CEO.CA Chairman's Briefing

By Peter @Newton Bell, 17 November 2016

I had the pleasure to meet Mr. Don Moore, Chairman & CEO of Playfair Mining Ltd., at the Metals Investor Forum last weekend and just had to follow up with him. He was a great conversationalist at the conference and I got the sense he was well respected in the community.  

It was from hanging around his booth at the conference that I met Dustin Angelo and conducted an interview with him that I released on CEO.CA earlier this week. My interview with Don confirmed my impression that he is an influential character in our community and I am grateful to be able to bring this little bit of him to you.

>>

P: What are the company's goals and what strategies will it use to reach them?

D: The company's goal is to develop a new gold district in Ireland. And what we are using to reach them is all of the sophisticated methods that are available to us, things like geochemistry and geophysics, and some of the old-fashioned ones, called prospecting.

  

D: Boots on the ground -- that’s the way this particular program started. We're at the point now that we are going to use drills. Basically, we are prospecting with a drill, at the time being. We are trying to determine what is there at some of these targets that have been developed geophysically and on the ground through recovery of float in close proximity to these geophysical expressions, which we consider to be expressions of structure. Until we drill these, no-one knows exactly what you are looking at.

D: In fact, we have started to drill -- we have followed a vein, northward, that the prospectors have discovered through boots on the ground. We started there because it was the only spot with gold in place in that part of the district and we just followed that vein northward into the structure. Every step we have moved northward has been a better step. Every time we have drilled a hole, the visual appearance of each piece of core has been better than the last one. We are trying to get a fence of holes across this structure. From the geophysics, we know the structure is a minimum of four, probably five kilometers long.

D: One thing that we've noted, already, is that there is alteration in this structure. That is something that is new to this part of the world. The Curraghinalt deposit owned by Dalradian Resources in Northern Ireland does not have alteration associated with the veins. We are dealing with something new here. We are really excited about it.

D: How we go forward is to continue our drilling program using the benefit of 150 years of geological experience. Three of the guys involved have accumulated 150 years of geological experience. And if you throw me in the mix then you have a couple centuries of experience in the gold-searching business.

D: Now that we are drilling, we are starting to recognize that there may be other things that can help us out. We are seeing silica in the structure, so it may be possible that IP may help us out. At this early stage, we're still trying to figure out the interactions between the sulphides, the graphite, and all the other things in that structure. We went into the program thinking that there would not be any other geophysical aids that we might use to narrow-down our field of drilling. As it stands now, the most likely thing will be IP. Barring that, we are continuing to drill!

D: We are drilling a fence right now and have a lot of room laterally. We are now on the structure to try and determine whether this alteration is spread throughout that structure or not. It is a real exciting time -- every time we drill a hole, it's something new.

D: One thing I can tell you for certain is that there is gold in the system. We see it at surface on the vein. Beyond any doubt that there is gold in the system, but how much is there remains to be seen and that's the purpose of us doing this program.

D: Incidentally, we are comfortable that this is a mesothermal system, so whatever we are looking at surface is likely to go to great depths. The target area that we have is not only on strike, but at depth in this particular structure.

D: Did I answer your question, Peter?

P: Wonderful, yes. Thank you very much. To be honest, I think you answered it in the first couple things you said but I don't dare stop you for fear of missing out on the great info here. Moving on.

P: How are you gonna make me money on this deal, and when will I make it?

D: Well, you are one of the lucky ones and the market is one of the lucky ones at this stage of the game because we have come out of one of the worst resource markets we've seen in decades, if not in my lifetime. These stocks are down at prices that we would not have dreamt of ten years ago. For example, when I raised the first money for this project we raised it at a nickel. We had the good fortune of raising it mainly with mining people. It was their support that got us in the door and kept us in the door.

D: Going back ten years, Don Moore never would have dreamt of financing any drill program at a nickel. It just didn’t make any sense. However, after the last 5-6 years we were not only happy to get it financed -- we were grateful. Subsequent to that, we've done another financing of a half-million dollars that has just been announced as closing today. What all this means for you, as an investor, is that these stocks have not run. They are at prices you would not have dreamed of, 6-10 years ago, to be able to take a shot on a new discovery area at the prices these stocks are trading.

