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

Good afternoon. Campbell Mccrary, Amvest Capital in New York. Welcome to the Amvest Capital Inc. Live Webinar with KORE Mining Inc. KORE with K -- KORE trades on Venture as KORE and on the QX -- OTCQX as KOREF. We hope you'll today's -- enjoy today's program. It will also be available in replay mode. Please chat in your questions in the question pane or send them in an e-mail, and we'd love to ask them, we'll incorporate them in the Q&A. Anything micro, macro, whatever you want, we'd love to hear from you, and it really raises the level of this event. Amvest is a New York-based specialist investment management and corporate finance firm, focused solely on the natural resource sector. Today, we have with us, again, Scott Trebilcock, who is the President and CEO of KORE, making you presenter, Scott, I want to turn on your Webcam. More than 25 years of experience as a process engineer, management consulting -- consultant and mining executive. He was the CDO of Nevsun Resources, responsible for strategy, corporate development, IR and exploration. Nevsun, you may recall, sold to Zijin Mining for $1.9 billion after a long contested defense process led by Scott. He also drove M&A at Nevsun, including the 2016 acquisition of Reservoir Minerals. So 2 incredible deals during that time with Scott behind it. Following the presentation, members of Amvest Capital, again, we'll be asking questions. Please send in your questions as well. And let's have a conversation. So welcome to the show, Scott. I can see the slide. I can hear you. Let's go.

