Newcore Gold Ltd. (NCAU) Earnings Call Transcript & Summary

Good morning, good afternoon or good evening, depending on where in the world you're joining us from today. I see on the list Alaska through to Ghana through to Australia. So we've got global coverage, which is always nice to see. I appreciate all of you for being here for Stacking the Odds - How Heap Leaching Wins. On today's illustrious panel, we have with us Luke Alexander, Newcore Gold; George Salamis of Integra Resources; Jon Gilligan of Liberty Gold. And today's event is going to be moderated and run by Steven Therrien, of 3L Capital. Before I turn it over to speakers today, I want to do some quick housekeeping first. This is an interactive event. So please use the chat button on the bottom right of the screen to post questions and speakers at any time during today's event. Questions about individual securities will be shared with the appropriate team. So please do feel free to shoot those along. Questions that are on topic for today's event, we are going to try and tackle at the end portion of this webinar. Today's event as you know is also being recorded and will be available shortly after it closes on both 6ix.com and 6ix's YouTube page. Last thing before we get into the protein, Steve will be sharing a screen today at one point during the event. If you'd like to blow it up larger on your screen, there's a small button on the top right of that view that you can use to enlarge. That's enough out of me. Steve, I'll turn to you to get started today.

Great. Thank you, Romeo. Hello, everybody, and welcome to today's webinar and Stacking the Odds - How Heap Leaching Wins. I'm Steve Therrien mining analyst at 3L Capital, and I'll be the moderator today. Whether you're an issuer, investor, a mining industry professional or an analyst, you're in the right place to explore one of the most cost-effective methods for extracting precious metals in today's markets. So for today's webinar, we'll explore the advantages of heap leaching, featuring insights from our panel, which includes the CEOs and the President, COO of leading precious metal heap leach developers, along with a new heap leach producer. We'll hear panelist intros offset the context with key heap leach insights, and then we can dive into a lively panel discussion. So I want to start with an introduction of each panel member. And first of all, I want to say thank you, Luke, Jon and George, for your time and participation. So for 1 to 2 minutes per panelist, let's focus on your current role and background. A quick summary of your company's heap leach projects, including high-level economics and then one key achievement or milestone within the last 12 months. We'll start with Luke, then Jon and George.

Yes. Thanks, Steven, and thanks a lot, Steven, for the report that you put together, why heap leaching ultimately wins out. It was a very comprehensive report. I'd encourage anyone who's on this call to reach out to Steven to get a copy of it, lot of good insights in there. In terms of myself, so I spent the first 20 years of my career on the investment banking side of the business. I was in London for 12 years, covering all the big global natural resource funds out of the U.K. and Europe, really focusing on the mining sector. That's where I got to know the team involved with Newcore today as well as the Enchi project. So our Enchi project, it is located in Ghana. Ghana is a Tier 1 jurisdiction to be operating in. In the last 12 months, one of the big catalysts for us is we did put out a PEA, which outlined extremely robust economics. We're now in the process of taking that from a PEA to a PFS. So doing a lot of the de-risking work to ultimately accomplish that. We'll look to commission that study in the second half of this year and then get it published in the first half of 2026. And then layered on top of that, you've got district scale exploration across our project, very large land package, 248 square kilometers in size. We've identified over 25 targets to date. So lots of exploration that we're going to be going after. We did announce a 10,000 Meter Drill Program in Q3 of last year and on the back of a very successful $15 million financing in February of this year, we increased that to 35,000 meters. So we are aggressively exploring on the project at the moment, which we think will create real value for shareholders as well as that derisking from PEA to PFS. We see that as a real catalyst for the company. When you typically go through that period, you'll get a much higher multiple from the Street. And then lastly, management and Board were aligned with shareholders. We own 15% of Newcore. So we ultimately want to trade a lot of value for shareholders. So yes, so that's Newcore and myself.

Great. Jon?

Steve, thanks very much and thanks to you. I want to echo Luke's comments. I thought your piece on leaching was really, really insightful, and it provided a bit of technical detail, which I think with leaching, it's a very simple process, but the devil is in the detail and you really need -- if you really want to get into what's a good leach and what isn't, you have to have some level of understanding of some of the nuance in the numbers. So -- and you've started to do that. I think that's a great education piece. So welcome, everybody online. My name is Jon Gilligan. I'm the President and Chief Operating Officer of Liberty Gold. I'm originally a geologist. I've spent time across the world working in lots of different commodities from gold to copper to uranium, ran a couple of mines, built a couple of mines, one in Chile and one in Argentina. And I also work with SSR Mining, Silver Standard as it then was when that company purchased the Marigold deposit from the Barrick Goldcorp JV. And so I was involved in the integration team and bringing that asset into Silver Standard or SSR Mining. When I got the sort of tap on the shoulder just over 3.5 years ago to join Liberty for this thing called Black Pine, I looked at it and I thought, well, that's a dead ringer for Marigold. And we saw the value in that lower grade, simple, basic opportunity of heap leaching, material movement heap leaching at Marigold and Black Pine is exactly the same thing. So Black Pine located in Southern Idaho is our flagship asset. Recent catalysts, we produced a PFS late last year, outlining a 17-year mine life for a total metal production of 2.2 million ounces. First 5 years production 183,000 ounces a year. Life of mine average 135,000 ounces. We ran the economics at that point at $2,000 gold and had a lot of heartburn around whether that was too much or not, and today, you think, well, it was worth thinking about that. But at $2,000 gold, this thing has an after-tax NPV at a 5% discount rate of $550 million, and internal rate of return of 32% payback in 3 years. So it's a pretty attractive project. Running the economics at spot today, it's a $2 billion NPV and payback is just over a year. So that illustrates one of the key features of typically of leach deposits, they tend to be lower grade, but they can be very highly leveraged to the gold price. And I've no doubt we'll talk a little bit more about that down the road. Going forward, we submitted our mine plan of operations to the U.S. Forest Service. So we started U.S. federal permitting in January. We expect to get our notice of intent, which is the sort of next step in the permit process within 6 months, and that will put us 24 months away from an approval. And we're looking at construction commencement early '28 with first production late 2028. So we're an explorer who's emerged into a developer. Like Luke, we have some significant exploration upside on the property. The current resource is 5 million ounces. We see a pathway through 8 million plus and we have a significant footprint to be able to explore over the next few years. So exciting times for Liberty. Thank you, Steve.

