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

Good afternoon, and thank you for joining us today. My name is David Talbot. I'm Managing Director and Head of Research here at Red Cloud Securities. And I'm delighted to host the Red Cloud webinar on gold today. We are going to hear from Japan Gold's Chairman and CEO, John Proust, and he will join us today. Now during today's webinar, he will provide an overview and outlook, and then we'll take some questions. [Operator Instructions] But before we kick things off, first, we need to discuss the fine print. During this Japan Gold webinar, forward-looking statements may be made. I direct listeners to the forward-looking statements outlined on Page 2 of its corporate presentation. I'm hoping it's on Page 2. That can be found on the company's website, japangold.com. Now for Red Cloud Securities, I'd highlight this webinar is for information purposes only. It should not be considered a solicitation or recommendation to buy or sell. We note this call does not consider the particular situation or needs of individual investors. Participants should rely on their own investigation and seek their own professional advice before investing. So please see our most recent research located on the Red Cloud website for specific disclosures on Japan Gold. With that, I now turn it over to John to update the audience on the company. John, take it away.

David, thanks for hosting today and nice to see the audience online with us as well. I'm going to run through our current deck corporate presentation. But really, what I want to focus on is the exciting elements of this year's activities, which is really drilling, drilling, drilling. And I want to supplement that with a new addition to our team who is making a significant impact now and talk about the future and results from our drilling activities, which we expect to release in the summer and right through the balance of the year. So thanks again for joining. As David mentioned, we've got some forward-looking statements, and there they are on Slide 2. So to recap, we're exploring in Japan for high-grade epithermal gold deposits. These are quartz vein-hosted gold deposits that are plentiful in Japan and are very, very high grade. Our investment thesis, and we've tried to distill this down to a few bullet points, is that we are the first mover in Japan, and we have been since the Mining Act changed in 2012. It's a vastly under-explored country, certainly since the Second World War with modern mining methods. It's a new frontier for gold exploration because it's been closed to foreign involvement right until 2012. So it's kind of been on hold for a number of decades. There's demonstrated high-grade gold potential because one of the highest-grade Tier 1 gold mines and the only operating gold mine in Japan is active today. And we derisked the opportunity by some very significant investors as well as international mining companies that are part of our activities. We've assembled a world-class team of not only Japanese individuals that have expertise in-country, but international experts that have seen same style of mineralization and can bring that expertise to Japan. We're looking at district scale opportunities here, and that's going to be a bit of my commentary today in that sometimes companies focus on very small footprints, very small projects, and that's where they put the bulk of their activities. We've now found districts that are really impactful and that really have the high potential for new discoveries. So we're going to talk about that. We're also going to talk, in conjunction with that, search space, so where do you actually look if you're an explorer at what depth level and why. And again, as I mentioned, we are actively drilling for discoveries now. So why Japan? I think the audience is well familiar with this. Geopolitical safety is at the top of the list. There is that history of high-grade gold mining. We are incredibly under-explored with modern methods. And again, our new team member is really highlighting that. We've got the low capital expenditure potential by being able to integrate with local infrastructure. There is significant infrastructure in place already in Japan, and it's a mining-friendly regime. They've invited us to come there to restart the gold mining industry. So again, the history of gold mining in Japan, there's 500 years of gold mining right up to 1943. And what that produced was 6 mines that were just shy of 1 million ounces up to 2.5 million ounces. And by and large, these were very shallow mines that were really mining things that had emerged from the ground, veins that have been identified at surface by prospectors and where those veins had been chased into the depths. In 1943, of course, that's when the closure of all the gold mines were put in place by the Japanese government in order to allow the workers to support the Second World War efforts. And so after the Second World War, very limited production resumed. And again, by our count, there are 64 closed gold mines in Japan today. So really, after the war, limited work, mining companies went abroad to bring natural resources back to Japan. Japan started building significant infrastructure by way of smelters. And again, 5 large copper smelters are located in Japan that all need quartz as part of their processing regime as silica flux. And there are a number of other smelters in the country as well, a total of 23. So then we fast forward to 1981, that's when the Hishikari Mine was discovered. Again, I think our audience is well familiar with this. This is the only operating gold mine in Japan today. You can see it's in a lovely setting down in Southern Kyushu, a beautiful setting with rice paddies and streams and a very small footprint, yet this is a 14 million ounce ore body that's already produced, of those 14 million ounces, approximately 9 million ounces at in excess of 30 grams per tonne, far greater than the global average. This is a very shallow mine, and it's a mine, in my earlier comments, where they extract the ore from underground, bringing it up a ramp. They don't process it on site. They just directly send it to the smelter. And again, that creates an all-in sustaining cost, so the cost to produce 1 ounce of gold that is remarkably low, it's only approximately $500 an ounce as compared with the global average, which is currently sitting around $1,500 an ounce, so an incredibly profitable mining operation. And that same opportunity exists for us today if we have silica-rich ore coming from a mine or an ore body that we identify, that we can have that same opportunity to ship our material to a smelter and get that low all-in sustaining cost. This is the smelter, the Sumitomo Metal Mining smelter, that the Hishikari ore is sent to. So you can see an enormous infrastructure. It's been in place for a number of years and that we can really benefit on as producers in the future. So in 2012, as I mentioned, the Mining Act changed, and we came into Japan as