CEO.CA Chairman's Briefing

After some back and forth with Mr. Andy Randell on twitter, I found myself sitting down with him and Mr. Shawn Khunkhun, President & CEO, to talk about StrikePoint Gold. I didn't know very much about the company before the meeting, but I learned a lot quickly. It is my pleasure to provide a transcript of the hour-long conversation I had with Shawn and Andy for your consideration below. Please note that the interview contains forward-looking statements and is provided for informational purposes. I hold shares in the company, but was not compensated to prepare or disseminate this material.

StrikePoint Gold (TSXV:SKP) is a junior explorer focused on a portfolio of 22 properties in the Yukon. They acquired these properties from IDM Mining Ltd. in 2016 for $150,000 in cash and 10.5M shares. The properties were previously held by Ryan Gold Corp., who spent over $25 million on exploration between 2010 and 2014. As noted on the StrikePoint website, "The acquisition comes with an extensive database of soil and rock samples, geophysics, geological mapping and drilling results. Several properties are ‘drill ready’ targets, while the others are in advanced stages of exploration."

As of March, 2017, StrikePoint had 35M shares outstanding. Since then, they have closed two significant financings that position them with $8M in cash. As Mr. Khunkhun said in our interview, “Not only do we have this year's budget, but we have next year's as well”. Being so well-financed will allow the company to take a careful approach to exploration on their large portfolio of projects, which will start with three one-month efforts at priority targets this season and one extra month where the target is yet to be determined.

The first financing, announced on April 4, 2017, brought in $2M in flow-through shares at $0.295 and over $1M in non-flow through units with one common share at $0.295 and one two-year warrant at $0.50. The second financing, announced on May 3rd, 2017, brought in an additional $5M in units with a flow-through share at $0.38 and a two-year, half warrant at $0.50. Mr. Eric Sprott participated in this second financing, investing approximately $2M and acquiring over 10% of the shares of the company. The total share count for StrikePoint is now approximately 59M and, with current share price of $0.50, the market capitalization is approximately $30M.

PB: Hello Shawn and Andy, thanks very much for meeting with me today. I look forward to hearing about the story. I know a bit about you, Andy, but I haven't met you before, Shawn. Please can you can tell me a bit about yourself to start us off?

SK: Sure, thanks Peter. My name is Shawn Khunkhun and I am the CEO of StrikePoint Gold. I have been in the mineral exploration and development business for about 15 years. I've worked on projects mainly focused in Canada from exploration through development and production. I have worked on single projects that have raised upwards of $500M and have been a part of discoveries that have been as large as 4M ounces of gold. I have been involved in production scenarios up to 85,000 ounces of gold per year. My role is in the marketing and financing.

SK: What I see in the opportunity with StrikePoint is that we have built a nice technical team, which I will let Andy describe, we have a good share structure, and we are fully-financed. All of that allows us to build upon the prior success associated with this portfolio of properties that we've acquired in the Yukon Territory.

PB: Thanks, Shawn. I imagine we could talk for a few hours just about your experience. Can I ask briefly about your experience on the production side?

SK: Yes, the mine is currently operated by a company called Klondex. It is 60 miles west of Red Lake and is referred to as their True North property. The history goes back to the 1900s as the old San Antonio gold mine. It is located in Manitoba, just across the border from Ontario. If you were to land in Winnipeg, then it is a two-hour drive to the east.

PB: And how about your experience with the development projects you mentioned?

SK: I have been involved with gold exploration projects throughout Quebec and base metal exploration in the Bathurst mining camp in New Brunswick. When the opportunity presented itself here with this Yukon portfolio, the fact that it had seen $25M worth of exploration meant that there was some really interesting work we could build upon and we jumped on the opportunity.

PB: And there is quite a history to this collection of properties you have in StrikePoint. I’m afraid that I don't know too much about it, yet. Please can you tell me about it?

SK: A good place to start is with Shawn Ryan, who is a world-famous prospector. You could spend a few days talking about what he has done so far in his career but, suffice to say, he has focused on taking exploration discoveries and building upon them in one jurisdiction, which is the Yukon. Two of these projects have become meaningful deposits. One of those, the Coffee Gold project that Goldcorp acquired from Kaminak, is being developed right now.

PB: Right. That acquisition was a significant event for the junior markets in 2016.

SK: Our package of properties in StrikePoint represents the old Ryan Gold portfolio. At one time, there was in excess of $60M raised to explore these properties and $25M of that was deployed. We are looking at building upon the early-stage work done by prior owners in terms of grooming the properties based on prospecting, soil sampling and geophysics. We are taking up the mantle, so to speak, to continue exploration work on this large package of properties in the Yukon.

PB: It seems to me that $25M is a fair amount of money for early-stage exploration. How far have these properties been advanced?

SK: They are all still at the early stages of exploration, but some are more advanced than others. We have prioritized three properties where we think we could add value through drilling this season and are focused on those. One of these three, in particular, has seen about $2M of exploration work done.

PB: Great. It seems appropriate that you are getting to the drilling stage following the earlier prospecting work.

AR: If I can interject here, Peter. My name is Andy Randell and I am the Vice President of Exploration for StrikePoint. Sometimes, it helps to describe the properties we acquired with StrikePoint as buying a house off-plan -- the construction work is done and now we get to make it ours by choosing the countertops and the colours of the cabinets.

