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

All right. Good morning to those joining us in North America, and good afternoon to our European participants and shareholders. Welcome to KORE Mining's webcast to discuss the FG Gold drill results. I'm Scott Trebilcock, Chief Executive Officer of KORE Mining. And joining me is Jim Hynes, Executive Chairman. KORE has been drilling at our BC Project, FG Gold for the better part of this year. We're incredibly excited about the results that we're getting and how that ties into our larger district scale opportunity, what we call the South Cariboo Gold project. So I'm going to start and tie those together a little bit, then I'll hand it over to Jim to walk through what everyone's waiting about the results. And we'll be making some forward-looking statements. I encourage, as always that shareholders and potential shareholders thoroughly review all of the materials available on our website and on SEDAR to thoroughly understand the risks associated with before investing in KORE Mining. I'd like to set the stage a little bit and congratulate the KORE team for having a great 2020 delivering results and generating catalysts for our shareholders. We've put together a great development team based in the United States in Denver and Imperial County, California. We've also got an incredible exploration team up here in Canada, led by Jim and Mike Tucker, our VP of Exploration. They've been on the ground, working hard in the portfolio. We've seen a lot of great news releases come out of KORE, the part of this year, we're not done yet. We're expecting at least 4 more news releases in the back half of this year, maybe more depending on what we hit with the drill bit, but we certainly are going to see some more results from FG, something from Long Valley, some news out of Imperial, and the drill results are just going to keep coming in 2021. So really excited about KORE Mining. So I'm going to start by laying a bit of the groundwork to talk about FG Gold project and what it means in the greater context. So you'll see in our news release, and we talk a lot about the Cariboo. And what is the Cariboo? The Cariboo is the original gold district in British Columbia. It's the source, the Cariboo Gold Rush, which in the mid and late 1800's led to the development of the Interior British Columbia. The famed Cariboo Wagon Road, went up to Fraser River Valley and really pioneered and opened up the towns all up through 100-mile house, 150-mile house and all the way up into the Cariboo gold fields. There's been continuous gold mining, both plaster and industrial scale mining in the Cariboo ever since. If you fast forward to today, there's also been large copper porphyry discoveries to the south of the district. You see 2 large operating mines, Mount Polley and Gibraltar, operating in the region. You've got lots of plaster gold operations. And because of that, you've got great infrastructure in the Cariboo. You've got power, roads, access to local skilled labor and communities that are comfortable and understand mining. This is the place in BC, you want to be discovering gold and advancing gold project. Another thing, we're keeping in our eye on very carefully, and it's creating some certainly excitement about our own project is what's going on at Osisko. They've created a new company Osisko Development, which holds 1,000 square kilometers of mineral rights in the Cariboo. They're developing one of those projects to deliver almost 200,000 ounces of planned gold production. The company is being led by Sean Roosen, who you know is going to be pounding the table on the district. He's got $100 million to drill aggressively, and he's already sitting on almost 6 billion ounces of almost 4 grams per tonne. And that's on their part of the Cariboo. And that company is worth $820 million. So a flagship project with about 200,000 ounces of planned production with $820 million. While gets who controls the entire southern half of the Cariboo. Well, that's KORE. Our team did a great job putting together a 1,000 square kilometer claim position on the South Cariboo, which we will call here forward the South Cariboo Gold District. It's a 100% KORE-owned, it's low royalties and on it, we have 2 flagship projects in FG Gold, and our Gold Creek discovery and at least 5 other gold prospects that show the great potential of this clean block. Zooming in now to that flagship FG Gold project, at that project alone, we've got a massive growth opportunity. If you look at the property, it hosts a 20-kilometer trend that Jim will give you some more details on, on that trend, not only a small part of it, we've got the main zone, which hosts bulk of the current resource of almost 1 million ounces. That 1 million ounces is only been drilled shallowly. We've got this huge rock mass, it's getting under the property and on this trend that gives us a great potential to have a company maker in FG Gold and in the South Cariboo. So with that set up, I will turn it over to Jim to walk us through the exciting results out last night and what's going on at FG Gold.