Thanks, Campbell. All right. Excellent. Well, thanks, everyone, for taking some time to spend with us today. I will be making some forward-looking statements about KORE Mining and hopefully, getting you to understand the business case and investing in KORE and some of the attributes and what -- primarily what we've got planned in 2021 and what we did in 2020, I think, is going to be our primary subject today. So I encourage anybody who has an interest in KORE as an existing shareholder to spend some time on SEDAR and on our website, understanding our disclosures and the risks associated with investing in small-cap stocks like KORE Mining. So without any further ado, let me kind of just -- for those that are new to the story, I'm just going to walk through some of the highest-level attributes of the investment case. And then for those, I'm going to then brief into -- bridge into what we did in 2020, how we started to create value in the company from our great portfolio of mining assets and show you what we're going to do in 2021 and hopefully get you really jazzed up about KORE Mining, and then we'll have a nice little discussion in the M&A. So primary attributes of KORE and know why I'm a shareholder of the company, KORE has gold ounces in the ground. We've got almost 4 million ounces of gold, drilled off on 2 projects in the Great Basin of the United States. KORE is a pure-play U.S. gold exploration and development company. On the development side, we've put out last year $1 billion in NPV through 2 PEAs. So that is a preliminary economic assessment, which is seeing what is the potential value of these ounces we have in the ground. Well, the mine plan show we've got a potential up to $1 billion in NPV, if you believe in $1,600 gold and even more, if you believe in higher. That's the value we're trying to unlock by taking those projects and derisking them through the development cycle. On the more exciting side, KORE also has some incredible exploration growth potential on what we call district scale. And you're going to hear me say that word probably way too many times, but we're trying to get it to sink in. KORE owns 100% of our assets. We've got large claim areas around our assets that we think create some great potential to discover entirely new deposits on trend from our current deposits to grow our current deposits and otherwise generate a lot of shareholder value through exploration, and we've got a great team to deliver on both parts of the strategy. We think we've got some great value catalyst set up from the exploration in 2021. We'll talk a bit about that. As a shareholder, myself and the rest of the Board and management at KORE are aligned with shareholders and value creation on a per share basis. That has kept our capital allocation very tight in 2021. And the share register of the company reflects a very tightly held company with our supportive shareholder, Mr. Eric Sprott, owning 26% of the equity, alongside management at 38%. If you want a fundamental valuation type, you can look at P/NAV, which is price to the net present value of those economic assessments of those deposits or price to ounces in the ground. On both basis, I think, you'll see KORE is an attractive valuation, and hopefully, we can do much better in 2021 to add some of that value to the per share valuation of the company. Looking back at 2021. For those that saw a presentation last year or may have followed the company indirectly, up until very recently, KORE also had assets in British Columbia, Canada. And our strategy in 2020 was to work equally across all 3 of our major assets. Those 2 great PEA stage assets and land positions in California in the Great Basin and our BC assets. We chose late in 2020 to spin out the BC assets into a new company called Karus Gold. Anybody who was a shareholder in early January of KORE is now a shareholder of Karus Gold. We're currently doing a rights offering in Karus Gold, and it will continue on as a TSXV listed company sometime in the middle of the year and generate a lot of value from those great assets in British Columbia, but they are no longer part of KORE Mining. KORE is going on under my leadership, and we'll be pursuing 100% of our growth and future value in the Great Basin in the United States and primarily on our current 2 assets, Long Valley and Imperial in California. So we're changing from the portfolio approach to a more focused approach in 2021 and an approach very much driven by exploration. I don't show -- share charts very often. I not want to sort of gripe about market valuations and those types of things. But I did decide to plot, as I was preparing some Board papers prior to Christmas, our performance against some of our peer U.S. gold developers. And in this case, for those who don't know the ticker symbols, I've got the GDXJ in the light blue, Corvus, Gold Standard Ventures, Liberty, Integra and Midas, all Great Basin U.S. gold developers in Idaho, Nevada and ourselves in California. And we see that KORE's equity has done quite well on the back of Eric Sprott's investments. And you can see the stars that I've put in the background here, the brown stars, the orange stars, those are all exploration news releases we put out across our portfolio in 2020. So you can see we generated a lot of news flow. As markets got hot in May, we were able to participate in that and do very well in the shares. As markets soften for everybody in the market over the last 6 months, you've seen the shares come off. And then most recently, we've seen the shares dip after the dividend out of our Karus company to our shareholders. And I think that's created a great valuation opportunity in KORE Mining. For those that are familiar with the mining business, I really like the Lassonde curve. It's sometimes hard for companies to talk about it. The Lassonde curve is a sort of theoretical curve about the points at which you can generate value in the mining business. And you start at the bottom of this chart on -- you go from concept, which is, hey, I got some moose pasture in Northern Canada somewhere or I got patch of desert in the Great Basin in the U.S. You then have a geological concept that says, "I think this could be prospective for these reasons." You then explore, which is pre-discovery. You're doing field work. You then discover by using the drill bit