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

Hello, and thank you for joining us today. My name is Timothy Lee, and I'm a research analyst at Red Cloud Securities. And I'm delighted to host this Red Cloud webinar on gold exploration today. With the gold price up over $2,600 an ounce, this is an exciting time to invest in this space. My special guest today is John Proust, Chairman and CEO of Japan Gold Corp. During today's webinar, John will provide an overview of the company's achievements and outlook for the company's plans going forward. Then we will take questions. You can type your questions into the chat box at any time, and we will get to as many as we can. Before we kick things off, let's discuss some fine prints during this Japan Gold webinar. Forward-looking statements may be made. I would direct listeners to the company's forward-looking statements disclosure outlined in the Japan Gold corporate presentation, and that can be found on the company's website, japangold.com. For Red Cloud Securities, Inc., I would highlight that this webinar is for information purposes only. It should not be considered a solicitation or a recommendation of buy or sell securities. We note that this call does not consider the particular situation or needs of individual investors, and participants should rely on their own investigation and seek their own professional advice before investing. Please see our most recent research located on the Red Cloud website for specific disclosures pertaining to Japan Gold. And now I'm delighted to introduce John Proust, who will present the story. For those not familiar with the story, Japan Gold was a first mover and pulled together a significant portfolio of exploration projects in the country. As a result, it's drawn the attention of majors and has an exploration agreement with Barrick, partnering with some of these properties in Japan. I'd now like to turn it over to John to update you on the company.

