Read on for the first major section of my new interview. Please note this is not sponsored content.
Peter Bell: Hello, I'm Peter Bell and I'm here with Mr. Perry Little, CEO of Green River Gold Corp. CCR on the TSX-Venture. Hello, Perry.
Perry Little: Hello Peter.
Peter Bell: And I've got that wrong already -- it's not the TSX-Venture. You're on the CSE.
Perry Little: Yes, exactly. I was going to point that out. Thanks.
Peter Bell: I think of it as like an example of a new generation junior mining Canadian pubco.
Perry Little: We've got a sort of a unique take on mining and how to structure a mining company, with regard to placer. I'm a former stockbroker and I realized how difficult it is to put a placer mining company into a public company. There have been many attempts and they never seem to work. Everybody says you can't put placer into a public company and there are a few reasons for that. There's a catch-22. The 43-101 rules are necessary and a good thing for the industry but it's difficult to get a 43-101 report that's really going to tell you much about a placer deposit.
Perry Little: I saw an estimate on one property when I first started looking and what it was going to cost to prove up what they figured they had on this one property was about a million bucks. Frankly, if you had the million bucks, you'd start doing a couple of trenches to find a good spot and then start mining.
Peter Bell: Perry, can I interrupt you for a second. Do you have any idea how many ounces they would have been able to put on the books for a million dollars there? Is that fifty thousand ounces? Twenty dollars an ounce finding costs.
Perry Little: I honestly can't remember how much that was. We're going back about four years here. The fact is if you had the million dollars, you would have started mining it. If you have that much money, then you would have started mining it rather than spend the money on 43-101. That's the catch-22.
Perry Little: You must have some proof of your resource in order to get financing. Most of these guys will never have the money to do that in placer mining. It tends to be a small person's game. There's not a lot of big money in the placer mining industry. It's a lot of small people who have difficulty raising capital. We looked at it and thought, maybe we can think of this a little differently. The costs of just getting started placer mining are high, really. Anything of significant scale is probably going to be out of pocket about a million bucks by the time you pick up all the equipment. If you also must purchase a claim and then do the bonding, which can cost quite a bit on a large project. It really does put you behind.
Perry Little: I came up with the idea of having the public company purchase claims, get them permitted and ready to go, then put up the bonding. Once we get an agreement with miners that we want to deal with we will have all kinds of control over the way that the mining goes -- we will be very careful to safeguard our bond. We'll be in there to watch what they're doing.
Perry Little: They will be able to just come in and start mining.
Perry Little: They don't have to deal with permitting issues. Does logging have to be done? All those things are done for them and that cost is saved. What we do is we charge them a rent.
Perry Little: The rent is based on ten percent of what we expect they will recover from that project.
Perry Little: That's a bit of a negotiation situation. No different than rent between a barber shop and a strip mall. Both must be happy with the rents.
Perry Little: The rents we would collect on a monthly basis at the beginning of the month. We do get some benefits out of that.
Perry Little: If you were to look at a large operation, a large placer operation on a claim maybe 20 hectares, run for a year with a significant operation -- the maximum you can do is 20,000 cubic yards of pay dirt through your plant. If they do that, then they're not really going to touch much of that 20 hectares. Maybe five percent, maybe ten at maximum.
Perry Little: At the end of the season, we will still own the claim. We will have a pretty good idea what's there and we still have 90 percent of the claim left over. There's a significant advantage to us on this in that we're having somebody come in and do our exploration work for us, if you will. They give us an idea what that claim is worth. There are very good odds that we would also own the surrounding claims. It has an impact on the valuations of the entire claim group.
Peter Bell: Amazing.
Perry Little: I think it works.
Perry Little: It's something we're still testing in the early stages. We've got some people interested. We do have some permitted claims and we should have some people up and running for this season. We'll see if it works as well as we expect that it will.
Perry Little: I do believe placer claims will go up in value over the next few years.
Perry Little: We run, oddly enough, a small retail store in the north end of Quesnel, not far from where the famous Barkerville highway 26 hooks onto highway 97. We like to say it's the corner of gold mining and gold mining.
Perry Little: We opened a little store there.