Great. And George?

Thanks, Steven, and thanks for putting this together today, by the way. It's a great panel. Great subject. So George Salamis, President and CEO of Integra Resources, which is kind of the second iteration of Integra Gold was a company that we sold a number of years ago. We kept the band together, so to speak, and sort of we went off down the road of looking at certain opportunities kind of our sweet spot is kind of looking at past-producing mining operations, and that was the focus of the company then 7 years ago with the acquisition of DeLamar, our past producing asset from -- that we acquired from Kinross, which we thought there was a tremendous merit looking at as a heap leach. We then went on to acquire a second sort of round of projects with the acquisition of Millennial Precious Metals, and suffering -- the slings and arrows over the last 5 years in the development space, which Jon and Luke also suffered and many of us, we decided to make the strategic decision to look at actually getting into production and finding a funding mechanism that was going to pay for the other 2 -- the development of the other 2 assets. And so therein lies the crux of the basis for the acquisition of Florida Canyon, which is now what puts us into the production space. And so in terms of all of these assets combined focused on the Western U.S., the Great Basin having this tremendous geology that's really ripe for low-grade oxide heap leaching. And I have worked at these operations before during my 30-year career, I worked for Placer Dome, worked at Cortez, but I'm a geologist, I'm not a mining engineer. Let's get that straight. So we find those ounces and typically hand them off. With respect to what's going on at Florida Canyon right now. Again, we have this funding mechanism that's going to fund the development of the other 2 development projects that we have in the Great Basin, all of which total about 10 million ounces of gold right now. When we acquired Florida Canyon, the gold price when we started looking at it was roughly speaking about $2,200 an ounce. Our view was if that's enough cash flow from that operation and enough margin to pay for everything else that we needed to do to derisk the other 2 development projects, that's great. Now having just sold gold yesterday at $3,340, we have the ability to look at deploying some of that capital opportunistically to really look at pushing growth. These are all opportunities that we didn't have available to us even 3, 4 months ago. So we're in a great spot. And I'll echo Jon's comments, heap leach deposits are great. They have a lot of torque when they work well, really highly leveraged to the gold price environment, especially now.