Thank you, Tim, and welcome to the attendees today. I appreciate the opportunity to give you an update on Japan Gold and where we're going forward. It's a very exciting time in the company's history, and I'll hopefully outline that for you now. I'm going to move through some slides fairly quickly. I'm going to -- we've got a fairly comprehensive presentation here, but I'm going to move around some slides to try and give you the best update possible. We do have, as Tim mentioned, forward-looking statements. And I would direct you to that slide. As Tim mentioned, we are exploring for high-grade deposits in Japan, and there is a rich history of high-grade gold mining in the country. I'm going to spend very little time reviewing the history, but I think most of the audience knows that there's been gold mining in Japan for over 500 years. And we're capitalizing on some of the discoveries that were made and the insight that early explorers made, but we're building on that to identify new areas to search for the new big deposits in Japan. The one comment to really make is that Japan is indeed underexplored and it's underexplored because the historic mining was really very shallow. And while it's encountered a number of significant ore bodies and several mines that were in excess of 1 million ounces up to 2.5 million ounces, it really hadn't -- the exploration hasn't really looked deeper into Japan to the area where the Hishikari mine was discovered in 1981. And of course, that mine is a little bit deeper than the historic mining that was done prior to the first -- or the Second World War. And it's now in excess of 13 million ounces. So it's really a step change from the shallow 1 million to 2.5 million ounces up to 13 million ounces. And of course, the Hishikari mine is the only operating gold mine in the country today. Of course, what brought us to Japan was the change of the Mining Act of 2012. We were the first company, as Tim mentioned, there to come into Japan under this new Mining Act change. And we were able to review the country's closed gold mines that have been closed in the second world war and really identified the areas that we wanted to explore and also the historic mining that had the same style of mineralization as the Hishikari gold mine. We were fortunate to bring Barrick in as an alliance partner, and we'll talk a little bit more about that in a moment. And what the exciting part of us and our program today is that we're already drilling now. So we've done years of mapping and geology and geochemistry and geophysics but we're now drilling for Barrick, and we'll be drilling for ourselves soon. Our exploration model, as I mentioned, is looking for high-grade epithermal underground gold deposits. The slide -- or the photo on the left of this slide is the Hishikari -- one of the Hishikari veins. They have 40 veins. But you can see a beautiful vein that's the classic photo of several meters wide. It's loaded with gold, and you can see a miner that looks pretty small at the bottom of that vein. So that's the target in Japan. Again, our approach is really to look deeper, we'll talk about that more, and really to refine our portfolio which we've done substantially over the last few months. Our exploration model, as I mentioned, is high-grade epithermal gold deposits. And what we're always doing is we're evaluating the opportunities or the targets that we're finding to find out where they are in the sketch that you see here, this Buchanan model, that you see here of where we might be positioned in that model and what the opportunity is that lies below the areas that we're evaluating. So our model has been quite straightforward. Again, we're a significant project generator because there were projects in Japan before we came there. But we've really looked at advancing exploration ourselves and funding with partners. And so in 2020, we entered into an evaluation program of our portfolio with Barrick. Barrick has spent $20 million at this point evaluating our project portfolio and ultimately advancing three priority projects with a total of 5 targets that do have the potential to host a Tier 1 or Tier 2 ore body. And so we're quite excited to show you that a little bit more here. Of course, there's compelling economics that you've heard me speak about before in Japan, where we could take this silica-rich or quartz-rich ore and deliver it to one of several smelters in Japan and are looking for the silica actually as flux in their smelters. But of course, we'll take the whole ore and basically deliver the 90% to 95% of the gold back to us as potential producers. So what this does for us, if we can collaborate with a smelter owner is it does provide very low all-in sustaining cost, and an example of Hishikari's case, they're the lowest quartile of all-in sustaining costs. And so that's very compelling from an economic standpoint. So let's move into our projects and what we're doing. So here's our map of Japan. And again, if you've attended previous webinars or seen other presentations, you'll note that it's been refined over time. The gold ovals are the four gold districts in Japan, and those are the areas that we're a very dominant player in all those areas. And the projects that Barrick are advancing, the three projects that are advancing, one is in the Southern area, is a project called Ebino, which we'll have a look at more in a moment. So they're advancing the Ebino project, which is immediately adjacent to the Hishikari mine. Then they're advancing the Togi project, which is on the west side of Honshu Island. And it has similarities in some respects to the geology or the geological setting of the Sado mine, which was the largest past-producing mine in Japan. And so we'll be talking about our drill program there. And then finally, up in the North, up in Hokkaido, the Hakuryu project is being advanced by Barrick, and it's immediately adjacent to the second largest past-producing mine in Japan, the Konomai mine, which produced just under 2.5 million ounces. So to move forward from there, I'm just going to slide up a few slides. So again, just to touch on -- we've talked about the Ebino, the Togi and the Hakuryu projects that are the priority projects for Barrick. They were the outcome of that initial evaluation phase. But basically, where we're at now is that Barrick is in the earning phase now. So in order for Barrick to earn an interest in a project, they have to complete a pre-feasibility study which gets them to 51%. And then ultimately, when they complete and fund a bankable feasibility study, they get to a 75% interest. And so we're carried right through bankable feasibility and we retain a 25% interest in the project. We're going to now -- actually, I'm just going to, again, direct you to the Hakuryu project, which we're going to touch on first. So we're up in Northern Hokkaido. And I'm going to blow up right into that Hakuryu project, with a fairly sort of complicated sketch here. So you can see there's an inset map. We're in Northern Hokkaido, which is called the Katami metallogenic province. And the white little boxes in the inset map, that's the area that's highlighting the Hakuryu project. So as I mentioned, directly north of the Hakuryu project, which is the square shape that's outlined in blue, sat the Konomai mine. And Konomai mine, it's actually in a corridor of veins that are highlighted by these dashed lines. And you can see that there's veins, which are red, there's, these red lines, these are all ports veins that were mined under the Konomai mine. And they actually started mining at the north end of our property, where my cursor is now, near the Motoyama vein. And they mined the first 700,000 ounces there. And then they moved north to the Sumiyoshi vein and the Konomai veins, et cetera, et cetera, to reach their 2.35 million ounces. The Konomai mine, which is owned also by Sumitomo Metal Mining, the same owner as the Hishikari gold mine, stopped mining, as I say, in the 1970s. And subsequently, there was a road that was driven through the property area, the Hakuryu property area. We went south through that area. When we looked at the property, we thought we saw similarities and exposures to potentially that vein system extending further south in our property. But it was really only until almost exactly a year ago when a senior geologist from Barrick and one of our senior team members was actually walking through the Southeast quadrant of the Hakuryu Project that they happen to see a very interesting feature. The reason we haven't gone in previously into this area was there's a very dense canopy of the tree cover, very dense and also very high bamboo grass which is very difficult to navigate through. So it masks a lot of things. But at the end of the year, leaves have fallen off the trees, the bamboo grass was sort of suppressed and they could see this feature, which was a large hill, 100 meters high, a few hundred meters long and 50 meters wide. And that hill would look pretty benign from a distance or from the sort of the uninitiated bystander. But when you hit it with your hammer, we found that, that hill was almost consistently quartz. So it was layered quartz. And what that showed us was that it basically was similar to the veins that have been mined at the Konomai mine to the north. So it was really where potentially a vein had erupted and had formed this big hill. And so that got us pretty excited. And so what we did was we then did a significant drone magnetic survey. And from the initial area that where you can see my cursor is now, which says -- there's a label to the right that says the target is the Hakuryu, Kokuryu area. So we went almost 5 kilometers to the southwest. But certainly, in that first oval, you can see with the black outline, it really lit up very, very well with our magnetic survey. So that gave us further enthusiasm and also identified that there was other targets in the area as well. So we're organizing now. We're rushing the permitting. We're at the final stages of our permitting to be able to drill this project. And we have a plan to drill four holes initially sort of under that hill that I described to you and then looking at further areas that we might want to expand a drill program into. So what we've also done, which is very unique for Japan, and we're just delighted that we have the support and the collaboration of all the stakeholders in