Listen to Golden Predator $GPY CEO Janet Lee-Sheriff in this +30 minute interview recorded August 16, 2019.
Find more on google drive here, https://drive.google.com/open?id=1gX59caC0iDKedRI0xrC5jZavNULaaxtM
Peter Bell: Hello, I'm Peter Bell and I'm here with Ms. Janet Lee-Sheriff from Golden Predator. Hello, Janet!
Janet Lee-Sheriff: Hey, Peter. How are you?
Peter Bell: Very good, thanks. Nice to be talking to you -- first time I've had a chance to do an interview with you.
Janet Lee-Sheriff: Thank you for the invitation.
Peter Bell: You're welcome. Thank you for the recent trip to the Yukon! I was invited by the Yukon Mining Alliance for a tour in July. We visited the Golden Predator Three Aces processing plant and I was impressed.
Janet Lee-Sheriff: Thank you, thank you. It's a pretty exciting project. It's the first in the Yukon, so I think we are all looking forward to what it can do for us.
Peter Bell: A chemical-free gold plant -- apparently the idea has been out there for a while. Great to see you as the first to really seize it and run with it. Amazing how it's really a secondary focus for the company now with what's happened at Brewery Creek this year. Finding a way to get the permits in place has given you a big opportunity.
Janet Lee-Sheriff: The plant started as a way for us to better manage the recovery. The sample program up at Three Aces involved high-grade gold, very nuggety gold at surface. We just weren't seeing it in the drill results -- they weren't representing it properly. The idea of sending the gold ore away to be processed came up, but we knew that we wouldn't gather the necessary technical information and probably wouldn't see accurate results. What started out as necessity has turned into something that's really providing us with a great deal of technical and scientific information. We could potentially and continually test that high-grade gold. We can look at processing chemical-free. And now we're moving into cyanide-free. It also has a nice by-product -- gold -- which keeps us from having to dilute at low prices for financings.
Peter Bell: All the stuff you've done with the coins and everything in the Yukon Mint -- pretty inspiring stuff.
Janet Lee-Sheriff: Thanks. We really try to find ways to involve the community more in our projects and look at creative ways to create spin-off benefits.
Peter Bell: And those things are potentially a level-up for you here. The potential economic impact of the Brewery Creek Mine are a level above.
Janet Lee-Sheriff: Definitely. When we had the Yukon government with the support of Tr'ondëk Hwëch'in, which is the local First Nation, both validate and clarify that the water license and quartz mining license are valid -- we are fully licensed and able to have an immediate restart of the gold mine. It just changed our reality instantly. We've been keeping up with the plant and the bulk sample and running, aggressively, at Brewery Creek . Somebody asked what our biggest challenge was and I said it was, "Running as fast as we can for as long as we can."
Peter Bell: Yes. Is it a marathon? Is it a sprint? Is it a relay race?
Janet Lee-Sheriff: Really, it's everything.
Peter Bell: I am thinking -- who else permitted a project, effectively, this year? I wonder about the timelines on that. For people who are trying to keep up with you, things have happened quickly at Brewery Creek.
Janet Lee-Sheriff: From the outside, it looks quick. We've been plugging away quietly behind the scenes, working on our due diligence and and presenting the information to allow everyone to look at it. It's a different type of assessment process, but it worked. It came together, honestly, very quickly.
Janet Lee-Sheriff: I think it's hard for people to process that. "You have licenses but you need some sort of approval, right?" No, this is it. We are fully licensed. We've submitted a re-start plan under the current existing licenses to the government and we're moving equipment onto site. We're doing a feasibility study on the re-processing of the heap. We see that as the best way to start and move into a revenue stream at a low capex.
Peter Bell: Wonderful. And the recent $9.3 million dollar financing furthers those goals.
Janet Lee-Sheriff: Yes, we've already completed a first round of drilling and we now have two or three rigs on-site as of today. We'll be looking at both expanding existing resources and upgrading existing resources. We have heavy equipment on site and we're starting to do some testing of the heap to see what level of crush we should do there. We're fixing up and expanding the mine roads at present. It's underway.
