Transcript: Allegiant Gold (AUAU) - Growing 1Moz Au, 8moz Ag. Farm-out Funded
Interview with Peter Gianulis, President & CEO of Allegiant Gold. Allegiant Gold Ltd., a former subsidiary of Columbus Gold Corp. (CGT: TSX), was spun-out to form an independent company focused exclusively on precious metals exploration in the western United States.
Allegiant holds a 100% interest in 10 projects in the southwestern United States with 7 being located in the mining-friendly jurisdiction of Nevada. The majority of the projects were discovered and developed by Andy Wallace, former Head of Cordex. Cordex is considered by many in the mining industry to be one of the most successful gold exploration groups in the United States.
- 2:36 - Company & Progress Overview
- 5:11 - The History: CEO's Background & Track Record
- 7:37 - The Business Model: A Cautious Approach to Marketing?
- 11:22 - 10 Assets, 3 Farmouts: A Look at Cash Flow & Capital Handling
- 14:10 - Drill Program Overview & Timelines
- 16:11 - Get Rich Slow Scheme: What's Driving the Pace?
- 19:28 - Eastside Project Potential: Plans, Costs, & Timeline
- 21:30 - Value Growth & Debates Over the Outcome for Rest of the Assets
- 23:53 - Opinions on Stock Shorting
- 25:20 - Farmouts: Drill Programs, Expectations, & Relations with Partners
- 32:28 - Intermediate Goals & Objectives: How Much Control do They Have?
- 39:45 - M&A Options & Considerations
- 42:12 - Mining 101: Who's Got Skeletons in the Closet?
Matthew Gordon: Peter, how are you sir?
Peter: Hi Matt, how are you?
Matthew Gordon: Really good, haven't seen you for a year. What've you been doing?
Peter: Yes, I'm doing amazing. We've been very, very busy at Allegiant. I mean clearly the pandemic has slowed a lot of companies, fortunately from our perspective, we've been open for business and we've actually had one of our busiest years in terms of drilling over the past 12 months, so things are going well. Assays are coming out and things are just going as we predicted, which is just executing our Business Plan and we've stuck to our Business Plan throughout the pandemic, so we're pretty happy how things are going with us.
Matthew Gordon: Okay, well given it's a year I'm going to run through some of those headline topics in a second, but how's Miami?
Peter: Miami's great, I'm between Miami and Reno where basically we're headquartered, but Miami was just more of a… something I moved from New York 18 years ago and it has really been an amazing place to spend the pandemic. Not because of only the weather, but the fact that Florida's taken a different approach to dealing with the pandemic and I think with some very good results. It's a great place, it's been a great place for a year and a lot of people are moving here. That's for sure, Europeans as well as people from the New York area.
Matthew Gordon: Wowzers, so house prices through the roof. I've missed the boat haven't I?
Peter: It's insane. I compare housing prices with my friends who live in Greenwich, Connecticut and other places and certain parts of Miami are far more expensive on a per metre basis for land than many places in the north-east, it's crazy.
Matthew Gordon: They were already expensive Peter from my…
Peter: Yeah, fair point.
Matthew Gordon: … my memory of Miami. Hey, well good to have you back, enjoyed it last time we spoke but I think, given it's a while we're going to have to probably go through a few things again, but we're going to speed through it.
First of all, give people who haven't heard the story before, just that one minute overview and I'll pick It up from there with some questions.
Peter: All right, well thank you. Allegiant simply put is a mid-stage Gold exploration company based in Reno, Nevada; expanding and developing its flagship project called Eastside with an inferred resource of 1Moz of Gold and 8Moz of silver approximately 30 km from the town of Tonopah, Nevada. In addition Allegiant owns 9 other Projects in Nevada, New Mexico and Arizona of which 3 are currently farmed out, which generates valuable cash and share positions in other companies.
