Transcript: Tombill Mines (TBLL) - Equinox Gold Gathering on the Boarder

Morgan Leighton
October 12, 2021

Tombill Mines, formerly Bluerock Ventures Corp., is a Canada-based mineral exploration company. The company is principally engaged in mineral exploration, primarily gold. It owns various mineral exploration and gold properties in the Geraldton and Beardmore region, Ontario, Canada. The company has around 74 claims; of which over 60 are owned and patented; around 5 leased; and over 9 where the company owns the mineral rights. The company's Main Group comprises around 54 owned patents, and over four mineral rights. The Property is located in the Township of Greenstone, about four kilometers (km) southwest of Geraldton, Ontario, and is accessible year-round via the TransCanada Highway 11 - which crosses the Property laterally east to west, and vice versa.

We Discuss:

0:00 – Company Overview

01:07 – Potential Play, Progress & Complications

06:38 – Capital Allocation, Assay & Other Problems

11:39 – Announcements, Next Year Plans & Decisions

16:19 – Outro

Adam Horne: Hello, it’s Adam Horne. I’m the CEO of Tombill Mines. Tombill Mines is based in Geraldton, Ontario, which is approximately 250km down the trans-Canada highway from Thunder Bay. We are right beside and are surrounded by Equinox’s hard rock project, which currently they’re doing an awful lot of work on. The resource of that project is 5.5Moz of proven and probable, which will be in their open pit, plus 6.5Moz is underground that plunges from their open pit towards our shared border, plus 2.1Moz were mined there during the 1930s to 1970s. Our objective is to continue the exploration that Hardrock has done on our property, and we have done that from January to date where we have demonstrated equivalent lithologies and results to them on our side of the border.

Matthew Gordon: Adam, it’s good to have you back. We spoke in June, quite a fulsome conversation then, I thought. We talked last time about a closeology play. You described yourself as a doughnut surrounded by the great and the good and it was obvious then what the potential play was. Has that changed? Are you still trying to set yourself up for Equinox to walk in and buy you out, or have you got other options now?

Adam Horne: It’s changed that initially, we’re focusing on really the plunge line from Equinox’s hard rock onto our property, specifically the F-Zone and the other zones, and we’ve achieved some of that strike over our property with the exploration we’ve done year to date. I’d like to add that we are doing a lot more on the surface around Talmora, which is on the northeast part of our property and it’s where we had a past-producing mine. We feel there is additional near-surface type mineralisation that could be attractive. We’ll know in the next few weeks; we’ll be able to tell the market what we’ve seen with our drilling program up there. I’d say we’ve diversified a little bit from just being a pure-play down plunge from Equinox.

Matthew Gordon: Okay, but I think it’s always good to be frank with investors about where or how they’re going to make money. With a story like this, which is a nearology play, closeology play, which is a big chunk of your thinking, they’ve got to be prepared to sit and wait with you as you prepare as best you can to make it as attractive as possible to an Equinox of this world. We spoke to them last week. It would seem that they’re investing a lot of time, money, and effort up and around you, but you’re not in control of that process. Can you talk us through what you’ve been up to since we spoke? I think you raised $6.5M back in December, there was another $2M followed through in March. You’ve got a certain amount of money, so what do you do with it?

Adam Horne: What we’ve done with it obviously, by and large, is drilling. We’ve continued our program along the strike F-zone, and the other minerals, and we have shown equivalent grades with that drilling program to date. It’s been somewhat complicated at depth. And then we’ve allocated some capital to the surface drilling because we think there is some potential around the Talmora mine. It’s really all gone into exploration, all that money, and we’re just looking to get results from the assay. Our objective is to do what our neighbour has done, prove the strike at grade, at equivalent grade or better, and with similar dimensions, and also look for an open-pit opportunity. That’s the additional thing that we didn’t discuss last June.

Matthew Gordon: Right, okay. What do you mean complicated at depth? Do you mean it didn’t give you mineralisation there, that was not good?

Adam Horne: No, we’re at a similar depth to the depth that our neighbour had, we just continue along with a 12% plunge, so around 1,000m.

Matthew Gordon: What were the complications?

Adam Horne: Complications are just the depth of drilling, and you have fractures underground. We had a water cavity in one place. These are things we put in our press releases. It’s just the natural problems you come across when you’re drilling at depth.