the first mover and as the only company active there for 4.5 years, and evaluated the country and selected what we thought were the very best areas of the country to host new discoveries. Now we have approximately 2,500 square kilometers, and that is located in 5, or probably 4, of the gold districts or provinces in Japan, and we are the dominant player in all those particular areas. We've then gone through systematic exploration of our project portfolio with mapping and geology and geophysics and geochemistry. And we've been able to select the areas that are the high priority areas for us. So we're really focused. And then we've moved forward with a partnership that we'll talk about in a moment. We have active drilling programs underway. So how have we derisked this opportunity for investors? And what does it demonstrate for the potential going forward? A couple of different ways. First of all, we derisked it by bringing in a partner. After a competition that we had in 2020, we selected Barrick to come in and evaluate our property portfolio or our project portfolio, and they've spent in excess of CAD 20 million evaluating our project portfolio and selecting 3 projects that they think have the potential to host a Tier 1 or Tier 2 ore body. And so our sole focus for the Barrick Alliance now is to now drill the very best targets across Japan that they've identified, and we're well underway in that series of drilling programs. The ultimate result is that Barrick has the opportunity to earn a 51% interest when they complete, at their cost, a pre-feasibility study on a project. And when they advance to a bankable feasibility study, they can increase to a 75% interest. That means that we're carried right through a 25% interest. And at that point, we would have to go shoulder to shoulder with them to fund our portion of the mine build, our 25% portion. And we put, I think, some very good elements in place to support that, which we'll talk about in a moment. That's one way we've derisked it. We brought in one of the large gold mining companies in the world that's done their own evaluation and has identified opportunities in Japan. On the other side, just recently, we concluded a financing with Osisko Gold Royalties. Osisko Gold Royalties is one of the large royalty providers in the world, and they did something quite unusual. They elected to buy a small royalty from Japan Gold because of the potential that we have to make a new discovery in Japan. So normally, royalty companies buy a royalty based on resources or reserves of that entity. In our case, we didn't have reserves and resources, but we had demonstrated the potential. So we were able to raise USD 5 million, which is basically the large portion is set aside now to fund our drilling programs outside the Barrick Alliance. So those dollars are standing by to be utilized a little bit later in this year. And again, if we have any success there, they have an additional USD 3 million, which we would get in early 2026 that would add to that drilling fund. So we're, again, delighted that they've come in, they've done their due diligence. And again, they've derisked this opportunity by identifying that there is significant potential in Japan. When we look at our share structure, and many of you have seen the share structure in the past, I always highlight the fact that 63% of our shares are now held by 12 of the large institutions globally. These are institutions that are very familiar with mining internationally, that have done their review of Japan and have come onboard to be our current funders in a small way, but to be our large financing partners when we go forward to build mines in the future. And those are companies like BlackRock and RCF and Rothschild and Equinox Partners. It's a very, very outstanding list of funding participants. So we're very happy to have them onboard with us right now. In addition, Newmont owns an 8% stake in our business, and they've been very supportive and have provided a lot of information for us that we've requested over the years. One thing that I'll just touch on, on this particular slide is that in April, following the Osisko financing, we made a decision to do a brokered financing. So that's engaging 2 stockbrokers, being, in this case, Canaccord and Moneta Securities, to lead a financing for us. That was based on an approach that they made to us to go forward, that they felt they had the shareholders or the investors to come in and take on that financing. We initiated a financing in the middle of April. But subsequently, the financing expired just recently at the end of May. And we did not go forward and conclude that financing. Through that process, while there was interest in what we were doing, I found that the brokers, by and large, really had a focus on other larger financings, there was sort of this tidal wave of opportunities that came to the fore with the strong gold price, and resuming financing in international markets. So ultimately, we let that financing expire at the end of May, and we're really considering other alternatives from a financing standpoint in terms of how we're going to proceed with our working capital needs going forward. I have to say that we're fully funded by Barrick for their work programs this year. And we're fully funded for our work programs external from Barrick through our Osisko Gold Royalties financing. And so we are in good financial shape, but we are adding dollars through that brokered financing. My experience over the last 10 years is really that we've done non-brokered financing where we've approached various potential shareholders or existing shareholders to participate in financings and then brought that collection to the table. And then we've also worked with brokerage firms, and Red Cloud is a classic example, where Red Cloud has been excellent at going out and identifying other shareholders or potential shareholders that weren't part of our shareholder base and bringing those to the table. And we've been very appreciative of that and have rewarded any finders of those kinds of orders. So the non-brokered financing is the way that we'll be proceeding going forward in any future financing endeavors. Anyway, back to our management team. I wanted to really talk to you about something I'm quite excited about. Over the last year to 1.5 years, we've really added to our technical team to really zero in on capitalizing on the data that we've collected over the last number of years and really taking that data, distilling it and turning it into targets, drilling targets, where we hope to make those new discoveries in Japan. So the first person that joined us just over a year ago was Fraser MacCorquodale, who came to us as the former Head of Global Exploration from Newcrest which was subsequently acquired by Newmont. And Fraser is onboard as our senior technical adviser, and he has specific expertise in the style of mineralization that we have in Japan and also in the type of search space that we're looking at in terms