typically. If you find a deposit, which that's a great value creation period. You've seen companies like Great Bear, generate huge amounts of value going through that discovery phase. You then go through the feasibility stage, which is historically a period of challenge for companies as some of the excitement comes out of the exploration story and the realism starts to sit in. And then you recreate more value as you then move a project into development. So I put this up here because I think KORE is sitting on the precipice of a couple of those upward portions of those curves, where we have the ability to unlock a lot of value. So going across the chart, on the target generation side, so taking projects from concept to pre-discovery, we did a lot of that work last year. We moved our Mesquite-Picacho West targets over to drill ready, and we're currently permitting drilling. We generated some great targets for Long Valley sulfides and resource growth. Those are drill ready, and we're currently permitting drill programs to go hit the exploration side with the drilling hard in 2021, create that value in that Lassonde curve going through that discovery phase. So that's sort of value creation path #1 at KORE. The second is in parallel doing the development phase. So last year, as you heard me say, we did 2 PEAs, showing almost $1 billion in potential value from the Imperial and Long Valley projects. We are moving Imperial into the permitting process in 2021 and advancing that project to development, while we continue to advance the feasibility stage of the Long Valley PEA. So the Imperial project is poised to start unlocking that $1 billion value. So KORE is currently a [ CAD 100 million market ] cap company. By development, we want to unlock that [ CAD 1 billion ] in value for our shareholders. If you look at that in a different way, this is our plan in a Gantt chart format for 2021. We're currently on the development side, preparing a mine permit application called the plan of operations. We're conducting environmental and other resource baseline work on the project, and that will then lead to us entering the permitting with our federal agency, the Bureau of Land Management in the middle of this year, generating some significant derisking milestones we feel in the back half of the year. On the exploration side at Imperial, we're currently in the field doing target generation work, generating drill targets that we think have potential to make great greenfield discoveries in our huge land package we've got because KORE basically controls an entire district, or other people might call it gold camp in a great with gold mining location in Southern California. The Mesquite-Imperial-Picacho project, and we're permitting drilling to go out there and hit some of those targets later in this year. Up at Long Valley, we've already gone through the full target generation process, and we're just waiting for the drill permits to come through to get a drill turning in Q2 and go out there and start testing some of those targets. We'll follow that up later in the year with some more target generation. And overall, the little triangles on this chart are meant to estimate when we might have newsworthy kind of information coming out of the company and trying to show we have a lot of potential news flow in the back in throughout 2021, hopefully, generating the excitement and that great value creation you saw in 2020 in KORE Mining. Looking at some of the details from some of those other key points and back to the fundamentals of the company, KORE has currently almost 4 million ounces of gold in the ground in our Imperial and Long Valley projects. Those are both shallow, open pitable-type deposits. We've also got large claim areas over 16,000 acres at Long Valley. Some of which we stated last year to capture some upside and some blue sky potential at the project. We've got over 26,000 acres on that Mesquite-Imperial-Picacho district, which is 28 kilometers of strike, right around -- centered around our Imperial project. We'll look at that a little bit. We've got some incredible exploration opportunities, and that can generate a lot of value for shareholders as we start pumping out drill results in the back half of the year. If you stack up the development assets and the 2 mine plans that we published in our PEAs last year, you see KORE Mining heading towards being a 350,000 ounce gold producer, once Imperial and Long Valley are put into production. That is not an insignificant amount of gold production. These are real mid-tier gold assets that KORE is pursuing, and that is what we also want to discover and grow using the drill bit. So just creating more and more upside for shareholders. If you believe in higher gold prices, obviously, our projects, like all gold projects, have high sensitivity to the metals prices. If you believe in $2,000 gold, as these projects go into production several years from now, you're going to see much more value created, which will all hopefully flow into the per share valuation of KORE over time as we derisk and advance these projects. Some details on the PEAs for those that are familiar. Our summary is, our projects are importantly 100% owned, okay? There's no earn-in agreement. There's no other major costs outgoing. We own these assets outright. They are simple heap leach gold projects, which means they have low technical risk compared to complicated projects with mills and tailings ponds and all of these types of things. Both projects are nearby infrastructure and as a result of low capital intensity and robust economics that result from all of that, plus the exploration upside really gives a lot of juice and value creation potential. Looking at that price to NPV metric I mentioned earlier as a way to look at fundamental valuation. If you completely throwaway exploration upside, which is all very speculative, and just look at the NPVs of those 2 PEA projects, of course, currently trading about 0.15x the combined NPV, and this is only using $1,450 gold, by the way, of our projects. And I've compared it using $1,450 simply because I had the numbers across all of our peer companies that I mentioned earlier, Midas, Corvus, Integra, Gold Standard, Liberty, all great basin explorer developer-type companies. And you see KORE trades on a much more discounted basis to those