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

[Presentation] Hello, and welcome to The Assay TV. Today, I'm here at 121 Mining Investment London with Luke Alexander, President, CEO and Director at Newcore Gold. So Luke, it's always great to catch up with you.

Yes. Great to see you. Thanks for having me.

Absolutely. And so it's always good to get an update from Newcore Gold. Can you give our viewers a bit of a refresh on the company?

Yes. So Newcore Gold, TSX listed, trade on the OTC as well in the U.S. We're advancing the Enchi project in Ghana. It's a district-scale exploration project. Fundamentally underpinned by a PEA that we put out last year, which outlined extremely robust economics at today's gold prices. It has an after-tax NPV of about $1 billion and over 100% IRR. So fundamentally underpinned by those economics. But then layered on top of that, we have true district-scale exploration, which, at the moment, we're in the midst of a 35,000-meter program. So our project is in Ghana, which is a Tier 1 jurisdiction, and we're moving it forward at the moment.

Sounds great. And so since we last caught up, you've released quite a few drill results. So can we talk about some of the latest results, especially from the Boin area. Yes, walk us through some of those highlights.

Yes. So recently, we put out some additional drill results. We have been putting drill results out on a monthly basis for the last 6 months or so. From our Boin deposit specifically, we put out some results that intercepted very wide zones of high-grade mineralization, so 2.25 grams over 56 meters. The hole actually then ended in mineralization beyond the current pit wall. So that was an intercept that was over 100-gram meters. So very nice intercept. And then if you look at some of the other results from our Boin deposit, we also had our highest-grade intercept ever on the project, 204 grams over 1 meter. And then as part of this program, we are focused on resource conversion. So we have been also infilling and adding big wide zones of mineralization to ultimately convert ounces on our project, which is one of the key elements that take us from a PEA to a PFS. So great results, and we're obviously going to be very busy drilling throughout the rest of this year.

Yes, absolutely. I mean it sounds like there's quite a bit going on there. You also released results from the Nyam and Kojina areas last month. So can you talk about some of the key takeaways from these?

Yes. So Nyam is our third largest deposit. It's actually an area where we've identified, so far, a couple of very high-grade feeder zones. When you look at the Sefwi-Bibiani Belt and these greenstone-hosted deposits that sit along trend from us, to the north, you've got Chirano at 5.5 million ounces; Bibiani at 6.5 million; and then Newmont's Ahafo project sitting at 20 million ounces and growing, what you see with all of those deposits is these feeder zones that ultimately extend that depth and increase in grade. So Nyam's an area that we've identified some of these shoots, and we're very excited to be drilling in that area. We had some nice high-grade results as part of the last drill result. And then Kojina Hill, that one is not a resource area for us yet. So we don't have a deposit there. But we have done some historical drilling. We've made discoveries, and it's an area that's very prospective for us. So we put some additional drill results into that, had some good results, and it will warrant going back to look at potentially, again, increasing the overall mineralized footprint, with the goal of turning it into a resource over time. So Nyam, existing deposit. And Kojina Hill, one that we expect to be a deposit in the future.

Sounds great. And so you've got this 35,000-meter drill program and about 17,500 meters that have been given results already. So are there a few key achievements that you want to talk about or share?

Yes. So the 35,000-meter drill program, we actually expanded that from an original 10,000 meter. That was on the back of a financing that we completed in February of this year. We went out to raise $12 million, increased that to $15 million, brought in a couple of new large institutional investors and took our overall institutional ownership to about 55%. So with that expanded drill program, the first half of it that we've now completed and released to the market, a lot of that was focused on resource conversion. Again, one of the key elements to take us from a PEA to a PFS. But then the second half of the program really is going to be focused on exploration and resource expansion. If you look at our project, we do talk about district-scale exploration. It's a large land package, 240 square kilometers in size. When you look at the shears that run through our project, we've got over 100 kilometers of shearing going through our project. We've identified about 25 targets to date, of which we've drilled on 9 and only 4 of them make up our resource today. So lots of opportunity for us to aggressively explore across the project. All of our existing deposits do remain open along strike. So systematically, stepping out and adding near-surface ounces is something that we're going to focus on with this additional drilling. And then the opportunity at depth. We've talked about it a little bit. The feeder zones that we've got at our project that we see along the Sefwi-Bibiani Belt, that's something we're very excited to follow up on, and look to continue to chase those to depth as well as along strike, with the goal of continuing to make high-grade discoveries across our project, to show that longer-term opportunity that there is beyond the project that we've identified today, which creates a huge amount of cash flow.

Okay. Sounds great. And so you have this expanded 35,000-meter drill program. What are some of the primary objectives of this campaign? And how do you think it's going to impact Enchi's overall potential?

