Transcript: G2 Goldfields (GTWO) - Maiden Resource in Q1/22, after High-Grades
G2 Goldfields Inc. is a Canada-based resource exploration company. The Company is focused on the discovery of gold deposits in the Guiana Shield. The Company operates primarily in Guyana, where the Company owns a 100% interest in two past gold-producing mines, as well as a regional portfolio of prospective projects. The Company's projects include Oko Aremu and Puruni. The projects are located at the southern end of the Cuyuni Basin and host high-grade Orogenic Gold mineralization within the Cuyuni Basin Sediments and the underlying Barama volcanics. The Aremu Oko District covers a strike length of approximately 17 kilometers. Its Aremu/Oko and Jubilee/Peters Mine properties consist of approximately 37,068 acres and are in the Cuyuni-Mazarumi region of north-central Guyana in the Guiana Shield.
00:00 – Company Overview
00:29 – Recent Drilling, Market Signals & Intervals
03:23 – Minor Resources, Raising More Money & Next Lift
07:57 – Spent Money, Potential Suitors & Tight Resources
12:10 – Press Releases, Resource Keys & High-Grade Answers
16:32 – Cash Flow, Current Market Direction & Share Costs
Dan Noone: Good morning, I’m Dan Noone from G2 Goldfields, on the TSX trades as GTWO.V. In the States it trades as GUYGF. We’re drilling off the high-grade Oko discovery in Guyana. We’re currently drilling with 2 rigs up until Christmas and we’ll continue drilling into the new year. We have a plan to get an initial resource calculation out in the first quarter of 2022.
Matthew Gordon: Fantastic, Dan, lovely to see you. I saw you towards the end of September, but I wanted to catch you before the end of the year because you’ve had some fantastic drill results. Seeing some more drill results coming in recently. I want to dig into, if you don’t mind, to what end? If we look at the press release you put out. you’ve got a map of the area that you are drilling into, it’s just slightly over a 900m strike length. To what end was the recent drilling done? You’ve got 5 zones but what were you trying to get out of the most recent drilling?
Dan Noone: Okay, this last round of drilling was basically, after the last round, we said in Zone 3, we had enough intersections to join the dots and to be able to get that to a resource calculation. At Zones 4 and 5, we still had huge gaps up to 80m - 150m between high-grade intercepts. We said we need to fill that in so that we can drill enough drilling in 4 and 5 to get it to resource-stage by Christmas, but also, we wanted to step down-plunge on Zone 3, and north on 4 and 5, to keep expanding the deposit. We think we’ve got there by Christmas.
Matthew Gordon: Okay, so if I look at the image that you put on your press release, it looks like a pincushion. There’s been a lot of drilling. You’ve got how many holes now? Over 100 holes in there?
Dan Noone: 104, yeah.
Matthew Gordon: 104 holes. You want to put out a resource - to what end? What are you trying to do? Are you trying to signal to the market? Are you trying to signal to your neighbours? Who are you trying to impress with a resource now? Why not just keep drilling?
Dan Noone: We’d like to just keep drilling and never have to put out a resource until we’re off it. Unfortunately, the market wants to know what the potential size of the deposit is, and what we already have. We don’t want to put out anything too small, but by the same token, we want to put out something that shows the potential size, particularly shows the grade, and when we put it out in the first quarter, it’ll be like, ‘Okay, here it is, it’s still open and we’ll give you another one in 6-months’ time because that’s basically, we’ll keep expanding it.’
Matthew Gordon: Okay, sorry, I know I’m skipping over the- I haven’t given you a chance to actually talk about some of the grades that you are seeing and the intervals as well. Maybe just remind us of what you’re consistently seeing here?
Dan Noone: We’re consistently seeing intervals between 2m up to 8m that are greater than 10g/t. What we have are high-grade veins in the core of our shear zones, and we’ve had 550 vein intercepts, the average grade is 15g. Within the shear that will be diluted down, so how tight we keep it will determine the grade we get, and how much low-grade we pull in will determine how low it gets. We’re trying to keep it as high as possible and basically, it has to be coherent. That will come out in the resource calculation, but we’re very confident that the grade will remain high-grade, and that’s what we’re targeting here.
Matthew Gordon: Look, we talked about your track record in our first interview, right, the model you guys like to employ here which is you don’t necessarily want to move it all the way down the study process, you want to demonstrate that you’ve got something good, you’ve got something strong, the grades stack up, and hopefully, someone steps in early to take over the project. Just remind me, is that still the plan here?
Dan Noone: That is correct, Matthew. Basically, our attitude is really to define a mineable resource here, but basically, we don’t need to take it through to a Feasibility Study. We’d like to think that a 1-mine mining company is a long gap in-between discovery and releasing the value. Somewhere along the line, we’d like to think that we’d sell it to another party who could take it to production.