Janet Lee-Sheriff: We just announced some expansion to our team. Something we look at is how people see us from the outside. The question is, how can a junior exploration company move a mine into production? It's all about expanding the team. We've identified two people that have joined the team and are working on engineering and metallurgy. It's coming methodically, step-by-step. Lots of work in the background, but extremely exciting. The community is behind us and the First Nation is behind us. There's a lot of responsibility there to meet expectations but we have support. Brewery Creek is a proven commodity, environmentally and economically. The risk is reduced. There is a lot of history to show what the costs are. I think we're in a a really good place to look at getting the money in place to get this going next year, moving into development.
Peter Bell: Good for you. Regards to James Hesketh with his Nevada experience. I've talked to him once before about Viva Gold and was very impressed by the vision that they had putting that company together -- waiting for the right time and then acting boldly when the opportunity presents itself. And Robin Fraser -- I don't know them, but a good metallurgist is mission-critical. Great to see you adding operational bench strength.
Janet Lee-Sheriff: Robin has been with us for about a year. He is the person behind the plant at Watson Lake. He improved it and created all the efficiencies there and has really taken it up to another level. We met him because he was involved in a couple of projects in the Yukon -- the Minto Mine, for example. They brought him in to do some upgrades on the mill. He knows the Yukon well.
Janet Lee-Sheriff: Jim Hesketh has a really interesting background, you're right. He's an operator. He is known for managing costs extremely well. He has very good, practical experience as an engineer. There are two really neat things about Jim. For one, he ran a barite mine in Watson Lake in the '80s. It was a very profitable operation. He's actually run an operation in the Yukon. For another, when he was with Rothschild he did a complete economic evaluation of Brewery Creek in order to extinguish their debt back in the '90s. He walked into this with a complete working knowledge of the Yukon and the project that he's working on.
Peter Bell: Wow.
Janet Lee-Sheriff: He's given us some very sound advice. Very practical ways to manage costs.
Peter Bell: Impressive. I didn't know about his Yukon experience there. These connections between Yukon and Nevada are neat. The small world of mining!
Janet Lee-Sheriff: You're right. Jim's a great guy. We're all going to be up at site at the end of the month. We are bringing our technical team together up there -- all the Yukon regulators, First Nation, First Nation business arm -- and we're just walking through the entire plan. Making sure everybody knows exactly what we're doing, how it fits under the current plan, and where we're going to start seeking amendments down the road. It'll be like Nevada -- serial amending as you go and expand over time.
Peter Bell: That benefits the Yukon, too. If they can more experience with experienced operators who can put them through their paces, then that's good. They haven't had so many opportunities to deal with that from a regulatory perspective as the last few years have been pretty tough.
Janet Lee-Sheriff: I've always said that if they can clear up the Brewery Creek licensing confusion, then it is really going to help the Yukon. As somebody who's got strong ties for many years to the Yukon, I'm happy. As the CEO of the company, I'm even more happy. It's proven brownfields. It's in a great spot -- 45 minutes by road from Dawson. 20 minutes to the Dawson airport, which is now landing 737s from Alaska! Where do you find a mine 20 minutes from an international airport in a place that wants to permit it with people around who understand gold?
Peter Bell: It's pretty impressive. It made an impression on me when going up there. It was the first time ever being up there -- not the last.
Janet Lee-Sheriff: Great. I think you have to be on site to understand how much infrastructure was left. When you see the pits, the foundation for the ADR plant, and the ponds -- there's millions of dollars in cost savings from having all of that left to help with a timely re-start. We're thankful to Alexco and Viceroy for the way they managed the project before us.
Peter Bell: It's a testament to closing a project well. Temporary closure! And questions about the mine plan -- it's good to hear you talking about bringing all the stakeholders together there to start setting some detailed expectations around what this is going to look like. Your shareholder base has pretty sophisticated mining groups, they understand exploration through production. There may be people out there who have been following the exploration side of Golden Predator who may be facing some transition. When you start talking about putting something into production, it's different. Testing the heap to begin with -- it's not testing waste piles! The details of the facts are important. It was break of mine material on the heap leach and there is an opportunity to crush it now! All the detailed engineering and metallurgical stuff that comes up with that is essential. How are you finding your communications around that with your existing supporters and whatever new audience you might be reaching out to?