the area, which could be the sort of the federal government, it could be the prefectural government, it can be the local towns and it could also be the various forestry departments, et cetera, that are all collaborating to move the permitting for this project along as effectively and as quickly as possible. And so again, we're looking forward to getting that in place now. We're hoping to be building our drill pads and moving drill rigs on in the next couple of weeks. But the only caveat really to note here is that this is an area -- Hokkaido as an island in the north is an area that gets significant winter conditions. There can be very, very cold temperatures and very significant snowfall. So that's something we're monitoring carefully now, but we're moving ahead to try and move on this project as quickly as possible. If, for whatever reason, we're interrupted with winter conditions, if it doesn't look safe for us to do so, then as soon as the snow melts in the new year, which is usually by the end of April, somewhere in that area, sometimes it can be earlier than that, and that's when we would be active. But we're delighted that the permitting is coming together well. So to move on from there. I'm now going to take you down and I'll just go back to a previous slide. Going to move down more to the Togi project. So the Togi project is on the Noto Peninsula. And it's the one that -- it's directly across from Tokyo. So this light color area on Honshu Island is Greater Tokyo, 38 million people living in that one area. So incredibly dense there. But when you go to the west side of Honshu Island and the Noto Peninsula specifically, it's very remote, and that's where our project is located. So let's go have a look at the Togi project, and we'll show you what we're doing there. And I'll just skip up to that. So the Togi Project, and you can see this is the inset map. So there's the peninsula. There is the red outline area which was our area of focus, and then we actually picked up the same geology around the project area as well for sort of greater certainty. Looking at the larger map here, this is the Togi Project. It's approximately 8 kilometers from the southwest to the northeast, it's about 4 kilometers wide. And it really features two historic mines, one in the south, one in the north. When we went in and we started to evaluate this abandoned gold field, we identified through our sampling very consistent and significant high grades in terms of our samples over quite an area. So again, this is sort of about 5 to 6 kilometers between these 2 mines. If you look carefully at the map that's highlighted here, there are purple triangles, you can see in the south and the north. And these were all samples that basically assay in excess of 7 grams, and that's quite significant from surface. So what we've just completed as our first drilling program for Barrick in this area as we've drilled two drill holes in the north oval, this oval that I'm showing in the north, which is called the Akasaka target. And so we drilled two drill holes of approximately 500 meters each under the system that we're seeing here. And what we're trying to do, it's very simple, we're trying to identify, is this a significant system? Is this a big system? Is this a Barrick size system? And so we've drilled those two holes now the drill holes -- or the drill core, pardon me, is being cut and shipped to the lab for assay, and we hope to be reporting that to you in January -- in early January. So that's where we are with our Togi Project, and that's the first of five targets across Japan that we're drilling for Barrick. So we've talked about the Togi Project. We've talked about the Hakuryu project. And now we'll move on for the next three. So I'm now going to take you to the area that has really become an important focus for Barrick but also the very important focus for Japan Gold and specifically Fraser MacCorquodale, who I introduced you to in our previous webinars. But for those of you that perhaps didn't attend, Fraser MacCorquodale came to us 8 months ago. where he had previously been the Head of Global Exploration for Newcrest and had done a significant evaluation of Japan several years ago when we had the competition with Newcrest and Newmont and Barrick competing to be our partner in country. So we were delighted when Fraser came across to join us in Japan and to become our President and discovery lead. And so his focus after looking across Japan, his initial focus is absolutely huge. So we're going to talk about that now, not only from a Barrick standpoint, but then we're going to move into our own thoughts on the area as well. So just to orient you on the Island of Kyushu, this is a very busy slide, but it shows the Island of Kyushu. And in light green are the two gold provinces or two gold districts in Japan. And the most important one in Kyushu is the southern area, and specifically, it's the northern half of the southern area. So we're going to move into that a little bit more in a moment. So moving into that southern area now, this is called the Hokusatsu district. And again, many of you have seen this slide before. But just to highlight, in the yellow area, that's the Sumitomo Metal Mining holdings. And the mine marker in the middle is the Hishikari gold mine. So that's your 13 million ounces. But also, this area is incredibly endowed with other historic mining as well. Down to the Southwest, you had the Kushikino mine, which was almost 2 million ounces at 6.7 grams. You've had the Yamagano mine, which is close to 1 million ounces. And then you had several mines to the north, which if you added them up, we're again another 1 million ounces. What's particularly unique to know in this area is the styles of mineralization that you can counter. So there really are two things that we're finding. As I mentioned previously, historically, the mining in Japan had been epithermal veins that have protruded from the ground. So prospectors had found epithermal veins that are stuck out of the ground and they chased those veins and mined them. And that's what the -- that's what the Kushikino mine is down in the southwest and some of the other smaller mines that we've identified to the north as well, including Yamagano initially. The Hishikari mine is different. And that's because there was a second sort of setting. And the second setting is that because this is an area where there was significant volcanic activity, in the past you had volcanic ash that was spewing out, and it was settling like a thin blanket across the landscape. And so it was sort of obscuring those veins. So in the areas that the ash has settled, there wasn't veins poking out of the ground. But therein lies the opportunity. Now the Hishikari mine, as most of you know, was the first blind or concealed discovery in Japan. So it wasn't veins coking out of the ground. It was discovered really by accident because the geological survey or the metal mining agency of Japan had drilled a vertical hole in the Hishikari mine discovery area, just measuring those young voltaic rocks, the ash effectively and where the older basement was. And when they drilled that hole, they accidentally, at that confluence of the volcanics and the basement, discovered the Hishikari gold mine. In order to find those types of discoveries elsewhere in this area, you have to have a different mindset. So you can't be looking for things protruding from the ground. You have to use modern models, modern evaluation techniques, a strong understanding of geochemistry and geophysics and you have to really look for a geophysical footprint or fingerprint, as we say, that might be very subtle but it would be what you would see at the surface above a Hishikari mine. And then what you need to do is you need to take that geochemical fingerprint and see where else on your project areas could you replicate that? So this map highlights in blue and in red all the projects that Japan Gold has in this area. We have 84% of all the prospective ground in the area. And virtually all of it has that thin veneer or blanket of volcanic ash on top of it. So what we've done is we've replicated the geochemistry fingerprint and tried to identify where that is around the areas. And I'll give you a good example. The Kushikino mine, that was a series of veins that were protruding from the ground. But we think it might extend to the east under our project area, the Kushikino-iriki project area, which is covered within volcanic ash. We definitely feel that's the case in the Mizobe area here now, where the initial scout holes were drilled by Barrick but where we've taken that project on now. And we're definitely seeing mineralization in the drill holes that we're drilling there. So this is a feature area for us. Where Barrick has focused their attention, it's really in the red area that's directly adjacent and directly north of the Hishikari mine. And so I'm going to show you that in a moment. But I will also say that we're seeing again concealed systems, the evidence of concealed systems up in the north in the Tobaru and the Tobaru-Fuke area as well. So let's look at what Barrick has found, because this project, we've advanced very carefully with the Barrick Alliance, and we're just finalizing our drill targets in order to drill it in the first quarter of 2025. So let's look at that area. And I'll just point out this yellow sort of finger that sticks up to the north as a point of reference in the next map that I'll show you. Let me get to that in a minute. Sorry, I'm just going to go there for a moment. Okay. There we go. All right. So what we are seeing here is a compilation of alteration and other technology that's been utilized to prepare the map that you're seeing on the right. The yellow finger I'm tracing it with my cursor right now, that's the yellow finger. So the ground in the south end of this map is the Sumitomo Metal Mining ground. And the Hishikari mine is really highlighted by sort of a yellow rectangle or rectangular shape that my cursor is tracing now as well. So that's what is showing up for a representation of the Hishikari mine. We've now looked very carefully at the Ebino project, which is the Barrick project to the north, and we've identified three discrete and separate targets: the Masaki target, the KZ target and the Otsuka target that all have similar fingerprints -- geochemical fingerprints to the Hishikari mine. This