Equinox Gold (TSX-V: EQX) – $725M Market Cap in 18 Months. Pretty impressive.

Equinox Gold (TSX-V: EQX) – $725M Market Cap in 18 Months. Pretty impressive.


Hello and welcome to our viewers on CRUXinvestor.com
and to our listeners on CRUXcast, our podcast series. And to those of you who are new to
CRUXinvestor, please remember to subscribe to our YouTube channel. We’re talking today
to Christian Milau, the CEO of Equinox Gold. He’s going to talk to us about Ross Beaty,
ETF’s and their effect on the marketplace, M&A (Mergers and Acquisitions), their new
investment partner and also his view on the Gold market. You can see the timestamps of
all of those topics on the description below. But right now let’s talk to Christian. Hello
Christian how are you? Yeah. Good morning. Great to be back. We spoke back in February. A lot’s happened
since then and I guess we’ll get into that in a minute. But why don’t you kick off for
newcomers to the story, gives us a 1-2 minute overview of the business. We’re now a mid-tier Gold mining com pany
based in the Americas. We’ve now got one producing mine in Brazil, which we’ll talk about, but
also we’ve got a producing mine in California and we’ve got another we want to build in
California starting in the next 6mths here. So we’re now going to be a three-asset company
that’s focused on the Americas with roughly +200,000oz production today and with a goal
of going to 400,000oz-500,000oz of production in the next few years. So we’ve got a nice
platform in this kind of market where Gold seems to be picking up. Yeah okay. Let’s get on to that in a second.
We’ve got a few questions from subscribers. I’d love to throw a couple of those at you.
They’re really about the origins of this all because, obviously, you’ve brought together
three Gold assets. You’ve got some big names attached to those assets: Ross Beaty, Richard
Walker, and your team, obviously. Tell us about that first conversation that you had,
how did this come together? Yeah it was interesting. I guess with Ross,
he had a Brazilian asset and company called Enfield back in the day, a couple of years
ago. We started with Luna Gold which was the Brazilian asset in Arizona which we now have
put into production. We had some commonality and we obviously interact in Vancouver on
a regular basis, see each other – it’s a small city. And we always talked about ‘how is it
going in Brazil’ and ‘what do you plan to do in the future’ and we realised that we
had the same vision and goal. We both want to create sort of that mid-tier to larger
Gold mining company at this bottom point of the Gold cycle. Ross’s vision is really around
building something in Gold, it’s very similar to Pan American Silver, which is now an 11-mine
company, which is a good larger silver company, wants to do the same in Gold at this point.
And my view is, do the same as we’ve done recently, myself, and some of their team,
and endeavour mining. And start with one asset and try and build it into four to six assets
over time. So we really had the same vision and Ross said he started his career with Equinox
Resources back in the 80s and 90s and that was a success and he wouldn’t mind book-ending
it with something like this at the end and we suggested the name Equinox Gold and he
loved it. He said ‘it’s a great end to my career’. So it isn’t one of those the-sum-of-the-parts
stories. You get some people who are very protective over their assets, they want to
do their thing and they don’t need any help. But you guys all seem to have a track record
of bringing together assets and building something bigger and, therefore, hopefully, better for
shareholders. Is that what happened? I absolutely believe that. I mean, to put
it in real context we sat in a room together myself, and Greg on our side, Richard walked
from the Newcastle side, and Ross from the Enfield side and we sat in a room for a couple
of hours and we said, with no advisers, no lawyers, anything. We said ‘Hey, what is our
vision? Is this common? Who could run this, who wants to be the face of it and contribute
to the financing of it’. And we actually came up with a board and structure very quickly,
and a valuation effectively that at least got it kicked off. And that was all because
we had the common vision. Richard walk again has worked with Ross over the years in building
companies like Ventana and other things. And Ross tends to be more of the market-facing
person of the group and was very happy to take the chairmanship. And obviously myself
and the team are very happy to run the business so there was no stepping on each other’s toes,
it really fit together nicely. So how does something like that work? You’ve
got two assets in California and you’ve got one in South America. They’re all Gold. So
there’s that in common, but they’re all in slightly different phases of development,
so how did you imagine that coming together and how’s that indeed happened? It almost worked better because they were