I think there are 5 main characteristics that separate Allegiant from any other Gold exploration company in the world today. First is a large resource that has the potential to grow significantly. Second is a strong technical team led by Andy Wallace who is one of the pre-eminent geologists in the history of Nevada who has found, and put into production more than 5 Major mining, Gold mining assets and 3 is jurisdiction. Nevada continues to be ranked as one of the top jurisdictions in the world, it's very easy to do business, relatively inexpensive to drill, the infrastructure's just amazing and then fourth is cash-flow, which generally separates us from any other Junior explorations; because of our model of focusing on one project and then farming out our other projects we're able to generate cash which basically pays for all of our overhead. Then fifth is skin in the game. I don't know and I may be mistaken, but I don't know of any other company in the Junior exploration Gold sector in which management and insiders have purchased in the open market as many shares as the insiders at Allegiant. Since September 2019 the combined entity has purchased over 16 or 17% of the shares outstanding in the open market.
You know, those 5 characteristics taken together really separates us from the crowd. That's basically a one minute introduction to Allegiant.
Matthew Gordon: Yeah good summary, actually we can use those as talking points. Okay, 37M market cap to date, so it hasn’t been exponential, it's kind of a funny year for you guys, really volatile in terms of the share price. Partly because obviously Gold did its thing last year and then kind of dropped off towards the end of last year. I want to focus… Do you know what would be brilliant? Remind people of your background. I think that would be a good starting point and then we'll get into the talking points from there.
Peter: Sure. I started my background at Salomon Brothers in the mid-90s in one of their hedge fund groups and helped grow that into a multi-billion dollar business which we later spun out, after a few mergers and acquisitions, to a company called City Bank and we spun out about in 2004. I also started my own fund, which was a private equity hedge fund in 2005 that focussed primarily in the natural resource sector; I did that for about 12 years. I've sat on the Board and helped other mining companies get started as well as helped them through some M&A activity, but I have been in the mining and the resource sector for about 23 years, since 1997, so 24 years now and I was on the Board of Allegiant, and have been on since 2009 so about 12 years now. I took the CEO role of Allegiant back in September 2019 and have been running it ever since so that's a very quick background.
Matthew Gordon: Remind us why you stepped in.
Peter: Well, I mean I was a shareholder, I'd been on the Board, I understood the company very well, I was very much involved in the acquisition of most of the projects that we had over the past 12, 13 years and there was just really a void in that role. Allegiant had spun out of Columbus Gold and created 2 different companies. One in French Guyana and one in Nevada and I was really the natural choice to take the CEO role to advance the company because of my knowledge of the company and my vast background.
Matthew Gordon: Okay, it wasn't really moving before you stepped in right? I think that's fair to say right?
Peter: Yeah I think that's fair to say, but there were other reasons but yeah, the company really was kind of, really without a direction because it had just spun out of Columbus Gold, there were 2 competing interests, one in French Guyana which was a very large, wonderful Asset. It just happens to be in French Guyana and then the other Projects were in Nevada and it was just a natural role for me to take…
Matthew Gordon: Right, okay so since then, September 2019, there's been some activity but do you think…? Because I'm looking at the last year, like I say peaky in places but pretty flat. I'm not quite sure what people's expectations were or is it the fact that you don't talk to the market very much. I mean, why are you taking this kind of very cautious approach to marketing yourselves, because you're doing some drilling, seen some nice numbers, press releases look okay, but you… you're kind of quiet.
Peter: I think it has to do with the way we approach it. We tend to be very conservative in the way we approach everything and we don't necessarily want to be overtly promotional. We tried that, it's just not part of our makeup as individuals and we take a cautious approach, we're very disciplined in executing our Business Plan and you know, we're just not one of those groups that are going to put out a press release that says you know, the wind shifted from 20kms to 15kms to the west. I mean, I'm trying to make light of it but the reality is there's a lot of that going on. I think it's hurt the industry as a whole, just because people come out, we contracted a drill rig. Why is that newsworthy? Because we contracted a rig or we hired X company to do geophysical work and we've tried that, we just don't like that and we will come out with news when we think it's something that warrants it and people may or may not like it but I think that patience has paid off, we've been very disciplined in how we've executed our Business Plan. We continue to execute and you know, investors that take a long-term perspective as opposed to, are you getting news out? Will be well rewarded by investing in Allegiant; I know very few companies that have been able to advance their Project and get some of the results we're getting. It's going to be on the timetable of an exploration timetable and to answer your question, we're just not a… it's not in our knitting to be overtly promotional.
Matthew Gordon: So you run a fund, you're a banker, background. You're looking at the 2020 market and you saw lots of companies doing the opposite of what you did. I mean their valuations went sky-high. I mean they trebled, quadrupled, even more in a number of cases. How can you argue that yours is the right method and theirs was wrong in that case?