of where we want to find new ore bodies in Japan. So a great person to be our senior technical adviser. More recently, we've announced the joining of our new Vice President of Exploration, Jason Letto. Now Jason has joined us from Vale, an extensive career at Vale, an international career where he's looked at precious metals as well as base metals globally, and he's really zeroed in on near-mine district-scale exploration. He's been fortunate enough to make 6 discoveries in that vein, and we're delighted to have him come onboard and join us. He brings onboard a lot of technical expertise and also knowledge of new techniques to efficiently, cost effectively and quickly identify new exploration targets for us. And he's also leading our existing drilling programs under the Barrick Alliance. So we're delighted to have him onboard with us as a new potential team member. And he joins, of course, Takashi Kuriyama, who is the previous Head of Global Exploration for Sumitomo Metal Mining and was previously the General Manager and Chief Geologist at Hishikari Gold Mine that I showed you a few moments ago. So we've got a fabulous technical team onboard. So in Japan, we're the project generator. In Japan, we have generated an enormous set of projects. And we have all the capabilities in-house to advance those projects and bring them up to a point where we bring onboard partner-funded exploration. So that's our model, is to generate projects, advance them ourselves with our own resources, but bring onboard larger partners, like Barrick, to establish those. So we continue to look for potential future partnerships. We were very pleased to see the number of companies that approached us at the recent PDAC, and we continue to have ongoing dialogue with mining companies. Our approach to where we're looking, and that's the search space question, is we're looking near surface around those historic mines, the 6 historic mines that I mentioned to you, that were the 1 million ounce to 2.5 million ounce producers over the last number of years. That's a very shallow search space. And again, it's looking, as they say, within the shadow of the head frame of those old mines. But the Hishikari mine is a little bit deeper. It's 200 to 300 meters below the surface. And that's a step change where you've gone from 2.5 million ounce ore bodies close to the surface to 14 million ounces, a little bit deeper. And so that search space really has not been effectively explored in Japan. And again, it takes new modern techniques to really look at that search space or that depth window and identify the targeting there. And that's something that Fraser MacCorquodale, and specifically Jason Letto, our new VP of Exploration, have expertise in. So that's what we're moving on with now. Okay. So I'll just move to the next slide here. So here's where we are in Japan right now. Where are we drilling? So I want to talk to you about drilling and drilling results. At the end of last year, we drilled Barrick's first target, which is the Togi project. And it's adjacent to the largest past-producing mine in Japan. We drilled a very large structure that ran for almost 7 kilometers and had a historic mine at either end. We've identified with those 2 initial drill holes that there is a very large system there, and Barrick is now considering how they're going to advance that particular target. Then this year, we went up to the north, up to the island of Hokkaido, and we drilled immediately adjacent to the Konomai Mine, which had produced just under 2.5 million ounces of gold; closed in 1973. The Hakuryu Project is adjacent to the Konomai Mine. And our view is that this may be an extension to the Konomai mine. So we've now completed our drilling there. We drilled 3 out of 4 drill holes to get the information we required, and we've now sent that drill core off to the labs, and we expect those drill results. Those assays are going to be in hand in July. So we'll be releasing those. We've now moved down to Southern Japan directly north of the Hishikari Mine that we've talked about that's produced over 9 million ounces, and we're drilling immediately adjacent to that to the north. There's 2 projects that were there, and we're hoping to announce the initiation of the Ebino drill program very, very shortly. So standby for that. That drilling program will take a couple of months, and we would expect that the drill results from the Ebino program will be in hand in September. So we've got lots of drill news to be bringing forward to investors. So now we're moving forward to focus on that island of Kyushu and just to talk to you about that upcoming Ebino drill program that we're about to embark on now. So here we are looking at the island of Kyushu. The light green areas show the 2 gold provinces in the island of Kyushu. And the focus for us is really the southern province, the primary focus. You can see the Hishikari mine is highlighted there, and the red project outlines our projects in that area. This is the premier area of Japan. In addition to the Hishikari Gold Mine and there are 9 million-plus ounces now produced, there have been a number of additional mines in that area that have produced significant gold over the last number of years and up to 1943. So to zero in on that area and to elaborate on that a little bit, down in the southwest, you have the Kushikino Mine that produced just under 2 million ounces. You had the Yamagano Mine in the center of the area that produced just under 1 million ounces at high grade. Then you've got the Hishikari Mine in the yellow area highlighted. And then you've got the Ohkuchi Mine, another 0.75 million ounces; and the Fuke Mine further north of that. So an incredibly endowed area. Barrick selected the red Ebino project area as their focus here. Now what I want to explain to our audience today is that this area and this district around the Hishikari mine, which runs about 40 kilometers north-south and about 15 kilometers east-west, has basically got a layer of volcanic ash or volcanic rocks sitting on top of the prospective ground. So what you have to do is you have to be able to look underneath. So this is like a thin blanket that's obscuring what's underneath the blanket. So you have to use certain techniques and various elements to identify discoveries there. The Hishikari Gold Mine is the first discovery in Japan that is a concealed ore body that has been discovered and turned into a mine, and it's turned into one of the highest grade Tier 1 gold mines in the world. So a great success. So the question is really, what else is under this blanket? The mines that I've highlighted for you, the historic mines, those were all predominantly vein systems that poked out of the ground that were identified and subsequently mined. But the blue area and the red area are areas that have that volcanic cover. And so our job is to look under this volcanic ash and volcanic material and identify where the new targets and the new ore bodies are located. Fortunately, again, Fraser