Wallbridge Mining Company Limited (WM.TO) Earnings Call Transcript & Summary

Okay. It looks like folks are actually filtering in pretty fast. So I'm going to go ahead and get started. And I'll say good afternoon, good evening, depending on where you're signing in from today. It looks like a bit of an international audience. I really appreciate people taking time around the world to join us today. And I'm really pleased to introduce Brian Penny, Wallbridge's CEO; and Mark Petersen, Wallbridge's Senior Geological Consultant, for today's live webinar. Gentlemen how are you doing today?

Excellent. Thank you very much, Romeo.

Awesome. Now here's how today is going to work. First, Brian and Mark is going to walk us through a quick intro into Wallbridge and just some context from most recent news release. Then they'll get a number of questions from me and then some questions from the live audience. Now you can enter your questions at any time during the proceedings in the bottom right corner of the screen. There's a little chat button. And I'll let you know in advance I'm going to be kind of jumping around with the questions, so fitting them into the conversation where it feels most fluid. If we don't get to your question today because we ran out of time or it's just off topic that we're discussing, I'm still going to make sure the Wallbridge team gets your question and gets back to you as soon as possible. So please do still pose it. I will make sure the team gets it really as soon as we can. As a final note from me today, today's event is being recorded and will be available as a replay likely late this afternoon. They'll pop right in your inbox. It will be on both YouTube and 6ix.com. But nobody came here to hear from me. So we'll get into the pro team. Brian, I'll let you get started with the presentation.

Well, thank you very much, and welcome to a session, Wallbridge, where we're going to talk about the Martiniere drill results that we announced last night. Wallbridge is a company that's focused on exploring in the Northern Abitibi. This slide, we talk about our shareholdings where Eric Sprott owns 16% of the company. William Day Construction, a firm out of Sudbury, owns 5.7%. They've owned this for 10-plus years. And Agnico owns 9.9% of the company. Agnico Eagle inherited the position from Kirkland Lake Minerals when they acquired them. And subsequent, they participated in all financings to maintain their ownership interest at 9.9%, so a very supportive shareholder. The balance is held by small institutions, retail shareholders, high net worth individuals, family funds, but all below the reporting threshold. So unfortunately, we don't have any other chunky holdings, but this represents about 1/3 of our shareholders. So it's a good position, covered by BMO and Paradigm. Our team, a seasons team. The Board has many, many years of experience. I don't want to add them all up because then it will -- we'll all come to the conclusion we're all just very old. But our Chairman is Tony Makuch. Tony used to be the CEO of Kirkland Lake Minerals. Actually, I've known Tony since while I started my career at Kinross, and we acquired the Macassa mine from Barrick in the mid '90s. Tony was the underground superintendent at that point in time. So I know Tony quite well, and it's great to be associated with Tony again. Brian Christie, long-time analyst on Bay Street. Danielle Giovenazzo, a Quebec-based geologist. Jeffrey Snow is a lawyer. He ended his career, I believe he's retired now with IAMGOLD. Michael Pesner is a financial expert. He was a partner at KPMG. And Janet Wilkinson is an HR expert. So looking at our team, our senior leadership team, Mary is our CFO. She resides in Sudbury. She's been with Wallbridge for about 12 years. Mark Petersen, I brought him in after Attila left the organization. Mark and I go back and we worked together at New Gold for 10 years. And I brought Mark in to advance the projects, and we'll talk more about Martiniere out in the next few minutes. Tania has recently joined the company as our IR expert. She's got great experience in the industry. Francois Chabot is our Technical Studies Manager. He put together the -- or led the PEA that we completed in mid-2023. Carol is our HR person and Sean Stokes is our Corporate Secretary. So a well-experienced team. We're focused on the Northern Abitibi. We have 2 deposits, one called Fenelon, one called Martiniere. They are about 30 kilometers apart. It's about -- from La Sarre or Amos, it's about a 3.5-hour drive up to our site in our camp. So it is in the far north. And with that, that brings certain incentives on the refundable tax credits we receive after incurring expenditures that pass the purpose test for CEE purposes. Most of the conversation today will be about Martiniere, but we may have time to answer a few questions on how this all fits together. Our property position is 97 kilometers of strike length on strike to the Detour Lake mine. The dotted line is the Ontario, Quebec border. So that's where the Detour Lake mine sits. Everything in blue, we own 100% of. Everything in gray are subject to some sort of agreement. Detour East, we've optioned to Agnico to earn up to 50%, and they have to spend another $2.5 million by this time next year. Casault, we've optioned from Midland. We're earning into it, and we have about $1 million to spend on that to earn a 50% interest in that property by middle of next year. Some of the remnant properties like Beschefer we sold to Abitibi Metals, and we're focused on this 830 square kilometer block. With that, I'll turn it over to Mark. And Mark is going to give you the update on these very positive results with respect to the Martiniere Phase 2 drilling program. Mark?

