Transcript: District Metals (DMX) - Polymetallic Profile Reflecting Bergslagen
District Metals Corp. is lead by industry professionals with a track record of success in the mining industry. The Company’s mandate is to seek out, explore, and develop prospective mineral properties through a disciplined science-based approach to create shareholder value and benefit other stakeholders.
The advanced exploration stage Tomtebo Property is located in the Bergslagen Mining District of south central Sweden is the Company’s main focus. Tomtebo comprises 5,144 ha, and is situated between the historic Falun Mine and Boliden’s Garpenberg Mine that are located 25 km to the northwest and southeast, respectively. Two historic polymetallic mines and numerous polymetallic showings are located on the Tomtebo Property along an approximate 17 km trend that exhibits similar geology, structure, alteration and VMS/SedEx style mineralization as other significant mines within the district. Mineralization that is open at depth and along strike at the historic mines on the Tomtebo Property has not been followed up on, and modern systematic exploration has never been conducted on the Property.
00:00 – Company Overview
01:02 – Why Raising Money? Value, Comparisons, Equivalents
04:10 – Significance of Garpenberg Mine, Statistical Analysis
09:05 – Strategy to Attract Global Audience, Impact of Numbers & Market Condition
11:22 – Maintaining Upward Momentum, Future Prospect & Drilling Cost
16:21 – Endgame: How Far Do the Phases Go? Selling Option
17:19 – Increased M&A, Acquisitions, Overall Game plan & Monetization
21:01 – Message for Investors & Potential Investors
21:49 – Outro
Garrett Ainsworth: Hi there. My name is Garrett Ainsworth, I'm the CEO and President of District Metals Corp. We're an explorer developer in south central Sweden in the Bergslagen district, looking for high-grade polymetallic deposits. We're focused on our flagship property, which is called Tomtebo. We also have 2 other advanced stage exploration properties that we recently acquired and we continue to progress those along.
Matthew Gordon: Garrett, lovely to see. I saw you at the end of May, beginning of June, I think, how have you been, all good?
Garrett Ainsworth: Excellent. I mean, that is around the time that our phase I drill results first started coming out and they're quite good. A lot has happened since that point in time that we talked. We started our phase II drill programme in early October, acquired 2 new projects that closed in October. So yeah, it's been a busy time.
Matthew Gordon: It has, I saw a press release, you've raised some money at a time where your shares are 50% of what they were when we last spoke. Why do it now?
Garrett Ainsworth: Yeah, so I mean, it's been a rough summer fall and leading into the end of this year in conferences, I was told by a number of people that we're going to need to finance in January. And as you approach that time that everyone's expecting, it can get even worse for the share price. So we still have about 2.6M in the treasury when all the bills are paid from the Phase II we’ll have 1.3M. But that's obviously enough to keep going but not to do a significant drill programme. So the decision was made to strike now, also, because there was some good interest from some funds, some new funds into the district story. We made a fairly quick decision to move on this financing that we announced today.
Matthew Gordon: Well, it's a tough one, I should say, is there ever a right time? Ideally, when your share prices are sky high, but if you're in a position where you're kind of getting up towards the timings doesn't work in your favour, it's problematic. Give me some upside, did you get some good shareholders and were you able to bring in people that you wanted to, were you able to take some people out? Or is it just case of, we just need the money now and let's just make this thing happen?
Garrett Ainsworth: No, it's been very well thought out through the virtual conferences that we've had, bringing the story to new funds. Our existing shareholders and funds are very supportive and we've been communicating with them all of our results, quite some detail. But it wasn't a major reaction, we've been circling around with these new groups for quite some time. The idea was not to let it get to the point of having to be a knee jerk reaction, which is very important.
Matthew Gordon: Yes, okay. Well, I guess it's going to be more important what you do with it. I get the 2 acquisitions, I want to talk about those in a second. But we better talk about Tomtebo. Going through the press release, you've been busy, lots of drill results coming out but I have to say that I'm not actually quite sure what I’m meant to be looking at, because one minute, we're talking Copper, next drilling Silver, I know it’s polymetallic, but I am trying to understand how I value you. How do I compare you? How do you do it?