Matthew Gordon: Right, okay. In which case, I keep coming back to this image because I thought it really beautifully demonstrated what it is that you’ve got, that you’re working on. You’ve also been buying up additional properties. I know that, so it’s a much bigger land package than this, but just again the mentality of, why have you gone after this? I probably unfairly described it as a pincushion, but you really have drilled into this section. Why is that? What’s the picture you’re trying to paint for someone else to step in?
Dan Noone: We have a large land package that runs over 17km from the old Aremu mine down to the Oko deposit that we’re drilling now. We’ve picked up a package of land of 7,000acres at the inflexion point there where it comes through and moving northeast. Basically, we’re sitting in a triple-point junction between 2 large batholiths, and that is the focus of the mineralisation here. We have put together the land package for whoever wants to come in and build the Oko mine; they’ll want to own the whole district. We see in these greenstone belts that they’re never just 1 deposit, they’re generally just a string of pearls. Within 15km of 1 mine, you can truck everything to the 1 deposit. We think we’ll find another 3 or 4 at least similar to Oko Main, but we’ll be focusing on Oko Main, 1, to basically build a package that looks like it can be a mine, but 2, also as we drill that and we do the detailed geology, it informs us about the patterns we will see around the district and we’re starting to see those all the way up to Aremu, and we’re starting to see them to the northeast, which was one of the drivers to pick up that land to the northeast. We feel we’ve got a great understanding of not just the geology, but what the controls on the mineralisation in that geology are.
Matthew Gordon: Okay let me ask then, if you’re going to find this string of pearls as it were, how much more do you need to do on this to be able to then park it up and say, ‘Look, that stands alone as a mine if someone wants to do that now, but we’ll go and raise some more money and we’ll start drilling off and find the next Oko, and the next Oko, and so forth. Where does it stop? How do you finance that? How long do you actually want to do that for?
Dan Noone: That’s a good question. We discuss that almost daily here. We think down to 400m to start with is probably as far as we’ll go on the Oko Main, 1, because all of a sudden, you’re getting into a longer lead time on mining, 2, it’s expensive, and also, we think the next big lift here will come on finding the next pearl on the string. To that end, when we get back in January, one of the rigs will start drilling at our Oko Northwest, which is only about 3.5km to the northwest of our Main Zone. Over the last year, the local artisanal miners have opened up a huge track there, 1km long where we can now see the geology. We’ve been mapping it and we’re starting to see these east-plunging chutes all through there. That’s exciting for us, and what we think will be our next lift. Then also, back at Aremu, up at Jubilee and Shepherd, which has seen a little bit of activity this year as well, there’s an open pit on the Shepherd mine now, which runs about 120m long, and the grades we’ve sampled out of there go anywhere up to 120g/t. Basically, we see these other deposits, we want to go and drill them, and as I said, we’ll probably take the Oko Main down to 400m and put a ring around that and say, ‘That’s what you can get to in the first probably 10-years, or maybe less than that.’ Basically, that’s far enough.
Matthew Gordon: Okay, basically you’re going to leave something on the table for other people, right? You’re open in all directions and at depth, right?
Dan Noone: That’s correct.
Matthew Gordon: Right, so most big companies say to you, ‘Well, how deep have you drilled?’ Well, ‘We’ve drilled down to what, 400m, we’re happy with that, if you find more, that’s great.’ I hark back to experience. If it worked before, can it work again? When you move to the next target, do you just say, ‘Let’s get the bulk of the juice from this target and do the same here because, in terms of time spent, money spent, and quite frankly how long we want to hang around for, that’s the best use of money?’ What’s the data that’s telling you that is the best way to go? I know you’re saying it, but what backs that up?
Dan Noone: We look at it as business owners in the sense of how much money you make and what the value of these assets is to a company that wants a mine that can make money. The other thing is, when you have a series of deposits, you can start to crank up the ounces per year as well. If you keep going down the same deposit, it’s harder to get quantum leaps in the number of ounces you can get out of it, so if you’re trying to find something which can produce 500,000oz a year, which would be great, that would be tier 1, its expression is very similar to the Oko Main Zone, and so, that’s our next challenge.
Matthew Gordon: Okay, so if I look at what you’re trying to do here, yes you need to impress the market because you’re going to need to raise some capital to actually go off and do this drilling, but the end game is you’re starting to show a bit of ankle to potential suitors. There are clearly a lot of people around you. There are some obvious groups that will be looking at you. Have you had or advanced any conversations of that ilk, or do you need to wait for this resource to come out? Because so many CEOs come on and say, ‘Look, the resource is for the market, the drilling is for potential suitors, right?’ So, you put out the numbers. They can see what’s happening there. Are any conversations happening?
Dan Noone: We always talk to the majors and the people around us, but we haven’t had any discussions about buy-outs of takeovers or mergers yet. We like to keep our neighbours informed, and we like to know what they’re up to as well. That’s where we are at the moment. I think once the resource comes out, people can put a number around what they feel the value is.
Matthew Gordon: Okay, and with the recent properties that you have picked up, why did you feel the need to pick up more land package? You had a lot already. Is that the best use of money?
