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

Welcome to Virtual Investor Conferences. On behalf of OTC Markets, we're very pleased you joined us for the Precious Metals and Critical Minerals Conference. Our next presentation is from Wallbridge Mining Company. Please note, you may submit questions for the presenter in the box on the left of the slides, and you can view a company's availability for one-on-one meet by clicking book of Meeting in the top toolbar. At this point, I'm very pleased to welcome Brian Penny. He's the Chief Executive Officer of Wallbridge Mining Company, which trades on the OTCQB Venture Market under the symbol WLBMF and on the TSX under the symbol WM. Welcome back, Brian.

Well, thank you, John. I appreciate it. For all people new to the story, welcome to the story. I will share our thoughts and our value creation catalysts in this short presentation. And then for people that have been following us for a long time, welcome back. As per any presentation, there's forward-looking statements here. On Slide 2 and 3, you can see the details of those for review. Looking at Wallbridge, we're focused on exploring in the Northern Abitibi. We have two discoveries. One is the Fenelon Gold project. We have about 3.5 million ounces of total resources. Half of them are indicated, half are inferred. And at Martiniere, we have about 0.75 million ounces, again, about half indicated and half inferred. Fenelon, we recently completed a PEA, and we'll talk about that a little later in the presentation. And the mineralization is on trend with the Detour Lake mine. You can see from this slide. It's on the Ontario side of the border. And all of the properties lie on the same fault system known as the Sunday Lake Deformation zone. Here's a closer up of the property. Everything in the darker blue, we own 100% of. The lighter blue is an option property we're earning into. The 2 deposits are in gold. You can see on the chart. It's about 82 kilometers of strike on the Sunday Lake Deformation zone and accessible by road. You can see from this map, there's Highway 810, which comes to a mine road that heads into the site. Our share structure at the end of October after we closed our financing. Yes, we have 1.2 billion shares outstanding. At the end of October, we had $31 million in the bank, fully funded for next year. Next year, we're planning on doing a 20,000 to 25,000 meter program, and we'll have more details on that early in the new year once our plans are approved by the Board. But our shareholders, the biggest shareholder is Eric Sprott owning 13.5%. Agnico Eagle, they inherited their ownership interest when they acquired Kirkland Lake Gold because Kirkland Lake first subscribed for equity in Wallbridge. And Agnico has been a very supportive shareholder, participating pro rata in all the financing since they got involved to stay between 9% and 9.9%. We're followed on Bay Street by 2 analysts at BMO and Paradigm. Our leadership team. I'll talk about 2 members of the team. Tania Barreto, our Director of Investor Relations, will join us to ask the questions in the Q&A period. But myself, my history is I was the first CFO of Kinross from '93 to 2004. After I left that, I got involved with a company called Western Gold Fields, worked with Randall Oliphant. We took control of that company, financed it, put the Mesquite mine back into production and then merged Western Gold Fields into New Gold, which I became the CFO for 10 years. I ran with that with a gentleman on the part of the management team here, Mark Petersen. He's a geological consultant, and he was the VPX at New Gold for 10 years. So after I was appointed the CEO position 2 years ago, I brought Mark on Board to help with that. Mark is a great seasoned veteran here. He is a great mentor to our younger team at the site, and it's a pleasure to be working with him again. A little bit of a history on the company. We first bought in 2017, a 10.5 square kilometer property position in the center of that property map we saw called Fenelon. It's where all the resources are today. And then in 2019, we had the major discovery where we discovered Area 51 Tabasco Cayenne zones. We liked it so much. We entered the capital markets transaction, acquired Balmoral Resources. That's where all the property came from with the exception of this small start-up position. We started off 25 years ago as a nickel explorer in the Sudbury Basin. All those assets have been disposed of. So we're out of the nickel business, totally focused on gold on this one very large property position. It's 600 square kilometers. And as I mentioned earlier, most recently, we had a new PEA in March on Fenelon and new resource estimates in March on Fenelon and Martiniere. Our resources at the end of March, you can see because it's a contiguous property, they appear on the same statement, but they are sub total. So we have about 3.5 grams, all categories at Fenelon and a little less than a Martiniere. But Martiniere, we've done a lot of exploration this year, which I'll talk a little bit at the end of the presentation. It's still early. We believe that in order to -- for Martiniere to get really exciting for us, we need to prove up about 2 million ounces. And so we're a little less than halfway there, but we had some great success this year on our exploration program. So moving on to Fenelon and preliminary economic analysis results. We focused on -- when we looked at this, we looked at risk. We looked at -- we're a smaller company, our market cap is about $100 million. What's the best path forward for this company? And we landed on -- we did a tonnage grade analysis and landed on 3,000 tonne a day mill. That helped manage the initial capital, which helped manage the risk. When we looked at this, we looked at dry stacked tailings. Dry stacked tailings are a little bit more expensive, but it's the right thing to do versus the old traditional tailings. So we built that into the assumption, again, to help us with permitting and stuff like that. 3,000 tonnes a day is below the threshold that the federal government would get involved. That's usually about 5,000 tonnes a day. So we're only dealing with the province. So again, less -- one party to deal with on permitting is a lot better than 2. This study was done in -- we went hard on the prices in February of this year. That's when long-term analyst consensus price was $2,200 an ounce. On the next page, you'll see some sensitivities that were provided at that time. And today, long-term analyst consensus price is probably somewhere around $2,800 to $2,900 an ounce. So substantial improvement since February. But you can see the numbers, attractive costs. We try to get the initial capital down as low as possible. Sustaining capital seems a little bit high, but we built in certified rebuilds every 3 years or 5 years for all of the equipment as the mine goes on. It has a 16-year mine life. So equipment doesn't last for 16 years. And NPV 5% of $706 million is a good bump to the initial capital and an IRR of 21% at $2,200 gold is very attractive. However, if we look at this chart here, and let's see if I can get this [indiscernible]. There we go, very straight line. At $3,000 gold, NPV goes up to $1.4 billion, 34% IRR. And I'm a financial guy, the most important thing is a 2.4-year payback. So very attractive at these higher prices. The mine -- the PEA mine plan mines out about half of the overall resource. So there's room to expand in the future. But again, to have a 4-year payback off the spot price assumption to a 16-year mine life to have a tail of 12 years when you look and put together project financing and other things, it's very helpful. So again, focusing on the risks of developing this thing. We went to first principles. There is some historic workings up here. There was a bulk sample done in 2018 and 2019. There is an old historic open pit. There are some underground workings in gray there. We'll access, extend the ramp by -- at 3,000 tonnes a day, we don't have to build a shaft. We don't have to build a head ramp. We can extend the current ramp and mine 3,000 tonnes a day up this ramp. You can see that there is the indicative stope layout here based on the DSO optimizer. And the whole thing sits in with about a 1-kilometer cube. So very friendly for mining and mining engineers will love developing the plan around this. We did some early trade-off studies on material handling, as I said, tailings management, looking at dry stacking versus regular stuff and some mobile equipment. Again, I said we mentioned the existing infrastructure, and it's all current as of the first quarter of this year. So what we're looking at is once everything is in order, 2 years to build it and then you have a 16-year mine life. Years 1 to 15 come from the underground operations and the last 1.5 years is open pit. Ideally, it would be great to get the open pit up first, but the portal sits right where the open pit resource is. That's one of the trade-off studies we're going to work on is it doesn't make sense to sink a ramp from somewhere else so we can get access to that open pit material earlier, but stay tuned. An interesting thing we have here is down here is the James Bay hydroelectric transmission line. That provides power to Leau Quebec and Upstate New York. We in our plan, we have $30 million to build a power line to energize the site. The price here is the current charge-out rate is about $0.06 a kilowatt hour from Quebec Hydro, so cheap power. It comes from the James Bay hydroelectric system, green power. Again, that could help with project financing. However, until we have a bankable feasibility study, we won't get an allocation. So we're still communicating with Quebec hydro. We're telling them what we think we're going to need a smaller operation, less power requirement. It's probably not going to move the needle on their demand charts. But we need to continue to advance this because it's a great asset that we could take advantage of. And then part of the trade-off studies is how much of the underground fleet do we electrify. So that's something else to look at in the future. Here's the indicative layout. You can see the tailings facility is in brown. The infrastructure, the mill and everything is pretty small and compact. The Gabbro pit here is where the underground portal is currently planned to be and a very small waste pile because we're planning on paste backfilling everything in the -- when we're constructing the ramp, waste material will come to surface. But once we're in production, a lot of it will never see the light of day as it will be used for paste backfill to backfill as we go along. We currently have a camp. Everything in blue is in place. Everything in white is stuff we would have to add as part of the study that was just completed. Milling, we completed a met testing about 5 years ago. It says that good gravity gold recoveries, about 30% will come out on a gravity circuit. And then with cyanidation and flotation, overall recovery improves to 96%. Very simple milling process and very helpful as we go forward with this project. The neat thing, which really helps to a quicker payback is the first 5 years. Yes, average mine