Corvus Gold CEO Jeff Pontius: Looking at the Dynamics of 2020 for both Motherlode and North Bullfrog

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Trevor Hall [00:00:53] Everybody welcome the mining stock daily. This is Trevor Hall and I'm sitting here with the CEO and president of Corbis Gold. Mr. Jeff Pontius, he covers gold trades on the TSX with the symbol KOR and also on the OTCQX with the symbol CORVF. They have a nice low a property down southern Nevada. And I'm sure most of our listeners are familiar with both Motherlode and North Bullfrog properties that Jeff and his team have been developing for the last few years. We are going to do a kind of a summary of 20 of 20, 19 and then get into the outlooks for next year. Jeff, first of all, thank you for joining us. And how have you been? Could you please? So, Mike, could you please sum up, what, in 2019? You know, as we wrap up the year and you kind of look back, I was 2019. Kind of a new definition for for the project there, for Corvus.

Jeff Pontius [00:01:43] Well, for Corvus, it was a great opportunity for us to take what we put out at the end of 2018, which is our PEA that outlined a project with about 3.6 Million contained ounces in pit in in it, most of it M&I. And and really take that to the next step. So we went in, did about 30000 meters of drilling in the motherlode area to do are what we call Phase 3 expansion. Those results came out great. We were very happy with what we've got. It looks like we'll be adding somewhere in the neighborhood about 300, 400 thousand ounces to the deposit with that work. So it was very effective. We were able to also raise significant money during the year. We just completed a bought deal financing with BMO for 23 million and that was in October. And that really cash is up the company for two year exploration program. And and then some. So that's we immediately moved into what we call phase 4 at Motherlode. And that's what we're drilling on right now. We're chasing mineralization in the central zone where we just released some results and in the early part of December here. And then we're also be looking at the northern extension of the ore body as we go down deep to the north. So that's an important thing that's going on for the next six months. You're going to see a lot of news and a lot of intercepts from that area. We were able this summer to get in and do our follow up drilling. We haven't been back there in two years, probably at North Bullfrog. That project is been reconfigured. It looks like we'll do what would be probably considered a starter pit type project, and that's going to have about a million ounces in pit in it. It's the higher grade part of the system. The main vein system at Yellow Jacket and the surrounding low grade initial look at this stuff looks to be very attractive. It looks like we'll be probably with NPV as in this project that'll be in the neighborhood of close to 400 million for this starter project and we can get it going for under one hundred million dollars. So that's a great way to get up and going and get this project making money so it can basically finance the further development of the project. Motherlode itself is probably the big brass ring that we have out here. Right now, it looks like we'll be pushing that deposit resource close to 2 million ounces. Phase 4 could easily add another million ounces to it. So lots of cool targets at Motherlode as we grow it. We did find a new vein system at North Bullfrog called Cat Hill. We'll be following that up with some follow up. Fairly wide space drilling initially to get a shape. And then we'll come in with resource development, drilling, follow that pans out.

Trevor Hall [00:04:44] Okay. So I have so many questions and very limited amount of time. The starter pit of North Bullfrog was kind of news to my ears because it sounds like you can actually start generating some cash flow. Yeah, it would help the development with motherlode and North Bullfrog. Correct. Absolutely. So. But you need about 100 hundred million dollars to get that started. So. Yeah. Do you foresee going back to the markets to raise to get that starter pit next year and two years or you know,.

Jeff Pontius [00:05:11] What we're doing right now is is raising the level of understanding of that to pre feasibility level. So we'll be we'll be conducting a lot of development type work. Some additional metallurgy with the grinding circuit we're looking at. So that work has to get done. It will have that wrapped up about the middle of the year summer. And we should be able to make some decisions at that point.

Trevor Hall [00:05:35] So some of that. Twenty three million dollars. Yeah. Just raise part of this PFS first.

