Transcript
Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:00 I'll say good morning, good afternoon, or good evening, depending on where in the world you're tuning in from. I've got with me today Kevin Reade, CEO of Arizona Eagle Mining. Let's talk about very recent exciting news from the company, so I'm very eager to get into it. But excuse me, I do have some brief housekeeping to go through quickly. I know some of you have submitted questions in advance over email, absolutely appreciate that. But in case my questions and those don't get to the bottom of what you're looking to answer, there's a chat function at the bottom of the screen. Feel free to use it at any point during today's event. You can ask Kevin questions. I'll make sure that we get them answered. If we don't get to them today for whatever reason, I'll make sure that the Arizona Eagle Mining team gets them and they can respond to you either over email or phone. Also, today's event is being recorded. It will be available for replay probably about noon eastern, so about midday for those on the East Coast. It'll come right in your inbox, but it'll also be available on Six's YouTube channel. I'll start off by saying, Kevin, how are you today?
0:52 I'm doing really well. Thank you for having me back on here, Romeo. Appreciate it. Awesome. Yeah, great. So I wanna get right into the news because it is, I think, actually pretty exciting. Because I'll say most juniors who inherit an old mine, they talk about infrastructure, talk at length about infrastructure, but then keep drilling from surface anyway. You see that all the time. Now, as you finished phase 1 in August, and within a month, you had cameras down 2 openings that hadn't been touched since 93.
1:17 So what did phase 1 tell you that made getting back underground the obvious next move rather than doing phase 2 from surface? Well, first of all, thanks for that intro, Romeo. It's excellent. I prefer to call this instead of calling it an old mine, I prefer to call it a high-grade mine. All these mines by nature are quite old. This one's a little over 100 million years old. It's actually very young in the context of geology. We
1:50 went public. Here's the exciting thing for our shareholders is it's about capital utilisation. And I'll get to more of that in a minute, but to address the phase 1 program, We got listed in the springtime. We only acquired this asset in March 2025. It took us 3-4 years to negotiate a deal. The gentleman that owned it held it for over 30 years after BHP closed it in 1993. He was very attached to it. He held it for close to 40-years and we negotiated ultimately a deal and then we consolidated the district. We went public in the springtime, April this year, and obviously it's get drilling. We wanted to get some news out for our shareholders.
2:36 So we drilled, we got a surface rate going and we drilled 7 holes. In those 7 holes, we had Gold in almost every hole, but we made 2 economic discoveries on hole number 2, hitting the past producing mine horizon. It was faulted 30m to the north, so we discovered it. And on hole number 6, we hit nearly 30% of Zinc over a metre, which is very interesting because it's not what we were necessarily looking for on our VMS target, or on our Mesothermal Gold system, the McCabe Gold system, but it's very analogous to the
3:16 Iron King mine we drive by on the way to our project, just a few kilometres away as a crow flies. So hitting a VMS target was kind of like, whoa, we got VMS here. So we were drilling from surface around this known high-grade Gold mine. But why? We didn't want to hit workings. We just wanted to get results and we did get results. So very exciting. That was the phase 1 program. No, I think that's great. One thing I want to talk about, because I know the 95% figure is doing a lot of work in the release. It's a little, you know, it's eye catching. Cause from surface, you're drawing hundreds of meters of barren rock to reach those steeply dripping veins. But from a drift, you're basically starting at the target. So If you could just paint a picture for the folks in the room, people watching our replay, help us picture that geometry at McCabe and what it does to how many holes you can afford to put into the known zones.
4:11 Excellent question. And this is really the paradigm shift for the company. So obviously, As I mentioned, we want to get drilling right out of the gate. That's what we promised our shareholders we would do. Understanding how expensive it is, as you rightly point out, we're drilling in some cases 1,500-foot holes. Those holes can cost approximately US$150,000-$160,000 a hole. Once we finished that phase 1 program, of course we realised, since we have this US$50M in infrastructure, We have a 14-foot concrete-lined production shaft. We have a 6-foot in diameter ventilation raise. We have kilometres of underground workings to access all these areas. That's $50M in 3-4 years to replace.
