Resolution Minerals Ltd (RML) Earnings Call Transcript & Summary

I guess what I'd like to sort of get across today, everyone, is to -- just to sort of orientate everyone where we are. We're talking about the 64North Project, right next door to the Northern Star's Pogo gold mine in Alaska, a world-class high-grade operating gold mine, which has produced 4 million ounces in its lifetime at around -- a historic average around 300,000 ounces per annum. So pretty exciting district to be in, very well endowed. What we wanted to focus on today was the -- was that we have just got the first results back from part of the first hole on our initial program. And one of the things I wanted to really -- although the gold grades were a little bit disappointing from actual, the whole numbers on that, what it is, is that it's actually a fantastic result of what we've got. Because what it did is it showed that we've got the Pogo-style gold mineralization on our side of the fence, right next door to Northern Star's Pogo gold mine. And when I was up there in the core shack having a look at the -- looking at the rocks, this quartz veining here was -- which we saw the arsenopyrite, bismuthinite and the pyrites in, was what really got us excited as geologists. And it was very intriguing to see what we came back with assays. Gold is pretty tough stuff. You can't necessarily predict what you're going to get in an assay. You can sort of make visual estimates of what you see in pyrites or sulfides, but it's very difficult to see what you -- what sort of gold grade you might get. So while obviously it was a little bit disappointing on the overall grade, just the fair fact that we managed to hit just the classic geochemical signatures that tell us that we're in the right grade -- system was very encouraging. So if we have a look at the picture on screen at the moment, this is the one that sort of caught my eye when I was having a look at it. At about 127 meters, there was a zone there of around 20 meters of quartz veins that was -- looked classic for the Pogo style. Then when we got the results back from the assays, we had a -- this is sort of further confirmed when we look at the -- have a look at the strip log, which should be on your screen at the moment. And what you're seeing there is, on the left-hand column, you've got the lithology, which is the rock type, and that's the paragneiss host. And I've got in a little box on the right-hand side there what you typically see as Pogo style. And that -- the Pogo -- when you talk about Pogo style, you see gold, arsenic, bismuth and tellurium in close association/correlation. You see dolomite-sericite alteration halo or -- in the rocks. And again, we see that. So the next column is the alteration style, dolomite-sericite, that tells us we're in the right path. The minerals there, we're seeing the pyrites coming through in the third column. And then obviously, the gold grade, arsenic, bismuth/Bi, Te/tellurium. And that correlation there really tells us that we're in the right neighborhood here. So very exciting for us as a geologist to see that. Then when we look at the -- we sort of zoom in on that zone that I really like the look of in the first hole when I was up there, before we're delayed due to the COVID issues, we saw the -- again, the right -- the paragneiss there, the dolomite-sericite alteration, which made me believe we're going to be looking at something pretty good. We had the gold grades then correlate again. So this is a classic sort of Pogo style. So we keep talking about this Pogo style. What does it mean? What does it look like? And when you -- this is a Pogo-style mineralization model over the actual Pogo gold mine itself. And what happens there is you've got these plutons at depth. You can see those sort of the orange blobs there. You've got the vertical feeders, which allow the mineralized fluids to sort of flow out towards the surface. And then you've got this shear zone, which gives that horizontal sheared rock where the mafic, in the paragneisses, they're the type of rock, which will -- brittly, it will deform, allowing the gold fluids to sort of sit in there. And so what we were looking for was the geochemical signature of a classic Pogo-style system, which is that arsenic, bismuth, tellurium associated with gold, low sulfide system, and we're sort of looking for the right sort of alteration associated with that. So from -- and what we were also targeting with the very first hole, which was not our priority hole, was that we were looking at one of these vertical structures. So we're trying to drill down sort of through the side of one of these vertical structures, testing to see if it was mineralized, and then out into the sort of the more horizontal zones down below there to see whether or not we had the Pogo sort of the flat-lying sheet. Now I guess we don't necessarily understand everything there is about this particular Aurora Prospect yet. It's fairly early days. The prospect itself is pretty closely located to the Goodpaster