Transcript: G2 Goldfields (GTWO) - Guyana Gold District Scale Exploration
Interview with Dan Noone, CEO of G2 Goldfields Inc. G2 Goldfields, formerly Sandy Lake Gold, is a Canada-based company engaged in exploration of its projects.
The Company owns projects in Canada and Guyana. Its projects consist of The Sandy Lake Gold Project in Northern Ontario, Canada; The Aremu/Oko Gold Project in Guyana, and The Peters Mine Project.
Sandy Lake Gold Project is approximately 230km north of Red Lake, Ontario; located within the traditional territories of the Oji-Cree First Nation Communities of Keewaywin and Sandy Lake. The Aremu/Oko Gold Project consists of gold deposits. The Peters Mine Project is located in Guyana.
- 1:31 - Company Overview
- 2:24 - Business Plan & Model: Money Put in & Confidence in Project
- 9:46 - Jurisdiction & Neighbouring Companies
- 12:11 - Money Allocation & Drilling: Grades & Expectations for Timing & Spend
- 22:25 - Team Experience & Track Record
- 25:10 - Evaluating Potential for Scale: Expected Resource Numbers
- 32:20 - Spin-Out of Sandy Lake Project: Agreements & Benefits to Shareholders
- 38:01 - Management Remuneration & Focus
- 39:13 - Expectations for 2021: What News is Coming?
Matthew Gordon: Dan, how are you sir?
Dan Noone: Very good thank you Matthew.
Matthew Gordon: Fantastic, fantastic, where in the world are you?
Dan Noone: I'm in Toronto.
Matthew Gordon: Right, right still in splendid isolation.
Dan Noone: Most definitely.
Matthew Gordon: So how are things, are they…? You look like you've got a bit of a tan there so it can't be all bad.
Dan Noone: The sun's been out for the last week, so yard work has been the order of the day and getting some Vitamin D, it’s been good.
Matthew Gordon: Good lad, okay, well look. Hey, first time we've met, spoken, haven't heard the story before so I'm keen to get into it but before we do can you give us a one minute overview and I'll pick it up from there.
Dan Noone: Oh for sure Matthew. G2 Goldfields Inc is listed on the Toronto stock exchange, it trades under the symbol GTWO. It also trades on the OTCQX under the symbol GUYGF. We're a Gold exploration company, we've made a high grade discovery down at our Oko Project in Guyana in South America. The management team is the team that found, took the feasibility, finance and built the Aurora Gold mine in Guyana; thirty five miles north of our current discovery at Oko. Insiders own 30% of the stock, and have invested USD$5M of their own money. We're currently on hole 73 and drilling continues as we speak.
Matthew Gordon: Fantastic, okay I was keen to get into this because you know Guyana quite well. You've worked there, you've obviously done business there and you chose to go back there. What did you actually set out to do? I'm intrigued by what you were trying to achieve, so is there a business plan?
Dan Noone: There is, and basically we annunciated it right at the start so we set out, myself and Patrick; it was 1. Explore for large, high-grade deposits, Tier 1 assets, and so we needed to put ourselves in a place where you can find these and so obviously Guyana we knew well. It's the western half of the Leo-Man Shield in north-west Africa, which has 300Moz delineated. The Guiana Shield had 100Moz, 60M in Venezuela after the 1990s, so there's a lot of potential between Guyana and northern Brazil for high-grade, world-class discoveries. We knew Guyana well; let's go to Guyana, that's A.
Second was to acquire District scale properties, so we don't want a postage stamp, we want to own Districts where we can put together a series of deposits because these orogenic Gold deposits tend to be a string of pearls as opposed to porphyry deposits which tend to be large 10Moz in one body together, as opposed to let's say, Obuasi which is over 8kms and 70Moz, but basically a series of deposits; Chirano 17km long and 7 different deposits for 4½Moz, that sort of thing so we wanted the Districts so we did that. We went and found the Aremu Oko District, put that together and we also have the Puruni District with the old Peters mine there; so that was step 2.Step 3, Patrick's always about exploring in the shadow with the headphones and so on these claims we also have the Peters mine in Puruni and the Aremu mine in the Aremu Oko District which were modern day mines in the first decade of the 20th Century, so they were there. They'd had mid-scale mines since that, operating when we came in at Oko and also at Jubilee in the Cuyuni District, so in a mining district.