Fantastic. Okay. Great. Yes. Thanks, everybody. So I'm just going to pull up a few slides from the report that I wrote. Just give me a second here. So heap leaching as a processing method, if you're not sure for extracting metals from low-grade ores that cannot be economically processed using conventional methods like milling. The process involves stacking run of mine or crushed ore on the large heaps on impermeable pads and followed by applying a leaching solution through drip emitters or sprinklers for weeks, months or years. As the solution percolates from the top of the heap to the base, it dissolves the desired metals, which are then recovered from the metal and liquid known as the pregnant leach solution. The solution is then passed through tanks containing activated carbon, which absorbs the metals and where the loaded carbon can be stripped later. The metals are then recovered by electrowinning and smelted imported into gold bars or buttons. Alternatively, the gold and silver could be recovered using the Merrill-Crowe process. And this process removes oxygen from the pregnant solution, add zinc dust, causes the metals to precipitate and allows them to be refined later. And typically, you'll use a Merrill-Crowe when the silver content of the mineralization is high. And I just got some good pictures from El Dorado's heap leach mine, which you can see in detail and verify on their website. Heap leach is often favored for its lower capital and operating costs, simplicity and suitability for low-grade, typically oxidized near surface ores. Uses less water and energy versus milling operations and enhancing sustainability in highly remote areas and is highly scalable, allowing for flexible production. While recovery rates are typically lower, 60% to 85% versus 85% to 95% for milling. The trade-off is acceptable for low-grade ores or in unstable regions due to lowered financial risk from smaller initial investments and easier site closure. They play an important role in producers' production profiles globally. For example, Kinross operates 3 heap leach mines in the U.S., and they've accounted for 32% of their 2023 production. And in many cases, these projects have been the first producing asset and catalyst allowing junior single-asset producers to grow. A good example is Orla Mining. So Orla evolved from a developer to a single asset producer to a multiple asset producer, all stemming from the successful construction and operating of the low initial CapEx Camino Rojo project in Mexico. And in the lower right table, you can see some production data that I've gathered from some North American listed producers to give you an idea of the production, quantum, the grade and the ASIC of these types of deposits. So you can see the production for pure heap leach projects grades around 0.5 gram per tonne, and the ASIC averages around $1,350 an ounce. So heap leaching success depends on a bunch of factors, such as ore oxidation, permeability, grade, recovery, leach times. Oxide ores are ideal for heap leaching, offering high recovery rates. Sulfide ores can require costly pretreatment, saprolites and laterites, weather tropical ores are great candidates as well, but typically require cement agglomeration due to the clay content. Clay rich deposits can be challenging due to poor permeability. But you can get over that with agglomerations. So what is agglomeration? Basically mixing that ore -- was spent and turning finer particles into larger stable aggregates that enhances the solution flow through the pad. And you can also overcome that by mixing clay-rich zones with [less clay-rich zones], if you have those. Gold grades as low as 0.2 to 0.3 grams per tonne can be economical across different throughputs and cutoff grades at heap leach mines can reach as low as 0.07 grams per tonne for run-of-mine heap leach operations. The recoveries, like I said, usually range between 60% to 85% and that's lower than what you'd see with the mill, which is, I would say, between 85% to 95%. And unlike milling, where recovery is immediate, heap leaching recovery does have a leg and there is some delayed cash flow there. Many parameters can impact the recovery rates, such as the coarseness of the gold particles, whether the gold is exposed, or as free particles around rims, and what's the efficiency of solution flow through the fractures and the heap once it's stacked. There's different lab tests that you can do to look at recoveries, the timing of recoveries with other -- and other characteristics. So cyanide shake assays and bottle roll tests, column leach tests. If I touch on column testing, you put mineralized material on a vertical column. It's typically a couple of meters tall, and you apply a leaching solution at the top, and that percolates to the column and you can get a lot of really good data that's going to help you simulate what it's going to look like when you build the mine so you can get factors such as eligibility of the metal, the recovery rates, the leach kinetics, so the rate at which the gold dissolves, the reagent efficiency, how much cyanide is being consumed and stability. And so how much compaction you're kind of getting when you apply this solution. To get too much compaction, you can start to form channels through the heap leach and then that solution is not kind of flowing nicely through the heap and you would potentially get lower recovery if that happened. So these are just some charts that are out of the report. And so we went through a bunch of technical reports and charted up milling and heap leach data from those technical reports, and we have inflation adjusted them to the end of 2024 based on the date of the tech report. And so what you'll see is the initial and expansion CapEx for heap leach projects is much lower than milling operations at the same size. So for example, a 30,000 tonne per day milling operation might cost around USD 920 million, while a heap leach operation of the same scale on tonnes per day basis might be $225 million. So it's almost a $700 million delta in CapEx. If you look at it in terms of the life of mine payable metal value, it's still also less capital intensive. Why is that? It's mainly -- you don't need energy-intensive high CapEx mill. There's no liquid, solid separation and there's no tailings disposal like heap leach mines. On sustaining costs, heap leach generally requires lower sustaining CapEx than milling. However, when you look at it against the life of mine payable metal value can sometimes be more expensive. For open pit milling operations, variability comes from factors like ore hardness or tailings dam phasing. For heap leach, the sustaining CapEx, a lot of it is going to be for expanding the leach pads. And it can actually be quite lumpy as you expand the pad every so often to increase the capacity and be able to stack more tonnes. On unit operating costs, that's where heap leach really shines. So across scales, it doesn't matter if it's 20,000 tonnes per day or 80,000 tonnes per day. You can see that the operating costs stay low, somewhere generally between $10 to $15 per tonne processed, and that's a stark contrast to milling. And so this cost advantage even holds when you apply -- when you look at it versus life of mine payable metal value. And again, that comes back down to simplicity, lower energy needs of heap leach. And then at mining cost on a per tonne processed basis, heap leach is cheaper at lower throughputs. And this might -- on a per tonne mine basis, it's kind of mix. On a per tonne processed basis, you can see that is slower, but this could be just a result of the sample projects that I have. The average strip ratio of the heap leach operations in the study, that were lower than 20,000 tonnes per day, had a strip of 2:1, while the milling operations had a strip of 5.5:1. And then you can see on the processing OpEx versus tonnes per day. This is really where heap leach shines at 20,000 tonnes per day heap leaching costs that might average $3.87 per tonne, and that's a lot lower than the average milling rate at $9.92 per tonne. So if you're looking at -- when you're looking at projects, these are some things to kind of think about during due diligence. So if you look at gold particles, is the gold free exposed? Is it on mineral rims, in fractures? Is it encapsulated in sulfides like pyrite, arsenopyrite. If it's free, it's on rim or it's in fractures, it should easily dissolve in cyanide, but if it's encapsulated, you might need processes like ultrafine grinding or pressure oxidation. And also look at the proportion of fine versus coarse gold. Finer particles are going to dissolve a lot faster. Things that can impact recoveries, high copper can cause issues. You can form cyanide, stable cyanide complexes and that reduces the cyanide available to leach gold. That can lower your recoveries. That can also be mitigated with what's called a [storey] plant. High-clay content can be an issue, but that could be overcome, like I said earlier, with agglomeration or a good blending strategy with low clay ore. Carbonaceous material is also -- it can be an issue. So it absorbs gold cyanide complexes preventing recovery. What you can do is, you can domain those zones out over your geological model to keep this material off the leach pad. And so I've just got a cross-section from Liberty. And you can see they have domain in some areas in the deposit that have higher carbonaceous material, and they've applied a 0.001% recovery and excluded any ounces or mineralization in those zones. So they've done a fantastic job at derisking that aspect of the project and making sure that doesn't [indiscernible] end up on the pad. The other thing that I'll mention, it's really important to know the different domains. So your oxide, your transitional and your sulfide domains. Each one of those is going to have different recoveries, different recovery curves on column test in the real world. And so these things can be separated out based in your model based on visual core logging, you can use cyanide shake assays and look at the ratio between the cyanide shake assay value and the fire assay. And if you have high ratios, that's a good sign that you have leachable oxide material. If you're going to have, let's say, 0.3 to 0.7 ratios or less -- or sorry, in that range, maybe it's transitional. And if you have less than 0.3, maybe that could indicate fresh rock or maybe you have some preg-robbing carbon. So other things you want to look at, have representative samples been taken from all these key domains and subdomains of the deposit. Are they spread out spatially? Do they represent kind of the different grades that are going to exist in the mine plan, oxidation state, mineralogy, were test conducted on blended samples to simulate the ore feed during mining. There's lots of different things to look at. The other thing I'll mention, where do the recovery rates plateau? In those column leach test. And is that going to be economically viable? And how long does it take to reach that plateau? And faster recovery means quicker turnover of the heap leach pad, boosting throughput. If it's slow, you could face bottlenecks and delayed cash flow and increased working capital needs. So this is just a slide of some useful links. If you're interested in learning more, I pulled a lot of data from Kappes, Cassiday & Associates. They've got a lot of good papers on their website. Heliostar Metals, they operate 2 heap leach mines, they just put out a great series on Twitter with videos of how the heap leach process works. 911Metaullurgist is a good site to learn things from. And if you're interested, we read a lot of research. We write thematic pieces, including this one that I'm talking about today, heap leach, but we've done stuff on West Africa, permitting time lines. We write research on companies, site visits, so you can always go check that out and sign up to receive that research.

Well done, Steve.