5:03 Our market cap today is CAD$30M. We're not getting paid for any Gold. We're not even getting paid for the infrastructure. We believe there's a lot of value for shareholders. The paradigm shift here is, we had to go about how do we get underground as economically efficient as possible? We interviewed a number of contractors and we landed on Hancon Mining, who are way above our preferred partner. This team is working for companies like Pan American, Agnico Eagle, America's Gold and Silver, that mine these high-grade deposits. And they were very keen to get involved with us. And they put their money where their mouth is. And they said they would take partly stock for their work, which for us is incredible.
5:50 It's what we wanted. We wanted a partner. But getting back to the geometry, if you imagine your computer screen as being sort of a little cave deposit, it's steeply dipping mine horizon. Getting underground and drilling through that screen is very, very few metres. It will range depending on where we want to get the target, But if you're just drilling the mine horizon from underground, you could do 10, 20, 30m holes instead of 500m holes. There are 2 bits to this, and this is based on internal estimates based on, number 1, our known costs from drilling from surface and our budgeted costs from hand-on mining on underground drilling. I'll give you some numbers just to give everyone context on how incredibly powerful this is for us. We're investing now, we're using a reverse Alamak raise to go down the ventilation shaft. It was determined this would be the most economically efficient way to access the underground and get drills, men and materials underground. That's number 1 that's in our press release.
6:56 The 95% reduction comes as this. We're drilling 5% of the metres from underground to reach our targets. 5%. So instead of it being 1,500 feet, we're drilling 5% of 1,500 feet. That's the first part of it. The second part of it is the drilling costs per metre themselves, as a result of using smaller drills and so on, is actually not $400m, it's $200m.
7:30 Massive benefit. That's how we get to, It's basically $0.03 on the dollar to drill underground. Instead of spending $9M on drilling 60 holes from surface, we'll spend approximately $300,000 to drill the same 60 targets. Now we're going to be in a position where our market cap to our drilling costs is right-sized.
7:53 Once we're underground, we can drill at infinitum. That's my personal view. Once we get those drills turning, they'll never stop. We'll be newsy, because we're drilling 30, 40, maybe better if we get more drills underground, holes per month instead of 2 holes a month. And costing, again, 3% per metre compared to surface. It's an absolute game changer. We've got this infrastructure that very few juniors have. We have many high-grade mines, not just McCabe, on the structure that we get to explore. It's a huge event for the company. And again, I'm very pleased that Hancom Mining came on board. And we're just super excited to be working with that team. That's great. I can feel the sigh of relief a CEO must have when 3% drilling costs come up. I do want to talk about the hand-cump partnership, but there's 1 nuance I wanted to unpack first, and this is between the shaft and the rays. So you've got the 14-foot concrete line shaft that goes to 1,600 or just over 1,600 feet.
9:00 You've chosen to go through the ventilation rays 400m away instead. Why is the raise the cheaper door and does the shaft still have a clear job in this plan? This is why we're fortunate to work with smart people that know their business at Hancom Mining. We scheduled a site visit on September 16th and the team evaluated the scenarios. Using a reverse alamac raise instead of having to buy a hoist on the big shaft, obviously the big shaft is 3 times the size and you have a hoist so you need hoist operators and you need more people and you also need more materials.
9:46 All of that adds up and it's about 2-3 times the cost, depending on the shape of the shaft. We've seen from our excavation so far that the shaft is in excellent shape. By going through the ventilation rays, you're not using a hoist. That takes $2M off at the top. It's a reverse Alamak raise, which is a lot less. It's about $500,000 instead. We were looking at getting a used hoist and of course, these prices can vary slightly, but the point is, it's about 25% the cost just for the reverse Alamak raise. That's a win. You're using half the men. That's another win.