Also we want to explore in a mining friendly jurisdiction and we know Guyana, we built a mine there. For us, that wasn't hard and we think once you have those 4 things, you'll attract the Majors and that's why you see Barrick and Newmont active in the Guyanas and particularly Barrick in Guyana itself. Zijin acquired Aurora Goldmines, they're China's biggest Gold-mining company, so once you have that and then you start to get M&As from the Mid-Tiers, Gran Colombia acquired Gold X. You know when you find something you can sell, so that was the first 4 things we had to put in place and then we just had to make a discovery; and that's what we did at Oko, so it was right off the bat. It happened quicker than you'd think it would and so that's where we're at.
We're at the discovery phase and now we move on and the phase here is to build out the resource at Oko and then, but at the same time explore along trend. There's 17km between Aremu and Oko we control and also get into Puruni; the main focus at the moment, after discovery, is the Oko main zone.
Matthew Gordon: Okay, so I get the jurisdiction and all the things that you just mentioned that kind of come along with that, but you've put a lot of money in this. You've put USD$5M in it so you clearly have a high degree of confidence in what you've picked up, so can you just talk about what it was that you bought? What did it cost, how did you pay for it, how did you structure that?
Dan Noone: Okay, so basically G2 Goldfields used to be Sandy Lake Gold and it had claims in north-western Ontario and was going fairly well. We just spun back there, our assets out again but basically when we left Guyana Goldfields, we said we want to do this Guyana proposition. There was a company called Bardicombe Investments which was attempting to mid-scale mine both these areas; at Aremu and the Peters mine and so we acquired that asset for… there was about 50M shares, it was about 35% of our company and that’s when we took it on and we put the money in and financed it.
Now the reason we like this area is geologically it's in the same basin as Aurora, so we knew the geology very well. Also from the work we've been doing at Aurora we started to understand where we need to be in these spaces, which is in the margins and the corners so we had a triple point junction down here at the south. A historically very high-grade mineralisation at the Aremu and Peters, the Oko we picked up as an option from the Vieira Family in Guyana after the initial acquisition because they had some sub-contracting Brazilian underground miners there who were pulling out spectacular amounts of gold, so Michael had called up Patrick and said, come and have a look at this, this is fantastic. So I suppose that's serendipitous they get down there, these people and so we put that together and we said, well this is as good a shot as any because if you want to find a world-class deposit and you're looking for your model and the model is the Obassi and why would you want to model something smaller. Then you say, let's look at the same geology and it is the same geology, so let's go and explore for that, you've got the carbonaceous shales, you've got your batholistic, you've got the basin margin structures. You've got everything you could possibly wish as a geologist to see, to go and find one of these things and so, you know, you're not getting any… you may as well put your money where your mouth is and go and explore and that's what we've done.
Matthew Gordon: And so what's the model there? From Aurora obviously, you've learnt a lot in terms of how you should approach the assets that you've got now, so that's all good news but just remind me though because I'm trying to understand whether you're going to apply some sort of cookie cutter approach. Where having seen how Aurora's developed, whether, you're going to take it further up the curve?
Dan Noone: Yeah, Aurora's to a degree an accidental build because the financial crisis came in the middle of the whole Feasibility Phase, everything went crazy but we kept working and we drove it through to Feasibility. Cuyuni at that time also really didn't have many Majors exploring there, back in the 2000s so every potential enquiry brought down, we had to enter the country for the first time. Also the IFC was a major shareholder and they were driving hard to get it built, so they wanted to finance it. They wanted us to build it so we built a team around that and did that. It's not the Gold, certainly this time, I mean I'm a geologist and Patrick's the explorer. We prefer to find it and be taken out and that really is the model which we're working on here.
Matthew Gordon: So by that, find it means don’t do any studies on it?
Dan Noone: Look seriously, we take it to a pre-Feasibility Stage I think, I mean you always have to keep marching it forward until someone comes along and says, hey I want to buy you, but you have to be looking for that opportunity as well. I think in Guyana this time with the activity down there amongst the Majors and now we see Mid-Tiers, that opportunity will come a lot easier and earlier than it came at Aurora.