Perry Little: The reason we did is that we needed office space. We picked up office space right on the highway and we thought it would increase our exposure, as well. When people drive by and see the sign, they realize that we're permanent residents there. We saw an opportunity. We picked up a bunch of retail mining supplies and picked up a couple of product lines on top of it. Our admin person sits in the store and we're surprised at the amount of things that we're selling out of there. Already. We're just into early May and there's still two feet of snow on some of the mining claims up there in the Cariboo.
Perry Little: I know of one guy trying to drive to one of their claims the other day and they couldn't get through. It's still going to be a while before people start mining this year. Yet, our store is already busy. We never anticipated doing much more in there than covering the rent and givingive ourselves a reason to connect with the mining community.
Perry Little: It's far busier than we expected.
Peter Bell: A mining bull market fills your sails up quickly!
Perry Little: It's a pleasant surprise. I never thought it would be a big part of our business, but it's bigger than we thought it would be. It really gives us a finger on the pulse of the mining activity.
Perry Little: What we're seeing is what we expected.
Perry Little: With the lockdowns going on and so many people thrown out of work, we thought there may be a bit of a parallel unfortunately to the 1930s when the Cariboo region had a mining boom. Everybody remembers the famous CARIBOO GOLD RUSH back in the late 1800s, but there was a resurgence in the 1930s. We seem to be seeing the same thing now. People thrown out of work. Thinking, why don't I try this?
Perry Little: We're set up to equip them with everything they need for small hand mining.
Perry Little: We've got starter kits that we sell out of the store with a pump and a highbanker, which is sort of a portable sluice box. The pans, shovels and everything they need -- we can equip somebody for about seventeen hundred dollars to go out there and try hand mining.
Perry Little: We also have a private company, which manufactures larger equipment. It's about three blocks back from where the store is and we sell trommels. Big round drums that you see on TV for washing the gravel to separate it from the gold. We build those at a plant and can service the mining community. We have multiple points of contact with them. It gives us a bit of insight into what's happening up there, where the good claims may be and who we want to deal with to put deals together. Whether its buying claims or selling claims, it keeps us in the game all the time.
Peter Bell: And here you are in Edmonton!
Perry Little: Here I am in Edmonton. Not so much in the summer. I've been married for about forty years; I've got three kids and four grandkids here. This is very much my home, but I fell in love with the gold idea -- placer gold -- a few years ago. Go back to that story in a moment. My wife puts up with me heading out there for several weeks at a time in the mining season. They don't need me out that much in the winter, but I'm on the phone with them consistently throughout the day. I don't how many times phone calls, emails, and texts during the day -- it's great what you could do from a remote location.
Perry Little: We have great people on the ground.
Perry Little: It's all local people from Quesnel. We went through the first period where you meet a lot of people that maybe you shouldn't meet. We got to the point where we're dealing with good people.
Perry Little: You mentioned that we were a fairly new company it's not quite as new as you said, Peter.
Perry Little: We've been out there placer mining ourselves since 2016. This is the start of our fifth year doing placer mining. When I got out there, I realized the lack of services for the local miners. Just trying to find a trommel for ourselves -- we ended up way over-paying for a piece that was not wonderful. We realized we could probably build better stuff ourselves and rent it out. Quesnel is cheap by most standards -- ridiculously cheap, actually.
Perry Little: Picking up a shop with a building to do service work for the other miners -- we'll have a service truck on the road here shortly. That's all through our private company. That morphed into the retail end of the public company now.
Perry Little: We build things through the private company that are marketed under the Green River Gold Corp name.
Perry Little: I don't think we'll ever have Green River Gold get into manufacturing. That's a different thing altogether. It's easier to keep that in the private company and use the familiar name to market the machines. It's worked out well, but that's private company stuff.
Perry Little: It is an affiliated company. It is related to Green River. We have the ability to store things on there and use the shop to fix equipment. It's a handy deal.
Perry Little: Office space right in Quesnel. It's driving distance, a quick daily commute to go to our mine site. We don't have to have pay a lot on accommodations for people.
Peter Bell: Amazing. There are so many aspects -- things to discuss that you've mentioned here already. The one burning question for me is for people looking at the stock -- how much forward guidance can they expect to get from you in terms of any aspect of the business? You mentioned the 10% number as an interest in placer miners who are operating on your land -- what does that equate to? Do you have any ability to provide any dollar figure amounts on what that might look like? Or what the retail location might do? What could you do in a manufacturing business -- is there any forward guidance on the financials? Or backward-looking stuff regarding the private company?! Any information we can discuss on how much money has been put up in the past?