in different stages or phases. So we had the one producing asset in California. So that’s
kind of our starting point we can actually use that for leveraging off knowledge skills
etc. And recording all these different techniques of managing the business and then we had one
in construction in Brazil. And then we had a third one which is sort of in that study
phase, in the pipeline that could be constructed after we finished Arizona and Brazil. So,
when you put them together you actually get a nice runway to becoming a mid-tier producer
into the system. Rather than just slamming together three operating mines with different
cultures, we’re able to actually put them together, build the culture as we go. Because I actually watched our interview from
February this morning, as a run through, remind myself what we talked about. The big theme
that came through there was, not only have you got these three assets, but you have access
to cash. You’ve got… Both Ross and Richard are very capable individuals, have track records,
you are too. But cash wasn’t an issue for you. And where we are in the cycle, we talked
about how advantageous that is for you in terms of being able to pick up assets cheap,
and perhaps we can get onto M&A in a minute, but just again to remind people on the financial
side, you know, where you started. You had these three assets, some assets you offloaded,
someone on the corporate side. But what did you start with and how did you value those
and lets maybe get into where they are today? So when we did put this together we had obviously
the three Gold assets, which were going to be the core to our business. We had a couple
of our columns smaller, one was a processing mill in Peru, one was a small Gold project
in B.C. And then we had a bunch of Copper assets. So what we decided was to focus on
the core value-creating Gold assets. File out the Copper assets last summer into a separate
vehicle which I’m happy to talk about but we’re excited and we still own 40% of the
last Copper. Then we sold the mill in Peru to a local operator, I would call it. And
then we sold the B.C. Gold asset just recently to a local group here because they were too
small, not going to create enough value in a company now our size. We’re now $600M-$700M
market cap, so we’re focused now on the pure Gold assets of scale. So do some simple Math for me. So you brought
three assets together which were valued at what? Oh boy… I guess when we brought them together
we bought Mesquite for just over a $150M. Aurizona and Luna Gold when it came in, I
can’t remember the exact valuation, but I’m gonna say it was between $150M-$200M. And
then Castle, again, was $150M-$175M and we put them together. The nice thing today that
we’re excited about is, you see that our market cap is now greater than the sum of those parts.
We’re now $725M. $725M. You told me this morning. There you go. But how much money have you raised in there
as well, which is obviously GNA, CapEx, etc.? So we’ve probably, during that process, we
probably raised, I’m going to say it’s $50M, maybe it was up to $70M to help finish the
funding on Aurizona in Brazil. But what we’ve really done on the funding side that’s more
interesting is we’ve restructured the balance sheet completely, which, again, I’m happy
to explain. Tell us about that because obviously we’ve
seen mention of Abu Dhabi sovereign wealth fund in there and, obviously, project refinancing
as well. So why don’t you give us that before we get into the projects proper? So everything over the last 18mnths has probably
moved faster than we even expected. We’ve had great support from guys like Ross and
Richard and some of our core shareholders. And so we originally had a project finance
loan from Sprott that was coupon 10%. That was financing the build in Brazil. It’s expensive
money but we our single-asset development company was unfunded when that went into place,
so it was market. Then we had an acquisition facility from Scotiabank and a group of other
lenders that came in to acquire Mesquite. So you’ve had siloed structured financing
or debt that sat at the asset level. What we did in, I guess it was February we announced
and we’re just completing it right now, is we’ve paid out the actual loan that was project
finance in Brazil. Replaced with the MOU Batalha convertible note, which is sitting at the
corporate level and paying a 5% coupon, and brings in a partner that has a base of a trillion
dollar sovereign wealth fund that is there to help us grow the business into the future.
So they’ve replaced an expensive debt with, sort of, half the coupon cost but they’re
also there to grow long-term as a shareholder and funding partner. So you bring that up
to the corporate level. And the second piece was we took the same banking group that funded
Mesquite and repaid and refinanced that acquisition loan and brought it up to the corporate level.