Peter: Well I'm not arguing whether theirs is right or ours is wrong. I'm just arguing whether it's good or bad, that's for the market to decide. Clearly we believe on a relative basis we're, I can't argue on the absolute type, on the relative basis we're grossly undervalued and maybe their models work better, and I can point to a few companies which I will not mention, but that have done an amazing job promoting them and I can take my hat off to them. But I can't paint stripes on myself and call myself a zebra when I'm a horse or some other type of animal, it's just who we are. We've tried it Matt, last year we tried to promote, it just doesn't feel right for us. We're going to get the news out, we'll host the Webinars, we'll promote the way we feel comfortable and come on a great show like yourself, who asks difficult questions, we try not to avoid that. We actually try to seek out individuals that ask those difficult questions because I believe that's the only way that a company can really stand out. The easy softball questions really don't separate anyone.
Matthew Gordon: I'd agree with that. Let's talk about… well I'll explain through it, we talked about having 9 Assets right?
Matthew Gordon: Three of which are farmed out. This is the kind of interesting bit, this is a bit of a differentiator for you guys, so talk about the 3 farmouts, what does that give you in terms of cash-flow etc?
Peter: Yeah, so we have 10 Projects, not one of them is our flagship Project, that receives 100% of our resources, okay. The 3 other Projects which are Four Metals, which is farmed out to Barksdale, we have Mogollon a wonderful Silver Project, high-grade which is farmed out to Summa Silver and then the third one is Bolo which is farmed out to New Placer Dome. Those combined companies produce between, or generate with… combined around USD$1M in cash to our treasury every year, that more than covers all land-holding costs in our G&A. I wouldn’t say more than, but it sufficiently covers our burn-rate. Anything above that that we raise, if we were to raise any capital would go straight to drilling and you know, the next logical question is, well how much do you have in your treasury? We have a little bit over USD$1M in treasury but we are constantly getting payments and we'll be getting a series of payments in August and September and we feel very comfortable over the next 2 years that we're well funded to be able to get through any difficult times and it's one of the main advantages of Allegiant. We haven't had to blow out our share structure like many companies, we've looked at other companies when we started and we both had 50, 60M shares outstanding and there's a few companies that are in that universe that now have 150M or 200M shares. I'm not trying to be critical, it's just the approach that we’ve taken where we have 78M shares outstanding. We're extremely cautious in how we issue shares, now we are in the business of exploring and that requires capital. We just won't raise money unless it's accretive to our investors, so we take a more disciplined approach on how we raise capital for exploration.
Matthew Gordon: Okay, so with that circa USD$1M coming in to you, and I get the timelines August, September's important. Are they annual payments, quarterly payments I mean how does that…?
Peter: They're annual payments, they're just not on the same time basis, right. It depends on when we had signed up farmouts, so some of them are I believe in April and some of them are in August and one of them is in December.
Matthew Gordon: Got it, okay fine, so you reckon for the next 2 years if you carry on as you currently plan to, you're kind of good? You're good on the G&A, you can pay your bills but it doesn't sound like very… I get the conservative nature in terms of going forwards in the marketplace, but it doesn't sound very aggressive in terms of the drill programme, so what is the drill programme?
Peter: We had announced a 15,000m drill programme and we've completed 10,000 of that. My guess is we're going to add to that significantly. Over the next 12 months Allegiant will most likely see over 30,000m of drilling. That is by ourselves and our partners in our farmouts, so I know the market wants to hear news flow and you know, whether I agree or disagree with that philosophy, we're going to have a lot of news flow because we're going to be drilling and our partners at Mogollon which is Summa Silver and then New Placer Dome at Bolo will be drilling significantly, so we look forward to the next 12 months as one of the most busy periods in our history as a company with significant amount of drilling.
How do we drill our own Projects? Well after the most recent drill results it's clearly… we really need to follow up on many of these drill intercepts, which were the best in the history that we've ever drilled and probably some of the best in Nevada over the last 20 years; at least one of the intercepts, it really moves us to go and follow that up by drilling. Now, you know, it's not clear whether we can fund that with our current treasury and the current inflows, but we're going to make that judgement as the markets dictate and you know, if we have to raise money we'll do that, but we have the clear advantage of being patient to find the right moment to do that and historically we've done it. Like last year, we raised USD$3M in July and we used all that money to drill. It wasn't that we raised USD$3M and used 30%, 100% of that money went into the ground.