Janet Lee-Sheriff: You've raised a good point, Peter. It's something that we've discussed with a number of our shareholders, especially our larger ones. Once the licenses were confirmed, we were immediately in Toronto meeting with them. We have a great deal of support from them, but that doesn't always represent every shareholders. Some like the exploration stories and new discoveries, but a lot of people are realizing that the increase in the price of gold isn't having an impact on the juniors yet. If you don't have a revenue stream or a potential near-term revenue stream, then the risk with the juniors is still too high. At some point, that will shift. For now, the companies that have things like Brewery Creek or bulk sampling programs underway, I think that they are going to follow the producers into realizing some potential gains in the share price. I think most people are starting to figure that out. As much as we like the exploration play, we still get it in Three Aces. It's not going away, it's just that Brewery Creek is taking a big chunk of our mandate now. I think people have come around to the realization that this is a good thing as long as we have the capacity to do it. I think that adding team members solved that.
Janet Lee-Sheriff: We're moving into a three-phased process. We're going to rebuild the existing infrastructure and re-process the heap, which was run of mine. We will now crush it. There's a resource on the pad that's identified in the PEA. We'll do a feasibility study and be able to raise money to expand the mine. In the second phase, we will finish the current mine plan. In the third phase, we will continue to expand outside of current areas -- identify deposits in the license beyond the mine plan.
Janet Lee-Sheriff: If we did the whole thing, we would be looking at an $85 million capex, which is small, relatively speaking. By staging it, we're able to reduce it even further. It's not like we're a $30 million dollar junior that's trying to build a $500 million dollar mine. We're trying to make it realistic and stage it with the right people over time.
Peter Bell: That reduces the risk to some degree, right? There's always some sentiment that you should, "Be careful of a junior trying to put something into production!" To have a coherent plan with the different phases and spread some of the capex out over time as needed -- important stuff!
Janet Lee-Sheriff: Yes, and we benefited from how the plan allows us to rebuild the existing infrastructure. The ADR plant and an assay lab -- all the records are there. The construction drawings are all there. The Hatch engineering drawings of all of the deposits are there. With twenty years of data and information, we're in a very good position that most people don't end up in. The other thing that's really interesting about Jim Hesketh is he's actually restarted two mines by re-processing the heap.
Peter Bell: Brilliant.
Janet Lee-Sheriff: His comment was that he wouldn't re-open a mine without re-processing the heap. Not only to recover the gold that's in there, but to stabilize the pH and You do that by crushing and agglomerating. The other thing you want is you want to eliminate some of the existing pathways that have been created for the cyanide flow because it was run of mine. It's nice to have somebody that's actually done this twice before involved.
Peter Bell: What a niche thing to do, really. It's not a strategy or a part of a plan that a lot of people may encounter. It's the first time that I've really heard about a re-start scenario like this.
Janet Lee-Sheriff: I'm not a geologist. I don't have a technical background. I have experience in business, social license, and communications. When I took over as CEO, we looked at it -- we didn't want to put a geologist into the CEO position. Specifically, we didn't want that skillset sitting in the office -- you want those people in the field. You don't want them to become emotionally involved with your project -- it's a business. It's the same thing moving into mining. We've got a great geological team out there and they see some really great upside at Brewery Creek. We're going to let them focus their and get the right people on the mine development program and run it like like a business! It's all about the team.
Peter Bell: So often, we see accountants at the top of producers. There's a huge administrative aspect of the permitting, as you said with the ongoing permitting activities that come along with being in production. I guess your shareholder base gives you a pretty strong sounding board for corporate finance strategy?
Janet Lee-Sheriff: Yes, they do. And Bill Sheriff, our Chairman, he's raised over a couple hundred million dollars over time.He has a master's in geology, but he keeps saying that he's more of a prospector than a geologist. He loves deals and he's good at raising money. We've got people there that can take care of those types of responsibilities and let us focus on the administration and execution.
