KORE Mining Ltd. (KORE) Earnings Call Transcript & Summary

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the KORE Mining Limited Exploration conference call and webcast. Today's presenters are Scott Trebilcock, KORE's CEO; and James Hynes, KORE's Executive Chairman. The presentation today will be broken up into 3 parts with a question-and-answer session following each section. [Operator Instructions] With that, let me hand the call over to Scott Trebilcock. Please go ahead.

Thank you, operator. Hello, everyone, on the phone. Thank you very much for taking some time to spend it with KORE during all of our busy days during these interesting times. Been very exciting times here at KORE Mining over the last 6 quarters and over 10 months now since I became CEO of the company. We're really happy to see some traction in the market, and some excitement around KORE Mining's great story. We thought we'd do something a little different for you today. There's lots of webinars we've been putting and publishing on the Internet, been participating in lots of conferences and online forums. But in very few of those forums, do we get a chance to really get into the exploration story at KORE Mining. We talked a lot about the great PEA we put out recently on our Imperial project in California. We'll get into some of the exploration upside. But you've seen as shareholders and potential shareholders of the company, a great series of news releases we've been putting out since January of this year, espousing the benefits and potential value creation from these great projects. So today, we're going to spend some time. We're going to try and keep it relatively casual. We're going to have a bit of a dialogue. We really like to get involved with all of you, both on the web and on the calls to get into the Q&A and really mix it up and let's talk about the great exploration opportunities we have here at KORE Mining. As the operator mentioned, the agenda today will go through 3 main parts. We're actually going to try and coordinate 3 separate Q&A sessions. So the operator is going to be bouncing back and forth, and we'll be opening up the Q&A to live questions through 3 different parts of the presentation. After I get some in my little preamble here, we'll talk about Imperial and the exploration story, followed by a Q&A, then Long Valley and then our VC projects. In the final Q&A, we can bridge into talking about any element of exploration. But if you've got questions related to Imperial projects or general corporate questions, hold those and send us to us off-line. We really want to focus today on exploration and generating value at KORE Mining to pursuing exploration in parallel with development. I will be making forward-looking statements along with James on this call. I encourage all shareholders and potential shareholders to carefully review all of our disclosures available on SEDAR and our website. Some of you probably saw this morning, we posted the technical report for the preliminary economic assessment at Imperial. That's a great supporting document that talks about a lot of the risk factors related to KORE's key assets. You can also read our management information circulars and MD&As for more information. Okay. So getting into it. KORE is a great opportunity in this market to build value by exploration. James and the other founder of the company, Adrian Rothwell, one of our directors, did an incredible job building a portfolio of assets in 2017, '18, getting them public. We've gone through a period of capitalizing the company with strategic investments from Macquarie Bank and Mr. Eric Sprott's personal investment. They've now funded a total of, I think, CAD 10 million to advance these projects, and I think we're in a great position today to spend the recent investment from those investors to advance even further and deliver more great news to our shareholders. Let's first talk about Imperial. Obviously, Imperial gets a lot of airtime at KORE. We're not here to talk about the PEA. But I very much like the picture on this slide, it really shows the kind of terrain we're dealing with an Imperial where in flat, Northern Sonoran desert. And KORE has gone out and stated what historically was an incredible gold district in this part of California. The Mesquite mine to the Northwest, the Picacho mine to the East, kind of pins in the middle, the Imperial project. All of those 3 deposits discovered by Outcrop are connected by a large fault structure and trends that drives mineralization at those 3 deposits, KORE has gone out and claimed the entire terrain. So this is a super exciting exploration opportunity for KORE, and we'll hear a bit in a little bit about some of the work we're doing on that regional exploration play. We've also got some great opportunities in and around the Imperial deposit itself that we further defined with geophysics in a news release earlier this year. So to kick it off talking a bit about rocks. I'm going to hand it over to James Hynes, Executive Chair of the company, Founder, and geologist leading the great exploration work at Imperial. Jim?

