Corporate Update: Contact's Matthew Lennox-King on Green Springs and Pony Creek

Trevor Hall [00:00:06] Welcome back, everybody, to Mining Stock Daily in another corporate update. Today, I'm airing a conversation I had with the CEO of Contact Gold, Mr. Matthew Lennox-King. Please note that this conversation was recorded last week during the AME Roundup Conference. Therefore, the conversation happened before yesterday's news with their drill results with 70 meters with 2.36 Grams per tonne oxide gold, which hit the wire yesterday morning. So just take that in mind as you listen in. It's a great conversation with Matt as he talks a lot about the developments with Green Springs. I do ask him about the likelihood of moving back into Pony Creek later this year. And then we talk a little oxide gold projects as well. So enjoy the conversation. Thanks again for tuning in. Have a wonderful day.

Trevor Hall [00:00:54] Welcome to Mining Stock Daily. This is your host, Trevor Hall from the Association for Mineral Exploration Conference. The Round Up Conference 2020. And right now, I am joined by Mr. Matthew Lennox-King. He's the CEO of Contact Gold. Contact Gold trades on the TSX Venture with the Symbol C and also on the OTC markets in the U.S. with the symbol CGOL. Contact Gold is a sponsor, a corporate sponsor of mining stock daily and so we are actually giving a corporate update with you, Matt. Thanks for joining us. Yeah, thanks for having me. You know, we've chatted pretty frequently in the last couple weeks, but give us a quick rundown of, you know, it sounds like there might be some more drill results. They're Pending and should be publishers sometime short while short future from Green Springs.

Matthew Lennox-King [00:01:39] Yeah, that's right. So Green Springs is our new project. We've had some great results out over the last couple weeks. We're just processing results from the last few holes there at Green Springs. And as you said, anticipate having those out in the next couple weeks.

Trevor Hall [00:01:53] And we don't need a rehash the conversation we already had a revert to listeners back to that. That was just published last week or two weeks ago where we talked about the Tango target and the Echo targets which should be moving here this year. Well, I actually just want to spend some time asking, you know, obviously in the height of conference season here in Vancouver. We've we're just wrapping up the third conference of the week, which is crazy to think about. But what's the overall sentiment for junior miners now? Do you feel like it's it's a healthy comeback?

Matthew Lennox-King [00:02:25] I think so. I think in these shows it's always a bit hard to tell. There's there's a bit of group think, group exuberance. Right. People want things to do well. I do think that we have seen some explorations really come storming back. You've seen Great Bear. They've been doing well for a couple of years. Liberty Gold has done exceptionally well over the last 12 months period. They've gone up from about 35 cents Canadian to well over a dollar now. And that in both cases that's been driven by really exciting and repetitive exploration results. And from a Contact Gold point of view, what we've seen already in January and we're about three weeks in is a real uptick in our volumes, a meaningful  increase in our share price as well. And I'd suggest that that's been driven by the same type of factors that have driven Great Bear and Liberty i.e. great grades over big, thick intervals with a clear case of more to come.

Trevor Hall [00:03:25] Do you think that if when junior mining does have this big influx of new or missing investors, there's gonna be a transitional, educational moment? And once again, where we got to actually describe how this business really works?

Matthew Lennox-King [00:03:42] I hope so. I hope. Good. I hope so. I think that one of the reasons that you see when you can see a lot of volatility in exploration stocks is that people don't really understand the process. They don't understand that you're not going to hit on every single drill hole. And let's say in northern Ontario, or Quebec, if you're hitting on 20% of your drill holes, you're doing really, really well. And then in our case in Nevada, you tend to have a bit of a higher hit rate. But, you know, it still takes a volume of drilling, it still takes missing. And I think that if if investors are a bit better educated or informed on the sector, they might make wiser decisions and you might see less volatile.

Trevor Hall [00:04:22] Well, and it's it's really not one of those things to where, you know, you can just go online for an hour and read as much as you can and then walk away it. Okay, I get it. But that takes years. I mean, I've been working in this industry for five or six years, and I'll be the first one to admit there's more. I don't know. Right. So but it's still to hear that we welcome the educational moment that we see that as an opportunity more than anything. I think so. Yeah, I think so.

Matthew Lennox-King [00:04:48] Today, that network that helps people differentiate high quality, geology driven opportunity from a promotion.

Trevor Hall [00:04:56] Right. That's one thing I did not ask you last week that I wanted to we were just kind of beholden to time. Contact has really been focusing on Green Springs and things looking good. Obviously, more news flow from there. So what's what's going on with Pony Creek?

Matthew Lennox-King [00:05:13] So Pony Creek has been our flagship asset. It was the asset we went public on. As you know, it's southern Carlin Trend right next door to Gold Standard Ventures. And we've been really active with the drill the last three years. So 2017, 18 and 19. We've had some great results, two and a half grams, over 50 meters of oxide. And our hit rates been exceptional. It's been about ninety two percent in across one hundred and seventeen drill holes at the moment. We're essentially weathered out and we're also waiting for our plan of operations. We're still waiting on our plan. And until that comes in. I mean, we could keep drilling, but it's really not that efficient. And so we anticipate having that in hand by May and that will coincide with the start of drilling season at Pony Creek..

Trevor Hall [00:06:02] Do you see the spring and summer you'd be running both operations simultaneously or would you transition from Green Springs back into Pony Creek?

Matthew Lennox-King [00:06:12] Look in an ideal capital markets environment? You're gonna do both, right? Right. Right. We're not in an ideal capital markets environment. And then that's really a strategic decision that will make over time if green if Green Springs is continuing to hit it out of the park. You know, if we're still getting 5 grams over 40 meters at Green Springs, there's a compelling case to keep on with that. Right. You know, that said, and I'm not trying to skirt the question and not answer, but Pony has massive, massive, untested targets as well. It has an oxide discovery that's over two kilometers of strike.