MacCorquodale is an expert in looking for concealed ore bodies and Jason Letto is an expert at looking at district-scale, near-mine, think Hishikari, new discoveries, and he's made 6 discoveries in that vein. So I think we've got the right team assembled for us here. So let's look at that Ebino Project and why they selected that. So Barrick selected this area because with the compilation of work that we did for Barrick prior to drilling, we looked at the Hishikari area, which you can see is in a gold oval at the bottom of this sketch, and then that shows that concealed Hishikari ore body. But then on the Barrick Alliance ground, we identified the Masaki, the KZ and the Otsuka targets, concealed targets, as potential opportunities for the Barrick Alliance. And so our drilling programs, our upcoming drilling programs, the first ones will be at the Otsuka and KZ targets. So in addition to that, with our ongoing work, we identified the Tobaru area further to the north as an area that had that same potential for a concealed ore body. So this is a very exciting area for us, and we're really looking forward to the drill results here. To look at that a little bit more, I've highlighted that area and that trend that goes to the northwest with a gold oval here. And you can see that there is a trend that's sort of lining up there. Interestingly enough, it's a parallel trend to the Hishikari Gold Mine, the Ohkuchi Mine moving to the Northwest, and the Fuke Mine. So there's a parallel trend there. And again, all this combined information has really got Barrick enthusiastic and ourselves very much enthusiastic as well. So this is the area that we're focused on. Now outside the Barrick Alliance, our area of focus is the Mizobe area, which is south of the Hishikari Mine. Interestingly enough, this is an area that Barrick initially selected as an area that they felt had great potential. But as their technical team changed, their technical team's expertise really focused on other styles of mineralization, and the Mizobe area became less important to them. So ultimately, they relinquished the Mizobe area, we have it 100%, and it's our top priority and will be the first project that we're drilling outside the Barrick Alliance, utilizing those Osisko Gold royalty dollars, which we have in our treasury. So that's where we're going to be going after we finish the Ebino project in, I would say, September, October of this year. Now we'll look at Mizobe just a little bit more. So basically, this area, this Mizobe area, and there's a lot of detail on this sketch, but basically, we think it's an emerging undercover target. And what we mean by that is there's that blanket of volcanic material over this area, but there have been certain little windows that we looked at with an initial scout drilling program with Barrick. And we drilled 7 widely spaced drill holes, 5 of which hit mineralization. So that was a very, very high percentage. And we not only found veins, quartz veins with gold in it, but we also found that the host rock carried mineralization as well, carried gold as well, lower grade, but over very large distances. So this is something that's very intriguing to us. What we've also put on this sketch is the Hishikari to scale map. So you can see that at the bottom. It's a very small footprint, and you can see how there's the potential for room for a Hishikari scale in this Mizobe area that we're advancing. So to move forward with that, this just highlights the fact really that it is an emerging undercover target, but that in the lower-grade material, the host rock, we had over 140 meters of just under 1 gram, which was really very, very impressive. And that also included 10 meters at over 4 grams. So there's something very intriguing here. And all this is saying to us go deeper because something has pulsed gold into this system, and we need to find the source of it. So we need to look a little bit deeper. And this is just a sketch that shows what we did originally and that we do need to go just a little bit deeper than that because the vertical extent of our holes is really not that great. It's just over 100 to 150 meters, and we need to go below that. So another area that I wanted to point out is that, on the map of the island of Kyushu, I showed you 2 light green areas. The one that we focused on is in the south. But in the central part of Kyushu is the second area. And this area is anchored by a historic mine, the Taio Mine, that produced just over 1 million ounces, and we have a project directly north of that, which we think could be the extension of the Taio Mine. And there's a lot of silica there as well, a lot of quartz strewn across this property, which we think could be a good feedstock for the smelters that require that silica for their smelters. And interestingly enough, about 65 kilometers to the east is one of the 5 large copper smelters in Japan. So there's potential opportunity there. The second piece that I want to talk to you is something that's become very, very topical, and this is around our Bajo Mine Project. So the Bajo Mine Project, I really like for its gold potential because there was a historic mine that produced over 400,000 ounces predominantly from one very large vein, but there really hasn't been significant exploration in this area. And this material was producing gold at up to 125 grams per tonne. So it was an extraordinarily high-grade area, and it really is something that shows very interesting potential for us. More recently, and as those of you that are following the critical minerals space have noted, antimony has become one of the most sought-after and sourced materials in the world for a whole variety of uses, high-technology uses in everything from armaments, so weapons production, missiles, ballistics, right into your cellular phone. And the predominant supplier has been China, who has now restricted the supply of antimony globally. Antimony is often found as a byproduct from a gold mine where they might have a small amount of antimony. But interestingly enough, on the Bajo Project, in East Bajo, there was a dedicated antimony mine that produced right up to the Second World War and then was closed. It was very high grade, and we're now really looking carefully at what has been done historically and where the potential might be here to advance something in that antimony space. So stay tuned for that. But I just wanted to highlight that when we're in Japan, we're called Japan Gold for a reason, but it's not that we don't see other things like antimony and silver that I'll be talking about in a moment. So I just wanted to highlight that for you. This, again, is a more detailed blowup. You can see this on our website, but it shows the area that was mined for the Bajo area and where we see that there could be a potential in that project. I now want to take you right up to the north end of Japan up to the island of Hokkaido and talk to you about that Hakuryu drilling that we've just completed and where we're expecting