Jeff Pontius [00:05:39] Right. Right. And that that goes to bringing that along so we can make an actual decision about what to do with it in the future. Now one interesting thing is this project is a very attractive. For mid tiers, and so we've bit we've have a lot of interest. I would say in Phase 1 from mid tier groups and so we'll see how this project gets developed. But it is very well advanced on the permitting front. We've got cultural surveys, air quality, water quality, all this data is is up to snuff and ready for with a little bit of work for a submission of a mining permit. So that will be the next big, big phase for this after the PFS, I think.

Trevor Hall [00:06:26] So I have to give credit where credit is due. I was chatting with our friend Luis Garcia the other day. Mr. High Grade. And he'd been just bombard me with questions that he said you should ask me not just this as Jeff, about this. So so I have to give credit for some of these follow up questions. But I definitely want to talk about some of these deep drill targets of Motherlode. News came out, I think it was last week or two weeks ago with the two initial drill results. It sounds like there's four drill results that are still pending assays.

Jeff Pontius [00:06:57] Right. Where? Where whether those should be available in the new year and we'll get those out soon.

Trevor Hall [00:07:02] So my question with those is, is this a different type of mineralization below that of the current resource that you're seeing? And how does that change the dynamics of the project?

Jeff Pontius [00:07:13] Yeah, it is a bit different. For one thing, it's all oxide because our main ore body at Motherlode is a sulfide ore body. We've advanced metallurgy on that now, that sulfide body. And it looks like Biox is going to be the way we're going to go. Tank biox, very similar to what Anglo's doing on their property at Silicon. And and they have a lot of experience with that. They're also our largest shareholder at nineteen point nine percent. So that is the main ore body at Motherlode. Now, this new mineralization is following intrusive dykes, which is thickening as we go down deep on these. As we drill them deeper, they become broader. They're well mineralized the surrounding paleozoic sediments, carbonates around them are well mineralized. So what we're we're running into more of a classic sediment hosted system that you would find maybe a bit more in the Carlin trend. And the beauty is we have very deep oxidation at Motherlode below the main sulfide body. And. And so we're going to continue following that down dip. Now we have a geophysical target at depth, which is a very interesting target. It's a chargability target, which suggests sulfide mineralization. And it's and it's quite a broad resistive target, which suggests solidification. So in those you know, the model for that is more of an intrusive or maybe a small, porphyry type intrusive there. That is a really attractive target. So and as we drill this widening, intrusive related mineralization down dip, we expect to go and intersect that target. The first hole into that geophysical target will be collared about will be started around the middle of February. And we should see results on that and in March.

Trevor Hall [00:09:05] So I am not a geologist, but one of the things that caught my attention was I feel like typically people that do follow the industry will see oxidized gold above a sulfide gold where it is. So you're talking the oxide layer is actually below the surface. Does that is that unique for its exploration?

Jeff Pontius [00:09:25] Yeah, it is unique in this situation. And it's driven by the fact that the stratigraphy or the the layer cake geology in the area is deep into the north and daylight to the south. And what we had is a series of sediments in there that had a clay layer that sealed off the system and preserve the sulfide ore body. Very typical of what you would find in the Carlin trend. Sulfide bodies, strat about sulfide bodies. And then there's an unconfirmity between the upper sedimentary package in the lower package and that on conformity was altered and and a lot of solidification came in, a lot of brecciation and allowed a pathway for surface water to go. There's water table in the body area is quite deep. It's a very dry part of the world in. And so that water table goes down to about fifteen hundred to seventeen hundred feet. And so what what we've drilled is the upper sulfide body. We've drilled through that unconformity or that contact and then down into an oxide zone that it is benefit from surface water oxidizing it over the last twelve million years or so. So that's it. It is a bit of an upside down ore body, but it's it's very intriguing. And and with this new zone associated with this dyke, this widening dyke at depth, which is quite good grade. For oxide mineralization, it's gram and a half to two gram type material. It would be fair, it'll be very lucrative if we can mine it all out of the open pit right now. So it looks like it's definitely going to fall into the into the resource.

Trevor Hall [00:11:05] That's one of my follow questions because it always and I know this is pretty forward thinking, but could your sustaining costs actually decrease the deeper you go to Mine?

