the Hishikari gold mine. It went into production in 1985. And to date, Hishikari has produced approximately 8 million ounces of gold at between 30 and 40 grams per tonne with significant reserves remaining. When we went into Japan in 2012 as the first mover in country, we were able to study the full Japanese government database. We also were able to provide significant input on how to build a globally competitive permitting process in Japan. And after 2 years, we applied for a significant portfolio of projects. Today, we hold 31 projects in Japan, in all the main gold provinces. We're the dominant player in all the main gold provinces in Japan, and we cover over 40 of the closed gold mines. Our activities have allowed us to attract some of the largest gold miners in the world, including Newmont as a large equity shareholder and Barrick who has a countrywide alliance with us that was formed earlier this year in February and is advancing and sole-funding 29 projects across Japan. We have significant shareholders and we have a very strong management team and Board of Directors that are experienced in making discoveries, putting them into production and have extensive experience in Japan. Our share structure is as follows. As I mentioned, Newmont holds a 13% stake. Some of the largest institutions in the world hold over 35% of our shares and management holds 9% of the company. Our market capitalization is approximately CAD 60 million or USD 45 million. Our Barrick Alliance that was entered into in February of this year is -- has several key elements associated with it. As I mentioned, Barrick is sole-funding the evaluation of 29 projects throughout the country. And 2 projects that are outside those Barrick Alliance, we've granted Newmont, the joint venture right of first refusal, if we seek a joint venture partner. Initially, Barrick has a 2-year period to evaluate the 29 projects, and we're doing that as operator on behalf of Barrick very, very quickly. If Barrick identifies, in that 2-year period, a project doesn't meet their criteria, all the work that Barrick will have funded becomes our work to use to attract other third parties or advance the projects ourselves. If Barrick likes the project, in order for them to earn something, an interest, they must complete a prefeasibility study to earn a 51% interest and a bankable feasibility study to earn a 75% interest. And that allows Japan Gold to be fully carried through to the bankable feasibility -- the completion of a bankable feasibility study. I'll take you quickly now through Japan. 3 main islands. Kyushu in the South, Honshu, the main island in the center with Tokyo being located on Honshu and then Hokkaido in the north. The Japanese government focused on the change in the mining law in 2012 because they wanted to stimulate Hokkaido and Kyushu's rural economies. As they've really become an issue with the demographic challenges in Japan, with an aging population, leaving the rural towns and villages and moving into the large urban centers. And so the government was looking for an economic stimulus to attract people to remain there or to move into those areas. And as it turned out, the closed gold mines were predominantly located in those 2 islands. I'll take you to Kyushu first. Kyushu has 2 gold provinces. We have 3 projects in the middle Kyushu epithermal gold province, but our main area of focus is in the red shaded area, which is the Hokusatsu region. This area has produced over 11 million ounces of high-grade gold to date from several past producing mines and the Hishikari mine I mentioned earlier, which is right in the center of this Hokusatsu region. Japan Gold now currently holds over 80% of all prospective ground in this area. The Hokusatsu region is focused on this slide. You can see the red project outlines are our Barrick Alliance projects, the 1 light blue project is our single project in this area that has the Newmont right of first refusal. The green area is Sumitomo Metal Mining small footprint. And then right in the center, there's the Hishikari mine that I spoke of. The highest-grade Tier 1 gold mine in the world. And more recently, Newmont, in conjunction with another junior mining company, have identified these have -- picked up these 4 areas in dark blue and have also taken an option on 1 of the past producing mines. Under our Barrick Alliance, we are doing 2 types of evaluation. One is we're doing geochemistry. So across all 29 projects, which is about 1,700 square kilometers, we're walking up all the streams and catchments. We're taking stream sediment samples, and rock samples and then we're assaying those for gold and multiple elements, and we're blagging. What blagging does is that allows us to identify the low level of background gold so that when our assays from our stream sediment and rock samples come out, we can identify areas of higher grade anomalous gold. The second thing we're doing is geophysical surveys. We're doing gravity. Gravity identifies structures that could be the pathways for where mineral-rich fluids deeper in the earth have migrated closer to the surface and be deposited. And so what we're looking for is areas where there is coincidently anomalous high-grade gold with very good-looking structures that are supporting those. And those become our key areas of focus. On this map that you see here, I've highlighted, in light red and dark red shading, all the areas that have geochemistry completed, and the dark red areas have geochemistry and geophysics completed. We're reporting regular to market. Every 4 to 6 weeks, I report on our progress of covering all 29 projects with geochemistry and geophysics. And then intermittently, as the results are now coming in, if we see anything we like that we identify those coincident anomalous high-grade gold areas with good structures, we report those to the market. And just recently, we've made that first report. These 2 projects, the Mizobe projects have demonstrated to us that there's 4 areas of high-grade anomalous gold with good-looking structures, and we're directly south of the Hishikari gold mine. In this light blue area that's in the center, this is our single