Transcript: Anaconda Mining (ANX) - Nova Scotia Gold Asset Providing Scale & Grade

Morgan Leighton
November 10, 2021

Anaconda is a TSX and OTCQX-listed gold mining, development, and exploration company, focused in Atlantic Canada. The company operates mining and milling operations in the prolific Baie Verte Mining District of Newfoundland which includes the fully-permitted Pine Cove Mill, tailings facility and deep-water port, as well as ~11,000 hectares of highly prospective mineral lands including those adjacent to the past producing, high-grade Nugget Pond Mine at its Tilt Cove Gold Project. Anaconda is also developing the Goldboro Gold Project in Nova Scotia, a high-grade resource and the subject of an on-going feasibility study.

We Discuss:

00:00 – Company Overview

00:26 – Phased Feasibility Study, Two-Phase Approach & Financing Permits

06:22 – Conscious Decisions, Expectations & Current Pits

13:21 – Cash Allocation, Total Cash &  Feasibility Situation

21:28 – Time Importance, Newfoundland Projects & Delayed Processes

26:55 – Feasibility Timeline, Funders & Their Understandings

30:14 –Understanding Feasibility Timeline & Near Term Plans

32:59 – Outro

Kevin Bullock: Hello everybody, it’s Kevin Bullock here, President and CEO of Anaconda Mining, a company that’s active on the East Coast of Canada. We have a limited gold production in our Newfoundland assets in Eastern Canada, and we also have a development project, which is really, really becoming the value of our company for the future in Nova Scotia called Goldboro. I’m happy to be here to update people on the progress that we’re making.

Matthew Gordon: Good to see you. I haven’t seen you since June.

Kevin Bullock: Good to see you.

Matthew Gordon: I see you’re back in the office and you’re wearing suits again, it must be getting serious.

Kevin Bullock: It’s getting a lot better here in Toronto. The streets are getting busier pedestrian-wise and traffic-wise, so people are getting back. Things are getting back to normal, or the new normal, I should say. I always think it’s good to be interactive face-to-face as much as we can. That’s where ideas and strategies pop out.

Matthew Gordon: Yeah, that’s good. Okay, I made contact because I’ve been reading through the press releases since we last spoke about some of the things that you’re up to. I think the big topic that I want to discuss is the Feasibility Study. You said you would put out a Feasibility Study, which is great, but you’re now talking the language of a phased Feasibility Study. What does that mean and why?

Kevin Bullock: We, as a lot of people might have seen these shows in the past, which are excellent by the way, keeping people up to date - what they’ve seen is a Preliminary Economic Assessment on Goldboro. A Preliminary Economic Assessment, just by definition, could include all categories of resource; measured, indicated, and inferred. You’re really giving a snapshot, or a projection in time, over what can happen to a project with all the resources, should they come to fruition. That’s what the PEA showed with some very good cost numbers and low Capex, and a very, very robust project. When you move into Feasibility and you’re defining the project with more detailed engineering and understanding how to go forward, and you’re setting up that actual Feasibility Study to raise project finance, whatever that may be, better equity or otherwise, you cannot use inferred because they aren’t yet proven, they aren’t yet drilled tight enough spacing to be proven. You’re only allowed to use measured and indicated. A mine life of 8-years+ is usually what’s required to go for project finance, and we know we have well over 10-years of open-pit mining. This will be an open-pit mine to start with for several years before we even think about underground, as the PEA envisages. It’s year 5 or 6 that we start developing it. We chose, instead of raising $30M or $40M now at a low stock price, and dilutive, to drill something off that won’t come into play until year 6 or 7 of production, which means 8-years from now, we would rather do that drilling with cashflow. We have a 10-year+ open-pit mine life, so to get that going, and not to dilute our existing and future shareholders until this gets started and generates great cashflow from a high-grade open-pit mine, which whereby we can drill off the inferred and do the phase 2 Feasibility, which will be introducing the underground mine to the overall process. We are doing phase 1, the open-pit portion of the PEA and a Feasibility, phase 2 will be adding the underground portion. It’s not that we need to start both at the same time and we’re delayed with the underground. The underground does not start until we’re further down mining the open pit. The other advantage of this, which is really important, is we will open up the deposit to 3 or 4-years of open-pit mining, and understand it in 3D, in an open-pit, really understand the deposit, rather than designing an underground mine based on drill holes that are not that big.

