GoldMining Inc. (TSX: GOLD) Chairman Amir Adnani on Why 2019 Will Be a Great Year in the Gold Space

January 10, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Chairman of GoldMining Inc. (TSX: GOLD)(OTC: GLDLF), Mr. Amir Adnani. Amir, how are you? Happy new year.

Amir Adnani: Happy new year, Gerardo. 2019, we're on.

Gerardo Del Real: We're on, let's get right to it. You obviously have your finger on the pulse in the gold space. I was reminded this morning of GoldMining Inc.'s healthy cash position. I believe that you currently have approximately $9.2 million, you have zero debt, you have 9.5 million ounces in measured and indicated gold resources globally and an inferred resource of 11.7 million ounces of gold. Market cap relative to the ounces in the bank is tiny, hence the opportunity.

What can we expect out of GoldMining Inc. in 2019 Amir?

Amir Adnani: You covered everything nicely. And I think that speaks to some extent the simplicity of the GoldMining strategy and business and assets today, Gerardo. In the sense that we have been able to really take advantage of this prolonged bear market that we've had in the gold sector, with gold equities and the gold price really being generally below $1,300 an ounce since late 2013 time frame. This has been a period that even some of the CEOs of major gold companies have called the dark period.

Speaking to again the capital flight that has happened, the capital that has gone elsewhere and the lack of exploration, the lack of development and the stark reality that when you look at the latest stats, the industry reports that are coming out that take into account how long does it take and how much does it cost to explore for a gold resource in the ground. The latest numbers I saw from National Bank Financial and S&P Global were highlighting numbers in the range of $174 per ounce, when you consider how much it costs, the all-in costs to go stake the ground, to go drill, to do geophysics, to do geochemistry, to pack your bags as prospectors and get out on the weekend looking for hotspots. All of that stuff takes time and money before you come up with the resource in the ground.

So when we've had this incredible environment to be able to acquire resources in the ground for less than $10 an ounce, way below that unit discovery cost that I was just mentioning right now, we stuck to our knitting and we've executed year in and year out since the company’s IPO in 2011. I think the stats you were mentioning earlier are really important factors that I look at. We just had a budget meeting yesterday with our team and we talked about even the concept of G&A costs on a per ounce basis. Everything we look at we look at the value and optionality we're creating on a per share basis.

So if we're looking at gold in the ground, and we've accumulated a very large portfolio that's diversified, we want to look at how much gold resource we have on a per share basis, then we want to make sure that we don't have to dilute and go to market unnecessarily. So we've kept costs down as much as possible. So we look at G&A on a per ounce basis, making sure that's kept at a very low level. Our investors love that because that means the longevity of that option value that you have for this very large gold resource per share basis is that much longer. It's like holding this multi-year optional warranty in your hand.

But anyways all of that said, Gerardo, I'm really excited about 2019. For us, it's going to be a focus on low-cost work, especially on permitting some of the projects like Cachoeira in Brazil and Yellowknife in Northwest Territories in Canada.

So it'll be a year with a mix of news and activities on our portfolio, always having an eye on accretive acquisitions, quality acquisitions, but really always being focused on making sure cost is low, cash on hand is strong, cash is king. Keeping a balance sheet very tight, keeping capital structure tight, and making sure we've got a very strong gold resource per share metric, which is ultimately what drives the value on a per share basis.

Gerardo Del Real: Well said. Before I let you go, Amir, I have to get your take on what you expect from gold in 2019. 2018 was a year where a lot of speculative capital was diverted away from the resource space. It went into things like cannabis companies and the crypto space. Both of those bubbles seem to be deflating a little bit and sometimes a lot at a time. I think this year it's a much more accommodative market for us in the resource space. I know the World Gold Council just put out a report saying it believes gold will become even more relevant due to the proven track record for delivering returns, its low correlation to major asset classes, its liquidity and risk-adjusted returns.

What are your feelings on gold in 2019? Is it going to be a good year for us?