is very exciting for us, these are concealed targets, and these are the areas that we're going to be drilling in the new year. What we've also identified on the Tobaru project, which is outside the Barrick Alliance is a very significant fingerprint up at the Tobaru project as well. So that's something that really -- and I think this slide really well demonstrates how our detailed work and our modern technology along with the new styles and models of exploration are really unlocking areas of Japan. And I'm delighted to be drilling those in the new year to see how the drill results come out on those. So I'm just going to go back just a little bit more to talk about the Mizobe area, and we're getting a little lag on our -- so I'm just going to go back to the sketch. So we just looked at the red outline project area. And so now we're going to look at the rest of this Hokusatsu district and what -- and this is just another way to look at it. So in Japan, the major mines across Japan have all been found adjacent to or around a gravity high. So this is a geophysical signature that is basically an area where the older basement rocks have domed up or pushed up into the younger volcanic rocks and sometimes through the younger volcanic rocks. And in doing so, they've released the pressure on those mineral-rich boiling zones that are deep below these areas that are molten and allowed those molten masses that are under pressure to release that pressure and closer to the surface, concentrating the precious metals and depositing them around gravity highs. So that's a bit of technical background. The bottom line is that if you look at this map on the right, the red or the darker sort of pinky reddish areas are gravity highs. And so you can see going down to the bottom left, we've got the gravity high in the Kushikino area and off to the west is the Kushikino mine. You can see up in the north, you've got the Toburu-Fuke area, and you can see there's mines associated with that as there are at Ebino. And the Hishikari mine just sits off to the side of gravity high as well. Where we're focused and one of our top targets is the Mizobe area, which encompasses the Mizobe Project and several other projects. So we just call them sort of the Mizobe area, Mizobe district for us. And you can see there's a whole series of mines that are very shallow and are around the gravity high area that we see here. Bear in mind that all these mines were things that were poking out of the ground and there's that thin veneer of volcanic cover. So we're very excited to go deeper. Our search space is deeper to look at what really could be here. And again, recalling that step change between the shallow historic mines that are 1 million to 2.5 million ounces and the Hishikari mine, which is deeper and concealed and is 13 million ounces. So that's really our -- these are our search spaces, our areas of priority in this region. And so what our plan is now is we're completing the Barrick targets, the 3 targets that I showed you across. The Ebino project, we're drilling those coming up. We're drilling the Hakuryu project coming up. We've already drilled the -- sorry, the Togi target. So we've got five targets that we're drilling in a row across Japan, Barrick's five targets in the country. And results will be starting in January and we'll probably be going right through until probably July across those drilling programs. In the meantime, Fraser MacCorquodale has been working with a series of international experts to evaluate all the information that we've got across Japan to focus in on this area that's on the screen now, the Hokusatsu region, and to identify our very best targets as well so that we're lining up to then consistently move forward to drill our targets as well. And so it's a very interesting time in Japan Gold's history, and it really represents kind of an inflection point where we're drilling for discovery with Barrick and to our own account. So I'm just going to move ahead in the interest of time now to -- just a moment. I'm just flipping through our presentation here. Again, we're getting just a bit of a lag here. So I've just tried to highlight or summarize our Forward program. Again, we've got the Barrick Alliance drilling the five targets across our three projects. That Mizobe district that I just showed you is very important for us. So we've got detailed mapping that's just being finalized now across Mizobe and the adjoining the project areas. We're getting organized to do a drone aeromagnetic survey, which has been very, very helpful and informative for us up in Hokkaido at the Hakuryu project. And we're getting organized for our next phase of drilling at Mizobe. Now we already have drilling permits there. So this is something we can move on fairly quickly. And we also recognize that Kyushu is in a much better climate environment, where we don't have a harsh winter there. So we can be active in Kyushu all the 12 months of the year. Up at Tobaru, which was just north of the Hishikari mine and the Ebino project of Barrick, we're going to be doing more mapping, soil sampling and our drone survey there as well. And they were really looking at that target generation that I described under Fraser MacCorquodale's leadership. So let's move away from our projects to talk about now just our ownership structure. So recently, we had the Japan Gold Annual General Meeting. And some of you may recall that we had a convertible debenture that -- we did a convertible debenture about 8 months ago to our largest shareholder, which was Equinox Partners. It was a small convertible debenture of USD 2 million. But their ownership stake was increasing above 20%. And when that happens, you need to introduce that at your Annual General Meeting and have your shareholders approve that subscriber as becoming what's called a control person or someone that owns 20% or above of the company's shares. And so that was fully approved at our Annual General Meeting. And so we were immediately able to convert, at our instance, the convertible debenture. And what was very good for our shareholders was that while our current share price is approximately $0.75, our convertible debenture was converted at $0.13, almost double the current share trading price to Equinox Partners. That allowed them to increase their ownership stake in the country -- in the company, pardon me in Japan Gold, to 26.16%. So they have 26% of our company. And they represent a significant portion of the 63% of our company now, which is held by 12 institutions and funds. So we're delighted that, that's the case. In addition to that, Newmont owns 8% as another significant shareholder. So I wanted to just demonstrate that to you. Our market capitalization -- that brings our market capitalization to just approximately $20 million now. So still dramatically undervalued given the efforts that we put in -- the expenditures we put into Japan to date and the portfolio and partnerships that we've assembled. Now, I will just touch on our corporate management team. You've seen this before, but I'll really highlight our discovery team for a moment. I think we're very unique as exploration companies go in that we have not only one Head of Global Exploration for a major international company, Newcrest Fraser MacCorquodale coming and joining us. But of course, we have Takashi Kuriyama, who I've spoken about before. who was previously the Head of Global Exploration for Sumitomo Metal Mining as well as previously being the General Manager and Chief Geologist at the Hishikari gold mine. So it's an incredible team that we've been able to assemble. We've also recently, since my last webinar, we have brought Dr. Keiko Hattori on to our Board of Directors. She's a very interesting and a lovely individual who is very skilled in our space. She was the first woman to receive a PhD in economic geology from Tokyo University. She has become a very distinguished professor at the University of Ottawa in Canada. And she has been very well recognized with a recent award called the Duncan R. Gary Award for the top economic geologists. So we're very delighted to have her join our Board of Directors. Why invest in Japan Gold? Before I jump into that, I will tell you that I've just come back from an incredible 2-week trip talking about Japan and Japan Gold around the world. So if I seem a little jet lag today, I am. But basically, I was in Zurich at the Precious Metals Summit. I was at a conference in London. I was also at a conference in Dubai. And then I also met with one of our significant shareholders in Qatar, being Qatar Mining. So I was very fortunate to get great feedback from them and support from around the world in terms of our activities and recognition of what we're doing. And it was interesting, I think we've even had representatives of other countries come and approach us and say, "We've seen how you've moved into Japan and you've built this organization. You've become well established and you attracted the largest gold miners in the world. And we're using that as our playbook for other countries." So that was very gratifying as well. Again, I always go back to our checklist. Japan, high-grade gold is what you're looking for. And especially, as Tim pointed out in the introduction, we've got gold prices still about $2,600 an ounce. It's fantastic for us. And with a very strong U.S. dollar that they're quoted in. We're in a safe geopolitical jurisdiction, and that was highlighted around the world when I went to these various conferences. Japan respects foreign investment. They treat us extremely well, and we have direct access to all of the levels of government that I spoke about in terms of the permitting process and our ability to have the collaboration of all the stakeholders in moving our permits forward and rejuvenating the gold mining industry in the country. We put together a team, which is second to none that's really taking on Japan now and is really finding the best targets. And that's now manifesting itself in multiple drill programs that are going to be carried out across the country with results that we hope to report to you successfully. So that's why you should consider investing in Japan Gold and why you should consider gold as an asset class that you might want to consider. So thank you very much for listening to my presentation. I'm happy to pause now and take any questions from the audience.