10:27 It's just stacking those wins to reduce the cost to achieve the goal. And that goal is to be able to drill from underground, to access these 5km of underground working. All those workings require man and material and cost to open up and excavate. And all of that is there for us. Shifting back to your part B of your question, the production shaft. Clearly, that is $30M to $40M based on Chad GBT of replacement costs and time and money. We have it. It's in place. So obviously the idea is get underground,
11:08 drill baby drill and just get as many, you know, hundreds and hundreds of holes now at a 3% of the cost of surface is going to create a dynamic where we can go after this hard and get lots of news. Should there be a production decision, which will be after all the drilling and seeing how much Gold is there, and Again, we've got 8km only on our private ground of structure to explore. And again, our resources are 800,000oz, but that's only down to 400m. It could 5X that if you go to 2km, which these mesothermal systems do. There's a lot of upside from a Gold perspective. Back in June, we acquired 3 pass-producing high-grade Silver mines on our project as well.
11:59 Getting underground and drilling, create the resource, understand the geology better and the cut-off grades and what's appropriate doing all that work, which I think will lead to some exciting drill results because from the historic record, we have
12:15 many, many over ounce per ton hits, Gold and multi-ounce hits, Silver. That's exciting for us because we know where they are. We know that now we can get underground and get at them and hit them hard. The production shaft is Great to have, saves us a couple of years and 40 million US. So when there's a production decision, that is, you can take that off the CapEx number. Yeah, that's always handy. I know, but appreciate the extra context. I do wanna get more into the Hancon deal because I do think it's really interesting part of this, because they're getting paid costs without markup, obviously great for shareholders, and their 20% margin comes in shares priced off the 30-day VWAP when the work is done. So I guess question, because I don't see deals like this very often, Why structure it that way first? And then what does it mean to you and hopefully to the market that a contractor working for Agnico and
13:08 Pan American is willing to take stock in a company at your stage?
13:14 Well, you know, I've had the opportunity to sit down with Matt Krueger, the CEO of Hancon several times now.
13:26 He's an entrepreneur. He's a young man still in his 30s. He's built a very successful business. He sees the passion we have for this project. He sees the upside. He's been doing this a long time and he gets it.
13:53 When we discussed the nature of our business deal, I said, I'd really like to see you guys be owners of this and how can we figure that out so that you're getting stock. I believe it'll be back in production 1 day. Matt shared that view. He sees the potential, as do we. He said, I would love to partner with you on this. We structured a deal where his costs, his dollar costs out the door, we cover, but his margin, which is 20%, we're paying him, as you said, in stock. Over time, he will build an equity position in our company through his work. And of course, for us, having that partnership is is incredibly important.
14:44 So That's the nature of it. We're really pleased to work with entrepreneurs as well. These are entrepreneurs. This isn't a big company that's multi-billion dollars and sends you invoices every month. And it felt, it feels like a true partnership with phenomenal people. I've met Several people on his team. It's just, these are the people you want to work with. Awesome. No, it's exciting. I think it's just an interesting structure deal. So I wanted investors to get a sense of it. One thing I found really interesting about the release, but just generally about the system is roughly 700,000 of the 880,000 historical gold ounces sit in the geologically inferred bucket. And the 89 and 93 estimates only counted material
15:27 right beside the workings. So drilling from those same workings is, like we talked about, how you test that gap. How does the underground program change what a modern resource at McCabe could look like versus what, you know, like I said before, endless series of hundred meters of surface drilling would ever get you? I'm sorry, let me just clarify what exactly?
15:49 How does the underground program change what a modern resource at McCabe can look like? Oh, okay. Well, a resource. So, well, it'll be easier for targeting. That's really what it boils down to. As I mentioned, 60 holes from surface would cost $9.6M. That's based on our numbers because we've drilled from surface, so we know what it costs. To get those same 60 holes from underground would cost $300,000. These are based on known numbers and Hancon's budget for drilling underground.
16:37 How it changes things is those holes from surface would take 8.5-months. If we had 3 drills going underground, which we believe we'll get to, those same 60 holes would take 1 month. How does it change a resource? I can't tell you when a resource will come. It will be results-driven. As I mentioned, this deposit that we're talking about has many stacked lenses and it's over 800m. We could be drilling a lot and hopefully finding a lot of Gold. But we've got 10 times that to explore. Clearly, we're not in the business of tapping our upside. We're in the business of we've drilled this off, time to go to a new zone and drill it off. And then when we're done drilling that off, time to go to a new zone and drill it off.