Garrett Ainsworth: Yeah, and that's a great question and it's one that I've shifted on. Because, you know, talking in Zinc equivalent, Silver equivalent, Copper equivalent, it still can be quite confusing. I mean, our main target is Zinc and Silver which is the best analogy to that is leading to Garpenberg mine, which is 25km to the south east of us. I'll actually share my screen here and bring up.
Matthew Gordon: Right, that's fine, before you get stuck in, nice numbers good. Before you do, what's special about Garpenberg mine, what's it done? Why should we be looking at that going, oh, that's quite a good analogue.
Garrett Ainsworth: So Garpenberg is actively operated by Boliden. It is a gigantic polymetallic deposit and it had almost shut down in the 1990s. Our technical advisor Rodney Allen, he led the team that made some key discoveries that took it to a tier I asset for them. To have that 25km away from us, we've got the same geology structure, mineralization styles as Garpenberg is, you can't ask for a better comparison or a better target to get to.
Matthew Gordon: But talk to me about it in terms of scale is one thing, economics is another so talk to me in dollar terms, there's this thing throwing off cash, is you want to be like them, because it throws off cash, is that what you are saying?
Garrett Ainsworth: That's key and it goes back to the confusing point of polymetallic. So what I've done on this slide, I mean, Boliden’s supply is amazing, data on their operations and last year Garpenberg they produced 3Mt which in some polymetallic districts that's a deposit on its own and they've mined that one year. The grades here, Silver, Zinc, Lead, Gold, that's confusing. So by breaking that down into an in situ value per tonne, we come up with $165/t using these fairly low metal prices down at the bottom. And that's really to illustrate that even in depressed metal prices, that this mine is a cash cow for Boliden. I mean, their Opex is only $43/t, I should state this in situ value so there's no Royalties tax that's been taken off of that.
Matthew Gordon: Just for people listening on podcast, which there are many, about 53% of our audience; Silver, you're using $15/oz, Gold, you're using 1650 an ounce, Copper 215/lb, Zinc 0.85/lb so yeah, it's truly, you know, conservative numbers. So are you saying you're sitting just parallels in terms of the distribution of the commodities?
Garrett Ainsworth: Correct yes, the distribution of metals that you see at Garpenberg, we're seeing those same distributions at Tomtebo, which is pretty important. But that also comes with similar geology and alteration styles, to Garpenberg as well. So where's Falun that's historic mine 25km northwest, it's very Gold-Copper rich and it's an unusual one. It's kind of a freak of nature, in the sense of how big it is for having a Copper-Gold feeder style zones.
Matthew Gordon: Right, so what else does this place tell us? I'm looking at the Opex there at $43/t compared 265 is situ a tonne, that's nice.
Garrett Ainsworth: Yeah so they're clearing a lot of money at Garpenberg and that's using depressed like metal prices. And I mean, the incredible part is that they're mining down at the 1400m level and they're able to do this because it's highly automated mine. They're doing bulk tonnage, 3Mt is a huge operation. Their plans for 2021 are to expand it to 3.5Mt so they're putting even more money into it. And their mind cut off of $32/t that's almost just like an ounce, it's almost an ounce of Silver per tonne. So that's a very, very low cut off to be mining especially at that depth.
Matthew Gordon: Okay, so you think you can be like this, right? And what was the other number their mind cut off $32/t. Okay, so I get a sense; you're talking about contained metals the thing that interests you whether it's similar to Garpenberg or there or there abouts, it doesn't matter to you. You think that the value here is being able to replicate something like they have done. You are a $20M company, today, you've raised a little bit of money, you're going to be able to advance this thing, forward x months, and you're going to do step by step by step by step. How do you talk to the market and say look, we are very clear about how we become Garpenberg and what is it drill, drill, drill or is there more to it?