Perry Little: The private company is really a different animal altogether. I'd rather kind of stay away from that one.
Perry Little: I will say that it's gaining traction on the manufacturing side.
Perry Little: Our personal mining experience with it has been a little hit and miss. We're getting better at it. We realize how difficult it is because we're out there trying it.
Perry Little: I spent the summer of 2017 living in a trailer three kilometres from our mine site. I was on the mine site every day trying to learn every aspect of the placer mining business. It was a learning curve for a stockbroker, really. It was very informative. Without that, I don't think I'd be equipped to do what I'm doing. I'm glad I got my hands dirty for a summer. I also dropped about 25 pounds in six weeks at one point.
Peter Bell: Oh yeah!
Perry Little: It's a good workout, running up and down those hills.
Perry Little: I think that forward guidance is something we'll will be able to provide in a while. Right now, it's difficult to do so. We are just in the process of getting deals nailed down. I'm quite certain we will have some in the next little bit for this season.
Perry Little: I would hope at least three.
Perry Little: Over the summer and then next winter, we will be getting a lot of our claims permitted. We'll have a much larger inventory to offer next season. This is a scalable thing, and this is our first year really rolling out.
Perry Little: If you wanted a quick example, let's say that we've got at operation that we believe is capable of producing 100 ounces of gold. Both the operator and Green River agree that's what it would be. We would take 10% of that.
Perry Little: We have our 10% of the estimated gold for the season. At $2,400 Canadian that would be $24,000 worth of gold to us.
Perry Little: We don't want a portion of the gold production; we want a cash rent. Our experience with everybody that we've seen out there is that the gold doesn't show up whenever anybody gets a gold-based royalty. The gold seems to disappear before they get their cut. I wouldn't believe in any company that was doing it that way and I wouldn't expect any investor to believe in it.
Perry Little: We avoided that.
Perry Little: We thought, let's just take a cash-based rental rate. It'd like a royalty except that we get cash. We don't care if the gold goes missing. We feel sorry for them if the gold went missing, but it's not going to impact us. If they end up doing better than they expect -- well, that benefit accrues all to them.
Perry Little: In that case, $24,000 mining over four months would be $6,000 a month rent. We get that upfront. We picked up the claim and we did the permitting, which is a little bit of cost. We've cleared off any trees that might affect the mining operation ahead of time. Then, we put up the bonding. The bonding could be upwards of a hundred thousand dollars for a large project. That comes back to you once the project is properly reclaimed. It's not really an expense. It's a refundable deposit, if you will.
Perry Little: We've got a pretty good track record of cleaning up the properties that we work on. We do respect the land. We make certain that the operators play between the lines.
Perry Little: When you look at it if it was four months rent on one property, $24,000 twenty-four thousand dollars doesn't sound like very much but in a lot of cases we're not paying very much for those claims.
Perry Little: We could pick them up, do a little bit of testing on them, and make them more valuable -- at the end of one season, If you remember what I said, we still have 90-95 percent of the claim that's not mined.
Perry Little: The only other thing that we've put up is the bond.
Peter Bell: Wonderful.
Peter Bell: And one of the things that people love to criticize about placer is "oh it's got no runway" or "there's no mine life". It's highly uncertain and there's not much reason to think that it could be particularly long. The attitude I've encountered most is of small size and short mine life -- getting 10% of that?
Peter Bell: In one of those land packages, is there reason to believe that the miner could go at it a few seasons funding and organizing themselves to do the work? I would imagine juggling the bonds and all the permitting and everything for the small business operator might be a stretch for their expertise.
They may be good at moving dirt, but not so good at moving paperwork.
Perry Little: Well, there are agents that will do the permitting. Not the bonding.
Perry Little: There are very good ones. Our mine manager actually charges above $95 an hour to do permitting for other miners, as well. We'll take care of that. The permitting is not rocket science, but it's a little more involved than people realize. If you mess something up, your permit goes back to the bottom of the pile again.
Perry Little: I've seen people miss a year of mining, simply because of glitches.
Peter Bell: The permitting is an unaffordable risk, really, for a private company that's trying to have that as a going concern. If you miss a season in a situation like that, then that's a big problem.
Having a specialist help with the permit is not a bad idea. They're less likely to make those errors that can slow you down.