project that's outside the Barrick Alliance. And that project, the Ohra-Takamine project covers 5 mines. And this is a project that is being advanced through a technical committee, which has significant Newmont senior technical representatives. And we've done all the mapping, geology, geophysics, geochemistry, and we've just completed our first test hole under the Urushi mine, and we're able to drill a test hole under the Ohra mine with results in late November and into December of this year. So we're looking forward to that. I'm now going to take you up to the -- sorry, I'm going to take you up to Hokkaido. So let's move up to the North Island of Hokkaido. And the North Island Hokkaido has 1 major gold province. Here's the major gold province outlined in purple. The red project outlines are Barrick Alliance projects. The light blue area is our 1 project outside the Barrick Alliance. And I will point out that our 31st project was just recently acquired under the Barrick Alliance immediately next door to the Newmont related project. And this Kanehana project covers 7 past producing mines, were all closed in 1943. We've now been able to complete geochemistry across all of our Barrick Alliance projects here and we'd like to move forward with our geophysics on these projects as well. I'm now going to show you this 1 project that's outside the Barrick Alliance, and it looks like this. This 1 single project covers 20 historic high-grade shallow underground gold mines or significant surface workings that were all closed by the government in 1943. With Newmont's support on this project, we've done all the preliminary work that we're focused on 2 prospects, the Ryuo prospect and the Kitano-o prospect. The Ryuo prospect covers a single mine that I'll show you in a moment and the Kitano-o prospect is a large prospect of 6 kilometers North-South by 4 to 5 kilometers East-West and covers 8 mines that we have now identified are all part of 1 large system. And so we're very excited about advancing and evaluating this area with drilling. The Ryuo prospect, I'll quickly show you that mine. The Ryuo mine, this is what it looked like in 1943 when it was closed by the government. At that time, they'd be mining on 6 different levels. And after the war, the government -- or pardon me, Sumitomo managed to enter this mine and sample the roofs or the adits, the backs of these adits or tunnels that they can get access to. It just on this 1 level alone at this level 4, they identified 72 meters of over 40 grams per tonne. So a very significant high-grade gold event here. The mine collapsed after that, but we're now -- completed with our initial evaluation, and we're awaiting our drill permit so we can test the results, the historic results of the mine. We can look for depth extensions in parallel structures. Moving further to the Kitano-o gold prospect. And I'll just move forward with this slide. This is further in the south end of the Kitano-o gold prospect. This is an area that we've done extensive exploration on with Newmont. It's 3 kilometers across. We've done test drilling on the West side, where significant gold had been mined between 1900 and 1943. And our trail clues have now led us to the eastern side of this prospect area. Over 2 kilometers that cross the east here, where we think the best locations for the upflow zones will be in this eastern area. So we're awaiting to drill permits here, and we're hoping to drill and to identify those upflow zones or those sources of the mineralization that occurred at surface. Our leadership team, we have a very strong Board of Directors. Mitsuhiko Yamada, is our representing Director in Japan, having been the previous Chief Executive of Sumitomo Corporation, the Global Minerals division. And so he's one of the most senior mining executives in Japan. Paul Harbidge has recently joined our full Board of Directors. Paul was originally at Randgold with Mark Bristow in Africa. And Paul ran the technical team there that made significant discoveries in country. Paul left and went to Goldcorp to become their head of global exploration, and that's where we met Paul and his enthusiasm for Japan and our activities there. On our management team, Takashi Kuriyama was previously the Head of Global Exploration for Sumitomo Metal Mining. But prior to that, he was the General Manager and Chief Geologist at the Hishikari gold mine. Our 2020 program is as follows. And as I summarized in my comments, with Barrick Alliance, we're evaluating 29 projects that Barrick is sole funding now through the geochemistry and geophysics work that we're doing now. And we have to do that within a short 2-year period that started this past February. So we're moving very quickly there now. With our single project outside the Barrick Alliance down in Kyushu, we're now drilling there, and we'll have results shortly. And with our single project that's outside the Barrick Alliance in Hokkaido, we've identified significant prospects and we're awaiting our drill permits. Japan Gold is a very unique company. We are in one of the safest geopolitical jurisdictions of the world, Japan, first of all. We've been the first mover there. So we've had the ability to move in Japan and acquire 31 projects that cover the dominant areas of the major gold provinces in Japan and over 40 of the mines that were closed by the government moratorium in 1943. We've been able to attract the 2 largest gold miners in the world, Barrick Gold Corporation and Newmont to become active partners with us in the country. We've built a very strong operational team that has geologists, field assistance, permitting group and our own drilling division to advance our operations there. And we look forward to making significant discoveries in the country. More information can be found out about Japan Gold at our website, japangold.com. There's a more fulsome PowerPoint presentation there as well. And I look forward to meeting you at the conference as we move forward. Or if we don't have the opportunity to meet there, please feel free to reach out to me. I'd be happy to meet with you and discuss Japan and the Japan Gold activities. Thank you for your participation today.