drill results in July. So the Hakuryu Project is highlighted here in red. The blue projects are our projects that are outside the Barrick Alliance. And the Hakuryu Project sits directly south of the Konomai Gold Mine that was another Sumitomo Metal Mining asset that was closed in the 1970s. Now we again think that the Hakuryu Project could be an extension of the Konomai mine going to the south, and we're looking forward to the drill results that are going to come out of our initial work there as well. And I'm just going to show you a couple of slides just to show you what we've done. So this is a blowup of our Hakuryu Project, and my cursor is outlining the square project area of the Hakuryu Project. It's situated in a corridor that you can see there's dotted purple lines, which are the Konomai district, the Konomai mining district. The red lines are the quartz veins that were mined by the Konomai Mine that produced their 2.35 million ounces. And the work that we've done in these black ovals, which include a drone magnetic survey, which really lit up the area, shows that there could be great potential further to the south. And so our drilling started at the eastern end of this large oval, this southwest to northeast trend in oval, right at the very tip of that, the eastern tip of that. And that's where we've completed our drilling. I'll just show you that in just a different format here. So again, you can see that same corridor. You can see all the historic sort of mining areas that have been mined with the Konomai Mine through that area and the potential in gray that we've identified in areas that really haven't been evaluated and could be that extension. So we drilled our holes. We had 4 drill holes planned, but we felt that we drilled 3 holes and we got the information that we needed to tell us where we needed to go. And so you'll see that information in the drill results that we're anticipating in July. So I'm just going to go back to our map of this area. So I've talked about district-scale potential and Jason Letto's evaluation expertise in that. And I just want to highlight to the southeast of the Hakuryu Project, the Ikutahara and Kanehana project areas that we look at sort of one combined area, so it is called the greater Ikutahara area that we've done a lot of work on historically, but we think has that district-scale potential. So to give you a sense of scale, the Hishikari Mine District, that area was about 40 kilometers north-south and about 15 kilometers east-west. This Ikutahara area is about 25 kilometers north-south and about 20 kilometers east-west. And so I'm going to take you that through and blow that up for you just to show you what that looks like. And here it is here. So this is an outline of those 2 projects combined. Now what I want show you here, demonstrate to you, is that, first of all, we put the historic mines and workings in this area on this map. So you can see that there are all these little red mine markers, and there's over 30 of them. So there's over 30 historic mines and workings that were all closed in 1943 by the government. So an incredible endowment of gold ore bodies right through this whole particular region. The second thing I want to point out to you is that the green color are those younger volcanic rocks that are sitting on top of rhyolites or intermediate rocks or the basement. And so these mines, these historic mines that I'm showing you here, are really ore bodies that were in the volcanic rocks and not really so much into the basement. There's a little bit of basement discovery and production over in the east. So the opportunity for us just to look under the volcanic rocks, the shallow cover, and find what concealed ore bodies are there through this district. We've already identified that there are 3 priority areas, the Ryuo area in the north, the greater Ikutahara area in the central area, and the Saroma-Jomon corridor to the south. So this is very exciting for us. And again, we've got Jason looking at this quite intensively as well. I'm just going to go past these slides for a moment because we've already touched on this. So this is a bit of a promotional slide, but I wanted you to see this. So these are the best drill intercepts from Japan over the last several years. If you look at gold at the top, Japan Gold has the highest gold intercept by far by over 1,300 grams per tonne over 0.5 meter. And that came from that Ikutahara district that I just showed you. So it shows the potential high-grade gold that could exist there. Now the second highest is the Mizobe project. That's right at the other end of the country. That's our first project outside the Barrick Alliance that we're going to be drilling using those Osisko dollars. And that's where we found the host rock carried just under 1 gram per tonne over 144-plus meters, so very intriguing there. Then you go down to silver at the bottom of this slide. Japan Gold has by far the highest silver intercept of over 1,400 grams per tonne over a meter, and that's back up in that Northern district that I just was talking to you about in Hokkaido. So it really bodes well for the kind of discoveries that we can make across Japan now. So where are we at? Just to sort of bring you right into a focus here. We're drilling Barrick's best 3 targets, the Hakuryu target that we've now completed with assays in July. We're now drilling and we're about to announce drilling at the Ebino project down south, directly north of the Hishikari mine and the 2 targets there, with results expected in September. In addition to that, as soon as that's done, we'll then be moving forward on our 100% owned project outside the Barrick Alliance for extensive drilling using those Osisko dollars and being ready to drill other targets that our team is identifying in that area as well, and we're fully funded across the Barrick and the Japan Gold projects. So back to why invest in Japan Gold and how are we unique compared to everything else that's out there in the exploration field. We've got a history of high-grade gold mining in Japan. We've got low geopolitical risk. We've got new search space that we've identified where we've seen already a 14 million ounce ore body, and there's been limited exploration in Japan. And we're leading the way with new technology and new mines, new ideas, new leadership to do that. We've derisked this approach, and we derisked Japan by bringing in some of the biggest gold mining companies in the world and also bringing in some of the largest institutions to participate as shareholders and ongoing larger funding sources for us, and by one of the largest royalty companies in the world. We've put together a world-class team that's capable of identifying new areas that are prospective, targeting those areas and making discoveries. And we've got drill programs underway with drill results pending. So that's where we stand now, and I'm delighted to take any questions from you. So I'll just pause and turn it over to David to facilitate questions.