Peter Bell: From what I've seen about the deals around you, it's impressive. It's amazing to see you breaking new ground. Looking forward to what next. Are there any other mines like Brewery Creek that were put on temporary closure in the Yukon?
Janet Lee-Sheriff: No, I don't think so. There's some that they put into permanent closure. I think BMC Kudz Ze Kayahwas temporary, but I think the license lapsed. It was clear at Brewery Creek that they were reclaiming it for a restart. It didn't go through the full de-commissioning of the mine. It only was temporary. What an amazingly smart strategy by the company and the regulators. It's in the minutes for the water board and the governments of the day that this was being reclaimed temporarily for a restart -- when the price of gold went up, it would go back into production. Some people changed over time, so this message was lost but it was all there. To me, the secret is to put it into temporary closure. As you've heard in Nevada, the best place to find a new mine is at an old mine.
Peter Bell: Amazing. It's one of the questions I had from a friend -- are there any roadblocks to permitting at Brewery Creek? I tried to explain to him that he wasn't asking the right question. He seemed to have missed some of the news. I wonder what's the story of Brewery Creek, where did you get it and when did you figure out this temporary closure thing for this clear pathway forward?
Janet Lee-Sheriff: We picked it up in 2009. A gentleman by the name of Joe Harrington was involved with the reclamation of Brewery Creek and was with Alexco. He happened to be sitting on a plane next to Bill Sheriff and they got to talking about this. Bill likes the Yukon, he wanted a project and Joe said he should check out Brewery Creek. Bill was very clear that he didn't want a project without road access. We want to see a mine go into production -- not spend 20 years building a road. That's been one of our our requirements on projects. Bill and Joe had this relationship and we auctioned Brewery Creek. A few years later, we ended up buying the whole thing, 100%. We spent three years exploring it and increased five-fold in three years. We had a great success rate in exploration, 80%. We stopped because of market conditions and the challenges that we were running into for licensing. We just waited for the right time. About a year ago, I started looking at the licenses because they have timelines and I didn't want them to hit those timelines. I could not find proof that it was in permanent closure, as I was being told. I spent months in the data room pulling everything, reading it, building a chronology, and finding the source of the information. We had contact with Tr'ondëk Hwëch'in First Nation and I made the case to them. I showed it to them, they did their due diligence, and they agreed my opinion was correct. We presented it to the government. The government said we were correct. It's fully licensed. Your friend is very representative of most people, "You've got a license, now you need some sort of approval?" No.
Janet Lee-Sheriff: I think we have to keep repeating the message that we're fully licensed for an immediate restart. We need money, but we've got to get the license and then get the team before we get the money. It's over a gram per tonne in a first-world jurisdiction -- not too many new mines sitting there in North America ready to go.
Janet Lee-Sheriff: We're pretty comfortable, but it's hard to absorb that no we're absolutely ready to go now. We had to apply for a fuel storage permit in order to increase the size of our tank on site and that was it. We did it and now we're done.
Peter Bell: Amazing. It may be that people are waiting for some exploration drill results or some surface sampling or drilling in the old heap to give some sense more guidance on what next? It's not so clear to me that they will get the routine sets of information that they might expect from a developer because you are jumping into the queue at an unconventional spot -- a pretty advanced spot. To just have this appear is perfect for a gold bull market and a bullish summer!
Janet Lee-Sheriff: Yes, you're right we are we are not the typical story facing the same timeline as others. People will get it, I have no doubt. It's just a matter of us communicating in a really clear way.
Peter Bell: And your actions speak loudly, too. Building up the team is an important message. I wonder about guidance looking forward on news flow? Should we be waiting and watching for any exploration work at Brewery Creek in the near term, or is the immediate path forward to do with other things more around financing?
Janet Lee-Sheriff: I think you're going to see both. There is a lot of exploration work and we will have three rigs going. We're doing some core drilling -- deep. We've always stopped once we hit the sulphides at Brewery Creek, but the sulphides are there and there's a resource on them. We found some old studies from the Viceroy days where they looked at bio-oxidation on the sulphides. We really want to put in some deep holes on the sulphides and start to explore that potential. We think it's there.