Trevor Hall [00:06:46] But you've got a big smile on your face right now. 

Matthew Lennox-King [00:06:50] it's not that we're spoiled, spoilt for choice, but we have optionality on how we tackle things. And it really comes in a way. What's the best way to create value.

Trevor Hall [00:06:57] You also you know, I think your M.O. is you run a very lean ship, right? We do. And so if you are working on two projects at the same time, potentially, I mean, you almost have to do business a little bit differently. You have to expand some.

Matthew Lennox-King [00:07:13] Sure. Yeah. Yeah. And if if you're working those two projects simultaneously, it means that there's capital available. And if there's capital available, you tap the network and you grow the team.

Trevor Hall [00:07:24] So tell me, I mean, you know, you probably spent more time with bankers than you care to mention. But I mean, the access to capital for somebody like Contact. It's much easier now than it was a year ago.

Matthew Lennox-King [00:07:37] I would say I would say the way it was put to me by a shareholder I was talking to a few days ago, he said, look, I am looking for two things in this market. I'm looking for free cash flow or I'm looking for a dream. So exploration drill bit stories where you can make a new discovery, create value that way, i.e. a story like Contacts or someone like Roxgold or, you know, pick a company SSRM who has really good free cash flow like that. Those are the companies that are getting capital. They're getting they're getting attention in the market. Development stories with a big looming CapEx budget or anything like that are not.

Trevor Hall [00:08:17] Right. Well, this is this is in conversation. Seems like you and I have over and over about cash flow, transitioning from a company to a business, right? Yeah. And I and I do kind of feel like that's why these oxide gold heap leach type of projects are really becoming more in favor because of the low CapEx and the ability to actually start having cash flow fairly quickly. Yes. And so I think people are starting to I feel like I don't have any data back this up, just my own sentiment. But maybe you can agree or disagree with me. But I just think I think more people are willing to put money back into those projects. And we weren't seeing that a year and a half ago. It was dire.

Matthew Lennox-King [00:09:00] I think that's right. I also think there's a bit of a geopolitical angle to it as well. A lot of those emerging Keighley projects or existing ones are in places like Nevada, Idaho, Western U.S. stable jurisdictions, good rule of law. And I think as we have seen, some of the issues that would be beat around protest in South America, security issues in West Africa. I think I think the world for a lot of investors has shrunk. Right.

Trevor Hall [00:09:28]  Well, the challenge with those smaller type of projects is, you know, the market cap most likely will never reach a certain point to where those big institutions can come in and actually buy like, you know. Absolutely.  But but what does that mean for the small the small guy, you know, people who own just own shares, you know, that, you know, they understand what the risk reward is, but that, you know, maybe that's a more powerful tool for them. Possibly. Possibly. So I know. It's it's interesting. I just do kind of think, you know, things like Green Springs and Pony Creek and cash flow. And I just think it's there's a quite a powerful pull there because I think the market demands it.

Matthew Lennox-King [00:10:12] I think so. I think so. Great always wins. Size always wins. And jurisdiction.

Trevor Hall [00:10:17] But CapEx always loses.

Matthew Lennox-King [00:10:18] Absolutely. No, you're a hundred percent correct on that.

Trevor Hall [00:10:23] How have the shows been. I know you've been you were you've been in and out of all these conferences or what's conversations like what kind of questions are shareholders asking you about Contact and how are you answering them? Absolutely.

Matthew Lennox-King [00:10:34] So I would say the main the main feedback and it hasn't really been a question is the excitement around Green Springs. I think it is a it's by no means a brand new asset in Nevada, but it's a new asset for us. It hasn't seen much capital markets attention for for a long time. And I think people are really impressed with the grades, but also really impressed with the with the exploration thesis. They see what it could become and I think that generally has people excited.

Trevor Hall [00:11:07] You had your eyes on this thing for a while.

Matthew Lennox-King [00:11:09] We did. Yeah. I mean, we've known about it into. You could say internally, like within the team  for a long time. Going back probably 10 or more years. First when Ely Gold had it, then it was under option to Colorado Resources back to Ely. So we had been tracking it. And then our V.P.X., Vance Spaulding I myself have done a lot of work in similar rocks back to Long Canyon, Frontier, Kinsley, at Pilot, the Griffin deposit. Vance was running exploration at Kinross and Bald Mountain Mine and until right until a few years ago as well. And then that's all broadly similar geology, broadly similar stratigraphy to the rocks, we understand really well.

Trevor Hall [00:11:51] Does Ely hold a royalty on this property.

Matthew Lennox-King [00:11:53] Yeah. So there are a variety of royalties over the key area. It's three. It's three percent.

Trevor Hall [00:11:57] Three percent. Is there opportunity to buy that down in future.

Matthew Lennox-King [00:12:02] There are a variety of governing in agreements. Yeah. Simply put, there are some opportunities. But also three, you know, even if there aren't three percent in it, that is quite reasonable.

Trevor Hall [00:12:13] Matt, that's really all the time we have. Thanks for the update. Always good to chat with you. And you know, I hope this last week has been productive for you and the team and we look forward to seeing the news come out over the next couple weeks, hopefully.

Matthew Lennox-King [00:12:26] Thanks very much, Trevor.

Trevor Hall [00:12:26] So Matthew Lennox-King is the CEO of Contact Gold, which trades on the venture exchange with the symbol C and also on the OTC markets with CGOL.