peers. Some of that is the validation those other companies have by having strategic mining investors, you can see on this chart. Others are by having the market convinced they've got great exploration sites, such as what you see at Liberty and their Black Pine project and others is the fact that these companies are all significantly older than KORE. They've been in the market longer. People know what they've invested in and they built their share registers over time. So for all these reasons, I think KORE has great opportunities to grow our market cap and grow our per share value by deploying capital in 2021. Cap structure of the company is very tight. We've only raised equity to fund the company from Eric Sprott with some early seed investments from Macquarie Bank, who are now no longer involved in the equity in the company. So that leaves Eric Sprott with 26% of KORE, management still fitting with 38% because we've not done a lot of public financings on the company to date. We've got some growing analyst coverage with Nick Dion at Cormark, Chris Thompson at PI, you can get those on Bloomberg or reach out to us if you want to see some of those notes. And then we've got some other great analysts in Toronto following the company. So I think you see a growing following for KORE. All of these things will go to maturing our cap structure, maturing the company in the capital markets and delivering some of that value you see on those previous slides. Management of the company remains unchanged. For those that have seen previous presentations, our Chair -- Exec Chairman and Head Geologist remains to be Jim Hynes. He's also going on to be the Exec Chair and second largest shareholder after Eric Sprott of Karus Gold, our sister spinout company. I will be -- remain a Director of Karus Gold, but I'm going to remain the CEO, and my primary focus is going to be 100% on delivering value in KORE Mining. We have a shared CFO between the 2 companies. Marc Leduc, our Chief Operating Officer, staying 100% in KORE. He is integral to our projects as our Chief Operating Officer. He has a long track record of success in developing heap leach projects as well as having success in California, where he did the Castle Mountain project for NewCastle Gold, which was successfully sold to Equinox Gold. And now I am proud to report went into commercial production late last year, showing that you can put heap leach gold mines into production in California, and that was in San Bernardino County, California. Board remains the same. Adrian Rothwell, one of the Founders of the company; Don MacDonald and Brendan are all CEOs of other junior mining companies; as well as Harry Pokrandt, our ex-Macquarie banker, who is our Lead Independent Director And a great participant in the Vancouver junior market. I will spend just the briefest of moments on some fundamentals of the project for those that have not seen the projects before, but I'm going to blow through some slides really quickly here because I would like to get to Q&A as quickly as possible because that is always the most stimulating part of understanding the risk return in an equity. So Imperial Gold project, I don't know, picture says a thousand words. This is what the deposit looks like. Deposit is located in Imperial County, California, an experienced mining jurisdiction. The county currently host 2 large open pit mining operations, including a gold mine called Mesquite, which anchors one end of our claim area in the county. Mesquite is owned by the Equinox Gold company and has been in production for 25 years. There are multiple other closed heap leach projects and a 150-year gold mining history in Imperial County. So we think a great community that will be supportive of a responsible mining development, bringing economic development and jobs to an otherwise economically depressed region of California. The deposit itself is a very simple 100% oxide deposit with simple metallurgy. It is open in multiple directions. On work we did last year with geophysics and structural interpretation, we believe we've got some great opportunities to grow that resource even more and add more material over time into that PEA. We've also got an incredible district scale opportunity to go explore this 28-kilometer trend we control, which we think has high potential for discovering new deposits of Imperial or Mesquite scale in the 1 million to multimillion-ounce scale. We have infrastructure. Again, that's what we create these great economics from the Imperial PEA with a 44% IRR at $1,450 gold or much higher at higher gold prices. We've also done target generation work last year to start looking at where the best first places to drill on our Mesquite to Imperial-Picacho district. This is looking at the west part of that district from Mesquite to Imperial. We've seen some anomalous gold and soils. We've got some good geophysical ideas where fault structures that control mineralization are. And I'm really excited to get a drill out there later this year and start testing some of these incredible new discovery targets. Long Valley is a very similar story. You can see here, it's on U.S. forest service land, currently under a cattle lease, low vegetation, more and higher elevation outside the Sierra, 1.7 million-ounce oxide gold deposit with sulfides underneath, high IRR project, great oxide growth potential. We think there's great potential in this deposits case, to significantly grow the material as part of that PEA. We'd expect it sometime down the track to follow that up with an updated PEA or PFS prefeasibility study to show the value of what we believe will be a much-increased deposit after a little bit of drilling. We've also got potential for high-grade sulfides. Again, targets we're going to test with our drill program in 2021, excited what we might find down in the boiling zone as far as high grade at depth. Routes of this deposit and overall, you can tell, we're very excited about 2021 prospects for KORE. Lots coming with a drill bit in exploration. Behind that, we're pushing along with development Imperial, trying to unlock that $1 billion in NPV, generating value [indiscernible] for our shareholders and hopefully creating lots of buzz like we saw in 2020 and 2021 in KORE Mining. So I'll stop there and turn it back over to Campbell and the team to facilitate a Q&A.