Matthew Gordon: Okay, I want to be really clear here because I’ve seen companies make similar statements in the past and they’ve been absolutely hammered. The PEA came out with 1 set of numbers. You’re just basically saying, ‘I’m telling you now, we’ve got a 2-phase approach to this.’ You said the word ‘chosen’. ‘We’ve chosen to do this,’ because you want to get on with some stuff. What do you want to get on with? I would say the question is, why wouldn’t you wait? Just delay the Feasibility Study. It’ll be fine.

Kevin Bullock: For permitting reasons, to permit the underground, you’d have to do a lot more work, a lot more drilling, not only for exploration and converting ounces but for water inflows, all that kind of stuff, deep holes, very expensive work that we could otherwise do out of cashflow and not dilute the company. It wouldn’t be a good strategy to do just the open-pit portion if we had less than 8-years of open-pit mine life. Then that’s hard to finance. But we have well in excess of 10-years of open-pit mine life at full capacity. That allows us to go out and finance, and build a mine, and then use cashflow to move on to something that doesn’t come into play until year 6 anyway. We’re not diluting shareholders, we’re saving a lot of money, we’re not delaying permitting by several years to drill off something, and then who knows how much more difficult it becomes to permit. We get a mine going, we create cashflow, and then we do a phase 2 Feasibility. We will see a Net Present Value that is lower than the PEA simply because we’re only doing 1 portion of that value upfront, and then we’re going to add value at lesser dilution to the company by doing the phase 2 Feasibility, which adds the other.

Matthew Gordon: So, nothing’s gone away, you haven’t lost ounces, you’ve just deferred the process you’re going to go through so you can start doing other stuff, like environmental and permits and licences etc. to allow you to get the financing. Is that what you’re saying?

Kevin Bullock: That’s exactly it.

Matthew Gordon: Okay.

Kevin Bullock: It’s like if you were a real estate agent and you wanted to start renting out houses, you’d buy what you can with your money and as the rent comes in and pays for those houses and there’s a little bit extra then you add to it, and then you can add to it and add to it, and then you have all these homes that didn’t cost you upfront.

Matthew Gordon: Okay, I just want to be clear because we will have questions come in going - we have already - you’re not hiding anything, you haven’t lost anything, this is a conscious decision of yours to get the economics going sooner so you don’t dilute by raising at these rates because I think most precious metal companies-

Kevin Bullock: Yes, which protects and advances everything for all our stakeholders.

Matthew Gordon: While we’re on the topic, last time we spoke you were at about $0.90. You’re about $0.60 now. What’s going on?

Kevin Bullock: I think if you put us up against our peers and you look at comparable, it’s happening to everybody, it’s the market. I’m of the view that I think a lot of people are in this industry, and maybe I’m just too used to being with gold bugs, but the timing for our project is fantastic because I think we are in the final cycles of a gold bull run that will last for several years, starting next year. I think we’ll start seeing the gold value go up. Right now, gold doesn’t know which direction it wants to go. It’s struggling at a certain top and it’s not going through a certain bottom, so it’s range-bound at the moment and I think all indicators that make gold move are happening across the globe.

Matthew Gordon: What’s happening with your warrants? How many have you got outstanding? Is that going to cause any pressure later on?

Kevin Bullock: We have 0 warrants, so we actually exercised all of our warrants, we found buyers for any sales into exercising those warrants, so all those shares are in good hands now. We’re quite a tightly held company at the moment.