PB: Interesting analogy. You have some history with the projects, don’t you Andy?

AR: Yes, I was the Chief Geologist for Ryan Gold. I started working with them in 2011. They originally head-hunted me out of Victoria Gold Corp., where I was working on the Eagle Gold project. I started as a Senior Geologist and ended up becoming Chief Geologist pretty quickly. I was there for the main spending of the 2012 season. A lot of the project work that was done at that time was directed by myself.

AR: When I was with Ryan Gold, we had a huge exploration team in the Yukon with 87 properties in the portfolio at the time. Not everything had work done on it, but we made a good pass.

AR: IDM Mining acquired these properties from Ryan Gold and, when they had them, I worked as a consultant to IDM and we actually removed a lot of the properties. We groomed-out properties that were too small or in areas where it would be hard to get First Nations or environmental approvals, or would face other long term development challenges. As an example, there was one property near Haines Junction, which had some fantastic gold numbers but is located on a mountain that faces the visitor's center for the Kluane district. Are you ever going to be able to a road up there? I have a deep respect for the Yukon and didn't think it would be appropriate to try to advance that, so we decided to get rid of it. If someone else wants to go down that route, then they can. We have bigger fish to fry.

AR: What we are left with now are these 22 properties that are very prospective. They have had a lot of baseline work done but also have a lot of room for new discoveries as well. We have not discovered everything, even on a geochemical front. There is work that could be done on some of these projects, which could be appropriate for joint ventures.

AR: The three big ones now are: Mahtin, which is in the Mayo area of Central Yukon; the Pluto property, which is in the Kluane District; and the Golden Oly prospect, which is up on the border of the Northwest Territories. Each one of those properties are 30 or 40KM across. They are big properties. Even if we find an anomaly that is 2KM across on one of these properties -- which is a big anomaly -- we still have the rest of the property to look at. Most of these targets are not "one property, one target", they are "one property, several targets" and that is really important for giving us a few kicks at the can, so to say.

PB: Great. Thanks, Andy.

AR: This year's plan is surgical. We are employing GroundTruth Exploration to do the exploration work for us because they allow us to use a RAB drill, which is a great way to do this early stage work. The RAB drill doesn't provide physical drill core -- it blows air into the hole and blows out chips. Every meter, you get a chip sample. These samples can be assayed and provide all of kind of information.

AR: The RAB drill also uses a downhole tele-viewer, which takes a photo coming up and provides a strip-log. They will have an XRF gun there, as well, which will tell us what is happening on the rocks as they come out. Every night they will upload that information so, the next day, we can say "We're onto some good stuff here, let's make the next drill hole there." We will have a rough plan of where we are going, but we also want to have the ability to maneuver around.

PB: Interesting.

AR: Exploration, to me, is as much about killing a property as finding something. You don't want to waste money on something.

PB: Right -- the search for fatal flaws.

AR: And it is more than that. Do we want to spend money or have the moral burden of digging a road to get a drill rig into a pristine area? The RAB Drill is all done under a Class-1 permit. We don't need to build roads for it. It's self-propelled and doesn't use any water. It is just a compressor system that we drop with a helicopter and then has a range of 500 meters all the way around it.

AR: We literally put the RAB drill down in the middle of our drill grid and then the drill can propel itself from one site to the other. That really cuts down on our helicopter costs and our fuel costs.

AR: Also, it does not leave any scarring. The area of disturbance may be a couple of feet across, which you can plug and recap right away. Within a season, the plants will have grown back over it. I have a lot of respect for the environment up there and that's why I am really keen to do it this way.

AR: If there's a discovery to be made, then you go down a different route. We understand that and will cross that bridge when we get to it. Instead of drilling three or four different targets and leaving these massive scars as we do it, using the RAB drill will give us a more surgical approach. It's like keyhole surgery, basically. Get in there, get the information you need, then make the decision whether to go back there and spend more on additional exploration.

PB: The ability to do things for relatively low cost seems to fit well with the whole emphasis on searching for fatal flaws, as well.

SK: And this lower cost approach has big implications in terms of our need for financing, Peter.

SK: Prior to acquiring this portfolio from IDM Mining, we had 25.7M shares out. We issued 10.5M shares to IDM as part of the transaction and have since raised $8M in the last 30 days. That puts us in a unique situation, compared to a lot of our peers. Let me explain what I mean.

SK: Not only do we have this year's budget, but we have next year's as well. We don't need to go back to market until 2019. We have $8M in the treasury with under 60M shares issued.

SK: And if you look at the shareholders, 60% of the shares are held by institutional shareholders like Gold2000, US Global, Delbrook Opportunity Funds, Rousseau Asset Management. Recently, Eric Sprott has come in and he owns 16.5% of the company. IDM owns 18%. These strategic partners have a multi-year investment plan. They appreciate where we are, overall, with respect to the gold price, the markets, and the stages of our projects.

SK: In exploration, investors can typically wait until a junior needs another round of financing to invest in the company. If we went out, spent our treasury, and were lucky enough to make a discovery, we would still end up in a position where we needed additional financing to take it to the next stage. We would have to issue more shares.

SK: In this case, we don't need to go back to market. Not this year, not next year. If there is a discovery made, then it's going to place some demand on a pretty small float in the public markets. That is important to consider from a share price perspective, but it also has significant implications for our ability to take a long-view in building this company and pacing our exploration efforts.

