Gold Mountain Mining (GMTN) - Payment Received for 1st Gold Production

Gold Mountain Mining Corporation is a British Columbian gold company focused on its Elk Gold project. The project is a 21, 187-hectare past-producing asset that is located approximately 57 km away from the city of Merritt.

Matthew Gordon spoke with Kevin Smith, CEO of Gold Mountain Mining (TSX-V:GMTN) to discuss the company’s recent shift into gold production.

Company Overview

The company enjoys the support of Franklin Templeton, one of the world’s largest asset managers. The Franklin Gold and Precious Metals Fund acquired 2.9 million shares of the company and has built a position of between 5% to 6% in Gold Mountain Mining Corp. The investor split of the company is approximately a 7% to 10% institutional base, with the remainder being retail.

The Elk Gold Project currently produces 19,000 ounces of gold per annum and is planned to continue producing this amount for the next three years. The company’s rationale is that even though 19,000 ounces per annum is not a large production profile, it does enable the company to have cash flow and the necessary funds to reach the envisioned 65,000 ounces per annum production profile.

Gold Mountain Mining Corp. recently announced that it had delivered the first batch of ore to New Gold Inc.’s New Afton Mine in Kamloops, British Columbia. The delivery marks the company’s entry into revenue generation and cash flow. The first payment is approximately CAD$ 548,862 and is planned to occur monthly. Gold Mountain Mining Corp. plans on delivering 1,650 ounces of gold to the New Afton mine in April.

Gold Mountain Mining Corp. aims to increase the project’s annual production from 19,000 ounces of gold per year to 65,000 ounces of gold per year. The company plans to achieve this with continued exploration initiatives, including a winter and summer exploration program in the coming year.

The Elk Gold project

The Elk Gold project of the company is a past-producing asset that has seen over 135,808 m of exploration drilling as well as geophysical and geochemical analysis. The Elk Gold Project has in the past been able to produce gold from an average ore grade of 97 g/t gold.

Gold Mountain Mining Corp. has since January 2021 conducted over 22,639 m of exploration at the project and is currently underway with an additional 10,000 m exploration drilling program. The company was able to increase the project’s mineral resource by 49% in its phase one drill program and further increased the resource by 32% in its phase 2 drill program.  The mineral resource estimate of the project boasts 806,000 ounces of gold equivalent (AuEq) in the measured and indicated category and 262,000 ounces in the inferred category.

The company also published a Preliminary Economic Assessment (PEA) of the Elk Gold project in 2021, with highlights including an 11-year life of mine (LOM), an NPV5% of CAD$ 231 million, a total of 570,388 ounces of gold mined over the life of mine at an average grade of 6.98 g/t. The PEA also shows a planned annual production profile of 65,000 ounces per year, an initial capital cost (CAPEX) of CAD$ 9.0 million, a payback period of 1 year and an all-in sustaining cost (AISC) of CAD$ 692 per ounce of gold produced.

The economics of the Elk Gold project has been able to gain the attention of various institutional investors, amongst others being Franklin Templeton.

New shareholders

Gold Mountain Mining Corp. has seen a large turnover in shareholders since December 2021. The influx of institutional investors has been noteworthy with 7% - 10% of the company’s shareholders currently composed of institutional investors. Kevin Smith, the CEO of Gold Mountain Mining Corp. is excited regarding the shift in shareholders and states:

“What we are seeing though, is a really big turnover in shareholders. We're starting to see some institutions come in and create a base here. We're really excited as we start to mop up some of those legacy weak hands and drive forward as a new producer.”

The largest institutional investor of the company is Franklin Templeton Investments, one of the largest asset managers in the world. The Franklin Gold and Precious Metals Fund has acquired 2.9 million shares of the company since November 2021 and continues to build its position in the company. The current position of Franklin Templeton Investments in Gold Mountain Mining Corp. is approximately 5% to 6%. The company believes that the support of such a large asset manager provides it with creditability regarding both its project and resource or as Smith states:

“Obviously, it's a major name and a pretty big stamp of approval from an institution like that.”

Gold production

Gold Mountain Mining Corp. currently has an annual production rate of 19,000 ounces of gold a year at its Elk Gold project. The production rate, however small, enables the company to pursue its expansion initiatives necessary to reach a production rate of 65,000 ounces of gold a year without diluting its shares. The company is aimed at producing 65,000 ounces per annum between years 4 and 11 of its operational lifetime, Smith states:

“… 19,000 ounces per year isn't getting a lot of people excited. But what it does is it gets us into cash flow and allows us to expand to that larger 65,000 ounces per year production profile that we have slated for year 4, in a non-dilutive fashion. It has always been important to us to try to build this business in as non-dilutive a fashion as possible.”

