Maurice Jackson: Joining us today is Christopher McFadden, the
president, CEO, and director of NxGold where the focus is on high-grade gold in
world-class districts.
Mr. McFadden, for someone new to the story, who is NxGold Ltd.
(NXN:TSX.V) and what is the thesis you're attempting to prove?
Christopher McFadden: NxGold is a relatively new junior gold
explorer listed on the TSX. We are looking to make significant discoveries in
good mining jurisdictions with large volumes of high-grade gold that we could
eventually convert into mining operations to improve, and increase
shareholder value.
Maurice Jackson: Let's discuss NxGold's project portfolio,
beginning in Western Australia with Mt. Roe. Where in Western Australia is
Mt. Roe located?
C. McFadden: Our projects in Western Australia are in a region
called the Pilbara. Western Australia is obviously a very large state in
Australia. The Pilbara is northern Western Australia, not quite all the way
to the top. It's about 1,500 kilometers north of Perth where not far from the
coast there's a fairly large rural town, called Karratha on the coast, and
we're 30 kilometers to the south of Karratha.
Maurice Jackson: Now, how many hectares is Mt. Roe, and what type
of lithology is prevalent there?
C. McFadden: It's a relatively small project area. We have two
blocks; the total land package is 1,200 hectares. In terms of the lithology,
there's lots of different basalt flows, and in some cases some felsic flows
that are being interpreted to be eroded and then covered with various sequences
of the Roe style sediments and basalt flows.
What I say to people is this part of the world's crust is some of the
oldest rocks that are known on the planet. Some of these rocks I believe are
two to three billion years old. That it's perhaps a bit like a deck of cards
that have been shuffled and moved, and changed over time and over geological
history. So, it's quite a complex geological setting on our project area.
Maurice Jackson: Maybe it is too early to determine, but would you
define Mt. Roe as a placer deposit, and if yes, what does that mean for
shareholders?
C. McFadden: I think it probably is too early to say. I think it's
fair to say the project area has potential for the paleo-placers style of
mineralization, but it is too early to determine if it's the dominant style
on the property. An interesting point that will be of interest to
shareholders is that our geologists have recently been focused on an older
interpreted epithermal type vein mineralization on the property as well, that
may have been the source of the recently announced stream sediments
anomalies.
I think it was the 8th of August we put out a release showing some of the
findings of some stream sediment work that we've done. We'll probably talk
about the nuggets later on in our discussion, but there we have found what we
call hackly or rough textured gold nuggets on the property, which may have
come from epithermal veins. So that, I think, is of great interest, and a
strong potential for us on this project in that we possibly have a number of
different types of nuggets, and therefore types of their potential sources of
those nuggets.
Maurice Jackson: Speaking of those nuggets, do they appear to be
generously sprinkled throughout Mt. Roe?
C. McFadden: What's very interesting is that we've been able to
find nuggets in a number of places. We've been collecting them in the
northeast of the project area, and also down the northwest. Down the western
side of a ridge, our project has a ridge line that passes down the length of
the project area, and that ridge is probably two kilometers or a bit longer.
And, we've been finding nuggets quite consistently along that ridge line, and
in some pockets they seem to be a lot more concentrated, but as I mentioned
previously, the number of the nuggets particularly those in the northern
areas, are these flattened, what others in that area are calling melon seed
like nuggets, and they are like watermelon seeds in terms of even their size
and their shape, and that they're squashed and they're flat. And, if you look
at them very closely, and look at them under a magnifying glass you can see
little divots in them where they've been pressed and pushed against little
grains of sand, and other material. And, they do look exactly like a
watermelon seed.
What we've also got, and these are the nuggets we've been collecting along
the western side of the project area, they tend to be rough and hackly. Very
different style of nugget, where you can see that they haven't been squished,
they haven't been squashed and rolled between this other material. So, that's
what making us think that perhaps that they're coming out of epithermal
veins, and we've been finding them hopefully close to their source.
Maurice Jackson: You alluded to the nuggets having the watermelon
seed shape, which is alluvial. How does that factor into the thesis that this
may be an extension of the Witswaterand?
C. McFadden: Well, that's a very interesting academic argument that
others in the area are leading. I mean, it would be wonderful if the Pilbara
was the same as the Wits, and was able to produce the same levels of gold.