Matthew Gordon: Okay, but you've seen a spike in the share price recently off the back of good announcements. You say you have got the patience, you can move at your own speed. You've made a few quid, you're a big shareholder and that's the right strategy for you, but if you've got retail guys in here, sitting on your stock. You're saying to them, hey this is a get rich slow scheme, bear with us, it'll be fine. We'll eventually get there. Maybe they're going to be distracted by some of these other get rich quick schemes, so do you know you have a responsibility to your shareholders to, you know, maybe be a little bit more aggressive?
Peter: Well I don't agree with the premise, so I mean we're not necessarily trying to track the get rich quick schemes of investing. We are an exploration company, we're not a pump and dump type of operation. I'm sorry to use that word, I mean we're really just… if you want to invest in exploration it is a moderately long-term investment thesis. We believe that investing with us over a 3-5 year period, you're going to do exceptionally well and we also believe there are plenty of catalysts which I've alluded to with Mogollon, with Bolo and with Eastside so you know, irrespective of whether we raise money or not raise money there's going to be a significant amount of news flow coming out. Primarily through our partners and through ourselves so I probably would characterise it as we have plenty of news flow whether we raise money or not, it's kind of irrespective of whether we raise money. There will be a lot of news flow.
Matthew Gordon: Are you viewing it as… the way that you're doing it, are you viewing that as a way to guarantee longevity? I always say to people, 19 out of 20 of these explorers will never make it in the current form. They'll have raised too much money, diluted etc, etc. I mean, what's driving this method, this methodology that you're employing?
Peter: No, what's driving it is that this is an exploration company, it takes time. You have to drill, you have to analyse those results then you have to go on the back of those results and design a programme, which you probably… We have a master programmer, at Eastside I can tell you what we're going to do for 3 years. But as you receive results and Assays, then you adjust that programme and adjust it for the next phase within that 3 year programme and we take it in one year segments, but we build out a 3 year rolling plan, so I don't… it's not a function of what the market wants to hear or anything. I mean, I wish I could rush it, I wish I could get Assays faster, I wish we could interpret them faster but that's just not on the cards and we're going to do things irrespective of what an investor wants us to do. Sure we're… I think we're extremely respectful to investors and we're trying to move forward as quickly as we can but this is exploration. Anyone who thinks they can do it on a reduced timetable is, you know I'm not sure, well they may be a lot smarter than we are.
Matthew Gordon: Okay, let's talk about Eastside. It's your flagship Project, you talked about being able to look at 3 years of what you want to do. What you can't tell me necessarily is, if that's going to be 3 years or you are going to try and condense it and how much money you are going to throw at it, so what can you tell me today?
Peter: Well today we have a high level of certainty that Eastside is going to grow significantly. It's not guaranteed but we believe that we could double, we believe that we have a relatively clear path to double the resources at Eastside. What we don't know is Eastside 2M or is it 5Moz? Or larger and clearly it's open across every direction that we've been drilling, so on the west, north, south, east at depth and then that doesn't include… I mean so part of Eastside is the north zone which is where the pit zone is but we've also drilled, in December the Castle Zone which is the south part of the Eastside District. Eastside is a very large Project, it's almost a District sized Project, so on the south side we drilled 49 holes, shallow, the mineralisation was low grade but it was also at surface, so in a relatively low strip ratios, and this is something we're evaluating on potentially that being a starter pit area. It's not connected to the original pit zone but it would make a wonderful operation, the infrastructures flawless, there's a highway that's right there and there's a previous pit on the Boss part of the Castle Zone, so Eastside is growing. It's going to grow very large and our job is to ensure that we prove that up and I think that's what we're doing. I wouldn't do anything different that we've done in the last 12 months. The market may want us to talk about how we cut haircuts or something but I mean, we really are, we're spending money, we're drilling, we're doing exactly what we said we were going to do.
Matthew Gordon: Okay, so you've got the Castle Zone off the side but Eastside is, well it's pretty much all you've got money for and it is the focus and you're going to move that one forward. When you sort of see what's happening at Castle Zone etc, just that not make you curious about what else you could be doing with the rest of the Assets in the portfolio, or are you just happy to sit and bank those until you've created the value at Eastside, I mean what are the kind of debates that you're having?