SK: And it's all just about to begin! Andy is just about to go up to the Yukon on the 15th of May. We will have a team up there until, basically, October.

AR: We are doing a different site each month. It's like themed-months: June is Mayo, July is Pluto, August is Golden Oly. We just booked the rig for September, as well. We don't know where we're going to put it yet, but we might as well have it. We could follow-up on one of these prospects, or we can go to one of the other properties in the portfolio and drill something else totally different. It is normally OK to do stuff like that in September, but October starts to get a bit dicey.

AR: I am excited about this. I've had questions, just in the last week, where people ask if our exploration budget is going to go up now that we have raised this additional money. A lot of people almost expect you to do that, but I don't think that is either Shawn or my ethos. You can always spend more money, but I find it hard to find other stuff to do. We have done the soils and the geophysics, now it is time to do some drilling and careful prospecting work.

SK: The way I look at it is that Andy has a methodical, scientific approach to how he wants to go about this. From the shareholder's perspective, I have to be responsible for the money that we deploy. For me, there is no sense in spending money just because we have it. Let's be in a position where we are fully-funded and have next year's budget paid for, so that we don't need to go back to market and dilute shareholders.

PB: And the fact that so much of the recent financings have come through flow-through shares really commits you to put that money into exploration work. I imagine that helps convince your shareholders that you will walk the walk here.

SK: Yes, it does.

AR: Shall I introduce you to some of the properties?

PB: Yes, certainly. Please give me a moment to think about things, first.

PB: One thing that strikes me is the amount of money that you've been able to raise recently. The statistics that I have seen on the cumulative financings so far this year are well below prior years. Your ability to raise enough for two seasons in the Yukon is impressive. How much of that is a function of the limited exploration season in the Yukon?

AR: In early-stage exploration, you work with the seasons. You don't want to spend a bunch of money on winterizing. I did a winter drilling program with Victoria Gold. It was minus 50 degrees on the side of a mountain, where you have the rigs running and you have to bring water in heated lines. It is expensive, but it can be done. You only want to do that when you know there is something worth doing there.

AR: You can take that a step further to the processing. Victoria Gold is going to be using a cyanide heap leach. A lot of people said it couldn't be done in that environment because it would freeze, or you would have a limited season of processing, but Fort Knox in Alaska are doing it. We know that, if there is a discovery, then you can go year-round if you want to. You have to increase your infrastructure, but you can do it.

SK: Peter, when I look around the market over the last couple of years, even when things picked up in 2016, most companies that I follow don't drill for more than a couple of months a year, regardless. I think some of the best exploration programs are the surgical programs.

AR: When I worked in Guyana, you could work year-round and drill 4 or 500 hundred holes in a year. You would get that data, throw it into a computer program, and that's it. What I love about the Yukon and Canada, in general, is that the seasonality allows you to be a scientist.

AR: You go out, do a lot of exploration work, collect the data, and then you get time to come back and groom the data up until Roundup, normally, where you present your results. Then you get another 3 or 4 months to plan your next season. I actually think you get more value working in an environment like this with the seasonality than just churning out results and not doing the science.

AR: I've built my consulting and my career just focused on North America, specifically sub-Arctic Canada, because that seasonality allows you to be a scientist in that way. There's also the quality of life aspect -- you go out and work your butt off for 4 or 5 months and get sucked dry by mosquitos and blackflies, but you collect a lot of data that you can come back and put together. Then, you can produce a surgical program for the next year.

PB: It's interesting to hear you say that the interpretation takes time, having not been involved in it myself. I just get to hear the stories and don't really have an appreciation for the hard work that goes into them.

AR: There is a substantial amount of time and effort involved. And it is not always something that you can speed up, without sacrificing quality in some ways. The scientific aspect of an exploration geologist's work certainly takes time.

AR: Through my consultancy, we look at a variety of projects and I get to see the results of many different drill programs. In some cases, they drill on a grid -- starting on one side and advancing to the other -- and then come back and ask us to tell us what all the data means. That is a difficult proposition and it shows, to me, why it can be beneficial to take the slower approach.

AR: Drilling a dead hole is useful from a geological perspective. It hurts your shareholders, but, sometimes, you have to drill a dead hole to find where the edge of something is. If you're not thinking about your drilling and are just drilling every 50 meters, then it's a different situation.

PB: If you do all that work, then you can come back to your shareholders and say, “look how diligently we spent your money advancing the project”, whether it was done in a coherent fashion or not.

AR: Grids are great when you're building a mine but not for exploration work. Our holes will generally have 200 meter spacing, but one may be 75 meters from the last and the next may be 300-meter away because we need to be hitting the areas where we need the data to inform the scientific interpretation.

PB: Well, all of this is not a situation that I have encountered before. Having two years of program covered seems more like something you see with more advanced projects.

SK: Ryan Gold wasn't run like a junior exploration company that I've ever seen, Peter. It was run like a major.

SK: I have been around a lot of junior exploration companies and, typically, what happens is that you're given a shoestring budget and you're pushing your geologists to come up with results that are beyond what's even in textbooks -- just super results. What I saw here was a company that was willing to spend $1M on soil sampling on a property.

PB: Wow.