Very good. Thank you, Scott, and that's a great introduction, FG and the Cariboo Gold District as a whole. I'd like to dive right into our spring program, and this is the program that we wrapped up in May of this year. So we drilled just under 1,800 meters. And this was our chance to get our feet wet on the FG Gold project. Our first attempt here was to understand the zone that had been drilled previously by historic operators, very shallowly drilled, focused on a high-grade broad zone of mineralization rate at surface. We wanted to understand that zone and what was controlling gold mineralization on this project. So utilizing HQ oriented core as well as triple tube drilling style. We want to make sure we had great recoveries, good samples and good representation of what it is that we were drilling into. You'll notice some of our highlights from our spring program. And again, this is a very small, modest program of just under 1,800 meters. Yet, we had some very good gold mineralization, very near surface with some great high grades. Why this is important is, a, we are able to really start to understand the upper zone, which was the focus and the target of historic operators, but also we discovered the lower zone, which was an extension of where this lower zone and the upper zone come together. But ultimately, it was a new zone that we thought was different and important to the value-add of this property, this project and what the scale potential of this FG Gold project is all about. So this new discovery was 3.9 grams per tonne over 10 meters. Below the upper zone has been previously drilled. And if you move along to our next slide and look at in long section, what was previously drilled, looking at pre 2020. The upper figure that you'll see here highlights the focus of historical drilling. You see that center section, you see lots of little bubbles. Well, those bubbles are grade bubbles. And they show some of the high-grade intercepts, again, historically drilled, drilled shallowly. The red dash line that you see below those bubbles is the depth to extent of that historic drilling. You'll notice that, that is very shallow in context with the size of the rock mass and size of the land package that we have. And that is drilled to just under 100 meters. And you'll notice that we have 3.6 kilometers that have been, again, previously drilled, but a long strike, but really focused on a central section of just under 2 kilometers. Moving into our spring program, you'll notice something that is different from that historic drilling, and that is, we drilled down dip below the depth of historic drilling. When you look at that middle figure, you'll notice that we've opened up some new terrain, new rock below previous testing and drilling. And you'll also notice with those orange stars, we intercepted visible gold within those drill holes. That was just, again, a very small drill program. We've focused on a very small section of strike, just under 250 meters. But we really wanted to show that, a, there was great continuity within that first zone that we tested and also that it was continuous and open downdip. Moving into our 2020 and summer drill program. After receiving a great investment by Eric Sprott, we want to really put this money to work. And we wanted to show that the scale of this project was there, but this could be a very, very large project. We didn't hold back, we drilled deep. You'll notice that in the bottom figure what was historically drilled to a 100 meters. We're now drilling at depths 300 meters below that. So we're drilling 300 meters downdip. Again, looking at the orange stars, you'll notice we're constantly hitting visible gold and gold mineralization below historic drilling, but significantly below historic drilling and over a strike length of 1.8-kilometers. Again, this was a fairly modest program in relative terms, just under 6,000 meters of drilling. And our very first hole that we've released, which is 20-377. We hit fantastic gold mineralization. We had high-grade gold, and we hit high-grade gold within a broader envelope of, again, great gold mineralization. Moving along to our next slide, this is a cross-section of the area that we've drilled and the highlight of this news release that came out yesterday. And what you'll see is, we drill a target of 330 meters below downdip of historic drilling, and we pierced exactly what we were looking for. We are looking for great vein, quartz vein density, great quartz vein development with a deform zone that hosts great gold mineralization. And you'll see, we had 3.22 grams per tonne over 31.35 meters. But included within that, we have 6.44 grams over 14.35 meters. A great underground mine potential grades. Why that's important for this project and why we're so excited about this project is, this opens the door from what was regarded as a shallow, moderate to high-grade deposit, fairly small. As Scott mentioned, just around 1 million ounces. It is something now we've opened up this rock package significantly with some high grades with visible gold, and we have multiple zones. These zones are open at depth, which is still open below where we've drilled. We've shown that the grades have been increasing with depth. Again, this is just 1 hole of