10 minutes from Paul Matysek, yesterday...Will this blow the lid off the share value monday morning?
Loosely transcribed from audio recording (“…” replaces words unintelligible due to difficult recording levels) of Paul Matysek’s speech at the Toronto summit.
This transcript cannot convey the excitement during the speech and after the speech in the hall at lunch break.
Announcer: The next speaker is Paul Matysek, CEO of Goldrock Mines. Paul is a personal friend and he will let me tell you that his last 3 deals before Goldrock were huge home runs and he is a science based executive, he is very optimistic and he knows how to acquire and dispose of assets at the right time in the cycle and like I said the last 3 deals were all 10 baggers. He has a simple gold project in Argentina he is going to tell you about call Lindero, so Paul Matysek
Paul Matysek: Good morning. You can feel a change in the air, the atmosphere in our business, there is a lot of talk…. I am also a believer. I’ve got 10 minutes here today. I would like to give you an investment thesis how you can see value, in how I see value. I’ll give you those 10 minutes of the things I look for in actually investing and the things that I will talk to you about today is Lindero Gold Project it’s one of the world’s only heap leach deposits fulling permitted, ready to go, shovel ready. The thing I look at for investment is I look for people, and their experience, the resources, I look for the economics behind it, I look for sea level change; what makes it interesting at this time, at this moment. It’s relative value in the market, and how it get compelling thesis out of that.
Ok, so in terms of management, in terms of people that is very important. I have had a history of being early in a cycle, looking at commodities that are on the upswing….. I’ve done 3 one is uranium, early on in 2004 uranium was at $10.00 I took, it went up to $140.00 when I sold the company called Energy Metals for $1.2 billion. I saw the same type of parameters in the Potash industry through a company called Potash One the price of Potash was $300.00 went to $1100.00 and I sold it to a company called K + S. And another thing I might add, in most deposits that I actually work on they tend to become mines. This mine called Legacy K + S has now spent over $3 billion and next year they are opening up and so that’s a testament to my team in discovering and developing that project.
Thirdly the most recent one in Lithium, I worked in a Lithium space, a company called Lithium One, discovered a Lithium deposit Sal De Vida I sold that one to a company called Galaxy and now that project with Galaxy is worth over almost ¼ of a billion dollars.
On this project here (Lindero) the people that are significant to me to develop the heap leach deposit is David Keough, he has got lots of experience in Argentina he helped the development of Alumbrera mine in Argentina that’s 6 years there, he put the Amapari Mine heap leach project together, he worked with Wheaton Silver on Lithium Los Filos.
I have an excellent and very engaged … CFO called Bassam Moubarak who helped in the construction of a gold mine in Panama and he also helped with sales Petaquilla Copper to Inmet. And he also did a royalty to Gualcamayo to a royalty company.
So you need the team.
So what is the sea level change that is happening that causes Lindero to be a very good investment thesis, and that’s Argentina. For the last 3 years Argentina has been a persona non grata, I couldn’t even get a meeting to talk to Argentina and it’s a country that is very large, it is the 8th largest country in the world and it’s a big gold producer. There is a lot of resources, it’s a good place to work, it has a lot of tax advantages in terms of working there, there is a fiscal stability certificate that you get when your feasibility study completed, which frees your taxes for 30 years. All their incentives like selling of depreciated assets. A number of good reasons why there are a lot of companies there. The last 3 or 4 years it’s been a terrible place because of the politics and the regressive economic policies. But then in December there is a new election, there is a pro mining president, Mauricio Macri, came in and within the first 100 days he had revitalized Argentina, he got rid of currency controls, he….import export duty restrictions, he eliminated them. He gave, he resolved the debt issue with the debt holders in New York, and I think you’ll see in the next couple of years that Argentina will be the darling of South America and there’ll be a lot of flocking of groups back there.
So let’s talk about this deposit, so it’s a heap leach, it’s a hill, around 3500 meters in a desert, with the annual precipitation is like 3 mm. We’ve done excessive work in terms of metallurgy and drilling and we’ve outlined just to 500 meters a deposit that is just over 1.6 million ounces of P+P at appraised that are keeping with the average gold rate of a heap leach deposit. Let me emphasize, we have every permit that’s required to start the project tomorrow, the environmental permit, we got all the property permits, we’ve got all the mine concessions, we’ve have the water permits, we have energy for gas transportation and all the construction permits. So it is ready. One good thing about the work that my companies do is to de-risk, de-risk and de-risk. So having known that there was going to be an election in December 2015, I then engaged a group KCA one of the world’s best engineering firms for heap leach to get a feasibility study ready for this time and this gold environment. So we just released our feasibility study 2 weeks ago and this project is highly leveraged to go. So if you look at the $1200.00 gold price the pre-tax NPV is like $218 million, we trade today at around $38-$39 million, that’s Canadian at US it’s probably 30 million US. Our after tax NPV’s is $152 million, our after tax I + R 26%. What is unique about this deposit the highest grades are at the surface, we get the most number of ounces in the first 3 years, so very amenable to debt and payback period at $1200.00 is 2 years. You can see as we move towards $1300 and $1400 numbers that the economics is to this deposit are fantastic.
This is a little more granularity on the feasibility study so we are talking about mining 18 million tones, the strip ratio is almost 1:1. The total contained gold is 1.6 million (ounces) … produced is 1.1 million ounces, this is not an insignificant amount of ounces that any mid-tier producer is trying to replace their production, ok, our peak production which makes this also amenable to good debt is into the second year, 138,000 ounces and the life of the mine is 12 (years), let me add this is not the drilled at depth it is a porphyry cooper porphyry system and you know we ended some of the holes in mineralization, so it’s got up side in that respect. In terms of actual CAP costs, what it cost to put this mine into production, you know it is not an $800-$900 million proposition it’s a $151,000 million plus … and there is nothing of any most of the largest costs around the ore crushing and handling and we have to narrow or decrease the commercial production time, we purchased a HPGR, a crusher for 7 million dollars, it’s in the country and it’s ready to go. It will make the actual construction period down to 14 months. In terms of our all in sustaining operating costs at $1200.00 it’s $777.00. We have spent over 22000 hours doing basic engineering so that we could refine both the CAP fix and OP fix numbers and you can see that at $1200.00 we have a margin of $443.00 at $1250.00 today we’ve got almost $500.00 of profits.
What else you want in a property is, you want up side so as I said we have debt up side at Lindero and 3 km away as part of the same porphyry system we have a deposit called Arizaro and I drilled in 2013, 10 holes, I decided to do an I + I resource, worth almost 500,000 ounces, we’ve only tested less than 15% of that project. One of our best holes was 48 meters from surface of 1.38 grams per ton. So I think there is definitely close to a million ounces that is probably in Arizaro that needs to be looked at.
In terms at looking at our peer group, these are all companies that have proper feasibilities staged properties and if you look at, any measure you look at, I’m looking the market cap vs the resources if you look at general resources M+I, or I, or reserves, P+P, M+I+I, we are undervalued by ½.
So the thesis is that we have a rising gold market that makes it very attractive to a mid-tier producer, where Argentina has changed, and we are not getting discounted like we use to, and it is an opportunity for us to not only look to merge, to be acquired, but to also build. So our short structure is, we have very good shareholders, we’ve got almost 40% of our company is owned by Orion fund, potential for a debt equity holder Astrel, rich Argentine billionaire that takes an interest in gold, Waterton own 11%, management owns close to 20% and friends of the company. So we got 4 million dollars in the bank and we think our time has come, thank you.
(Loud applause)
Announcer: “Paul has really put a bow on that”