Goldquest Mining Corp V.GQC

RE:METALS INVESTORS FORUM JAN. 2016

[aknahow]

TGR: Now I want you to name three companies you think fit the criteria you just spelled out.

RM: McEwen Mining (MUX:TSX; MUX:NYSE), of course. It has huge insider ownership, positive cash flow, good optionality in terms of the gold and silver properties, in addition to its very large copper project, and exploration potential in Nevada, Mexico and Argentina. Despite the low gold and silver prices, it has been generating increasing free cash flow over last three quarters, the treasury has been growing and the balance sheet is solid with a small amount of debt. Management exercises fiscal discipline and will not build a mine unless the project can generate a 20% internal rate of return (IRR), has a low capex and a capital payback in three years or less. There is no harm leaving the gold or silver in the ground and waiting until the prices improve before raising capital to build.

TGR: Two other companies that fit those criteria?

RM: One is GoldQuest Mining Corp. (GQC:TSX.V). The company’s property is located in the Dominican Republic, so it is nearby and in a stable environment. Its management team has a successful record of discovery, mine development and building value for their shareowners. Its Romero property has an attractive grade and good exploration potential. It has not encumbered itself with royalties or metal streams, has no debt and has a small but sufficient treasury to keep moving the project ahead. I must disclose that I own 9% of the company.

TGR: At the Silver Summit, Rick Rule talked about that fiscal restraint. What is GoldQuest doing that’s showing fiscal restraint?

RM: GoldQuest has used this down time in the market to develop a robust preliminary economic assessment. The results show the project has the characteristics that I look for: payback is less than three years, better than 20% IRR and relatively low capex and opex. The company also has not issued a large number of shares at current low share prices and has not diluted its shareowners for the purpose of filling up its treasury.