Great. Thank you for that, John. Very informative presentation. As somebody that worked for Placer Dome, Franco-Nevada and Newmont for 10 years, I don't get to sit down and watch enough gold talks these days. So I quite enjoyed it. So we are now going to kick off the Q&A portion of the webinar. [Operator Instructions] So John, you talked about having a district-scale focus. Is it fair to say you spent an awful long time prioritizing targets and projects? But I'd say the task probably isn't even done. At your various projects, would you classify this drilling as really reconnaissance drilling still?

Yes. So two things. Our shareholders may remember that we went into Japan, and we picked up virtually everything that we thought had potential. So let's start there first. We had 35 projects across Japan. And then we started to focus. So the next set of focus was bringing on leadership that helped us identify what is our target, what's our minimum target in Japan. And so that's when Fraser MacCorquodale joined us over a year ago, and we decided that 1 million ounces at 7 grams was a minimum target in Japan for us. We then relinquished 9 projects from 35 down to 26 projects. So again, focus, focus, focus. We then went through the screening with Barrick, and Barrick's screening, $20 million across Japan, that screening really wasn't drilling. It was mapping, geology, geophysics, geochemistry to find the anomalously high areas. So I think your characterization as the drilling that we're doing is scout drilling where we're putting initial drill holes now to test the subsurface viability of the geology that we've got there, is what we're doing right now. So I'll give you a range. When Hishikari was discovered and a vertical drill hole was drilled, that was a scientific hole that wasn't even designed for exploration. It was a vertical drill hole and all exploration holes are angled holes to capture as much geology and get a better understanding, which is what our holes are. But there, they drilled just 200 meters and they discovered 14 million ounces. So it shows you one end of the spectrum, that's the incredible potential. That's winning the lottery out here. What we want to do is a more scientific approach to hopefully win the lottery, and to drill angle drill holes to understand the geology in the area, we're looking for those veins because that's what Hishikari is. We're looking for veins 0.5 meter wide to many meters wide. That's great. But when we find intriguing things like the Mizobe project where the host rock, the breccia, all is running gold as well, that's really intriguing to us because it shows that there might be a bigger opportunity there as well. So yes, these are scout drilling holes, they're going to really inform us on how we advance.