That would be a magnificent result, but I think it's probably too early to
say that we have a similar area or similar geology, or the same style, or
same size region. We're aligned with the thinking of our peers in the area
that the melon seed nuggets are part of what looks like potentially a marine
paleo-placers system, but there's a long way to go in the work to be done in
the area. It's less than two years since the comparison was first made, so I
think there's a lot of academic and geological work that needs to be done
first.
Maurice Jackson: NxGold is approximately 30 kilometers south of
Karratha, a well-known mining town; tell us about the infrastructure
surrounding Mt. Roe.
C. McFadden: It's an absolutely fantastic place to be. My past
history, I used to work at Rio Tinto many, many years ago, and I think those
that know the mining industry would understand that the Pilbara is the home
of the Australian iron ore industry. There are three significant iron ore
producers there: Rio Tinto, BHP, and Fortescue, producing huge volumes of
iron ore out of the Pilbara.
Those companies have been developing infrastructure in Karratha, and
around the Pilbara regions for 50–60 years now. So, Karratha is unique, in my
view, and in terms of world mining. There's a huge port there for iron ore
shipments to Asia. There's a huge railway line coming in from the Rio Tinto
operations, and the railway line is, as the crow flies, probably five or six
kilometers from our project area. We can drive to our project area on a
sealed road except for the last two or three kilometers, which is a dirt road.
Karratha is a service and infrastructure home for the Pilbara, and for the
iron ore industry. So, there's huge numbers of service providers there,
drilling companies, equipment hire. There's a labor force. There's
accommodation, there's services such as hospitals and schools, etc. Karratha
is a wonderfully established town. For us, the beauty is that it means we can
stay in Karratha; we don't need to build a camp, which saves us a lot of
money.
We can obtain all the services we need at very competitive rates in town,
because there are so many providers there. There's an airport that has a
number of direct flights to Perth every day. As remote as Karratha, and as
remote as the Pilbara is, it's very, very well serviced. It's a wonderful
location, a wonderful place to be.
Maurice Jackson: One of the virtues you just alluded to is capital
expenditures. There won't really be an issue here, because the
infrastructure's already in place. I can attest to it myself; I was in
Karratha last year, but it goes without saying here, but let's just clear the
air here. How would you define the mining jurisdiction?
C. McFadden: Western Australia one of the key mining states in
Australia, where at the federal level Australia is a very safe and mining
friendly country. So, the federal laws are very easy to operate in. Western
Australia itself, and the state is responsible for licensing, is often listed
as the top three to five mining jurisdictions in the world in terms of its
security of tenure. It's an environmental management and other regulations,
it's a great state in which to operate. For an exploration company, it's one
of the best plant places in the world to be, and that's one of thesis: if you
like of NxGold, we generally we try to operate in fertile countries in good
jurisdictions where it's safe. Where investment is protected, where there is
rule of law, and a consistent and even-handed approach to regulation.
Maurice Jackson: How about community relations, and specifically
with the indigenous people there?
C. McFadden: Yes, again, it's given the work that's been done by
the majors on the iron ore front, and other explorers in the region. The
indigenous groups in Australia are fairly sophisticated in terms of how they
consider mining and exploration. They understand the industry, and they
generally work in partnership with miners and explorers. Our peers in the
area are making good progress with obtaining mining tenure, etc. So, we
expect that our engagement with the indigenous groups will be of a similar
ilk.
One of the challenges I think in that area is that, because of the recent
interest in the area, there's perhaps a capacity issue, and there's a lot of
applications and paperwork that is being done. So, there is a bit of a
backlog in terms of the indigenous groups ability to deal with all the matters
in front of them, but you know our dealings with the group so far have been
excellent. We don't have any particular heritage issues on our ground that we
are aware of, but we're working with the indigenous people to make sure that
we're operating the right way, and we're not offending anybody, and that
we're working with them in partnership.
Maurice Jackson: Please provide us with an exploration update on
Mt. Roe.