Peter: I think that our debate is a little bit different than anyone else that would have this portfolio, I mean if Eastside didn't have a resource then it would be nice to spread out you’re your eggs, spread out your bets across different portfolios but it would be, in my opinion, ludicrous for us to take money away from Eastside and put it at Overland Pass or Browns Canyon. Why would we diversify when we already have, what we believe is a tiger by the tail and it would be really an inefficient use of capital. The best use of capital is just to continue to grow Eastside pretty much, why am I going to try to explore and try to find another resource which, if we were lucky to get another resource at another of our Projects, would only make the problem worse because now how do I allocate future capital, right?
I think that our model would be in a… and we receive offers for our other 6 Projects that are not farmed out all the time, it's just we're not going to farmout our Project to a fly-by-night operation that just started and raised USD$2M to do that because part of what we receive is shares in the company and we have been very fortunate that the companies with whom we've associated are absolutely great companies who have done a great job of advancing their companies and it's rare in this industry where you farmout, get shares and those shares actually appreciate in value, but that has been the case for us and I think that's a testament to how we've selected our partners. It may take us a little bit longer to farmout these Projects, but we're not just going to farm it out to someone else who wants to flip them or promote the story. We want someone who actually does work on the Projects because that means no value to us if they just promote the story.
Matthew Gordon: Why are you being shorted?
Peter: I don't know, I don't focus on that. I don't want to be…it doesn't, it's a good thing, they're going to have to buy back the shares at some point in time, it doesn't affect me.
Matthew Gordon: Okay.
Peter: Let them short it. [laughs] Good luck.
Matthew Gordon: Said the finance guy, I love it. Okay, well let's come back and talk about some of these farmouts because you've given us…
Peter: Okay, may I interrupt?
Matthew Gordon: Sure.
Peter: I believe that some of the shorting will even out, I think that… I believe that most of the shorting is just people shorting the stock to exercise the warrants that we have outstanding which expire very, very soon, so it's my guess, I don’t know with certainty but I would presume, given that we have been getting some warrant exercise warrants; my guess is that about half of those warrants are in Canadians hands and half of them are in Americans hands. Americans won't short to exercise the warrants, but Canadians do.
Matthew Gordon: That's interesting isn't it?
Matthew Gordon: That's an interesting psychology there.
Peter: More than psychology, I think it's just a… I don't believe Americans can essentially short Canadian stocks to exercise the warrants, I think there's a rule against it in the US. I don't think that rule exists… I know it doesn't exist in Canada.
Matthew Gordon: Yeah, we've talked about naked shorting with Canadian stocks versus US; a topic for another day. Hey, let's talk about the format please because it's giving you income, have you got an idea of how much money, how many metres have been drilled on each of those by your partners?
Peter: Yeah, I do, so we'll start from our Project on the border between New Mexico and Arizona called Mogollon. It's an epithermal Silver deposit, very high-grade, wonderful Project and we farmed it out to Summa Silver who is absolutely one of the premier Silver companies out there. Run by a guy named Galen McNamara who I really think very highly of. I've gotten to know him very well over the past 14 months, it's rare to find someone in this industry who really is of that calibre and I think they've done an amazing job. To answer your question, I believe they're going to drill between 5 and 10,000m over the next 12 months. They had applied for their permit and I believe that's forthcoming in the next month or so. I believe probably sooner but let's say within the next 2 months.
Then Bolo which is managed by New Placer Dome which we have farmed out to, they're working on earning into 50% of the Project; it's still 100% owned by us. They have to spend CAD$1.5M this year to comply with the farmout agreement. That probably translates to 6-8,000m of drilling, potentially more depending on whether they go, do core or just RC drilling and then… well those are the 2.
The third one is called Four Metals, owned by Barksdale, another very well ranked company we like. But they don't have plans to drill that, it's part of a land package that they've acquired and are putting together a District within Arizona for base metal plays.
Matthew Gordon: Right, okay, interesting so with Bolo, I mean it doesn't sound like a lot of money. What else have they got on? I mean what's your expectation for both Summa Silver and Bolo to actually progress with that farmout? Because obviously, these are options, they come and they go depending on the size of the company and what their core focus is. Things change right, so do you have regular conversations, updates with these guys?