SK: With that approach, a lot of time can elapse and there may not be a lot of excitement for the investor because you're not getting drill results, but this is the preliminary work that needs to be done. Now, the StrikePoint shareholders get to parachute in to season 3 of work on these properties and start drilling. That's exciting.

PB: It reminds me of the discussion around fatal flaws, where you cannot do any substantial definition in one month, but you can probably find out if something doesn't work!

AR: And these are only 3 of 22 properties that we are working on. The chance that all three of these are busts is low, quite frankly, but, even if they were, we would still have 19 other properties to look at.

SK: That's right, Andy. Just one of our properties is enough to keep us busy for the next three years and that's why it is so important to be careful with how we approach them.

SK: The other thing that is happening in the Yukon is, almost on a weekly basis, you have majors like Barrick, Goldcorp, Agnico Eagle, and Kinross making deals, whether they are strategic private placements, joint ventures, or takeovers. Upon success, there are a lot of eyes on this particular area. It is a very important jurisdiction for mining in Canada and you've seen a flurry of activity there recently.

PB: So, to the question of "why not accelerate the timeline?", I am hearing you say that you believe you can have meaningful success even with limited exploration activities at each property.

SK: We have sufficient budget that, if we are successful, we can pivot and get more aggressive on one property without having to go raise additional capital.

SK: Two months ago, we had a $1.5M exploration plan. Now we have a $2.5M exploration plan. The next time that we meet, we may be talking about something that is even more substantial. Having said that, one of the mistakes that have been made by some of the companies in this sector in the past is just spending the money because they had it. I've seen projects where they use six drill rigs and that can be very hard to manage.

AR: It's hard to staff them, as well. You have to feed them, you have to give them transport, extra helicopters, and everything.

SK: I would rather have the one A-Team move from project to project, ensuring the money is being spent in the right way. If that means that things take a little longer, then at least we know things are being done the right way.

PB: Good for you, Shawn. That kind of leadership is not always easy, but it sounds like the right thing to do.

AR: To be honest, this was probably a plan that would not have worked under Ryan Gold because their attitude was a lot bigger.

AR: When I was Chief Geologist there, I had 3 regional teams working -- that was 100 people between geologists, support staff, and everything else. If they had gone for another year, then you probably would have had either Ida Oro or Flume going, which were their two drill programs, and these three projects that we are working on all going at the same time.  They would have had all the other regional stuff going on, as well. It could have been another giant, $16M program.

AR: Technology has also improved over the last few years. The ability for us to come in and do this on a Class-1 permit for $2.5M, roughly, and get this baseline information is better now than in the past. Keep in mind, we are talking about 15 holes on each property. It's not just 2 or 3 holes. If we had that same one-month time constraint with diamond holes, then we may be looking at drilling only 4 or 5 holes at each project.

PB: And if you put 15 holes in the right places, then you can learn a lot. You have geophysics as well as the soil sampling to guide you, right?

AR: Yes, we have geophysics, soil sampling, and very detailed mapping for a lot of the areas.

SK: The fact that we have the continuity of the team with Andy and Scott, who were involved with Ryan Gold and are now running the program for StrikePoint, is very important. I have been a part of projects where you get a lot of data, but you have lost the personnel and the continuity of the interpretation. We don't have that here. They are basically carrying on as if the market had not fallen in 2013, 2014, and 2015.

AR: Unfinished business.

PB: Sounds like the best situation you could hope for with early stage exploration stuff. Impressive.

AR: We're not even talking about the properties yet!

PB: Well, I have heard bits and pieces of the story before. When IDM sold the properties, it seemed like one of those rare times when a junior was able to generate some cash. I recall that I was curious who picked them up and what they would do with them, so it's great to start getting the story here.

SK: We have just brought on Michael McPhie, as well. IDM has the right to nominate 2 directors as one of our largest shareholders at 18%. IDM have chosen to focus on Red Mountain, but they still retain a meaningful interest in these properties. By divesting these assets, IDM have been able to see the market ascribe some value to this unique portfolio of properties. And since we've been able to raise $8M and build a stellar exploration team, we are able to advance the portfolio. For them, it is a great way to have the market provide some value to the portfolio and also have the exploration work continue to be advanced.

AR: I was doing some consulting work for IDM last year on their Red Mountain deposit when they made the Lost Valley discovery. They even named a vein after me -- the Randell vein. For them to recommend that I work on this project speaks to their confidence in what I've been doing.

AR: Again, it's that continuity in the brains and the science. Scott Dorion, who we mentioned earlier, is someone who I have known since he finished university. He is in his mid-20s now. He worked for me in Victoria Gold and I head-hunted him from Victoria Gold to work with me at Ryan Gold.

AR: When this opportunity came up, I didn't know if I could afford him, but I really wanted him to come work with us. He had other job offers, but, when I told him about this, he said no to those other offers because he feels like he has unfinished business. There is a chance for discoveries here. He's super keen to get up there. I don't think I've ever seen him as driven as he is now.

SK: Looking at it from the stock perspective, I had some concerns about bringing on this team because I wanted to go lean, but, ultimately, I recognized that this is the right path to go with.

AR: We've both taken personal risks to do this in an industry that is not always that nice to you, no matter how much blood, sweat, and tears you put into it.

SK: Andy's 39 and I'm 36 -- we have both been in the industry for some time, but we think that this company provides us with an opportunity to reshape our approach to the industry. There are things we think could be improved on and we have an opportunity to build it the way we think it should be built.