Matthew Gordon: So you're saying that because the Majors are in there, that they understand the jurisdiction and the mining code and the law etc, so therefore that doesn’t put them off. It's not so well known amongst Junior investors though is it? I mean are they any sort of smaller players? Are there any success stories that people can look to?Dan Noone: That's true, I mean we look at probably 4 other companies down there in the Junior sector who are doing things, where they have picked up old artisanal mining areas and it has the potential, like us, to make a discovery. There's obviously other companies but there's 4 probably who are really having a crack at it, so it's not heavily explored by Canadian Juniors and there is a barrier to entry there; that isn't already a mining country and there's a lot of mid-scale miners. A lot of the land is already tied up by local miners who are mining and making money so you sort of have to cut a deal to get in there. It's not just go stake on the computer and away you go, so that is a bit of a barrier to Canadian Juniors. It's certainly not a barrier to Major mining companies and it's not a barrier to us because of our experience down there.
Matthew Gordon: Well tell us a little bit about the country, because we're seeing this sort of whole narrative around South America being not such a good place for retail investors to put their money because every time there's an election, there seems to be some sort of narrative around, oh it's a socialist country, they're going to tax this thing, they're anti-mining, it'll never work, right. We've seen it in Ecuador, Peru, Mexico; we're seeing it in Chile now; every single time. How does that affect the way that you talk to the markets? Does Guyana suffer a little bit from that?
Dan Noone: I think Guyana… There's a saying in Brazil that the Guyanas stand with their back to South America and they carry a prominent part of the Caribbean. They're not only considered to be Latin America, also… they sort of had their socialist crack at it back in the 60s and it didn't work out so well, so with that they're very much a British law, but also the new oil discovery down there will now take Guyana into the top 4 growth countries in the world and be the richest country per capita in South America in 10 years I think. It's also a highly educated country, the British did very well there; they've got 95% literacy. You know it's sort of a western-style country anyway, that just didn't have much money historically.
Matthew Gordon: Right, okay so how much money have you raised in total?
Dan Noone: We've raised in the last 2 years about USD$10.5M
Matthew Gordon: Right, is that when you're starting from, using…?
Dan Noone: Well if you're talking historically, back in the Sandy Lake days, originally this company was in Brazil, it was called Largo de Rardo, this is the third innovation of it, so since we did the acquisition of Bardicombe Investments in the Guyana, we've raised about USD$10.5M and I suppose another, that's about 10.5 including warrants, yeah.
Matthew Gordon: Right, how do you think you're doing? I think you sort of shot out the gate, people got really excited, you're up USD$1.20. It's come back down, settled down for about the last year and gone, say sideways right? But the results have been quite good. There's a lot of… I've looked at the halts right, there's some really nice high-grade veining going on in there and it's an orogenic so presumably you know a little bit more about, you know that meeting expectations. I mean what sort of average grade are you seeing outside of these high-grade veins for instance?
Dan Noone: In the sheers, which are generally anywhere between 3-5 and we have 6 parallel sheers. I mean we're getting assays commonly above 10 grams. On the back of the envelope we always drop it down to 8, but it's commonly above 10 grams over 3-5 m per sheer zone, so it is a high-grade deposit. I mean when you end up modelling these things, like in Northern Ontario, it always comes down to 8 grams because 8 grams is a good mine, so you include enough material to make it 8 grams. I mean at the end of the day it's a high-grade vein system and it basically will be what you want to make it, at the end of the day. I mean, certainly the core of these things, some of the assays, it's commonly half an ounce. But I think we would be comfortable talking about 8 grams because we know that works.
Matthew Gordon: Right, so therefore you've got an expectation because of what you know about the country. That's the way this would be mined to, because when we talk about orogenic there's typically a sort of lower-grade, more homogenous spread as welter, with high-grade veining through it.
Dan Noone: Yeah, I suppose when we locked the high-grade there is, you can include the lower-grade halos and I suppose if you look at an open pit you will do that and you'll drop the grade down. We're focussing on the high-grade because at the end of the day, most of your ounces end up there anyway and also in these orogenic systems they tend to be deep. I mean they all start at surface, as ours does but they all go deep, so at the end of the day you're going to have to have a high-grade mine somewhere, you may as well model it that way. If the engineers come later and say, hey we're going to take out all the low-grade stuff. Well good on 'em, fine but geologically we need to model what is there in the high-grade and then we can decide later, how you're going to mine.
Matthew Gordon: Right, so if you're only going to take it through to the PEA stage say, how much more money do you need? Because you're in hole 73.
Dan Noone: Hole 73, yeah.