Janet Lee-Sheriff: We've got a large oxide program planned, too. Those results will come out over time. The first twenty holes are already done. We've also been doing some sampling. When you were at Brewery Creek, I don't know if they took you by the cliffs -- the big orange cliffs -- but we did some soil sampling there. We just can't believe that there's been very little exploration in the southern part of the project. That's already underway. Looking at the heap, what we're doing there will come out. There will be a steady news flow from this place.
Peter Bell: Great. It's interesting to hear that. No, we didn't go to the cliff but I think we saw them from overhead. Next to the river, right?
Janet Lee-Sheriff: Yes.
Peter Bell: I saw that from a distance but didn't hear or didn't register the plan to go and do some first-pass surface prospecting work there. Very glad to hear that! The expansion potential on that project is significant, looking off to the east. It's impressive with some high-grade hiding around, as well.
Janet Lee-Sheriff: Definitely.
Peter Bell: And that makes me think of the Lassonde Curve with the excitement around discovery and then that quiet time when all the development work is being done. You're kind of parachuting into that dead spot -- the latter stages of it. The timelines are accelerated and a lot of the work that you know might register as "boring development stage resource definition exploration programs" are things the markets don't care about to some people. That's arguably new information. Certainly it's new information in context of this particular business plan for this company. It continues to fascinate me in all those ways
Janet Lee-Sheriff: It's not your normal project.
Peter Bell: And do you own a 100%?
Janet Lee-Sheriff: There are some some royalties on it. Another to consider is that in April, we put out a news release that we bought-back the Franco-Nevada royalty. It was on the first 30,000 ounces of production, which is significant in the first year. A lot of people didn't understand why we were buying back a royalty on a project that wasn't going anywhere. We were in the midst of our due diligence on the licensing and we saw where we were going to go with this, as long as everything fell into place. The need to get rid of that royalty became clear. We're working to reduce our royalty burden.
Janet Lee-Sheriff: There is a NSR held by a Alexco that we would like to see reduced. There's an NPI for a portion of the project. It definitely increases the economics getting rid of the first royalty. It was not the only one that we hope to reduce.
Peter Bell: Good to hear! Again, all aspects appear to be competently managed from what I can tell. The fieldwork through the corporate side, it's a pleasure to see you making good decisions. Just looking at the pitch deck, it's the IRR number of 45% at $1,600 gold. Then, seeing mention of whatever +$2,000 more recently -- it's pretty amazing. My head is spinning.
Janet Lee-Sheriff: And that's in Canadian dollars! That is $1,600 versus gold sitting at about $2,000 Canadian now. And we see some ways to actually improve our IRR. Re-doing some of the work can help us capture a lot of cost savings that weren't realized in the PEA. We can make this a much more efficient project.
Peter Bell: Allow me to give a shout-out to Whittle Consulting and Gerald Whittle. They had an event in Vancouver this week and they do some pretty neat stuff with mine planning optimization. They have some toolkits around sustainable operations and community engagement that the industry has not used at all. There's a lot of potential to do things better and that's another example of an important aspect of the business where Golden Predator is leading!
Janet Lee-Sheriff: Thanks. We've always said that if we can't bring the community along with us, why would they want us there?
Peter Bell: Thanks for mentioning the April news release. That's another example of something that might look a bit unconventional or surprising to most junior mining speculators, but if you have a slightly different perspective then it can make all the sense in the world. Our approach with community relations and First Nation relations is to come in early and often -- don't wait. Build those relationships over time. That relationship with Tr'ondëk Hwëch'in has put us where we are right now. You don't forget that as you're going forward. You spend more time and more energy trying to help create ways to keep the wealth local. Sometimes we forget that as we get bogged down in so many different things, but it's an important thing that pays off down the road.
Janet Lee-Sheriff: Certainly.
Peter Bell: Janet Lee-Sheriff, CEO Golden Predator. GPY on the TSX Venture. NTGSF on OTCQX. Thanks very much for talking with me today.
Janet Lee-Sheriff: Thank you very much, Peter. We will keep you posted!
Peter Bell: Thank you. Goodbye.
Find the video here, https://youtu.be/MT_Y4Olmwz4