Thank you very much for the very informative presentation, John. As John mentioned, we'll now start the Q&A portion of the webinar. Reminder to everyone on the line that you can type your questions into the chat box at any time. Perhaps, we'll kick it off here with a general discussion a little bit on politics. Obviously, you're very familiar with the jurisdiction of Japan. Can you tell us kind of overall how -- what is the political environment currently in the country, in particular in regards to mining?

Right, absolutely. Well, first of all, I'll make a couple of comments. In 2012, the government changed the Mining Act for a couple of reasons. They changed the Mining Act because the areas where the gold -- the historic gold mining was most active and where historic gold mines are closed today and have been closed since the Second World War, being Hokkaido in the north and Kyushu in the South are very economically depressed. So they need to stimulate industry in those areas. And this is one of the key industries that could really advance those economies. So this became a priority. Secondly, Japan has been incredibly stable in terms of having a consistent government for many, many years. Recently, there's been a change in terms of the way the government has -- a recent election and the way the government is going forward. But across the board, there is consistent support for restarting the gold mining industry. And that's underscored time and time again with us not only in meetings in Tokyo with the central government, but also meeting in Hokkaido, in Kyushu with the prefectural government or the provincial governments, where they all are behind us supporting going forward. And so the political landscape, while there's been a bit of a change recently with -- and we've seen some of that around the world, where sometimes the incumbents get moved on with new groups that have got new ideas, whichever the groups are in Japan, they all support the activity that we're putting forward in terms of rejuvenating those areas for economic development.

