Last week I had the chance to talk with Ken Holmes, CEO of New Carolin Gold, to get an overview on the assets his company has, the history surrounding the Carolin Gold mine, and his views on the recent price action for Gold.
With me today on the The Next Bull Market Move is Ken Holmes, who is the president and CEO of New Carolin Gold. How are you today Ken?
Very good. It's a beautiful day in British Columbia.
Let's begin by going over your background within the mining industry Ken, and how your involvement began with New Carolin Gold.
Well, I am, by training, a securities lawyer and, when I started practicing in the early eighties, some of my early clients were mining companies, junior exploration companies, and I’ve always had an association with them. Then about 13 years ago, I got involved with a couple of fellows and we started a junior, which had a real promising gold property in the Red Lake area.
I also started another one back then that had a excellent molybdenum property until the price of molybdenum fell out in the crash '08. So I've been on the founding and the organizing side and I've also been on the legal side, acting for the companies pretty much on and off for 30 years. It was back in 2012 when I first became aware of New Carolin. The company at the time didn't have full ownership of the property. My geologist partner at the time and I looked at the whole land package and we really liked it, but there was a big impediment for the company getting 100% of it.
At the time there were two other companies that owned 90% and New Carolin had a 10% interest with an option to buy the rest. In about 2014, I was approached because another fellow was getting involved as president of the company, and asked me to come on the board as an independent director.
I wasn't long on the board and I got recruited to help with the negotiations to acquire the other 90% of the Project. We managed to buy out the rest of the property owners for stock. We started doing some small financings and getting the underground rehabbed, and basically got things in shape for our exploration plans.
Unfortunately, the fellow who was president had health issues a year and half ago and stepped down. I was promoted internally by some of the other directors to take the reigns. So for the last year and a half, that's what I’ve done. We did a raise last year and did some drilling but we had to stop because there were some problems with some of the drill holes.
We fixed that and now we're back to it. We've just completed a financing of $1,350,000 and we're in the process right now of mobilizing the crew to get out on the ground and get back to drilling.
Talk to us about the other members of the team you have, and the experience they bring. I understand Chris Taylor, who is the CEO of Great Bear Resources is involved?
Yes, Chris is an independent director and a great resource for to have on the board. He's obviously very busy with Great Bear drilling madly up in Red Lake area. We also have Ed Beswick, who comes from an engineering background, and Bob Lunde, who’s been in marketing and finance for his entire adult life. We also have other engineering and geological consultants, that we bring on as we need them. So, we've got all our bases covered.
The infrastructure surrounding any deposit is crucial to a junior. So give us some details about what the company has and is there anything that is still needed? Are there any potential risks on the Infrastructure side of things?
Well, that's a very good question because one of our advantages is our infrastructure. If you take a look at the map of British Columbia and the location of our project, you’ll see that we're only 23 kilometers from the city of Hope and Hope is only above both 150 kilometers east of Vancouver. The Project is easily accessed by main roads. The portal of our Carolin mine is only about seven kilometers up from the Coquihalla Highway, which is a four-lane expressway.
In fact, I like to joke that we're so advanced, we have our own freeway exit. If you go up the Coquihalla Highway, you'll see multiple signs that indicate the turnoff for the Carolin mine. Being that close to Hope gives us a couple of big advantages. First of all, we don't have to spend the money on building a camp. If we move our project to a point where we can go into production, we wouldn't need to build a camp. Staff would be able to live in Hope and drive the 23 kilometers every day to work.
The property itself, being only seven kilometers off the Coquihalla, is that close to power. Its not a big stretch to get full power. The property originally went into production briefly for three years in the 80s., being '82, '83, '84. From that period we have considerable underground development that takes us right down next to the deposit.
So again, if we were to get to a point of production of that deposit, we wouldn't be spending millions of dollars to drift down to the ore. Also one of the things that was constructed back when it was in production was a significant tailings storage facility. It's a major water dam tailings facility which, with them only running the mine for three years, has considerable capacity left. We keep it permitted. We maintain it every year. We go through the inspections and keep it in tip top shape so that it's available to us. Really, the only major infrastructure that we would need to add initially would be a mill. The property has road access everywhere we need to go.
The historic mill is just a skeleton right now. We would probably strip all that out and build a brand new mill. Something maybe in the order of 2000 tons a day. Again, that would depend on the size of the deposit we finally achieve and the economic analysis of it. But it's something of that scale we would have to build. We've also maintained the initial production permit. Now, we would have to go back to the government and file a new mine plan and plans for that mill. But it's not like starting from scratch, starting the permitting process from day one with totally raw land. So we do have that. That's a big step up on the infrastructure side.
You briefly mentioned the drilling program for this year, so can you give us more details about this and what do you hope to achieve by the end of the year?