I think resource growth and new discoveries will be the 2 key things with the expanded program. When you look at some of the drilling that we've done and the results -- and I would encourage viewers to go to our website and look at the 3D model, which includes all of the new drill results that we've put out as part of this first half of the program. And what we've done with a lot of that drilling is we've actually pushed the drill hole beyond the existing pits that constraints our resource today. And what we think that's going to do is ultimately grow the resource as well as convert ounces. And then with the 17 -- the additional drilling that we're doing is part of the 35,000 meters, obviously, continuing to chase these structures along strike. We've identified a number of parallel zones on our project, which we've put some initial results on that are very encouraging. So we'll chase those. And then high grade. We've got a diamond rig on site at the moment, which is completing some metallurgical work and geotech work. But once that's done, we will start to drill some deeper holes with that with the goal of obviously proving up a much larger high-grade resource on our project.

Okay. And so is there kind of additional work underway on this project? And do you have plans to enhance the project's economic viability with this other work?

Yes. So if you look at the economics of the project today and really our motivation to take it from a PEA to a PFS, the economics within the PEA, let's say, at a $2,350 gold price, so well below where we are today, you've got an after-tax NPV of $630 million, after-tax IRR of 92% and a 1.1 year payback. As I mentioned, at today's gold prices, that increases to about $1 billion NPV to the project and well above 100% IRR. So the economics are such that it makes sense for us to fast track this project as quickly as we can to a production decision and then ultimately get it into production. That is fully supported by our institutional investors, and they're keen to see us achieve that in as quick a time frame as possible. So that's a big focus for us. And in terms of the work which you were asking about, the infill drilling, which we've talked a bit about. But beyond that, we're doing a little bit of additional metallurgical test work, hydrological work, geotech work. So these are all elements that derisk a project and that are required to take it from a PEA to a PFS. So we're doing all that work in the background, but we're also not going to lose focus on the fact that we do have district-scale exploration. So we will keep that drill rig turning because that can then create outsized returns investors as well. Fundamentally, if you look at projects and how they're valued at a PEA stage relative to a PFS stage, that's where we think we can create a lot of fundamental value for shareholders through that derisking process and the multiple lift that you get going to a PFS. But then at any point in time, with the aggressive drill program, that we've got that can layer on outsized returns above and beyond. So we're extremely excited in terms of where we sit today. And the other key element is we are fully funded. So we don't need to raise any capital to do any of the work that we've talked about. We've currently got about $17 million in the bank. We've got an additional roughly $14 million coming in from warrants that are well in the money. So one way to look at it is we've got roughly $30 million today, which will cover all of the PFS work, the 35,000 drill program, and we'll have money for a couple of years beyond that with the ability to potentially ratchet up our drill program fully funded from current cash and cash that will come in from warrants. So extremely well positioned from that perspective as well.

Yes, absolutely. And so what are the next plans once you kind of have this drill program complete?

My -- assuming the market doesn't roll over or gold price doesn't collapse, my guess is we're never going to stop drilling. You could drill 1 million meters on this program and still have more to go. I mean, again, we've drilled about 210,000 meters across the project today and the pits that constrain our resource is only -- are only down to 75 meters on average. So that gives you a little bit of perspective for the opportunity that there is at depth as well as along strike, and we've only drilled 9 of 25 targets that we've identified. So I don't think we'll ever stop drilling, again, assuming the market doesn't collapse. But with that $30 million of cash, cash equivalent that we have, we will be able to continue to drill well into next year. So drilling will be a big focus for us. But obviously, the economics of the project that we've talked about are such that it makes sense for us to fast track it into production as quick as possible. So we'll get that PFS commissioned in the second half of this year. We'll look to get that published in the first half of next year. And then my guess, again, assuming we replicate anything close to the economics that we had in the PEA, which we expect we will, we'll then most likely go straight to a full feasibility study with the goal of getting that completed and then making a construction decision.

Sounds good. And so just to wrap it up, can you talk about any upcoming catalysts for the company? Any additional news that we should be on the lookout for?

Yes. So if you look at the news flow we've had over the last 6 months, we've released about 17,500 meters, as you've highlighted. That's been drill results on a monthly basis for the last 6 months. So if you just kind of use that as a guide, you can expect results from us on a monthly basis for the next 6-plus months from a drill perspective. We're also doing a little bit of additional metallurgical test work, so we'll get that released to the market. So lots of drill results will be the key catalyst for the balance of 2025.

Sounds good. Well, I definitely look forward to catching up with you again soon to hear more about these results. But Luke, thanks for joining us here today at The Assay and 121 London.

Yes. Thanks a lot for having me.

Thanks.