D: Playfair has traded up as high as 16-17 cents. It's currently trading around 11 cents as I speak to you. For what these plays are, this is an amazing opportunity to speculate on a new discovery. If we are successful, I do believe in the principle that the new discovery of wealth in the ground leads to new generation of wealth in the public markets. I've seen it numerous times over my career and I strongly believe in it. Discovery is the way that big money is made in this business. And, you can participate in it by just participating in the shares.

P: Any comment on potential timeline in relation to how big it might be? Does that make it a bigger timeline for you to wrap your heads around what might be there?

D: When we started out, we had some hope that we could figure out what kind of project we were going to be looking at. At this early stage, we are convinced we are looking at a big project spread out across a long strike-length. We don’t know how much of that strike-length is going to be of interest to us, but we know it is going to great depth. Just at one of the two locales, Cloonacool, we can see the need for a lot of exploration here over the next couple of years.

D: How it unfolds is another story -- how lucky we are, in terms of our drilling. What kind of widths and grades we are going to see -- at the end of the day, Peter, this is exploration. I can't give anyone any guarantees, other than the fact that these three geologists working on it, whatever our fate is in the ground, it's there, it's not going to change, that these three geologist are going to try and figure it out. I have faith that they will, amongst themselves come up with the best formula for determining if we have something worthwhile here.

P: Great, onto the next one here. What can go wrong, how will I know what is going wrong, and what will you do if it goes wrong?

D: What can go wrong -- we are in the mining business, OK? So, the list of things that can go wrong in the mining business these days from Canada through to Russia through to Mongolia through to wherever on the planet is a lot political stuff. And a lot of environmental stuff. Then there is, of course, the inherent risk of what the geology is going to produce.

D: In terms of Ireland, it is ranked the #1 in the world for resource jurisdiction by the Fraser Institute three years in a row. We can't get a better rating than that -- that's out of 122 countries that were looked at. We can't be in a better spot, as far as the Fraser Institute goes. Does that mean we're not going to have any troubles? No, of course not. There's always somebody who is sticking their hand up and saying "oh, you're making too much noise" or "we don’t want any mining in the area". You'll always run into that. It's endemic to the whole industry. All of those normal, what have become normal risks, are there. 

D: As far as geological risk goes, we see this as pretty straightforward. It's going to take drilling. It's going to take some intuitive geological interpretation, possibly some geophysics, and drilling. It's a pretty straight forward program over the next couple of years.

D: And, of course, all of us belong to the septo-club. You don't know what the septo-club is, but you have to be 70 to join it. I guess there is an inherent risk having a whole bunch of guys in the septo club running this program. We'd rather not talk about those risks -- you'll hear about them if they become an issue.

P: God forbid. Hope for many good years ahead of you, Don. 

D: Did I answer your question, Peter?

P: Again, very well. Thank you.

D: If something goes wrong here, then we'll fix it. We've all been around a long time, we know what these troubles are and all been faced with them at one time or another. And we all figured out how to fix them. How you fix them, Peter, we have a lot of experience to rely on and a lot of friends in the business. One of the things that Playfair has, incidentally, is an incredible group of shareholders. The people that have backed us in this program are really, truly some of the gems of the mining industry. We are grateful for their support. We view our shareholders as an asset to this company. Our shareholders are nearly as big an asset as our property -- our shareholders are great.

D: Let me note, shareholders -- not unit holders. Our shareholders are shareholders, there are no warrants issued by this group. Ever. Regardless how good some people think they are, they are poison to our industry. I do have an opinion on that.

P: Thank you. I think that may just make for a great audio excerpt there.

D: Next question!

P: What is the current liquidation value of your company versus the market capitalization?

D: The market capital is around $5M. Liquidation value is a difficult question. We have a couple other assets in the company that we don’t really talk about now that we are working in Ireland. We have a tungsten project in Newfoundland that we have a PEA on -- depending on the price of tungsten, the NPV is anywhere from negative to as high as $165M in the past. As we view it now, it's just a project on the back shelf waiting for better days in the tungsten market.