the next 14 that are to be released, but it's a great starting point to show that this project has legs, and we have lots more to come with respect to the drilling that's been done. But also future drill. You'll also notice that, again, this is the section where we drilled our first discovery of this lower zone, drilling at 3.9 grams per tonne over 10 meters. We really wanted to follow-up on that, and that was the first thing that we did was we stepped out, stepped downdip, looking for that high-grade gold mineralization. We also have that upper zone were 0.71 grams per tonne over 12.81 meters. Again, we're looking at that continuity of the upper zone and what extensionally that will do at depth as well. We have 1 drill hole pending within this section. That's Hole 376, we drilled 377 before this one. But we've also noted that we have great vein development within those sort of key target areas. Visible gold and great deformation. We expect to see great results coming out of Hole 376 as well. Now moving on, I'm going to go back to that long section, but Zoom didn't hear a little bit on, this is what the best look at what our project is and really what the potential of this project is because what it shows is we have great continuity again, you can see where we've pierced that 3.22 grams per tonne over 31.35 meters. That's significantly below historic drilling. We downdip from -- again, from where the bulk of the resource of the FG Gold project exists. You can also see that we've pierced multiple points along this trend over 1.8 kilometers again, showing visible gold. We have 10 of our 14 drill holes that are remaining have pierced this lower zone. And 7 of these remaining drill holes have visible gold in them, again, yet to be released. Assays are pending, and they'll be coming out over the next couple of months. But the important factor here or thing to think about is look at all the untested rock that we have. When we have these first drilling areas that are on trend and on strike with our main zone, there's some great drill holes that have come out of that historically, very little follow-up, but again, nothing that has really been drilled at depth below it. And as we've seen in our current drill program, the summer drill program, we have improved development at depth. We have greater grades that have developed at that. And so we really look forward in the future of expanding the scope of this and really feeling that how big this project can be. Again, it's still open downdip. A lot of untested trained and way open along strike along this, again, 20-kilometer trend that we've been discussing. If I move on to the next slide and go back to the slide that Scott had spoken about in terms of this horseshoe shape that we have. And why this is key is, the horseshoe shape that we've determined is where this permissive rock package comes to surface. When I say permissive, it's where gold is able to mineralize. It's a good horse rock from where the gold can develop. And we've shown through both geophysics and geochemistry that, that zone continues right around the, what we call the nose of the syncline of our project. And if you look at the right-hand figure, you'll notice that the zone that we're targeting, which is in that small box because right underneath our property comes out on the other side of our property. So this is a very large land package, but that's also a large rock mass that post this gold mineralization. So there are lots of targets. There's a lot of future potential on this project. And we've just been scratch the surface here in terms of focusing on the main zone, showing that we can really understand how the structural controls of this project work, then we can apply it to the rest of this land package as we as we continue to move forward and continue to explore. And now I'm going to just talk about the district as a whole. And I think this is where we need to tie it all together. The FG Gold project is an orogenic gold deposit. And why that's important? And is the Barkerville district, so the Osisko Developments property, also orogenic, our Gold Creek property, orogenic. All part of a very similar trend where you have mass regional deformation. You have great mobilization of gold. And again, where you have the right structure, the right permissive rock, you're going to find gold. This is a well endowed district that has seen a number of great deposits that have been discovered, the Osisko Development guys are doing a great job of advancing their project. And if you look forward to the coming months, we're going to talk more about our district as a whole, this large land package we have, a series of targets that are very akin to FG and Gold Creek, their drills turning at Gold Creek right now. We had some great success there in 2018. And we're following up on that to show, again, this is a district scale potential. The scale is there, the size is there, and we're just going to look forward to unlocking true value of an undervalued asset in under-explored district of British Columbia. So again, looking forward to more results coming out. We'll be unveiling those over the coming months as assays come in and have the drills recurring. I'll hand it back to Scott, and we'll move into a Q&A.