Matthew Gordon: Grade's been good, you're hitting mineralisation a lot of the time so it's all good. But how much more money, how much more drilling needs to happen? What do you need before you actually push the button on commissioning the PEA?
Dan Noone: Yeah that's a good question, because it's like, how long is a piece of string? Hopefully, if it's really big it takes longer and lots of money. When you step off it and you get to the end of it and go, that's it. Well that's when you start to say, okay, now it's infill drill and get it resourced and whatever else. So that's a very hard question Matthew. I would like to think that it's going to be, you know at least 10-20 it could be USD$30M if we keep building it out. I mean, okay main zone we have it over about 900m now, where we keep consistently hitting… all the sheers, they're behaving themselves, they're good grade and then we come to the south-west turnstile, inline for another 1.5km and we still hit mineralisation but we haven't hit the consistent high-grades. That is still a riddle to figure out, but that is contiguous with what we've been drilling to date so we're working hard to find a standard of anything. If it comes together then you've got another 1.5km on the 850-900m we already have and then you're also… and when do you say you're going to approve a PEA? I suppose it's when you drill enough to say, really we need to do it here now, we're not finding anything else around this, and I don't think we're anywhere near there yet.
Matthew Gordon: Okay, and this is where it gets interesting for me, it's the way that the company goes about… if you were saying like, right I'm going to get this thing into production; the order of play is different, right. You make a bunch of different decisions but given that you know your hard stop date is production of this PEA. How do you go about allocating capital? How do you approach drilling, because you're presenting a different set of information for someone else to kind of pick up and you've got to leave a little bit on the table for them as well, so what are the decisions that are…?
Dan Noone: They have a goal, we could say this last 5M, when we raised that, okay what are we going to do from this discovery where we had about 40 holes already and not quite understanding exactly what's going on. Where do we want to take it with this money to increase that value? So we said, okay we need to basically keep stepping down and out to keep making it bigger and showing best results are getting bigger. We also needed to drill back in some of the holes, some of the misses and say, what's the controls? You know, we're not quite understanding that so we need to drill the mineralisation to see in detail what the controls are, but in general we like to keep stepping out; so this time we're stepping out to the west because we thought there were more sheer zones. We sort of hit things which look like it, so now we've increased to 6 sheer zones not 3.
We also now know there is a control which is plunging to the north so we're going to drill down to the north beneath the surface and… so to extend it, and we'll keep doing that, so that's what… we're trying to find where the boundaries of this are and sometimes you still need to drill within, you know just little step outs to show that your theories work. But you have to consistently come up with a model, test it, model, test it, so you have to keep drilling new, which leads to misses. Which the market sometimes punishes you for but basically, if we're going to make this thing as big as possible, as quickly as possible to attract a take-out from a Major, that's the thing that we have to do. We have to keep stepping out, keep challenging ourselves to keep moving the model forward and testing it and so that's how we plan our drilling and stuff. We're not planning to infill, once we know that sheer zone is over there and we're comfortable geologically, we'll keep moving out. Statistically, they may make you come back and fill in later but that's something for a second, for another phase when you're trying to calculate a resource which you want to put a mine around.
Matthew Gordon: That's quite a topical conversation at the moment, because we've seen companies hit high-grade veins and they step out 10m. That doesn't tell you too much, there's not a lot of new data there but, when you say you're doing these step outs, you're trying to work out the extent and the limits of these sheers, so how do you plan it? Because if you're going to hand this data over to someone looking at the PEA, they're going to want to know that you are trying to understand the District better. Do you know what I mean? Because there are companies that perhaps do these smaller step outs because they're looking for a headline, trying to bump the price up which they want to raise money more cheaply, and that's fine, that's part of the game but you've got a different set of drivers, so how do you approach it?
Dan Noone: I think if you drive by geology because the geology here is… it's not crazy, I mean it's rather simple geology. I mean it's been performed multiple times, but the geology, you can log it, you can arrange your course so that you know structurally what's going on and basically you can really say that sheer is that sheer 50m away. I've logged it, it's on the contact of this site of carbonated shale and on the other side of the carbonated shale is another sheer and that joins up with that intersect over there, so geologically it works. I mean statistically they My say, those holes are too far apart, you're going to have to put holes in between, but I know geologically; and if you work down there with the chief geologist from a Major company, and you walk through the core and you walk over the ground, then they'll see it as well.