D: We've got assets like Granite Lake, which is an exploration play that we don’t talk about either. We've had good holes of moly and tungsten in the past there. Low-grade stuff that, really, at today's prices isn't really of any interest but is an asset that, maybe, be some other company may want to take up and run with. We've had one group look at it there during the bad days of the market, going back four or five years ago. They had been scouring the year looking for projects like that but, unfortunately, they ran out of cash and the geologists who were really interested were let go. We continue to hold that as an asset. What is it worth right now? I can't put a number on it, it's just one of those things that is out there.

D: The asset right now, for the company, is the shareholders and the opportunity we have in Ireland. I have no way of putting a real value on that. If we have a new gold district under our belt over there and it stands up to economic scrutiny, then it's going to be a wild time. If it's not, well then we plug on.

P: Well, it's one of the worst questions of the bunch there and you gave me a good answer. Thank you. The next one is: Who else will you tell this story to, how will you tell them, and when?

D: Well, we've been very grateful to have people like Eric Coffin, Gwen Preston, and John Kaiser pick up on it. People like Louis James have been looking at it. Not all of them have written it up, but three of them have at least given us a nod to be on their 'watchlist' so to speak. As we go forward, we are old school guys. I think our shareholders will be the single biggest source of promoting us within the mining community, just because the shareholders we have such long tentacles out into this community. If we have success, the company will breed further success just by virtue of it's shareholders.

D: Beyond that, Peter, I am certain there's gonna be guys banging on our door to write articles and get us involved in the internet. Some may even want an interview!

P: (Laughs)

D: Although my name is Donald, I don’t tweet. I'm not on facebook. Neil does belong to one group, a connection between a bunch of business guys -- Linkedin. We're not entirely left out.

D: One thing that may happen as we progress in time, over the next 3-5 years and given success, I'm certain that we are going to be attracting young people to our group. They are direly needed in our industry. Those people will likely open the doors to things you are more familiar with, like this internet stuff.

P: I'm with you Don, thanks. Moving on, please tell me about your management team and directors, especially their success in mining and markets.

D: Neil Briggs is our geological brain in our little operation here. We have three legs on our stool that manage these companies. Neil is the geologist. Kathy Mitchell, who is my wife, keeps Neil and I out of trouble with the regulators and takes care of all the administrative, legal, and listing issues. Myself, I am responsible for raising the money and sticking my nose into their business enough so that we all go forward together here. Neil has a long background with big companies. When he first came to Canada, he was in the great north of Labrador, working on iron deposits. He joined Falconbridge and was with them for quite a period of time. Ironically, when he was with Falconbridge on Rouyn-Noranda, Don Moore was his broker! Out of Kirkland Lake, which is a mining community where Don Moore got a lot of his exposure to mining.

D: Neil Briggs went on from Rouyn-Noranda to Newfoundland, opened up the office for Falconbridge doing exploration for 6-8 years. Then Falconbridge got out of exploration, he moved to Manitoba Minerals, was Vice President Exploration for them and eventually President of a Crown Corporation for a number of years. Ended up selling the corporation to Anglo United, I believe, for some $65M back about 25 years ago. He came over to the dark side -- he joined his old buddy Don Moore. He has been instrumental picking all kinds of really interesting projects for us through that 25 years. Neil's profile doesn’t really fit into the senior company profile that much. Neil likes to drill holes. It is our common belief that without drilling holes into the ground, no discovery will be made. Nothing of consequence will happen without drilling. Neil is always looking for an excuse to drill. I try to put the reigns on him a little bit but, over the years, we have tackled some real great projects. Peter, when you tackle these big projects, not all of them workout. We swing for the fence and here we're doing it again.

D: Kathy Mitchell has a background in accounting and she has been well-versed in all this junior market for the last 25 years. It's her management company that keeps us in place. She manages all the day to day stuff of our little company. Basically, it is a three-legged stool in terms of running the company. Neil's a director, I'm a director, and we have a third director named Steve Chan. He is well-known in Vancouver, he helped Cambridge House get off the ground. Going back some years, Steve joined our team and has been a director for some time. He is not a terribly active director, but he does have a lot of connections within the mining industry and is an asset to our team.

