Albert J. Matter, Director & Chairman (Strategic Planning)
The following exclusive interview of Chairman Albert J. Matter of NuLegacy Gold Corp. (TSX-V: NUG) (OTC: NULGF) was completed in the week ended February 19th. The views, facts, opinions, assumptions shared by Mr. Matter are entirely his own. Please see disclosure provided by NuLegacy at the bottom of the page. Albert’s BIO from the Company’s February 2016 Corporate Presentation: As Chairman of NuLegacy, Mr. Matter will continue developing the Company’s strategic agenda and ongoing business plans while supporting CEO James Anderson’s financing efforts and value recognition programs. [see bios of management team, Board & Technical Advisory Team]
Albert has 40 years of diverse experience financing both public & private companies, and structuring / negotiating transactions with particular expertise in the mining industry. He has provided corporate finance, strategic planning, M&A and business development assistance to numerous corporations and high net worth individuals, frequently working with leading names in the Western Canadian business & investment communities. He is one of the Founding partners of National Gold Corp, (National Gold merged with Alamos Minerals Resources to form successor company, Alamos Gold Inc) Gryphon Gold Corp & NuLegacy Gold Corp.
All references to grades are for GOLD. All references to potential attributes of the Iceberg deposit are conceptual in nature. Please see links to additional information at bottom of page
Albert, what’s the latest on the Iceberg deposit? Please note near-term catalysts.
AJM: The discovery of significantly higher, nearer-surface zones of oxide gold in the North Zone is a game-changer. The North Zone is open in most directions and represents a potential near-term, ‘starter pit’ development option for us.
Near-term objectives are to complete preparation and report on plans for our 2016 exploration program in March; commence our drill campaign when ground conditions are optimal, likely in April; enroll a senior miner / strategic investor to fund remaining exploration, likely by June; prepare Iceberg’s maiden NI 43-101 resource calculation, likely by August; and achieve a stock price that properly reflects the value that has already been created.
Objectives over the next 12-18 months are to complete the delineation of the Iceberg deposit and capitalize on its value through the sale or merger with a capable gold producer.
In 2012 when the Iceberg Deposit was discovered, gold averaged US$1,660/oz. Is a resource target of ~100 million Metric tonnes (Mt), grading between 0.9g/Mt to 1.1g/Mt, that special at US$1,225/oz. gold?
AJM: The Iceberg deposit is special! This 100 million (est) Mt exploration target was developed in 2013/14. Its potential is being updated to include 2015 drill results referenced above. When gold was US$1,660/oz., the cost of producing it was approaching US$1,200, whereas with oil at US$30/bbl, not US$100, steel at 1,500 yuan/ton, not 4,000, & copper at US$2/lb. not US$4, the cost is closer to US$750/oz. – especially in Nevada’s Cortez trend.
Our drilling costs are 65% of what they were in 2012, and we’re able to get the best drillers, resulting in better bang for the buck. We now have 69 holes, as opposed to a single discovery hole. Our confidence level has increased significantly.
An irony of Carlin-type deposits is that difficult drilling, due to highly fractured ground conditions, is the most favorable for the optimum deposition of higher grades. Our crew has been getting good to excellent recovery in these zones. A significant feature of these Carlin-type deposits (in the both the Carlin & Cortez trends) is that once you’ve found one, they’re like the Duracell battery, they keep going and going…. [brief technical commentary on Iceberg deposit]
For example, deposits discovered in the last great exploration cycle of the late ‘80s / early ‘90s initially had resources of 1 to 3 million ounces. They grew to between 5 & 50 million ounces. [Note: See link of Iceberg’s potential, particularly slides # 9 to 12 & slide 18]
In December, NuLegacy completed its Earn-in to 70% of the Iceberg deposit. Soon after, Barrick Gold opted NOT to, “clawback” to 70% by spending $15 mm over 5 years. Please explain why this is NOT a vote of no confidence.
AJM: No, it was not a vote of no confidence, it’s quite the reverse. [See helpful video clip of the Iceberg deposit]
Barrick has been an excellent partner on many levels. Their sharing of knowledge of the geology & deposits in the Cortez trend greatly helped our development of the Iceberg deposit. Barrick’s key insights and logistical resources helped keep our costs down and increase the productivity of the US$5 million of qualifying property expenditures we made that enabled us to earn our 70% working interest.
Barrick’s geological staff in Nevada remain positive on the Iceberg deposit. However, when large companies decide to cut back spending, it’s impractical for them to make exceptions, no matter how attractive a project might appear. If you follow what Barrick has done this past year, and what Goldcorp & OceanaGold
Barrick’s philosophy is to have a majority position and operatorship, and a minority partner helping to carry the load. That way, Barrick gets talented, highly motivated geologists and technical experts to prudently explore for the next elephant deposit. Witness the Arturo deal with Premier Gold, Rye Patch Gold (the Patty property), Quantum Pacific & NuLegacy.