And now it’s a corporate revolver that we can borrow and repay. It’s a little bit larger
instead of $100M, it’s now $130M. So we now have all of our debt sitting at the corporate
level, all of our cash flows are fungible and free to move amongst all of the assets
in our organisation and they’re all Growth Partners. So as we grow, they all want to
be able to fund us in a bigger way. Yeah, again we did talk about that last time
and I do want to talk about it in a minute, but lets just quickly go through, I think,
a point which is talked about in the chatrooms, etc. And that’s your ability to prove the
economics around the Brazilian asset and get that going, bringing that to market. So where
are you with that? So we finished the construction in, I would
say, early May and we were commissioning the asset. It was probably about a quarter behind,
so a little disappointed with that. Why was that? Basically, there was no major factor. I mean,
the rain was very heavy this year. I think we’ve had 3.5m of rain in the first three
or four months, where normally you get 1m-2.5m for the whole year. So it’s a very heavy year.
So doing electrical terminations and then the rain is probably 50% productivity for
that work. There’s a bit of extra piping and scheduling work at the very end so nothing
that I would say was a major incident, like the mills falling off the trucker that ship
or something. Right. There’s no issues from the Brazilian
government? Obviously, a very high profile incident earlier this year but are they more
nervous? No, the government… I give them their credit.
They actually delivered us our operating license the day we poured Gold. Normally it comes
about 6mnths after you pour gold. So I would say, actually, a real tick to them, a check
in that box where they delivered it early. And in terms of inspections on tailings dams,
which obviously are a big thing in Brazil right now. That incident happened early in
the year. They were inspecting all the dam sites around the country and they did come
to ours, of course. and we were just in final stages of getting it into readiness state
of readiness and basically we our design is not an upstream down like Valley had there
and had the issues with which is inherently less able. This is downstream in center line
which is inherently much more stable and we’re very happy with the inspections actually. So what do things happen that you think obviously
it can go one of two ways if people within the company can get the minister of mines
can get very very nervous and take longer to get things done or because it’s damaging
to the reputation of what is a mining you know big mining country. They try and accelerate
things to say we’re open for business. I mean what’s your sense of what’s going on there. I almost think they’re accelerating things
at the moment because of the urgency and the need with the recent incidents there. And
I do think when they’re not happy I I would suspect it was going to take longer to permit.
There will be more hurdles to jump on that. But if you’re doing things on the international
standard basis you know that it is expected of companies like ours they really shouldn’t
have problems right. And we haven’t experienced any. Right and say the team that I’ve done their
experience with South America and Brazil in particular quarter behind. But you know unfortunate
event is what you’re going with. Yeah. And so you know what we said was all
right Sorry we’re a little bit behind a little bit over budget or probably about 10 percent
over budget overall which in the scheme of things. Three months and 10 percent over is
not the end of the world’s shame but in parties since May 14. Well we did. Poor. We’ve now
gone for about 30 days of production and we are now producing or putting through the mill
more than the rate at capacity. So I think we’re at eight thousand tons of data radio
capacity and some days we’ve gone up to sort of nine ten thousand times. So it’s very nice
to see that you’re 10 percent plus over the mill actually capable of performing at the
expected levels. Right. Were there any doubts in your mind
as to whether Brazil would work or not. Was it all going swimmingly. I think anyone would say there isn’t a risk
or doubt I’d be kind of kidding. But we did feel that we were investing in this project
to make it make it successful. The idea was not to cut corners because of the past history
here. When they originally built this in 2008 or 9 it didn’t have a proper lady crusher
at all and they didn’t have a proper milling circuit it was a fairly old six year old as
best as not back. So it was almost setup to have challenges and it still performed okay.
So we figured if we spent the money and put in the proper equipment with professional
contractors you were bound to have good success here in due course. Right. And just so if I may come back on the
on the refiling that refinancing that you did and I think they’re so competitive I know
you’ve said you’ve got to all the corporate level which is much easier to deal with and
you refinance that you’ve got a little bit a little bit more cash there but more flexibility.
