Crux Investor June 23rd
Matthew Gordon of Crux Investor introduces Cherie Leeden, CEO of Gold Bull Resources in their first interview to discuss Gold Bull’s combined forces with Inventa Capital and their ambitious growth strategy to add ounces by both exploration success and additional acquisitions in and around Nevada. The team has the expertise and the financial backing, but will that be enough to secure multi-million ounce gold projects?
00:00 – Company Overview
00:46 – Cherie Leeden’s Background
02:31 – Craig Parry: Gold Bull’s Tasks
04:27 – Sandman Project: Future Company Expansion?
06:00 – Gold Bull’s Business Model
09:08 – How Much Capital was Raised?
10:17 – Were Gold Bull Resources Expecting These Results?
11:02 – Getting Noticed & Growth: What’s the Plan?
15:59 – Leeden’s Gold Outlook
16:51 – What Does the Gold Market Need?
17:56 – Company Finances
18:28 – Outro
Matthew Gordon:
Hello, Cherie. How are you?
Cherie Leeden:
Very well. Thank you. How are you?
Matthew Gordon:
Fantastic. Well, thanks for coming on the show. You’re part of the Inventa Capital guys. We’re really keen to sort of see what you are up to. We’ve liked what we’ve seen so far. We’ve liked what we’ve seen so far indeed. We haven’t spoken before and I haven’t heard the story before either. So we’re going to sort of start with a little romp through what you guys are doing there, but first we’d better get an introduction to you. So what’s your background?
Cherie Leeden:
I’m a geologist by background. I’ve got about 20 years experience. The first 10 years very much boots on ground and the second 10 years I’ve gone more of the corporate route.
Matthew Gordon:
Right. But you’ve been with some pretty big companies. You were with Rio Tinto, right?
Cherie Leeden:
Yes. I was with Rio Tinto. That’s how I met Craig Parry, our chairman. We go back 15 to 20 years. The numbers keep growing. And had a great training with Rio Tinto. Rio gave us that ESG spin that we really adopted in all the companies that we formed subsequent to working for the major.
Matthew Gordon:
Fantastic. I always say to people that come from big companies, it’s a very different place to operate than when you sort of step down into the junior space. There are problems. They’re just different problems, right? So how have you found that transition?
Cherie Leeden:
I think I was lucky because I started with a mid-tier, LionOre, prior to working for Rio Tinto. And that really gave me kind of a well-rounded outlook on the differences between working for a junior that became a mid-tier and was eventually bought out versus a Rio Tinto and the different focus, the pros and the cons of both. And I’ve certainly tried to take the benefits of both and merge that into the junior sector in the projects that I’ve been involved with.
Matthew Gordon:
It’s quite a different space though.
Cherie Leeden:
Oh, absolutely. Absolutely. Yeah. The focus is very different. The additional bureaucracy and the paper pushing with the majors, you can’t deny that, but when you have a beast that big, there’s also a reason for why they do that.
Matthew Gordon:
So, we spoke to Craig Parry a couple of weeks ago. People would know him from NexGen, IsoEnergy, and Vizsla, amongst others. Those sort of flagship projects, for sure. He’s surrounded himself with a team of people. Obviously people he knows and trusts from, I guess, Rio Tinto and elsewhere. What has he brought you into to do. What’s he tasked you with?
Cherie Leeden:
So he’s tasked me with a gold roll-up. Project generation is my expertise and when I say my, I say my team, because I’ve been working with the same group of geoscientists for quite a while now. And when we were doing project generation prior to going global and with a Nevada focus. Matchmaking assets, we’d appraise hundreds of projects and during a round-up conference in February last year, Craig and I caught up and got talking about some of these projects that were becoming available that we really liked. Liked too much to find another home for them. And I thought that we could do something in Nevada because there’s a real lack of mid-tier companies producing gold in this state. You’ve got the majors, like the Newmonts and the Barricks and the Kinrosses producing hundreds of thousands of ounces, but there’s very few producers, if any, producing between 100,000 to 200,000 ounces.
And we see that as a niche market. Canada or Australia, you have numerous, too many to list, gold mines that are producing circa 100,000 ounces whereas here it’s either mom and dad small operations or the majors. So we thought, well, we can roll up a few assets in this state. It’s a mining friendly place. We’re all locally based. Because of COVID, we had our wings clipped so it really forced us to look in our own backyard and found some amazing assets. Purchased the first one from Newmont and decided to get back in the public arena, along with the Inventa team, including Craig.