Yes, sure. Romeo, did you have some -- did you have a question you wanted to...

I did, yes. If you don't mind, I'm going to kind of put you through the ringer a bit on these questions.

Yes, you bet.

So I appreciate you answering a couple that we've got. So first thing, just looking at the most recent news release, with the Phase 2 results showing those multiple high-grade intercepts outside the current boundaries, how does this impact the strategic planning for Martiniere's development time line, particularly in relation or if you could compare it to the Fenelon project?

Sure. Well, one of the things -- the first thing I would say is it's kind of a nice set of problems to have. And we started out 2024 really with the objective to try to do enough exploration drilling to both advance some of the technical studies, specifically metallurgical testing and geotechnical characterization. We got that -- and we broke the program into 2 phases. The first phase was finished around mid-Q2 and that was really infill and peripheral step-out drilling, but again mainly to address getting some material for metallurgical sampling and geotechnical work. And of course, it was infill drilling. So certainly, there's some value coming from that. And in parallel with the drilling, we realized we really needed to do a bit of a refresh on the underlying geologic model in our overall interpretation of the geology and specifically the controls to gold mineralization and grade distribution in the deposit. Since the Martiniere resource that's currently published was put out in early 2023, there's been -- and this is prior to 2024, there's been on the order of another 20 kilometers plus what we've done this year. We've now got another 30 kilometers of drilling brought in. And so, we wanted to get that information integrated into an updated interpretation and kind of along the way as we were drilling -- doing Phase 1 and doing that reinterpretation. And then when the results of Phase 1 came in, it became clear and clearer that this system -- this overall gold system that drives the Martiniere project, we don't really know really where the ultimate edges of it are. We know where all of the historic drilling has been done, of course. But we realized there may be some real opportunity to expand it. And so that's really what Phase 2 was about, was to get out beyond the limits of the known resource, and that's kind of outlined in that kind of dotted red line that's kind of wandering around the central part of this map image. And we had some satellite targets that had been identified and then prioritized this year. They were identified previously. There had been a few holes in them done in 2023, specifically Horsefly and Dragonfly, which are labeled there on the map, but also the Bug Lake North system, which is -- there is a high-grade ore shoot called Bug Lake North. That remained open vertically at depth. And we had another target that we put 3 holes in down in the kind of lower central part of the map image called Bermuda, where there really hadn't been any drilling, and we had a conceptual target that we developed there that we tested. So we were moving the drill around through Phase 2 among these 4 targets. And really making our decisions on where to drill next based on what we saw in the drill core as we went. And as it turned out, 3 of the 4 targets really, really have come in nicely in terms of what we got for our efforts. And that's Dragonfly, Horsefly and the down plunge projection of Bug Lake North. So the takeaway from all of this year's work really is that although we set out thinking we could bring Martiniere up to a level more or less equivalent with Fenelon in order to consider looking at combining the 2 projects into an updated PEA for some type of hub-and-spoke production scenario, we realized, no, we're not done exploring at Martiniere at all. And hence, a good problem to have. So directionally looking forward, we're really going to just keep exploring it at Martiniere and keep Fenelon advancing down its path of more advanced technical studies and so on and so forth. So these 2 projects will continue to advance in parallel, but we definitely have more exploration to do at Martiniere.