Yes. Thank you very much, Scott. And jumping right into the Imperial project in the Imperial district, what's most important for us is that this is on the western edge of the Basin and Range Province. So much like what you see in Nevada, some of the great trends in districts of Nevada and Northern Mexico, this is what we see here in the Imperial-Mesquite district. So why this is important to us and why this project to us is so exciting, especially on a district scale is that we have a flat lying mineralized gneiss that were experienced at both Imperial. It's being mined at Mesquite, and it was part of the main ore body at the Picacho mine until it became depleted. Why that's important is the mineralized gneiss as a gneiss itself is a great host rock for gold mineralization. They're all deposited by a hydrothermal system that is using the low angle detachment faults in normal faults along this trend as their conduit for mineralization. This is then been modified by late-stage faulting and that late-stage faulting has either been same mineralized -- same mineralizing or it's been post mineralized into the former to alter the ore bodies. Moving on to the next page. We have, as you can see in this picture with the Picacho peak in the background. This is taken from the Imperial deposit itself. You can see the alluvial cover, which is basically sand and gravels as well as miocene basalt. Why that's important is that when you look at the district as a whole, the bulk of our trend is covered by this alluvium and basalt. And that varies the potential mineralization and leads us to opportunities to find undiscovered deposits. Moving on to the next page on mineralization and what controls mineralization. I spoke about this a bit. But what's important to note here is that the biotite gneiss which is a legacy aged host rock is typically bounded by mineralized faults. And these faults are, again, the hydrothermal conduits for mineralization. They're part of a sort of a complex metamorphic alteration in the region. And we have this footwall area, which was formed by post mineral fault displacement. So current low angle detachment faults that we see as an example, a reactivation of thrust faults in the region. On the next slide, we have the visual character of mineralization at Imperial. And if you look at the red color rock that you see in the chip tray, these are chips from RC drilling on the project. You see that the orange rock is where the mineralization occurs, and that's due to the abundant limonites and phenotypes that have been essentially oxidized over time. And it's a great way to see where the ore is in the ore body. Our next slide is on fault at the Imperial project. Why this is important for us and for future exploration is Imperial is a lot of the past drilling was vertical or near vertical and quite shallow. And the structure of the deposit is not well understood. And so we have opportunities where portions of the deposit may have been faulted or moved where we can find more and add to the size and characteristic of the Imperial deposits. I'm going to hand it back to Scott here.