You happy with the with the terms there. Or is it a case of actually I like who it’s from
because obviously Abu Dhabi sovereign wealth fund has a lot of cash available and it likes
what you’re doing. That bodes well for eminent activity which we talked about previously.
We happy with those times. We’re extremely happy I mean when you look
at that convertible bond we have a partner who is not out there shorting or hedging your
stock. You know like a normal convertible might be with normal hedge funds and art funds.
There are long term Esther. They have no short term time horizons. They wanted to work with
Ross and Ross is private talk talking them on and off for at least five or 10 years and
I think they were excited to partners someone to build a great Gold mining company that
they could trust. So I think we got really good turns and we looked at various market
comps and what we might have been able to do in the market I think for those. Right and saying you might want to convert
that you know get a structure that any any way right. They got the money they could paper
it up anyway so why convert. Why did that work for you. It’s interesting I mean at this stage of our
involvement and growth and development. They would like to be a long term equity holder
but they’re used to actually making investments. I’m going to use a big round number but a
half a billion dollars so it’s a very small investment one hundred and thirty million
for them to come in there is a debt instrument of peace in place already that could be refinanced
and clearly replaced. And even that link ultimately to being an equity investor which we would
like them to be in the long term because I think there would be a long core stable shareholder
along the likes of Richard and Ross. So it was kind of at least this hybrid interim instrument
that allowed you to solve your current debt expensive debt situation but sort of late
linked them into a long term equity position. And it’s a smaller ticket than they’re used
to so if it does I guess come in a form that gives them a little more security on day one
that would if it’s pure equity a small check basis. Yeah. Yes on some some whatever. What is the
coupon on that 5 percent 5. OK. OK. Very good. Pretty good. And what are the rest of the
terms on the. So the five year term. It’s 5 percent coupon
it converts at a twenty five to twenty seven percent premium depending what share price
you’re using. Right. That’s adult 38 Canadian. Yeah. You’re saying when we announced it in
February. The share price went up and we’ve seen so many people announced convertibles
that are market oriented where to convert where the actual share price goes down. People
are shorting your stock. Yeah. Dark funds ADRs did the opposite. So we saw it as a nice
vote of confidence that we had a long term partner and one of the biggest things I had
was I was at a conference time and a lot of other peers come to us say can you make an
introduction. How can we get access to that capital. It looks like a great partner that’s
there to stick with you through the ups and downs of the cycle and right now as you know
we’re towards the bottom end of our cycle and the smaller the company the harder it
is to finance. And know I think we’ve been well above our weight a little bit there. Yeah I mean just stay on that point of say
I mean you did you did have a bit of a spike and then it kind of came down as his lowest
moment when I won on a couple of occasions on your backup at one 130 one ish again. So
you’ve had a few. What do you think those drops were. I mean it. Was one thing for sure. I mean Gold I think
had its dip below it’s obviously much more positive. I mean it hit 13 50 this morning.
So it’s much more positive. We’re in a 12 70 to 80 90 range you know below. Fifteen
hundred I see there’s not a lot of conviction from some of the precious metals funds some
of the generalists they really want to see it pop over 30 50 to really get some confidence.
The other was we were right in that crocs period of finishing off Arizona and till you
announce you core Gold or you’re in commercial production. People have their doubts and you
know I guess rightfully so they want to see that there’s no hiccups and major issues along
the way. And we weren’t able to announce that’s on May 14th. We had a double whammy of those
two items. Right. Okay. Okay. What does that say about
the there in their partner you know equity and that what are their expectations. I see
no board seat for that. But you know they they they have a big say in what they expect
you to do presumably or they are a passive investor. No they do have a board seat. They do get
one side and they they are partners with Ross in many ways here and they see themselves
on a pro forma basis they would be an 18 percent shareholder if you were to convert at all.
