RSD at Beaver Creek Interview Series: Mawson Resources (TSX: MAW) CEO Michael Hudson & President Dr. Nick Cook

September 23, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today from Mawson Resources (TSX: MAW)(OTC: MWSNF), Mr. Michael Hudson and Dr. Nick Cook. How are you gentlemen?

Michael Hudson: Very well. Thanks, Gerardo.

Nick Cook: Great, thank you.

Gerardo Del Real: We're doing away with titles. We're here at the 2019 Beaver Creek Precious Metals Summit. I must say the tone this year is very different from the tone last year. Some thoughts initially so far, Mike? I know you just got here.

Michael Hudson: You've got a market.

Gerardo Del Real: I love it. Mr. Cook?

Nick Cook: It's great. There's a lot of interest.

Gerardo Del Real: Excellent. You're in the sweet spot. You actually had some very important news this morning about the liberation between the gold and the cobalt success on both fronts. And I want to talk about that because it's important to the company moving forward.

Before we look forward, however, I want to talk a little bit about the past. Mawson Resources has a history of struggling to get to where you're at today, which is being able to drill the areas that you want to drill, having this cobalt kicker that is becoming more and more important as every month passes.

But there's some misconceptions out there about this deposit that you have, and I would love for you to address some of the more common misconceptions. So if we could talk a little bit about the past, and then we'll get to the present and the future, gentlemen.

Michael Hudson: Understanding the past is important, but it's not a reflection of the future in anything we do. It's important to understand it. So I'm glad that you brought it up. Number one is, I think you brought it up, is that we've got permitting problems. Now we put 83% of our drilling in the last three years into this project. So we've been permitted for the last three years. We got a renewed permit in January, so we are permitted for the next three years.

The area has been ratified in the land use plan by the local municipality for mining. It has huge support in terms of that local area. What we saw a number of years ago was environmental groups appealing, which is a standard thing to do in Finland. And it slowed us down. We're in the Natura 2000 areas, partially 13% of our areas in the Natura 2000. That adds complexity without a doubt.

But we have Anglo American up the road in the same area. Dundee Precious Metals permitted a gold mine in one of these areas in Bulgaria. The extensions to Kevitsa are in one of these areas. So there's many examples of mines operating in these areas today. So it's more a perception around that. We're very engaged at the political levels and the social levels in Finland, which you need to be.

So we're really on top of that and I think that's reflective of having the 6-year permit in place. So tick, gone.

Gerardo Del Real: Love it.

Michael Hudson: Number two is that it's an older story. We made this discovery in 2013 at Rajapalot. Before that, we had some of the best, well the best drill hole in Europe in the last decade in TSX companies in Rompas, which was another 8 kilometers away. It was a slow process. We came through a hard market, we had private equity supporting us. But the key number there was, what I told you in the last two and a half years, we put 83% of the drill meters in. We've gone from a science experiment to resources and expanding resources.

That old story is actually new. It's very new. It's a two and a half year drilled deposit.

And one of the other things was that we bought these projects from Areva, who were the largest uranium company in the space. That was from Rompas where they'd found some uranium. We're 8 kilometers away and 8 years away from that project area. And we see, in our current resources, uranium averaging 17 parts per million, which is extremely low. It's like a granite. So tick, gone.

Gerardo Del Real: Excellent. Let's talk present. You have a very large strategic shareholder that obviously did its due diligence and was comfortable coming in and writing a big check. I have to believe that large strategic partner is very, very satisfied with this morning's news regarding the gold and the cobalt.

Dr. Cook, can we speak about the importance of the cobalt? Because this is an emerging new story, it says, not an old story. This is not something that I believe the market has digested yet, just how important a kicker this is. And I'm calling it a kicker, but it really is more significant than that.

Nick Cook: Yeah, absolutely. There's always questions with cobalt, especially when it's associated with other minerals, as to whether it will come out of the rock. And the key about this cobalt is it's relatively coarse grind in these systems. So say almost the same size as the gold, 50, 60 microns, that sort of size. And when you crush the rock in cold water, called liberation studies, it's broken out and it's broken out cleanly.