Dan Noone: It is an investment, and they’re not huge amounts of money that we paid on the option agreements, but what we are doing is we are in a mineralised belt and it’s quite large. At the end of the day, it’s best that we put the package together and inhabit it all under 1 roof, rather than trying to deal with it later. In Guyana, most of these lands are held by mid-scale miners, so it’s not like we just walk up one day and make an offer. This stuff goes on for months if not years, and they’re quite sophisticated. It’s not something that just happens overnight, so when you get there, you do the deal.
Matthew Gordon: Yeah, I guess. Timing is everything. Just on the drilling, have you guys - when are you going to put some guidance about how much drilling you’re going to be drilling in Q1, Q2, and do you know what budget you’re allocating to that, and what you need to raise in additional capital?
Dan Noone: I would say in the first weeks of January, we will know, 1, what we need to drill at Oko to either infill so that we can get a tight resource, but also the holes that we need to keep drilling down to take it down to 400m, and then the exploration, we’ll be able to put that out as well. Once we have all these results back from the current amount of drilling, we will then sit down and put out a plan for next year, and I would say it’s similar with the money. Basically, we know that we have to raise money. We never run out of money, we’ve got deep pockets from the insiders and a small group around us, but by the same token, we don’t waste money either. We’re not going to go on and raise a huge amount of money and dilute ourselves. We will keep it tight. If the market- incrementally exploring, and like I say we will raise money at the appropriate time.
Matthew Gordon: Okay, and with regards to the drills, you’ve got 2 drills going, do you see that to be the case for 2022 or do you expect to raise the tempo slightly and add a third drill?
Dan Noone: I would say that we’ll start with 2 and if the market remains as it currently is, I will say we’ll continue with 2. If we start to get a bid in the gold market, and especially down in the juniors now that we’ve seen Golden Bear get taken, well hopefully, we may be able to increase the number of rigs that we have because we don’t have a shortage of drill targets. That just comes down to managing what we can get out of our drilling versus dilution.
Matthew Gordon: Okay, so you had some analysts drop down recently. What were they keen to see? I guess visible gold, that’s always exciting. But what were the questions they were asking you and what seemed to be concerning them most?
Dan Noone: I think the 1 thing that impressed them the most was the flyover of the district to see the scale of the artisanal mining, the historic mining in the area. When we got to site to go through the model, and then get down to the core and see that you can actually put your finger on all these things that we talk about in our press releases and to constantly see that you come out to a high-strain zone and bang, you get the quartz vein, visible gold. And you can walk through that every section that we have down there. For them, the model really worked, and it was consistent, and then like I said the scale. One of their comments was, ‘You’re just scratching the surface.’ It’s like, to a degree, you’re right. We actually now do understand the system, and they walked away with that image, definitely.
Matthew Gordon: you’re scratching the surface down to 400m. You’re working a bit harder than scratching the surface, I suspect. Okay, so that lays out next year. That was the key focus, to see you continuing to drill. The idea is, put out a resource in Q1, but then what? Upgrade the resource or expand the resource? Don’t worry about doing any kind of studies yet.
Dan Noone: Yeah, pretty much. We’d like to expand the resource down-plunge to a certain depth. The good thing is that the plunge to the northeast of the envelope of the mineralisation is fairly shallow. It goes about at about 20 degrees, so there’s a fair bit of room down there before you get to 400m depth. How long it goes, we’ll never know. I think it’ll go until you run out of ore as opposed to mineralisation. That’ll be the focus.
Matthew Gordon: Okay, and obviously, if you continue to put out resource updates, that’s great, it’s a great model, we’ve seen someone benefit from that recently with a lot of M&A in the market. I think that’s great, but the industry will be able to put a value on the ounces in the ground as a result of that, the market, not so much. You’re going to have to help them a little bit and do a bit of peer analysis, I suspect, for the market to actually understand not just the scale of the opportunity but in terms of how valuable this thing could become. There’s a danger that you just put out high-grade ounces on your headlines and that is the thing that values you. Are you going to be able to get a little bit more sophisticated than that?
Dan Noone: Definitely. Like I say, we have a lot more targets, so we’ll definitely be attempting to put a size potential amount on the other areas, like Northwest Oko, the Aremu District, as well as basically increasing the tonnes and grades at the Oko Main. I think it’ll be a 2-pronged attack. Like you say, it is to show a bit of ankle and to show the potential buyers the potential scale they’re buying, and from any size of supplier, I would say. From any scale of miner, from mid-tier through to a major, should look at this and say, hopefully, next year, ‘That’s something that I’d like to have in my pipeline.’
Matthew Gordon: Dan, keep at it. Fantastic drill results. You’re really clear about what you’re doing and how you’re going about it, good for money. I’d love to hear from you in Q1 at some point and see when this resource comes out because that’ll be a real statement of intent for sure. I appreciate your time, thank you.
Dan Noone: Thank you, Matthew.