I tried to keep it to 5, but it's probably around 8. But -- so I've just highlighted some key ideas and points from the January report that I wrote. And just curious what points resonate most with your experience? And what unique strengths do you guys believe your projects have to offer? Whoever wants to start, can go for it.

I mean I think one of the key things you honed in on is ultimately the economics that are driven by a heap leach operation. I mean one of the key metrics that a lot of institutional investors and corporates and others will look at is, what's the NPV to CapEx ratio. That's a key ratio. So every dollar I'm putting into the ground, how much NPV is that driving? And a lot of those graphs that you just highlighted there, ultimately show that heap leach projects are much lower CapEx. I think you said they're kind of 1/5 or 1/4 of the CapEx for a similar size project, heap leach versus a milling operation. So when you're spending much lower capital, obviously, that drives much higher returns for shareholders. So capital intensity, I think, is one of the things that really kind of differentiates heap leach projects from milling operations. And if you have the appropriate material, then it makes a lot of sense to ultimately push forward a heap leach operation given both the capital advantages as well as, as you highlighted, the operational advantages and the lower cost from an operating perspective as well. So those 2 key -- I'd say those are 2 key elements to a heap leach project. And that's what ultimately drives the returns in our project. If you look at $2,850 gold, we've got $890 million after-tax NPV, 125% IRR and less than a 1-year payback. And the big driver for that is lower CapEx, lower OpEx. So yes, that would be my comment.

Jon, you're on mute.

One of thing that attracts us to this whole heap leach game is simplicity. These oxide deposits, and some people ask me what's an oxide. Well, oxide is simply the near surface expression of a sulfide deposit that's been oxidized at surface. So these things are at surface. So generally, they're very amenable to easy open pitting. So this is a simple near-surface open pit mine generally, which is a very well -- clearly well understood. We know how to drill blast load and haul. And then you have a very simple metals extraction process where you simply lay down an impermeable layer. You stack the material on top of it, whether it's crushed or run of mine dumped out of trucks. You irrigate it with a solution. The solution dissolves the gold and you simply pull the gold out of the solution and then recirculate that solution to keep going. At the end of the mine life, you simply cover the heap and basically, the mine is then complete. You don't have, as you mentioned, no tailings facilities, no water consumption, no high energy consumption. They are very simple from a sort of technical straightforward point of view. There is complexity in understanding the detail, but at a high level, these are very simple, very efficient, very cheap operating mines. And success typically comes from your ability to mine efficiently at a good cost base because the overall largest component of the operating cost per tonne in the heap leach operation is generally the mining costs. And so if you're an efficient miner, these mines build good open pit operators, who understand how to move cheaply, who understand their fleets, understand the loading efficiencies and as a result of that, are able to mine down and profitably grades that on the face of it sort of almost look impossible. So that is very attractive, I think.

Yes. I'll echo some of the comments that both Luke and Jon said. And Steven, to your point, we've already discussed the CapEx upfront -- CapEx and OpEx benefits of heap leaching versus milling. Obviously, that resonates with us specifically when it comes to DeLamar. As our shareholders will recall. We looked at DeLamar both as a heap leach and basically a milling scenario. Concluded pretty quickly that there's still a mill to be built there someday to treat some of that sulfide material. But ultimately, heap leaching was the way the preferred way to go. I think for us, another big driving piece was reducing permitting complexity when it comes to heap leaching versus milling for the reasons that Jon just mentioned. Less water, no need to put together or build a tailings facility. All of these things really add up when it comes to permitting success or permitting viability. For us, that was a big one with permitting being a big deal. And I think the other piece, too, that you touched on in the course of your presentation, Steve, which really resonated for us and all of the assets that we have is that ability to source different material from different mining fronts. For example, DeLamar has got -- it's 2 major ore bodies. It's 4 low-grade stockpiles that were put by Kinross back in the day, we've got backfill. So we've got that ability to put together blending strategies, which people will see in the upcoming feasibility study, which we'll put out sometime in the second half of this year. That gives you that operating sort of flexibility so you can blend high-clay content ore with low clay content ore for example. That's -- optionality is a miner's best friend ultimately when it comes to mining. And we saw some of those same qualities by the way at Florida Canyon.

Steve, if I could perhaps add one sort of final comment. You mentioned the operating cost of these -- of the sort of leach -- open pit leach operations, $10 to $15. Our PFS, we had ourselves at $9.11 I think, a tonne. $10 is probably a good number. And what I'd like to tell people is, today, a gram of gold is worth about $100. So that means 0.1 of a gram recovered gives you $10. If your operating cost is $10 a tonne, that means what 0.1 gram recovered pays all my operating costs. So that is the definition of a breakeven cutoff grade, 0.1 recovered. The recoveries, as you rightly say, are somewhere between 60% and 80%, so 0.1 is at the low end. So 60% recovery at 0.1 gives you a head grade of about 0.17. So 0.17 grams is your breakeven cutoff grade. And you can make $1. And if you've got lots and lots and lots of tonnes at 0.17 surrounding a higher-grade zone at 0.5 gram, 1 gram that sort of has the goal in it, that pays for the operation. All of that sort of halo of lower-grade material is cream on the top and goes to reducing your strip ratio. So less waste rock to move for a given tonne of ore, and that's where you get the leverage of these things to gold price. So 0.17 breakeven cutoff grade, that's a remarkable number that I think is -- it's almost hard to believe. So hence, the illustration on the gold price.

Yes. I think -- and I'll just add to that because it's a great point, and it's one of the things that we always have to kind of talk about and often educate investors on is that because of the low OpEx cost, because of the low CapEx cost, you can drive that cutoff, as Jon is highlighting down to that 0.1, 0.17. What that then does is, it brings your overall grade down. So it's not necessarily that these projects are low-grade projects. It's just that they're highly economic at those lower grades because of a lower CapEx and the lower OpEx. When you look at a milling project, you'll typically use -- over the last few years, it's been 0.5 gram cutoff is what the -- what's typically been run. And obviously, at a 0.5 gram, that's going to increase your overall grade for the resource. That's now dropping to 0.4 and 0.3 in this environment because obviously, we're at $3,300 gold. So it's more economic to put some of that material through a mill. But heap leach projects, you're looking at, as Jon highlighted, 0.17 was the number, but you go all the way down to 0.1 in a number of instances. And those are still very profitable mines, whereas for a milling scenario, you probably need to use a 0.5 gram cutoff to cover that OpEx and additional CapEx cost. So it's a great point that Jon makes. And just to follow on that, for a milling scenario, you're looking at a much higher cutoff.