Peter: Oh, all the time we have very good relationships with all of our farmout partners. I make it a point to have these conversations, to understand what's going on. Try to help them think through an issue. I have a long issue with many of these Projects I may be able to provide some insight. In the case of Mogollon with Summa Silver I think we've been instrumental in helping them understand it. It's a Project we've owned for 15, 20 years and we did work on it, we farmed it out to a company called… We actually sold it to a company called Sante Fe Gold. In 2011 Sante Fe had ran into a lot of problems and gave back that Project after paying us a significant amount of money, millions of dollars and then we farmed it out to New Placer Dome as well in 2018, that was returned to us as they had purchased Kinsley Mountain and it wasn't really their focus, Silver wasn't going to be their focus and it was very opportune, it was very fortunate for us. It worked out very, very well and we farmed it out to Summa Silver and I think Summa Silver is a… well they are a Silver focussed company. They're well-funded and I would think this is just the beginning of their drilling and they're just starting their farmout agreement with us.
Bolo is now in the third year of the farmout agreement, so things are escalating in terms of their drill programme and they've complied with everything and they've drilled what they said they're going to drill so, I don't know beyond that, beyond this year what the plans are with New Placer Dome, but I'm taking it really year by year and this year they need to spend 1½M to continue to earn into the agreement.
Matthew Gordon: Well like I say, it comes down to picking the right partners who are going to one, have access to capital and show intent and actually do something. Just coming back to some of the other Assets, you said oh we're not going to farmout to a USD$2M company with no cash etc. I totally understand that but are you having those sorts of conversations with meaningful groups on any of your Assets? Do any of your Assets actually have value or is it just a nice thing to say, hey we've got 9, 10 Assets over here. It sounds good but what's the reality with each of them?
Peter: Well we wouldn't hold them if we didn't think they had any prospect. We started at 26 Projects and we've whittled it down to 10 so, our philosophy is why own it to pay land holding costs and claim fees and every other fee it's just not worth it, so if we believe that it's not perspective, we will get rid of it. We're just not holding it to hold it. Do we believe some of our other Projects are very prospective? Yeah we rank our Projects every year, based on what we think is, from a prospectivity perspective, Goldfield West is one of our best Projects that we own period and that is right across from Gemfields, which is a mine being built literally 1km away from us. Right next to the Goldfield District and about 50km south of Tonopah, actually 50km south of our Eastside Project, maybe 30km south of Tonopah so we have great projects. Browns Canyon's a great project. Overland Pass is right next to Bald Mountain, when I say right next, I don’t mean 10km I mean like they share a fence and so there's some great Projects. It just doesn't… as a focus company at this stage we're not allocating any cash.
Are we getting… I think the first part of the question is, are we getting interest? All the time, from companies that probably don't meet our criteria and a few companies that absolutely would meet our criteria but maybe the offer is just not what we're looking for in terms of compensation and we'll address that. Although Gold is continuing to do well, I will say that the Junior exploration market, by any stretch of the imagination, is not in a raging bull market and no-one would think that Gold at 1950 or 1900 or anything over 1700, we would see the Junior mining market mired in a… you know, not in a great market so, but you know, once again, these are not our focus, they're not excessively high holding costs and we're willing to be patient and ride it out until we get the offer that we believe will compensate us for, and all also the partner we're looking for.
Matthew Gordon: Okay, do you want to go through your intermediate goals and objectives? I've got 4 in front of me. Grow Eastside into a multi-million ounce Gold oxide deposit. You're going to do 3 things, pass the 2Moz, Scoping Studies, PEA and 20,000m additional drilling by 2022, so how are we doing?
Peter: We're doing amazing, I think that we're on path for all of those things. I feel extremely comfortable that those goals will be achieved, without… well I'll never say without a doubt, but I think we're well on our way to achieving those things. Now the Scoping Study that we have… or PEA which we've been contemplating would be on the Castle area not on the original pit so the Castle area's very well understood. There's been 100s of holes drilled there historically, as well as 49 by ourselves, so there is a very well understood deposit there and we believe that it can grow significantly. That will require some infill drilling and some expansion drilling but we know that there is a limit somewhere, whether the Castle's going to be and it's a global resource as well. It's 500,000 or 1Moz just in that part of Eastside. Which is not part of our current 43101, we'll address that soon. In the original pit zone, for us to move to a PEA or Scoping Study would be, in my opinion, silly because we still haven't found the limits of the deposit and just that's where the 1Moz of Gold and 8Moz of Silver are contained right now, in the pit. That can grow significantly and it would be, I think, too preliminary to move to a Scoping Study or any PEA. We need to drill more there and find the limits of the deposit.