Thanks, Jim. So I'm just going to walk through. So with that to your logic background, one of the first things we did in order to better understand the exploration opportunities was we ran IP geophysics over the intact Imperial deposit. We saw a news release come out on that in January. And these are some of the sections available on our website that you can see resulting from that work. And these sections are great at showing what the original operator, Glamis, was facing drilling the resource versus what we see today with the benefit of all that information. If you look on the left side of the slide, you can see the vertical RC drilling following that purple rock, which is the gneiss that Jim was talking about, down plunge, down plunge, down plunge until they eventually stepped out at the depths they were looking for, and they would step a long strike and keep drilling. And really, they were using that conglomerate underneath that gneiss on the thrust fault as the marker for stopping drilling. So it's a very, very simple way of drilling out this ore body. But it also has left a lot of opportunities on the table for KORE. So particularly in this case, you can see there's the down plunge opportunity, and I think we would like to go down for sure and test that certainly on whether that's a swelling and what kind of grades exist on that at the bottom because as we see this deposit was sheared off from something and is now lying on top of these younger conglomerates. Now what the geophysics revealed, and you can see this on the right is we have this very -- we can see where the mineralized material is. So that's great because that's a great mark where we can use on the regional exploration, we'll see in a moment. But we also see this untested geophysical anomaly that underlies the Imperial deposit. And that's something that in the future drilling, hopefully, later this fall, we want to get and run some confirmatory drill holes through the existing resource and down and make sure we're testing that geophysical anomaly because you can see in the little middle chart, that geophysical anomaly represented by the red line actually goes the full extent of the ore bodies and continues on strike in both directions from the ore bodies, and is a really exciting opportunity for KORE to find some more mineralization. Stepping through the section, you see a very similar story. I think in this section, the interesting part is also the continuation of that anomaly under the thrust fault. But we also see, in this case, there's been some vertical faults that are moving around. The gneiss and the mineralization, and this has left some opportunities open for exploration. For instance, it looks like there could be a down drop block below the depth of current drilling between the East and West pits so right where this section is running through. So that is a very interesting drill target for us to follow-up in a future drill program. Sort of continuing to step along the sections. Again, you see the continuity of that geophysical anomaly, additional untested drill targets. And when you take that onto a plan, we've got drill targets on strike in the geophysics anomaly and step-outs and looking for some of the faulted structures on the existing resource. So great opportunities in and around the deposit validated by existing drilling and as well by the geophysics. Now stepping out to the region. We then took those IP geophysics signatures that we saw at Imperial and an understanding of the geology, as we talked about -- Jim talked about earlier, and now we go look out on this great exploration package we have heading out towards Mesquite, you'll see that about probably 2 weeks ago, 3 weeks ago now, we put out a news release with the first results from IT geophysics lines on that regional exploration ground. Super exciting is kind of validated what we thought was out there that really hones in our minds where we need to focus a lot of energy. The geophysics identified where it looks like there is additional fault structures and quite continuous fault structures heading up towards the Mesquite series of deposits. They're under cover. So they're blind, and drill bit will tell whether they're mineralized, but this is a super exciting opportunity. KORE is going to focus first on the Mesquite East of these targets. There's great near-surface faulting, so we're going to see what that looks like as well as permitting some drill pads in and around Imperial to test the Imperial East and West targets on strike. Because we want to make sure we have our deposit fully explored and understood as we head into and through the permitting process because we want to make sure that we have the right mine plan in place when we had pushed the mine into production. So great opportunities, both in the mine and regionally. Don't forget, this does not include any work yet on the eastern half of our regional exploration ground. There's another similar strike length that goes out towards Picacho. We haven't even touched that ground yet. We've got years of opportunities to follow-up on this block alone. So again, great opportunity for KORE to make new discoveries and generate value for shareholders. At this point, I'd like to hand it back over to the operator for questions.

[Operator Instructions] I will hand the call over to Arlen Hansen to ask questions that were previously sent in.

Yes, Scott, Arlen here. I had some questions from shareholders. I thought I'd just kind of kick off with. Has there really been any much exploration between the Mesquite and the Imperial deposits? And why hasn't there been if there hasn't been?

Yes, that's a great question, Arlen. Now I think the key point is that Mesquite, Imperial and Picacho all had an element of outcrop so they were really following outcrop mineralization as it doped down under that cover. Mesquite then found several satellites that under covered that weren't found when the original mine was put in production and continued to step out and make new discoveries effectively following the same trend we plan to follow from our deposit up towards theirs. So really, there was no strong motivation for the operators at that time to spend a lot of time looking under cover. So there really has been almost 0 expiration between these 3 deposits. However, it's important to note that Gold Fields and Newmont have this whole area staked up in the '80s and through the '90s. So I think there was keen interest from large companies looking for additional Mesquite-scale deposits in this belt. So it truly is a district opportunity that was previously owned by majors. Jim, is there anything you'd like to add to that?

No, that pretty much covers it.

And then you said one of your higher priority target is Mesquite East. Why there versus maybe some of your near targets to the deposit like the Ogilby target?

Jim, you can take that one.

Sure. When we did the geophysics this winter one of the things that was quite apparent was proximity to surface. The Mesquite East deposit is very near-surface as the geophysics suggests. Allowing us to do some early-stage drilling that's quite shallow, where we can start to feel out some of these targets. And as we compress between and keep expanding out Imperial and working back from Mesquite East, then we'll start to investigate the Ogilby target.

And I'm guessing first hassle, all BRC and shallow?

Yes. The idea would be to keep it as inexpensive as possible. So likely RC with a follow-up with some larger diameter core drilling.