Matthew Gordon:
What’s the plan then? So obviously you talked about Sandman there, the project that you got from Newmont, and I think it was in the Mark O’Dea Company at one point too. It’s a good start because it got some historic components out there. I mean, I know you’ve been in Nevada for seven years. You told me just before we started, you’ve been living there seven years. So you are boots on the ground literally, but you obviously know what’s around, right? But how do these building blocks get built? So you talked about prospect generation, for instance, but that’s going to mean different things to different people. So you’ve got a cornerstone, how do you build on that?
Cherie Leeden:
We’ve looked at hundreds of projects and out of those hundreds, we’ve got a shortlist of five assets that we want. And we’ve got the Sandman already in the door and the other ones that we want for a number of reasons and they’re not all one particular grade. There’s a couple of high grade, a couple of very low grade. And they all work for various different reasons. But in that due diligence process, we look at anything from early stage projects, such as our Big Balds project. That’s as greenfields as it gets. You whack a few holes there and you’ve either got a massive new discovery or you’ve blown a few hundred thousand dollars trying. And that’s what we are interested in. We’re looking for elephants in elephant country. Because we’re all from the majors, we realize it takes us as much time and energy to develop a 200,000 ounce project as it does a 10 million ounce project. So we’re looking for big projects and we’re going to keep rolling the dice until we get one.
Matthew Gordon:
Right. And are you putting together a team of builders or are we just… I’m just trying to understand the model because, again, different parts of Craig’s business have different models. So what’s yours?
Cherie Leeden:
Right now, we’re building ounces. So right now we’re not focused on development. However, that will come. And whether I’m the CEO when that comes or not is a different story. But my task is to roll up the gold ounces to build this resource inventory to get our assets over a million ounces, the current assets. If they’re not going to get there, it’s probably not for Gold Bull, and to acquire the next asset, ideally with already million ounces in the resource space. And those assets do exist and a number of those are going under the radar. They haven’t been doing the rounds for the last 30 years. In most instances, they’ve been sitting dormant since the early 1990s, when the gold price crashed and they don’t work at a low gold price, but at a gold price over $1,500 and then we’re really good.
Matthew Gordon:
So how do you go about vetting these things? Because again, we see also retread stories out there in the marketplace and people pumping those things hard. Again, just going back to conversations I had with Craig, he’s saying, “We have a look at them and we cut them real quick if we don’t think they’ve got the legs,” right? You look at a lot of stuff, but what’s your vetting criteria? What makes Sandman, for instance, so good?
Cherie Leeden:
So Sandman, we really liked the undercover, like sand covered exploration potential there. We think the previous explorers did a fine job exploring the outcropping geology. However, they did a pretty poor job exploring anywhere where there was sand cover, which is 70% of the license. And you could actually extend that statement to the entire state. I’m just blown away by the lack of exploration undercover Nevada and coming from Western Australia, where we deal with cover everywhere. Kalgoorlie’s full of cover. There’s no deposit sticking out of the ground. So for us, it’s just, yeah, you’ve got 50 meters of cover, you deal with it. But here you got 50 meters of cover, you don’t drill it. That was the mindset and the mentality in general. They’ve been blessed with a lot of outcropping gold discoveries, obviously. So we’ve taken that approach to… Oh, at Sandman there’s half a million ounces sticking out of the ground. Basically we have no downside with a market cap of $30 million and half a million ounces known. And we’re basically valued as an explorer. So what we’re going to do is explore between those resources where we’ve got the sand cover. Many instances, we’ve got two little resources and then sand covering, no drilling in between that sand cover. So that’s where we focus on drilling right now. And we’re not drilling blind. We’re relying heavily on geophysics. Our vice president of exploration is a geophysicist and geophysics is something that’s so underutilized in the USA. I don’t know why because it works a dream. We’ve done orientation surveys and it’s lighting up the gold mineralization where we know we have gold. And now we’re extending that geophysics between the deposits to find drill targets. And we’re also not adverse to drilling for the sake of geochemistry, another foreign concept over here. But again, coming from Australia, that’s just how we explore. So I guess we’re using an Australian exploration model in Nevada led by Aussies.