So we think of them as a core shareholder. Also you know in the long term so we very
much want to work with them and their vision is actually very similar to ours and they
want to grow to a larger scale Gold mining company. So we will definitely look to them
to support us on growth activities being acquisitions or growth internally. So we go back to the first question which
is how do you guys come together. What was it it was and it was a common thought that
what you could do with the butler on board is that thought changed your horizons expanded. I think it gives us maybe it gives a bit more
impetus to move quicker or at least it gives us the ability to think a bit more actively
about how we can grow this business because we know there’s availability of capital in
the near term and we don’t have to necessarily go at source it from new sources. If we do
find an acquisition often. Yeah so that so that says a lot of time. Again
just remind people the type of company you are your unit you kind of a both processor
of of Gold you’re not chasing things around. So just quickly describe that for people because
I wouldn’t want to ask you about that. Yeah I mean I three or two operating mines
and our third to come into operation are really are larger open pit mines so they’re big dirt
moving exercise as you described it. Our goal here is to build scale and to be a growth
oriented company and we’re not shying away from growth and a lot of the bigger companies
in this part of the cycle have been paying down debt. And I’d say call it right sizing
or making himself smaller and selling off assets where we’re trying to actually do the
opposite because as the cycle does churn will have already been ahead of that curve and
we’ve set a target and it’s maybe a round number but you know we’d like to be a million
ounces a year by the round the twenty twenty three. What are you to do with. So we’re probably
two hundred and two hundred and thirty thousand today. And with the assets we have in our
pipeline we could go to four to five hundred so roughly halfway there. Right. And so the
goal you’ll need to add another at least two assets I think along the way to get to that
sort of market. It doesn’t have to be in milk but it’s a good target. Yes. Nice round number as you say. See if
I look at the type of company you are the type of business that you get at being this
large earth processing business you’ve got the skill sets now to find those types of
assets globally at the moment. Well I know you’re kind of America’s focus but I guess
it’s nervous restricting. People don’t sell good assets cheaply. The Gold price is going
up. Right. So have you guys found things that you’re looking at or are you constantly evaluating
now. You know what’s the chances of some MNC activity this year. Yeah. With me we’ve been really inward looking
because of finishing off the build in Arizona and that sort of infinite from the integration
of the scheme. So I’d say we hadn’t been looking at sturdily but I would say the last month
or so you know Gregg and Ross particularly gotten really active again thinking about
what we could acquire and so you look at several categories you’ve got single asset producers
out there you do have a few multifaceted producers that are listed. You also have the major Gold
companies emerging and there will be some castoff assets or some they’ll sell it. They
may be good or not good but they also might be just too small for them. And that’s one
of the challenges now is a big company and they might fit us perfectly. There are a few
private assets owned by private equity groups that will come available in the next few years.
So and then there’s the smaller strategic assets that might be earlier stage for us.
Maybe they’re not perfect for us today but could fit into our pipeline in the year two.
