Categories: Precious Metals
Topics: Gold Stocks

Headwater Gold (CSE: HWG)(OTC: HWAUF) and OceanaGold Sign $65 Million LOI to Explore Three Projects in Nevada

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Headwater Gold (CSE: HWG)(OTC: HWAUF), Mr. Caleb Stroup. Caleb, it's great to have you on. How are you, sir?

Caleb Stroup: I'm doing great, Gerardo. How are you?

Gerardo Del Real: I am well. Listen, gold is back above $3,400. Silver looks like it wants to break the $40 mark. It's a heck of a day to announce up to $65 million US in potential exploration expenditures with OceanaGold. Congratulations on the letter of intent to explore three different projects in Nevada. I suspect that M&A is going to continue to pick up. I suspect that the majors want quality projects in top-tier jurisdictions, and I think this is a clear indicator of not just the quality of your projects that you've been able to bring in, but the work that you've done to get them to this stage.

Would you love to share some context on the release? Congratulations again.

Caleb Stroup: Yeah, obviously we're very excited to advance this with OceanaGold and bring in another partner into the portfolio. And as you said, I think the timing really couldn't be better. We've all seen this gold market developing over the last, it's been about a year now, but over the last six months I think I've been seeing some more concrete indications of people really wanting to gain additional exposure in the early stage exploration side. And hopefully, I expect that to continue and this is a great start for our company and really an excellent example of how our business model can deliver value to shareholders through early stage exploration and partnership with big companies.

Gerardo Del Real: No, listen, well said. I had the pleasure to interview Mr. Brent Cook here a couple of weeks ago, who of course is an advisor to Headwater and I asked him, I said, “You know what Brent? You don't lend your name out there very often or attach yourself to very many companies. Can I ask why Headwater Gold was attractive to you?” And he said, “Bottom line is we did a site visit and they're doing real work, real exploration, and they got a technical team that is top-notch.” So I got to believe you're excited about the second half of this year. Lots of catalysts for Headwater and for shareholders.

Caleb Stroup: Yeah, no, for sure. I mean that's really our approach to gold exploration on the early stage side is you really have to lead geoscience first and take a solid technical approach. Obviously it has to be combined with a business model and corporate structure that allows that to work. And in our case, I think that has allowed us to generate a lot of interest from the bigger companies who don't just partner with anybody, they look for solid technical groups, people doing the right things. And like Brent said, there's not a lot of companies out there who are really making it their primary objective to take a first principles approach towards making new gold discoveries and big established jurisdictions. And I think that's why we've been successful at gaining some attention from the big guys.

Gerardo Del Real: Yeah, no, look, I think that attention is warranted, I think you're going to get a whole heck of a lot more of it. And look, more than anyone how excited I get for exploration via the drill bit. I get that the geochemistry and the geophysics and everything that leads up to target delineation is important, but nothing like the drill bit. I'm excited to see the drill bit turning on multiple projects in the second half of this year. Can you just touch on that one more time, please?

Caleb Stroup: Yeah, so I mean it's probably worth just a bit of an overview on the principal terms of the proposed deal that we announced this morning here. So it's three projects included in earn ins with OceanaGold. These are staged earn ins very similar to earn ins we have elsewhere in the portfolio with Newmont. There's a minimum commitment component for two of the three projects that's a million dollars US within the first two years, one of them it's a half a million. And then from there on it's sort of staged earn ins. I'll take our TJ project as an example. So there's a million dollar US minimum commitment in the first two years that's included in a $10 million stage one to get them up to a 51% interest in the project within the first four years. If they get to that point, they'll have an option to spend an additional $15 million US to get up to a 65% interest.

But really the big one is then the stage three. If they get to 65, they can get to 75 by completing the PFS. So we're carried all the way through that PFS and at that point we also get a 1% royalty that kicks in on the projects. So a ton of value for our shareholders and really a unique mechanism for to expand exploration in a really significant way all the way to that pre-feasibility stage

Gerardo Del Real: Should be a fun second half of this year. I know that several of us got back from the Rick Rule Symposium here recently. The mood was as energetic, I've heard, as it has been in quite some time. I think it's going to be a fun second half. Caleb, anything to add to that?

Caleb Stroup: Yeah, no, we're obviously looking for a very exciting second half of the year. This project, we need to get this done and dusted and the definitive agreement in place and the budgets all finalized. But I think on both sides, we're expecting to hit the ground running, including some drilling this year. Our TJ project is probably the highest priority. There may be more to come. But I think TJ we'll get that one going as soon as we can to follow up on our 2024 self-funded drill program out there and drill some core holes down into the guts of that epithermal system and see if we can find some high-grade bonanza gold down there. The timing and details of that will likely follow as we get all the definitive agreement, and there's plenty more to talk about on that front as well as this all comes together.

Gerardo Del Real: All right, look, looking forward to having you back on to get the details on that. Thanks again for your time, Caleb, as always.

Caleb Stroup: All right, thank you.

Gerardo Del Real: Chat soon. Cheers.

Caleb Stroup: Yep, bye.

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