Matthew Gordon: Okay, number 2; resource estimate of Bolo. Additional 10,000m by 2022 initial resource assessment. You just said 1.5M gets you 6-8,000m is that… confident?
Peter: Yeah I think that's right, yeah I think it depends on whether it's a core or RC because core's a little more expensive but we are… I mean we don't control whether New Placer Dome is going to move to a resource estimate. I think that after this next round of drilling I think that they could conceivably move to a resource estimate at Bolo and I think confidently would have some, you know I don't know what the resources would be but they… We made the discovery in 2016, they've followed up on that discovery and there's definitely a resource there, I don't know what the size is going to be, but there clearly is a resource there but Bolo could, once again could also grow fairly large.
Matthew Gordon: Okay, like you say you don't control their plans. You can't make them do it so… you'd like them to but that's a sit back and wait and see, not in control of that and farmout 2 additional Projects. That's on top of the 3 you've currently got by 2021? When you say by 2021 I'm assuming you mean by end of, in all of these cases, right?
Peter: Yeah by the end of.
Matthew Gordon: Right, okay.
Peter: Yeah, that's going to be contingent on the market as a whole right, so if you ask me today, do I feel confident that we're going to farmout 2 in the next 6 months or 7 months. I don't know, I mean look, in 2020 we farmed out 2 within a 4 week period of time so if the market gets hot and companies come knocking on our door, then it could easily happen and it could happen over a very short period of time. Today, I have no way of gauging whether we'll be able to achieve that by the… in the next 7 months, it could happen but…
Matthew Gordon: Okay, but you'd like it to?
Peter: … It's really a functional thing.
Matthew Gordon: You'd like it to because it could bring a little bit more cash in, in terms of again G&A drill programme for you guys right?
Peter: Oh I'd like to farmout.
Matthew Gordon: That's…
Peter: Yeah I'd like to farmout 6 other Projects right, because you know, we want that… Projects to be worked on, we want to receive cash and for us, it's in the best interests of our shareholders to get those Projects worked on but we also realise that bringing in a company, the wrong partner could be more destructive than not doing anything.
Matthew Gordon: The reason I ask is because you kind of lay these things out there and the reality is like, some of these things you're in control of. Some of the things are market dependent, some of the things which obviously affects, ability to talk to partners which affects the ability to, as you say, provide further cash etc.
The last one is listed on NYSE AMEX or Nasdaq, and you've written 2 reasons here. One is contingent, I suspect a contingent on reaching 100M market cap. You're 37M today. You're going to need to meet listing requirements as you say, so you can sort… you can do something to control that but again, Gold's going to have to pop up more than it has been and you're going to have to do, you're going to have to have some nice drill results, so again it's not… It's sort of in your control but not, is that right?
Peter: Yeah, but I'm also a big believer, you put out what your goals and objectives are and you try to achieve that. Some of them you will try to. I'm a firm believer that investors need to know what are the objectives of a company? It doesn’t mean you have to achieve those but you need to know where your north star and we understand where we want to head and getting to NYSE AMEX listing seems a little far today but we have an objective and we have set our goals and some of that we can control, some of that we can't control and there's many paths to get there. It's not just growing your market cap. I believe there's consolidation in this industry that needs to occur. I think that Allegiant will be, this is my guess, I'm not alluding to anything, but I believe Allegiant will be at the centre of that for all consolidation within the Nevada side of the business, or at least the south west of the United States. There is very few companies that I can point to, that have this portfolio and the resources and the wherewithal that we have and if I were looking back and I was fund manager, as opposed to running a mining company, I would start with Allegiant as my consolidation vehicle and then start pulling in Assets across that. Not even Assets but other, different types of resources that are associated with it, so there are different paths to getting to an NYSE AMEX. I think consolidation is one of them and I'm a firm believer and we have been, I would say proactive in getting companies to start thinking about potentially a merging in the sector, there's too many exploration companies as a whole but with that… also Matt, there's not a lot of great candidates to… that we would like to merge with. We're not going to merge because we want to get bigger, there has to be some type of… some other benefit to us, whether that's another great Asset or just a great team that we want to put together
Matthew Gordon: Yeah I agree with you on the M&A side of things, I think there does need to be some consolidation. I think some, a lot of companies overvalue out there, every CEO will tell me they're undervalued but there's a lot of overvalued Assets out there, on a fundamentals basis.
