Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:07 Thanks, Ken. Yes, we had a good year. To us, it was a success, certainly, a lot of positive news flow, being able to keep our staff safe, being able to still operate and bring production online during COVID for the first time ever, bringing production online and obviously demonstrating how important it is to have an in-country team and skilled obviously labor force exists in Mongolia. So that's all been positive. I think on some of the feedback and negative side is maybe our communication in the way that we've adjusted our forecast or lack of adjusting our forecast more publicly. Certainly, as we are in startup and ramp up and anyone in the mining business, anyone, an investor or a miner knows there's plenty of hiccups. Everything does take longer.
1:02 And most people are comfortable to know about that. But I think it's very important because you're dealing with some new investors, maybe some generalist investors to be able to, you know, succinctly, you know, message on a regular basis, you know, any updates. So, For example, if we encountered a bottleneck in crushing in the summer, while we were fixing in the background, we could let people know that while doing ramp-up, we're encountering some bottleneck of crushing, which could eventually impact our production numbers down the road, which certainly they did. Not the only reason by any means, but it goes back to the communication of what's happening on the ground, how that could potentially impact. Not always will be negatively impacted if we fix it in time or whatnot. But I think the communication in terms of our forecast or what's going on in country, we have been updating all our investors. So most of our investors are always aware of what's going on, large investors and even smaller ones. But I think there's a much broader audience last year than there was in the previous years. So I think we have to do a better job of making sure we communicate to each and every investor. And so that's why we do things like this, so that everyone can get hold of this information at the same time.
2:22 Yeah, good question. Certainly, I think from a value proposition, we haven't actually extracted or uncovered the value that exists in our company today. We listed at $2 and we're only trading about 10% higher than that. Almost 3 years later after de-risking the country, the company, the assets and producing cashflow with a lot more upside. So certainly there's a lot of room to grow. So from a value perspective, I think what we've done a good job of is protecting the downside. So having a strong balance sheet of circa 30 million US, having future cashflow for the rest of the year and the next few years as well, while bringing phase 2 online, certainly is a lot of value without relying on a higher goal price, you know, not relying on expiration success, you know, all the, or additional production that can come from optimization as we get to a more steady state this year after we worked our way through ramp up.
3:22 So I think from a value proposition, we're significantly undervalued versus our peers, but we offer probably a lot more upside in terms of where we can go in the next 2, 3 years versus what we've accomplished in the last 2, 3 years.
3:41 Yeah, I think, you know, there's probably 2 challenges today. You know, 1 is we are still in a global pandemic, so it's very hard to get face to face. I think a lot of people are getting fatigued and doing the webinars or Zoom calls. There's a lack of conferences and how efficient they are virtually. And so not being able to do the face to face, whether it's the PDAC booth to all the conferences we go to globally where we get to get to see people for the first time or again in person. So we're certainly missing that opportunity, which I think is very important, especially when you're talking about a company that's in an exotic location like Mongolia. And so the second point is Mongolia. When people hear Mongolia, new investors, even they for whatever reason in the past, they they they they paint us with the same brush that whatever they had some experience, good or bad, obviously some kind of negative experience or perception that they don't know why they don't like Mongolia. So starting off with a word Mongolia sometimes has closed the door for us, but that's something that we keep knocking on. And we've certainly in the last few years converted people who said no to Mongolia.
4:58 Certainly as you'll see from some of the new additions to our shareholder base. So I would say those are really the challenges today in terms of getting in front of new investors. And finally, the banking support. I think we need more research coverage that gets you in front of more eyeballs, more eyeballs, more validation, when more banks are covering you. We do have we have had another bank last year for coverage. And I think, you know, that that will continue to to grow more eyeballs if we get more banks that have retail exposure, as well as more institutional investors on the platform.
5:39 Yeah, I think today it's still COVID related. You know, we are luckily operating in country, but, you know, with lockdowns going on both in Canada, in Mongolia, you can encounter procurement delays. It's made roster changes a lot more difficult in country even. With the new rules, you have to quarantine when you change provinces. So people who travel from 1 province to another to get to site, they're safe on site thankfully and we've never had any issues. But I think COVID still represents a very big issue in terms of the staffing, the roster changes, the procurement, even on the feasibility study that we're completing for the summer, we've encountered delays on the sampling work, the lenders who want to give us the debt for the back of the bank if we're going to study the lack of ability to go to site. So I think Covid currently is really the factor here that could impact our business. But luckily, we're chugging away. We have a strong balance sheet and hopefully it can't get any worse.