Perry Little: Kyle is wonderful at doing that stuff.
Perry Little: He knows the Mining Act inside out. We're very lucky to have him on side with the permitting. Taking care of that for people is wonderful.
Perry Little: We also have contacts who could do any logging that needs to be done. The first year that we got into it, we had to do some logging on the property that we were mining and that's a completely different permitting process. I didn't know the rules on that at all and it was rather intimidating, actually.
Perry Little: It's just one more nuisance.
Perry Little: When it comes time to deal with some trees, we have contacts that take care of that.
Perry Little: Not too many miners are also loggers.
Peter Bell: Perry, you mentioned working 10% of the ground in a season. What's to say how much of that ground is even prospective for pay dirt? Is there a reason to believe it is 20% or 30% or 95%?
Perry Little: With most claims, there's only part that's higher grade where you believe there's economic quantities of gold.
Perry Little: Just because it's 20 hectares doesn't mean you've got 20 hectares of good paying areas. Most of the ones that we're picking up that we're looking at are going to have at least several years of mine life -- that is something we look at.
Perry Little: We wouldn't want to go through the hassle of permitting something where it's only got a one-year mine life. That's not the kind of thing that we bother permitting.
Peter Bell: And it's this combination of quick payback but also being able to get a few years out of it. With placer, you get a quick return. Think about the returns associated with successful exploration work -- the years and years and years it takes to advance something from an exploration perspective. The valuations that you get on success -- it's high stakes. A lot of cash burns upfront in exploration companies over the years.
Perry Little: It is very much like a lottery ticket. You're not going to win very often. When you do, you win big. I've seen more flops than hits.
Perry Little: And I have not barely mentioned our 82 square kilometers of mineral claims. I'm excited about that. It's contiguous with the Osisko Cariboo project, which used to be Barkerville Gold Mines. Osisko bought them for I think it was $335 million dollars in the fall of 2019.
Perry Little: Sometimes good luck is better than good planning.
Perry Little: We negotiated for a long time on the property that we bought -- the 8,200 hectares. We staked that particular area with the help of some local people who had a lot of experience mining.
Perry Little: That's our lottery ticket.
Perry Little: Timing was wonderful. We picked it up at a price that I don't think we would get today. We negotiated that when gold was $1750 Canadian, not $2400 Canadian. We finished the deal and closed it in August of 2019. It was one month later to the day that Osisko bought Barkerville Gold Mines for $335 million. That raised the value of the neighborhood.
Perry Little: We do believe we have a lottery ticket there. Quite possibly a winning one. We'll see.
Perry Little: We will be doing exploration work on there over the next few years to find out exactly what we've got, but we're in the right place.
Peter Bell: And that's the Fontaine?
Perry Little: That's the Fontaine project. Yes.
Perry Little: And we've got 680 hectares of placer at the Fontaine. We'll be up in that area quite a bit.
Perry Little: When you look at our company, the way it's set up is a lot different than most junior exploration companies in that we aren't just a lottery ticket. We have that on the side and that excites the heck out of us, but I believe we have a viable business model just on the placer end of things.
Perry Little: The analogy is that it plays out as a lottery ticket where you know you're at least guaranteed the $10.00 prize. You'll probably win more than ten bucks.
Perry Little: I think the placer will do well for us. It gives us a backup. If we drill out there for a few years and for whatever reason you know it doesn't come out to be what we expected we've still got a company. We're still running and that's something that I think separates us from the rest.
Perry Little: In fact, I believe a couple years down the road we'll be able to fund our exploration programs largely from our own cash flow.
Peter Bell: What a position to be in for a little junior.
Perry Little: I am excited about it. I really am. It's unfortunate the circumstances that are leading to the increase in the gold price. And the decrease in the energy price.
Perry Little: You can't get a better scenario for placer mining than $2,400 Canadian gold and cheap energy. That's one of the prime determinants of success in gold mining. Placer mining, in particular, one of your biggest costs is fuel. When that cost is low, it's fabulous.
Perry Little: The ratio of the gold price the Canadian dollar gold price to the Canadian dollar energy price is a very important determinant of whether you can succeed at placer mining.
Perry Little: I don't believe it's ever been higher than it is today, give or take a few days. That ratio is absolutely huge at this point.