Well, let me give you a little background on the project first, so that'll put the drilling plans in perspective. Our property is really district scale. We have 144 square kilometers of claims and crown grants, and that's our land package. Now, when you say 144 square kilometers, I know the image that immediately comes to mind is a square and in fact it's not. Our land package is a long, skinny rectangle, generally speaking. It's 28 kilometers long and about five kilometers wide.
The reason for that is, the land was accumulated to straddle a deep crustal fault referred to as the Hozameen fault. It appears that this fault is the main plumbing system that brought the fluids up that brought the gold. If you read our 43-101 technical report and you look at the other information on our website, you'll see that most of the gold that has been found so far is all associated with that fault system.
In addition to the Carolin mine, on our property there are four other historic mines with prior operations, smaller operations from the twenties and thirties and earlier. There's also 24 other known gold occurrences. They are all up and down and associated with that fault. So the two things that we want to do this year. First, we want to get back underground at the Carolin and continue drilling there. We have an existing resource in the underground and the deposit is open in several directions and we want to start testing it down dip.
Our targets are right off the end of the underground development. We have a drill located there right now and, as we get the crew mobilized, we're going to be drilling with a view to adding to that resource. However, what we also want to do this year is drill some surface targets. Those will take a little bit longer because we have some initial groundwork to do and drill permitting applications to make for those surface targets.
With these other historic mines on the property and these other known gold occurrences, we've got geologists right now analyzing our database, which is considerable, to identify the best potential surface targets. We've settled on a few and they're refining the targets right now for that surface drilling.
The reason for this is because too often when I talk to people about our project, they hear New Carolin gold, and immediately brings to mind the Carolin mine, and that creates an image for them that that's all we have. At that point its always necessary to explain to them, how much bigger our land package really is. I have to point out to them that there's four other historic mines and 24 other known gold occurrences and all of those only account for a portion of our property package. There is much of it that is unexplored.
So, the potential is there for multiple gold deposits on this property. Thus our task this year is to get underground and drill with a view to adding to the Carolin resource, but also to get out on these other surface locations and hopefully start pulling some discovery holes to demonstrate the potential that we have elsewhere on the property. We want to clearly demonstrate that this is not just a one mine project, but this is a large district scale project that has the potential for multiple deposits.
As well, if we were able to drill up another deposit, it would be close enough to the Carolin mine for ore from that deposit to be processed at the Carolin if a new facility was to get built there. We don’t expect that we would need to develop separate processing facilities.
One of the key highlights for me is the tight share structure you have. So how many shares do you own personally, Ken? Can you tell us about the amount of working capital you have and your burn rate currently?
Well prior to this last round that we just did, we were at just over 30 million shares issued and outstanding. The most recent financing of $1,350,000 brought us to a total of approximately 47 million shares outstanding. We do have some debt, but we're looking to settle a lot of that debt for stock going forward. The bulk of that money is going to be used for drilling and marketing. We want to get out and get more people telling the story, more eyeballs watching us on the trading screens, more people becoming familiar with the story while we've got the drills going.
As for shareholdings, between myself and other directors and our family members and people close to us, we probably have over three million shares now. So we have a good reason to see this through.
As we begin to wrap up Ken, what would you tell potential investors who are taking a look at your company for the first time? And do you feel you're in the right place at the right time with a higher gold price?
I would say two things in that regard. First, it appears that we're definitely coming into a better market for juniors exploring for gold. There's no doubt about that. With gold breaking through 1500, that has brought a lot more interest back into the market so that in the short term its going to help for raising money and keeping the drills turning.
Second and I'm sure I would get some economists who would argue with my analysis here, maybe it's too superficial, but something I did recently for a presentation was to use the Bank of Canada inflation converter to adjust gold prices from the period the Carolin mine was in production to 2019 dollars. Previously, I kept getting asked a lot of questions about when the Carolin was in production back in '82, '83, '84, and what happened, why they didn't keep mining? Well the simple answer is that the price of gold went down dramatically.
I realize this maybe a bit simplistic - but if you take the Bank of Canada inflation converter and convert the price of gold in '82, '83, and '84 to 2019 dollars, you'll see that when they started producing back in '82, the price of gold was a little over $900 in today's dollars.
In '83 the price of gold reached its peak for that period, which was about $1,100 in today's dollars. In '84 when they shut the mine down, gold had dropped below what would be $700 in today's dollars. The actual numbers were much lower, but if you convert them to 2019 dollars, it started out just over $900 went up to $1100 and, when they shut down operations in '84, gold was at the equivalent of what would be today below $700.
So yes, we're at a good point right now with gold being where it's at and bringing more attention back to the junior resource sector from the cannabis sector, which has been attracting a lot of money that normally would be looking at gold deals. So we are in a good place to that extent, and if you look at what they were working with back in '82, '83, '84, you can see that we have a significant price advantage in the gold price for us today with the price of $1500 plus.
Thank you very much for your time today Ken.
Not a problem. I very much appreciate the opportunity to tell you about our project.
The Next Bull Market Move
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