Jeff Pontius [00:11:15] That's true. And I just had this discussion. I was meeting with Anglo and they're they're doing a lot of work in the area. So we we talk about things geologically and. And, you know, they're the Anglo person I was talking to would say, you know, this is really unique in the fact that you could actually your cash cost could drop the deeper you go into deposit, which is unusual for open pit mining projects.

Trevor Hall [00:11:39] Well, and that's obviously when you're looking at partners or some sort of acquisition or merger in the future. I mean, that's going to definitely come into play, right?

Jeff Pontius [00:11:48] Yeah. So we're putting a lot more holes into that area because it looks really intriguing and we're getting some deep holes to continue taking that down. It will eventually go through the oxidation zone down probably around I'm guessing it'll be around eighteen hundred feet, maybe nineteen hundred feet down and then go into a sulfide system. If the geophysics is correct and that sulfide system would be the primary ore and and that could be large. It could be extensive.

Trevor Hall [00:12:20] And so I think you mentioned before. But can you just rehash what the timeframe is for some of these new drill results specifically with the poor targets here?

Jeff Pontius [00:12:27] Yeah. So what we're doing right now is completing a series of pre collars. Basically, we drill RC holes down case and get ready to drill core tales out the bottom of those holes. We can drill those quite deep. We get a lot of geology from that from the core as we drill it down deep. So we'll be drilling a series of those as we go north on the ore body down dip and we'll be drilling a series of those in the central area in this geophysical target area. What that looks that will be testing this intrusive, targeted depth. And then we'll also be drilling a series of them to the west, where on the other side of a large fault that dips to the west, we call the floor Spar Canyon fault and the down drop piece of the motherlode or bodies on the other side of that, we believe. And so we'll be drilling some holes into that to see what that looks like on the downdraft block of that fault. So those are the deep targets that we'll be drilling and and they're all fairly thick targets. So they all represent attractive mining scenarios, whether they're going to be open, pit or underground. And in the history of the district is typically at what Barrick did. There was mine open pit until they got to deep and then they minded underground out of the bottom of the pit. And I I imagine it'll be a similar thing for a motherlode. So Motherlode looks really exciting. It looks like it could be another sediment host gold system in Nevada. And those things have typically been five to 10 million ounce type targets. So they're really attractive here in the press releases.

Trevor Hall [00:14:00] Says it looked like this extension moved to the southwest of motherlode zone, correct? Yeah. So if you're looking at the land package, I mean, just do you have enough within your permitted area to go for that southwest? It almost looks like you can actually go under. Beatty Yeah, you're right.

Jeff Pontius [00:14:18] Well, we have a big package, a land further off to the to the west of us motherlode property that we own. But we're surrounded by Coeur and we're working quite closely with the Coeur guys, Coeur mining. And and they're drilling a series of holes on the northern extension of motherlode model. If Motherlode is a typical said hosted system, it's probably extensive and it probably does extend onto Coeur's ground to the north. So I would imagine, you know, we're hopeful Coeur is gonna be very successful. What we really want is for all the groups in the area to define a very large mining target, multiple pits, Anglos got what sounds like a terrific discovery up at Silicon. They're doing a lot of work in the district. And so we're seeing, you know, lots of work going on by Coeur, lots of work by AngloGold and lots of work by Kinross. So a lot of companies have discovered, Beatty, which, you know, we've been there for like 12 years. And finally, we're getting some press.

Trevor Hall [00:15:21] Well, and I do want to talk about that jurisdiction, that sub jurisdiction here in just a few minutes, because I think after seeing the Nevada Barrick mergers and Nevada Gold mines, you know, is there something potential that could happen like that in southern Nevada where you're located with all these major players, right? Yeah. Well, obviously not our place to say.

Jeff Pontius [00:15:41] But, you know, the way things usually work in these in these evolving exploration plays like this is one usually large company consolidates land if they can. And so they definitely don't choose to have partners. They choose to control it all themselves. And. And, you know. So, yeah, I think it's it's it's gonna be an important target. We need to we're working very hard to to explore the entire district and really open up the potential of this district, because we believe at the end of the day, that kind of consolidation will happen.

