Midas Gold (TSX: MAX) CEO Stephen Quinn on $38 Million Investment from Barrick Gold & Bipartisan Support for Permitting of the Stibnite Gold Project
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Midas Gold (TSX: MAX)(OTC: MDRPF), Mr. Stephen Quinn. Stephen, how are you this morning?
Stephen Quinn: Good, tired. It was a late night and an early morning, but I'm very pleased to be talking to you, Gerardo.
Gerardo Del Real: You know, the last time we spoke, Stephen, we talked about the fact that the company is at that point in its history that's considered the boring phase for a lot of the speculators and the retail investors. But pretty exciting news this morning, nothing boring about the news this morning. Barrick coming in and making a strategic investment in Midas Gold to the tune of $38 million, that's US, in exchange for 19.9% of issued and outstanding shares. Congratulations.
We've talked in the past about Midas securing investment and capital from some of the smartest money in the space, that includes John Paulson, Franco-Nevada, it includes Teck, and now Barrick. Congratulations. What can you tell us about the work that went into getting this done?
Stephen Quinn: Sure, it's been an extensive process. We've been engaged with Barrick in discussions off and on over a number of years. They've always seen it as a project of interest, of the size and location that would be of interest to them. And we started engaging much more actively in the latter part of last year and into this year, and this is a culmination of that process after an extensive due diligence exercise to really understand the project and its permissibility and its economics. And I think the quote from the president of Barrick kind of sums it up. There's low geopolitical risk, large-scale production, competitive operating costs, and exploration upside. I couldn't have said it better myself.
Gerardo Del Real Yeah, and I'll read his quote verbatim here. "Midas Gold's Stibnite Gold Project in Idaho offers a compelling investment proposition with low geopolitical risk, potential for production of over 300,000 ounces of gold per year, at competitive operating cost, and exploration upside."
You and I have talked in the past, and I have been on site twice. I know personally that the exploration upside is a very important part of why Barrick wanted to come in and take a piece of this. This isn't just 300,000 ounces per year – I think that's a great start – but I think we've talked in the past about how excellent and world class the exploration upside is at Stibnite. Can you speak to that a bit?
Stephen Quinn: Sure. The reason as an explorationist myself got interested in this project in the first place is this is a district play that will likely be around for many, many years as a large-scale producer. We're currently focused on three of the deposits that we've identified to bring those to production, but there's considerable additional potential on the projects that we've parked for the present, because we're permitting and want to get through that process and get into operation. But once you're in operation you would definitely expand out to look at both extending mine life, but also get a potential for increasing production.
Gerardo Del Real: There was recent overwhelming bipartisan support by a lot of the political folk there in Idaho. The second part to Barrick's President Kelvin Dushnisky's comments were that they were impressed with the emphasis that Midas Gold has placed on building partnerships with local communities, and they share their strong commitment to environmental stewardship.
You recently went on, I believe it was called Idaho Investor Days, where the Governor of Idaho joined you and a group of Idaho explorers and developers. Can you tell me how that went and maybe provide a bit of background?
Stephen Quinn: Sure. This is something that we felt the investment community really didn't appreciate –Idaho as a jurisdiction to invest in for mining. The Governor and his staff were of a similar opinion. So we worked together with the Governor and a group of ten mining companies based in Idaho to get the story out there and make the point that Idaho's open for business. And the Governor did an outstanding job, as did his staff, but particularly the Governor, in Toronto and in New York, where we had a group of investors and analysts and bankers and different groups like that attending presentations where the Governor made the compelling case that Idaho is open for business generally. Very favorable tax regime, very business friendly environment. And what they've been able to do to attract substantial investments to the state because of that climate of being open for business, but emphasizing the point that part of Idaho's economy is founded on mining, and still a big component of the economy, and they're strongly encouraging further investment in that sector.
So, it was very well received. I think it definitely woke up interest in Idaho as a place to be, and I think it will reap long term benefits.
Gerardo Del Real: Excellent. How are you going to use the proceeds? Obviously you're advancing the feasibility study and permitting, how's that coming along?
Stephen Quinn: Yeah. We're continuing to push down. The permitting part is obviously the main driver, and the feasibility runs in parallel to that and is somewhat interlinked, and we're advancing permitting. As you said, permitting is not the most exciting period in a company's history, but it's one of the most value creation opportunities, because a fully permitted project is worth significantly more than a project that isn't. So we’re obviously pushing the project down through that permitting process. The process is not particularly exciting, a lot of analysis and evaluation of the project and different alternatives, and how you're going to protect the environment and so on, and all the things that need to be done. So we're continuing to work with the regulators, with stakeholders, community groups, and so on, to move that forward as efficiently as possible.
The US permitting process is definitely substantially slower than many other jurisdictions, even in first world countries. But one big positive about the US is you own your asset, and geopolitical risk is nonexistent. So it's worth the perseverance to work your way through that process and get to the end result, and to end up with a fully permitted project in the United States has considerable value. These are marquee assets for anybody, whether it's a mining company or a shareholder type investor. So we're moving through that process, round numbers based on the current schedule, we're roughly half way through the process. We filed in September 2016, and we're scheduled to be complete at the end of 2019. So roughly half way through that process, and we're continuing to move through it.
As I said, the feasibility process is running in parallel with that. That's scheduled to be completed around the end of this year, and we've essentially completed, call it the physical work related to that, any drilling, or geotechnical work, or things like that, metallurgical testing has been completed. Now, we're into the design and planning and costing phase, the desktop part of that process, and working through that at the moment, but we don't see any reasons why it won't be completed at the end of the year, and continue to emphasize the value and scale of this project.
Gerardo Del Real: You know, the junior resource space is a fascinating space. No one like Midas Gold at $0.25 or $0.50, but everyone today is absolutely loving it at $1.10 Canadian. So congratulations again, Stephen. I think $1.10 is just a start, again, there's a lot of runway there. The exploration potential is world class, and frankly we're not in a gold market yet that has broken out. We still see gold trading range bound. So I think you may be in that fortunate spot where you hit the sweet spot right around the approval of the permit there.
Stephen Quinn: Yeah, I certainly hope so.
Gerardo Del Real: Stephen, congrats again. Thank you for your time.
Stephen Quinn: Thank you, Gerardo. Appreciate your interest and your readers interest.
Gerardo Del Real: I'm a happy shareholder. And I can tell you from some of the feedback I've gotten this morning, there's a lot of happy shareholders. So, congrats. Thanks, Stephen.
Stephen Quinn: Great. Thank you, Gerardo.