production is about 107,000 ounces. But the first 5 years because of the higher grade of the earlier stuff because we're focusing on getting access to -- there's a higher grade core of the ore body that we would ramp down to and provide feed for the first 5 years. And the benefit of that is definitely helps with payback. At $2,200 gold, here's a bar chart of our net free cash flow. And then this is the details of our capital expenditures. The biggest initial CapEx is the mill and the paste plant and the tailings, dry stacked tailings is included in that and the underground development and others. Mining equipment, we look to use a contractor during the initial capital and move to an owner-operated fleet in the sustaining period. That's why you see a higher CapEx in the sustaining period, but that's because we're sort of buying the fleet. Martiniere is -- we've had a lot of success at Martiniere this year. That was our primary focus of exploration this year. We completed the PEA. We announced the results of our PEA. We filed the technical report. And then we took some time to figure out how long and how much to take it to the next level, which would be pre-feasibility. That work is complete now. The QP that the independent QP on our tech report estimated it would take us about $50 million to take it to a pre-PEA. And we -- our work is about the same number. However, we don't have $50 million to take it to the next step. We are focused on some of the early-stage work to start some of the work associated with the pre-feasibility like do another metallurgical test. From that, we will get a waste product, which will help us determine if dry stacking is the right way to go with the tailings. Dry stacking usually the biggest problem is clay, and there does not seem to be a lot of clay here, so we don't anticipate any problems. It will give us further metallurgical stuff on other areas like Tabasco, Cayenne and the contact zones to review the model that we have. And then we can also take the waste product and test it for the paste backfill assumption. So we are doing some of the work. We don't want to overextend ourselves. We believe that the short-term catalyst here is Martiniere. The longer-term catalyst is Fenelon. Let's go forward with Fenelon. Let's continue to derisk it as much as we can. We -- as we -- the year goes on, there the models are always being reviewed. It could lead to targets, and we could do some drilling at Fenelon. We will do some drilling on the [indiscernible]. That's a property we're earning into. And Martiniere, we're planning on about 60% to 70% of our drilling. As you can see from this, this is our drilling from last year. This gray box here is the underground resource, underground resource that's in place, open pit resources over here and over here. And we started a program of step-out drilling. And every one of these holes is about 100 meters apart. So 150 meters apart, sorry. So we continue to step out and we've kept hitting. So it's starting to fill in this gap here. We've outlined an area that has about 800 meters wide and 2 kilometers long. It's getting very exciting. It's still open. So we will continue to do these 150-meter step-outs and then at some point in the future, come back and fill it in. But we want to find the size of the prize, the extent of the prize. It's very encouraging from what we've seen this year. And it's a series of sheer zones throughout this structure. So we love what we see. We seem to be connecting the 4 targets along Bug Lake, and we even drilled a couple of holes north of the Lac du Doigt that previous geologists said there's nothing above it, and we drilled a couple of holes and hit something. So it even looks exciting for further extensions beyond that. So Wallbridge. Fenelon is a long-term platform growth, 16-year mine life. We need to continue to derisk it and advance it and take it to the next step when funds are available to do that. Martiniere is our near-term catalyst. We're expanding the gold system. We're really, really, really excited about it. And stay tuned for news flow on that one. We've got a strong technical team. In addition to Mark, our team has been with us for quite a few years, and our Board has deep industry knowledge and experience. Quebec, the best location in the world to explore and build mines. Quebec has a thing called the refundable tax credits. And every year, any exploration money you spend, historically, it was 33%, 38%, now it's 22% of what you spend that qualifies under this tax regime, you get a cash refund when you file your tax returns. Over the years, we've collected the best part of $70 million. So it helps create employment in the northern part of the province, and it's very helpful that for us to keep the programs advancing in a sustainable way. And we're ESG focused. Recently, we got our ECOLOGO certification. We constantly meet with our First Nations partners and our communities around us where we operate. We do have 3 First Nations partners. Two are from the Cree community, which we have signed predevelopment agreements. One is from the Algonquin community, which we're working on a predevelopment agreement. With our financing, we had to slow things down, but we should have that in place by the first quarter of next year. And next year's program is probably going to be somewhere around 20,000 to 25,000 meters, focusing on Martiniere, maybe a little bit on Fenelon and maybe some drilling on the Grasset option property because we need to spend about $1 million more, and we vest to a 50% ownership interest. So with that, I can open up for questions. Tania?