Matthew Gordon:
Feisty talk. You’re going to have to now deliver on that.
Cherie Leeden:
Might burn some bridges with my American mates.
Matthew Gordon:
Hey, so how much money did you raise for all of this and what are you applying it to?
Cherie Leeden:
We raised around $13 million in November last year, $13 million Canadian. The majority of the money went out the door on day one to purchase 100% of the Sandman acquisition. We paid $4 million US for that and there’s also $1.5 million bond associated with it because we’re allowed to disturb 500 acres. Another plus of the project is that the permits that we inherited from Newmont is some top class plan of operation. So that’s where the bulk of the funds went and subsequent to that, they’ve gone in the ground. We’ve been drilling. We’ve completed 3,700 meters of RC drilling. We’ve completed a 3D IP survey over between North Hill and Silica Ridge resources. We’ve got more geophysics underway and we just recommenced a second phase to our program comprising of 5,000 meters of RC drilling. So we were pretty much hitting the ground running and we’ve got results starting to trickle in from all that work.
Matthew Gordon:
I mean, you’ve put a few press releases out on that as well, but obviously, any news of roughly what you were walking into, but has it been delivering or, as far as you’re concerned, did you walk into what you expected?
Cherie Leeden:
Yeah. So with our proposed drill programs, 25% of our holes are going to be resource extension holes. In that half a million ounce resource, and there’s a number of open areas where we know we can add pretty easy ounces, low risk, medium reward kind of holes. However, 75% of the holes are located where there’s never been any drilling and they’re the high risk, high reward holes. That’s what I’m most excited about because I think if there’s another sleeper sitting there, it’s likely to be where it has not been drilled.
Matthew Gordon:
Right. Okay. Right. So you’re quite confident about the way you’re going about doing this and what you’re starting to see and what you’re going to be able to come back to the market with. So here’s the big challenge, right? You are, let’s say $30 million company, as you say. There’s lots of you in the US, Nevada, Arizona, even down in California, all saying the same thing. I think the management teams maybe don’t have the quality that you’ve got, but they’re all saying the same thing. So how are you guys going to stand out? Because you’re going to have to get noticed and then kind of shoot past where everyone else is. So until you’re 100 million, no one’s really paying too much attention. So what’s the plan?
Cherie Leeden:
Yeah, it’s a tough competition. There are a lot of similar on paper companies. So I’d say what differentiates us is obviously that we’ve got the half a million ounces to really limit the downside. Worse comes to worse, we start digging that out of the ground that’s sticking out of the ground. Second point is that we’ve got an amazing shareholder base. Our major shareholders are backing us for additional acquisitions. We’ve spoken to our major shareholders. They’re there to write $20, $30 million checks. And not a lot of juniors can say that. And that’s partially due to the fact that we’re backed by the Inventa group and Craig, Mike, and the team, and they’ve got a great track record of success. My team’s got a great track record of discovery and paired up, we think we’ve got the access to capital and the access to the projects.
So, we’ve spent a lot of time, over a year, on a couple of the short lists projects that we’re going for and we’re in the negotiation phase and just working out win-win deal structures. We’ve got Keith Peck advising us regarding deal structures and Keith was an advisor to Skeena and obviously Walter Coles and Craig are on our board as well. And Skeena’s my role model company. And what they’ve achieved is sensational. And they’ve basically had a similar roll-up strategy using a major’s non-core assets. Barrick in that instance. And we’ve got a very similar strategy here.
Matthew Gordon:
You’ve got a similar strategy but have you got the access?
Cherie Leeden:
Yeah, well, we’ve done a deal with Newmont for the first project which is, I think, one of their best divestments for a very long time. So I hope so.
Matthew Gordon:
But what about the rest? Because you threw away a line there and said obviously, if we can get after this half million ounce now, right? But the reality of doing that economically is going to be tough, right? So what you need to do is a roll-up exercise. You need to deliver on that, but there’s a lot of competition out there. There’s also some people who will overpay, which means that to win, you’d have to overpay. So it’s a tough kind of environment out there. So are you close to getting the next one over the line?