The other thing about cobaltite, which is the mineral that contains most of the cobalt, is that it's quite dense. So in this gravity program that we described in the press release, it comes out in the dense fraction. So the gold and the cobalt, a lot of it comes out in the dense fraction. Mike, you might want to comment a bit more.

Michael Hudson: Well it's low cost and it's environmentally friendly. We're just dealing with gravity and water here. And importantly, it behaves like the gold and that's a fantastic thing. So we're not dealing with refractory gold, which is what Kittila, Agnico's operation up the road is, so it comes down to cost.

This project, if it ever becomes a mine, will have half the cost of processing. And then the cobalt, as Nick said, it behaves beautifully. It surprised us. So it's a very real addition. It's a byproduct. The gold will drive this project, but 10 to 20% in situ value is cobalt.

Importantly, it creates a strategic asset for Finland, which creates a very, very strong political support for the project. We're simply not a gold company owned by foreigners.

We are a strategic asset for the country, which is very important because Finland is very strong in the cobalt supply chain. They produce half the world's refined cobalt outside of China. So 10% of global cobalt comes out of Finland. And 90% of that feedstock comes from the DRC, which doesn't fit well with a European and Finnish society.

Gerardo Del Real: For those not familiar with the project, can you give us a brief overview?

Michael Hudson: Yeah, it's a first principles gold discovery on the Arctic Circle. The Arctic Circle is mild in that part of the world. It's cold for an Australian, but for a North American it's balmy. So it's all year round working. We've put about how many meters into the project so far, Nick?

Nick Cook: 49 kilometers into the Rajapalot Project.

Michael Hudson: So we had 15 kilometers into the initial resource, which was between 400,000 and 500,000 ounces. We just put another 15 kilometers that we've just finished, which has nominally doubled that volume in an exploration target. So you can see where we're sitting around the 800,000 to 1 million ounces exploration target. We need to infill that and we'll start doing that as soon as we have more capital in the kitty.

We're looking, this winter, to go to 1.3 to 1.5 million ounces exploration target, based on drilling lower risk targets. We understand the geology, we've broken the code. This guy's done a fantastic job with the team and with the EM, which is basically building big metal detectors on site that the mineralization lights up and it continues. These bodies are being drilled beneath known mineralization. So the science experiment is ended and the resource expansion is now ongoing.

Gerardo Del Real: Let's talk about the big pivot in the geology and your understanding of it, because something happened four to six months ago, publicly anyway, that I noticed in the press releases where the press release spoke a lot more confidently about the predictive nature of what you were seeing and what you expected. That was not always the case.

Nick Cook: No, no, no. Exploration's a funny business, that you drill and there are some moments where the team all gets together and the ideas change. I could say that this season was one of those. And our keywords for this season, the discovery is what we call light and straight. So we can see almost a linearity that we hadn't seen before in the data. And that's allowed us to put the high grades together and it's allowed us to be successful in the predictive drilling.

So the end of this year's winter program – it's what you're referring to – was very successful. So 8 of the last 12 holes were our best holes of this season and that was based out of 44 drill holes for the season. So our 15 kilometers and that was a great result and great reflection on the work of the team to put all the data together, because you can imagine having four rigs going, it takes a bit to keep gathering the data and keep it up to date and they've all done a great job.

Gerardo Del Real: You've done an incredible job. What can shareholders look forward to, Mike?

Michael Hudson: Drilling, resource expansion and valuations increasing, ideally around just those metrics. It's a relatively simple story. Now with $25 million market cap today, we can see it going into 1.5 to 2 to 3 million ounces, and your listeners can do those sort of numbers on those peers of what kind of valuations they're getting.

We've got a project that's locally supported very strongly. We've got the metallurgy working for us. We've got high grades, we've got the similar grades at an underground level that Kittila up the road has, plus that cobalt kicker of 10 to 20%, so so far so good.

Gerardo Del Real: Excellent. Nick, Mike, thank you so much. Appreciate it.

Michael Hudson: Thank you.

 

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