Great. And then as far as -- obviously, Japan is a fairly densely populated place. Are there challenges in terms of getting access to the properties? And do you have to consult with local communities or local stakeholders?

Right. Yes. Excellent question. So for most people who haven't been to Japan, they think about Tokyo when you say Japan. And they think about a densely crowded 38 million people in a highly efficient country that you can set your watch by the time the trains -- when a train is supposed to arrive, you can set your watch by it. And it's safe and it's clean and it's remarkable. However -- and there's a number of cities that are like that wherever there's dense urban areas. But there are vast areas of Japan that are virtually unpopulated or very sparsely populated. And that's because, again, in Hokkaido and Kyushu specifically, that's the -- those are areas where, because there's been no industry, people have moved away from the rural towns and village to those large urban centers, And so there's a myriad of ghost towns across these areas. But the contrast is that across Japan, there's incredible infrastructure. So there's highways, there's bridges, there's tunnels, which are some of the best in the world. And so you've got access to -- from that standpoint to all your projects. Japan is very straightforward. If you want to access your properties, you go through a very systematic and simple process to get access onto your property areas. Sometimes the surface rights are owned by private individuals. And we've had incredible support across Japan, where private individual landowners are happy to have us onboard. Sometimes they're owned by the forestry department. We have a relationship with many of the forestry departments across Japan that are in our areas as well, and I visit them regularly. So uniformly, the industry and Japan are behind us moving forward to unlock these new discoveries. And the system is well understood. And the more we've gone through with various permitting and access, the more it's become simplified and the more people become comfortable with it. There's always an element of education when you go into a country that has been really closed for this industry for 75-plus years. And so we've been very careful to do that socialization wherever we go, and we've got an excellent team of Japanese executives that are part of our group and myself that go in on a joint basis.