Garrett Ainsworth: It's definitely yet getting that critical mass but I should say like, I mean, when you look at all the global reserves, resources production, it's above 200Mt when you put that all together. The standalone operation from our due diligence phase, a standalone operation in Bergslagen is thought to sit at about 10Mt. So that's not a very high bar to attain to get a standalone type operation. The expectation isn't we don't have to find the twin of Garpenberg in order to make it work. You can find something much smaller and it will work in this part of the world because the infrastructure is so good, cost of power is quite low. There's a lot of things on your side.
Matthew Gordon: But again, just explain for me because I think you've helped me understand I should not be hung up or whether you're talking one week about Copper and the next about Silver, etc. You're looking for these massive sulphides which contain lots of metals, which are of significant value and you'll get into the economics at some point. So right now, we're saying we should think like you do, okay, get it. The thing that I need to next understand is how do you go about financing this thing through all the different stages without continuing to dilute your shareholders because at the at the moment, 20M market cap, share price is 50% of what it was the beginning of the year. What needs to happen next year for you or needs to happen as far as the market is concerned for you to get the recognition. Because the big numbers that you put out yesterday, that's fantastic but you didn't get much of a reaction.
Garrett Ainsworth: Yeah, it jumped up to $0.30 I believe from 2024, it was pretty good and then it cooled off at the end of the day, but it was a bad day in the market. And that really has been the story overall, it's been a tough market to get any kind of share price appreciation even with good results. But what we need to do to continue our upward trend is connect the dots and keep hitting this style of mineralization such as what we hit and hold 25 which was 14.3m of 14.2% Zinc equivalent on that one. So that's the key is to keep connecting the dots and then get us closer to a resource estimation stage so that we can show what your some like concrete values that we have in situ in the ground.
Matthew Gordon: How much more money you're going to need to spend to be able to put out a resource which is going to be of interest? Not just put out resource for the sake of resource, but that you think is going to be meaningful and give people clues as to the sort of project that you have in front of you at Tomtebo?
Garrett Ainsworth: Yeah, I wish it was such a linear trajectory that I could say exactly how many metres that would take us but it's very much results based. We're going to do a phase III programme; we haven't decided how many metres that's going to be exactly because we're still in our Phase II right now. So we're going to look at where the metres are going to be concentrated and if all goes well, we could be in a position potentially to put some sort of resource out in late 2022, but there's no guarantees behind that.
Matthew Gordon: Right, so it is drill, drill, drill, in which case, so the money that you've got takes you how far I mean, I don't know how many drills are turning at the moment or what type of drills or what the plan is, can you give me some sense of that?
Garrett Ainsworth: Yeah, for sure. So, we have 2 drills going at Tomtebo, the cost per metre, all in is CAD$300/m, that covers everything. So it's a relatively in the middle ground of costs globally, I would say. So 5000m programme which is what we're doing phase II is about 1.5M. And then you do your geophysical surveys, downhole electromagnetic surveys to pick up those conductive bodies so that's another $150,000 or so. But that's the key thing is that, we drill we get good results, but we're also using downhole electromagnetic surveys to see where we may have missed a massive sulphide body so that we come back and we can test the conductive plate that's been modelled. And then we're also using through Rodney Allen uses something called whole rock geochemistry and essentially, it's samples have been taken all the way down the hole in unmineralized rock and it tells you where you are within the VMS system and what geological unit. And then that helps pinpoint, well, we already know where the fertile horizon is but as we continue to get this whole rock geochemistry back really get, we delineate even better so we can be smarter with each subsequent drill hole.
Matthew Gordon: Okay, so how many metres are in Tomtebo to date?
Garrett Ainsworth: By the end of this year, it'll be 10,000 plus, well, 10,600.
Matthew Gordon: Okay, so you're going to know a lot about that massive sulphide that you identify that discovery but you're going to have to do I think phase III drilling to know more, is there a phase IV I mean, how massive sulphides are by definition large. But how much do you need to know about that one before you can put out a resource, before you actually want to start putting some numbers on it? Because it's not easy to make discoveries but you also need to know when to stop.