AR: Case in point: surgical exploration. Some people think diamond drilling is the only way to go and they will tear up the ground to do so, but that's not how it is done anymore. For example, the First Nations there are supportive of exploration in their territory, but if we go in and rip a road through a waterway or a caribou herd, then it could become very hard to negotiate with them in the future.

AR: We actually sent letters out to them a couple weeks ago and told them that we were going to be in the area doing this and that under a Class-1 permit. They appreciate that. I sleep better at night knowing this program is well-received by the First Nations in the area.

AR: As geologists, we are regularly vilified as people who don't care about the environment, but I am so far from that. We have to produce metals for the population, but we have to do it sustainably. The Government puts the permits in place to try to limit the amount of impact you have in exploration, but a lot of people jump to the advanced stages of permitting so that they can be covered in case they do have a negative impact. I don't want to do that. I want to have as little impact as possible at each stage.

AR: Another thing to mention is that we are going to we are going to fly drones over the property, which will provide very high-resolution imagery over the whole area.

AR: We are going to look at these images from a geological perspective, but we are also going to look into what else we can do with that data. For example, you can identify the different kinds of lichens that are growing on the rocks and actually use that information to do geological mapping. You can also do plant surveys and ecological surveys that may not be useful for the geological interpretation, but they may be valuable to other groups of people.

AR: That kind of non-geological information goes into our reports as just a paragraph or two in an assessment report, but if we can give that information over to the First Nations or others afterwards, then it can be very valuable to them. It is a program that may cost $25,000 per property but can be very important for our impact on the communities.

AR: 80% of my mind is on the geology, the other 20% is how we impact the local communities -- what can we do to offset our impact and win their favour? At the end of the day, we are trying to develop something here, but we don't want to ruin our reputation on the first round.

PB: Yes, you can ruin it pretty quickly.

AR: I have seen that happen. In my years of working in the industry, I have learned more from people about how not to do things. Now that I am my own boss and I am employing people, I get to say how we are going to do things.

PB: Sounds like you two are on the same page here.

AR: Right now, we are saying these things like we don't have any First Nations involved, but pretty much everything we are getting up there is local. We are getting food locally, we are using local expediters, and our drill company is based there. We may not have a direct impact, but we are already having that impact indirectly.

AR: The other day, I was booking all the flights for the staff and I started wondering about the carbon footprint of all the flights. It was something like 12 tonnes of carbon. I am going to look into paying to offset that in my business and I hope that we can do that with StrikePoint, as well.

AR: There are great programs in the Yukon around renewable energy and renewable resources, where they train students to do things like installing a solar roof or putting up small wind turbines. These are not massive projects but they are good ways to give back.

PB: And it is better to have something small that works than something larger that never gets off the ground.

AR: Absolutely. You may look at the team now and say that there are no First Nations, but it is something we will move towards once we are up there. Right now, we are looking at things to offset the impact.

AR: My company is called Hive and you will see it pop up here and there. It is a consultancy, but I also do mentoring. Instead of just me doing the work, I bring graduates on and mentor them through the process so that they get to learn. Even through the downturn, there were opportunities for people to learn different things about geology by bridging that gap between academia and the workplace.

AR: I have four graduates who have never been to the Yukon and never done fieldwork, but we are going to train them in the field with StrikePoint this summer. There may be even more, depending on the funding programs. These warm fuzzy things are very important, in addition to the pure exploration.

AR: I've just come back from CIM in Montreal and listened to lots of people getting excited about their programs, but it is often a totally different approach. Maybe it is a Vancouver thing for me to emphasize that we are trying to take a holistic approach where you try to find a balance -- not over-spending, not under-spending, and not wrecking things as you go along.

PB: And the technology that you've mentioned seems to fit with that.

AR: Embrace the technology and let's get this done. It's nothing to be scared of.

PB: In broad terms, are there similarities between your properties and what is known at Victoria Gold?

AR: Geologically speaking, the Mahtin property is similar. It's actually 40KM away from Dublin Gulch, which is the name of Victoria Gold's main property.

AR: When Scott and I landed there at Mahtin in 2011, we both got out the helicopter and said "Aha -- this looks like Dublin Gulch!" To us, it is a good thing because it is a known geological model and we know what kind of systems we are looking for, but, to some investors, it is a bad thing because it is a low-grade, bulk tonnage scenario. With those systems, you get a rind of high-grade material around the outside of the low-grade material.

AR: At Dublin Gulch, the Olive and Shamrock zones represent the high-grade material that exists on the outside, whereas the Eagle deposit is the low-grade material. The Eagle deposit is where they are developing the mine.

AR: We have found several intrusions at the PDM and Golden Oly properties and the majority of them are intact. We should have the high-grade shells at each of them, with lower-grade material in the middle. The high-grade shell is one of those things that can be a little tricky, in terms of metallurgy, but the grade is much higher. It is generally oxidized, as well, so it is easier to pull out of the ground.

AR: If you are considering a mining scenario, then it is great to have this higher-grade material because it can give you a boost of cash to start off with. Again, these properties have been groomed on information like that, not just whether they have a hot soil anomaly.

AR: If you look at a geochemical map of Dublin, the actual Eagle deposit has barely any geochemical signature. If it is buried under a cap of sediment, then you won't see it in the soil samples. Nonetheless, there are six million ounces of gold there.

