Toubani Resources Limited (TRE) Earnings Call Transcript & Summary

So good morning, and thank you for joining the Toubani Resources Investor webinar. With the company listing on the ASX today at 1:30 p.m., Australian Eastern Daylight Time, under the ticker code TRE, I am join by Toubani CEO and Executive Director; Danny Callow. Danny will be providing a pre-listing company update and engaging the Q&A session. [Operator Instructions] Danny, I will now pass on to you.

Thanks, [ Glen ], and good morning to everybody in Australia, and I guess, good afternoon in Canada and good evening in Europe and London. I'm very, very happy to be presenting today. It's a very exciting day for us and a culmination of significant amount of hard work in moving towards a dual listing on the ASX. And hopefully, as we move through this presentation, you'll see some of the rationale behind the strategy to look for a second listing in Australia. And I think today is, as I said, a very exciting day for us. I'm going to be talking to you about our flagship projects in Southern Mali, the Kobada project. And I think what I'd like to get out of today is to spend a bit of time talking to you initially about the investment case and why we believe this is such an exciting company right now. And then move on to a little bit of detail about where the exploration is going to be going over the next 12 to 24 months. So I think really, we see 3 or 4 key investment items here that are for us pretty important. We believe we have a substantially de-risked project. We've been working on the Kobada project for a number of years. We've drilled a substantial amount of meters. We've done a significant amount of metallurgical test work. And all of that really rolls up into a definitive study, feasibility study that was produced by -- in September last year, which showed a very straightforward process of gravity plus CIL to produce gold through oxides and sulfides. We also believe that we're very undervalued to our peers on various metrics. One of them, I guess, which exploration companies normally look at is EV to total resource. And we're sitting at an EV to total resource of around $4 per ounce. And obviously, there's a lot of information out there that shows what some of our peers in the industry are sitting at. Most importantly, and really where the crux in today's presentation is, is the upside potential for exploration. And this will add significantly more ounces, we believe, to our current resource base of 3.14 total -- million total resource ounces. And finally, in terms of an investment case, we believe we have an experienced management team that can take this company forward and a very experienced Board made up of predominantly Australian-based directors and 2 out of Europe. So I'll just refer you to the disclaimer in the presentation. But really, I think this is a story of a substantial strategic focus over the last 2 or 3 years and really taking a company that had a lot of drilling done and a lot of test work done, but really not a lot of strategic focus. So really, over the last 3 years, what we've done is we've focused very much on the technical side. So we've done a lot of confirmatory drilling, making sure that the historical drilling has been done here is to the right quality. We've done a comprehensive metallurgical test work, as I've mentioned. And we've also tested the fresh rock or the sulfide rock, see how that behaves through the plant that's been designed in the definitive feasibility study. And ultimately, on the technical side, really delivered a definitive feasibility study in 2021. At the same time, we've been looking very hard at a corporate cleanup and consolidation. I inherited a company a couple of years ago that had a very different looking Board and management team. And over the course of the 3 years, we've spent a lot of focus in making sure that the corporate side was cleaned up and that's not only in terms of the Board and the management team, but also in terms of the balance sheet. So we're sitting in a very strong position now with 0 debt, no legacy issues around streams or royalty deals, 100% owned project in Southern Mali and very well positioned to move forward now in terms of growing the resource base to exploration. And that's the phase that we really see ourselves moving into over the next 2 years. And for those of you that have been through the prospectus, you'll see that the major focus now is really to grow this resource and that's to build on a 3.14 million ounces total resource and hopefully, through the drill bit grow that quite substantially over the next couple of years. And we'll talk a little bit about that through the course of the presentation. And then clearly, based upon those results, a Phase 4 would then look at those additional ounces and how do we optimize the current project and develop it going forward. But really, I think most of today's presentation is focusing on that highlighted block, which is looking about growing through the drill bit. Just to talk a little bit about the Kobada Gold Project. For those of you who don't know, we're right smack bang in the middle of the Birimian greenstone belt. That is the prolific gold producing belt that runs through most of West Africa. And certainly, it's home to a large number of mines in the region. We have a fairly large land holding, but what we believe is to be very manageable. Around about 300 square