Garrett Ainsworth: Exactly, yeah. So spacing for an Inferred would likely be 75m to 100m. So that's kind of a good metric to go by. Obviously, that can change based on the geologic conditions that you're encountering and then if, we would always start with an Inferred but if you were to move to an Indicated, then your drill spacing would be more on the order of 25, potentially to 50m if it's really strong continuity. We step out until we stop hitting and we stop seeing conductive plates further down dip. But in this part of the world, these kinds of deposits are quite often they continue at depth. So we definitely have that on our side.
Matthew Gordon: So remind me what the end guess, we have spoken for a couple times, but remind me the end game here is what you're a bunch of explorers, obviously. How far down the phases do you take it or you just kind of prove it up to be interesting enough to someone else to take it over?
Garrett Ainsworth: Yes, and again, that's part of the due diligence was identifying potential suitors for once we develop project, are they there? And are they in good financial shape and the answer was yes with Boliden and Lundin being very active with their mines in the Bergslagen. So quite comfortable from exploration, discovery, delineation up to like a PFS level and at that point, it definitely is around a good time to look for a monetizing event for myself, that's my strong suit. I mean, if I told you that I was going to bring this into production, then yeah I would be very leery of that.
Matthew Gordon: I could probably push you on that one. So okay, so obviously, you've named a couple of players there, are there others? Are there other examples where people have been doing M&A or do you think we're moving into a more M&A phase with regards to metals and acquisitions next year, rather than what we've seen this year, which has been a little bit muted?
Garrett Ainsworth: Well, I think with Gold, absolutely we're seeing increased M&A, not really base metals but that generally comes a little bit later. So there's definitely I mean, Bergslagen is a small district. We've talked to Boliden and the key people there, and we've talked to Lundin as well. They're starting to get more active on exploration. Actually Boliden dropped their exploration team in Bergslagen in 2017, completely dropped it. And now they're in the process of rebuilding. They're quite curious as to what other people are doing and so it's a good sign when we're having a good dialogue.
Matthew Gordon: Right, okay. And just tell me a little bit about these acquisitions, Gruvberget and Svärdsjö.
Garrett Ainsworth: Yeah, so Svärdsjö is lake and Gruvberget is mountain mine, that's the translation in English.
Matthew Gordon: Thank you and why did you buy them?
Garrett Ainsworth: So the game plan, coming into Bergslagen all along, wasn't just to be a one project company, it was to come into a district and establish ourselves with multiple advanced stage exploration projects. We looked at dozens of projects before deciding on Gruvberget and Svärdsjö. So one vendor was EMX Royalty who we know quite well, they sold us Tomtebo. The other one Gruvberget is from private Swedish company called Explora Mineral AB. Their past exploration, past historic drill results that show mineralization is open in many directions and have not seen modern systematic exploration. So if they're very similar to Tomtebo, both of them the Gruvberget project is a very significant zone called the North Zone and it's got 550m of continuous mineralization. That's been historically drilled down to 160m depth and it's completely open. So at depth and somewhat laterally so that's going to be a walk up drill target. But I mean, we recently just started airborne, electromagnetic magnetic survey. So we're going to follow the same path of exploring these properties as what we did at Tomtebo.
Matthew Gordon: Right, but what's the game plan here just to understand it. 3 assets, Tomtebo obviously significantly advanced in relation in comparison to the other 2. Is it a case you'll spin assets or would you be looking at company sales in terms of monetizing events? And how do you monetize it for yourself and shareholders?
Garrett Ainsworth: I would say definitely not spit it out so this is keep it all together. It's very Bergslagen focused, that's important. And then we get these assets up to a certain level of interest from a major and then go for a monetizing event at that time.
Matthew Gordon: Okay, really clear. Just leave is with final thoughts in terms of the money you've got available, you're going to be, you're going to try and work out how you come out at next year, but what are the thoughts you want to leave investors, potential investors with now?
Garrett Ainsworth: So District Metals we started with 1 project and we now are a full blown company. We're running on all cylinders right now. Things are very, very busy and there's a lot of excitement in Sweden with what we are doing. The fact that we'll likely be drilling 3 different advanced stage exploration properties next year really gives us a good shot at getting a property to advance it to a stage where there could be interest from a major.