I mean, the sales point here, at the end of the day, is we want a Major to come in and say, yeah we want to buy that. You know, how we’ll sell it to institutional investors, we have to be a little more, less detailed in the geology, just talk generically and I suppose for our retail investors we need to say, look we're drilling a high-grade deposit we're going to keep hitting high-grade mineralisation. But, I mean it's got to be driven by that end goal which is, we want to find as big a deposit as possible, as quickly as possible, with spending as little as much money as possible, so that's the driver of how we go about exploring.
Matthew Gordon: Okay, and what's the different side, I'm going to labour this point because a lot of new people in general that are coming into this space, perhaps aren't too technical, right? We did try… we put out reports about, you know, how you interpret drill holes so I want to spend a bit of times with someone who does it, who's a geologist and I know there's a bit more to you than just geologist, but what's the difference between doing these 10, 20m step outs and going out 400m and then coming in and doing infill? Why are those 2 approaches different?
Dan Noone: Sometimes when you're drilling and you don't really understand the geology but you've got a good hit, it's like, I don't know where to go. I'm just going to step out 15m and see, you know I've got at least 2 points, or 2 points of reference and I can start to build a model around this; but once you've got a robust… enough data in that area and a robust model. Then you start to say, it's going over there, let's step out 100 yards and hit it and if you hit it, great keep going. If you miss it then you have to come back and say, what assumptions have I made to take me out there which was wrong? And sometimes you have to come back and drill again. That's basically the scientific method really, I mean you're basically building a model, you're testing it. If it doesn’t work out you've got to come back and collect more data from the known area to give you that information.
Matthew Gordon: Okay, so it's confidence?
Dan Noone: It is, that's a good answer.
Matthew Gordon: Right, okay, good. Okay, so let's talk about the team, the rest of the team. You mentioned obviously, you… actually give us your… you gave us a bit of your background what about the rest of the team?
Dan Noone: Okay, so the rest of team is Patrick Sheridan, who's the Executive Chairman, who is the founder of Guyana Goldfields back in 1994. He comes from a long history of mining families. He's a Master of Economics, London School of Economics, so that's his background. He's been very successful in the Junior mining sector, he was one of the founders of what became Gold Eagle and was taken out by Goldcorp for USD$1Bn, so he's very knowledgeable on the street.
Then in country we have Violet Smith, who was the Country Manager for Guyana Goldfields, who went down with Patrick in 1994 and started the company. She's a Guayanese national as well as Canadian.
Our VP of Exploration is Boaz Wade. He's a Guayanese national who was with Troy Resources and then we got him across to Guyana Goldfields, he was Head of Round One Exploration and the remodelling of the whole geology there and then he came across to us last year and was here for the discovery, so he's an excellent geologist; very good structural geologist
Matthew Gordon: Right, okay, so obviously you've talked about Aurora and so forth, is that the one stand-out success? Is that what we should look to in terms of what you're capable of, or is there more to you?
Dan Noone: There's more to that, basically I started with Rio Tinto, or it was taken out by Rio Tinto in Papua, New Guinea for 4 years and I swear… now that was the Lihir discovery. I wasn't on that, I went and worked on it a bit, but basically I saw what a big deposit was right, and I was like, wow that's what we look for. Then I went and worked for Newcrest in Indonesia, there was the Cassawong discovery there, while I was there, which turned out to be 5Moz that was a great deposit that was another good discovery experience. Then I worked for Homestake in Peru and that was generally looking for another high, soft relation system they could buy which ended up being Veladero in Argentina so that was… all came out of the back end of that 4 year programme.
Then I went to NBA, came back and decided to do it myself and then we… a private company Colpui picked up a high soft relation system in Peru, we made a discovery, ended up being about 600,000oz but were taken out by Aquiline Resources, so I stayed on with them. We were taken out again by Pan American Silver for 600M and that's when I rolled onto Guyana Goldfields with Patrick. That's my history, so I've been around discoveries which… haven’t necessarily been involved in the discovery of, but I've certainly seen them unfold and discoveries myself, so yeah it's quite an addictive pastime.
Matthew Gordon: It is. I just want to… I know I asked you about the timing and so forth and how much more to spend, but what I don’t think we discussed really was, what's your expectation? Because you have to bring out a Maiden Resource before the PEA, you must have a number in your mind as what that needs to look like. You're talking the language of, you know, big companies there. Big discoveries, you know, big resources, so do you feel that you need to come to the table with a big number in terms of the resource, before you can do a PEA or is there a smaller number in mind?