Awesome. I appreciate that. The other thing I wanted to ask is the report intercepts, they show off to my eye as considerable grade variability. So I'm curious how this impacts your approach to future resource modeling and, yes, eventually mining method.

Yes. This is not an uncommon feature of deposits in the Abitibi. And for that matter, a high-grade gold deposits, we call it a nuggetty effect where there's a lot of variation in grade. Fenelon is in that same family. And in terms of how do we deal with that, well, yes, it presents a challenge, but it's not -- there's nothing new under the sun here. Really, it comes down to a couple of things. First off, we really need to, and we have and will continue to really focus on the fundamental geologic elements to control the distribution of gold grade and where the high-grade clusters. And typically, that's going on with the structural controls or another way to think about that, if you're not geologically inclined, just think of it as the grain, like the grain and wood, the rocks have a grain to them. They have a fabric. And where that fabric opens up, creates open spaces, that's where the gold is going to concentrate. So we put a lot of effort into understanding where those controls are into our interpretation and to the extent the data allow -- what the data allow is essentially how much drilling you have to work with, how much drill data you have to work with. We emphasize more empirical observation to build that into our interpretation as opposed to conceptual targeting, which is typically the space you're in earlier more in the pre-discovery stages of exploration. So we're moving toward a more empirically fact-based model because we've got a lot of data to work with. So that's at the geologic modeling and interpretation level. Then the next level up is, okay, now we need to get numerical. And we apply -- essentially, we look at the geostatistics of the grade population, the distribution of grades in a statistical sense. And we let the spatial relationships that come out of working with the geostatistics kind of drive our thinking. And that really is what feeds into our estimate and strategy when it comes time to estimate a mineral resource. So it's really those 2 levels. First, get the geology right or as right as you can with the data you have and then really do a rigorous application, rigorous interrogation of the data with the statistics and then apply what comes out of that into your strategy for estimating grade in 3D space.

Thanks for that, Mark. I really appreciate the wood grain analogy. For those aren't geologically inclined, that's very helpful to think of it that way. One thing I wanted to just ask you, so you mentioned the Bug Lake Zone remains open along strike and depth. So given the high grades encountered at Horsefly in your surface, how are you prioritizing shallow versus deep targets for next year's program?

Yes. I think in 2 ways. One, Horsefly is a no-brainer. We need to go back in there. We've got high-grade mineralization right coming at the top of bedrock as soon as you get through the overburden profile, especially on that one hole #100 with 15.6 grams over 11 meters. We will absolutely be going right back there and doing some step-out holes around that to get a better handle on what direction is it going. We have some thoughts around it, but it's not a slam dunk. There's at least 2 grains in the fabric there to use that analogy again. So we will be putting in some follow-up holes to understand that better. But going to Dragonfly, really -- and if you want to just move to the next slide, we have a long section that's showing, I think, provides a little bit better look at things. Really, our drilling at Dragonfly overall isn't that deep. In a relative sense, we've really only tested the upper 200 meters from surface there. So -- and if you look to the left of the Dragonfly intercepts, which is the cluster of intercepts highlighted there in the right part of this view, and this is just a view looking straight north or northeast at the overall trend within the Bug Lake deformation zone. So Dragonfly is that cluster of new hits. To the left of that, you can see the outline, the dotted red line outline of the current resource pit shell that's defined to report the current resource, the mineral resource. And there's some other intercepts highlighted both within that pit shell shape and a bit outside of it. The one hole 99 there, that was a hole drilled as part of our Phase 1 program. And that was -- that drilling was done to collect the material for met samp, metallurgical sampling. And then some of those other call-out boxes are for holes that were drilled subsequent to the reported resource. So that's new drilling post early 2023 that's also in the mix here. So overall, it's open a long trend, both to the right or to the Southeast. But there's also a -- again, thinking structural grain of the rocks, there's a fabric that's kind of we use the term plunge, moving off to the lower right at an angle. And so within a structural zone, there's kind of a subordinate fabric that's controlling the trend of grades within, call it, a fault or just a zone of disruption, which is what this cross-section is following. So there's also this down plunge direction, and this is very common in structurally hosted ore deposits like we have in the Abitibi. It's getting a handle on that direction because that's the direction you're going to -- you're most likely to continue to hit the zone where the gold is concentrated. So significant growth potential, both the long strike and in that down plunge direction. And then, I guess the last thing I would just point out is that if you look at the cluster of holes again in that Dragonfly area and then look at where the pit shell is, there are only a few drill holes intercepting this cross-section that have been drilled. So there's a big gap of information just in between Dragonfly and where this pit shell is, which is the Bug Lake North high-grade gold shoot. So we've even got potential right inboard. And again, like Horsefly, there may be -- there's upside just where there isn't drilling because the system -- the geology is there. We just have to go keep exploring it.

