Toubani Resources Limited (TRE) Earnings Call Transcript & Summary

Good morning, everyone. I'm Jane Morgan, and welcome to the investor webinar for Toubani Resources. Today, I'm joined by the company's current CEO, Danny Callow; and our incoming CEO, Phil Russo, who'll provide a company overview and engage in a Q&A session. Please feel free to submit questions via the Q&A function at the bottom of your screen. Danny, I'll hand over to you.

Thanks, Jane. Good evening to everybody in Canada. Good morning to everybody in Australia. I guess quite late evening for anyone who's dialing in from Europe or London. I'm very pleased to see so many of you on the call today. I know it's very close to Christmas, but I thought it was important that we really gave an opportunity to ask some questions and answers to our incoming CEO. I'm also going to give you a bit of a recap of the year, which I think has been a very exciting year [indiscernible] with some of the world events that have been happening. But the company has managed to remain very focused on its strategy, and we'll go a little bit into detail on that before we go into a Q&A session at the end. I think it will be important for me to be able to highlight some of the key milestones that we've achieved in 2022. We've managed the site operations very well with no reported incidents at all. That includes any first aid injuries or incidents for the full 12-month period, which is very satisfying. And likewise, due to good communication and some strict protocols in place, we've managed to continue to stay COVID-free throughout the whole COVID period but certainly through the whole of 2022 as well. We've maintained our ongoing social responsibility projects. Obviously, at a company of our size, right now we focus on projects that are important for the health of the local community, and most of this is focused upon clearing drains and opening roadways especially in the malaria season, which has just come to an end, and also to continue some good communication between the 3 main villages that surround our concessions. Through the middle of the year, the company focused on targeting new potential gold areas within our 300-plus square kilometer concessions and specifically on Kobada-Est, which is to the east of our main Kobada concession. We followed a fairly rigid and structured methodical regional exploration programs throughout the last 2, 3 years, and this has now culminated in an auger drilling program. An auger program is really the last step before moving into full-scale drilling, and the auger program delineated some pretty good results on our Kobada-Est project. So this is way outside of the main shear zone area, which opens up some really good possibilities for future drilling. As you may have seen in prior press releases, we have opened up a strike length on Kobada-Est, certainly around 700 meters in [indiscernible] and around 150 meters in width. We've had some good intersections there from almost near-surface drilling. Some of the intersections included [ 20.69 ] grams per tonne over [ 8 meters and 2.42 ] grams per tonne over 2 meters. As I mentioned, these are all near surface. Auger drills only drill down to around 20 meters. We know that our ore body on Kobada main shear is down to 200-plus meters. So I think these anomalies are showing some really good [ indicators of Toubani potential ]. At the same time, we have been [indiscernible] to complete [indiscernible]. This has taken pretty much most of the year, but we're very successfully [indiscernible] in November of this year, and we welcomed a number of new [indiscernible]. And I'm very pleased to say that with Canaccord's assistance, we managed to raise over and above what we expected to raise for the IPO, which has allowed us to really fund the next phase of our reverse circulation drilling program. This Phase 1 program is targeting around 10,700 meters. And depending upon the outcome of that drilling, we will [ determine ] the Phase 2 drilling program, which will ultimately build on that. But [indiscernible] and in a previous webinar, our major focus now is the extension of strike. So we have around 5 kilometers of potentially 55 kilometers of shear zones drilled. Those 5 kilometers delineated more than 3 million total resource ounces. And now the intention is to [ stack ] our drill and to see if we can extend that strike north and south of the existing Kobada main shear zone and also into Kobada-Est and the Gosso shear zone in future drill campaigns. I'd also like to introduce our new incoming CEO, Phil Russo. This has been a very extensive search for the right person to take over from me as I move into a Chairman role. And perhaps it would be a good time for me to introduce Phil and also to allow him to give everybody on the call a background and where we're going with the new strategy. Thanks, Phil.

Thanks, Danny, and good morning to everyone and wherever you may be. As Danny mentioned, I'm Phil Russo. Nearly 20 years' experience in the resources sector primarily in precious metals. A variety of roles from corporate development, strategic planning, project development, investor relations across Barrick, Dacian Gold and Perseus Mining. So -- as well, I've had 6 years' experience at a North American investment bank [indiscernible]. So a rounded skill sets that I think complements the Toubani team and where Toubani is positioned today and where we want to take it going forward. Thanks, Danny.

