Midas Gold (TSX: MAX) CEO Stephen Quin Talks Institutional Support for Recent $19.9 Million Financing & Path Forward with Permitting and Prefeasibility at the Stibnite Gold Project in Idaho

June 12, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Midas Gold (TSX: MAX)(OTC: MDRPF), Mr. Stephen Quin. Stephen, how are you today?

Stephen Quin: Doing good, Gerardo. It's a nice sunny day here in Vancouver.

Gerardo Del Real: I'm glad it's sunny, I'm glad it's not raining. I am in Austin where it's almost always sunny and every now and then we get a little bit of rain. We've gotten some recently.

I want to talk about the $19.9 million dollar Canadian bought deal public offering that you just announced. But before we get into that and the thinking behind it, we all know it's been a brutal bear market in resource stocks. Gold is actually holding this $1,325/$1,330-level, so I want to talk about that.

But before that, you and I had the pleasure to catch up in New York last week at the 121 Mining Investment Conference, and I'd love for you to share your takeaways and how busy you were, because I know that you had to back-to-back-to-back-to-back meetings for both days.

Stephen Quin: It's an interesting conference. As you can guess from its name, for your listeners, 121 is basically a lot of one-on-one meetings with a variety of different types of people from conventional gold funds, mining funds, and people like that to family offices that invest money for high-net-worth individuals, mining companies, and different things like that. We had a pretty packed schedule. I think we had 22, 24 meetings in two days, which is a pretty frantic schedule. Some very good meetings.

I think the interesting takeaway from the meeting was that the call it conventional mining funds are not that strong at the moment, but you're seeing the family offices show up in strength. Those are more characterized as generalist investors, and they're just looking at the market and saying, “This sector's so beaten up.”

As your lead-in said, there's this brutal bear market. People are starting to notice and seeing value in the mining sector and the generalists are the ones that are stepping up to the plate more than the gold funds who still haven't seen the fund inflows yet.

Gerardo Del Real: Let's talk about stepping up to the plate. I mentioned that gold is at $1,326 as we speak. It's had a $70-something-dollar run here in the last week, week and a half. Very little profit-taking. I'm encouraged by it. We talked about stepping up, and two big groups that have been very vocal supporters of Midas Gold are also taking down a large portion of the financing that was just announced.

I mentioned it was $19.9 million Canadian. It's 33 million shares. It's priced at $0.60 Canadian. There's not a shareholder that is ever going to tell you they like dilution. However, the fact that you have Barrick Gold, who I've speculated is a potential suitor for the company, and Paulson & Co., which obviously is going to negotiate to try and get the highest price possible on the other side. I'm encouraged as a shareholder that both those groups came in. Can you speak to that a bit?

Stephen Quin: Sure. Both Barrick and Paulson came in to the financing and essentially took about 49% of the financing, so almost half. Just barely under half of the financing was picked up by both of those, and I think that's a very encouraging sign of them seeing value in the company. As you say, dilution is always painful when you have to take it, but as we announced back in April and we talked about before when our permitting was extended.

Essentially, more time means more money and you never want to go the market when you have to have money. You want to go when the money is available. We had a clock ticking with Barrick where they were prepared to support financing up to certain time, Paulson were willing to step up alongside them. We were pretty convinced that them taking almost 50% of the deal would bring other institutional support, and we saw that. The deal was well taken up with a good range of institutions. Some are existing shareholders, some are new investors, and some good retail participation as well. All in all, it's encouraging to get it done and have the financial confidence to keep pushing forward with our feasibility study and our permitting, but obviously it's always painful, dilution, when it happens.

Gerardo Del Real: How is the permitting process progressing? Will this financing allow you to cross that finish line and get to a decision?

Stephen Quin: Well again, it does really get us a substantial way along there. The challenge with permitting is we don't control the timeline. The regulators control the timeline, so you can never answer that question definitively because you don't what the final date is going to be, and the final questions and answers that we have to provide. That definitely puts us in a very strong position to push through, well into later next year, and keep pushing that process forward.

Gerardo Del Real: Well said, well said. What can we expect from Midas Gold? You probably just said it, obviously working on the feasibility study, pushing the permitting efforts along. Anything else that you'd like to add to that, Stephen?

Stephen Quin: I think those are the two key drivers of value, and they walk in lockstep with each other, because they're sort of interrelated. You want to have the feasibility reflect the permitting, and the permitting reflect the feasibility to the extent that makes sense. So the two of them are marching forward, and the permitting delays are frustrating and they add additional cost, but they also give you additional time to work that feasibility over, study over it, study it over one or two more times and try and get the best product and best results out of that. So we're taking advantage of that additional time to try and optimize the budget and things that we might have done later will come in sooner and get incorporated into the study so, hopefully, it's as good a product as we get.

But the challenge with these kinds of stages of companies is you're really kind of in this quiet period where you're doing a lot of work, but it's in the background and it's not momentous. But then you emerge out of that and you have these major events and catalysts coming down the road. So this is always the case for patient investors who see value, and that's what we're seeing with the people who participated in the financing we've just done, and they're not investing for the quick flip trade. They're investing because they can see that the upside of getting through those major milestones when we get there.

Gerardo Del Real: It's worth noting that Midas shares trade at substantial discount, to be kind, to the net present value, even if we use $1,325 gold, I don't believe that we need $1,500 or $1,600 gold in order for Midas to be – and these are my words – an easy double or triple from these levels. However, I do see an environment where gold continues higher, and if that happens to coincide with the permit, then this may be an absolute bottom here. It's not surprising that the institutions and funds that participated decided to do so at the level they did, so I'll leave that there.

 Stephen, thank you so much for your time. I appreciate it, as always, and look forward to chatting here in the near future again.

Stephen Quin: Great. Thanks Gerardo, and thanks for your shareholders for their support!

Gerardo Del Real: Absolutely.

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