17:28 And hopefully we're building ounces over the coming years and creating a story where the valuation starts to reflect what we have. I believe that will take time, of course, but getting to the place where we can right-size the cost to market cap. I believe the market cap will go up and I believe the drilling costs will go down, which means we can add more drills and get more news. So instead of 2 holes a month, it's 30 holes a month or ideally better if we can get more drills underground. So that's going to create a story. And Drilling into a high-grade Gold deposit, we will be one of the lowest cost drilling stories in the market.
18:14 It's utilisation, as I said at the outset, It's capital utilisation. We're taking $1 from shareholders, including my money, and how do we drive value as best as possible? As we've shown, having this $50M in infrastructure allows us to dramatically,
18:31 going to $0.03 on the dollar compared to surface, get underground drill. We believe that there is very few companies at our stage, if any,
18:41 that have that type of capital utilization rate. In fact, I would challenge anyone to find one that's better. Yeah. I certainly don't see many and I talk to companies every day. I'll say it's fun to let the truth machine rip, which is what you guys are about to do. So that's pretty exciting. So that's the end of my questions. I do have a bunch from the audience. There were a couple that came in over email. Then there's 1 in the chat, but feel free people to add your question. I know there's a bunch of you in the room. First one is what is the permitting status of McCabe right now?
19:10 Well, this mine was reclaimed in the 90s, and that's a very good question. So What's the permitting status? We have over 420 acres of patented ground. What does that mean? We've got another 4,200 acres of BLM ground. We've got about 5,000 acres in total. It's a district with 12-13 past producing mines, if you include the Iron King, that's just up the road. So, 13 past producing mines. McCabe is one of those mines. It's on patented ground, which means we're not dealing with federal agencies like BLM or National Forest. The permitting status is we are able to work our private ground
19:54 that we own surface rights and mineral rights to at our leisure. We found the shaft, we scraped it off, we excavated it, we've put in roads, we've got a drill permit, a surface drill permit in 24 hours. So it's not permitted for production per se. Well, what does that really mean? To go into production on my private ground, we would need blasting permits. We would need air quality permits. We would need a variety of permits, which is standard fare. But what typically blocks these mining projects, like you will see in other areas of Arizona, is that they're on national forest ground or on Bureau of Land Management ground.
20:41 We are on private, patented ground, which means we don't need to talk to them about what we're doing. Of course, if we're going to go back in production, we would need to do things according to the standards of MSHA, mine safety and all those things. We would need to get blasting permits and all those things. But we have, through Hancock Mining, all the expertise to get those permits in short order. It's not, we don't have Aboriginal negotiations, we don't have species issues, we don't have federal land that we need to negotiate access on or utilization, it's private patented ground. So As a result of that, going into production, starting to remove a lot of material without any formal permits, But to keep it simple, the permitting process is much more streamlined because it's getting your blasting permit.
21:37 Water discharge, we can discharge the water. We actually just did a test. We're doing testing, but we just got the test results back from the ventilation race and the water quality came back as suitable. In fact, one of the people that reviewed it said it's actually better than the drinking water in Phoenix. So these are the things that we're doing and advancing the project. So being on private patented ground, I know people can get confused. Well, I know Arizona, they had resolution. It took a long time, but these are on federal lands. We're not on federal lands. Right, and sort of to some degree connected question that came in over email. So he wants to know if you have good relationships with local communities and groups. Yeah, I mean, the local communities do humble.
22:23 We've met with the team there. You know, this is a very small town, wonderful people, just that small town feel. And, you know, they're very constructive on mining. I mean, there You go to the town and it's all the old mining town buildings that are still showcasing the town. We've met with town council and they just want to know what we're up to. They're very pro-mining. They want the economic benefits, which they should get from a mining project. They just want to know what we're up to. They're very pro-mining. They want the economic benefits, which they should get from a mining project. They just want to know what we're up to and that we're doing everything with the community in mind. And of course we are. And that's why we water test before we discharge. We want to make sure that the water suitable for discharge and and we are active in that, you know, as we grow, we intend our community relations to increase as well. Lock and stuff. Great.