AR: We will not aim solely at the geochemical anomalies this year. You will see us drilling in places where there seems to be nothing and people will ask -- why are you drilling there? Well, we are doing it because we have had the luxury to step back and do the science. That was happening at Ryan Gold, as well. There are several fairly well-known geological models for some of these areas.

PB: Good to hear.

AR: We are going to start off at Mahtin North, drilling across a saddle like the one shown on the cover page of our presentation. That area is a big intrusion, which is the same age as Dublin Gulch. It is a limestone, so we have a nice dirty skarn through there that is giving samples with 8-12 g/t gold. And that is just from the contact zone -- we don't know what the actual intrusion is running at.

AR: We have the potential to hit the skarn, the mineralized carapace, and the lower-grade intrusion. We potentially have three hits on one target. There is also the May-Qu to the south at Mahtin, which is a much more traditional intrusion-related system.

PB: The ability to test several zones is very intriguing. And I assume there has been a lot of glaciation in this area, which would help expose things?

AR: Actually, no -- this area was a bit of a refugium. The glaciers didn't close in over this area, so there is no till and we don't have to worry about thick ground cover first. You get out and you are right onto the rock. It is good for drilling -- you don't have to go through 50 meters to get to the target area.

PB: Interesting. And it would not have been eroded away, either.

AR: Yes, that's right. Some of these are partially exposed, some of them are still intact, and some of them are totally buried.

AR: The geophysics for Golden Oly are interesting in this regard, which is on the border with the Northwest Territories at the south end of the Selwyn Basin. This is, traditionally, a sedimentary exhalative, or SEDEX, type of deposit where people go after the zinc. When we flew the geophysics, we got these 6 circular anomalies. Each of these is around 6KM across.

AR: The one furthest north is called the Nuke intrusion, on the Nug claims. It is a granitoid intrusion, the same age as the stuff up at Dublin Gulch but is located about 200KM to the south -- it is at the other end of the basin. We took grab samples there in 2012 that ran at 20 g/t gold from polymetallic veins, which have never been drill-tested.

AR: One of these, alone, would be a project for a company. This one property has 6 of them. We also have the PDM property next door, which has another one. You could build a company off of this, but this is only one out of 22 properties that we have.

PB: And it is in this basin.

AR: Yes, it is in the Selwyn basin.

SK: For me, spending my entire career focused in Manitoba, through Quebec, and New Brunswick, this reminds me of projects that I have been an investor in with places like Mongolia, the DRC, or Ecuador. The fact that this is located in Canada and hasn't been adequately been explored is great. We are in elephant country here.

AR: And you probably wouldn't have discovered these without the geophysics. You could get the regional geochemistry of gold cropping up, but you may have assumed it was just a vein-related volcanic type system that may not have much volume related to it. By flying the geophysics and seeing the 6 anomalies, it led us to get out into the field and find that these are granitoid plugs with similar age as what we have up north.

PB: And the size of this property looks like approximately 200KM squared.

AR: Yes, this is 50KM by 30KM roughly.

PB: A very large area.

AR: And this is just one of them. Normally, this is more of a SEDEX area, but there is something very interesting going on with the sequence of things here.

AR: The SEDEX deposits are 300 million years old and these intrusions are approximately 80 million years old, so they have re-cooked the ground and could have re-mobilized a bunch of mineralization in this area. We could also have a zinc type deposit around these intrusions, as well. When we go up there, we are not just looking for gold -- we are looking for anything that is shiny and sparkly, basically, and we will work it out from there.

AR: This year, we will have people looking after the drills, but we will also have my team mapping and sampling over the wider area as well so that we can really start to understand these properties.

PB: With the geophysics that we are talking about, how much soil sampling has been done at Golden Oly?

AR: You can see it in the presentation here. Ryan Gold did all of the ridge tops and spurs, then threw grids over one intrusion and a little bit on another. These are where it is daylighting and the high values are in excess of 1,000 ppb. Another one of these intrusions doesn't have a soil anomaly, but we know from the geophysics that there is something underneath.

AR: I'm not the best at geophysics, but I have been told that the detection would be 20-50 meters below surface, which is well within a drill target. Our maximum drill holes will be around 200 meters. We are just testing into the systems and can really pick out some of the mineralization that sits around the edge.

PB: Were the soil samples tested for zinc throughout?

AR: Yes, every soil sample has 52 elements on it. We have got all that information, but people only want to see the gold in the presentations.

PB: Right. With all the layers of information here, we have to peel the onion!

AR: Myself and Scott have all of the information loaded-up. We are at the point now where we will focus on that before we go into the field. We know what we are targeting, in terms of gold, but the other stuff that we want search out will be determined as we go.

PB: And how hooked-up is your camp for all of that with your computers?

AR: The first place we are staying is a log cabin on the side of a lake called the Silver Trail Inn, which I have used a couple times. It is great and we get the whole place to ourselves. It sleeps up to 12 people and has a kitchen. That is the luxury stop for us. It is close to town, but it is also easy to get to Mahtin.

AR: In terms of access, we have helicopter access to a lot of the properties, but we just recently found out that one of the local placer miners built 18KM road to access his placer claims. That road goes right onto our Mahtin North target and runs right through all these newly prospective areas that we are looking at. We have been thinking that we should get out there to do some work on them and now that we can physically drive to some of these sites, we are very excited.