kilometers plus/minus on 3 contiguous permits, so a mining permit in the middle, and the North and a South, exploration permit, and these are predominantly where we see most of the exploration upside coming from. As I mentioned, we have a global resource of 3.14 million ounces, of which 1.7 million ounces is measured and indicated and that translates quite nicely into a mineral reserve of around 1.2 million ounces at 0.9 grams a tonne. All of this, however, has given us an opportunity to look for additional exploration targets. And when we talk about that, you'll see there are some substantial number of exploration targets that we'll be looking to focus on over the next couple of years. In terms of the regional setting, I mentioned we're in the Birimian belt, but I guess if you had to zone in on exactly where we are, we're in what's called the Siguiri basin. Most of you will probably have heard of AngloGoldAshanti's mine, Siguiri mine. That fits in exactly the same geological structures as us. And what we're seeing here is very continuous geology through this region of Northeast, Southwest striking shear zone. And as we zone in onto our properties, specifically, you'll see that these follow through. Again, taking the Siguiri basin and putting a cross section through it, which you can see in the diagram, you can see that the structures and the folds throughout this Siguiri basin are very consistent with what we're seeing on our Kobada project. And to put this into perspective, we're seeing around 8-plus million ounces of gold that's already been produced out of the Siguiri basin, predominantly out of the Siguiri mine. But more recently, we're starting to see a lot more exploration concessions in this area showing very good signs of good gold. Mali itself is a key producer, third biggest in Africa. You can see from this diagram that almost all of the majors are operating within Mali. You can also see that they're all along this southwestern side of Mail, bordering on Senegal, Guinea, predominantly in Burkina Faso. But names like Barrick, IAMGOLD, Endeavour, are all companies that have been around in this country for a very long time and continue to spend substantial exploration dollars here as well. Zooming in more specifically on our 300-plus square kilometer concessions, what you can see to the -- on this diagram is our concession, which are the red blocks, so the mining permit in the middle, which is called Kobada mining permit, Faraba to the North and Kobada Est to the Southeast. But joining up on to our concessions are additional exploration companies that are exploring in this region. So to the South we have Sylla Gold, who have carried out a fair amount of exploration right on our border to the South. And to the Northeast, we've Cora Gold who have just defined the 920,000 ounce resource and about 420,000 ounce reserve. So I think what I'm trying to show in this diagram is that we fought a lot over the past couple of years about the continuity of shear zone strikes through our property. I think just to put it into perspective, all of our 3.1 million ounces are sitting on a very, very small part of a very large shear zone structure in our property. And, obviously, now the focus for us is to start to grow the understanding and the awareness of how big this shear zone potential could be on a property. And as I've mentioned a couple of minutes ago, what is positive is that the shear zones that runs our property are showing very good signs of mineralization to the South of us and very good signs of mineralization to the Northeast of us. So we're certainly starting to see this theory of continuous shear zones running through this region, producing good mineralized gold areas. I think, as I've said in this slide on exploration, the best is yet to come. Many people ask me that when you have 3 million ounces, why go out and find more? I think the simple answer is that we really have only explored around 10% of our property. And it makes a whole lot of sense for us to get the drill bit back in the ground and to start -- to step out and understand the extensions of strike across some of these multiple shear zones. And some of the areas that you're going to hear about in this presentation is the Kobada Main Shear Zone where our current resource is sitting, the Foroko Shear which merges in just to the North of where our resource shell is, the Gosso Shear and the Kobada Est Shear. We also have Faraba, which is the deposits into the North of us, which we've done very little exploration on right now, but that also features in some regional exploration over the next couple of years as well. So I think that we have a solid resource foundation based upon substantial drilling. As I've mentioned there, more than 150,000 meters of historical drilling. So certainly, we're building off of very strong base here, we're not speculating. But we've also identified in the process through regional techniques over 50 kilometers of identified mineralized shear zones on the property which are yet untested. And I think that is the important point. They're untested, but we're certainly seeing the same source of geological structures through these shear zones that we see in the 5 kilometers of strike that we've delineated 3.1 million ounces. So in terms of where we move forward now post-IPO? In the prospectus, as most of you have read, most of the money that we've raised is going into exploration, and