So that's pretty interesting. And it kind of relates to the second question I wanted to ask. What do investors have a hard time understanding about heap leach? And is it just they see the grade of drill results and these aren't that great without understanding the cost to mine them? Is it understanding the -- like what do you think is kind of the biggest challenge in conveying the opportunity, the value to investors on heap leach?

Yes. I think from explaining to shareholders' perspective, I think one of the things that we spend a lot of time doing explaining and it's important is knowing the metallurgy of your oxide profile. And doing enough of that work to justify moving from PEA to PFS to FS and beyond. It's not as simple as a couple of call them leach tests that you can blanket over a deposit and call it uniform extraction. So these deposits, they live and they die in the oxide profile and specifically, within that mixed oxide sort of what's historically called transitional material. We call it mixed oxide. Understanding that material is really key because that's where things can go sideways very quickly. So that's where an abundance of sampling, which is a lot of column leach test work done on that, a lot of bottle rolls, correlating those bottle rolls, a lot of sample media needs to be taken in those zones, particularly. And that's something that we spend a lot of time telling people who are looking at us for sure.

Steve, I also think, one of the things that perhaps is the least attractive, if you like, is these are not great plays. I think the market looks for high-grade intercepts and looks for double-digit grams per tonne and gets very excited about those sorts of intercepts. And that's for a very good reason. This type of gold mine isn't that kind of game. And you can't really judge it with that same mindset. In fact, you shouldn't really be looking at grade when it comes to these types of deposits. You really need to focus on margin, and that's a bit harder because grade is a single number upfront. Everyone goes, yes, okay, I could see that. It's easy, it's accessible. It looks great. I'm going to buy in. Margin takes a little more time and a little more understanding. But once you start to get an eye in for what makes sense from a revenue over costs and then life and ease of permitting and operational simplicity, typically environmental simplicity as well, these things really start to shine, but let's face it, they're boring. They're boring assets. They just sit in the background, they churn away and they're relatively straightforward to run, assuming, as George very correctly says, you've got to understand the math. That's probably the biggest I think opportunity perhaps in the industry is to really understand metallurgical process, leaching, leach kinetics, what's going on in your different ore types? What do you really need to do to get that recovery at the end of the day. So there is some technical complexity there. But I think overall, it's that understand the margin opportunity here, low capital cost of entry, very nice long-lived margin against rising gold prices. I think that's where the market I think has opportunity.

Yes, And I think I'd add to that, and it's a great point that both Jon and George are making. The other thing is, as we've highlighted, these projects are simple open-pit mines. And with that, typically, you've got very low strip ratio. So if you look at our project, for example, it's 2.7:1. And I guess, Jon and George would kind of be 1:3 or again, you guys can jump in. But typically, your very low strip ratio, so that is a critical element as well. One of the things we always say to investors is if a company is not highlighting in their presentation, what their strip ratio is, you better ask. You'll even go into some of the full PFS tech reports and there'll only be one mention of the fact that it's 10 or 20:1 strip ratio on the project. So again, from an economic perspective, if you've only got to move 2 tonnes of waste for every tonne of ore, that is a huge advantage over having to move 10 or 20 tonnes of waste for every tonne of ore. And that, again, back to the OpEx piece, that is generally one of the key elements that drives the economics. And those are all crucial elements. But I think Jon's point is great. The flashy high-grade result that comes out, maybe a way of mining the market, but when you dive into it and find out well to actually get that, it's 500 meters below surface, and it's going to cost $1 billion to build a shaft and an end. The economics of these heap leach projects, again, simple, low material to move is what really differentiates them.

So going to the opposite spectrum now. For people that maybe know more about both the industry or the project. There's always -- people always have one thing to say about why a project won't work. It's refractory or the mine is never going to be built there, for example. So what are 1 to 2 concerns maybe that you guys have heard about your projects that you don't think, you face skepticism over but you don't think it's an issue. And how have you demonstrated that it's not an issue to kind of change your view?

Yes. I think, again, sort of talking about aside from the production we have at Florida Canyon talking about DeLamar for a second again. The question that we get a lot is, what does silver recoveries look like in the context of the heap leach. DeLamar has historically been this massive gold silver district and depending where the silver gold prices were over the course of 150 years, it was either a predominantly silver producing camp, if you will, with a gold byproduct or the reverse, gold with the silver by-product. And so knowing, of course, that silver is an important component at DeLamar and its 100 million ounces of silver out there, what becomes very important from us, from a revenue perspective is silver recovery in the heap leach. We spent a lot of time on that. So now silver, as we all know, doesn't recover as well as gold does. But maximizing silver returns for us is a really big deal, because it's a big revenue generator for us. But explaining that and explaining it over and over again, hey, how can we get 40%, 45% leach recoveries of silver is something we spend a lot of time on because it generates a lot of revenue, but it's a question that comes up.