Great. We did have some questions come in here on, I guess, specifically one Togi -- on Togi Project. When would you look forward to some drilling results from Togi? And how many meters, how deep would you plan to drill?

Sure. Yes. So we drilled two holes that were approximately 500 meters each. And those -- so those are good holes. Those are angled holes where we are going under the surface area where we've identified this trend and we're trying to establish how big this system actually could be. The assay -- so the drill core is sent to the ALS lab in North Vancouver, which we know them very, very well. And we expect our drill results in January. So it's very straightforward. We're on the program, and material is already on its way. So we expect to see those results in January.

Okay. Great. And we had a couple of questions about the Barrick relationship. How large of a deposit does Barrick need to see to want to move forward? 3 million ounces or more or less?

Yes, that's a great question. So the standard that most people are familiar with, with the majors is that they're generally looking for a Tier 1 ore body which is 5 million ounces, where you can mine 500,000 ounces a year for 10 years or more. So that's a Tier 1. Tier 2 is 3 million ounces, where you can mine 3 million ounces at 300,000 ounces a year for 10 years or more. So that's generally the rationale. In Barrick's case -- and let me step back a little bit. The all-in sustaining costs globally today is approximately $1,500 an ounce, $1,400 to $1,500 an ounce. So to get an ounce of gold in my hand, it's going to cost $1,500 to get there. So what Barrick -- Barrick is very smart and they're obviously active globally. But when they look at Japan, they go, "There's a unique case here." Because they look at Hishikari." And first of all, they look at Hishikari that was discovered in 1981. And just 4 years later, they were in production and 4 years later, in 1985. So they look at that. But then they look at Hishikari and they go, there's this unique opportunity to send that ore, to mine it, bring it out of the ground and directly send it to the Sumitomo smelter without processing it on site. What that does is it cuts out the capital expenditure for the processing facility and a number of other aspects. And so the all-in sustaining cost at Hishikari are approximately $500 an ounce. So all of a sudden, you're almost $1,000 an ounce more profitable. So then that changes your evaluation of what you need to look for in Japan. And so from our standpoint, I would say that Barrick's target is approximately 3 million ounces but I think it's on a case-by-case basis. What our target is, our target is 1 million ounces at 7 grams per tonne. That can be a wonderful mine in Japan, 1 million ounces at 7 grams per tonne. And part of the evaluation process that Fraser MacCorquodale did in the initial months when he joined the company was looking at our whole project portfolio across Japan and recognizing the kind of footprint you'd need for 1 million ounces at 7 grams and the type of setting. And we were very strict about this, and we decided to relinquish a series of our areas that look highly prospective but maybe just didn't have those attributes. And so that's what we've done now. So today, we're down to 25 projects, but we've gone from 35, really down to 25 projects that are our focus, three with Barrick and the balance being our portfolio that's expanding. So anyway, that's just a little bit of background about the economics and what Barrick could be looking for. So I'm just cautioning everybody that we don't have to necessarily find 5 million ounces. We'd like to find five million. We'd like to find the next Hishikari, which, of course, is our goal. But we've got smaller targets, which would be incredibly successful and beneficial for Japan Gold.

And one final question, again, with regards to the Barrick agreement. What are the earn-in terms for Barrick to gain a 75% interest? How much might Barrick have to spend in total through a bankable feasibility study?

Yes, excellent question. And really, there's two steps. So what I'll say is, if you think about different styles of mineralization, when people make a discovery, if you discover a big porphyry as an example, a very low-grade -- so low grades of gold, maybe 0.5 gram per tonne or something but in a very large homogeneous area. You can drill a series of drill holes that are spaced apart fairly broadly and prove up a resource, which will be the underpinning of your pre-feasibility study. And then ultimately, you'll have the economics on to that and other logistics and you'll come up with your bankable feasibility study. So there's sort of budgets associated with that. What we're looking for is different. We're looking for epithermal vein system. So in Hishikari's case, there are approximately 40, 4-0 veins that they're mining. Veins have the annoying characteristics of not being precisely where you want. Sometimes they pitch out, sometimes they swell. Sometimes they're verticals. Sometimes they dip in different directions, et cetera. So it takes more drilling to get to your resource calculations. And then once you can do that, then you can build your -- so your economics onto that so your bankable feasibility study are somewhat easier because these mines are generally smaller and they're underground small underground mines. So it's hard to precisely project what that would be. But I would say a pre-feasibility study, $30 million, maybe something along those lines. A bankable feasibility study could be another $20 million or more. it's those kinds of dollars. So we're -- and that's, of course on one project. So we're carried through that. And again, what we've done is we recognize that when those are concluded, we're going to have 75% of the project and Barrick potentially will want to go build a mine and we'll have to come up with 25% of the funding for that. And so what we've done, and that's why we spent so much time interacting with the large institutions and funds, is to find groups that want to put up those large dollars when you go to build mines. And that's why we're fortunate to have 12 institutions that have all made the decision doing their due diligence that Japan has the potential to host a significant new potential line that they would be willing to support. So we're in a very strong position there. But there's -- it's large dollars that go into each one of these targets or projects to get them to those stages, and that's what Barrick solely has to fund on their three projects and five targets.