So there’s a bunch of different categories and we prefer to be in the Americas to start
but we weren’t completely closing the door to Europe and Africa and Oceana necessarily. Yeah. And I think that a lot of people with
a lot of ideas and I think it’s like one of those when a celebrity turns up in a capital
city. People talk about it and I think Ross has been certified various locations to people
and make assumptions. Not least s vast parts of South America. So it’ll be interesting
to see where that goes and where that leads. But now is the time I get from what you said
now is the time. Now while it’s cheap you know that the the price of Gold is going up
slowly and the confidence is slowly. What would you agree with that. Is it slowly returning. I think it’s slowly returning but it’s still…
when you talk to our peers out there… it’s still pretty depressing, maybe not the right
words, but people are pretty… they’re struggling to find new money, shareholders, people to
get invested and interested at the smaller scale. And I’m talking sub a $1Bn of market
cap. Interestingly it was two Fridays ago, we had a big block trade for 20M shares. I saw it yes. Sandstorm sold their whole position to a new
long-term only fund. Who is not a Gold investor. I mean they do invest in a little bit of Gold,
but historically they invested it all across different sectors and they have a good 25yrs
track record. So we’re really excited to see that kind of money coming into our stock,
No.1, but also into the sector where there are people who are generalists, who’ve been
talking about investing in Gold, who are now taking some action. And I think this last
little tweak here where the dollar hasn’t fallen off a cliff, but it stayed reasonably
strong, the markets are a little bit wobbly. People are looking for somewhere else to invest
their money and Gold has become a little more popular. And I think getting close to $1,350
maybe if we can hold it for a little period here, I think there is some conviction that
we’ll start coming back, somewhere above $1350. Could we dropped back down? Absolutely. It
does feel a little more positive. Yeah I think you know Ross was into these
recently talking about the Gold price, and he was saying in the end 2017-2018, even the
Gold price went up. The equities fell down. These are some strange times when normal rules
don’t seem to apply. And we took previously about the distractions of Cannabis and Bitcoin
and Blockchain before that. Well Bitcoin is coming coming back again. But did you think
those distractions have gone away and this is just about people wanting to see how the
geopolitical dust settles, or it’s just more fundamentally about the dollar? I think some of that speculative money in
cannabis and cryptocurrency has come off the boil. I wouldn’t say it’s gone away. People
are still making some money, but it’s not easy money anymore. I do think consolidation
in both those sectors will happen. And people lose interest when they can’t make a quick
dollar in the first three months of investment. And I think Gold is seen as a now coming to
the right point this cycle. And I think what the markets are rolling over I don’t think
anything major is happened there. Yes and the dollar maybe is going have a rougher patch
with all these trade issues hanging out there, and all that excess debt in the system. Interesting
it’s the first time in years, they’re talking about interest rate cuts. And I’m actually
surprised they talking about that so quickly and so soon. That seems like to me a little
early, but if we’re talking about interest rate cuts that can only be good for Gold,
because it will probably impact the dollar ultimately. Right now Gold is seen as one
of those bombed out industries and sectors that most other sectors are not in that position.
Most other ones have had a good run over the past 9-10yrs at least at some point. So we
are maybe going to be one sector that’s seen as having some value today. Yeah. Well it will be interesting to see how
it plays out because I say I don’t think the normal rules have applied over the past couple
of years with regard to Gold. Yeah that’s the hard part. Very complicated. It is very very difficult.
You said something like a third way at a throwaway line though no one unless you’re over a $1Bn
right. You’re at $725M. You know another acquisition you could get to a $1Bn but like you say,
a $1Bn company. That’s that’s nothing, really. For the US it isn’t. For the U.S. It isn’t. But also is that how
you measure yourself. Is it market cap? Is it to do with shareholder returns? Is it to
do with how many assets he got? Is it to do with the potential exit in the future? What
are you targeting? The thing that really matters is shareholder
returns here. And the reason I say that is, Ross owns 12%. Richard owns about 6%. I have
my small stake but it’s very meaningful personally. I really don’t care if I’m a $1Bn company,
$500M or $3Bn. You’ve got a 5yrs plan. We talked previously
about a 5yrs plan. You’ve got a 5yrs plan. Today doesn’t matter so much. It’s like whereas
the end point. And I assume.. It’s not a quarterly business. We’re trying
not to be overly quarterly results focussed. I mean that’s something where the UK I do
actually misheard the system or is on a six monthly basis, where in a way it allows management
to put their head down for every six months and focus on the business not have to worry
about each quarterly reporting period. But we have that 5yrs plan or working hard to
get towards that we’ve now put in place to financiers to allow us to deliver it. And
interestingly that $1Bn mark I mean that’s not exactly right. But if you’re not in any
of the indices the passive funds and I know there’s a big difference between Europe and
the UK in particular v North America now. So much of the money over here in North America
has moved into the ETF and passive funds. I was going to ask you. Has that was being
distracting for you? Sorry to interrupt. Iwas going to ask you, how distracting have ETF’s
been to you as a company? To distract, partly because you can’t talk