No. I think for us, Steven, there's -- people say, well, can you really recover it? Do you have the recovery model properly? Do you understand the ore well enough to know that I can get 60%, 70% recovery. And I think -- what we say to people is, well -- and George mentioned this earlier, this -- when you use the term oxide, it's a pretty loose term, it does actually have a technical definition. And when the way we talk about what's oxide gold is, we do a cyanide solubility test which is basically take a sample, you've analyzed gold by fire assay, that's the total amount of gold in the rock. If you take that same piece of rock and you add cyanide solution and you mix it up and then you test how much gold comes out, you extract some percentage of the total gold. And a high percentage above typically 60% of cyanide-soluble to total would be called oxide as in cyanide-soluble gold, and then you have lesser and lesser amounts. Understanding the distribution of that in space. So my oxides tend to be near surface. That sort of transitional period where it's in the middle where it's sort of semi soluble to not very soluble, understanding that distribution and space and allowing you to model recoveries and ore types in space is very, very important. And I think distinguishes the serious leaches who really want to understand where the ore is, how do I treat it versus individuals that take 1 or 2 box samples and say, it's all of this type. I think that subtlety is really important. And last comment, you mentioned, you illustrated these carbonation sales. Some of these particularly Carlin-type deposits have horizons, shale horizons in them that have carbon, and that carbon is a problem in the -- if it gets on to the heat because the carbon absorbs the solution and absorbs gold. So modeling those in space and understanding what is ore and what is waste, what's good ore and what's worse ore. I think that whole modeling piece is a critical technical requirement and not well understood, I think, by the market. So I think if you're looking at a deposit, and they're telling you it's all one ore type and we've got one sample and the recovery is 68, that perhaps is less trustworthy than someone that's done, okay, there are 18 ore types, and we've got a recovery equation by ore type and they're distributing space in this way. That resolution makes a difference.

Yes. So I think we've talked about grade. I mean that's something we always need to address. But again, I think we've highlighted that these projects because of the CapEx, OpEx are very, very profitable. And if you look at any of our PEAs or PFSs that have been put out, those are all driven by the grades of the project. So that's something that we need to address. Recoveries. I think Jon and George have just kind of touched on that, so I won't reiterate that point. But for us, specifically, we've got tropical saprolite, it leaches incredibly well. We're getting low 90% recoveries in our study, we used 85 for the oxide transitional material. So -- but continuing to explain the recovery piece is important. And then for us specifically, in Ghana, rain would be something that we need to educate investors on. So there is higher rainfall in the Southwest part of Ghana. That being said, there's been lots of other heap leach operations in Ghana, including Tarkwa that have similar rainfall levels. If you then look at other projects globally, Brazil, for example, with Lundin, Chapada there, AngloGold, I mean, again, we've looked at a number of other projects with similar rainfall, but that always becomes an education process. And part of that is look at these other heap leach operations that we've had in Ghana, most of them got mined out years ago because, again, typically, you go after that material first because it sits at surface and given Ghana is such a mature mining jurisdiction, most of that material is mined out years ago. But then looking at other projects globally that have similar or more rainfall. Shahuindo would be one that probably a lot of people know that Pan American has similar rainfalls there. Very successful heap leach operation. So rain would be, for us, specifically something that we have to educate investors on.

Great. So I'll ask one more question. So with gold surpassing [$3,200] an ounce forecast prices are climbing, what can you guys do, George, and even at your development projects to reduce costs and boost margins? Like what type of trade-offs are you guys looking at, at the mine? And for your studies, is there anything -- are there any trade-offs that you're doing right now? Or are you still going to assume whatever $2,000 gold price in your future studies?

Yes. Hopefully, not $2,000 gold price in future studies. Yes. So one of the things that we -- that really struck us hard when we were doing due diligence on Florida Canyon was how many elements of that mine, especially at higher gold prices are available to us to tweak? And it's the kind of the cumulative effect of these optimizations that we're looking at now. No single one of these is going to be the big driver. It's going to be 1 or 2 or 3 of these things. Specifically, with respect to the way we're looking at things now. And the big turnaround at Florida Canyon has been the transition to -- from crushed ore leaching to run-of-mine leaching. Now that's what's really driven record years of production in the last 2 years at Florida Canyon. And this is a whole other topic, by the way, that we can talk about crushed ore, heap leaching versus run-of-mine heap leaching. They're both very different. They both have different cost profiles, different implications. There's lots of trade-offs to do in terms of what you lose in terms of recovery by not crushing versus the revenue that you're generating by bypassing that pressure to -- in the first place. So that's one of the things that we're looking at now. And there's a lot that goes into that, and that comes down to understanding geometallurgy. In other words, what's the geological reason that prevails that makes that run of ore mine versus crushed ore, and I can speak about ore because it's in the context of a mining operation. But there's a real opportunity there for us to be gained. And Jon, maybe you can jump into this, but the mine that's just kind of up the road from Florida Canyon, Marigold, which is where you spent a lot of time. I mean that's gone to 100% run-of-mine leaching and while that's a tremendous benefit to that operation, specifically. So that's just one of the optimizations that we're looking at now at higher gold prices, obviously. Makes a ton of sense to look at.

So in terms of Liberty and perhaps, just answer George's question, the run of mine, the types of deposits that are suitable for run-of-mine, our deposits where when you do a series of recovery tests at different grain sizes. So from a fine crush to a light crush to a little crush. So you would go from a pulp at 75 microns to 0.5 inch to 2-inch to 6 inch, and you do test work on those grain sizes, you tend to see a flat recovery curve so that all of those different grain sizes, you tend to get the same amount of recovery. And what that means is the gold in that rock is generally very fine and it's distributed over fracture surfaces in the rock. So it doesn't really matter what the size of the lump is. The solutions can get into the cracks and the microfractures and access the gold. There are deposits, of course, that benefit by crushing because it exposes more surface and then obviously creates a better opportunity. Run of mine saves you anywhere between $3 and $5 a tonne, not having to crush and agglomerate. So I think that's a huge -- and it's an innate characteristic of the mineral. And where it's available, it's a fantastic opportunity. And Black Pine has one of those characteristics where it's a very flat crush recovery curve. In terms of what we're doing with the upcoming gold price? We're going to -- we're looking very seriously as you move into feasibility at the end of this year to increasing our production rate throughput from 50,000 tonnes a day to 65,000 tonnes a day. And what we're really looking now is the definition of ore and waste becomes an absolutely critical part of your operating strategy and that goes straight to stockpile because I've got a fixed capacity in my leach. I could take so many tonnes a day, but I'm mining more material that I can put on the pad. So now I have to stockpile it. And of course, I have to rehandle it off by stockpile and that's another $1, $1.10 a tonne. And so the economics of what becomes ore and becomes direct feed to the heap and what becomes stockpile and subsequent feed to the heap, that is the key game, I think, today. And as that gold price rises and rises and rises, what happens is the amount of true waste rock that you have to move gets less and less and less, and that strip ratio goes lower and lower and lower. And that is a huge positive on all of the economics surrounding these things. So that game, if you like, or that optimization is a fundamental part of what we will be doing going forward into fees.