Dan Noone: No, I think definitely a big number. I think where we're at the moment we can talk multiples, in the millions of ounces early on here I think. Just at Oko it's the target, and like I say, these things tend to be a string of pearls anyway and that's why we want the District, so if Oko ends up being a couple, then fine. Then we'll put a number round that, whilst we explore the rest of the District but when we finish at the main Oko zone, that's when we'll put a number on the PEA. I mean, there's always a funny thing about resources, once you put a number there, people hold it up and say, that's how big it is and when are you upgrading that? It's like, well we're still exploring the rest of the trend so there is that but I think it does need a number on it, the company.
I mean we only have a mark-up around 50M now, so I think putting a resource number out there, hopefully before the end of the year would be a goal and to just put a line under the value of the asset. With the knowledge that we're still expanding that, but also expanding the whole district, so to attract the Majors at the end of the day, you have to keep… start putting these numbers on them but you also have to have the District. They don't want to buy a deposit, they want to buy a District so… and we have to keep exploring the District.
Matthew Gordon: Okay, I…
Dan Noone: If only to reduce our cost to capital which by putting out a resource we think would.
Matthew Gordon: Yeah, and we've seen a few business models out there, the way the companies approach these things, getting a stake in the sand, getting a rerate, it's great, makes raising money a little bit cheaper as well. It also helps people understand what the potential is but as you say, a small number, a couple of million probably not that interesting unless you go and dig further works, so it's merely a stake in the sand and if you put out a PEA that doesn't necessarily mean come and get us, that's just pay attention? I'm trying to work out when an investor should…
Dan Noone: I don't think you'd do a PEA on the back of a couple of million, I think you'd basically, if you're going to put a resource out, you'd put it out. Look in this little block here, that's what we've got. You know, just to show that you've genuinely got a third-party, validated resource which you look at and go, oh that'll be a mine, right? It mightn't be a Major company mine, but it'll be a mine. Puts a line under your value of the stock, but I mean, then you want to be clearly talked to the fact that this thing is going to get a lot bigger via exploration, right. I mean, like you say, there is a tricky balance there, because you need to attract shareholders who want to buy in for the exploration upside and pay a better price for it. I mean, if I was in a Major company and you had endless money, it'd cost nothing to wait, why would you? You'd wait till you'd drilled the whole thing off, right?
Matthew Gordon: Exactly, I'm just… I'm trying to work out how you judge that careful balance because as shareholders looking in, you're going, well what are they up to? What's the timing here? People like to throw some curve stats at you or were trying to work out where they should ride this through to, do you know what I mean? It just helps, understanding what's going on in your head.
Dan Noone: Look, and that’s a debate we have commonly in the company, because we understand, you know that's problematic. I mean Gold Eagle, they sold for a USD$1Bn to Goldcorp and never had a resource. It was at Red Lake, it was next to the mine, you know every buyer up there understood what was there and, you know, you're not going to drill off a resource up there right? Basically in that situation, why would you bother? You know, and so we would prefer to err on the side of caution of not putting one out, but eventually we will have to basically, without having drilled the whole District out, if you know what I mean. Or drill out 5Moz so that Newmont or Zijin goes, yeah we'll come in over the top.
But then again if we get lucky and we just keep building out the Oko main zone well then maybe we will. I think once Oko stops, once we get to the point where we're just drilling holes round Oko and can't find any more extensions, I think we have to put a number round that.
Matthew Gordon: Yeah, I agree. It's just it's always a fascinating conversation because, you know we've spoken to companies who are 800M, 1Bn, 1.3Bn, no resource; you probably know who I'm talking about, and that's fine they keep drilling and it gets to the point where the market gets bored of these high-grade results and they want a little bit more conventional certainty around, you know what it is that's there, or at least some clarity over what the management plan for an exit is, because that sort of scale, that sort of market cap, it's hard to see where the growth story comes from.
Dan Noone: Completely and I suppose that probably brings another point to the discussion we have, it's like how small, what size does a Mid-Tier Company need to turn it into a mine? Because if that's your baton, your second-best option, well then what is that number? Because that also will put a value on the stock here right, so you wouldn't put out, I mean you can't put out an ½Moz resource, when no-one's going to buy it and no-one's going to build it, so why would you bother, so you have to get something that's buildable by a credible company and is going to make a certain amount of money, right? I mean, you wouldn't bother putting a resource out before that, but also I think you need to have stepped out and defined how big this deposit within the trend is. It is certainly something which people ask you about. Some people… and lots of different opinions on it as well, from different investors, so it depends if that's what you want.