that is key for us now. And really, what we're trying to do here is prioritize this into a number of key drilling areas. And what I've tried to do just for ease of reference is, in terms of the priorities in this table, you'll see the reference back to the prospectus on what we've called the various drilling phases. But ultimately, if you have a look at the map on the right-hand side, it's fairly well laid out. So again, as I mentioned, Area 1 is effectively the extension of strike on our current Main Shear Zone to the South, so Kobada South. Area 2 is the Kobada North and Area 3 is Kobada North. So just really trying to see how we extend the Kobada Main Shear Zone over more kilometers. And we did start to pick up some very interesting stuff out of what we're calling Kobada West, and that's a parallel shear zone to our main shear. So it makes a lot of sense while we're up there drilling to go and poke some holes in here and have a look. We've got to go back into the Gosso Shear. The Gosso has already given us around 750 meters of strike. So this is looking at a Southern extension to that. Again, strike extension drilling. And then the next phase really is to start to have a look at the Kobada Est area where we've done a lot of auger drilling, and we picked up a fairly good mineralized zone here, which we've spoken about before. And that is an area that we'll be focusing on as a much later priority. To put this into perspective, phases for priorities 1, 2 and 3, gives us around 10,700 meters. That's around about the amount of drilling that we'll be doing in Phase 1. And that really ties in with a prospectus of around 10,000 to 12,000 meters. And really, if we can, we will start to get drilling down before the December break. I think that all of these areas are backed up by some very strong underlying geological information. So what I've tried to put forward in many presentations before is, we're not drilling and hoping to find something, we're really building on the base of a very good regional exploration plan that's been going on for a number of years. So if we take, for example, Kobada South, all of these holes have been laid out based upon just soil geochemistry, historical artisanal mining, which is a very key indicator of potential for gold mineralization. Geophysics, already some historical drill holes in the area and basically the orebody model just showing us the potential for extensions of strike. And if you have a look through most of this, you'll see that it is built on a very strong foundation. If I move a little bit into the details, so we talked about Phase 1 Kobada South, built on some very strong regional geological and drilling information. What we're focusing on here is to try and see if we can extend strike to the South and basically pick up the gap here between some inferred resources sitting down in the Southern isolated pit here. And the inferred resources sitting in this part of the pit here, which could see a potential to extend strike in the South by another 400 to 430 meters. So this, we believe, is a very important amount of drilling that we'll go in here and drill to make sure that we can test to see whether there's this continuity that we're seeing through the rest of this Kobada Main Shear Zone. Following on from the that, Phases 2 and 3, which are all part of the initial 10,700 meters of drilling. Again, looking in is main shear area. We are starting to see this potential to extend just to the North of our current resource shell, which we're calling first phase Kobada North. And then to join up with some of this historical mining that we're seeing in this area, which could potentially show a continuity of strike over 2 kilometers. So there's certainly something that for us is very important, and again, based on very strong regional and historical drilling information. And then at a later stage, and obviously, this is really dependent upon how successful Phase 1, 2 and 3 is and whether we need to go back into that and drill some more. We can start to look at, as I mentioned, this Kobada West area. It's based on some strong regional and artisanal mining historical data. And that has a potential to potentially give us a strike length of around 1,300 meters in terms of the drilling that we're laying out here. So again, you can see that we're building this on a very strong base. We're looking to test the extensions to strike, which will give us a lot of confidence in the potential to then come back in and infill drill that at a later stage. And then again, building on a very strong auger drilling program that we've been doing through the first part of this year. So based on the soil geochemistry, we did some auger billing, we delineated a fairly good area within that Kobada West Shear Zone of some good gold grades. And ultimately, what we need to do there is go and put some reverse circulation drilling in at some stage in the future to go in and really test that area we are there. And then finally, as we talk about sort of priority 6 and 7, the Gosso targets. We have 750 meters of strike base, again on some very strong exploration baseline. But again, what we're looking to do here is to see whether there's a potential to increase that strike substantially from 750 meters, something closer to 2 kilometers or more. And then as I've mentioned, there's a significant amount of additional drilling that's clearly not in the plan for now. But