Trevor Hall [00:16:21] Well, then I think the strength of a position is I mean, obviously, Agnico owns just under 20 percent Anglo or Anglo. Sorry. Oh, excuse me. AngloGold owns just under 20 percent. But then you also have a core in Kinross in the area. So you are not one of those plays that kind of abides. You know, the major producing company has the leverage to me if a merger were to take place.

Jeff Pontius [00:16:46] Right. There's a half a dozen institutional shareholders in management that control over 50 percent of the stock without Anglo. So. So, yeah, that has got a great shareholder base that would allow for a competitive, you know, competitive situation.

Trevor Hall [00:17:06] But can a takeover be your only exit here, Jeff?

Jeff Pontius [00:17:09] Well, you know, the phase one is becoming a really interesting opportunity for us because it's from a financial standpoint, it's within the scope of a company like Corvus. I mean, we have roughly about a little less than 200 million dollar market cap for US. And there's a a structure of being able to finance Phase 1 with that as a series of debt and equity. And this would be the starter, the starter pit. And and, you know, it is. Mining is a very difficult business and it's very filled with danger basically further for the development companies. And I've been through a couple build outs, which is why we're here. Yeah, I've seen I've seen some some very difficult things. That's hard. But the beauty of the Phase 1 project is it's off the shelf dead simple heap leach project. It is something that's could be within the scope of of a group like Corvus. We're very fortunate. And we. About a year ago, we added our new chairman, Ron Largent, who is the chief operating officer for AngloGold Ashanti Worldwide. And Ron brings. I've worked with Ron on projects where we built mines in and developed them, made them better. And so, you know, we we can make a good decision within the company. Chorus would certainly have to fill itself with people that could execute. But there is a opportunity for Corvus to take phase one forward it because it's it's a doable project for us.

Trevor Hall [00:18:47] So but that sounds wonderful. Phase 1 starter pit sounds, wonderful cash flow. But then obviously there'd be ongoing work over a motherlode, which you just you described as the brass ring. That's a land package. So with these new deeper drill phase four drilling happening, a mother lode. Would you kind of go into an updated PPA next year or 2021 or would you maybe go straight in to more PFS level work for?

Jeff Pontius [00:19:18] Well, I think Motherlode will be part of an updated PPA that should be out in summer and it'll include the Phase 1 project. So we'll reconfigure Corvus so that we can bring this project forward in in with a lower initial CapEx and and paint a pretty good picture, I think, of how this could go forward with a smaller group like Corvus and eventually get into the motherlode part of the equation. I mean, we've had some great Met data come back lately that looks like the biox that we're looking at for treating the sulfide or is is going to be a drop the overall capital of the current PPA by maybe 100 million dollars. And that's that's all of a sudden things become much more doable if you've got phase one building that that financial flow for you. So I think it's going to be a really interesting assessment that we come out with. And remember, we we do all of our work at $1250. So we're using a fairly conservative gold price on this end. And, you know, we'll look at it at what does it do it. Higher gold prices like usual. But this project's probably going to perform really well in $1250.

Trevor Hall [00:20:40] So you'd be putting both mother vote in North Pole program to basically one study?

Jeff Pontius [00:20:44] Yes, that's right. Yeah. And we'll be updating the the recovery plan. Right now we're using pressure oxidation for the sulfide material, which is requires a fairly substantial capital investment. Biox is going to be a lot less wear pattern patterning that plant after the Oberweis plant that Anglo operates in in Ghana.

Trevor Hall [00:21:08] So what's what's the PEA last year just from mother lode?

Jeff Pontius [00:21:11] Yeah, the PEA was for motherlode in North Bullfrog. And so we just looked at North Bullfrog, as you know, we didn't break it up into a phase one where we could start getting a lot less capital. We looked at developing all of it together at the same time.