Okay. Very good. Please send in your great questions. I very much appreciate it, and we'll ask them that there's a few more. When do you envision guidance being issued regarding the rights offering for the Karus spinoff? If you could just highlight that again?

So anybody who's a current -- was a shareholder of KORE at the split should have received in their brokerage account, their Karus shares. Soon to be followed should be your Karus rights. And at least in a Canadian brokerage account, you should see the rights appear like you would have warrant in your account. For those in the U.S. or international, you may get them in the mail. So be patient. Those are being mailed out until the 12. Any questions, I encourage you to go to the now up and running Karus Gold website and look at the rights page. There's some important dates. But the key thing is that you -- if you're a holder of brokerage account that you're very proactive in exercising because you don't want to go past the close date for those rights of March 15. So act early to make sure you get access to your rights.

Good. Again, California and permitting, when is drilling commencing? And you're permitted for that? Is that the case?

Yes, correct. No, we're not yet permitted for our drilling in California. If you go back to my Gantt chart, in your mind, we currently have 2 plans of operations being processed for drilling, one at Long Valley and actually a very large program for the Imperial project. The Long Valley project has been in permitting with the forest service for, I think, 6 or 7 months now. And indications are we are expecting yet a decision in Q1, so in the coming months here. That should give us the ability to go out and drill some of those great targets at Long Valley later in 2021. And then down at Imperial, we've got a -- we've been in the process for several months now with the large drill program going through the BLM. That will give us multiple years of targets. We're only going to do a few of those discrete, highest priority discovery targets on the project in 2021, but we are expecting to get that permit granted in the middle of 2021. So likely, we would start drilling first in Long Valley.

Excellent. Can you just summarize again current cash position in your 2021 exploration budget and annual G&A, including costs for permits?

Yes, cost -- permits don't cost much. You do have some bonding. You have to do for the minor disturbances you do building a drill pad, but those are usually remediated pad to pad, so it doesn't build up. So no significant cost to the permitting other than the staff we already have down it in Imperial County. We currently have CAD 5 million in the bank G&A for the company, thinking the budget runs about 1.5 a year in KORE, that would be for corporate salaries, listing costs, those types of things. And beyond that, exploration is discretionary. So with the pads we're drilling, we could do like we did in 2020, look at the value we generated in Karus. We only spent $3 million in Karus in 2020 to show the kind of value and the amount of work you can get done with small budgets. That said, if markets are good, KORE share price is doing well and we want to do $3 million, $5 million worth of drilling and drill 5,000 or 10,000 units, will have the pads permitted, and we can choose to do that, but it is discretionary. So we will do what the capital markets will enable us to do in 2020. But for sure, we're going to be testing those highest priority exploration targets because that's what's going to generate the excitement, and we don't want to over capitalize the company. So we're comfortable where we're at right now.

Again, average grades and cut-off grades at Imperial and Long Valley.