Thanks, Phil. Jane, I think over to you for the Q&A.

Yes, absolutely. And again, [indiscernible]. [Operator Instructions] We have had a few come through, so I'll jump into them now. So we've mentioned before that at the flagship project, we've only drilled 10% of the strike to date. Can you give us a little bit more information on the exploration upside that the company is looking forward to?

Yes. Thanks, Jane. I think I've mentioned this a number of times earlier that we believe that we have fantastic upside on the property. It's rare that a company of our size, sitting in the resource that we have of over 3 million ounces, still has so much ground to go out and drill. And I think what's important is that the last 2 to 3 years has really been spent understanding the structural geology, which enables us to put the drills in the right place. It's easy to have a great big concession. It's not so easy to go and follow that gold and make sure that every drill hole that goes in the ground turns into exploration ounces at the end of the day. And I think in our case, we have delineated a significant amount of strike or shear zone length. And obviously, we're now in a position to be able to poke the drill into some of those. So what we are looking at, [ as I mentioned ] earlier, is strike extension. We have a lot of ounces that we can go back in [ an infill ] stage. But right now, I think [ it's important to get ] an understanding of whether these shear zones are mineralized all the way through. And I think if anyone has read our recent investment [ situation ], they will see that these shear zones in this specific region of the Birimian greenstone belt follow a northeast to southwest trend. And on the northeastern side of us, we have Cora Gold who have just come out with an updated definitive feasibility study and around 450,000-plus reserve ounce and nearly 1 million ounces of resource. And to the southwest of us, we have Sylla Gold who are also drilling in the same shear zone structures that we're drilling in. So we're very confident that if we have a look at the region, there's a lot more gold to be found. And I think one of the reasons why we've made this decision to put the drills back in the ground is to really exploit that now and understand what the potential magnitude of this could be over the next 12 to 24 months.

Thanks for that, Danny. Just further to that then. So when can -- with the drilling campaign that's currently underway, so when can we expect results to come through?

Well, the great news is, is that we've started drilling. We're on our third hole already. So apart from the fact that we had a pretty prolific rainy season this year so access to some of the drill pads was a bit challenging, we've managed to get the drills turning. We're using a drill contractor that we've used before, so they know the site well. And we hope that by the end of this week, we will batch up our first set of assays that can go off to the lab. Clearly, Christmas sort of gets in the way here, and we'll hopefully start to see some results early to mid-Jan, which, if all goes well, we'll be able to report that to the marketplace.

Thanks, Danny. Just a couple of questions that have come through about grade. So what are the chances of actually being able to bump up the grade somewhat? I mean we're sitting at about sort of 1 gram per tonne level. Are we looking for higher grades?

Yes, I think unfortunately, we have to deal with what Mother Nature throws at us in terms of geology, but there is always the possibility that we will go out there and find higher grades. The nature of the structural sort of shear zone systems that we have in this area are that you can go and find higher grades in pockets and obviously be able to mine that selectively to be able to look at, I guess, a sort of a more focused mine plan to put it into the process plant. I think I have said it a number of times that the more ounces that you have, the more flexibility you have to be able to optimize the grade into the plant. And I think one of the things that we are doing now, which is to target additional resource ounces, is to be able to give us the flexibility to be able to redesign the mine plan at some stage in the future to be able to look at potentially higher grade in. Because the one good thing about designing a 3 million tonnes per annum plant is if your grade jumps from 1 gram to something higher, all of those ounces come out the back end pretty much at the same price. So I think for me, what's important right now is to focus on understanding the potential size of Kobada and our exploration concessions. And at a later stage then, we'll be able to go back in, rerun the mine optimization on the higher ounces hopefully and then see where we can optimize grade certainly in the early years. And then obviously, there's the upside potential of seeing some grades similar to our neighbors on the northeast and boundaries or slightly higher than that. So there's this possibility always. And there's many examples in the junior mining world of companies that start up a process or an operation on lower grades and as they continue to drill, they find better grades. So we're always hopeful, and we'll certainly be out there targeting areas where we believe that we have that opportunity.