PB: Gotta love those placer miners!

AR: It's great. And because it is connected to the highway, it means that we can use that road. We will get our first look at it next month. We believe it is going to be incredible.

AR: At another location, the highway runs right through it. We are still going to need a helicopter to hop up to some of the other targets at Golden Oly, but we can get quite close.

AR: Pluto is a little more remote. In 2011 and 2012, we went all the way around Kluane Lake and accessed it from Burwash Landing by helicopter. I have been talking to other operators on the Carmacks side, like Rockhaven Resources, and believe that we are going to use their camp as a staging ground. It makes it a 50KM flight rather than a 120KM flight to get to there.

PB: Another example of the importance of a good reputation in the area! And you mentioned the RAB drill and the XRF guns -- I guess that equipment is fairly compact and easy to transport to the sites, but you still want to be focused. You could go around to more sites, but that comes back to the whole one-month-at-a-time thing. You don't want to try to do too much at one time. Do one of them, do it right, and then move on.

AR: When we are processing that information, Scott will be in the field generating more information with his team and that will be fed back to me. It's not a big team -- there will be just six of us and there's no reason why we couldn't take two of us to drive out to a place for a couple days and do some follow-up to generate information. We have that fluidity to be able to do that. Again, it's surgical. It's quick, it's cheap, and it gets the information.

PB: It occurs to me that having the option to go out and poke around could be problematic if you're trying to do too much at once.

AR: Totally, that was 2012 for me. That is where I got all my grey hair in 2012.

PB: And the quality of things can go down.

AR: In general, you become more of an administrative person more than anything else. You spend 70% of your time signing invoices and making sure money gets paid. Really, you should be spending 70% of your time in the field.

PB: Golden Oly -- it is big. What can you do in a month here?

AR: We are going to focus on one intrusion. We are going to come up to the Nuke intrusion which is furthest north, which would be my preferred one because it is half-buried. If we run the drill over the peak, then we will get a full cross-section of what it looks like intact. On the side where it is exposed, we can map it directly -- we don't need to drill it, which cheaply expands our coverage.

PB: And there have been chip samples taken off of it already?

AR: Yes, that is where we got the material in the 20 g/t range.

PB: And when you drill this part that is covered, what is the topography like there? I guess the intrusion is coming up into a hillside?

AR: Yes, it is a mountain with ridges. You could pick a ridge line and drill into it, once you know which way the veins are directed.

PB: Hmm. Wouldn’t it be tough to determine that because the veins could radiate out in almost any direction with this circular intrusion?

AR: Well, they are exposed at surface, so we can trace them out. Once we know the general orientation, it helps a lot.

PB: Exposed at surface! Right, I didn't realize that.

AR: I've got a picture of one of these bad boys and it is about 1 meter across. It is just shiny, with poly-metallic mineralization. It was found on the last day of a prior campaign and was never followed up on.

PB: And these intrusions are young, too. Only 80 million years.

AR: Yes, they are fairly recent. Again, this is proof of concept at this point. If we drill here and get positive results on one that has been partly eroded, then we have these other ones that are still buried. Geologically, geochemically, geophysically, they look the same. If it walks like a duck, quacks like a duck, then it's a duck.

PB: People may still find a reason to disregard the results.

AR: They are not as sexy as high-grade veins, but this one has both. As I say, poly-metallic veins are great for assays but can be challenging for processing, although not impossible. If you have the density and sufficient grade, then that's important.

AR: We are also going to do a bit of water sampling in the area because the water tends to be quite nasty around these systems. You get arsenic, antimony, and stuff like that coming off of these veins. We are going to do baseline water studies pre-disturbance. That will establish what it is like before we start drilling or anything. That will be important for later years.

PB: Indeed, you can't wind back that clock.

AR: And it is fairly cheap to do those activities, too. That kind of thing is important to do and I have made a point of having it in the budget.

PB: We have these intrusions, what is the host rock like around there?

AR: You get a lot of sandstone, quartzite, but you also get mudstone and limestone. The quartzite tends to fracture and then you get quartz veins running through it. If you have mudstone, then they tend to add carbon to the mix and the good chemistry drops out. If you have limestone, then you get the skarns deforming. Each one of these is almost coming up in a slightly different unit, so the metamorphic aureole will be a bit different on each of them, but the same minerals will be present.

PB: Do you know if the mineralization will be similar?

AR: It should be fairly similar. The quartzite is the one that tends to be the poorest. The mudstones, which are the majority of this area, and the limestones are both good.

AR: Again, if you have a SEDEX deposit in area in the first-hand, then that is why you could be getting the poly-metallic mineralization. You are actually scavenging the zinc, lead, and other stuff that was laid down 200 million years before being redeposited into these veins. These intrusions could have sucked up everything from that area and concentrated it. That is just a pie-in-the-sky geological idea at this point.

PB: Well, to see so many of them clustered is very interesting.

AR: And so uniform in size, as well.

AR: The other thing that interests me about all of this is that you can get cupola off intrusions, which are like little pimples off the main intrusion. All of these could be connected to a giant intrusion underneath the area.

SK: Sorry -- Andy, did you just say there could be one intrusion?

AR: There could be. You wouldn't know what depth it would be at, but it definitely could be there. It wouldn't show up on the geophysics.