Matthew Gordon: I want to dig into how a company like you with the resources you have now lays out your wares on the table for Equinox to come in and take a look because you can either say, ‘Look, we’ve raised $6.5M plus $2M, $8.5M. We’ll spend that in the most officious and efficient way possible, and then we’ll just sit back and let them come to us.’ Or, you have to go out and raise some more money and continue the drilling, continue to understand and be able to present more information.

Adam Horne: Yeah, we’re going to have to raise more money.

Matthew Gordon: Right, you’re doing that.

Adam Horne: We’re going to have to raise more money because our strike is 2.5km in our opinion. That’s our hypothesis, at this grade. We obviously need more money to duplicate the program we’ve done today, and right now we’re about 450m from our border. Basically, we’ve gone through 20% of the drilling on the F-Zone, and then we need to do, as I said, further drilling on the surface and try to get a diversified other source of gold. We’re trying to get to an inferred resource so someone, any investor, if they looked at our property would say, ‘This is a well-resourced,’ - you know, we’ve done the work to demonstrate there is gold at volume under our property, and it hopefully is similar to what our neighbours enjoy.

Matthew Gordon: Right, but you talked there about maybe the potential of an open pit. Let\s have that conversation. You think in some way shape or form, you could mine this yourself and maybe a toll agreement with Equinox instead of selling it to them. You drill a different way for that kind of potential outcome versus a ‘make yourself more attractive to your neighbour’ type of outcome. You’ve got 2 designs there. How do you play that?

Adam Horne: You have to play it in terms of how you’re going to allocate your capital, but I think we’re providing 2 asset streams. Instead of relying solely on the F-Zone, 1-dimensional, we’ve also because we have this past-producing mine, we believe there could be opportunity in the shallower bits and we believe we should be a 2-dimensional story, not a 1-dimensional story.

Matthew Gordon: It gives the optionality and certainly, I guess, some degree of-

Adam Horne: It also gives anyone, if they ever wanted to purchase us, that optionality as well.

Matthew Gordon: Right, okay, but in terms of a discussion with a potential buyer, if they’re the only story in town, that’s a fairly 1-sided negotiation. I can see why you would say that.

Adam Horne: I think they’d be the only 1 story in town if there were limited resources underground. If you get the volume of mineralisation that we hope to see, then others will be attracted because the economics of scale are available.

Matthew Gordon: Okay, you’ve presented some assay results. How much more is outstanding? How much more information is coming through?

Adam Horne: We still have some further drill results on the deeper mineralisation, and as I mentioned earlier, we’ll have some results in hopefully the next few weeks on the near-surface drilling, which is approximately 300m - 400m from the hole.

Matthew Gordon: Okay, fine. You’ve been experiencing delays as well?

Adam Horne: Yeah, we used to have a real carte blanche because - I think I might have explained it to you last time - we have an assay lab that’s 1mile from core shack, but it’s called Actlabs, and Actlabs is quite big, but others in other parts of Canada - and they’re big companies, big names, not that big, mid-cap, have also discovered probably through Actlabs there was some capacity at our plant. It looks like bags have come from Sudbury and another place from afar; some quite big companies. We had a monopoly at one point, but it no longer exists.

Matthew Gordon: Right, so any other problems that you’ve been facing? I think a few people say there have been delays to the assay results. I think that’s fairly normal. Have there been delays to your actual drill program caused by anything?

Adam Horne: As I mentioned earlier, we have had some complications with the drill program with underlying fractures. We have 2 dykes that were identified under a geologist called Pye some 50-years ago, and they happened to be there. He discovered these even though he didn’t drill there, no one drilled there, and these dykes have offset the fractures and so forth. I think we’ve shown that in our last press release with the way we see the F-Zone, it steps down a little bit. We’ve seen these fractures in the rock. It hasn’t altered in a large way, but it’s adjusted a bit.

Matthew Gordon: Sorry to keep bringing it back to Equinox, but we spoke to them last week, they’re putting a lot of effort in up there. What are you seeing? Have you had conversations with them? Are you seeing them working up at your border with them? What clues are you getting?