I appreciate that. Now on Dragonfly, I know you just kind of got into this, but I'd love to just expand on it a little bit more. Now obviously there are some very impressive grades in there, especially hole MR-24-102. I'm curious if you could, just broadly speaking, discuss the geological similarities or differences, just do a general comparative between Dragonfly and the main Bug Lake Zone, so that the audience can understand.

Yes, sure. Essentially, it's the same style of mineralization. And to use a little bit of geologic terminology here, the rocks are solicified. That just means fluids came in and brought in more silica or quartz, and essentially flooded and soak the rocks. And with that also comes a fairly healthy dose of pyrite, which is iron, just simple iron sulfide also called fool's gold. And it was the fluid, the hydrothermal fluid that brought in the silica and the iron sulfate is also what brought in the gold. So mineralogically, it's the same type of material and likely we'll have very similar, if not identical or nearly so, metallurgical characteristics. And by that, I mean the types of gold recoveries we could expect to get from material there in the Bug Lake North shoot, which is shown on this section. We also have another one called Bug Lake South to the south of Bug Lake North. And what we're seeing at Dragonfly, really nothing dramatically different between them at all. So very similar there. And again, we're still in the learning phase of really understanding the details of the structural controls, but we are recognizing the overall trends of mineralization and grade distribution in the system. And that's taking us one or a few steps closer to getting a lot more predictive in our drilling and our ability to spot drill holes and drill in the right place.

I appreciate that. Moving on to Horsefly. So I do want to talk about those as well. I do see the question in the chat. I just have a couple more to get through, I promise. But looking at the Horsefly results, particularly the 15 grams over 11 meters in hole MR-24-100, curious what are your initial interpretations on structural controls.

Sure. If you can just flip back to the map view, I can speak to a little better there. So there's 2 things we know. And I was just speaking with one of my senior geos before this call because I really wanted to make sure that I was up to speed and on the right page here. So that other section line is there's a B and B primed. That's running right along another structural trend in this overall Bug Lake deformation zone, the Martiniere North structural trend. And sorry if these names get confusing, it's a legacy thing that we've inherited. But in any case, horse -- that high-grade intercept, that 15 grams over 11 meters, at Horsefly lines up right along that Martiniere North structural trend. And there's been drilling in there. There's a little bit of resource. You can see that kind of elongate peninsula or projection that surrounds that Martiniere North label on the map view. That is -- there is some resource along there. So this intercept at Horsefly is sitting right along that trend. But in addition to that, a little bit farther down the same hole, we've got other intercepts of note, 7.2 grams at about 7 meters and 3.7 at 5.6. So it's also pretty clear that there's another part of the fabric coming in, a bit of a different trend. Maybe it's looking like there's a northeasterly fabric intersecting this northwest-southeasterly Martiniere North zone trend. So it's the interplay of these 2 things that are probably driving this clustering of high grades right in there. And that's what additional step-out drilling around this hole or in this general area is going to do to help us flesh that out a little bit more to understand. It's not simple, straightforward, just follow things in this one direction, especially when we get down to deposit scale like this. There's always a couple of things going on that are driving the underlying drivers to where the gold is going. But I think we've got -- I think we're onto the right track here. And it's just a matter of just, we just got to stay on it and keep on it.

Mark, thanks so much for putting you through the ringer. I know I asked a bunch of questions also. I really appreciate it.