D: Myself, I was born in a mine office. I guess I could lean on that as my main attribute to be in this business, but I've gone on from there. I did work in the mines as a kid, I was brought up in a mining town. I worked as a broker in a mining town, Kirkland Lake, Ontario. I was brought up in Red Lake. Through time, I started putting deals together. First of all, I was a broker for 8.5 years.

D: Then, I was Director of Economic Development at Kirkland Lake for a number of years where we put together a really great scientific program to encourage exploration in the Kirkland Lake area. It was called the KLIP Program and we encouraged the governments to switch from 400M centers to exploration-grade 100M centers. We encouraged the development of geochemical sampling in the area, basal till sampling, and core storage in the Province of Ontario. At that stage, I got to know the connections between Government and the Ontario Geological Survey. We got the first-ever funding for a Provincial agency from the Federal Government, through the Ministry of Northern Affairs, to fund the Ontario Geological Survey to do the KLIP program in Kirkland Lake. It was a $5.5M program. It was so well-received that they changed the name of the program to the BILD Program, named after Bill Davis who was the Premier of the day. It went from $5.5M to about $400M and became the standard of geoscience programs in Ontario. That eventually caught on and a lot of the things you see across the country originated in Kirkland Lake with our little group, which was called the Kirkland Lake Economic Development Commission. Led by a great guy of the name of Pete Smith.

D: After my five-year tenure with them, I ended up doing a favour for a friend who was looking for a gold property and I ended up meeting with Don McKinnon up in a Connaught, Ontario. On the back of an envelope, first words on a piece of paper that eventually became the Hemlo play. I was a Director of Corona, and Executive Vice President of Corona in the early stages of the Hemlo discoveries. After which, when Murray Pezim, who was a well-known promoter of the day, did, what was probably for Corona the worst deal of the century and the best deal of the century, if not ever, in getting Teck to take over and we were out the door. Then, ended up doing finance deals over in London, England. Got a lot of experience in the financial end over there. Came over to Vancouver in '89 and worked with the likes of Bob Friedland, Bob Dickinson, and Murray Pezim again. Learned stuff from those guys. Ended up striking out on my own in the early '90s and here I sit today after all these years taking punts at various projects over the years.

D: I don't know if that answers your question or not, but I do feel quite comfortable in this industry. I've known a lot of people over a long period of time. I can't think of a better way to have spent my life.

P: Wow, what a life! I sense we are just scratching the surface of your life story here, Don.

D: Well, it's been fun.

P: Last two question for you here. First one: Who owns this company, how much did they or will they pay for it, and when can they sell it?

D: Well, the shareholders own the company. Management has a fair stake in it. It's one of these rare companies -- we got a hold of Playfair when it was in a previous life called Layfield -- when we took it over, none of us had a stick of stock in the company. We did it as a favour for another local entrepreneur. We sort of babysat it over the years. We accumulated our stock positions either through purchases on the market or through debt settlements or whatever. It's one of these rare deals where everybody in this room and in this company has got skin in the game, if you like to hear those words. We'd rather not have as much skin in the game as we do, but that's the way it's evolved. We didn’t have any special privileges getting our share positions.

D: As far as our deal in Ireland goes, it was an ingenious deal for the tough market. The deal calls for us to expend money, $2.28M, on the ground. In exchange, we acquire 90% ownership of the private company that holds all of these prospecting licenses. As we spend the money, there are no property payments per se. But the individuals who have developed the play, Andy Bowden and Rick Parker and their little company of BowPark, they charge their time as geologists to the program as a means of their compensation. They are compensated at the going rate for geologists -- in fact, they give us a better rate than most junior geologists get. In that regard, they have skin in the game also. They receive 1.8M shares in four tranches over a period of time as we spend this money. Once we get to 90% there is another mechanism with which we can get to 100%. If this property stands up then these guys will be really wealthy and they will be happy. They will have cash payments and net smelters to get their last 10% and that's the way it should be. These guys deserve to be well-treated.  