Yes. And then can you talk about what your like near resource exploration targets would be, like drilling at depth in the existing resource or stepping out from the existing resource. Is there much opportunity there? I guess Scott handled that a little bit in the PowerPoint, but just a better understanding of the very near resource exploration.

Yes. As Scott mentioned, there's a younger conglomerate underneath the current deposit. And so understanding the thickness of that conglomerate, whether there's a mineralized ore body sitting directly below that, as part of our sort of blue sky opportunity on Imperial. Not only that, we're seeing some geophysical targets north of the deposit, and those could be essentially similar type conduits as we see with the thrust fault, but more near vertical faulting. So I think it's a combination of extending this down dip on strike. But also below the current deposit and the opportunity to really expand the size of the resource is quite huge on this project.

Okay. And then just, I guess, last one before I go live is what's the process to start turning the drill bit there?

I'll let Scott answer that one.

Yes. So we're currently in discussions with the Bureau of Land Management. Our first proposal will be a notice of intent with an under 5-acre disturbance, we can permit a number of drill pads off existing BLM road infrastructure. And accomplish some of our objectives, and that will allow us a reasonable fast track to drill pads and drilling, and we'd like to be out drilling in fall.

Okay. Operator, can you go to any other live questions if there are any?

I do have one question from Chris Thompson from PI Financial.

Thanks for hosting this call. Just a couple of quick questions here. I wonder if you could just talk to the what is this -- where does the oxide transition? Or is there a sulfide component to this as you drill down. But where does that sit?

Jim, you can take that.

Sure. Yes. Thank you very much for your question, and thanks for joining the webinar here. Essentially, Imperial to date hasn't seen any sulfide in drill cuttings. And so far our understanding is this is completely oxidized and opened at depth. And part of our future investigation is to find out if they're -- where that contact is, where the transition ore may be? And if some of the targets that we're seeing in geophysics are sort of remnant sulfides in terms of sort of that transitional point between oxide and sulfide. So to answer your question, no sulfides on the Imperial deposit unlike at Mesquite. And so I think we're likely to see a combination of the 2 across the deposit or across the district. And it's really a function of proximity to these fault structures themselves. The closer you are to a fault structure or part of a fault structure, the more oxidized it's going to be because it continues to be a good conduit for oxidation post mineralization?

And then I'm just intrigued by this IP anomaly, I guess. Is this in the basalt conglomerate?

It's quite likely that, that is below the conglomerates. If the conglomerates are resting unconformably on the gneiss below it? So it's possible that our ore body is a trusted gneiss over top of the younger conglomerates. And we could be seeing a mineralization below that conglomerate where it could either be a basal unit of the conglomerate itself or actually the gneiss that we're seeing as the main ore body.

Okay. Is it a bit different -- is there a similar sort of profile at Mesquite on this? I mean, what is -- is any work? Obviously, you guys have done the work, but I mean can get your hands on any sort of geophysics over the Mesquite project? I mean looking for an analog here.

Nothing on the geophysics, but certainly on the geology, the analog would be the biotite gneiss is a perfect host rock at both deposits. And proximity to any sort of sin mineral or pre mineralized faulting is the key for higher grades. So really, it's chasing the opportunities of proximity to these large thrust faults or vertical faults and expanding on disseminated gold around those or halos around those. And so we'll continue to do that. And it's possible that localized folding could play a bit of a role as well in terms of higher grade, again, proximal to some of these vertical faults.

All right. And the final question, I guess, is homing in on some of these high angled faults, I guess, the Southwest, Northeast sort of trending faults here. Any of those manifest themselves within the East or the West pits?

Nothing that we've been able to ascertain from previous drilling although the caveat on that is the past drilling was vertical RC with just a few HQ and PQ cores for metallurgy. And so really one of our first objectives with drilling the Imperial deposit is, gaining a better understanding of that structure, and any fault structures that may occur. But one of the -- I think one of the upsides within even the drill deposit itself is that these high angle faults could be hosting the higher grade mineralization. And if we have that within our own deposit, we're likely to see more of that reveal itself with angle drilling as opposed to historic vertical drilling.