Quote charts can be deceptive. A look at the all-time chart for Riverside Resources (
TSXV:RRI,
Forum) gives the impression of a company that has worn out its welcome, having nibbled $1.30 back in 2011 before enduring a long, slow decline in the five years since.
But switch that chart to ‘YTD’ mode and you see a company that is catching the eye of investors who realize – finally – just how valuable a company with $3.5m cash in hand is, a company that hasn’t had to raise money in five years and has no plans to do so any time soon, a company with low risk, a tight share structure, almost a decade in the business, with a piece of multiple properties and drill programs paid for by partners.
If you ‘got woke’ in mid-January, you’d have got Riverside stock for $0.12.
Today? Double that.
With PDAC rolling in soon, and Riverside likely to be a participant, President and CEO John-Mark Staude (it rhymes with howdy), gave us the gospel on what makes Riverside run, how he’s endured the down times, and what’s to come.
- How would you describe your company’s opportunity to investors?
Riverside has never been in such a strong position and yet we have the lowest valuation we have had since pre-IPO, 9 years ago. Riverside has a strong cash treasury of $3.5M, a tight share structure of 37M shares.We have high quality gold, silver and copper assets with major partners funding 100% of the exploration spending for the next 3-4 years and in each project investing more than our enterprise value into just that project to earn a 65-70% project interest. We believe our additional high priority non-partnered assets, acquisitions we have been making during the market drop, and flow of exploration spending by partners---Riverside is ripe for potential share price appreciation moving forward.
Having been careful with the treasury and share dilution we are now well positioned to benefit from the results of upcoming drill programs and project advancement in addition to any market rally or support.In the past three months our stock was easily able to nearly double based in part upon on results and lining up the key drilling opportunity at our Tajitos gold project as one immediate catalyst which Riverside investors have as an amazing opportunity.
We are very positive for the potential in the coming 2-4 months for growth through a potential expansion of our surface gold mineralization with the inaugural drill program.
- 2015 has obviously been a tough year for much of the resource sector. Would you say it was tougher than 2014 for your company, about the same, or easier?
This past year has been tougher for us as, although we have quality assets and a sustainable business, the decrease in the sector makes investment by partners more difficult and slower. We have had to reduce some staff and non-core projects to protect the highest quality property assets and maintain a fully functioning core technical team which works closely with partners, including Centerra Gold (
TSX:CG,
Forum), Antofagasta (
TSXV:AN,
Forum) and our junior partners.
- Did you raise money in 2015? If so, how much? And are you planning a raise in 2016?
No, we did not need to raise money. We have a strong treasury and have been fairly unique in the exploration sector, having not had to raise funds through a private placement in nearly 5 years and still having a strong $3.5M treasury with an annual cash spending rate of around $1M per year over the past 8 years.We are committed to quality growth and taking advantage of this low valuation market to pick up excellent assets at deep discount prices.We have the cash position to keep going strongly at Riverside.
- Are you expecting 2016 to be a break-out year for your company? If so, why? If not “break-out”, how would you describe your expectations for 2016?
This year so far has already begun to be a nice upward swing and, for the coming 3 months with exploration results in Sonora at the Tajitos project and then following up with the Thor project, we are well positioned for a break out year.In addition, having not financed or diluted the shares over the past half-decade, now is an excellent opportunity for Riverside to be re-rated with our improved portfolio. In 2015, we acquired 4 new quality assets and for 2016 we will be looking for more deals as we expect 2016 to be a strong year.Yet we continue as well to be careful and protect our treasury and not get over extended as a company.No debt or warrants outstanding on the company.
- What could governments and regulators do to clear barriers to success for public company miners/explorers going forward?
Public companies need to follow the rules and continually work together to lower costs of such compliance and make sure we as an industry do the right things can help keep the costs low.Government’s help with flow-through financing is vital for the industry. Riverside has two Canadian projects currently and we would like to partner with companies looking to use flow-through financing to fund the discovery for copper in a fertile easy to work area. Some of these regions in BC have seen a drop in forestry due to pine beetles killing trees and we think we can develop jobs and potentially new discoveries in these areas. Government making lands open to mineral exploration is important.Government working with us and First Nations to have clear title and cost effective ways to work together where we bring risk capital to try and help better know and understand the mineral potential is also important. This support can help deliver value generating discoveries in Canada to benefit numerous stakeholders.