Cherie Leeden:
I’d say the goal is certainly this year. It won’t be next week, but this year I think is realistic. We’re certainly talking about what that looks like because our challenge is our market cap. How do we get another 2 million ounce projects when we have a $30 million market cap? So we’re playing around with cash, shares, milestone payments, and just working back and forth with a couple of different companies to see how that works and how that marriage works. Because again, Skeena was a fantastic example of a beautiful marriage where both companies, I think, have done very well out of Eskay Creek’s success. And if we can do a similar seamless deal structure in some of these assets, I think it could be win-win for the divestment partner and also for us taking the project to add those ounces.
Matthew Gordon:
Yeah. It’s going to have to be something interesting like that because I know you’ve got people willing to write $20, $30 million checks, but that $30 million market cap, that doesn’t work for anyone, right?
Cherie Leeden:
Exactly.
Matthew Gordon:
Okay. So if something may happen later this year, is it a case of because you spotted some targets not necessarily because you’re in advanced discussion? You’re hoping something like that would happen quickly.
Cherie Leeden:
It’s going to come down to a combo of the deal structure, our market cap as well and the gold market. So we’ve got the assets, we’ve got the relationships with these parties and now it’s just working out which of the assets will be the first to come into the fold because we obviously can’t bring in the three or four assets right now. Be one asset most likely this year, and then deciding which one of those makes the most sense. And it’s not a technical decision based on geology alone. The environmental aspect plays a massive role in our decision making. Biden administration has also got a spotlight on minerals and critical minerals and there’s going to be positives and negatives that come out of that. But I think, in our due diligence criteria, another thing that separates us from the pack of gold explorers is our emphasis on that. And a lot of projects, a lot more than a handful, have met out geology code criteria, but most have failed due to the environmental and permitting aspects.
Matthew Gordon:
Yes, it’s interesting times with Biden. Some of the statements coming out about critical minerals are great, but not necessarily for non-critical minerals. What’s your outlook in gold?
Cherie Leeden:
Oh, I’m a gold bull so I’m bullish on gold. I mean, I think with 5% inflation, it’s defying logic right now. And I’m surprised it’s not already at $2,000. So I think inflation and gold, they have to come together at some point. And even at the current price of gold, all the assets that we’re looking at make a lot of sense. I’m a little perplexed why gold isn’t even stronger than it is currently, but I’m not an economist. I’m a geologist. And right now we are going to build those ounces and I think it’s a safe bet looking over the next couple of years.
Matthew Gordon:
What do your finance people say when you’re talking to those guys because statement from the Fed about inflation’s probably going to be a little bit more than they realized. They’re the only ones that didn’t realize. Typically, people talk about gold as a safe haven, et cetera, which is all wonderful stuff, but the gold market seems a little bit wobbly at the moment. It doesn’t seem to know where to go. What’s it looking for, do you think?
Cherie Leeden:
I was speaking to one of my shareholders yesterday and they attribute that to the Central Bank playing games. Again, it’s a little complex for me to correlate why gold isn’t tracking with rising inflation and interest rates at the moment. Like the reaction of gold yesterday, I thought it’d have the opposite reaction. I thought it’d be a hundred over rather than a hundred under. So it is interesting. And then we’ve got the cryptos in the mix as well. But again, I’m going back a currency that’s been around for a few thousand years than a few years. And I think most of our shareholder base are on the same page there. Basically, this is a blip and a buying opportunity.
Matthew Gordon:
Okay. So given this is sort of downloading exercise to me so I could introduce story, I’m intrigued by anything by the Inventa group, quite frankly. You’ve raised $13 million. You spent a bit of money. How much you’ve got left? What’s that going to do for you by the end of this year?
Cherie Leeden:
We’ve got $3 million cash in the bank and that is going to be deployed for that additional 5,000 meters drilling at Sandman. And we’re also going to do a couple of reconnaissance holes at our Big Balds project, and test for, another Bald Mountain style target, very geophysical anomaly.
Matthew Gordon:
Right. Okay. Stay in touch with us. Let us know how you get on. I’m sort of intrigued because of the quality of the team and the backing, the financial backing, the ability to go and get capital. I’m intrigued to see what you do with this. I’m more intrigued to see what you do with the M&A component. I think there are deals to be done out there. I think there will be a lot more M&A. Some stranded projects and companies out there. Thank you very much for today.
Cherie Leeden:
Yeah. My pleasure. It was nice to meet you.