Great, great. Well, maybe in closing, I'll ask a question here. But you've obviously mentioned some of this already, but just to review, what are maybe some key news items or catalysts that we might look forward to in the coming months?

Yes. Look, Tim, I think that we're at -- as I mentioned earlier, we're at the inflection point now where it's been years where we've been evaluating the whole country of Japan, either ourselves or with partners. Barrick did a comprehensive review. They spent $20 million of their money just to earn an interest to have the option on these three targets that we have now. So they obviously, a, thought was very important; but b, they evaluated Japan and came up with a thesis that gave us incredible information across the country. We're now proving that up with our drill bit. And so I want to caution the audience that not all drill holes are going to be successful, not all targets are going to be Barrick-sized targets. And so we recognize we're in the exploration business. But when you are most successful is when you can derisk a country like we are doing at our various targets by bringing in not only our own expertise but the expertise of international experts. So that's what we've done. And we're drilling targets now that we really think have that scale and that potential. We've also brought in a new Discovery Lead who has really been able to take all that data that Barrick has assembled and that we've done over years and now do the targeting with other associates that he's got that needs interacting with around the world to come up with our own excellent target. So we're at that inflection point. So again, drills out starting in January. and really going, I would say, for the next couple of years, where consistently we're just going to be drilling targets across Japan. And so when you look at the market capitalization of our company of approximately $20 million. And what the potential could be with just a drill hole that demonstrates some economic widths and some good grade, that really can be a complete re-rating exercise that creates incredible value for investors. So we always -- and we really appreciate the patience that our investors have been with us. Share prices have declined through downward markets and through times that we have been putting out that boring information of geochemistry, of geophysics, and geology that is not as exciting to investors. But that patience, we hope, is going to be rewarded through the drill bit. And so we look forward to reporting on that as we go forward in the coming months.

Great, great. And I guess maybe tacking on, but we did have one other question come in. But ever popular. How much cash do you have? And how -- will you need to raise additional funds in the next year or two?

So cash is always important for an exploration company, and that's what we always are focused on. So two things. First of all, as I mentioned, Barrick is fully funding their activities. And that also includes our Tokyo operations as well. So we're fortunate there. In terms of our projects going forward outside the Barrick Alliance, we need ongoing capital for that. But we also recognize how dilutive it is to go into the equity markets for that. So that's not our priority and that's not our interest. We are antidilutive. So what that has us doing is that has us always having dialogue with mining companies that are very interested in Japan and other large funding groups that I've been in contact with and engaging with in my global trip over the last several weeks. So I think you'll see more capital come to the table, of course, that we'll continue that funding requirement that we'll need as we move forward to do this. But all the groups that I've spoken to recognize what we've assembled so far and that we are at that inflection point now. So for them to fund the drilling going forward, they recognize that. What we've also done is we've been very careful with our expenditures. So again, we do this internally. We brought Fraser MacCorquodale on, and we got our chart pencil out and very carefully looked at our whole organization for any efficiencies there as well. And I'll finally add, and this is where people should take real comfort. When Fraser joined the company, he was paid a lot of money at Newcrest. He was the Head of their global exploration group and had been very successful. He looked at over 300 ore bodies around the world in the last 5 years. When he came to us, I said, "We can't do that." I said, "We're going to incent you through incentives like stock options to make discoveries. So if you make a discovery for us, you're going to be very well rewarded." And he said, "I'm absolutely onboard with that." And so again, we were able to really minimize our outlay by incenting someone that's knowledgeable on discoveries to step into that role. And that should give people a lot of comfort that the Head of our Discovery team is largely compensated or rewarded based on making new discoveries across Japan.

Great, great. Well, I would like to thank John Proust for presenting the Japan Gold story today. And thank you, everyone, on the line for tuning in. Red Cloud's webinar series will continue next week with Sonora Gold presenting Tuesday, December 3 at 2:00 p.m. Eastern Time. Have a great rest of your day and happy investing.