C. McFadden: We've had people in the field recently that was
announced on the 8th
of August. Now, our approach is to, even though we've ticked the main
box, we've got gold on the licenses, you can go with a metal detector and you
can pick up nuggets pretty much basically off the ground. It's quite
remarkable, and is new, too, in my experience. We're taking a step back from
that, and just trying to work out where this gold comes from.
So, we're going back to basics. Our approach is to take a very systematic
approach, follow a process of mapping of soil sample within sediment stream
sampling. There's quite a lot of drainage in the area that we've been taking
some samples from. And we announced recently, that we've got over a kilometer
of hits from some stream sediment. There's been some panning of that, and
visible gold in those samples. So, that's all now in the laboratory getting a
more detailed assessment of the material that was collected at the time.
We're hoping for those sampling tasks in the next few weeks.
The labs are very busy at the moment, so it is taking a bit longer than
we'd hoped, but once we get those results, we're in the process of doing some
geophysics as well that it is being flown I think this week. So, we'll get
those results from the geophysics, we'll get the geochemistry and then we'll
work out what we're going to do next in the next phase if you like of the
exploration on the ground. It may well involve some drilling to get a better
understanding of what's going on under the ground. We may consider looking at
some large bulk samples, it just depends on the results that we get from the
work that we've recently done. So, we'll take a very systematic approach, one
step at a time, and every dollar we spend has to be justified by the results
that we have.
Maurice Jackson: Mr. McFadden, we've covered the flagship project,
Mt. Roe; let's discuss your second gold project, Kuulu. Where's Kuulu
located, and how many hectares is this project?
C. McFadden: It's a fascinating case study if you like. Kuulu is
the project that we basically recapitalized the company on about 18 months
ago. The project is in Nunavut in northern Canada, so you could not get a
more different place than Nunavut and the Pilbara region of Western
Australia. Western Australia is always very hot and dry; Nunavut is almost
Arctic conditions where our project is located, and so our geologists love
going from one to the other. The temperature change can be extraordinary. The
Kuulu project is larger, it's about 4,000 square hectares. It's just north
about 40 kilometers north of Rankin Inlet in Nunavut.
Maurice Jackson: What can you share with us regarding the lithology
there?
C. McFadden: The interesting part of this project, and what got us
so excited about it initially, was that it's directly a long strike from the
Agnico Eagle Meliadine project that is currently being constructed, and will
be in operation I think next year; 2019 they're looking to commence
production. That is a world-class deposit, and it will be a significant mine
producing I believe, 400,000 to 500,000 ounces a year, possibly more. It's a
large deposit, many millions of ounces at a significant grade. So, we are up
strike along the fault that Meliadine is located on.
Maurice Jackson: And are the drills turning there?
C. McFadden: They're not at the moment. We have some challenges
with that project from an access point of view. We don't have a surface
rights license at this stage from the Inuit Association that's based in
Rankin Inlet. We're working with them to try to obtain that, we have numbers
of walk-up drill targets there. We have been able to take advantage of
previous work done on the license area, and some of our own geophysics that
we did last year, to identify some very exciting targets where we're hoping
to drill as soon as we can, but working with the local people we've been able
to identify that they are concerned about drilling during the hunting season.
And the impact that increased activity, particularly with helicopters and
drill rigs, the impact that may have on caribou, in particular, and other
animals that they hunt.
So, given the concerns that the local people have about hunting, and the
impact on the animals, and their hunting activities, we have agreed that at
this stage, we will drill over winter only. We're still in discussions with
the local people, and we have a number of visits and the meetings planned
over the next few months to try to achieve that goal. But, we have all the
other permits that we require in order to undertake exploration activities on
that license area.
Maurice Jackson: Mr. McFadden, before we discuss the management
team, are there any reversionary interests on these projects?
C. McFadden: With Mt. Roe, we have an 80% interest in that project.
The vendors from whom we acquired the project have a 20% interest in that
project. We are currently funding all of the exploration work ourselves, and
we have an obligation to fund 100% of the work through to completion of any
feasibility study that may be undertaken on that project should it get to
that point.
For the Kuulu Project, we are currently earning into that project from the
vendors. We have to meet certain expenditure obligations in order to earn our
interest, but given the difficulties we're having with the surface licenses
those spending obligations and requirements are currently on hold, pending
the satisfactory conclusion of the license situation.