Matthew Gordon: Well yeah, if I look at a Roxgold or Serabi Gold, they've got… they're high-grade mineralisation and they have gone on ½M and [31:31 inaudible] because that's the model to get cash flowing so there's lots of ways to come at it. I'm not, you know they're all good, well as long as they work and it's economic it's good but again, it comes back to… it's just really trying to get clarity for you, the way you were thinking about the best way to approach mining in Guyana.
Dan Noone: That wouldn't… we're not intending to build a small mine, so basically if we built that mine in Guyana and it was, like say it was sort of like, keep driving it, driving us forward in that situation. We'd like to think this time, that we have an exit strategy well before that and building a small mine isn't one of them.
Matthew Gordon: Right, okay.
Dan Noone: It'll be, somebody has to build this mine, there's no doubt about that. Whatever it is.
Matthew Gordon: Fantastic, so I don’t feel I've laboured the point, I just… it's the first time we've spoken and I'm really trying to dig into the mentality here.
Can you talk out the spin-outs? Sandy Lakes, so obviously that was an obvious thing to do but you've done it, it looks like.
Dan Noone: Yeah we have and it closed the other day. That was a… because when we had Sandy Lake, I mean one thing about northern Canada, it is seasonal, so you know it comes and goes. We drilled some good holes up there, we were probably at the stage where it was like, above the first 10 holes at Oko, except I mean Sandy is more like a red lake model where it really is spectacular, it grows like 8m of 30g and then 10m of where'd it go? So it's one of those, a difficult geological model, it'll need a lot more work. You also have the band lime formations up there which we drilled, we had 50m at .5 which was interesting right, a big 70 system but then we came into COVID. We had the success at Oko and just started looking at saying, well unless we do budgets where're we going to spend the money next year? Sandy Lake doesn't come anywhere near what we're doing down in Guyana so that's certainly not going to get the money that we raise, so for Sandy Lake to start to release value it needs to be a stand-alone company again. We own the 60km, we own the whole greenstone belt up there. That was like a serendipitous situation where the first nations hadn't wanted exploration for ever, then they allowed it and then as the Government was going from physical staking to map staking, they asked us to stake the whole area because they didn't want strangers coming in, so it was a very serendipitous situation.
We haven't necessarily got agreements to explore the whole area but basically on the west end we have so, anyway but that is going to be a separate company now and run off on its own. It'll be Canadian focussed, a lot of Canadian investors like northern Ontario Gold exploration stories, so I think it's a different value set and it's an earlier stage in the exploration cycle than what we are at Guyana.
Matthew Gordon: For sure, and so G2 shareholders benefited how?
Dan Noone: Yeah, we dividended that to ourselves. It was one share for every 10 and we gave a right to buy another share for $0.10 to go with that share that was issued. Now normally when… a lot of time when these spin outs happen it's like, let's spin it out, give you a bit of a share, but they finance it themselves the insiders, and take all the shares so we were like, we want to do it fair. We like the English system, the exchange here is a bit… We had to walk them through the concept of a share issue here, but it worked. It could over-subscribe for the people who didn’t take up the rights and that was over-subscribed by 11M so people saw value there, it's come out and it'll have 25M shares and USD$1.25M in the bank, it's going to be worth it. So that was, I think a positive value creation for the shareholders and allows that company to focus on the Canadian assets…
Matthew Gordon: Okay, so…
Dan Noone: … and raise money for that exploration.
Matthew Gordon: Well there you go, to the point, I think the structure looks good, cash position not so much but… so how do they move forward? I'm only asking because Nick Johnstone worked out for GT shareholders why it made sense for them.
Dan Noone: Yeah, well we'll certainly know the value, I think, within the G2 company, even the Sandy Lake assets. It wasn't a focussed thing, like I say we sat behind the budgets and gave an allocation of funds. Sandy Lake was well behind Guiana so now they get a share in a company and a right, which is most took down to which… It does need agreements extended at the east and west end of the lake so it's a winter drilling programme. The earliest we could be up there would be next winter, to get a rig up there to drill on a barge in the summer so it's got a long lead time on the only drill news so the money that's in there now will take us all the way to the point where we say, we're going, we're drilling in like a month or 2 months. Because you don't want to raise money, in 18 months' time we're going to get you some news and so basically the money that's there now will take us all the way to the drilling programme; which then that money will be raised for that.
