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

Thank you. Good morning, everyone, and thank you for joining us to get an update on our flagship Fenelon project and our earlier stage Martiniere exploration project. Just through the course of this presentation, note that I will be making forward-looking statements. So please take that into consideration. Wallbridge, we are located along the northernmost greenstone belt in the Abitibi gold province. We're directly along strike of Canada's largest producing gold mine currently in the Detour Lake mine owned by Agnico Eagle. Our 2 projects, as I mentioned, are our flagship Fenelon project and earlier stage Martiniere gold project. We control 830 square kilometers of prospective ground on the Quebec side of the Sunday Lake greenstone belt, and that covers approximately 100 kilometers of the projected trend of the Sunday Lake break, which is the same fault structure that the Detour Lake mine sits on. It's a much less explored part of the Abitibi than the southern parts of the Abitibi, where there's much less surface cover, but it's just as prospective as the southern half of the Abitibi province. We have a good foundation of strong supportive shareholders with Eric Sprott holding 15% of the Wallbridge stock. 9.9% is held by Agnico Eagle and 5.4% by a Sudbury-based construction company, the William Day Construction company, who have been shareholders, I think, since inception of Wallbridge 20 or more years ago. They've stayed with the company up until now and continue to be strong supportive shareholders. 0.7% is held by insiders and the balance is held by retail shareholders. We have an experienced and diverse Board of Directors consisting of 6 directors and a corresponding experienced and diverse set of senior management people. Our CEO, Brian Penny, who had planned to come to the conference to be here, had some matters come up in Toronto. So he had to stay behind. But Brian's background, he and I both go back to -- we worked together for 10 years at New Gold. And Brian was the original CFO of Kinross when it was founded 20 or more years ago, I think. Okay. I won't go into a lot of detail given time constraints on the history of Wallbridge. It started out life as a Sudbury-based nickel company and 7, 8 years ago decided to transition into gold. It's now 100% gold-focused company. All the nickel assets have been divested. Most recently, this year, we completed -- delivered updated mineral resource estimates for both Fenelon and Martiniere. And in tandem with that, we completed an updated preliminary economic assessment for the flagship Fenelon project -- actually not an updated one, it's actually a new one envisioning the project under a different concept. And I'll get into that in a moment. But for the MREs, essentially that boils down to the Fenelon resource totaling combined indicated and inferred resources of 3.4 million ounces at an average grade of around 3.5 grams. Martiniere is currently delineated to approximately 730,000 ounces combined categories. There's a lot more upside in both deposits, and Martiniere is really where we're focusing our exploration efforts now. I'll circle back to that toward the end of the presentation here. But next, let's take a dive in on our new PEA for Fenelon. So these are the highlights from the new PEA. It's almost entirely an underground operation, returning 107,000 ounces average annual production over the 16-year life of mine. And in turn, that's $120 million average free cash flow per year through that same time frame. Initial capital estimate, about $580 million, and sustaining capital, $450 million. Again, this is a snapshot in time. There's a lot more upside to be realized, but right now, we decided to really take a first principles approach with developing Fenelon. And that -- we did first principles on mineral resource estimates and again on the engineering design. And what that really distills down to is a lot of effort and time taken to come up with an optimized stope design, utilizing long-hole stoping, multiple trade-off studies in the areas of material handling, tailings management and mobile equipment and a phased approach to CapEx expenditures. Likewise, operating costs have all been updated to current costs benchmarked against similar scale operations across the Abitibi. Okay. So phased approach, what does that look like? Preproduction would be 2 years of infrastructure construction, underground development, followed by a ramp-based underground mining scenario for 15 years, 3,000 tonnes per day. And then final last 2 years would be ramping down with a small open pit, which would be developed at the Gabbro Zone, which is where the portal is currently. It's currently underwater but it would need to be dewatered. And yes, the one thing I should mention here, just to highlight, is compared to the previous PEA that was issued in January 2023, that was a 7,000 tonne per day concept involving an open pit and underground. We're going entirely underground, as I mentioned, and scaled it down to 3,000 tonnes per day. One of the benefits of that is it's much more manageable for a company of our size to advance the project going forward. And it also brings us under the 4,000 tonne per day threshold in the permitting space where if, once you go above 4,000 tonnes per day, not only do you have to deal with provincial permitting process but also the federal one. So this would only be envisioning permitting through the provincial process. I would also mention that this plan only mines 50% of the currently defined mineral resource. So that leaves a long tail with a lot of upside for future exploration and development. Okay. Site footprint. A couple of key highlights here I want to point out. We've gone with dry stack tailings, the reason being that this terrain in this part of Canada, it's all very, very flat. It's swampy, water saturated, very difficult place to build design structures on top of. So by removing wet tailings, we've shrunk the footprint considerably and reduced the water management factors that come into play with a