Listen to the podcast interview with Amir Adnani:
James West: Amir, welcome back to the show.
Amir Adnani: Good to be back.
James West: Amir, let’s talk a bit about Brazil Resources/Gold Mining Inc. You have changed the name, and I guess that reflects a broadening of the geography. Why don’t you give us an overview of exactly what has happened in the last quarter of 2016 since our last conversation.
Amir Adnani: Since our last conversation, we had definitely a very active quarter for Gold Mining Inc., formerly Brazil Resources. And it really, the first news item since our last interview was an acquisition that we announced in Colombia, a project called Titiribi, which is a gold/copper project. So this is a very large property, it’s on a gold equivalent basis, the measured and indicated resources are just over 6 million ounces gold equivalent; inferred ounces are 3.4 million ounces, and really a project that has got district-scale potential with gold/copper porphyry and epithermal systems.
About 270 drill holes had already been completed, and it’s a project that we were able to acquire for shares, and overall it was a very accretive acquisition, and after announcing the acquisition, we definitely saw a very favourable response in our share price. Great infrastructure on the project as well, and since we made that acquisition, so far this year there’s been some good news and developments with projects and, in general, the country of Colombia. It’s really been ranked now by a number of industry analysts as a top jurisdiction to be in this year. You have the new FARC treaty with the government that just provides a backdrop of safety and security that’s important, and some projects and companies have received production permits and other good advances that overall, I say, our timing into Colombia as a country was very well timed.
And in addition to this acquisition at Titiribi, we completed a financing just over $12 million, and that was done at $2.50, and we definitely felt by the end of the year that our portfolio of projects, certainly not being just in Brazil anymore, that the name Brazil Resources, it was time to change. And we needed a change and a name that would really reflect the multi-jurisdiction portfolio that we have amassed over the last six years. While our main focus originally was in Brazil, since then we’ve acquired a gold/copper project in Alaska in the US, and we have now this project in Colombia, Titiribi, and we have a uranium project and joint venture with Areva in Canada. So clearly, I mean, the uranium project is non-core and we plan to spin that out, but back to the name: We wanted a name that definitely captured the essence of our existing focus on gold, with 10 million ounces of measured and indicated gold in all categories across all projects, and 8 million ounces of gold-only across all projects in the inferred categories. So the name Gold Mining, we felt, captures that; also captures the very aggressive vision that we have as we grow the company.
We were fortunate enough to secure the ticker GOLD, G-O-L-D, on the Canadian exchange, and GLDLF in the US, and a new website, goldmining.com.
James West: Those are all feathers in your cap. I love the symbol GOLD, that’s got to be one of the all-time coups of the century. So let’s talk a bit about the gold price environment, and how is that going to affect the evolution of your projects?
Amir Adnani: It was a funny moment for me, because the night in late November, the night Trump won the election, I was certain, along with I’m sure a lot of other people, that we were going to see the gold price just torpedo higher and shares in gold mining companies were going to take off. Of course, we all know what has happened since then, and we’ve seen what I believe to be a temporary pull back in the gold price. So to some extent, this is interesting for us because our whole strategy as a company is to acquire resource-stage gold projects, especially when there’s time of distress in the market. And this strategy has worked very well for us, and this strategy worked extremely well between 2013 to late 2015, where there was an incredible amount of pain in the resource sector and for gold stocks.
And so that’s where we were able to really assemble this very large gold resource portfolio that we have. So I view this temporary drop in the gold market since Trump’s victory to be another window for gold mining to be able to cut deals and to make acquisitions, basically stick to our knitting. We need these types of pull backs in the market, because as you well know, if the gold market is soaring there would be new capital coming into the industry and there would be a lot more exploration and everyone would get financed.
So this is really an exceptional window and opportunity for us. We built a war chest with over $21 million of cash on hand, the very large resource base that we have, and that serves as a key point of drawing more companies to us who want to be part of the platform that we’re building. So this is a very interesting window for us; I believe this is a temporary window as well, because there’s no doubt in my mind that the policies of President Trump will prove to be very inflationary. And these very inflationary policies will drive real interest rates into the negative territory, and I really do believe that the stage is set for higher gold prices, but of course, these things take time to develop and manifest themselves.
James West: Right. Wow, okay. So then when and which of your projects will we most likely see in production the soonest?
Amir Adnani: When you look at our projects, I would say that the area that we have been in the longest are areas we have done the most work on, so we just have a greater confidence and understanding of these projects, and that’s Brazil. And in Brazil, our focus has been in one state in that country, Para State, and in Para State the two projects that we have there is Sao Jorge and Cachoeira, are both very similar in terms of similar style of geology, similar grade; at Sao Jorge, the grade is in the indicated category at about 1.54 grams per tonne, and at Cachoeira, it’s over a gram per tonne, I believe it’s about 1.1 grams per tonne there.
El Dorado Gold
But Sao Jorge is definitely a project that benefits from being in an area where companies like El Dorado Gold, for example, have announced plans to develop projects in this area. El Dorado has a project that they want to take to production in this area where our project Sao Jorge is. This is important, because obviously it creates a lot of regional activity and excitement, and infrastructure and other spending. And for an open pit project, or open pit resource, at 1.54 grams per tonne we also think this is definitely a project that would be very competitive as more work is done to develop the new PEA and the infrastructure that we have nearby or just a couple of kilometres off of paved highway with a power line coming in, that this is a project that we know well because we’ve been in Brazil longest, and the dynamics around where the project is are all very favourable.
The Brazilian real has also depreciated quite a bit to the US dollar, so you have the currency advantage in Brazil, and overall, just a good time to be developing projects in that country. We’re also very bullish about our Titiribi project in Colombia, but we’re new to Colombia, so we’ve just been there now for the last five months, so we need to still formulate a strategy in terms of how we’re going to tackle and advance that project. We’ve got a great team in Colombia; one of the board members of our company lives in that country, and to this day, the oldest and one of the most successful investment houses in South America, BrasilInvest, who owns just under 10 percent of our company, and the chairman of that bank sits on our board, Mario Garnero, are great partners for us, both in Brazil and in Colombia as a very formidable force in Latin America.
So we’re very well positioned to advance those two areas, James, so there’ll be more news flow with our existing portfolio, but also news flow from our acquisition hunts.
James West: All right, Amir. That’s a fantastic update. We’ll come back to you in another quarter’s time and see what the update holds then. Thank you again for your time.
Amir Adnani: Looking forward to it. Thank you.
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.