Peter Bell: The history -- the Great Depression in the 1930s. The deflation that happened on the energy and the labor cost sides? And to have people available now, too?
Perry Little: Back in the 30s, the federal government actually had a grubstake program. They came up with it part way through, where they would take young men that were out of work in the cities -- they put them in a six-week prospecting mining course. Then they got some massive amount of money like $8 as a grubstake to set them up in the Cariboo to do gold mining.
Peter Bell: That's in the Cariboo, British Columbia, Canada! A region where you're active today.
Perry Little: That's it.
Perry Little: History doesn't repeat, but it sometimes rhymes. What we're seeing here is very similar to the '30s. The input costs went way down and the gold price went up. If you look at the history of the 1930s, the only companies that were really successful throughout the '30s were gold mining companies. I hate to think this might play out like the '30s but there certainly are some similarities. Including the massive number of people who have been displaced from their jobs. If this gives them an opportunity, then that's great. We'll try to do a lot of the groundwork and have places ready for people that want to come up and try to set it up.
Perry Little: We have a lot of claims where people can come out and do hand mining, if they just want to come out and try it.
Peter Bell: Good for you looking around the corner on that. It's important.
Peter Bell: So, it's more than Fontaine. At Fontaine, you have the mineral claims and the placer claims -- but you also have placer claims elsewhere.
Perry Little: We continue to add to that. We're pretty careful and selective about what we want to buy. As I mentioned, I don't want to buy something that's only got maybe one year of mineable area on it. We try to find things that are going to be a little better than that. Right now, we're around 20,000 hectares of placer claims.
Perry Little: That includes almost 700 hectares of placer claims in the middle of the Fontaine property. We also have a group of claims on the little Swift River and at Sovereign. On the Little Swift. I believe we have 15 linear kilometres right along the river. Historically, that's a pretty good river for mining. We're excited about that.
Peter Bell: Is there much cover at Swift River? Is there clay or layers of cover right to get through? The whole question of duration for placer mining and all the prep that goes into a season in advance? The stripping they do in the Yukon to expose pay dirt can be a year ahead. The Cariboo is different with milder conditions?
Perry Little: We've got one property that is pretty much ready for mining on the Little Swift River. We have somebody who's quite interested in it right now. Whether a deal will come to fruition or not, I don't know. That one's pretty much turn-key, ready to go. I don't think that one's going to be a terribly difficult mining scenario.
Perry Little: We've had a couple of our own that were very challenging, privately. There's gold on them, but they're very challenging to mine because of the location. This one at Little Swift is not going to be that difficult.
Perry Little: We have all the claims contiguous and that's an advantage to us in terms of advancing the "good until" dates.
Perry Little: I always think in terms of trying to increase the value of the claims.
Perry Little: An increasing gold price and more interest in mining out there will probably increase the value of those claims, but there's ways of adding value. Permitting is one of them. Also moving forward, the date that they're good to. You have to do a little bit of work on each claim each year to move the needle forward a year. If you do a lot of work, then you move the needle forward several years. If they're contiguous and all owned by the same company, then you can do a couple of larger programs. Maybe do some trenching or mining and apply that work to the entire group. You can move all of the claims in the group forward by several years and spread it out over the whole group. That's huge because if you get somebody who just wants to speculate in mining claims and there sure are a lot of them -- claim flippers -- they would much rather buy a claim that doesn't expire until 2028 than one that's going to expire in six months. It's kind of like having an "out of the money option". It's still got a time value. The shorter that time gets, the less that I am valuing it.
Perry Little: Extending the lives of the claims increases their value.
Perry Little: This year, BC has extended mineral claims by a year because of the virus. They basically said some people won't be able to get out and do assessment work, so they've simply given a blanket "don't worry -- your claims are not going to expire until at least December 2021".
Peter Bell: The AME BC association of mineral exploration -- I don't know how pivotal they were in making that happen? I think they were involved in it. Good advocates there for the junior mining business in BC.
Perry Little: I was so happy when I heard it. It didn't really have a direct impact on us, but I know other people that would have been really destroyed by it.
Perry Little: Working in gold can feel almost ghoulish in the sense that our industry is probably going to experience a boom coming out of this. For now, trying to raise money for projects in this environment is very difficult.
Perry Little: People don't know if they're going to have a job or if their business is going to fail. People are holding onto their wallets. Raising money is not an easy process in this market. That's the only negative for gold mining right now.