Matthew Gordon: Right, so it's kind of a holding pattern, you've done the structure, you've done the spin out. It doesn't need any further input until the point when you get closer to drilling at which point… so are you guys going to…? I assume… so how much of that company do you guys hold; the Management Team of G2?
Dan Noone: Same ratio…
Matthew Gordon: Right...
Dan Noone: … so basically Patrick's at 27, I'm at 5 and Stephen Stow's at about 4 so, beyond the rope the issue but no it came to us in the end.
Matthew Gordon: Okay, so that's good so in terms of the operational side of things, is it same again? Same people?
Dan Noone: Yeah, so basically… it's going to be basically… we're in the same office, it's like a sub. I mean at the end of the day the management, it could have stayed within G2 Goldfields and we could have managed it but for the purposes of raising money and spending it we wanted 2 separate companies; so functionally it'll be like, you know we're running another project up in northern Canada with the same management team.
Matthew Gordon: It's a bizarre concept isn't it, but that's the way it needs to be done in Canada.
Dan Noone: To a degree, I mean eventually if Sandy Lake really gets a discovery and gets going we'd need to, you know branch out on its own as it gets bigger, right? But at the moment we're really just running exploration programmes. Well first of all, you're really dealing with the first nation agreements and then logistics to start our drill programme. It's not a time consuming operation at the moment, it just needs to be guided through that process over the next 18 months.
Matthew Gordon: Okay, so big shareholders, can I just again ask how it's going? I'm intrigued with the way things are going, the spin out, 2 companies, same management team, same sort of shareholding structure which is great. What do you do? Split your time and salary between the 2 or does the newco pay you more money for managing? How does it work?
Dan Noone: Well the other day I basically talked about payment out of our S2, like at G2 when we started out management didn't take wages for 2 years and so basically we were putting money in ourselves, we didn't see the work that was needed to be done, we didn't need to pay ourselves; so it is too early to have that conversation. It won't be, if it's anything it'll be nominal I think and because really, there's not a lot of time if we decide that, if the Boards decide that there has to be a split, yeah I'd say 95% would be G2 and 5% would be S2 over the next 18 months. It's not a… like I say it's not a huge drain on management time but it needs to be guided through to the point where we can drill out there and then the decisions will have to be made then about staffing that and pushing it further away from G2. But at the moment it's pretty much being incubated under the wing of G2 as far as…
Matthew Gordon: Got it.
Dan Noone: management time and skill sets.
Matthew Gordon: Understood, okay, fantastic. Well look, great first conversation. I think I understand what you're trying to do, which is always a bonus. You've got a few things, obviously you've got to get through this year, so what can we expect to see from you on G2 for the rest of this year?
Dan Noone: So G2, we're continuing drilling at Oko, like I say expanding it out. We had plans to drill at the Peters and Jubilee Projects; we said second quarter which is next month. that's been pushed back because of what we're seeing at Oko, where the model worked; so we built a model, we're testing it. Now we're drilling more holes so that timescales are pushed back. We'd like to possibly see a second rig, if we can logistically and manpower work that, either at Oko or go across and test the Peters and Jubilee projects. There's also the Aremu project in the north-west, 17km from Oko, which we stuck some holes in last year and we had one hole that 3.7m, 10½g under the old Oko mine and we hit a bunch of shafts too. When we did first release and didn't understand it. That is something we've been mapping with our guys and we will want to get back there sometime this year as well. That was really the jewel in the crown when we first came here, Oko has sort of overtaken it. There are those secondary other assets which aren't as advanced as Oko which we want to drill as well, but basically we'll keep drilling Oko and possibly get a second rig there if we can our model far enough ahead of ourselves that we can justify so…
Matthew Gordon: Okay.
Dan Noone: Long-winded answer, sorry about that.
Matthew Gordon: No it's perfect, it's all good, something to look forward to. Well look Dan, appreciate your time today, nice story, like what you're doing there. Stay in touch let us know how you get on. I'd be definitely very pleased to take that phone call.
Dan Noone: Thank you very much Matthew, I'm sure I'll try and get back next quarter as well.
To find out more, go to the G2 Goldfields Website