and right. How do you convince them to buy your shares because they’re have to buy or
have to sell. But on the other side of it, we are not in one ETF or indices but we are
getting on the cusp and threshold of getting into them. And once you’re in them, and you
have to have that buying. I mean I had someone say to me, there’s 30M shares with the buying
coming once again GDXJ. And our key stumbling point is liquidity. But with this big block
trade last week or the week before and the daily liquidity over the last few weeks is
well in excess of a 1M shares we should in due course get a good shot at getting into
the indices later in the year. And what we’re going to do to help that along is work hard
to list in the US and to move up to the TSX. We have two California assets with a lot of
U.S. shareholders and interested parties in the U.S. I gotta believe that both of those
events will help us in addition add liquidity and a really good market. I think what for sure. So what do you think
the criteria is to get on the GDXJ? I mean you do need to be a certain size in
that and I know lots of companies are a lot smaller than us and they’re listed. But it’s
roughly $1M a day of trading. That’s the key one. And it’s over an extended period. I can’t
hear it’s 30, 60 or 90 days but it’s long enough where you need to keep it up, and you
can’t just have these little blips that’s going to get you in there. So our goal really
trade for the quarter at least over a 90 day period, $1M a day plus and look to get out
it’s why you exchange the indices later in the year. And part of the other benefit to
us is we have two operating mines. I mean we haven’t had an operating quarter yet from
more has only got two operating quarters or two operating mines for a quarter or two and
you’re in various different stock exchanges have greater liquidity and we’ve had this
uptick in Gold. Got to believe that momentum is moving us in the right direction. Right. I agree with you. I think that’s that’s
good news that you’re at that point now. Just on the market still we talked about ATX but
you know there are people talk about the sector being under invested. Okay. That means that’s
going to be a good thing for you hasn’t it. In terms of what you’re trying to create here
the scale of what you’re trying to create right now. It’s fantastic in a sense because where we’re
trying to build something that will be an investment of choice when it’s not under invested
when when that generalist money and the allocation of funds that need to have whatever is 5-10%
of their money towards something like Gold or harder assets would be one of those investments
choice with liquidity that’s high enough to allow them to invest in our stock but also
to get out of it. That’s what a lot of investors need to know is they can get out when they
need to. Yeah. So in a case we just come back to the
the assets side the side of things and you’re getting a couple assets into production now.
The SEC is the exec. You’ve got a. We talked about 18 previously there there. Been there
done that got the T-Shirt kind of guys but you’re trying to lower the exec increase the
Morrisons here a mean how much time and effort are you spending on that because we’ve talked
about a lot of emanate now but can we just look where the projects themselves would have
been the issue has been this year that you’ve been trying to overcome an Iowa spike of some
angst because it suggests margin to mean. Talks about profitability hopefully. So what
are the issues that you’ve identified that you were focused on with your team. Yeah I mean for Arizona and Brazil you know
getting it ramped up and running smoothly is the first thing and then working on actually
making sure your costs are nice and steady and where you expect them to be. So the benefits
with Brazil’s we now are coming through that period. I mean if all goes well I hope certainly
sometime early ideally in Q3 we’re getting into commercial production. Then we start
measuring it on a on a ongoing cost basis. And the benefit but the moment we’ve been
trying to make sure that all of our inputs and supplies are as cheap as we’d expect in
this type of market where I do think it’s not a huge demand. Things like cyanide and
power etc. In these remote regions I think Labor has been pretty good to get recently
because Brazil hasn’t gone through a great boom recently they’re probably coming off
some eyes a few years ago. So we’ve been only piecemeal call it skilled labor in Brazil
our supplies have been at reasonable prices. Power rates are pretty good in Brazil right
now. We have hydroelectric power plants and then I think we’re setting ourselves up well
with a good mining contractor as well that has great experience in Brazil but key components
of the costs you’ve got to focus on locking them in getting good contracts getting good
supply. So we rely on it. We’ve kind of come through that period now and now if your mill
is getting the good throughput you know your cost just sort of fall out of that. And the
other benefit that we have no control over obviously is the exchange rate. And in Brazil
right now it’s been in that three point eight to four reply to all. You know historically
it’s been lower so there’s been obviously the U.S. dollar has been strong so it’s hit
kind of other currencies particularly know I know Australia Canada Brazil have been weak
which is obviously a benefit to producers like us in that region. Right. And yeah I mean if you think I think
that’s true if the exchange rate does it does hit people different ways. But just on that
I mean this is the whole point about you know having multi jurisdictional deals risking
your assets. I mean your Americas focused. Will you continue to do that obviously with
this access to even more money than women. We lost hope is not a key driver for you in
terms you’re risking process. Yeah I think having four to six assets is
ideal. Maybe that everywhere but where it’s Americas
focused is that we’re going to stay with what you. Eric is focused. I’m not saying we wouldn’t
go east or west of that but I think it’s easier to run where our corporate offices in Vancouver.