Peter Bell: And yet, there's more money out there than ever before. It's just stuck on bank balance sheets and at the central banks earning whatever margin on excess reserves. At some point you know that money might come out into the system in some ways. There are sophisticated players in markets who have access to some of that money already and are searching for investment.
Peter Bell: One of the things with this public company that you have here too is the potential for some "side car" private investments. It's something I've seen in a few places, where a public company has a project that pretty impressive but for whatever reason Mister Market can't get his head around funding it. Rather than doing all the heavy lifting themselves and bumping up against whatever 20 percent equity in the public company as a filing insider -- at some point it becomes simpler and easier to just create a workaround. A private company that is a partner with the pubco, getting work done that otherwise wouldn't. You guys you have that in spades. It's amazing.
Perry Little: We see ourselves as a landlord, rather than a miner. Our private company does mining and we understand the whole mining process. We understand how difficult it is. We want to see people succeed and we'd like to take some of the wrinkles out of it for them. Everything we do is sort of a public-private partnership.
Perry Little: What got me hooked on placer mining was years ago when Omineca Mining did their work underground. I've known those guys for over a decade and they have a big chunk of property just to the north west of us. That Wingdam project is an unusual underground alluvial gold deposit. Paleo-placer with very high-grade. It's challenging to mine. They're going to go underground and freeze -- I know you're familiar with the project, Peter. It caught my attention years ago when I was a stockbroker.
Perry Little: Part of the idea of doing the landlord thing was watching them trying to raise money for an underground alluvial deposit. It was extremely high-grade, but you couldn't do a 43-101 report on it so you couldn't raise money on it. It was a real catch-22. They found their way out of it, interestingly, with a partnership with a private company.
Peter Bell: They waited a long time, Perry, to get there!
Perry Little: Yes. The good thing is the gold does not go anywhere. It's still down there.
Perry Little: Took them a long time to get there. I'm glad for them. I hope this thing works out very well for them. Another example of the public-private thing.
Perry Little: I actually went up to see some work they were doing. They were shooting down-hole seismic years ago and I started looking around. I started doing the math in my head on placer mining and that's where the idea originated from. Thank you, guys!
Peter Bell: Cheers. Plus one.
Peter Bell: Thanks to Omineca for creating some waves for the Cariboo, drawing more attention to it. Bringing miners from Saskatchewan who can handle the ground freezing is great -- bring their knowledge within Canada. Alberta. Western Canada is better together. We all need to work together to unlock some of the value hiding in the Cariboo. It's not hard country to work, but it's not easy either.
Perry Little: Westerners are used to surviving some pretty tough elements. It's a hard-working, honest crew of people for the most part. I like the way you said that. Sometimes our politicians love to play for points by creating friction when most of the people are basically the same.
Peter Bell: And we're out here trying to pull real money out of the ground, of all things? Imagine that! Look at all the economic chaos out there and talk about pulling real wealth out of the dirt. How does that work?
Perry Little: And it's a pretty environmentally friendly process. People think about gold mining and some of the disasters that have happened with tailings ponds but look at placer mining. We dig the gravel out of the ground, we wash it, we sift the gold out of it, and we put the gravel back in the ground. Put the topsoil back on and nature reclaims things pretty darn quickly.
Perry Little: If that's all you're doing -- washing the gravel -- then you're really not harming anything in the long-term. You do see guys occasionally abandoning equipment out in the bush. That always ticks me off when you see that kind of thing.
Perry Little: I hope at some point that they start awarding contracts to clean up some of the old placer mining sites. It's just filling in holes, for the most part. And dragging broken equipment off the sites.
Perry Little: I'd like to see that done. And it's something the government could create jobs doing.
Perry Little: We are hoping to get some work like that.
Perry Little: I actually put the word "green" in the title of our company because we had a couple of ideas on environmental things. There's a reason Green went into the title and we still hope to be able to do that.
Peter Bell: And this placer mining stuff is in there to help defray overhead costs for the pubco? Is it fair to say you're not raising enough money off of that to be able to do any drilling work?
Perry Little: Not right away, but we do believe this is a scalable process. It also increases the value of our placer claims. We're going to be continuing if we can find good deals on good claims. We'll continue to add to our inventory of placer claims and we will have quite a few more permitted and ready to go for next year. There's no reason we can't scale this up to a point where there's a significant amount of revenue coming in from it.