- Is this your company’s first PDAC event? If so, what do you hope to get out of it? If not, how many times have you been in the past?
Riverside is again at the PDAC with booth 2413-A, where we have been for the past 8 years, and we look forward to meeting our investors and business partners. We are bringing our key Mexico Manager so he can review the latest technology and meet leaders in other companies, our VP of Exploration to take part in partnership meetings and share the latest results from our programs.We have our Toronto-based VP of Corporate Development attending to work on more business transactions, as we closed four in 2015 and have a good line up of potential growth for 2016.PDAC is an important aspect of Riverside’s business to be a partner of choice, build new relationships, and bring excellent mineral properties to meet with capital whether with individual investors or companies at the PDAC.
- In your opinion, what will be the next commodity to surge when resources make their comeback, and why?
We like gold because of its strength as a store of wealth and when the world sees risk, gold is a store of value.Currently with world uncertainties, gold is poised to be one of the commodities to potentially make a good run and Riverside is prepared for this -among other commodities- to make a rebound.
- What is your company doing to find new investors?
We have a strong existing shareholder base and our experience has been that maintaining a high quality communications program with our key supporters has led to new investors being introduced to the story. Riverside has a senior office based in Toronto, head corporate office in Vancouver and solid relationships with investor networks in the USA and Europe as well.
- What is the most common mistake public resource company execs make, in your experience?
Fundamentally, we must run a business. We need to have income or a stable way to generate capital for the business. A common mistake, as it is very tough to get capital that does not stay with the company and the company over dilutes without gaining ability to generate cash flows out of that dilution. Riverside has always focused on running our business of owning properties and sharing the upside for discoveries while limiting our downside costs and corporate dilution.
- What is the most common misapprehension investors have about your company?
Patience is hard and we really appreciate the investors who believe and understand that although markets have been tough, Riverside has cut costs, focused work, acquired a much better portfolio, and has not spent our treasury.Investors not familiar with Riverside sometimes do not like our vision of sharing risk, as this approach at times requires a certain level of dependence on partner capital and therefore patience. Sometimes investors wish we would be more aggressive, yet the downward cycle has been so tough for many, and Riverside is extremely fortunate to employ the model and approach that it does, as we find ourselves in a position of having more cash and less shareholder dilution than the majority of our peers. This fiscal discipline allows us to now take advantage of the opportunities that now surround us.
- Is the slump in oil and gas making life harder for the resources sector too?
The slump has hit Canadian financial strength and our dollar has weakened, making working in other currencies, particularly in the USD, more expensive. Canadian investors having been hit by the drop in oil and gas prices and so many other commodity slumps at the same time have certainly reduced the amount of risk capital available to junior minors and explorers. On the flip side of the equation, US and other international investors are showing more interest as the currency rates make investments in CAD cheaper and more attractive.
Riverside’s partner on the company’s Penoles Project is backed largely by Canadian-based oil investors, and the drop in oil price has no doubt made it more difficult for this group to spend as much money in the mineral sector as a result of the challenges faced in Alberta. The Penoles Project is one of our lead assets where we have a gold-silver resource with open pit potential similar to nearby mines like the El Castillo Operation of Argonaut in Durango, Mexico. Meanwhile, the cheaper fuel costs will benefit Riverside and its partners where the company has work, drilling and transport needs.
- What will it take to make mining cool again?
Mining and the commodities are driven by strong demand and with an age of increased technology, urbanization, and required new infrastructure, I see the commodity cycle coming back, as it has often over the past 300 years, where we have seen global expansion and then recessions followed by rejuvenated growth. As I travel in Asia, South America, Africa and other regions I am struck that we do have a lot of required infrastructure replacement and new developments to progress, which will be part of driving a new commodities boom. Mining will be cool again when investors are able to brag about triple digit returns and 10-baggers. New major discoveries and the next upswing in commodity prices will bring mining back into fashion in the near future.
--Chris Parry
https://www.twitter.com/chrisparry