Trevor Hall [00:21:27] OK, you've got a lot on your plate here.

Jeff Pontius [00:21:31] Yeah, it's exciting.

Trevor Hall [00:21:32] So a friend of ours, I won't name names, but he described you as a serial discover. And so I'm just like if you look back in your career because you've been doing this for so long and you've got this what appears to be just a great project, which obviously will be mined someday. Yeah. Yeah. We don't know when, but it appears it will be someday. Now we're back with you. What were some of the lows that you went through your career to get to this tour? Is it kind of feels like you're on the cusp of really like you're on you're get to the top of the hill to getting to achieving so much success at a lot of geologists just don't get a chance to reach.

Jeff Pontius [00:22:17] Yeah, you know, I. I haven't really had any of those low points. I've had a series of discoveries that have kept me very excited in my career. And probably some of the biggest low points is is working in and very structured corporate environments for large mining companies where I spent a lot of my career up. And those are difficult for more, I would say entrepreneurial or exploration driven kind of guys that really want to get out there and and do things, you know, rapidly and and and try and make discoveries. So one of the best things that ever happened was in 2006 when I set up ITH and started that company and and getting in the junior market, which allows me the flexibility to do basically to lead the company where I want to take it myself. And that's great. ITH was a really good success for us. And then we spun out Corvus Gold of a , had a good run as well. And you know, but you know, when you when you go from one discovery to the next, it's it's pretty exciting life to live. I had my kids ask me this all the time. Gee, dad, like, you know, what are the challenges? Like, you know, I really haven't had a lot of challenges. It's been a pretty good run.

Trevor Hall [00:23:37] That's that's great news. I know a lot of geologists don't say that. I know.

Jeff Pontius [00:23:43] I know. But it's it's been great, though. It's it's certainly the coolest job I could ever imagine doing.

Trevor Hall [00:23:50] I want to ask you. Were you and I are fortunate enough to actually meet here in person because we're both Denver area locals, right. So we're not a part of Toronto or the Vancouver crowd, but. But Denver really has even though it's a smaller community of geologists and and miners and and developers, it's it it's it's still a pretty tight community. And I guess, like, you know, we're sitting here, we're in southwest Denver. We got the hogs back range in Denver foothills to your right. My left. I mean, what is that? And just curious about this, uh, this this culture of mining in Denver. And from what I've been told, there were so many highs in the 80s and the 90s and things really oil and gas boom. Well, yeah, and things kind of slowed down. And do you think there's an opportunity to maybe make Denver another lake, the U.S. hub of mineral exploration once again?

Jeff Pontius [00:24:47] You know, it's. It just depends on where the assets are. I mean, uh, Denver's great because it's got a really good airport here and people can travel in and out of here. That's why Anglo moved there, their corporate office here for the Americas. And that's why I moved here, because I came here when that happened. And when I moved here, my wife made it very clear to me since we lived all over the place in not such nice places as geologists do, that she and the kids are living here. And I can go do what you had to do.

Jeff Pontius [00:25:23] I mean, Denver is a great community. It would be a good a good spot. But, you know, you see, I think places like Reno are still going to be very important. The mining hubs, you know, to some degree, Salt Lake is a decent mining hub, you know, although it's getting less with the wined down of Bingham. But, you know, a, I don't really see a mining hub, you know, as we as you know, that the real hub for. Groups like ours as Vancouver or Toronto end, and that's mainly because that's where the venture capital is to to fund these kind of activities. So, you know, I would love for it to be Denver. We have, as you say, a really good group of geologists here. I think we met at a social occasion just a little while ago. So. So it was it's it's a cool place. And. And, you know, I would definitely put it in the running for a good hub for someone. But, you know, I think like Anglo is probably moving to London from Jo'burg. And, you know, they could've moved to Toronto or New York, but I think they'll end up moving to London. So I think that, you know, a lot of companies are are based around those financial markets. So for guys like us, it's Toronto, in Vancouver, know we're only one flight away, right?