Yes. So I mean, to avoid kind of being repetitive, I think Jon kind of outlined a lot of the trade-off work that's critical to be doing in a higher gold price environment. What cutoff should we ultimately be using in this gold environment, waste all those things. So maybe I'll just change gears, and I think probably Liberty, Integra are also focused on this. But in this gold environment, we're actually starting to see the market rewarding companies for exploration again. And one of the key kind of drivers for us on that front was at the end of January, we put out some drill results, good results, 1.85 grams over 68 meters from surface with some nice high grade in that sitting in the oxide transitional material. And for the first time probably in 2 or 3 years, we saw the stock actually move up kind of 10%, 15% on the day on the back of that. So we then raised $15 million. So in this environment where the market has started to reward us and I think other companies for exploration, we're starting to aggressively drill again. So we expanded our drill program to 35,000 meters. So that, I guess, moving slightly away from the specific study component of the heap leach. I think exploration, again, is something that all of us can create value with that in this price environment, companies seem to be getting rewarded. So that's something that we're also focused on is exploration.

Fantastic. And maybe if I can add on to Jon, what you're saying there, finding what's going to be that cutoff grade. So I'm assuming that you guys are going to be doing a lot of test work around that potential cutoff grade? Like you want...

Yes. We just -- I think the lowest grade sample we had -- we had column test work on was 0.12, and we just -- we're just about to kick off a bunch of columns going down to 0.06, 0.07. We're pretty confident that we can predict the grade down -- the recovery is down to those grades, but obviously, we need to confirm that. So we'll have those results sort of middle, latter part of the year.

Okay. Great. All right. I'm just going to go through. We've had some questions come in. So I'll go through and whoever wants to answer can answer. But there's a question here on tailings processing. I know that there are some companies, I believe, that are heap leaching tailings, GoGold, for example, in Mexico. Can you talk about maybe what might be different for leaching tailings versus just regular open pit mine?

I have to admit, I don't have a lot of experience with tailings leaching.

Okay. I'm assuming that it'll be a lot more -- I mean it'd be similar to having to deal with a lot of clay. I'm assuming you'd have to agglomerate and I don't know, Jon, do you have any...

Yes. I mean I think I'm sort of hesitant because I think the answer to treating tailings is so specific to a given set of tailings and the metallurgical, the grain size of the tailings, how long it's been in the ground? How oxidized it is? How are you going to move it? Are you going to dig it up? Are you going to hydraulically mine it? Is it in a pulp already? I mean I think it's very difficult to sort of generally opine other than it's absolutely doable. There's no reason why you can't mine tailings and re-leach tailings, albeit in a heap. So statically on a bit of plastic on the ground or probably more likely you mine it hydraulically and you put it into a mill, you regrind it. So you freshen up the grains of that -- the individual grains. And at that point, then you put it through a standard carbon and leach circuit, a typical, milled gold or circuit. That's probably a better route. The disadvantage of taking tails and stacking them on a heap is that you start to get into heat stability issues, and we would be remiss on perhaps not pointing out last year, we had a couple of significant failures of heaps, crushed heaps in this case, particularly fine crushed heaps. And controlling heat stability when you have a very, very fine crush can be quite difficult. It requires good operating practice and requires very good design. And so it's to be borne in mind when you're looking at potentially heap leaching very, very fine milled material, probably better off in a remill-releach circuit.

Yes. I think, Steve, as well, I think the thing that comes up for me on that topic of processing material that's already been handled is predicting grade and grade distribution within a tailings facility. That's not controlled by geology, right? There's sampling it. How do you sample it? How do you know what the actual grade is? There's a lot of great variability within tailings. I would see that as being a big question mark around that topic. And to Jon's point, I mean, there are several operations where that's done successfully. But not without its challenges.

George, you'll be aware, you guys have drilled out the backfill in your DeLamar pit. We're drilling out old waste dumps from the previous mine, the Pegasus mine in the '90s of Black Pine. These dumps are at a grade of 0.2, 0.25. So that's all today. But to be able to predict grade inside backfill and grade inside a waste dump is no trivial matter because there's no geologic control. It's a physical control from material that's stacked. And that can be -- how can I put it, not for the faint of heart.

Surely. Yes, I think it's correct.

Have there been any big changes in the process of heap leaching over the last 40 to 50 years? Or is it just steady as she goes?

Has there been anything significantly change in mining in the last 40 to 50 years -- that was the last major -- the last major change in mining was maybe autonomous haulage. But that's not -- I mean it's sort of a major change. SX-EW probably in the 60s, that was a big change. I don't think so. I think for us, and we're doing some -- as we go into feasibility, we got to think about the design of our -- the ADR plant. And for those who don't know what that is, that's the plant that receives the solution from the heap and then extracts the gold from that solution and then ends up processing that gold as [storey]. That's absorption, desorption recovery, that's ADR. And you have carbon -- use carbon in that process to extract the gold from the pregnant solution. You're going to have cascading columns or you can have a vertical column. Vertical columns are relatively new. They're not that common. They seem to offer some efficiency in footprint and possibly efficiency and recovery. So that's a sort of a tweak, if you like, on the leaching process in terms of optimizing, extraction potential. But other than that, these are -- it's pretty commercially proven old school stuff, Steve.

Okay. One more question. For each of these -- each of your projects, do you think it's possible to move from a heap leach to conventional mill in the future? Whoever wants to start on that?