Maurice Jackson: Now, realizing that you are an exploration
company, what is management's philosophy? Are you looking to build a mine or
arbitrage?
C. McFadden: We're looking to build a mine. Certainly, my
background in the majors is to make a significant discovery, and then
progress that discovery through to development and operations. Of course, who
can predict what happens along that journey; it's a long journey. So, we'll
just have to see what happens at the time, and take all interest into
consideration, and obviously the interest of shareholders.
Maurice Jackson: Switching gears, I learned from Rick Rule and Doug
Casey that the people running the business are equally, if not more
important, than the latent material in the ground. Mr. McFadden, please
introduce us to your Board of Directors, and what unique skill sets do they
bring to NxGold?
C. McFadden: We have a board that has vast experience in the mining
sector. Let's start with our chairman, Leigh Curyer. Leigh is currently the
CEO of NexGen Energy, and was the founder of that entity. I think a lot of
investors will be aware of NexGen Energy, and the great success that company
has had in the uranium space in Saskatchewan with the Arrow deposit. He
worked in private equity and reviewed numerous mining opportunities in the
uranium space, and prior to that he worked in a precursor to Uranium One, and
was heavily involved and was responsible for permitting one of Australia's
uranium mines. So, Leigh has close to 20 years of experience in the resources
sector. He is a great leader of NexGen. Perhaps I'm a bit biased there, but I
remain the chairman of NexGen, so I managed to see Leigh operate on a regular
basis, and he's got a great team and great leadership, and he's a very strong
strategic thinker in terms of project developments and community relations,
etc. So, Leigh's great to have on our board, and he's a great leader of our
board.
Trevor Thiele. He is an Australian, and he's based in South Australia.
He's quite close to our Mt. Roe Project. Trevor is our leader of our Audit
Committee, he's a financial veteran in the resources, and primary industry
sector in Australia. Very detailed, focused leader in the accounting sphere,
and has a great business mind, and great business acumen and is a very strong
director.
We have Richard Patricio, who is based in Toronto. Richard's a lawyer by
training, and again he's a very strong strategic thinker, particularly on the
legal side and awareness, and he's switched on and plugged in to the Toronto
market, and the people there.
And finally, we have Karl Laufmann, who is a recent addition to our board.
He's based in Perth, and Karl is in the financial industry. He has over 20
years of experience in capital markets in Australia, and internationally and
is very well connected. And again, very strong on his strategic thinking and
he's awareness of the market, and the gold, particularly the gold industry in
Australia and in Western Australia in particular.
Maurice Jackson: Tell us about Christopher McFadden, what makes him
qualified for the task at hand?
C. McFadden: I've been in the mining industry for over 20 years
now. I'm a lawyer by training, and I started out in the Melbourne legal
sector, particularly working in natural resources and energy. And initially,
I worked as an in-house lawyer with Rio Tinto in Melbourne, and also in
London. So in that 15 years, I was with Rio Tinto initially as a lawyer, and
then for the last seven or eight years as a commercial general manager
leading teams to transact large acquisitions, and large disposals, but also
large joint ventures on the exploration sphere.
I managed to work across the globe in many commodities at various stages
of exploration and development. So, I would say that with my global
experience, and my experience negotiating joint ventures and managing joint
ventures, and managing exploration projects in many places with many
different people, and many different cultures with many different challenges,
because no two projects are the same. I've been able to develop a very strong
skill set in mining and exploration in particular.
Maurice Jackson: What can you share with us about the technical
team?
C. McFadden: As a small company we have only one technical team
member on full-time staff, and that's our VPX, Darren Lindsey. Darren is
highly experienced in gold exploration around the world, with particular
experience in Northern Canada, and Nunavut in particular. Darren has worked
in across the all spheres of the gold sector. He's worked in majors, he's
worked in juniors, and he's worked in development projects, and he's also
been a CEO in a past life. So, he clearly understands capital markets, and
what drives shareholders and what drives interest in juniors so, he's a
wonderful member of our team. He's technically very experienced, and highly
skilled, and very methodical and a clear thinker. So, he's a wonderful person
to work with, and he's very excited about our projects and on working very
hard to make that discovery.
Maurice Jackson: Let's get into some numbers here. Tell us about
your share structure.