Trevor Hall [00:26:46] Yeah. And now we're one flight away to London. Yeah, that's right. That's great. Come one last follow up question and just kind of curious if there you see any opportunity or interest in being officially traded on a New York Stock Exchange? Absolutely. Yes. And if you would do that this year.

Jeff Pontius [00:27:04] Absolutely. So and and that is a goal that we have. We are we are already fully S.E.C. reporter. We're a full Sox compliant. We're already do everything that we would normally do if we had a senior U.S. listing in New York listing. And when I started ITH, we moved from Toronto to New York, and that was a huge move for us. The trading liquidity went up three or four fold. And and it was a much better market for us. And I think that exact same thing will happen with Corvus. So Corvus. You know, we we've had this little downturn in gold. I think the new year is going to be positive choruses ready for that listing. So we will definitely be looking at that as right now. The only thing that is holding us back is we during the listing period, we have to have a share price above two dollars U.S.. And right now we're about a dollar forty dollars fifty kind of thing. So, you know, I'm anticipating a lot of good news coming from Motherlode. And I think that will get back up there. I mean, we were there last year, so I think we'll we'll get back up there.

Trevor Hall [00:28:20] So from friends at Equinox across the border where they just started trading on New York.

Jeff Pontius [00:28:25] So I know they did a rollback, which is probably not in the interest of our shareholders. And so we'll try and do it organically and get there, you know, with you know, with value driven by the company. So, you know, I but that is a serious goal for us. And that could have a major impact for our shareholders. Now, with the in share price, but it could have a huge impact on liquidity and a lot of funds could then come in and start picking up Corvus because we're trading on the senior senior exchange.

Trevor Hall [00:28:56] Have you oh, you've been through a couple of different cycles before. I just kind of curious have conversations that maybe similarities and conversations you've had like leading up to the previous bull cycle, if you're starting to see that now again.

Jeff Pontius [00:29:09] I am actually I you know, we look at trading volumes, we look at trading prices of of a whole suite of juniors. And when we saw the last cycle, we saw that the gold price went up in 2004 and we saw producer prices go up in 2006. And we saw the juniors lag until 2009. And in 2009, we saw a major spike in in junior equities prices. And and it's. And it really was driven by the fact that that the producers were making more money. The shareholders of those producers wanted the more exposure to more of that money, which means more ounces produced. And that of sudden we started going into a cycle of M&A. And, you know, over the last few weeks, we've seen some of that start to happen, I think, and even development projects. Taranga, I think just purchased a development project from Barrick. And so those are the kind of things that led up to the last bull market. And I see that same pattern happening. And I think 2020 is going to be a time when juniors are going to outperform majors or producers and that we're going to get that same spike we had back in 09. And and that was great for shareholders of junior companies. And and, you know, it all sort of starts with M and A. And as that builds value and and companies are becoming, you know, harder and harder for these producers to buy at the prices that they think is fair and they have to move them up. That's that's what drove the last real bull market doing so.

Trevor Hall [00:30:56] Well last year, I think was definitely a testament to moving projects forward and when things were just really, really struggling. Get you raise capital and get things moving. I mean, some CEOs literally just put projects on hold. Yes. Because they couldn't they couldn't see why spend the money now.

Jeff Pontius [00:31:13] Yes. And and you know, it Corvus fortunately didn't have to do that. We've always been able to raise, you know, enough money to to keep advancing the project and making more discoveries. And so I think one of the real key points is that it's it's difficult when you put a project on hold to turn it back on again because you develop the skill set onsite to make those discoveries and build their size. And you have to keep that skill set because that is a hard to come by commodity right now with good, talented geologic skills and engineering skills that you can have in a junior company. And so it's very important for us to keep that that team together that can you know, that looks like the market's turning. And so everything is is getting a lot better. Those people are going to be harder to come by in the future.

Trevor Hall [00:32:11] Jeff, thanks so much for joining us on Mining Stock Daily. And I wish you currently best of luck in 2020. But merry Christmas to you and all your family and friends and colleagues there at Corvusso great. Thanks. Thanks. Appreciate it.

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