really, again, it's to push the extension of strike northwards on Gosso or the Main Shear Zone and all still on Kobada Est, and that's something that we'll look at based upon the results we get out of the first phase of drilling. I think we have been very successful with the drill bit, and I think this graph shows it quite sufficiently. When we took over, we inherited a resource of around 2.2 million ounces. We've managed to grow that by 40% over the last 3 years with the drill bit to 3.1 million ounces, and that gives us the confidence that we have a very good understanding of the geology within our concession, and we have a very good understanding of where we need to drill next. And based upon that very good growth in resources, what we have seen is a substantial growth in reserves by about 140%. And that really is testament to the fact that as you start to come in and infill drill in a mounts historical drilling and you close the gaps up, then you can start to convert this measured and indicated resource into a reserve. And that's what we've seen quite successfully over the last 3 years. We're not going to worry too much about reserves. For the next couple of years everything is going to be focused on resource growth. And obviously, the first phase now is to really be focused on testing the extension of the strike that we've spoken about over the last 10, 15 minutes or so. So really, if you have a look at the last few years and going forwards now, we've done a good job in upgrading the resource to over 3 million ounces. We've delivered positive metallurgical test results, which are key to understand how the ore body behaves under test work conditions, but it should ultimately be the way that you get the gold out. We've seen a proven and probable reserve increased by 140%. We've also managed to renew all of our permits and our licenses. So we're fully permitted, we have our mining license in place until 2045. We've updated our environmental permit and our 2 exploration concessions and all of these are valid for at least the next 2 to 3 years as well. And now the focus is on growing the resource through exploration drilling. And then obviously, on the back of that at some stage in the future to redo the economics and look at upgrading the output. So is there a possibility of pushing is to something bigger than the studies have already told us and also the life of the project as well. So that in a nutshell is the presentation. Clearly, there's a significant amount more information in the prospectus. And I'm very happy now to take any questions that have come up in the last 20 minutes or so.

[Operator Instructions] So there's been a few questions about potential M&A flow. Are you able to elaborate a little bit more on these opportunities?

Look, I think we -- with the ASX listing pending, we stopped any discussions that we were having. But clearly, a project of this nature with 3 million ounces of resource and 1 million ounces of reserve, it is of interest to a number of companies. We have had some discussions in the past. That didn't really lead too much. Solely because I believe that, we believe in getting the best value for our shareholders. And our current value, I think that with what we have in the ground right now and the potential of what we have in the ground, it would make a lot of sense to really focus on growing the resource ounces and then perhaps getting back into conversations, once we start to see the value in the stock getting back to where we should be.

Thank you, Danny. And just to the flagship projects. I know you've mentioned a lot of these throughout the presentation, but I will jump into them. So at the flagship project, only 10% of the strike has been drilled to date. So can you give a little bit more information on the exploration offside that the company is perhaps looking forward to?

I mean, we've drilled -- predominantly focus our drilling on 5 kilometers of strike. And we believe we have 55 kilometers of strike. It's not to say that all of that is mineralized today. This is geology. It doesn't always do exactly what you wanted to do. But what we have got is some substantial historical legacy artisanal mining on the property. And artisanal mining is a great indicator for gold being there. And to put this into perspective, and I think this is what is really important to note is that, most artisanal mine has been pretty much mined down to somewhere between 8 and 10 meters down. We're seeing thicknesses in our current ore body of 150 to 200 meters. So if you can follow the trends along the strike of historical artisanal mining, there's a very good chance that below where the artisanal miners have stopped, there's a substantial amount more that couldn't be taken out. So it is a very good geological regional indicator. So we do use that as part of our regional exploration techniques. But obviously, we use the techniques like magnetics and geophysics, soil geochem sampling and then obviously backed up by drilling. And I think what's really important to note is that every single meter that we drill in this coming phase of around 10,000 to 11,000 meters is all really backed up by some very strong underlying regional exploration data. So we're not shooting in the dark. We're actually pretty confident that as we put the drills in the ground, we will be able to follow a lot of these mineralized zones North and South of where our current resource is sitting.