C. McFadden: It's a relatively simple structure. The company was
recapitalized in early 2017; it was previously a shell company. We have done
two capital raisings since that time so, we currently have approximately 80
million shares issued and outstanding. We have quite a number of warrants,
there's about 45 million warrants, and about 7 million options. So, fully
diluted, the total is roughly 130–135 million on a fully diluted basis.
Maurice Jackson: How much cash or cash equivalents do you have?
C. McFadden: At this stage, about CA$5 million. We've completed a
capital raise a couple of months ago, which has restocked us very nicely. So,
we're quite well funded at this stage.
Maurice Jackson: And, what is your burn rate?
C. McFadden: We try to run very lean. Obviously, we don't have huge
full-time staff so, our burn rate all in including my salary is just over a
$1 million a year subject to travel requirements. And obviously, with
projects in different parts of the world that can be one of our higher costs,
but relatively low costs.
Maurice Jackson: Talk to us about the cash flow distribution, what
is the ratio between cash spent, and tangible assets on the balance sheet?
C. McFadden: The primary focus is to put money into the ground into
exploration. So, at least 70–75% of our cash is spent on exploration.
Maurice Jackson: How much debt do you have?
C. McFadden: We have $0 debt.
Maurice Jackson: Who are some of your institutional investors?
C. McFadden: Primarily most of our shareholders are high net worth
and we have individuals we know from our NexGen experience. So at this stage,
we don't have any really large, dominating institutional shareholders.
Maurice Jackson: What is the float?
C. McFadden: It's relatively small because we have some very loyal
and long-term shareholders, and so at this stage, I suggest perhaps a 20–25%
of the market cap would be the float.
Maurice Jackson: Are there any redundant assets such as a patent
mining claim?
C. McFadden: No, there are not. At this stage, we really just have
the two projects so it's very clean.
Maurice Jackson: Are there any change of control fees, and if there
are what are the terms?
C. McFadden: No, there aren't.
Maurice Jackson: Alright, sir, you survived the storm. Mr.
McFadden, multilayered question here. What is the next unanswered question
for NxGold? When should we expect results, and what will determine success?
C. McFadden: It is a multilayered question there, that's a
challenging question. We have a systematic approach to exploration. So, we're
looking for results out of Mt. Roe in the next couple of weeks in terms of
the lab results to just follow-up on our last announcement. And then, from
there that will determine the work that's done, and then I suspect that if
we're drilling or bulk sampling, there'll be results that will flow from
that.
In terms of success, obviously, success would be a significant discovery,
but it's probably a bit early to get there. If we're drilling, success will
be a better understanding of our geological setting, and if we are pursuing
those epithermal veins, well then if we can make some hits with those,
that'll be incredibly successful and very powerful.
Maurice Jackson: Mr McFadden, what keeps you up at night that we
don't know about?
C. McFadden: As a long-term mining person, one thing that does keep
me up at night, obviously, is the safety where we get people in helicopters
or working heavy machinery, that's all obviously a consistent stress. A big
one for me is really Kuulu and getting land access there. That is one that is
very important to us, because that is a significant project with great
potential. That's what keeps me awake at night other than the constant
concern about share price and share performance, which I think is a minute by
minute concern for every mining industry professional.
Maurice Jackson: And last question, what did I forget to ask?
C. McFadden: That was a very comprehensive interview, Maurice, I'm
not sure you forgot to ask anything, but one thing perhaps is just in terms
of our market cap and the potential that we represent by being in the
Pilbara, and also being with our Kuulu Project. If you compare us to some of
the other players in the Pilbara, I think it's arguable that we are
undervalued. With success I think there's great potential for our market cap
to rise significantly. I think that's where the interest probably lies in our
company, and the opportunity that our current, relatively low share price
represents.
Maurice Jackson: Mr. McFadden, for someone listening that wants to
get more information on NxGold, please share the contact details?
C. McFadden: I think the best place to start would be our website www.nxgold.ca. We have our
corporate presentation on the website you can access. We obviously have
access to past results, and we have profiles of our directors and senior
management there as well, and hopefully it's comprehensive and easy for
prospective investors, and those that are interested to follow.