Thanks, Danny. We just had a shareholder come through asking if the Toubani story could be similar to the Perseus Mining story.

[indiscernible] to Phil.

Well, we like to dream big here at Toubani, and so that's an interesting question. And Edikan was a low-grade deposit. That was the origins of the Perseus story. And so the hallmarks are similar here at Toubani. I would say that it is rare to find predominantly oxide deposits of this scale in the world, and so that's why I'm very excited about the future. And -- but again, as Danny was talking about, the potential to expand Kobada, I think we're only at the tip of the iceberg, I think, as the presentation says. So certainly, as part of my due diligence of joining, what was really, really, really clear is that there's no shortage of targets here to grow this deposit. And so we'll keep those rigs turning and from there, I think good things will happen, especially since -- the other element to the story is improving the market profile now that we're listed in Australia. And when you're trading at $5 an ounce, I think there's limited downside but a lot of upside here. So surely, I'd like to think we -- Perseus or West Africa, all these sort of success stories, that's certainly where we want to take Toubani.

Thanks for that, Phil. A couple of others coming through. So what is going to be done with the ancillary minerals, so the chemicals waste, et cetera, once the mine is in operation? And there's also a second part to that question. So what are the current security issues facing the area?

Yes, I'll answer the security one first because I think that's one that comes up fairly frequently. We -- Mali is a big country, maybe I'll start by saying that. I mean it's one of the bigger countries in West Africa. You have a very clear divide between sort of north and south or northeast and southwest, should I say. We're very blessed in Mali that all of the gold operations are sitting really along the sort of north/southwestern boundary of the country to the west of Bamako, and a lot of the issues that are happening in the country are effectively happening in the sort of central and northern parts of the country as you get closer to the east. And I think that the Malian government are very aware that a large proportion of their foreign -- of their GDP comes from revenues from mining companies. And therefore, they are very keen to make sure that the mining industry is very well protected there. I always take a lot of comfort when I go to Mali in the fact that all of the majors are operating in Mali. It's the third, fourth biggest gold producer in Africa, probably in the next year will become the third biggest if you look at its growth track. And you've got the Barricks and the IAMGOLD and the B2Golds and some of the really large-scale miners there that have operated in the country very successfully for a number of years. So I think that there's a government in place that is very aware that the security situation has to be handled. I believe that it is. I think as well that we have a very progressive mining code there, which encourages foreign direct investment, and that's all testament to the government. And certainly, a lot more progressive than some of the other African countries that I've worked in, naming no names, and I think that's very encouraging as well. In terms of the sort of the mining cycle, we've been very, very, very cognizant of making sure that everything we do on the mining side once we moved into a production environment is very contained. We're aware that we're surrounded by multiple villages. There are multiple water courses in the area that are the primary source of water for most of those villages. And therefore, when we did the mine design, we looked very carefully at things like the tailings dam, which is always a concern. And anyone that follows some of the -- the horrific news that has come out of South America in the last few years, we made sure that we went for downstream tailings dams, which means that you have a very solid wall containing the material. You don't build an upstream dam. We've also lined it with HDPE lining, which keeps anything in the dam that is in the dam. Nothing can come out. And we've made sure that the dam has been designed with a huge factor of safety to make sure that any 100-year or 1,000-year rain events will not cause any spillage outside of that dam. In the same vein, keeping on that environmental trend, we're looking at ways of providing solar battery power to the mine site rather than using diesel generators, which is typical in this part of the world. So I think -- and including in that is things like a cyanide removal plant. Cyanide is a pretty nasty chemical. Included in the design in the feasibility study was a cyanide removal plant. And we're also arsenic monitoring to make sure that the arsenic levels in the tailings dam don't pick up. So I think we've been very responsible in the initial designs. I think that by the time we get around to relooking at this feasibility study, hopefully with a lot more ounces, we will go back and review all of those things again. But I've always maintained in all of my 30 years of working in Africa that you set a mining company up to be world-class wherever it is in the world. And I think that's what we've tried to do here. [indiscernible] we perform to levels way higher than even the local laws stipulate. And I think that's what we try to do in all the studies that we've done.