Categories: Precious Metals / Mining Stocks
Topics: Gold Stocks / Copper Stocks

Kincora Copper (TSX-V: KCC)(OTC: BZDLF) CEO Sam Spring on Partner Funded Drilling for Copper & Gold in a Raging Bull Market

 

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), and in my opinion, it should be “Kincora Gold & Copper”, Mr. Sam Spring. Sam, how are you today?

Sam Spring: Very well, Gerardo. Thank you for the opportunity to provide an update.

Gerardo Del Real: Well, listen, what a time to be drilling with a major partner and to be hitting and discovering and upgrading gold and copper targets. You just put out some news expanding and upgrading several targets with your partner, AngloGold Ashanti. I would love for you to provide some context and maybe just stepping back a bit for those that are not familiar with the Kincora story, if you could just give us a brief overview of the company and then we can talk about the news here specifically.

Sam Spring: Yeah. And just to set the context, we're a hybrid prospect project generator. We did a financing that closed in September last year with a 12-month hold period led by Rick Rule, Jeff Phillips. And that capital provides us the ability to start ramping up really focused exploration, not just significant dollars, but really focus programs where we think we can add value across a portfolio of eight projects. And seven of those are in Central Western New South Wales, which is Australia's leading copper porphyry belt, which is a number of really gold rich assets in Cadia, Northparkes, Cowal. But we've also got ... Project portfolio in Mongolia. Again, resource mining license, just getting a second mining license.

But the bulk of historical expenditure is third party funding. And that's where we've got two earn-ins with AngloGold Ashanti up in this northern part of the belt, which is a real new province scale opportunity. And since we've started to see this third party funding take place in the first year, we had over 7 million as third party investment, over 16,000 meters of drilling that took place by those partners. And we received about $450,000 worth of management fees from being the operator of a couple of those. So we're ramping up activities across a portfolio of projects, and we're really pleased by these results that we're getting here at Nevertire.

Gerardo Del Real: Well, listen, I want to go really into the details of the exploration agreement, the joint venture with AngloGold, because it's extensive. And in this market, really, really, really buffers shareholders against dilution, which I have to believe was one of the main reasons that the likes of Rick Rule and the likes of Jeff Phillips decided to lock up their shares for quite a bit and to come in and provide those lead orders. Can you speak to the partnership a bit?

Sam Spring: Yeah. And that's one of the keys. What we've got here with AngloGold is two earn-ins. They potentially fund the first 100 million before Kincora has to co-fund. We end up with a material stake along with various milestones of that earn-in agreement. We're currently the operator receiving a management fee of 10% of expenditure. But the size of the prize is huge. It's 5 licenses, 100K north-south strike. We're looking for potentially the largest part of the Macquarie Arc, which has an existing resource of around 160 million ounce gold equivalent endowment. So it's a big undertaking and it would be very dilutive to try and do this at the listed equity level. But I think then at the project level, you end up in this scenario where you've got the right structure, you've got the right deal for shareholders to leverage any exploration success, but you've also got a partnership that you can tackle a beast that big.

And to put that into perspective, we'll dig into sort of the results in a bit more detail for what we've just put out in a sec. With this sort of Nevertire, Nevertire South project, which is two of the five projects included in the earnings with AngloGold, that size is the scale of what the Vicuña District is in the Central Andes and you've got 4 big deposits, new discoveries that are valued over $10 billion. So the size of the prize from exploring a district scale portfolio systematically with a partner that provides the capital, but also provides that technical expertise and special skillset that as a junior you just don't have access to is a really leveraged scenario for shareholders.

Gerardo Del Real: Listen, I mentioned $5,000 gold, $6 copper, $82 silver. You know the million-dollar question always Sam, what comes next? Walk me through the next 6 to 12 months of what shareholders can expect.

Sam Spring: Well, immediately here with the Nevertire project, it's drilling. The first phase of drilling we had at Nevertire South last year is what we put out in this release. We were really encouraged by 8 holes across the 5.4k strike, confirmed and upgraded our target and what the original interpretation from Newcrest was that was that region was an analog to Cadia-Ridgeway, Goonumbla. When you have a look at Goonumbla and Cadia-Ridgeway, you've got a cluster of these deposits that ... Let's say Cadia, you've got five economic porphyries, you've got two skarns at Northparkes, Goonumbla, you've got nine. So in that immediate target zone, we're buying up those really good results last year, you're looking for multiple porphyry cores.

What we've also said is off the back of those good results, we started looking at the wider license, which is about 40ks north-south, what we're looking at there is more clusters, more deposit scenarios in that wider belt where we've either had historical explorers that haven't been where they've drilled and haven't been followed up, or you just haven't had any drilling at all. So we've already commenced a geophysical survey advancing that 40k strike. We're going in and reviewing historical drill holes that are publicly available and we will look to systematically work up that wider prospect across a 40k strike while at the same time, going up some of the other projects where we've drilled, at our Nyngan project, we've put 19 holes in there in partnership with AngloGold and looking to do that over the course of the year.

So one beauty of this prospect project generator model is what's the direction of the spend profile from your partner and your concepts being upgraded and validated and then hit hard with the drill bit and that's certainly the case here. So far we've had about 5.5 million of expenditure from AngloGold. The budget that we put to them for this year is seven million and that's a pretty cool up-trick. And obviously this is just for the one asset that we've got with AngloGold Ashanti. There's eight assets in the portfolio, a number of which we did sole funded work late last year that'll come through this year.

So I think in terms of news flow and pipeline, bringing it back to high level, in the first 12 months of pursuing this business model, we've drilled at 7 different licenses. Over the next course of the next 12 months, we'd like to think that that profile would only accelerate and we're looking at further asset level deals to bring in other funding partners, which will again make this business model more scalable. So a really good time to be in a healthy copper and gold market. We’re seeing that reflected in the asset level conversations we're having with potential partners where a lot of these majors are increasing our options to exploration again, increasingly wanting to do it in partnership with credible juniors with good projects.

Gerardo Del Real: Listen, Sam, you're in the sweet spot. You got a great share structure, you're fully funded, you have major partners, you're in dialogue with several other potential partners. Drills are turning, gold is $5,000, copper is near the $6 mark, lots of shots on goal this year. Great, great work on getting the business model down the way that many companies try to get it down. You've actually executed brilliantly. Looking forward to having you back on when more assays start coming in. Anything to add to that, Sam?

Sam Spring: No, I think that wrap up was very good, Gerardo, and what we've got to do is start continue to execute. When we did that financing last year, it meant that there were more options for us to create value. We're early innings in terms of being able to execute and implement those programs. So plenty of good news flow and plenty more upside from execution of the existing business model. So thank you for the opportunity to provide an update.

Gerardo Del Real: No, thank you for the time. Looking forward to having you back on. Thanks again.

Sam Spring: Cheers.

Gerardo Del Real: Cheers.

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