Categories: Mining Stocks
Topics: Copper Stocks

Kincora Copper (TSX-V: KCC)(OTC: BZDLF) CEO Sam Spring on Expanding Over $110 Million in Partner Funded Exploration for Major Copper-Gold Porphyries

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Kincora Copper (TSX-V: KCC)(OTC: BZDLF), Mr. Sam Spring. Sam, copper's on a run again, as we thought it would be. I suspect that will continue. It's a great time for you to be back on and a great time to go over the recent bit of news. How have you been?

Sam Spring: Yeah, very well, Gerardo. Agreed, you've got gold at good prices, you've got copper that's getting a bit of a bid, so it's a good time to be out there looking at gold rich copper porphyries.

Gerardo Del Real: Well, let's get right into it. You had a release. And just let me provide some context for those that are not familiar with the company; you have managed to strike deals with major, major mining companies to fund tens and close to, frankly, $100 million in exploration funding potential. And so there's tiers and stages to that, but you have an industry-leading team. You're in a tier one jurisdiction, you're targeting tier one scale copper gold discoveries. And as you mentioned, the gold and the copper price are running. So awesome time to be in. Can you talk about the recent bit of news and the partnership there with AngloGold Ashanti?

Sam Spring: Yeah, that's right, Gerardo, and exploring for porphyries in Australia's leading porphyry belt, the Macquarie Arc in central West New South Wales. We've changed our funding model from raising capital at the equity level, at the listed company level to, as you say, finding asset level partners. And to date, we've done six deals that have unlocked potentially over 110 million of partner funding. We've just recently put out our quarterly that shows that we've had 5.5 million of expenditure by partners to date. We've had 11,000 meters of drilling. And that only recommenced in the fourth quarter last year.

And I guess we're ramping up this sort of exploration deal flow model. There's flagship projects that we're in advanced conversations with some of the gold and diversified and copper majors, so there's further deal flow. And I'd expect that 110 to increase. But most importantly, as you've touched on, we've just had a bit of positive news flow with our exploration that's ongoing that we're managing on behalf of the union with AngloGold Ashanti. That's what we call our Northern Junee-Narromine Belt. We expanded this to two agreements recently that supports two separate earnings that cumulatively could see $100 million worth of expenditure by AngloGold before Kincora shareholders need to worry about funding those projects ourselves.

And the nice thing about this update that we provided only late last week was initial results are good. We've drilled 15 holes, we've got another four in this program. This program's been expanded twice already because we've been seeing positive results. And what we're looking to do is then take this existing rig, take it down to another project that was the focus of this most recent deal with Anglo only the other month and start drilling there. And we should see pretty consistent news flow and drilling taking place at this portfolio until the end of the year. And I guess that's the beauty of this earn in model where we are also receiving management fees, which is important in terms of reducing dilution at the equity level with pretty significant drilling taking place at the asset level.

Gerardo Del Real: You check, and the company by default, obviously checks a lot of boxes that I look at when I'm looking at potentially writing a check or looking at potentially highlighting a company. And some of those boxes for me are potential scale of projects, capital pool experience. Capital markets experience is critical to limit dilution. Multiple shots on goal. And you have that in spades here. And so with all of that, with the potential 110 million there in exploration funding, partner funded exploration funding, where is your current market cap? Because there's a pretty severe disconnect there between what could be and what should be and where it's at right now.

Sam Spring: Yeah, and multiple shots on goal is really critical. And what we're trying to do with this partnership model is have multiple prospects at multiple projects being drilled, and it's effectively ... that's the best odds of giving yourself exposure to a big discovery without funding that at the equity level. And what we're doing at the moment is we've got partners at our Northern Junee-Narromine Belt, which we just discussed with AngloGold. We've got our Cundumbul project that Earth AI is operating and funding themselves. They've completed five holes recently, geophysical surveys. There should be news flow and the results of those programs shortly. Our partners through our Mongolian assets, again, where we're not having to fund the exploration there, is doing geophysics at the moment ahead of drilling next month.