Great. Thanks, Jim. Well, hopefully, this presentation gives you some idea about how excited we are in KORE about FG Gold in the South Cariboo Gold District. I'll turn it over now to questions. Please enter your questions into the chat box on the webinar. And we've got Arlen Hansen joining us here, who'll help us out manage the Q&A session.

[Operator Instructions]

Thank you, operator. It's Arlan Hansen here. Scott, we've got a couple of questions here from a few analysts. We'll start with Nick from Cormark. Really just asking about when we're looking to see the next set of assays and when we should see the next set of better results on the project?

Yes. Yes, it's a good question. I think I'm sitting here at the -- over the last couple of days at the Valley Mining conference in Europe. You hear a lot of companies talking about how busy the labs are. That's true here in BC as well. And add fuel to that fire because of the good science we're using on the project, doing both fire assays, and then once you do fire assays, you resend a whole bunch of KORE offer the metallic screens. We got a double weight at the lab. We are hoping to get 2 more holes out before Christmas, subject to getting those screens all back. And then when the KORE all catches up in the lab, we should see a flow of results right through till March.

And a follow-up question from Nick is, how much drilling and what type of spacing do you think would need to update the resource at FG Gold?

Jim, can you take that one?

Yes, sure, Scott. That's a good question from Nick. And the best answer I have for that right now is, I think it's a little bit premature for us to start talking about a resource update. Particularly because we have so much drilling left to do to really drive things, both along strike and downdip on this project. As we keep stepping out and hitting more gold mineralization here, we just want to see how big this thing is first before we start to constrain it with the resource. What I can say is that given the large land package, probably isn't any shortage of drilling that we can do to continue to expand the size and scope of this. So that will be our first priority before we start looking at putting a resource estimate around this and starting to constrain the resource itself.

So Scott, probably back to you. Nick asked this question and a couple of the other analysts did as well. How do you expect to split exploration budget moving forward between FG, Imperial and Long Valley?

That's great question. So just as a reminder to everybody, we are currently permitting a large drill program for our Imperial Project that would include both regional exploration. And all of the technical drilling we need to do to develop the Imperial deposit. So we're really excited about what we see there. Expect a news release before Christmas on some more targeting down there at Imperial. We're also permitting pads at Long Valley to grow that deposit. And then we're hoping to move into area permits at FG for next year. I say that because it gives us to the intent of the question, a large number of opportunities. We could drill a lot of meters at each of the projects next year, and you're right, capital allocation is going to be a key thing for the company. And we haven't decided yet how much we're going to spend. I think for sure, we're going to move the drilling drilling teams focused to California, likely in Q2 of next year. So when those drill results sort of trickle out from BC, we expect to move to drilling in California, whichever project gets permitted first, most likely. And as far as capital allocation into 2021, haven't made that decision yet. But I think stepping back, the company is being practical about how we -- our shareholders get exposure to these assets, and we're going to make sure we look to capitalize the company in a way that's most advantageous to the per share value of the company.

I got a follow-up question from a retail investor on the line here about your metallic screen upgrading resource, and you had touched base on that question about Nick. You mentioned a few times in your FG press releases, can you describe really what that goes through and what that means for the company?

Yes, I'll give that one to Jim. I think the -- yes -- how are -- we use the word upgrading the resource a lot or upgrading the past drilling. So maybe just talk a bit about that, Jim?

Yes, sure thing. So historically, on this project, a large number of the holes that were initially drilled, again in the shallow part of the deposit, were drilled with a narrower diameter or RC drilling. And the assay method used at the time was typically just to do a small sample into a fire assay of the sample for the drilling. What we determined is that to be more representative, given the nuggety nature of the deposit, nuggety beam more larger gold pieces as we've seen in the visible gold at KORE. And by using larger diameter and using what's called metallic screening, and I'll describe metallic screening. We're able to get a better sense of what the true representative grade of those samples are. And when I say that, the real priority here is to understand the larger, the sample size that we can get, the larger assay, we can get the more representative is going to be because of how much free gold or nuggety gold there is. And so there's typically a finer background amount of gold, but then you'll have variability because of the coarse nature of the gold. And what a metallic screen does is rather than just taking a 50-gram sample or a 30-gram sample and conducting a fire assay of a representative section of KORE, we take a larger -- a much larger sample size, usually a kilogram or more, where it gets crushed and ground down. And then the coarse gold can actually be screened off independently in fire assay. And what that allows us to do is get a representation of the coarser gold in the sample and then the finer gold in the sample. And then the 2 are added back together to create something that's representative. The upgrading that we're seeing is, we drilled some holes adjacent to some historic drill holes. I wouldn't call it '20, but I would say that we've drilled through some known areas of the deposit and we've seen higher grades, higher -- it's particularly in some of the high-grade gold, some higher grades coming out of these sections. And what we're seeing in terms of our original fire assays relative to our metallic screening, we're getting a pretty decent upgrade, sometimes 50% or more of a fire assay to metallic screening, upgrading those assays, but also it points to the historic drilling that we did on -- or has been done on the property or on the project and how that may underestimate the true nature of the deposit, both in terms of overall grade and in particular, some of the higher grade portions of the deposit. So methodology here is key. And as we continue to drill here, we keep refining our methods. But we found a particularly good method now with our larger diameter core and our metallic screens, which we feel are most representative that can be done in a drilling process versus larger bulk samples.