And you did go through a lot of projects there, but when it comes down to it, you're drilling 3 projects. I think it was 2,000 meters inside the Barrick JV and then maybe one target 3,000 meters outside. Yes, what's your budget this year for both?

Yes. So for both, a quick calculation for those projects would be $7 million. And the 3,000 meters that we'll drill outside the Barrick Alliance, we've actually got another 1,000 meters-plus in our back pocket. So we've got those 3,000 meters earmarked, but we are working on significant targeting additionally to that. Our focus really is that Hokusatsu, that region around the Hishikari Gold Mine. We think that that's got such great potential and such a great analog in Hishikari that we should really look at that area. So we hopefully will have more news for you about that shortly.

Okay. And when you were talking about news earlier, you said assays due in July and then September. So how quickly are the labs returning assay results? Is this turnaround an issue?

Yes. It's not for us. So we have great relationships with the labs. What we do is we send our drilling core to the ALS lab in North Vancouver, Canada. The ALS lab in North Vancouver is one of the best state-of-the-art labs in the world. We know them very, very well. Our turnaround time, we always say, is 4 to 6 weeks. And when we assay, we don't just assay for gold and silver, but multiple, in excess of 40 elements that we're assaying for. So sometimes, depending on the timing, we might rush the gold because gold takes a little bit longer, and then use the regular time line for the other elements of the assay, so they could kind of go inside at the same time. But I'd say 4 to 6 weeks is our turnaround time, and we're quite happy with that.

Okay. That Kyushu island deposit that was found in '81 that you spoke about a little bit, it's shallow, but it was concealed. So how does that discovery -- what does it suggest you do to try to find gold at several of the projects that you also say are undercover?

Yes. Great question. And it's really the essence of what we're doing. So there's 2 styles of discovery. Again, if you're a prospector walking across the ground and you see something outcropping, something sticking on the ground and you hit it with your hammer and you go, "Oh, that's a piece of quartz. And look, there's some gold in that," that's one style of discovery. And again, the historic mining base was that style. To be looking at concealed ore bodies, you have to be more sophisticated. And so I liken it to finding a very subtle geochemical fingerprint. So you basically use geochemistry supported by geophysics and you try and look for subtle geochemical signatures that might say, there is an ore body beneath us somewhere. Now at Hishikari, as an example, at the surface, some of the 1981 discovery, at the surface, there had been 3 or 4 historic, I'll say, mining to the surface at 25 meters, something like that. But then they pinched out and they were finished a long time ago. The drilling went down and for 150 meters, there was a barren zone. So there was nothing there. And then you got 14 million ounces right down at the base of the volcanics and at the base contact. But there were very subtle geochemical signatures at Hishikari that we think can be replicated and that we're seeing replicated in other project areas that we've got. So that's just one tool that we're using to try and help us target that. And so again, we use the geochemistry and the geophysics, and that's why that Ebino project north of Hishikari, all of a sudden, I highlighted them as yellow blobs, they look similar to Hishikari, and those are concealed as well. At surface, you're just seeing that very subtle signature.

Okay. And you did also mention that silica flux is highly desired in Japan. These gold deposits are typically rich in quartz, I imagine, that you can take advantage of as well should they come in.

I mean, virtually, all of our targeting, David, is low-sulfidation epithermal gold projects. That's what the Hishikari Mine is. So it's quartz veins, as I say, that are 0.5 meter wide to 4 meters wide that have gold in them. So that material is relatively easy to mine, it's clean, and it's 85% silica or quartz or more, so you can directly ship that to the smelters. That's a smelter's criteria. And so that's what we're targeting ourselves. And we've been approached by the largest smelters in Japan that don't have domestic supplies or are running out of domestic supplies of silica. So they're importing it and it costs a lot more, et cetera. So they would love to have that same style of arrangement where we would just mine that material, bring it up to the surface and then not process it. We would have it and put into trucks and shipped away to their smelters. And then they return to us 90% to 95% covered ore. That allows us to go to that same lowest quartile all-in sustaining cost of $500-odd an ounce that Hishikari can demonstrate as opposed to the global average of $1,500, a great profitability. That's not lost on Barrick, and that's not lost on other mining companies that we have discussions with as well.

Okay. The Barrick Alliance down to the 3 projects that they're drilling right now. How much has Barrick earned thus far? Or do they get just the 51% of PFS?

Yes. So they've earned nothing so far. So basically, if you distill it down or think about it simply, Barrick spent $20 million for an option on our portfolio in Japan, an option to pick projects that they felt had the potential. So now they're just in the phase where they're starting to work towards what would be a pre-feasibility study, and they have to complete that at their cost on a project before they get 51%. So currently, they have 0 interest. We have 100% interest. And if at any time they walk away from a project, say they go, "We drill it, we don't see the size potential that we're looking for," then that project comes back to us 100%. And so we're in a very, very favorable position being funded with Barrick.

Yes. Okay. We're running out of time, so I'm going to combine a couple of questions here. You let your recent financing lapsed, but I think everything you're doing right now is being funded by Osisko Royalties, which is, I think, a nice nod of approval from some seasoned investors. Would you still look at a potential equity raise here? The benefits are probably public float, for example. I mean it is 26%, although that doesn't include any of the institutions, which may or may not be strategic.