Is it useful to compare NuLegacy to Gold Standard Ventures (GSV)? Both are Nevada exploration companies, both are sitting on large land packages. What are the key takeaways?
AJM: Yes, it’s a very useful comparison. Our, ‘cousins to the north’ of NuLegacy are in the parallel Carlin trend. GSV’s CEO Jonathan Awde and team have done a marvelous job with their Railroad-Pinion project, overcoming innumerable difficulties, raising large quantities of cash and drilling many successful holes.
GSV has a head start on NuLegacy, though we believe we’re closing the gap. Both companies opportunistically acquired or optioned the largest independently owned (as distinct from the Majors who own most of the rest), contiguous land packages in their respective Nevada gold trends. GSV has 40+ sq. miles located on the lower end of the Carlin trend, with neighboring deposits in the 2 to 5 million ounce range. We recently completed the earn-in to 70% of 38+ sq. miles, located on the lower end of the Cortez trend, with neighbors having between 15 to 21 million ounce deposits.
Since 1835, ~180 million ounces of gold have come out of the Carlin trend. The Cortez trend has produced ~40 million ounces since 1956, most of it since 1989 when our Chief Geologist, (COO) Dr. Roger Steininger discovered the Pipeline deposits (~21 million ounces and counting).
GSV’s exploration team boasts significant discoveries in the Carlin trend, while 3 of NuLegacy’s geological team are credited with the discovery of 3 of Barrick’s best performing mines. As mentioned, Dr. Steininger is credited with the discovery of the Pipeline deposit (thus establishing the Cortez trend), which started as a 1 million ounce resource and has grown to a 900,000 oz/year producer in 2015 with All-in Sustaining Costs (AISC) of US$ 603/oz. It has produced over 21 million ounces and is still running at ~500,000+ oz/year at AISC of about US$700/oz.
GSV has spent ~C$17 million to acquire, and ~C$45 million to explore, the Railroad-Pinion property. Since focusing on near-surface oxide material, GSV has established a NI 43-101 compliant resource in the Pinion deposit of 423,000 Indicated ounces (20.84 million Mt grading 0.63 g/t) and 1.02 million Inferred ounces (55.93 million Mt grading 0.57 g/t), and a satellite deposit (the Dark Star) hosting an additional 0.375 million Inferred ounces (23.11 million Mt grading 0.51 g/t).
By comparison, NuLegacy has spent ~C$7.0 million focusing on nearer-surface oxides, establishing an exploration target of 90-110 million Mt grading 0.9 to 1.1 g/t, within a 3,000 meter structure. [Note: These figures are conceptual in nature and derived from a compilation of 149 historic & 34 NuLegacy drill holes in and around the Iceberg deposit. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.]
To date, there are 2 areas in the North zone (covering circa 350 meters of strike) and a larger area in the Central zone (covering circa 650 meters of strike) where drill density is sufficient to support the planned NI 43-101 compliant resource calculation.
Presumably, NuLegacy is entertaining proposals on its 70% stake of the Iceberg deposit. Without being specific, what are the types of scenarios being contemplated?
AJM: Yes, we are entertaining a number of proposals. The primary scenario being discussed is having a Major take an equity stake in NuLegacy…at a premium to market.
Numerous intermediate to large miners have expressed interest in investing with us to advance our project. These discussions are covered by confidentiality agreements, so all we can say is that we expect to finance the remainder of our exploration programs by issuing stock to a strategic partner at a premium to market.
The perception by some is that it’s been a long-time waiting game, waiting for Barrick, now waiting for something else to happen. How much cash liquidity does the Company have to carefully weigh options?
AJM: It took 5 years to earn-in 70%, and 90 days for Barrick’s decision. Capital was hard to raise, so we spent it very carefully. We have C$1.25 million in the treasury, enough to last up to 18 months.
We expect to be able to announce several milestones over the next six months; a possible investment from a Major, starting drilling to expand the Iceberg deposit and hopefully identifying new deposits, and the calculation of a maiden resource. It should take 12-18 months to demonstrate the value of NuLegacy’s nascent Carlin-type deposit, and capitalize on that value through a merger or sale to a producing miner.
With increasing geopolitical risks, Majors want a position in Nevada. Notice how quickly the new CEO at Goldcorp positioned his company in the Carlin trend via their investment in Gold Standard Ventures.
NuLegacy’s best assays in the North Zone demonstrate high-grade. How do those holes stack up to Barrick’s nearby mines and its Goldrush development project?