conventional wet tailings scenario. Also, you might note, there's no surface storage of waste rock. There's a small waste pile, but that's temporary storage. All waste rock that would come up from underground will go through a paste plant and be pumped back down underground for backfill of mine stopes. Also, the camp, it's a camp-based operation. You can drive to this project. It's approximately 3-hour drive north of Amos on paved highway, the road that goes to Matagami. Matagami is about 1.5 hours away to drive. But it's paved nearly all of the way, so very user-friendly this way. And the camp and the mine site are only 6 kilometers apart. So locally very easy place to develop a mine. I also mentioned that the local power grid is nearby. This would only need a 27-kilometer line brought in to run the operation. And currently in the PEA, I think that was scoped at 30 kV. Right now, we have an engineering team looking at downsizing that because for the scale we're looking at right now, 3,000 tonnes per day, probably don't need that much. So there's potential cost reductions going on right now. Also, I'll mention we have an engineering team developing what we call essentially a road map to a pre-feasibility study, which would be the obvious next step for the project. And we anticipate having more clarity around what a pre-feasibility study would require in terms of timing, critical path components and cost by the beginning of next year. I'm not going to go into -- there's a lot of information here. I'll just refer anyone who is interested in learning more about the project to our website where you can pull up the technical report, or you can go on SEDAR to get that information. But production profile, so this is what it looks like right now, 107,000 ounces average per year with 127,000 per year during the first 5 years. Average grade coming out of the mine is on the order of about 3.5 grams, similar to the resource grade. And this is what the free cash flow looks like right now based on the concept we're working with, with $120 million free cash flow per year over the 16-year mine life. Sensitivities, we did this entire study at a base case price of $2,200. And at that level, at the base case, that yields an NPV of $706 million with a 21% IRR and a payback of 4 years. When we did this, that was where gold was. As we were nearing the completion of the study, because we needed to get it published and issued by the end of Q1, gold went up. And so we tacked on what do these sensitivities look like at $3,000? And you can see them right there in that bottom row on the top table. NPV goes up significantly, no surprise. IRR improves to north of 30% and payback drops to about 2.5 years. So we're very encouraged with what we've got. We think there is a lot more upside. But as I mentioned, we decided to scale this down to a project that seem more manageable for a company of our size, given where we are right now. Real quick, I've got a couple of minutes left here. I just want to mention our Martiniere project. It's 30 kilometers west of Fenelon is where it's located, going west back toward Detour Lake mine. It's earlier exploration stage project. Last year, when I joined the company, we started out drilling to do a bit of infill drilling and also drilling to get some material for metallurgical testing. Got all that done. Then we shifted into exploration mode to see what we could do by stepping out from the existing mineral resources. And we've had positive results. It really became clear to me the more we drilled that the currently defined resource is really focused where historic drilling was done by Balmoral Resources. That was the company that Wallbridge bought about 7 years ago, I believe. And so really clustered up in the areas there that are outlined with those little dashed footprint outlines. So those are open pit resource shells. We did come up with some underground resources, a small amount in the area labeled there as Dragonfly. But I developed a field that I think there's a bigger gold system at play here. I should mention there's no outcrop. So all of our knowledge is based on either geophysical data that's been collected and coming from the face of the drill bit. So this year, we started out with a strategy of rather than just try to grow the resource with small step-outs, let's really shift focus toward what is the bigger geologic footprint of this system. And so it doesn't -- it's hard to tell when you look at this image because it's all compact. But our approach right now with drilling is 150-meter minimum distance between holes, and that's both laterally and vertically. So it may not look like it, but those holes are actually -- that plan, those are the highlights from the first half of this year, that's a 150-meter spacing at a minimum, in some instances, even more than that. And the approach, it's paying off. We are capturing good, strong mineralized intercepts in the intervening gaps between resources as well as stepping out laterally along strike on the Bug Lake deformation corridor, that's shown a bit shaded pink zone in there. We're also taking a close look at our log geology and drill core to come up with a proper, more detailed first principles fault model. And so far, we've identified 16 different fault structures along this corridor, all subparallel northeast, southwest. All of them, if they're not mineralized, they have enough alteration indications that they could absolutely be just as prospective as the structures we know we have mineralization on. So stay tuned for more. We're anticipating putting out the first set of results from our second phase of drilling, which we began in mid-July. That should come out by the end of this month or early next month. And then we'll have all of the results from this year's program out by mid-Q4 of this year. So thank you very much. We think -- I joined the company because I see a lot of potential in the ground. And I really, really appreciate working with my boss and friend, Brian Penny. Thank you very much. I think that's it.

Thanks, Mark. No time for questions. Well done.