Prospect, which the Northern Star guys have been drilling out for the last couple of years and made a fantastic discovery there, very close to the Pogo gold mine. So we sort of see at the Goodpaster Prospect the same types of magnetic signatures. We see the same sort of structures. We see the same rock type as at the Pogo gold mine itself. And so we believe that this Aurora Prospect is -- has the potential to host the same type of mineralization. And then this first program was to go out and to test that and just to really focus on getting some validation of that concept. And I think this first hole, we've still got the rest of the bottom section to come in assays in a couple of weeks' time, and the hole 2. Unfortunately, as we disclosed to the market, the program was cut short due to the COVID issues, where the drillers decided to evacuate and return home to the lower 48. We have worked out how to work around those COVID issues, and we also have the spring floor at the moment. So we're not able to actually -- not drilling currently, but in the second half, later in May, we'll be getting back on the ground and starting to go out and start to drill the rest of the holes that we wanted to drill. The first hole that -- you can see the green dots sort of in the center of the screen was the first hole that we drilled. Now the white little dash line there is the road that we built late last year to get us to the start point, and we continued that up to the west. And that road was constructed late last year to get us that winter drilling head start this year. The first hole was drilled very close to where the road was. And while we started on the first target, which was really structurally orientated and part of the conductive rock unit, we then pushed the road down to the north, immediately along that Line 6 of the CSAMT survey line, and that's enabled us to get access to that northern hole. And then over to the right of screen, the blue dot was the second hole that we commenced. And that's -- unfortunately, that was one we've got cut short at about a couple of hundred meters. So the cross-section there, if I sort of flick to the next slide there, this is the Line 6. This is the resistivity and conductor, tells you whether or not the rocks are conductive. The hydrothermal alteration that's associated typically with Pogo-style mineralization can give the rock a slightly different conductance. And that's what we were targeting -- we're talking a structure and a conductor with this first program. So the hole on the left is the hole we've drilled. You can see where we hit the mineralization up in those top couple of intervals there. Not great grades, 1.5 meters at 0.3, et cetera, that's where that classic Pogo style was. And then we also saw repeats of that as we went down. Now it's possible that we have repeats of other layers of Pogo-style mineralization deeper in the hole as well, which is why we continue the hole down to 460 meters because these things can happen in stacked layers. We see that at Pogo, where they have the Liese veins, the L1, L2, L3, and they just keep repeating and repeating. In fact, they're really sort of open at depth in -- over at Pogo. So they just don't quite know how deep some of these things go. The next planned hole, which we're hoping to get back on to late in May and get out there and drill, is the one on the right-hand side of the screen. That's going to go through what's really predominantly targeting the conductive rock unit there in the red. Anything over about [ 500 ] meters of conductance means that it's probably got that sericite-dolomite alteration, which will determine -- sort of lead it -- is a lead indicator to say that you've got that Pogo-style alteration that was ripped through the rock and has sort of put the alteration around, which is slightly more conductive than the other rocks around it. So the right of screen there, the blue sort of colder area there, which is very highly resistant, it's possibly or probably a diorite, which is also one of the -- can lead to gold mobilization as part of the Pogo-style system that they see there as well. So the proximal to the diorite is a good indicator where we're at. The other -- sort of to go to where it is in a slightly bigger picture, I've gone to the next slide here, where we have the CSAMT line, that Line 6, you can see running north to south there, the Aurora Prospect in the south, is where we've -- our first drill program was and where our next drill program is going to be targeting. We've got a couple of more holes slightly to the north there, the orange dots along that Line 6, right up against that sort of more -- the whiter sort of area, that's with diorite, and that has strong analogies to the -- what we're seeing at Pogo as well. So we like those targets, and we want to get back there and drill them. And really, our focus is on getting out there and drill testing this thing. We're very confident that we're in the right neighborhood. We're certainly now just sort of about the