Peter: Yeah, I agree.
Matthew Gordon: So you're a fund guy, are you an M&A guy? Have you got the energy to do some of this consolidation? I know you're saying, I can't find anything at the moment and I don't know how far and wide you've been looking but are you the guy to take this forward and use your vehicle as a consolidation vehicle or are you going to sit back and let someone else do that for you?
Peter: We're not a one man show, if you look at our Board. I mean it's laughable because our Board could be the Board of Kinross or some other big company, right? This is a pre-eminent Board, almost embarrassing that they're on the Board of a USD40M company. I mean I say that in jest, yeah you know, Gordon Bogden was a premier banker at National City so… and also a geophysicist. Someone who I work very closely with on a daily basis, or at least a weekly basis on the Board, he is targeted with the M&A opportunities. I don't do the M&A day-to-day. I let Gord run that show and then come back and report to me and we have a conversation, we have a call in for hours to go through our weekly list and then Shawn Nichols as well is involved, in that he's part of that committee that looks at M&A. He has 30 years experience in Junior exploration, he knows everything. He knows where the skeletons are buried, he knows every management team, he knows almost every Project.
Then you get into Andy Wallace who knows every single Project in Nevada and has probably drilled every single Project, he knows them and then you have Norm Pitcher, who was the president of Eldorado. Norm has been for me, the great surprise of everything because his knowledge, his demeanour is just amazing and working with Norm has been probably one of the most pleasurable things in my history of Junior mining. He adds so much pragmatism and so much value to us. That Board that we have has been one of the greatest tools or resources that I personally have access to, so to answer your question directly; yes we are well equipped to do M&A activity based on the Board, not based on me.
Matthew Gordon: It always makes me smile when I see Boards like this and comments like yours; they know where the skeletons are buried and he's probably drilled…
Matthew Gordon: The information I get, after we finish filming a lot of CEOs… it gets, it makes me smile because you know where the train wrecks are, you know which companies aren't going to work, they don’t have the Assets fundamentally and it's just a pride play. You guys don’t say a damn thing and all these retail guys are sitting there staring going, oh my God, what do I look at? They all look great, they all say the same things but you guys, no.
Peter: Well I mean, there's one thing I won't mention names, but there's been companies that have built 100s of millions of dollar market caps, great management that have done it on Projects we turned down 5, 6, 7 years ago and would I take them today? No, but it is what it is and look, I give them all the kudos and all the great… I can't heap enough praise on them for actually doing what they wanted to do, which is build up a large market cap company, which has many advantages. I'm in agreement with you, they're able to actually buy credible Assets, they're able to… our strategy and my philosophy doesn't necessarily mean I'm right, it's just who we are. I'd love to go out and promote and get a USD$500M company or USD$1Bn company based on promotion, it's fine, there are some great people out there that do that, you know we just, we are trying to promote, we're trying to get the news out, that's why I like talking to people like yourself. There's only 2 or 3 that we're going to talk to, just because we also don't want to associate ourselves with non-credible people so that's how we approach things.
Matthew Gordon: Peter, loved catching up with you. I loved it last time and I liked it this time. I appreciate…
Peter: Thank you Matt.
Matthew Gordon: … you making… I know it's early in the morning for you there and you've got a busy day ahead of you, so appreciate that. Stay in touch let us know how you get on, okay?
Peter: Thank you Matt, take care, likewise have a great day.
Matthew Gordon: Thank you for listening. If you've enjoyed the interview, why not subscribe to CruxCasts or our website, cruxinvestor.com and of course our YouTube channel crux investor. Plus you can catch us most days on Twitter and LinkedIn. We really love getting your feedback so please keep it coming and we'll speak to you again soon.