Yes. So look, I mean, from my standpoint, it's always a balance about dilution and making sure you have enough capital on hand to capitalize on any targeting or any success that you're having. So the Osisko Gold Royalties financing was excellent for us because I took a risk going to Franco-Nevada and Wheaton Precious Metals and Osisko Gold Royalties and saying, "You should buy a royalty from us because we have this very unique thesis." And great that there was interest from all of them, and we concluded a transaction with Osisko Gold Royalties as our partner there. So very happy to do that. Those dollars are non-dilutive dollars. Having said that, that's in place now and with the potential to bring on another USD 3 million early next year if Osisko consents to that. It's up to their decision. But we always like to have a little bit of extra powder dry because we think we should do that. So again, our share price has been under pressure. And again, across the market, notwithstanding the historically high prices of gold that we've all seen, there still has been pressure for junior gold explorers. We're always trying to balance that off. We went out with our previous broker financing announcement with up to $5 million. I think from my standpoint, I'd probably consider shrinking that down to add some dollars because there's always that trade-off. But we have to just -- I want to make sure we're doing it right by shareholders, and it's always a mixture of our institutions, which are enthusiastic about providing us with additional capital and them taking additional ownership, but also bringing in additional retail investors as well, which I think are now is coming onto their radar screen and they've got an appetite for the style of mineralization that we've got and the timetable of our drilling results.

Right. And speaking of shareholders, Southern Arc has not traded on the venture since about April. Do you know why they're not trading? And is that still a shareholder of Japan Gold?

So Southern Arc, a number of years ago, we split Southern Arc, we distributed the shares to the shareholders. So Southern Arc was our investment bank. And effectively, as our investment bank, it held shares in several different companies that we have advanced quite successfully, I might add. And so those shares were distributed out to our shareholders. Southern Arc, we then took that company and we moved it on to the next Board, where it's waiting for its next potential project to go forward with. So Southern Arc is still very much alive and looking at new early-stage opportunities, and we'll see what comes out of that. So I think Southern Arc has a minor share position in Japan Gold that it retained. But by and large, it's looking at new opportunities in its current form.

Okay. And being a project generator, how many projects might you have available for option? And would Japan Gold be available for doing pretty much the heavy lifting on the ground, essentially providing a turnkey exploration project?

Yes. So we currently in our portfolio have 26 projects, all owned 100% by Japan Gold. Three of those projects are the ones that are under option, if you want to put it that way, to Barrick. Those are the ones that we're drilling right now and advancing. Those are the 3 projects. So we have 23 projects that are currently on offer, if you will, to bringing in new partners. And again, our thesis is to bring in larger companies to partner with us, look at the district scale in Japan and to advance it with us. So that's where we stand right now. And again, the recent PDAC, we had 8 companies that approached us there. And so we're enthusiastic that we may be able to move forward with more partnerships in the future, and that's clearly a fact. By the same note, those Osisko Gold Royalties dollars we can be very strategic about using those dollars to advance individual projects that we think might have the potential for ourselves to take all the way or take forward or to add a little bit more information, perhaps drilling success, more geophysics, that will really entice larger partners to jump into Japan. So we've got some really good flexibility and options for us.

Okay. And we're up on the top of the hour. So maybe just one last question here. People are always important. You spoke about a couple of new additions to the team. What do moves like bringing Jason and Fraser onboard mean for your chance of success, whether it's inside or outside of the big JV?

Yes. Well, interesting, I'm going to address that 2 ways. First of all, from a cost standpoint, the cost to run our business has actually really declined quite significantly since Fraser joined us and Jason joined us. So we've gone through, we've evaluated all elements of our business, we've looked at all efficiencies that we could. And I'd say we've brought our cost down by about 40%. So it's really, really remarkable. Jason and Fraser are both highly incented on success. So from a compensation standpoint, a large portion of theirs is based on success. Bringing Fraser onboard, and then bringing Jason on board with his new ideas, new techniques, et cetera, et cetera, it puts us in the best position to go and really identify the new targets in Japan and make new discoveries. So I got to say I'm really enthusiastic. I mean it's been a number of years putting all this information together, getting established and getting ourselves organized, then focusing in on the type of target that we're looking for and really getting that focus in place. Now it's all about really making those discoveries. And I'm enthusiastic and I encourage people to continue to come on the journey with us or to join us and come into Japan. That's a great place to be.

Great. Okay, John from Japan Gold, thank you for joining us today. Always a pleasure. I think you were my very first webinar like 4.5 years ago, so always enjoy it.

Thanks, David. Nice to see you. Thank you. Thanks to the audience.

Thank you, everybody else, for tuning in. Red Cloud Securities will be back tomorrow afternoon when Alina sits down with Foremost Clean Energy to talk about uranium. So that's June 5 at 2:00 p.m. Eastern. So have a great day, everyone, and thank you for supporting Red Cloud's webinar series.