23:18 I've had Phoenix tap water. It's pretty good. Better than that. Sounds all right. A couple more questions. One person sent it over email. Just want to know as of last reporting what your current treasury sits at. Current treasury is approximately 5.5 million dollars. So we're fully funded to complete this reverse alimac raise to get underground. Fully funded for that. Exciting.
23:38 One person asked from the chat, this is about 10 minutes ago, they said drill plans for the year, but I'll broaden it out a bit more. What is the drill plan from here? Just so people get a good sense of the next phase. Yeah. So what, you know, with our treasury, as I mentioned, it's about 5.5 million Canadian dollars. We're going to get underground with that money. Right. We're going to invest in accessing the underground and unlocking, as I mentioned, instead of drilling 60 holes for $9M, we'll drill 60 holes for $300,000. So Once we're underground, which we'll take, we're going to complete the engineering study to get underground in January and then commence ideally in February.
24:23 When we're underground, when that's completed in the springtime, we'll start drilling again from underground and I don't expect we'll ever stop. Great. I'm looking forward to seeing the results from that. JJ from the chat asks, how did you feel about the initial drill results that were released? Were you disappointed by them?
24:39 How did you feel about them? As I mentioned earlier, we were intentionally drilling around
24:45 the known high-grade Gold mine. Why? Because we didn't want to hit old workings, we would lose the hole. It's hard to see, it's impossible to see from surface, it gets hidden. We drilled around
25:01 it. Those were, for lack of a better description, wildcat holes. Of course, we use geology and geophysics to target, but essentially they're wildcat holes. So, 7 holes, 2 discoveries, that's like a 30% discovery rate. I would consider those results to be phenomenal, phenomenal results. But again, getting underground, we're going to be able to drill 200 holes for the same price and do them dramatically quicker. And I think you're going to see it. And we know where the, we know where many high-grade, we know because we've got the data up here in the mine.
25:36 It should be a very different outcome. But again, yeah, phase 1, I'm extremely pleased with the team and their targeting abilities. Oh, great. Yeah, I guess for folks on 30% discovery, essentially as wildcats, it's wild. That's unusually quite high. But, Carol, I'll give everybody in the room 1 last chance to ask a question by asking you what would otherwise be a wrap-up question, which is, what are you most excited about for the rest of this year? What's stuff people should mark in their calendar or keep an eye out for at Arizona Eagle? Well, the next phase of our evolution here is is accessing the underground and working with Hancom Mining,
26:13 building that relationship and and and watching them do their thing, you know, Watching them execute on getting us access to the ground via the ventilation rays. That's really exciting. Then, once we're underground, getting those drills turning and drilling rapidly, much shorter holes, much quicker holes, faster drilling, shorter holes, more results. The next 12 to 24 months for this company is incredibly exciting. We didn't know until September 16th that we could execute on this plan. I'm so grateful that we found Matt Koernik and his team at Hancom Mining because through their efforts and their know-how, we've been able to pivot in an incredibly powerful way.
27:05 Very few companies have this type of infrastructure
27:09 and high-grade gold that we have, and now it's about unlocking that value. I believe we're doing that. We're doing that here. There's no question. Awesome. Well, Kevin, thank you so much for going through very exciting news, but also letting me grill you a little bit, always appreciate it. For folks in the room, 1 reminder, there is a meeting request button at the bottom of the screen. Please do hit that. It'll be there after I close the room as well to request a meeting with the Arizona Eagle team. I'll make sure to pass that along. Same for folks in the replay, that button will be at the same place in the bottom of your screen. Kevin, thank you so much. This was fun. I'm looking forward to seeing what the truth machine shows us. It looks really exciting. Thank you very much, Ramin. Appreciate you. Have a great day,