All good.

I am -- we do have time for a couple of audience questions. And there's a couple that I did want to get to because I think they relate to what we're just talking about. Brian, I'm going to get you in actually for one that was just fairly recently asked. And that's how do you measure the balance between continuing to explore in multiple directions versus saying we have enough quality results to make the decision to move forward, whether that's an operating mine or M&A or et cetera?

That is a tough question. And the fact that it's open in all directions at depth, if we were to go to the next step, what would the resource be? How do we mine it? How big the mill would be? Can we co-mingle it with Fenelon? There's a lot of questions that we need to answer. This thing could turn out to be something really special that requires its own separate mill. But before we get in front of ourselves, we need to do a lot more drilling. And we were a bit aggressive in saying that we'd have a combined PEA in the first quarter of 2026. But for all the right reasons, our drilling has been successful, nothing is closed off. We need to spend another year with a similar size program as this year. And again, we'll figure that out and announce to the world in early January that will be before we can make the decision like now is the time to do a study. In the interim, we're -- as the news release said, we're planning to issue a new resource estimate on Martiniere in the first quarter. We're going to do the same thing with Fenelon. And then from that, we're looking at opportunities to improve the Fenelon economics. One, it was done at $1,750 gold. Today's gold prices are substantially higher. What is the right number? We'll figure that out. Can we focus on -- there's a higher grade core in the middle that has about 7,500 ounces per vertical meter? Can we extend the current ramp and mine that first to get the cash flow in the early years? Can we make the mill scalable, so that maybe we start with a smaller mill, less than 5,000 tonnes a day, simplifies the permitting process? But at the same time, it's scalable so that we can get to the 7,000 tonnes a day or it might be even bigger than that as we figure out Martiniere. And that will allow us to start the project description because in Quebec, they accept based on a PEA. We'll have to update it once we get a pre-fees done, but we can start all of those parallel paths working to ultimately get to a decision to build it. And in the interim, somebody taps us -- I know I'm wandering all over the place. Somebody taps us on the shoulder and says, we've got an offer that you can't refuse. We're in business to enhance shareholder value and we'll consider it.

There you go. No, I appreciate the thoroughness of that answer. I think it's actually a good link to, if you wanted to speak to the slide that's up just before we get to the last couple of audience questions.

Yes. Just again, hub-and-spoke -- ultimately, it will be a hub-and-spoke, but it's going to take a little bit more time than we thought to do this. The resource is growing. The economics are great at $1,750 gold. It's only going to be better. But we're looking at ways to reduce the upfront CapEx and so that your NPV to upfront CapEx ratio, which is your leverage ratio is improved, which gives you a better chance of financing this. The technical team is very, very strong. We've got great support from our Board. It's great to have Agnico as a 9.9% shareholder. When we're doing studies and whatever, they give us a lot of benchmarking data that we can use and be comfortable with. Great location, Quebec. The refundable tax credit regime in Quebec, since I got involved 5 years ago, we've collected $65 million of refunds. And then it goes right back in the ground. That's the whole purpose of it. That's what we're doing. And I'm not aware of any other location in the world that has a regime like that. And always focused on ESG, doing what's right. We've got great First Nations relationships, and we work well with the communities that surround us.

Awesome. Appreciate that. Time for just a couple more really quick questions from the audience demand. If we didn't get to you, I'll make sure that the team gets your questions and they get back to you as soon as possible. But one question from Jackson, he asked it fairly early, so I wanted to get to it now. What is the total drilling season at Martiniere?

Well, the drilling season is -- we could do it 12 months of the year. But being the fact that the drilling season will be dependent on financing, we're looking to close the year this year with $13.9 million, $14 million in the bank. So a good start to next year's program. As of September 30, our refundable tax credits that we would be able to collect from the government of Quebec would be about $4 million. So $14 million and $4 million is $18 million. This year's program was $23 million. So there is a little bit of a gap there that we would look to fund at the right time. But it's not horribly dilutive. We can do a similar size program to what we did this year, focusing on Martiniere to advance that as well as working on studies and other things. As we figure out Fenelon, at some point in time, we're going to need to do a new PEA. But first, we need to figure it out and rebuild the mine plants and all that stuff. So Francois is very busy.