That's digging deep back in my memory, okay? So average -- so our -- actually, I might have a -- hold, I think I'll have the resource page in here. There we go. So Imperial, Long Valley, both run around 0.6 -- 0.5 to to 0.6 grams per tonne. The higher grade Imperial materials near the top. So I think the mine plan averaged just over 0.55 grams per tonne in the mine plan. Now that seems low grade, but don't forget, this is mining in the -- in open pits in a heap leach. In Imperial's case, actually, we run a mine heap leach. And that means you can generate great economics in projects with those types of grades. And if you look at Mesquite, which is operating 9 miles from our Imperial project, they run recently 0.3 to 0.35 grams per tonne and make gold at about $900 all-in sustaining cost. So we think we've got great grades. We're very confident in the cost because that is the best thing about the U.S. You know to the penny, how much it costs to run a cat truck up and down hill, and you know how much your mining is going to cost. So I think we're comfortable we can mining it, make great returns on those grades.

I have one more question, and I'll pass it over to my colleagues. Federal path to permitting, how long will it take?

So currently, we're expecting to submit our mine. We're currently processing a drilling plan of operations at Imperial. Once that's done, we will submit our mine plan of operations to the Bureau of Land Management. We would then expect to go through a 2- to 3-year EIS public consultation process with the BLM that would result in a record of decision, which is ultimately the decision, if you can use the land you've proposed, such as federal land owned by all the people in the United States for a mining operation. We would then -- following that, we would get permits in the local county for air, water and reclamation. And the reclamation one being the most important to the -- that's done by the county because that's where we comply with the strict California Backfill Law, which is very important to getting the social license to operate in California. We're subject to incredibly high both environmental and reclamation standard, that basically return the site to a greenfield state. So it will not look like there was a mine there once we're finished the operation to our PEA plan. So I think that is what we're leaning on heavily in building our social license to operate in Imperial county. So 2 or 3 years on the BLM to get a record of decision starting middle of this year.

Thanks for the presentation, Scott. So this year, what would be kind of a budget for exploration versus development? I say at Imperial, you're looking to start the feasibility study in the end of 2022, is there any -- would there be any feasibility related to work on this year there? And when would you be looking at doing the feasibility at Long Valley or starting it?

Yes, yes. Yes, great question. So again, exploration is discretionary. So right now, we're out in the field with soil sampling. We've got currently contracting a geophysics program to keep honing targets in the greenfield exploration. We're likely going to be prospecting with an RC rig. So putting in nice cheap meters. We'd like to follow that up with a KORE rig, but that's going to be subject to KORE having some success, having some reasonable share price to go out and raise some capital on getting drill permits. And how much we spend and how much we drill will really be dependent on capital markets because we can drill all year around here, there is no seasonality. There's no -- we can turn up the rate at which we drill very, very quickly, and we've got a team now in place to manage the program down in Imperial county. So it's a bit of a wishy washing answer, but I could say it depends, and we want to raise capital when we get a permit because KORE has never been one to overcapitalize because there's no point in needlessly diluting shareholders if you don't actually have a use for the funds. So we want to go, let's say, the rate targets we have fund us to hit those targets. Sorry, that was your funding budget question. Your second one was...

Long Valley feasibility work.

Yes, sorry, the feasibility work in general. Yes. So no drilling in the budget in 2021, even if we drilled 10,000 meters at Imperial would be for, what I would call feasibility study work. It is all starting at greenfield exploration, obviously as close to Mesquite as we can get because there's already 9 million ounces in that camp. Stepping out across the highest priority targets towards Imperial next year, if we were well capitalized, we would literally not turn the drill off for 18 months. You'd move into step-outs to the mineralization, then some infill, probably some geotech and sterilization, and you'd finish up drilling at the end of 2022 and immediately launch a new feasibility study. At Long Valley, we are -- the drill -- the purpose of the drilling is to step out and drill more near-surface oxides. We believe from the footprint and what we've seen from geophysics and surface alteration, we can double the -- it's our objective to double the amount of oxides that were subject to that PEA. I think it would depend on how much of that we're successful doing, whether we do an updated PEA or a feasibility study next, that has not yet been determined. So it's going to be on success of exploration.

Yes. Then if you got that it's not a news release about the gold discovery in those dry stream beds between Imperial-Mesquite and the plans for next steps for that?