Gold Mountain Mining Corp. is currently underway with the environmental assessment of its Elk Gold project. The Environmental Assessment is necessary to expand the annual production rate of the project to 65,000 ounces of gold a year. Smith states that the environmental assessment takes 3 to 5 years in British Columbia and there is no way to expedite the process, and rather than holding all production until such time the assessment is finalised, the company elected to pursue a smaller production rate, he states:

“…we are ramping up into an environmental assessment, which is really the only hold up to get to that larger production profile. You cannot get around the 3 to 5-year timeline of an environmental assessment here in BC. Therefore, we elected to stay under 75,000t of ore being removed from the property, that gets us to roughly a 19,000 ounces per year production profile, then we can use that cash flow to scale up into year 4 of our mine plan.”

Gold Mountain Mining Corp. believes that its “walk-before-you-run” approach as Smith calls it, will not only contribute to cash flow but also enable the company to iron out any production headaches it may have before it expands on its annual production rate.

The 19,000 ounces of gold produced by the company will add approximately CAD$ 3 million a month to its treasury and in total CAD$ 36 million per annum.

Gold Mountain Mining Corp. recently announced that it had delivered the first batch of ore to New Gold Inc.’s New Afton Mine in Kamloops, British Columbia. The delivery marks the company’s entry into revenue generation and cash flow, with the first payment being approximately CAD$ 548,862. Gold Mountain Mining Corp. plans on delivering 1,650 ounces of gold to the New Afton mine in April.

The company aims to complete various exploration initiatives to allow it to reach its end goal of becoming a multi-million-ounce producer.

Growth opportunities and plans

Gold Mountain Mining Corp. plans to expand through various initiatives which include exploration activities at its Elk Gold project as well as the procurement of new assets or possibly merging with another company. Smith states:

“We're vetting different opportunities where we can take this operations-focused management team and continue to show scalability in the company. We want to develop the Elk in as non-dilutive a fashion as possible... we're vetting different opportunities as far as mergers and acquisitions, new financing to, and bringing more institutions into the cap table, but we're being very fluid at the moment.”

The first expansion avenue to be pursued is the exploration of the Elk Gold project. The company plans to conduct both a winter and a summer exploration program.

The winter exploration program will be primarily focused on infill drilling at the Sidewash North deposit of the company. The deposit is currently being mined by the company. The rationale behind exploring close to its operation in the winter months is that it is more cost-effective. The winter exploration program will not need to take into account various operating costs associated with the accessibility of exploration targets and will also enable a better understanding of the deposit.

The summer exploration program of the company will be focused on the exploration of its Lake Zone and South Zone deposits. The company aims to delineate the deposit’s resources through the planned exploration activities as well as target high-grade deposits. The exploration initiatives of the company will also enable it to potentially find a bulk-tonnage deposit.

Gold Mountain Mining Corp. is also investigating the potential of acquiring additional assets. The criteria of the company when it comes to potential assets is that the asset must have a clear path to both production as well as cash flow. The location of an asset however is not a deciding factor. The company believes that even though an asset nearby may be convenient the possibility exists for it to acquire an asset in any area of the world, as long as it adds value to the company Smith states:

“we're in a position right now where it's stick to our knitting, focus on the Elk, make sure we're delivering on that piece, but keep an open mind on what's coming next and make sure it's the right fit for our shareholders and our management team so that we can continue being successful in growing Gold Mountain.”

The final possible expansion avenue that the company may pursue will be potentially merging with or acquiring another company. The company has been approached by various other companies according to Smith. The aim of approaching Gold Mountain Mining Corp. is to further the respective projects of these companies. He states:

“There's no one scripted group that's approaching us in a typecast scenario. It's been broad-based. We feel very fortunate that people are starting to like what we're doing and developing here. We're just taking it all in and vetting these opportunities well. We feel like we've built something special here, not only just with the Elk, but also the structure of the company, by having not issued too many shares, still really flying under the radar, I think, especially from an institutional perspective. I think there's a lot of opportunity for upside growth here… we want to make sure we're not just diluting and bringing in another asset for the sake of growing. It's got to be the right fit.”

Gold Mountain Mining Corp. plans on remaining focused on the execution of its project as well as reaching its determined milestones. Smith believes that as long as the company remains focused it will not only continue to grow but also continue to show the value it possesses. 

To find out more, go to the Gold Mountain Mining website