Keep him busy. I got one question from TV in the chat. And obviously, it's hard to speak on behalf of somebody else, but he wants to know what Tony, presumably your Chairman, Tony Makuch, thinks about the drill results so far.

He's excited. We all are excited. This is great, great news. And now we just need to fill it out and see where it leads to.

Okay. Great. Early in the hour, and I missed it before, somebody asked, is it possible that Agnico grows its position while prices are still low? I want to know if there's any discussions there.

There are no discussions there.

Okay. Thank you. [ Suites ] from the chat asks, how concerned are you about share price with where gold is at and companies lowballing takeovers, et cetera?

Well, first of all, the entire exploration sector has been trading at or near their 52-week lows for the past year, and there's been very little M&A activity. Majors are doing what they need to do. They have their plate full. And then eventually, the money will come to the juniors. The institutional involvement in the junior sector is not great right now. So when I was a CFO of Kinross in the '90s, I remember 250 gold like it was yesterday. We had a few interest in junior companies that couldn't raise money. And after 9/11 happened, gold prices took off, eventually the institutions about 18 months later came to market. I believe that we're going to see investors coming into the market over the next 12 months or so, and that should be supportive of the stock prices. In a normal market, we should be trading at a 0.3x NAV multiple. Right now, we're trading at 0.1x. So that's our goal is. That's our big hairy basic goal. How do we unlock that value?

I appreciate that. Now I know we're a bit over time, but I do always like to conclude when I can by asking you both and getting whatever order you'd like. What are you most excited about in the near future for Wallbridge? What excites you the most? What's the most motivating? Mark, if you don't mind, I can throw it to you first.

Sure. I think it's what we've been talking about. I'm the exploration guy in the room and Martiniere is a very exciting exploration story. I -- over my 40-plus years working in the industry with exploration focus, I've been fortunate enough to be involved in a number of good projects from pre-discovery all the way through their paces into commercial production. This one really has a really good buzz to it, a really good vibe. And we're in the Abitibi. We're a long trend of Canada's largest producing gold mine today. And we're just at the right address. We've got the right kind of geology. And we don't know where the limits of this Martiniere system are. That said, it's really nice that it's not a one-asset story. Fenelon is clearly the more advanced one and just to see it continue to move down the development path with the continued technical studies that Francois Chabot is driving, that just makes for an even better story in that front. And we haven't even touched on the regional story, and I won't do that other than to say it's a pipeline in the making with Fenelon at the front and Martiniere not too far behind. And who knows what other discoveries we have yet to make.

Sure. And Brian, I'll throw it to you for the last word on what you're most excited about.

Yes. No, it's -- I echo a lot of Mark's comments. He stole my comment about the pipeline that I was thinking of.

Sorry.

But most companies work for decades to find a pipeline of projects and a lot of it's done through M&A. We have a pipeline within our 830 square kilometer property. It appears that right now, it looks like Fenelon will hit production first and Martiniere will follow up and augment it. There are other exploration targets out there that maybe we get another discovery and it's -- we will wind up building a very large central mill or something like that. We're going to figure that out over time. But I think now there's a path where we can advance Fenelon, really spend some money to understand Martiniere. But as we advance Fenelon with a new resource estimate sometime next year, a new PEA focusing on all the opportunities we're looking to improve it, that will clearly demonstrate to us that let's start with Fenelon, let's do it on a scalable approach. And then as we learn more about Martiniere, we can figure out how we scale it into Fenelon.

Awesome. So I know we went a bit over time today. But Mark, Brian, thanks so much. I think it was a great discussion. Thanks, everybody, who joined, obviously. Again, if we didn't get to your questions, I apologize. There are just a couple, I think. I'm going to make sure the team at Wallbridge gets back to you as soon as possible. But everybody, thanks so much for joining us. I hope everybody has a great day.

Thank you. All the best.

Thanks, everyone.

Thanks, Mark. Bye.