D: If somebody else wants it, then what's it gonna be? Peter, I recall the day that Barrick took over Arequipa after 9 drill holes -- so I will just say: anything is possible. If we are, in fact, dealing with a brand new district play and this structure stands the test -- if there is economic gold in this structure, with the strike length of it, and if Cabragh stands up which is 11KM away because it's the same basic story except we didn’t have any in-place-gold at Cabragh. We only have float at Cabragh and the geophysical expression of what we interpret as the structure. Cabragh is more risky in the sense that we don't have in place gold, but we do have the highest grade float that we have seen in this area. That float assayed up to 23.5-33.5 grams per tonne. What might someone be willing to pay at some future time? At this stage of the game, it's not a pertinent question. But because there is no warrants out, there is no excess dilution gonna happen. Other than the dilution we get from money that is gonna go into the ground. We have the chance of making Playfair a zinger.

P: Any comment on shareholder base? Institutional or people with larger amounts that are reporting insiders.

D: Most happy to say that I have no institutional interest at all in this company. It's all retail, it's all mining guys. We have strong shareholders -- good backers that have speculated in the mining industry in large ways. At this stage of the game, I would be looking to have institutional support once the initial discoveries are made -- let's assume they are made -- and the stock price is considerably more than what it is today. With any luck at all, we can get this to happen. That institutional support can be brought to the table -- all of us, management and major shareholders have dealt with institutional guys over the years. When the time is appropriate, we will make the approach. For the time being, this company is run on the back of the money from a bunch of really great mining guys.

P: Well, I often hear that "institutional investors fund exploration and retails fund market liquidity" so it is refreshing to hear a different take on things here from you.

D: Very few people on the planet will finance this sort of exploration. It's an oddity. Everyone wants to have a deposit before they finance. Then there's another group that wants to see a feasibility, and another group that wants to see a positive but they only want to see it when the market is terrible and they can buy it for 8 cents on the dollar! There are all different kinds of groups that play in this thing. I've even had the privilege of asking one well-known mining guy to take a piece of our private placement at five cents. His response was: "What do you think I am -- Santa Claus?" It's that difficult. This is a well-known guy and you'd be shocked. However, there are lots of really good mining guys that see the benefit of this and see this as an exciting time. It's an excitement play. It's possibility of a new source of wealth on the planet. Here we go -- let 'er rip! The rocks will do the talking over the next couple of months.

P: The last question here. How much money do you have, how much money do you need to succeed, and how are you going to get it?

D: We raised, during in the last four months, about $1.285M. That's enough to get us through this drill program and enough to initiate another drill program to start in January and probably carry us through till March. We run on really tight budgets. The money finds its way into the ground. As we go forward, given success on this money we're spending now, I see no trouble in getting more money for this project. It's just a matter of what price we have to issue the price at. I, of course, want to see it issued at as high a price as possible. The guys out there who are buying are going to want to get it as cheap as possible and that's what makes markets.

P: Great, thanks very much Don. If there are any stories or things from the Metals Investor Forum event last weekend that you wanted to share with people out there -- I would be happy to hear those.

D: Well, we've been talking for a long time here. One thing -- Eric Coffin has written us up. He also wrote-up Westhaven, which is another worthwhile early-stage exploration program. I am so pleased to be on the same page as them. Gren Thomas, who is a really well-known mining man, is the backbone of Westhaven. Gren has been a big backer of ours and I have nothing but the greatest things in the world to say about this man. It puts a twinkle in his eye when he sees this sort of early-stage exploration starting to get attention. It's really fun to have him following us along. The list of guys -- the mining guys that backed us is really neat.

P: Thanks very much, Don. I'm glad to hear that.

D: One other that I would like to point out from the conference -- Precipitate. I have a special interest there. Eric and David Coffin started that company and they hired a younger geologist, whose name is Michael Moore and he is my son. I am very, very pleased that their team has had a discovery of some significance. We don’t know how much yet because it happened in the worst of the market. Eric and his team, his geological entity did not get any credit at all because of the timing of the discovery. I would hope that that discovery would bring back glory to both Eric and his late brother David, and my son Michael as they go forward in time. It is another one that is meritas of a really close watch as we go forward.

P: Well-deserved, Don. Thank you very much for your time today. Best wishes for the future.

D: You're welcome, Peter. My first interview like this, so I look forward to seeing what you do with it. Goodbye now.

>>

You can find out more information on the company's website here and engage in dialogue about the company with other people on their own channel here at CEO.CA. Don said it best, when he said: "We have the chance of making Playfair a zinger."