Matthew Gordon: What can we expect to see from you? If I look at a company like Marathon, they did a lot of promotion around their Feasibility Study and the way they’ve gone about it, and obviously, they’ve got a good project there and they’ve built that out well. How do you intend to - given that you’re starting in a slightly unconventional way, right, you’re splitting it, there’s phase A, phase B, or phase 1, phase 2, however you want to position it, and you’ve explained why and it makes sense. Do you feel under a little bit more pressure to maybe put out more information, videos or promotions around how you’re going about doing phase A and phase B as you are doing it?

Kevin Bullock: Yes, absolutely. As soon as the Feasibility is done at the end of this year, we can then use that type of information to also hone into phase 2 and what it would look like with videos and more promotional material. The other thing is when you get into a phase of the flat portion of the Lassonde Curve where you’re building and permitting and it’s boring and why would I buy your stock until it’s built, well we’re going to put a wedge in that Lassonde Curve and tilt it upwards by drilling west of our project. We have 3Moz in 2 pits and a little bit of underground underneath them to 500m deep. We have 1.5km, which is actually the same strike length as our 2 pits 1.5km further to the west, and if you follow the strike of the mineralisation, it hits another past producer from the same era as Goldboro in the late 1800s, early1900s. They were mining the anticlinal systems to the west, the pits to the east, closing in on 3Moz+, and we haven’t drilled a hole but there’s a geophysical signature showing that mineralisation continues. We know there’s mineralisation for another 1.5km, but we have to drill test it to see if there’s any ore within that mineralisation.

Matthew Gordon: Okay, so potentially along strike is 1 thing, is there any old data you can look at in terms of what that mine produced or any of the data it left behind?

Kevin Bullock: From the mine? Yeah, we have some of the underground workers that were mining the anticlinal systems that we found in our deposit, so it’s the same trend, we just don’t know what happens in between, whether it’s at depth or it comes closer to surface. But the geophysical signature suggests the mineralisation continues. That’s fantastic. It’s not an arm-waving exploration target, it is - you know, if you talk about the shadow of a head frame, this is in the shadow of a head frame.

Matthew Gordon: Okay, so you’re looking to join up the dots there, and I guess you’ll explain what that drill program could look like once you’ve worked it out. The drilling so far has been relatively shallow, hasn’t it? I think up to 500m - are you planning to do any deeper holes than that?

Kevin Bullock: For these types of systems, it’s very shallow drilling so far. Our deepest hole is 540m up, of any hole we’ve ever drilled. Our resource that we’re looking at in the PEA for underground mining goes down to, at the deepest spot, about 500m. The analogues of these types of deposits, these anticlinal deposits that look like this around the world, like Fosterville and other Victorian deposits in Australia, go for kilometres at depth. We have a lot of opportunity at depth. We have 1km of the same opportunity on the western half of our project as we have on the east, which is approaching 3Moz and not drilled at depth. This, we’re convinced, is going to be a multi-generational mine once built.

Matthew Gordon: Just in terms of, I want to understand what’s going on here, you’ve got this former producing mine - are you seeing these - again, I don’t know how much data you’ve got - these haloes of deposits elsewhere? How do you go about targeting them, exploring them, or even just quite frankly understanding what’s there, the type of gold, how you approach it? Is that the sort of work that you’re looking at?

Kevin Bullock: Yeah, so what we’re doing is we will cut line west of our current pits in order to do a ground-based IP, Induced Polarisation Survey. That’s a geophysical technique to pinpoint chargeable mineralisation, which would be the host arsenopyrite that is associated with the gold. What it will do is pinpoint exactly where the nose is of these anticlinal systems come close to surface. That’s where we know we can drill from the north to the south, from the south to the north, to hit the limbs of these and continue just moving through the known, through the unknown, back into the known again of the past producer, and see where, within there, other pits may be lying of similar type mineralisation. Actually, the same type of mineralisation, but similar sizes to what we found in the east. We could be talking about quite a few million ounces here over time.