Maurice Jackson: And as a reminder, NxGold trades on the TSXV
symbol NXN. For direct inquiries, please contact Travis McPherson at 604.816.2686.
He may also be reached at tmcpherson@nxgold.ca. NxGold is a sponsor of Proven
and Probable and that we are proud shareholders for the virtues conveyed in
today’s interview.
And last but not least, please visit our website www.provenandprobable.com
where we interview the most respected names in the natural resource space.
You may reach us at contact@provenandprobable.com.
Christopher McFadden of NxGold, thank you for joining us today on Proven
and Probable.
[NLINSERT]
Disclosure:
1) Christopher McFadden: I, or members of my immediate household or family,
own shares of the following companies mentioned in this article: NxGold. I
personally am, or members of my immediate household or family are, paid by
the following companies mentioned in this article: NxGold.
2) Maurice Jackson: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: NxGold. I
personally am, or members of my immediate household or family are, paid by
the following companies mentioned in this article: None. My company has a
financial relationship with the following companies mentioned in this
article: NxGold is a sponsor of Proven and Probable. Proven and Probable
disclosures are listed below.
3) The following companies mentioned in this article are billboard sponsors
of Streetwise Reports: None. Click here
for important disclosures about sponsor fees. As of the date of this article,
an affiliate of Streetwise Reports has a consulting relationship with Jericho
Oil. Please click here for more information.
4) Statements and opinions expressed are the opinions of the author and not
of Streetwise Reports or its officers. The author is wholly responsible for
the validity of the statements. The author was not paid by Streetwise Reports
for this article. Streetwise Reports was not paid by the author to publish or
syndicate this article. The information provided above is for informational
purposes only and is not a recommendation to buy or sell any security.
Streetwise Reports requires contributing authors to disclose any shareholdings
in, or economic relationships with, companies that they write about.
Streetwise Reports relies upon the authors to accurately provide this
information and Streetwise Reports has no means of verifying its accuracy.
5) This article does not constitute investment advice. Each reader is
encouraged to consult with his or her individual financial professional and
any action a reader takes as a result of information presented here is his or
her own responsibility. By opening this page, each reader accepts and agrees
to Streetwise Reports' terms of use and full legal disclaimer.
This article is not a solicitation for investment. Streetwise Reports does
not render general or specific investment advice and the information on
Streetwise Reports should not be considered a recommendation to buy or sell
any security. Streetwise Reports does not endorse or recommend the business,
products, services or securities of any company mentioned on Streetwise
Reports.
6) From time to time, Streetwise Reports LLC and its directors, officers,
employees or members of their families, as well as persons interviewed for
articles and interviews on the site, may have a long or short position in
securities mentioned. Directors, officers, employees or members of their
immediate families are prohibited from making purchases and/or sales of those
securities in the open market or otherwise from the time of the interview or
the decision to write an article, until one week after the publication of the
interview or article.
Proven and Probable LLC receives financial compensation from its
sponsors. The compensation is used is to fund both sponsor-specific
activities and general report activities, website, and general and
administrative costs. Sponsor-specific activities may include aggregating
content and publishing that content on the Proven and Probable website,
creating and maintaining company landing pages, interviewing key management,
posting a banner/billboard, and/or issuing press releases. The fees also
cover the costs for Proven and Probable to publish sector-specific
information on our site, and also to create content by interviewing experts
in the sector. Monthly sponsorship fees range from $1,000 to $4,000 per
month. Proven and Probable LLC does accept stock for payment of sponsorship
fees. Sponsor pages may be considered advertising for the purposes of 18
U.S.C. 1734.
The Information presented in Proven and Probable is provided for
educational and informational purposes only, without any express or implied
warranty of any kind, including warranties of accuracy, completeness, or
fitness for any particular purpose. The Information contained in or provided
from or through this forum is not intended to be and does not constitute
financial advice, investment advice, trading advice or any other advice. The
Information on this forum and provided from or through this forum is general
in nature and is not specific to you the User or anyone else. You should not
make any decision, financial, investments, trading or otherwise, based on any
of the information presented on this forum without undertaking independent
due diligence and consultation with a professional broker or competent
financial advisor. You understand that you are using any and all Information
available on or through this forum at your own risk.