Oh boy, do we know something about that? DeLamar. DeLamar, we originally looked at as a heap leach as the kickoff and then kind of slowly over time, migrating to a milling situation. And again, not for the faint of heart, not for the least of which reason is the capital required to do that, right? And so demonstrating for us, demonstrating that capital requirement for us was daunting. Daunting for us and our shareholders, which is we chose to stick to heap leaching as kind of the narrative for DeLamar, not to say that at some point in the future, DeLamar, for example, Florida Canyon is very much the same because there's a large component of sulfide that underpins that oxide, and actually in Nevada North, same thing. But starting with the heap leach has a ton of advantages. Someday, on all 3 of our assets, there will be a mill. Somebody will be milling that material. Especially now that we're looking at a higher gold price environment. It would make sense to do that. But just the scale of doing that is completely different from, again, as we talked about originally, the capital requirements of heap leaching and milling are completely different.

Luke?

Yes. Sure, I can jump in. So on our project, we have very thick zones of oxidized material. So again, that's where it makes a ton of sense for us to push forward with a heap leach project, as well as the recoveries that we get in this tropical saprolite are very high. So from a column test perspective, we're kind of low 90s. From a study perspective, we use 85%. So often, the rule of thumb between milling and heap leaches, if you have more than a 15% spread between the recoveries that you're getting from the milling scenario compared to a heap leach, you're better off going with a heap leach operation, because of all the things we've discussed. The CapEx, the OpEx and the overall size and scale that George has been highlighting as well. That being said, when you look at our project from an exploration perspective and you look at the pits today, that constrain our resource, they're only on about 75 meters. So back to that kind of open pit, simple heap leach is what we've outlined today. We do have true district scale exploration. So continuing to target the higher grade sulfide material that is sitting below those systems and we're focused on with this 35,000 meters and additional drilling in the future. As that resource starts to grow, then logically down the road, it would make sense for us to look at a milling scenario. But one of the ways we're looking at it is, again, at a $2,850 gold price, this project generates over $1 billion, $1.2 billion of after-tax cash flow. You can use all of that cash flow from the heap leach operation to then in the future, call it, 5 or 6 years from now, to go and build that mill and then expand the overall size of the operation. So yes, milling is in the future for Enchi. It's just when we look at the economics today, we're obviously focused on that heap leach with a milling scenario down the road at some point.

So Steve, not to be too boring, pretty much identical answer for Liberty is the 2 answers we've just received. I mean in our case, we've got a 350-meter thick column of well oxidized material, at a PFS level, we've got 17 years of operations without going anywhere near anything that looks like sulfides. And I think in our drilling, when we hit sulfides, we stop. So we just haven't exposed what's going on in terms of the sulfide core of this deposit. And I think, as George says, there'll be a sulfide deposit stuck somewhere underneath Black Pine down the road. We don't need it to get the mine up and running. The oxides pay for themselves handsomely. And the interesting thing about the oxides is, you could think of them as a pre-strip for the subsequent open pit mine on the sulfides below. And in doing so, it sort of -- it unloads the economics on the sulfides because you've already -- it's become a free strip, if you want to think of it in that sense from a sulfide perspective. So now I've got this large open pit. I've got sulfides in the floor of my pit, and I paid for all the shipping. So at that point, the economics of the sulfide processing becomes quite different. So I think in Liberty and Black Pine's case, that's a conversation that would happen years 5 to 8, there'd be cash flow, there'd be a deeper exploration program, and then we'd start playing some broader, deposit-wide gains around well, how big can this thing go? And where do you go? So definitely on the menu, sort of dessert rather than starters.

Got it. Got it. Okay, guys, it's been an hour. I want to thank you for your time, and thank you for participating. I've learned a lot. I hope people listening learnt something today. And I just wanted to end it with each of you guys going over what's 1 or 2 key catalysts investors can look forward to this year and into early next year?

Yes, maybe I'll start there. So obviously, with the combination of production from Florida Canyon and development and permitting at DeLamar, so the 2 key things there are at Florida Canyon demonstrating quarter after quarter, sort of an increasing balance sheet. So here we've got a healthy balance sheet of over $50 million now. So adding to that quarter-over-quarter, and showing consistent performance from the mining operation and a growing cash balance. The second piece is derisking DeLamar. So we've just submitted a key document to the permitting regulators, federally. And our expectation is the NEPA time clock for us will then start some point in the second half of this year, which is a 2-year time frame for us. Again, there's a big derisking element for that. So look out for those 2 and news around that from our perspective.

So from a perspective, George, and I are in a 2-horse race here. We've submitted exactly the same document. And waiting for exactly the same sort of key permitting piece in pretty much the same time as he is. So early second half of the year, we expect to get the notice of intent, which is what we're both waiting for. And that puts you 24 months from approval, so in a permitting sense, that will be Black Pine off to the races. In an engineering sense, you can look to us starting feasibility, resource drilling in the next month and then feasibility resource published in the sort of latter part of the year and then full feasibility engineering starting in Q4 this year. So we're taking this thing seriously through development and staring at production down the road.

Yes. So for us, I think I've highlighted a couple of times, we're obviously in the midst of a 35,000-meter drill program. So we will have lots of drill results out. We've released about 15,000 so far. So typically on a monthly basis, expect drilling to come out. Last year 2024, publishing our PEA was a big catalyst for the company. And we're in the process of taking the project from a PEA to a PFS. We're looking to commission that in the second half of this year and publish it in the first half of next year. So included in that is a lot of derisking work. So resource conversion drilling, network, hydrological work, geotech work are on all things that are getting completed at the moment and will be incorporated into that PFS. And we see that as a real catalyst for the company as you derisk a project from PEA to PFS to BFS and ultimately, into construction and production, you typically get a re-rate from a market perspective. So big catalyst for us, we think, is taking it from PEA to PFS, will be a real re-rate for the company, but then layered on top of that, obviously, we are going to continue to aggressively drill across the project, and look to continue to make new discoveries and ultimately grow the overall size of the mineralized footprint.

Fantastic. Great. Thanks, everybody, for attending, and enjoy the rest of your day.