Peter Bell: And the lottery ticket is still out there.
Perry Little: If we can stay away from having to come back to the capital markets as regularly as most junior explorers do and fund at least a portion of our drilling program from our own pockets. It will save the endless dilution that seems to be a plague in the industry.
Perry Little: If we can avoid that, then I think we've got the perfect mix.
Peter Bell: I think you might be surprised how much money can be made in placer mining in the next few years.
Perry Little: I am a Gold Bug. I do believe the gold price will go a lot higher and placer mining is something where you can turn gold into cash very quickly.
Peter Bell: Cash into gold, Perry! Cash for gold.
Perry Little: We actually did a little gold buying. We flirted with doing that again and still may do so. We will probably do it through our private company because it's a very weird business. Our auditors would figure it out eventually.
Perry Little: We got a bit of exposure to it last year when our private company became a little bit of a gold bank. People were bringing in their placer gold and we were able to buy it, locally, and give them a cheque right away. That is a lot better than waiting two weeks for it to come back from a refiner.
Perry Little: It was informative.
Perry Little: That's an interesting part of the business that we'll probably explore again.
Perry Little: I don't know if that will ever fit into the pubco, but never say never! I think I'd rather have an auditor stand there for ten days watching it then decide whether there's something they could put an audit opinion on. It's difficult because when people bring in 20 ounces of placer gold and his brother brings in the same bag of gold -- they could be worth quite a bit different depending. What Creek did they mine -- one might be 90% pure, the other one only 82% one. You may have cleaned it very well and the other one might look like a bag of mud with gold sparkles in it. It would be pretty hard to explain to an auditor why you paid two totally different prices for two different bags of gold the same size.
Perry Little: I'm an ex-auditor, so I always think that way.
Peter Bell: Shoutout to INTERNATIONAL GOLD AND METALS $ICAU, a pubco on the Venture that's buying gold from small-scale miners around the world and kind of helping them fight against the refiners. Apparently, they squeeze the margins on those small miners.
Peter Bell: Acting as an intermediary there could have some good margin! Imagine that in a pubco.
Perry Little: There's definitely an ability to make money without having to rip off the local miners. Ideally, I think what we'd like to do is melt everything people bring in. That way, you get more of a standard purity around 95% pure gold once it's melted. You take out most of the impurities simply with melting.
Perry Little: Of course, you need a refinery to get it to the 0.999 stage.
Perry Little: At least we get a pretty good idea from cleaning and melting gold. It's a lot easier to agree on a price when you've got melted gold.
Perry Little: I think there's room to work with the miners and to give them a good deal. And still make a profit at it!
Perry Little: I will tell you that a lot of them are hand-to-mouth. When they come in, they want the cheque today. It's a rigmarole getting this stuff down to a refiner. The one most people use is down in Richmond. Do you package the gold up at your own risk and send a bunch of gold off to them and they haven't agreed to what it weighs yet?
Perry Little: Or do you take two days out of your schedule and drive down? It's a short mining season, you don't want to be doing that too often.
Peter Bell: Having somebody in town that can do it is a huge benefit to everybody.
Peter Bell: There's enough margin to make it work!
Perry Little: I don't think we'd ever get into buying gold watches or anything. That is a totally different business. We don't want to be a pawnshop, but we have toyed with the idea of getting back into the "gold buying" thing.
Peter Bell: Stunning that even in British Columbia, Canada, you have these gaps in market coverage. You'd think that the intermediary gold buying function is a pretty basic part of a placer gold mining industry. If the Cariboo district in British Columbia doesn't have that well-served in 2020, how much opportunity is there to bring some capital into this environment?
Perry Little: We think we're in the perfect place to do it. We've already got a shop that's supplying the big guys with equipment and doing service work for them. And a store that's handling the small guys. It was actually a refiner's agent sharing our rent last year. He did all the big purchases, but the refinery really wasn't interested in two ounces of gold. Having to run two ounces -- that's where we saw a gap. We are investigating that still -- whether that would end up in the public co or a joint venture of some sort? I don't know. I wouldn't rule it out, but it's not right on the front burner right now. Not at the start of the placer season.
Peter Bell: Another example of your finger on the pulse.
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