Time zones are extremely good for South and Central North America. And travel is actually
pretty good. I mean to get to the California site you can cover them both in a day for
Vancouver effectively and is a bit further on sleep but I think we can manage it fairly
well and turn the times on the communication there’s also travel and we prefer to stay
in that kind of time zone. Okay. Okay. And I just want to I want to talk
about this this this coming years in general terms and second budget. Just remind people
in terms of your remuneration et cetera and he did tell us last time but I thought it
was interesting and worth repeating since you got skin in the game etc.. So the way that we’ve set this up for me myself
and for the other guys started out to now four years ago here we made the commitment
that we were an investment company so at the time we put in roughly two to half a million
dollars with my continual investments and that we’re probably up to four to five as
a management team which line up for us on a personal level as a big investment. ROSS
I think in the last year put in about 60 million and so in turned the board and management
were fully invested and these are not seed shares or cheap shares these are I in the
market belong and block trades buying and financings and doing it reasonably regularly.
So I’d say we’re investing alongside shareholders and our exit strategy is really long term.
There’s no desire to be selling anywhere along the way here and remuneration on the other
side of it. Ross is known to be fairly frugal as a shareholder and a chairman and we’ve
taken that same sort of stance. We set out compensation to be roughly in that fourth
quartile. So the lower end of the scale we’d like to see that performing in terms of share
price particularly but also on the assets will give us a bit more return because we
actually met goals and expectations. So we’ve we’ve done a little differently and we’ve
not also linked at all to options which some people see as sort of free money. So you have
your base remuneration which is fourth quartile then you have your own investments and then
you have some long term incentives that generally are linked more performance right. This is actually I think it’s worth pointing
that out and the read the reason is because you know people in Science Forums are subscribers
that they go through the accusation. Well yeah they got some money in the game but they’re
pulling pulling these big salaries down. So they kind of don’t care they can they. It
doesn’t matter to them whether it works or doesn’t work. They are not truly aligned with
us. But what you are saying is a significant part of your wealth is invested in this business
you are directly lying because you’re buying in the market not options and people need
to understand that. And probably on a personal level for me I
guess a third to a half of my investable net worth is in this stock. Anything that I’m
involved in as a manager or a board member I put my own money in because I believe. Why
would you get involved in something and expect others to invest it if you told yourself.
So right we take it personally in that sense. Right. So say I say the management’s interest
to make the right decisions. You’ve also got Ross Richard also because lending is still
in. Yeah. Yeah. He’s still own one percent anyway
is that right. See you got some guys who know what they’re
doing. I opened a few doors and you’ve got the capital to be able to deliver the strategy
which you’re working towards. I suspect that will that’ll change as we find new assets
or not. And you look you’ll adapt accordingly but. Thanks for the update. I think that’s
been really interesting to hear. There’s a lot happened the refinancing is sounds fantastic.
The new ambassador involved sounds. Well I think a lot of people would be very jealous
of that. We look forward to seeing the you know the assets come on and the answers start
coming. Being port. Yeah. No. Appreciate you talking again and
maybe do it again in six months and we’ll keep keep moving forward. It’s still beautiful Beautiful. Thanks Christian
appreciate your time today. Good luck speaking. Thank you. Thank you very much for watching our video.
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