business of focusing on the high-grade zones and trying to determine where they are and where they sit. Every single drill hole gives us a whole lot more information about what we're dealing with and really leads us towards able to vector in on the -- on that next high-grade zone. There's probably -- I sort of touched very briefly on the gold numbers that we did get in there. Obviously, the grades, not fantastic there. But this is exploration. Sometimes you don't necessarily get the gold grades on the first drill hole. But when you do look at what our program is over the next few months, we've got -- we're going to be continuing drilling from late May, June, into July, drill testing this sort of -- this zone here, immediately adjacent to the Pogo gold mine itself. So I should just probably point out the yellow outlines on the screen. That's the surface projection of the Pogo gold mine itself and the Goodpaster Prospect. The Goodpaster Prospect doesn't have a resource on it yet. Northern Star is still doing more work on that. The Pogo gold mine itself, that's just -- that's 10 million ounces of endowment, and they're obviously making some significant inroads into adding more ounces as time goes on. You've seen in the recent quarterly they have announced further drilling very close to the actual current outline there and more discoveries to come from Northern Star. I guess at the moment, they don't really need to sort of add too much more. They've still got 6 million ounces in front of them to put through their mill. So they are being quite aggressive in just adding more and more ounces and increasing their reserves. Probably that's -- really in a nutshell, that's it for us. And the main message I want investors to take out of this is that this program has been, I think, very successful in delineating that we have the Pogo-style mineral system, outside of the fence. We're right next door to a world-class high-grade operating gold mine. This is just the beginning for Resolution Minerals in this area and that we're really super excited with what we've seen. I think from a geologist point of view, it may not be -- the market obviously didn't really respond fantastically to the actual -- the grade on the first drill hole. But look, when I look at the correlation here of the geochemistry, what I see in the core, the quartz veining, the Pogo style system, we're in the right spot. So I think pretty good spot to be in. And fully funded the next couple of drill programs and aggressive targets to go out and hit. So just stay tuned for that.

Is there -- probably there are some questions. If people would like to -- you could either just put them on, on the chat, and I can read them out and try and answer them as we go. A question here we've got. Of all the holes you've planned, what strike rate, ounce you're forecasting to achieve in the planned hole and future holes? I guess as this is fairly -- this is early stage exploration in some ways, we are next to sort of brownfields, next to this, we can't really predict what sort of grade we're likely to get in a drill hole. What we're doing at the moment is we're just really trying to vector in using the geochemical ratios to try and vector into which part of the system we're in. At the moment, what we're seeing with -- is that we're quite proximal. Gabe Graf, one of the consulting geologists that works with us from the Millrock team, he was the Sumitomo exploration manager who made the Goodpaster discovery. So -- and he was also working for Northern Star as their exploration manager out there for a while before he's joined with us. Now he's super excited about this. And he's like, well, you're proximal, you're so close. It's really a shame we didn't quite [ drive it in the first hit, but we feel confident that we're getting pretty close. So the -- I've got a couple more questions here. From [ Jack ], have the historic holes also shown the typical Pogo-style mineralization? I guess the historic boreholes -- there isn't historic holes here where we've drilled on the Aurora Prospect. Further to the west, there was a couple of holes drilled. But what happened with those holes? They did hit the same classic Pogo-style mineralization, yes. They were drilled on a steep angle. They hit what I think is a -- the vertical feeder, but they didn't drill down deep enough to hit the horizontal, the flat-lying mineralization. And that's exactly what happened in Pogo a long time ago, is that they drilled these vertical feeders, they drilled those, thinking they're a little bit narrow. And it was only when they turned the drill rig and pointed it straight down and then they intersected this Pogo-style mineralization, which was anything from a couple of meters thick through to 20 to 25 meters thick in places in that main vein. So that's why we're sort of pointing the rig sort of fairly steeply down and trying to target some more flat-lying opportunities. And now another question here. Can you explain why we chose the first hole to be drilled? Was it purely due