Matthew Gordon: I’m going to jump over to Stog’er Tight because you put out a press release, it’s getting funny now, it’s now still got another 2 to 3-years of life of mine, which it has done for the past 10-years. That’s good news because it’s throwing off cash. Talk about that, but I want to talk about what you’re doing with the cash in terms of the drill program in a second. Stog’er Tight, give us the update.

Kevin Bullock: So, in Newfoundland, where we have our operation and generate cashflow, we’re currently mining a deposit called Argyle, which we had some start-up issues with, but now, mining well we’ve caught up on the waste development, which is the expensive stuff that doesn’t produce ore, over a few quarters and now we’re right into Argyle and things are going well. That’s got another 14-months of mine life, but we’ve discovered another project, another mineralisation area called Stog’er Tight. Not long ago, we put out a resource on that, which is quite incredible because it’s 70,000oz and we only produce 20,000oz a year.

Matthew Gordon: Oh right, it’s even more. Okay.

Kevin Bullock: It’s 642t at 3g/t, so we’re currently mining just under 2. It’s higher grade, it’s closer to the mill, and it looks like that 60,000oz of mineralisation in resource at Stog’er Tight should translate to at least half of that, 50% - 60% of that, of mineable ounces at a little over 2g, 2.1g/t or 2.2g/t. That’ll be another 1.5 to 2-years onto the - so now you’re at 2 to 3-years again, which we’ve been at for a long time but discovering Stog’er Tight which is a little different to the mineralisation we’ve drilled in the past in Newfoundland has opened up a whole bunch of other targets. We have at least 4 quality targets that are lookalikes to Stog’er Tight based on geochemistry and geophysics that we’re now drilling as well, like Corkscrew and Big Bear and Pumbly Point and Deer Cove, which we mentioned in our press releases as well. Stay tuned for maybe other discoveries. What we’d like to always have is 1 mine in production, 1 mine being developed to follow it, and another mine being drilled off as a new discovery. It looks like that’s what we’re heading to in Newfoundland.

Matthew Gordon: Okay, so potentially another 10-years of 2 to 3-years life of mine?

Kevin Bullock: I don’t think we’ll ever show 10-years on the books, but I think we’ll show 2 to 3-years for the next 10-years.

Matthew Gordon: That’s what I thought. Okay, look, let’s get onto the cash component of that. That is throwing off cash for you guys. What’s the free cashflow from those operations, which allow you to reinvest into Goldboro? That’s the flagship, right?

Kevin Bullock: At CAD$2,000 gold, which is about USD$1,550, quite a reasonable long-term gold price for us, I think we’re going to have to start looking at jacking that up to USD$1,600 because that’s what’s basically out there now, USD$1,600 to USD$1,650 for long-term gold prices. That gives us, for next year, which is looking like a record year for us, should give us over $20M free cash. The next year after that, if Stog’er Tight comes on stream, again it’s a similar style deposit, similar size, little bit higher grade and a little bit closer to the mine site, it should do even better than that. We’re looking at $20M+ each year for the next 2 to 3-years, which obviously will not build Goldboro, but allows us to move it forward with Feasibility and have some kind of leverage when we’re talking about project finance as well.

Matthew Gordon: Exactly. Again, this is where I want to go. Before we do, total cash position at the moment given that this money is-

Kevin Bullock: About $8M. We have about $8M in the bank. The other things about generating cashflow, we actually don’t use that generated cashflow very much on exploration because our projects are in Canada and we have what’s called flow through here, whereby we can raise funds at approximately a 30% to 35% premium to our current share price to us on exploration only, and that’s the qualification. You must use it for exploration in Canada. We actually use that charity flow through and flow through to raise funds to do our exploration. Everything we do is looking at dilution to the company because we don’t want to dilute any of our shareholders or stakeholders, which include us.

Matthew Gordon: Okay, let’s try and get some numbers out of you that people will understand. In terms of this exploration program at Goldboro and what you’re trying to do there, if we can focus on that, how many metres, how much money, how much time, and to what end? Has everything got to feed into the Feasibility Study, or is there also going to be additional exploration?