Yes, exactly. So let me just sort of show you, that's easy if you kind of look at the map here. So in 2019, with the first investment we got from Eric Sprott, [ per the pitch to his hand was ] look, we can go out and put our foot on an entire historic gold district here. That was owned by Goldfields and Newmont in the 1980s and '90s. Goldfields discovered and built Mesquite originally. So we did that. And we staked all this ground to 28 kilometers, you can see, it's almost 21,000 acres of undercover exploration, and that's the key. It's Mesquite-Imperial-Picacho all outcropped and were ultimately drilled off from outcropped to deposits. Now Mesquite discovered several other deposits nearby undercover, but that was basically right next to what they were currently mining. We think that undercover exploration is really, really, really prospective, and that's what we're going to be hitting with the drill bit early -- earliest in our drill program.

Understood. And then...

I think I did not answer your question, but I had a -- that was a great answer to some question.

[indiscernible] And then...

What was your question? I think I wandered off there.

That's with the news release, the recent one about the...

Yes, yes, sorry, I didn't [indiscernible] the slide. So we broke the district into 2 pieces, East and West. We have completed what I would call reconnaissance of the West part, which started at Mesquite, and we've done IP geophysics, which is good for tracing the faults and faults control mineralization. There is a big strike fault. And wherever cross faults, that's where you tend to get to mineralized systems at Mesquite and Imperial. So looking for those faults, I think we got some good ideas where those are. We then went into the dry river beds, which have cut through some of the sanding gravel sediment, trying to see what we can see in the dry steam beds. We dig in big 60-pound samples out of these about 1 meter or 2 in the stream beds. And low and behold, we found some nice anomalous gold hits down in some of these beds. It's unlikely that gold could have been transported from Imperial or Mesquite, given the distance at which the -- all the -- you can see all the way all the stream beds and water flows are. So it's not coming from any of those. So something else is generating gold, and that's what we want to go find. So we are in-filling some of that work, doing more IP geophysics. We've also been in the field on the entire eastern part, so that's an upcoming news release. We've not yet got the assays back out there, and we did even more work over the known deposits. So lots of generative field work and mapping going on here.

Yes. And then what would be the best step-out how we've had from Imperial deposit?

There's a new slide I have to generate. I've not gone through the individual drill holes. When we took over the project, all the drilling was done by multiple operators Bema, B2, and I think Goldfields in the early days, back in the '90s. And I don't recall, but there's multiple hundred meters of 1 gram, 1.5 gram is what you'd expect to be drilled down the guts of our deposit.

Can you just stay on the slide here for a minute, you were talking about these faults. How many have you identified on the property at Imperial? And how long are they? And what's the general strategy for drilling and finding new gold or new mineralization based on that -- on the faults?

Yes. So there's actually a lot of interesting geological discussion about that. We're engaging with old time geologists that I know the couple of gentlemen that worked at Goldfields during the Mesquite drill out days. We've talked to the guys at B2Gold, who actually were a joint venture partner with Glamis and this back in the day. And there's lots of theories. But the general thesis is that there's a large slip fault, big, big regional fault that actually goes from Mesquite. You can see represented by these gray lines at the little red centers. That's kind of the interpreted geophysics. That go all the way down. They've kind of been broken somewhere between Mesquite East and Ogilvy, then they continue pretty continuously down back to Imperial where they then break again. And this is where you're getting cross faulting. That's moving around that big fault that we think ultimately created all of these deposits. There's even some chance, they're all related to a big -- a very, very large gold system, and they've all simply been slipped along that fault to each other or they're discrete mineralized systems. Again, there's lots of geologic areas, but you'd expect to find the best likelihood of success where you see a break in that large regional faulting that runs for the entire 28 kilometers of the property. And one of those is right where you see that 0.5 gram per tonne AU gold did in the dry soil beds, right near that break and that regional fault. So those are the breaks we're looking for and finding anomalous gold around those gets geologists very excited about what might be under there.