6:58 Yeah, again, I think because we are in a pandemic expanding, you know, we're taking on a large undertaking. It's an expansion project and in some ways it's actually easier than our phase 1, which was a smaller CAPEX, smaller project, because We did a lot of the heavy lifting in terms of permitting, building a camp, the road, the infrastructure, all that, establishing our couple hundred employees. We've done a lot of heavy lifting in phase 1, but bringing phase 2 online as quick as possible while we're in pandemic, again, it goes back to creating some delays, potential delays that could happen in terms of the financing from debt because of the debt lenders, because of their lack of ability to get in country, the procurement potential delays of getting large equipment on site, or maybe some of those expats that are required as part of the installation of that larger phase 2 expansion. So I would certainly say that that's a big risk that we're undertaking when the, I guess the pandemic is not behind us yet, But I guess we're not taking that really big push until the summer and hopefully things are a lot better than that. But certainly taking the expansion on now at this time, I think could be risky. But we were able to mitigate a lot of that because if it does take longer, if construction takes longer, if CapEx, for whatever reason, has to has to increase because of this, we still have a producing asset at surface
8:30 that actually run for the next 3, 4 years. So if it takes longer than 2 years to bring our expansion online, we still have a nice little cashflow machine at surface. So certainly it's a risk, but I think it's something that we're, it's not, it won't kill the company because we have, I guess, a lot of the downside protection in a buffer with a strong balance sheet and future cash flow from our phase 1. Yeah, so I mean, I think for us, it's always been an uphill battle or a climb here since day 1. So, you know, we listed a company here on the TSX that has an asset in Mongolia. We were the only IPO in 2018. So we were raising money to build our first mine in 2018 when the capital markets were not open. So that's why we were the only IPO, luckily, but we got it over the line. So in a very tough time, many failed, many were unable to get the capital to expand or build or list the companies in here in a very tough time in 2018, much different than it is today. When gold price was $600 less, we managed to raise the capital. And then 2 years later, we managed to bring production online for the first time ever during a global pandemic that we never, anyone expected to occur and how could you be prepared for something like that. So certainly a lot of barriers we've dealt with in terms of when we raise capital, how to raise capital in very tough times, building a mine and bringing online in very tough times. And then
10:02 lastly is still dealing with an exotic jurisdiction that I think is still a barrier for many, which is something that we're, you know, through education process, we're certainly fixing. And you're seeing that with the new additions to our shareholder base. What are the key takeaways from your experience at Mongolia? Yes, you know, our management team, I'd say, are certainly experienced globally in building companies and creating shareholder wealth. And also in Mongolia was very important. I wouldn't say that we're all experts at everything we do. So I think we're smart enough and we've always adapted to bring smarter people either on our board or through advisors, consultants, or even on the team to grow as we continue to grow and adapt. So, you know, startup ramp up is ongoing from April last year.
10:53 You know, we ran into issues on, you know, just normal startup ramp up issues. And we are able to adapt. We were able to add certain equipment or manpower with what's available. So I think certainly management is creative, dynamic and able to adapt to a lot of situations, which is great. I think that's a strength that we have having a lot of experience globally in different sectors and focuses and coming together allows for that, I think, the ability to grow. And I guess more importantly, like any investor, we are investors, We're owners. So we treat this company as if it's ours because we, you know, management and board own 20% of the company. You know, so we're aligned with any investor, whether the one who owns 100 shares or the one who owns 5 million shares and everyone in between, we feel the pain, we feel the dilution.
11:47 So we run the business like it's our own. And so certainly we feel the pain when others do too, and we'll obviously ride the success when others do. You don't see too many companies who have that kind of alignment with their investors. And I think that's very important for people to recognize is we don't do things for the sake of doing things. We do things that we think will create value eventually. Sometimes it takes longer to get that value whether the market or for us to execute on. But I think that's, you know, that small business approach is how we run our business as an owner, as a small business owner. And so it's your baby and you have that skin in the game. And that's very important, I think, alignment with your investors. Yeah, I think I think especially in this day and age is the communication side, getting that messaging, whether it's updated forecasts, any updates operationally or in country, whether it's lockdown related or operation related, forecast production related, financing related. I think the main key here is to be more communicative with your investor base. So we always have been, to be honest, and I would say 85 to 90% of our investors are well aware of what's going on on a regular basis. We speak to our investors as much as possible. We're very open door policy.
13:14 People email us and we call them back. We speak to our large investors, we speak to our small investors and everyone in between, like I said. So it's really about making sure everyone's on an equal level here in playing field and getting that messaging at the same time. So I think it's certainly something we've learned from some of our mistakes in the past is, let's try to re-forecast as quick as possible if we see some issues or hiccups. If we can't hit a production number, let's just let everyone know now instead of trying to fix it in the background and maybe not, obviously, not in coming up short. The more you can be communicative, I think everyone understands we're in the mining business. This is a business everyone knows. It's not for the faint of heart. Everyone knows there's always hiccups operationally on startups, financing. So this is not for the faint of heart anyways. But for those who are new to the mining space or gold space or more generalist in nature seeing a producing company, I think it's very important to really adjust your communication and forecast as soon as possible. And so that's something we're certainly working towards nipping in the butt.
14:16 But along the lines, I think we've still created a significant amount of value with what we said we would do in the last couple of years.