Kevin Bullock: Oh, no, there’s much more. We’re going to embark on a 20,000m drill program west of the - what I just described earlier, west of the pits. It’s a $4.5M program, it includes a 50-line kilometre IP Survey underground and that’ll all be with flow-through funds, separate from all the work that we’re doing including a lot of drilling at site. We’re drilling in between the pits, we’re infill drilling some of the inferred that surrounds the circumference of some of the pits so that they may even grow in size, the current pits that we have. We’re also doing a lot of geotechnical holes, a lot of water well drilling, all the work we need to do to finalise the Feasibility and to understand the water inflows into the pit, do the final numbers for getting the Feasibility done in mid-December.

Matthew Gordon: Right, okay. Again, you seem quite keen to talk to this anti-dilutionary language here, I guess as you should do. Are you feeling a little bit super sensitive about people’s perception of what the Feasibility situation is? Are you trying to make it clear that you’re not trying to dilute people, you don’t want to raise money?

Kevin Bullock: Right, I mean hence the reason we’re doing a 2-phase approach, one of the many reasons. It wouldn’t be a good use of proceeds right now to spend money on drilling deeper than 500m, and infill drilling all the inferred deep ounces to include in a Feasibility whereby those deep ounces don’t come into play until year 6. Why not open up the mine and get cashflow going to drill it off from even - with maybe even a drift off one of the pits to not have long, deep drill holes, and use cashflow. That’s much less dilutive to the company, and quite honestly opening up a mine for several years of open-pit obviously gives us that view of the deposit in 3D for years before we design an underground based on that.

Matthew Gordon: There are rumours that you’ve had another company walking around some of your projects. Is there anything to those rumours, and why would a company be walking around a couple of your projects?

Kevin Bullock: I think there are always rumours in this industry as you’ll see, as everybody knows. We do mine visits all the time. We always look. We work closely with Maritime Resources and Rambler on synergies in the area, especially with Rambler. If we have issues – the supply chain right now is difficult worldwide. If we have issues getting some components for our mill, we’ll call up Rambler and likewise, the other way around, when they need a hand from us, we’ll help them. There are times when people visit - I’ve visited every project in the area. Why wouldn’t I? I need to understand things more. That happens from time to time. I don’t know what those rumours are about or what they refer to, but we have people at site all the time. We’re open to showing it to everybody.

Matthew Gordon: Right, so there’s no M&A in the offing here?

Kevin Bullock: If there were, I wouldn’t be able to talk about it because it would be under CA. I can tell you that we keep operating, we love our project in Newfoundland, and from time to time, there are people that visit site.

Matthew Gordon: Okay, we will leave that there. What would you say your big message is here? You’ve said from day 1 that Goldboro is the thing that you are most excited about. You also said earlier you think you’ve timed it right. Tell me what you mean by that. The market’s sucked for the last 12-months, so why have you timed it right?

Kevin Bullock: I don’t believe that we’ve timed it right, I believe that the timing is working out for us. We are trying to get this going as quickly as we can and doing all the permitting, which we need to do to get it going, which is the bottleneck here. It’s setting itself up that putting a Feasibility out at the end of this year going into next year, and then talking about project financing for at least another year, I guess that permitting will take at least another year, I think we’ll be well into one of these legs of this gold bull run. I’m not talking about crazy numbers of gold like $5,000 or $4,000, but boy o boy, somewhere in the high teens or USD$2,000, this thing would be through a $1Bn NPV at those types of numbers. You’re looking at an environment that potentially has an increasing gold price, you’re looking at a project that’s in the first world and easily financeable for a company of our size. You’re looking at it being the next one to be built in Nova Scotia, and the largest gold deposit in the province, and the highest grade undeveloped open pit on the east coast. All those things tick a lot of people’s boxes and as I say, we’re tightly held. In a dull environment, or when it’s not a bull market in gold, you don’t have much trading but when you do hit a bull market and people want to buy, there’s not much supply. That’s when stocks will start moving quite rapidly.