AJM: They stack up quite favorably… and that’s a good use of the word. If you compare the stacking of the gold-bearing horizons at Barrick’s Goldrush deposit (adjacent to 3 of Barrick’s mines, and on strike with the Iceberg deposit), you will note that the Iceberg deposit’s gold-bearing horizons are nearer-surface. Goldrush currently has a resource of ~15 million ounces grading over 4.0 g/t.
Also noteworthy is that the Iceberg deposit’s high-grade gold is oxidized as opposed to Goldrush’s sulfide material. It’s significantly cheaper and easier to extract gold from near-surface oxidized mineralization than deeper sulphide/refractory material.
Combined with intercepts in the North & Central zones, our high-grade mineralization confirms that the Iceberg deposit is similar to Carlin-type deposits in the Cortez trend, composed of large envelopes of decent grades (0.2 to greater than 1.0 g/t), within significant areas of considerably higher grades.
Highlights of Central Zone assays indicate lower grades than in the North Zone. How does the Central Zone fit into the overall picture?
AJM: The Central Zone, with moderately lower grades than the North Zone, has an established strike length of over 650 meters (2,130 feet). Numerous holes have intercepted Iceberg’s 3 known gold-bearing horizons. The main target horizon is at a relatively shallow 300-500 feet deep and will add considerably to our maiden NI 43-101 compliant resource.
There has also been a handful of slightly deeper holes drilled in the Central Zone, most of which encountered gold-bearing sulfides. This indicates that larger and higher-grade zones may exist at depth, similar to other deposits in the Cortez trend.
Why should readers invest in NuLegacy now, as opposed to later when there’s more clarity on the Company’s future?
AJM: In our view, the risk-reward ratio for an investment in NuLegacy Gold, (TSX-V: NUG) (OTC: NULGF) has never been better. Not only is our exploration property in the Cortez trend valuable to a range of potential suitors, we believe assets in Nevada will command premium valuations.
This does not constitute investment advice but we feel our stock is undervalued. Once the market recognizes the value we’ve already created, our stock price should appreciate to reflect that NuLegacy has,
++ Discovered one of the best undeveloped prospects in Nevada, with excellent high-grade results and characteristics often associated with low operating costs,
++ Secured the ownership of a 70% working interest in the Iceberg deposit,
++ Identified parties interested in possibly investing in our Company. We believe our market cap of C$17.6 million / US$12.7 million is too low.
We’ve covered a lot of ground, are there misconceptions about NuLegacy that you would like to address?
AJM: In ending, perhaps it would be prudent to remind readers that the Iceberg deposit has a number of distinct Carlin-type targets.
In addition to the partially explored North & Central zones, there are the South zone West Iceberg, Avocado, Jasperoid basin & Vio targets that have only been minimally explored. The property has gold in 4 distinct horizons – all of which display strong continuity.
NuLegacy’s COO Steininger, says, quote, ‘just as the discovery and initial expansion of the Pipeline gold deposit in 1989 gained momentum over time, the expansion of the Iceberg deposit is gathering momentum with each round of drilling. Our understanding of the deposit is growing geometrically.”
Thank you Albert for your valuable time and keen insights.
February, 2016 Corporate Presentation
February 10th Caesars Report
Albert Matter’s Chairman’s Chats
Disclaimer from NuLegacy Gold
The foregoing interview does not constitute an offer to sell or the solicitation of an offer to buy any security and is not intended to be relied upon as advice to investors or potential investors. The foregoing also contains forward-looking statements, which relate to future events or future performance and reflect management’s current expectations and assumptions based on information currently available to NuLegacy concerning, among other things, anticipated geological formations, potential mineralization, future plans for exploration and/or development, drilling exposure, exploration budgets and timing of expenditures, availability of capital, potential resources and estimated timetable for initial resource estimate, future strategic relationships and potential future production, all of which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of NuLegacy to be materially different from those expected. These forward-looking statements are made as of the date hereof, are neither promises nor guarantees, and NuLegacy assumes no obligation to update or revise them to reflect new events or circumstances save as required by applicable law. Accordingly, readers should not place undue reliance on these forward-looking statements. Furthermore, there are no known resources or reserves in the Iceberg deposit and no preliminary economic assessment or other study has been completed thereon. Accordingly, geologically it is too speculative to apply economic considerations to the Iceberg deposit at this time. In addition, the presence of gold resources or reserves on properties adjacent to or in close proximity with the Iceberg deposit is not necessarily indicative of the gold mineralization on the Iceberg deposit. All scientific and technical information contained in this interview has been approved by Dr. Roger C. Steininger, CPG, NuLegacy’s Chief Operating Officer and a Qualified Person as defined by National Instrument 43-101 of the Canadian Securities Administrators.
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