Adam Horne: The clues are we have not had many discussions with them. People in our team are close to people on the geology side with them. I obviously know Eric Lamontagne, the general manager. We sold bits of land so they could move the highway and put their mill. What we’ve seen is they’ve built a huge complex of what I would call homes that can house 600 people with kitchens. That’s all been assembled, just finishing - I was there last week and I saw it. They built that and I understand that when they purchased the asset from Premier Gold, they had about 20 employees at the hard rock site. That’s now grown to about 120 people. They’re doing some infill drilling. We’ll see. We’re all waiting for their official announcement. I think that will give us the best direction of any.  They seem to publish updates every 2 or 3-days on the website, what they’re accomplishing on-site.

Matthew Gordon: For people who don’t know, you’re waiting for the official announcement on what?

Adam Horne: They put out an official announcement that they’re going into the construction phase and that has not yet come out.

Matthew Gordon: What’s that going to do for you?

Adam Horne: I think the construction phase suggests they’re ready to spend the $1.3Bn to construct the mill and the tailing pond, etc. which will take about 1.5-years to 2-years, and then they’ll start the mine. Obviously, over the past - this seemed to have a positive impact on our shares when it was announced in December, that they and Orion bought our Centerra and Premier Gold. I can only guess what would happen in that case. It would be conjecture.

Matthew Gordon: Yeah, but obviously there’s a lot of excitement in and around there, including with Equinox shares, but they’ve come off dramatically as have a lot of gold producers, gold developers, etc., as have you.

Adam Horne: Gold in our sector, in the juniors.

Matthew Gordon: Was that more about the gold price or do you think that reaction was around the actual-

Adam Horne: I don’t think it was the gold price. I don’t think the gold price has changed a lot. This is my own personal opinion, the gold price hasn’t changed that much from $1,700, $1,850. It’s been pretty static. I just think people reallocate their capital maybe to the US dollar to become a stronger currency, and that obviously has probably affected the larger gold companies, and larger gold companies have an impact on us. If they’re suffering, we’re going to suffer worse under them. Perhaps investors want to see a little more coming from the larger caps in terms of them developing additional sources of gold, rather than just what they currently have. Once again, that’s just a guess by me.

Matthew Gordon: I think everyone’s got a different view. No one is quite sure why.

Adam Horne: I don’t think it’s the gold price. That’s one thing I would say.

Matthew Gordon: Okay, look, I guess what we would look to you for is some of these assay results coming back, some of these announcements, in the next few weeks you say.

Adam Horne: On the surface side, yes. I think we can have something in the next few weeks.

Matthew Gordon: How are those going to change your decision-making? How is a gold recovery going to change your decision-making if it happens next year? Do you know-

Adam Horne: Well, I mean we’ve to do a bit more work on our budgets and our capital allocation, but we’ll put the capital - we need to continue the work, go along the strike, and do our surface. The question of allocating capital between those 2 places is still to be determined. Hopefully, we’ll continue what we’ve done on the F-Zone and the deeper, and demonstrate the strike, and we’ll see what happens with our surface results. Then we have to make decisions, how to allocate capital where it’s a lesser risk and so forth. At the end of the day, surface work demands less capital and lesser grade to succeed than the deeper stuff. We really need all the data in front of us to calculate the right decisions.

Matthew Gordon: When you get to that point where you’re running low on cash and say the market hasn’t recovered, you’ve got some very salutary decisions to make and it could be, you know what, let’s just hunker down for now, let the market do its thing and then we’ll come back to this when we can raise money at higher rates, or cheaper rates effectively.

Adam Horne: What you’re saying is definitely part of our decision-making. That’s something we have to consider.

Matthew Gordon: Look, Adam, we’ll sit back, and we’ll wait for those press releases. Hopefully we’ll speak soon, hopefully, the market recovers, and hopefully, you guys can make some of those quite serious decisions that you’re going to make, and we’ll look out for the Equinox release too.

Adam Horne: Matt, thanks a million. I appreciate all the good questions. I think your investors will get a lot out of it. Just to remind you, we’re continuing our program and hopefully, we’ll be able to show you some decent results on our surface program, which extends around our past-producing mine Talmora. We’ll continue along the strike of the F-Zone and surrounding other zones, and we’re at 250m, hopefully, we’ll extend that by a few hundred more metres at strike, and we’ll be able to demonstrate to you that we have a decent resource that’s equivalent to our neighbour over the next few months.

To find out more, go to the Tombill Mines website