PB: It is all coming up from the mantle, right?

AR: It can come up in a blob and then you get these little intrusions. Dublin Gulch has one, just to the north of Dublin Gulch is a cupola that is around 500 meters across. The intrusions at Golden Oly are big enough to be individuals, but there must be something feeding them at depth. The question is: How deep is it? Is it drill-able, or is it several kilometers down?

AR: We don't need it, necessarily, to be one big intrusion. If just one of these runs at sufficient grade, then it can be enough to count as an exploration success. Each one of these intrusions is around 6KM and that is a decent size. Dublin Gulch is over 500 meters across.

AR: These are the things that we have bullet lists of things we want to work on -- the questions we want to answer. We want to look for clues, at least. We might not physically see it, but if we are prospecting to the south, then we might see the metamorphic grade increase and start to get an understanding for what is going on. Next year, we may decide that we need to spend $1M to put a 1,000-meter hole to test the theory.

PB: And that makes me think of the importance of having a smaller geological team so that those subtle interpretations are not lost. You want key people closer to the action.

AR: Scott has some really good ideas on all this stuff. He is scary smart. He is driving a lot of this stuff, as well. It is a team effort and we are pretty excited about it.

SK: Peter, this is what I wanted -- this is why I wanted Scott as a full-time project geologist. I am up on a Sunday night thinking "how do we make this better?" and it is essential to have a team that is there with me. We will be sending emails to one another throughout the week and into the weekend to figure this out. That degree of commitment is the only way we will be successful.

PB: From the public perspective, it is hard to understand the depth of the geology here and the broad scale of the things you are working on. I suspect that you encounter some skepticism around how much you are trying to do and having a small team to do it.

AR: I had a conversation with someone recently who asked if we needed that many people in the field. I had to laugh and ask if they had seen the size of the properties! We also get the other comment, as well. You could have 20 or 50 people working on this, but I think you are right, Peter. The quality would drop because it becomes a data collection exercise. It becomes "pick up a rock and send it off".

SK: And I think that has been a big problem for the whole sector. After the gold price moved up, a lot of companies could go out with a lot of people, but you didn't have people who really knew what they were doing. We need to avoid that. We need to do things correctly and methodically.

SK: Although it has been very hard for the sector, the massive cleansing that we have been through has been beneficial in some ways.  We think it is a good time to be moving forward slowly and steadily. We are getting offers to spend our money on different things, but I want this money to last for the next couple of years. There is no sense in trying to rush ourselves and try to get it all done in one year.

PB: I am still a bit stunned by how much you could do and how careful you are in your approach with your surgical exploration. I don't see a lot of potential for massive failures on your exploration efforts this season.

AR: When I first started discussing this with Shawn, I emphasized just how seasonal it is in the Yukon. Doing three programs with four drills on different sites is an ambitious program, but we are doing it for $2.5M and we are getting to test three different targets. The numbers don’t jell for a lot of people yet. I am still impressed by what we are going to do.

PB: How much of your ability to do that a function of new technology?

AR: The technology for air-blast drilling has been around for a long time, but the ability to have it track-mounted in the Yukon so that we can do it under a Class-1 permit is relatively new.

AR: Yes, you absolutely do need diamond drilling at some point because you need to know your structures and everything. I was on the fence about this a little bit, but when they showed me the tele-viewer where they send the camera down the hole right afterwards I was convinced. The output gives you all the structures in digital images and they highlight everything. They even calculate the angles with a computer program. For this stage, it is great. It means we don't need core saws in the field, for example.

PB: I expect that saves a large amount of time, effort, and money.

AR: We can bring back our entire drill library on chip trays. We are going to do that, in fact. Our entire years’ worth of drilling will take up less space than the desk in this office.

AR: Then, when we get into the post-season time, we can even do metallurgical work. We can send chip samples to the labs and have them tested, rather than having to pencil it in for next year where we would have to spend $5,000 flying back out to one site to take a few samples. Or, if the intersection of interest occurred at depth, then you would have to physically drill to get that information again. I am going to have my library of chip samples and then I am going to have my backup set of chip samples.

PB: The data from the tele-viewer is amazing. That sounds like the same information you would get from the core.

AR: It is effectively a strip-log from the core, except that it is photographic and doesn't need me to stand there with a piece of paper writing it all down. And we would get that information every night.

AR: Similarly, with the mapping -- yes, we are taking a bunch of grads into the field who haven't done this before, but I love sending them out with chip trays. When you send them out mapping, one goes to one place, another goes to another, and they all come back with descriptions of a grey rock. When you send them out with chip trays, you can bring those chip trays together at the end of the day and actually compare the rocks. You start to be able to draw the lines on the map.

PB: And that reminds me of your focus on mentorship with your consultancy, Andy. That's great to hear.

AR: It's going to be an exciting season. There is a lot to do before we get out into the field and I can't wait to get out there again.

PB: Thank you very much for walking me through it all here today, guys. I'm afraid we may not have talked about the properties enough for Andy's liking, but we certainly covered a lot of ground. We also may not have talked about the stock enough for Shawn’s liking, either. There is certainly a lot to the company and it’s been great to start getting the info on it. Again, thank you.

SK: It's our pleasure, Peter. This is company is our primary focus and it is important for us to get the story out there, so we are grateful to you for taking the time, as well.

PB: You're welcome. Until next time!