So in terms of multiple shots on goals, those are all assets that our shareholders have material exposure to. But our flagship assets that remain in our portfolio on 100% basis that we're looking for partners for, we're in advanced conversations for those. And they're in brownfield settings within mineral camps that have got 20 million ounce gold equivalent resource inventory. And we're very confident that those flagship assets will find partners.

So again, that sort of approach of multiple shots on goal, drilling, active exploration, moving these projects forward is really important. But as you touched on, our market cap is only 10 million. And there's a number of direct analogs out there for what our peers could be, whether that’s getting a cash bid in Mongolia, that implies that our Mongolian assets are worth $30 million, or Inflection, which has got the same partnership type arrangement and management fee model with AngloGold Ashanti that's drilling adjacent to where we are at Nyngan, which again, is a 30 million market cap.

So there's lots of direct analogs, but I guess one thing that's maybe not obvious when you look at our news flow is that we've had a recent shareholder overhang that really has impacted the share price. They've been using these positive deals that we've been announcing over the last six months as liquidity events to exit the register. Fortunately, that last deal we announced with AngloGold Ashanti only the other month saw that overhang finally cleared and about 12 million shares trade on market in a pretty short period of time. So that overhang was only resolved midway through last month, and hopefully we're in a position where we can start rerating the stock back to where some of these peer group valuations suggest we should be.

Gerardo Del Real: Well listen, just on the deals that you've struck thus far, there is a lot of catch-up to be had, meaning a lot of shareholder value to be added. And for potentially new shareholders that are looking at jurisdiction with all the geopolitical risk going on, looking at copper and gold and saying, "Well, man, I would love some exposure, but I don't want to bet on one drill hole or one project," that are looking for a management team that is technically competent, knows what they're doing in this part of the world, again, all of those boxes are checked.

But the one box that I didn't touch on, and I did so intentionally, and you touched on it, was the share structure box, because you did have that overhang. And I'm glad to hear that that's been resolved because that can create and has, I think in fairness, just a limitation and a ceiling on potential upside appreciation. Great to hear that that is done, and I think a perfect time to have this conversation for potentially new shareholders that worry about that.

Sam Spring: Oh, 100%. And when you see these positive news flow events coming out and you see a share price that isn't going anywhere and you're seeing a lot of volume coming out, it doesn't make sense. And we tried to bid this shareholder multiple times at premiums. We couldn't get them off the register. And how long's a piece of string? So that issue is now resolved. And now we've just got to get on with this strategy, which is more drilling, more deals, more management fees. And ultimately, that combination leads to more discoveries and doing that off a really favorable valuation for investors.

And that's where it's really important for me to get out there and tell the story, Gerardo, and the opportunity to give this update to your network. I'm pushing at the moment on the Australian side with the roadshow in Australia looking to get up to Asia and meet sort of 20 investors next week. We've just got to get out there and explain that this business model is scalable, drilling is occurring, we've got some good deals, we've got more good deals we think are up our sleeves, and you've got that sort of unique three-legged stool of drilling, management fees and more deal flow to come.

Gerardo Del Real: Can't wait to see what the rest of the year brings. I think getting that shareholder registry cleaned up, and this is one of the beautiful things about being listed in Australia as well, is that it's a lot more transparent there than it is here or in Canada. So you get to identify who the shareholders that are using that good news for a liquidity event are immediately. So that's great news. I'm looking forward for the rest of the year. I'm excited about copper and gold. Really excited to see what you're able to do with the drill bit.

Sam Spring: No, thank you, Gerardo. And again, we've got a pretty tight shareholder register other than this overhang being resolved. We've got 40% of the company in insiders' hands represented on the board. It was just that damage that a relatively significant position ad selling on market that has caused, but that's resolved and we've got some clear sailing ahead of us.

Gerardo Del Real: No, great work. Well done. Let's chat again soon. Thank you, Sam.

Sam Spring: Fantastic. Thank you, Gerardo.

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