Thank you, Brian. And we do have a few questions from the audience. We'll start with Alex. He's asking or she, what are the derisking steps you need to complete before you would feel comfortable moving from a PEA to a PFS or FS?

Well, for us to go from where we are at PEA straight to a feasibility study is too risky. We need to follow the steps and do things correctly. The limitation we have right now is we have $100 million market cap. We raised $15 million. We have $31 million in the bank. We need $50 million to $60 million to fund a pre-fees. So what can we do in the interim to improve our market capitalization that can make this much more achievable by this time next year. So our biggest risk here is obstacle is funding going forward.

Thank you. We've got another question, and they're wondering if we've looked at spinning out any of our properties. I know we've already done a little bit of that this year. So maybe you want to talk a little bit in detail about that.

Yes. The biggest -- first of all, there's been a bunch of little properties all over the place that we have signed earn-in agreements. The most advanced one was with Abitibi Metals, the Beschefer property, which has gone its course, and we've got our cash. We've got our shares. We sold our shares, and we probably put another $1 million in the bank or something. There are some smaller ones, but the biggest one was a property called Detour East. It was on the border between Quebec and where our Martiniere project is. Agnico Eagle was earning into the property. And by November '24 just passed, they would have earned into a 50% interest. A joint venture would have been formed. They would have to spend another $20 million or so to earn up to 75%, but then we'd be subject to dilution. And there was an offer on the table from them that let's end all of this for $8 million. We looked at it. We looked at comparable transactions, and we felt that it would be a way to manage dilution, put money in the bank for a meaningful program this year, and we did that. But the rest of the property, if somebody comes in and says, we can do a better job, we're interested in looking at something we're all yours. Maybe there's a partner to be found. We'll see where that goes. But the biggest challenge we have right now is how do we raise enough money to take it to the next step in 2027.

Thank you, Brian. And speaking of raising money and next steps, our next question is, what are our milestones for 2026? And are we funded for 2026 projects?

We're funded for 2026. Our milestones are some of the derisking, the metallurgical study, the reviewing and updating our geological models with all the information we've gathered. There's a lot of new information at Martiniere, the exploration programs at Martiniere, maybe some additional exploration at Fenelon looking for extensions and then the exploration at the [indiscernible] property.

And our next question is one of my favorite questions to answer because there -- it's a good answer both ways. The question is, how are we prioritizing between advancing Fenelon and adding ounces at Martiniere?

Well, we believe the best short-term catalyst for the company is to add ounces at Martiniere. We need to keep going forward with Fenelon. We need to do some of the early-stage studies. A lot of it is desktop work. Like I mentioned earlier that one of the things we need to do a trade-off study that maybe it's better to sink a new ramp closer to where the heart of the ore body is from where the old ramp was. That's an easy desktop study. It doesn't cost a lot of money, but it's something that needs to be done. So some of the cheaper early-stage studies that we need to get to that next step.

Okay. And seemingly, our last question is what are your thoughts on your valuation discount versus peers and catalysts to close that gap over the next 2 years?

Well, yes, we are at a discount to some of our peers. And if we go back over time, we started off looking at this as an underground high-grade mine. And remember, I've been the CEO for 2 years. Then we looked at it as a large open pit, then it was a bulk mineable scenario. And the latest study, I think, is about where we should be, start off smaller, grow it. So I believe that's why we're undervalued. I believe in doing -- saying what we're going to -- communicating what we're going to do and deliver, and we're going to deliver. A year ago, I said we're going to have a completed PEA by the end of March. and we delivered on March 27. Not only did we complete the PEA, the news release went out and we filed the technical report the same day. So we need to continue to go forward. We need to continue to derisk this project, and we need to continue to hit all our deliverables on time and under budget.

Thank you. And at this time, there are no further questions. I'd like to thank everyone for attending our presentation. If you do have further questions, please reach out to OTC to get in contact with us or if you'd like to book a one-on-one meeting, there is a -- I believe there's a button on your screen to book a meeting. I'd like to thank everyone at OTC for inviting us and hosting this conference. And at this time, we will wish you a good rest of your day.

Yes. Thank you, everybody, and all the best.