Matthew Gordon: Do you think that your Newfoundland project could do better sitting in another vehicle? We’ve seen a lot of promote around Newfoundland projects from various parties, some projects better than others, let’s put it that way, but all getting an equal amount of love. Have you considered that in the last year, given what you’ve seen in the market?

Kevin Bullock: Yeah. Since I started with this company, we’ve always been looking at what’s best for shareholders. It is possible that that, either in a spin-out or in a separate vehicle, might be better overall. We’re always looking at opportunities and things that will create shareholder value on an ongoing basis. We do think about it, we think about it quite often, but remember flavours of the month change quite quickly sometimes. I think you’ll see, with the things that are going on in Nova Scotia too, I think you’ll see more investment going into Nova Scotia and then somewhere else will pop up in the world that’s quite exciting and things change. What we focus on is doing something meaningful for our stakeholders that creates shareholder value and grow the company.

Matthew Gordon: Based on fundamentals. How old-school of you.

Kevin Bullock: Did you just call me old?

Matthew Gordon: No, I meant old-school mentality. Focusing on making money properly based on fundamentals I think is a very good thing. Just on the environmental component again, I want to make sure I understand this. If you go ahead with the Feasibility phase A, phase B, you can get on with that process today. That’s a big driver for you because is it taking longer these days? With ESG as the number 1 topic for funds, for investors, is it taking longer to get over the line?

Kevin Bullock: Yeah, I think it’s the simple fact that there’s more work to do to prove that you’re not going to harm the environment any more than you need to and that you’re not going to create any social issues anymore than you need to. Getting that down and on paper and understanding the project and defining it specifically to the government of the province you’re in, or the area you’re in in the world, is very important. For us, we could put in our environmental assessment registration document today, but it wouldn’t be complete and that doesn’t fast track things. It actually does the opposite. We’re going to finish our Feasibility, then spend another 6 to 8-weeks after that putting our EARD together, and we want to be known for the company that put in the most comprehensive, detailed EARD in Nova Scotia’s history of gold mining, so that the question and answer and review periods are minimised. You can have anywhere from 1 to 4 of them, and they are 3-months each of review, further questions, review, further questions. You can have 4 of those. We’re guiding that we will have 4 of those because it’s a large project, but the better we do upfront with our EARD, the fewer questions we will get and the less time it will take to finalise to get final permits.

Matthew Gordon: Right, again timing of the Feasibility is what? What’s the date we’re looking for?

Kevin Bullock: Mid December.

Matthew Gordon: Mid December, so pretty soon.

Kevin Bullock: That means by the end of February, we should have an EARD delivered to the government that defines and sets the project as an open-pit project and exactly what you’re going to do, where the infrastructure is going to be and the discharge into the environment. Then, they start working on whether they have questions, they want further information. And there are 4 periods of that. We’re guiding that we’ll take all 4 periods, which is 18-months, until we’re shovel ready, from the end of February.

Matthew Gordon: Okay, so I’ve had a company on this week, and they’ve gone from PEA to Feasibility Study and then they’re getting funded. That seems to be the model that you’re suggesting and that you can employ here.

Kevin Bullock: Just to be clear, ours is a little different. We haven’t gone from PEA to Feasibility. We started the Feasibility 2-years ago. We did a PEA because we had such an upgraded resource at one point, and more specifically over 1,000% increase in open-pittable resources that we have to somehow find the change in scope from a small underground high-grade mine to a large open-pit mine upfront, and also to protect ourselves because we felt very vulnerable having millions of ounces added to our company and not have any economics around it. We chose to do the PEA in parallel. The PEA actually had a lot of fundamentally Feasibility-level work on the metallurgy and things like that that wouldn’t otherwise be in a PEA, it would be more of an estimate. For instance, the recovery in the PEA is Feasibility level metallurgical work, so that won’t change.

Matthew Gordon: Okay, understood. Are you already having conversations with funders about getting this funded? Because they’ll have those conversations subject to you getting the environmental etc. in place, right? What do you know today?