Amir Adnani: I think it's going to be a great year due to three main reasons; inflation hedge, gold rising in the face of rate hikes by the U.S. Fed. But should inflation expectations rise, gold will see considerable strength, so inflation hedge number one. Number two, safe haven. I mean the traditional role of gold doesn't change. We've got uncertainty around trade wars and the implications to global equity, debt, and currency markets. Economic growth rates are going to be under the spotlight from Europe to China, most of the world except for the U.S. and we'll see how the U.S. plays out. And then lastly, physical demand. I mean physical gold inventories have been consistently growing. So those three points are important takeaways and important drivers for the gold price in 2019.

Gerardo Del Real: I have to believe that with the diversified portfolio and the number of ounces you have under the GoldMining umbrella that you're going to be looking to use your network, your vast network, to possibly bring in some new assets. Would I be accurate in thinking that?

Amir Adnani: As long as it's accretive and as long as these are quality projects and really additive to what is already a very large portfolio. I think it's important that we recognize that for our company, Gerardo, we didn't just make acquisitions for one or two years, we've been consistently out shopping and making acquisitions since our IPO in 2011. I believe the market and our investors by now have become comfortable and give us the benefit of the doubt that as a management team and as a company, GoldMining has been able to identify really exceptional opportunities, cut good deals and do it consistently, and do it patiently.

Until we see a major surge in the gold price, I don't see why that changes. But the key word here is accretive, meaning if we're trading at a certain multiple of enterprise value to gold resources in the ground and let's say we're trading at an implied – and I'm just making up a number – let's say we're trading ourselves at $10 an ounce in the ground. Well then it wouldn't be accretive for us to go make an acquisition and pay for something, an asset which we may like but we're going to pay $20 an ounce for and issue shares for that.

That would be deteriorating the value per share that we're trying to preserve and grow, whereas every acquisition that we've made over the last seven or eight years has been accretive, every single one has been done accretively and has been done in a way where we've picked up a tremendous amount of historical value at a discount to that. If you look at the combined market cap of all the companies that we acquired, their peak market cap in 2011 for example when we had a stronger gold price, was about $800 million. All of our acquisitions totaled about $80 million. The amount of work that has been done on these projects is in the hundreds of millions.

Again, if you've paid $80 million for that. You can see we’ve made acquisitions well below historic values, historic market caps, and replacement value. So will we do more deals that fit those requirements? Of course. Having said that our share price is weak right now in my opinion, because we're trading near a two-year low. This is due to the fact that last year December became an intense tax-loss selling period. We had some warrants that were being exercised which was the context of the news release we had the other day, which you alluded to. But as a result of the warrants getting exercised, we did see some pressure on the share price but we also saw cash come in. Today, we're in a position where the company, with over $9 million in cash no debt, is in a financially strong position. We disclosed recently in our news release that our budgeted activities for the next year is about $5 million.

So you can see there's not only sufficient cash for budgeted activities to advance the current portfolio, but there's some dry powder available to pursue what you just alluded to in terms of potential accretive and quality acquisitions. So let's see. But I'd like to see, hopefully, first the recovery in our share price back to more normal levels first. Once that happens and we're always out hunting and we've demonstrated a good ability to identify and get deals done, we'll be there. But like you pointed out with projects in five different countries today and one of the largest diversified gold resource portfolios for any junior gold company anywhere in the world, I definitely don't feel the pressing need to do a deal, but definitely a deal that makes sense on our terms.

Gerardo Del Real: It's a heck of a re-rating opportunity if we get the higher gold price we're all expecting to see this year. Amir, thank you so much for your time and hopefully we have you back on soon.

Amir Adnani: I'm really excited, Gerardo. Thanks for this interview and I look forward to connecting and being in touch with you throughout what should be a big year for the gold sector and gold equities and GoldMining.

Gerardo Del Real: I think we've earned it.

Amir Adnani: I do, too.

Gerardo Del Real: Thanks, Amir.

Amir Adnani: Thank you.

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