Revival Gold (TSX-V: RVG)(OTC: RVLGF) CEO Hugh Agro on High-Grade Intercepts & Upcoming Mine Plan for Flagship Beartrack-Arnett Gold Project, Idaho
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Revival Gold — Mr. Hugh Agro. Hugh, how are you this morning?
Hugh Agro: I'm excellent, Gerardo. Thank you for having me.
Gerardo Del Real: The last time I had you on, we discussed the excellent — but what I described as ‘not spectacular’ — results from the Beartrack-Arnett project. I played devil's advocate a bit and said the market was really eager to get some of the higher grade hits that we all expected out of the drill program.
And true to your word… you have delivered, sir! Let me read the headline:
Those are fantastic numbers! Congratulations, Hugh.
Hugh Agro: Thank you, Gerardo. It's a credit to the diligent work of the team and it's the deposit. It just continues to give.
Gerardo Del Real: Let's talk about some of the implications from the release. You announced the final ten holes. They were drilled to test for high-grade sulfide mineralization and to validate, as you outlined in the release, a conceptual underground mining target hosted within the main shear zone. It seems like you were successful on both fronts.
Hugh Agro: We were and we have 3 million ounces of gold already in this deposit. So what should the strategy of a company with 3 million ounces of gold be? Well, it’s got to be to add more of it and more of it at higher grades to be of value into the plan.
And I think that's what our shareholders have been looking for. And these two holes in Joss point to what could be the next phase of Beartrack-Arnett’s life. As you know, we start with a first phase oxide open-pit heap leach operation. The current PEA calls for seven years. We’ve got an open deposit there at the Haidee satellite deposit. And I think we can grow that for another 2-3 years; take our mine life out to 9-10 years. Then, we go into the next phase, which is the mill. And we’ve got 1.5 grams [per tonne] in open pit in the Indicated resource there. And that's a great start for that mill phase.
And here today, what we have with these results is the beginnings of something that looks like it could come together as an underground core to the deposit — over a kilometer of distance in the mineralized system at Beartrack-Arnett. And that, of course, opens up a lot of possibilities because the deposit is open at-depth, and we've got a lot of drilling that we can do ahead of us.
Gerardo Del Real: So Hugh, just to be clear for people that aren't as familiar with the project and the plan, you can now see, and the team now sees a scenario where you go from heap leach to the mill to now potentially even an underground resource. Is that what you're saying?
Hugh Agro: That's it. And all trading at $10 an ounce in the ground today.
Gerardo Del Real: So the market cap right now is a meager C$51 million. I could make a pretty compelling argument that the infrastructure in-place onsite… that the replacement cost would surpass that. The potential for a restart here of production is a relatively inexpensive exercise given the cash flow that would be generated. What does that look like, Hugh, again, for those not familiar?
Hugh Agro: Yeah, so broadly speaking… that first phase of operation has been conceptualized in a PEA, which is on our website, published at the end of last year. And what it calls for is C$100 million of initial capital producing 72,000 ounces a year of gold at an all-in sustaining cost of just over US$1,000 an ounce.
And so that operation kicks off at US$1,550 gold somewhere between C$30 and C$40 million a year of free cash flow. And every year that we add to that plan, basically, is delivering the same cash as the value of our current market cap. So tremendous value in the stock… a very relatively straightforward operation to get going in the first phase.
The sulfide operation will be more complicated, more involved, of course; bigger operation, bigger plan. But coming back to the results today, I think what we're seeing here is the prospect for something that could be much higher grade and which could really enhance the economics of that opportunity.
So really, you’ve got a lot of option value in Revival Gold. We're trading at $10 an ounce in the ground. We’ve already got 3 million ounces in the resource. We’re building a pipeline of growth, if I can put it that way, going from oxide heap leach to open pit mill opportunity. And now, the beginnings of something that can come together on the underground side.
We will be having more news as we digest these results and start to reassess the holes that we’ve drilled in this area from past. There’s a lot of relogging going on; a lot of geological interpretation going on by our team, led by Steve Priesmeyer, our VP Exploration, and involving some industry experts.
We’ve had Phil Walford and Laurie Curtis involved as part of our geological advisory team. And these gentlemen just are superstars in the business and doing great things with the data. So we’ll have more news on that. And then, of course, we’re going to be heading into drill season soon. So lots to follow as we move forward with engineering plans and drilling.
Gerardo Del Real: You mentioned the free cash flow using US$1,550 gold. I'll use today’s price of US$1,800 gold. That's US$57 million-plus in free cash flow annually. So again, just to crystallize the opportunity here for everybody, this operation would generate more cash flow in one year, free cash flow, than the entire current market cap of the company. If that doesn’t speak to the opportunity here — I don’t know what does!
Hugh Agro: And that’s excluding anything from the sulfide mill opportunity. So yeah, lots of upside here; lots of option value. And I can tell you that the folks in the state of Idaho are really keen to be supportive of responsible industry in the state. The state is growing. It’s got a great fiscal situation. And I think it’s a state where we can do business and where we’re welcome.
And we’ve got the support of the local community. I’ve met with members of the local community in the County Commission Office and in the mayor’s office. And we’ve got a favorable situation there in terms of our location.
Our team loves to be in the state of Idaho. They’ve worked all over the world but are happy driving to work or short plane flights to get into work. It really is a special place.
Gerardo Del Real: Hugh, thank you for your time as always. Good work and we’ll be chatting again soon, I suspect.
Hugh Agro: Thank you.