Kevin Bullock: We have had over 60 meetings with project finance groups from streaming and royalty companies to debt providers to banks, everyone. They’re all pretty consistent with what they’re saying, which is this is a robust project based on the PEA so far, in a good jurisdiction - a great jurisdiction - and it’s easily fundable up to 60% to 70% debt if required. Those groups are ready to put term sheets in front of you, obviously condition on permitting, and other things, but they’re ready to do that. We’re not ready to do that until our Feasibility is done and we’re talking about actual concrete numbers.

Matthew Gordon: Absolutely. Have you had conversations with them since you decided to do the Feasibility Study like this because financing a project of scale and a big capex is going to be attractive to some, where if it becomes a little bit smaller, it may not be as attractive to them because the money required is smaller? What’s the dynamic of that conversation? Do they understand why you’ve chosen to do it this way, and has anyone fallen away as a result?

Kevin Bullock: Nobody’s fallen away. As a matter of fact, most people like it and the reason is, they’ll fund something that gets payback quickly within those 10-years. That’s why 8-year+ mine life is important. To them, it’s an open-pit mine life with this huge upside of an underground layer that really doesn’t play into their valuation, but they love that there’s a potential long-term mine life. The underground doesn’t go away, it’s just simply not at Feasibility level yet. You can still look at the PEA once the Feasibility of rope-pit is done and say, ‘Yeah, but this is to follow.’ They won’t be blind to that. Anybody that does fund this project is going to have their own independent engineer review it and stuff like that, and they’ll see the potential.

Matthew Gordon: Okay, look I appreciate the update. It sounds like things are 1, obviously moving forward. I understand the rationale for splitting the Feasibility Study between open pit and underground. Just again, leave me with that thought, what’s the timing on you saying, ‘Right, we’ll do the underground Feasibility Study’? At what point again?

Kevin Bullock: The PEA suggests that the best time to develop underground is around year 6, from within the pits. That gives us quite a bit of time to do that second phase, but we will do it as early as we can, which means as soon as we get enough inferred drilled off, out of cashflow when the open-pit mine starts.

Matthew Gordon: You’ve got to get that balance between the most efficient way, if it’s all about efficiency, so year 6 would make sense. You’d have a lot of data by that point. And obviously, pleasing the market in terms of scale, the conversation around grade, underground, etc. and bringing the economics forward. There will be a cost to it, but you’re going to be making money so presumably, you’re bringing the potential forward. How do you review that or get that balance right?

Kevin Bullock: What we’ve chosen to do is that the underground will start and actually, the $300M to develop the underground will be completely out of cashflow that’s built up over the years. There isn’t a secondary financing. Basically, you’re building 2 mines for the price of 1 with cashflow. Again, not dilutive. Year 5 and 6, you’ll see the all-in costs go up quite considerably because you’re spending, I think in year 6, $62M on underground ramp development, and then $30M the next year to develop it all to get it going, but then you’re stoping. The key is that underground mining at this particular deposit is only on the high-grade anticlinal lenses, whereas the open pit takes all of the halo mineralisation. The difference in grade between - even though it’s confusing, the grade isn’t getting higher at depth but when you go to underground mining, you’re mining all the high-grade veins within a system that’ slower grade. Really, you jump up the grade by 2 to 3 times when you go underground. It’s not about starting it earlier and getting more capacity through the mill, it’s about incorporating the underground and the grade actually goes up overall. We start at about 87,000oz a year on average for the first 5-years, and then we develop the underground and then we move to 137,000oz a year without any more throughput, it’s just a grade difference, for the next 10 in the PEA, at some very low operating costs.

Matthew Gordon: Kevin, good update. Stay in touch, let us know how you get on. I’m intrigued by the new plan and hopefully, we’ll get a sense of the new economics before Christmas as well.

Kevin Bullock: Great, thanks a lot, Matt. Have a great night.

To find out more, go to the Anaconda Mining website