to access? Or was it a confirmed mineralization you're trying to drive in the right area? So we had a structural target there that we were -- I'll just bring that slide up again, on -- so the first hole, it's not quite obvious on this one because we have other layers of information, the mag zones, so the demag and the structures. So that was targeting a structure and also partly the conductive unit there. So while on the screen at the moment you can see that there's like a more conductive unit to the right, the stuff to the left, that sort of deeper yellow and orange is actually still, according to what's known from the Pogo style or the Pogo gold mine, that's also quite likely to be of the same conductive number that will host the mineralization over at Pogo. And we've got another -- so we did drill that hole for that reason. Once we -- that was basically where the road went to. We started on that in the middle of winter and then very quickly push the road down to the next planned hole and the next 2. Unfortunately, obviously, we didn't get to finish the program. So very disappointed about that, but we'll get back there and get on to it. Next question here is, which is the most likely hole to find excellent gold results? And when will that be drilled? That's the $64,000 question. Thanks, [ Brian ]. Look, we really do like this next hole, but there's also some other really quite compelling-looking targets along the lines to the north as well. So for different reasons, they're also quite high priority. This next one is -- looks pretty good though. And obviously, that will be our first cab off the rank when we get back out there, late May, hoping to be mobilizing out to site and getting started. How variable are the holes at Pogo? How -- is it easy to miss economic mineralization? From [ David ]. That's a really good question, [ David ]. The -- talking to Gabe Graf, who used to work out of Pogo and some of the other geologists who work out there, the -- it is a pinch-and-swell system. So these thick veins that come across, they can be 20 meters thick. They can come -- pinch right back down to nothing or to 1 or 2 meters and then back up again. And talking to Gabe and some of the guys out there, you can drill a hole almost exactly like this, almost right in the guts of Pogo system, out of the mine. And just occasionally, you do get it done. So let's see what happens. We -- but it is quite possible this variability can be quite extreme. The second hole, partly drilled to what depth? Is a geological log available? We'll be publishing the geological log at the same time as the assays. We're expecting the assays out in a couple of weeks, and we'll release that at one time. Thanks for that, [ Ray ]. Is there -- [ Keith ], to everyone, what's the availability in getting a drill rig crew? And how do you know you have the correct vein orientation, given that Pogo lodes seem to go in all directions, including multiple flats? So first question -- first part of that, so getting the drill crew, we are confident that we can get a drill crew up. Mining is going to be -- it's essential services and that there's ways for the guys to come out and actually quarantine on site and commence work from the lower 48. And so we're looking at the moment to bring back the [ ruin ] guys from down south, and they've got the rig ready to go, just parked down the road from us. In fact, we've got a few rigs there, a lot of spare parts. So they're probably going to be able to come back on site without any problem. The other part of your question, [ Keith ], was how do you know you've got the correct vein orientation, given the Pogo lodes seem to go in all directions? There is -- at Pogo and Goodpaster as well, there is different vein orientations. There certainly is the flatter-lying, then we're seeing in north stone sort of a steeper section. We've done orientated core on this. And while we haven't had the time since we've got these assay results in to sort of try and match up the assays to the vein orientation, that work's ongoing, and we'll continue to assess that. But it's quite possible what we've got is we see sort of a subvertical or sort of a 20 degrees off-vertical sort of set of veins in there. And we also see quite a flat set of veins as well. So as we get more assays and we get all the information from the second hole, we'll put all that information together and help that to orientate our next drill holes in terms of trying to make sure we cut across the vein sets in the right angle to determine the thicknesses. The -- another question here, did hole 2 at least partially test the CSAMT resistor in the red? The -- hole 2 is actually not on this section, but yes, hole 2 did test what we believe to be the CSAMT resistor in the red as well. But obviously, it only got the first couple of hundred meters of a planned 600-meter hole. And hopefully, we can get back onto that as well later in the summer. And that's about all of the -- all the questions I've got at the moment. Thanks very much, everybody.