BMEX Gold (TSX-V:BMEX): Entering a hot market
Junior Canadian gold exploration company BMEX Gold has the primary objective of acquiring, exploring, and developing viable high-grade gold projects in the mining-friendly jurisdiction of Quebec.
Founded in 2017 and listed on TSX Venture Exchange, the US Exchange (MRIRF.Q), and the German Exchange (8M0), BMEX Gold is a small-cap company with a market cap with just over $12m. Founding shareholder David Sidoo brings more than 31 years of experience in the venture capital space. He was one of the founding shareholders of American Oil & Gas, which was sold to Hess Corporation in 2010 in an all-stock transaction valued at over $630 million dollars. He was also CEO and President of Advantage Lithium, building the company from a mere 477,000-ton resource to 4.8 million tons in two short years. Mr. Sidoo discusses his varied and successful career to date, the impressive sale of Advantage Lithium to producer Orocobre, and the Quebec assets that were recently acquired by BMEX gold.
“I grew up in New Westminster, British Columbia,” Mr. Sidoo explains. “I went to the University of British Columbia and played football there for the UBC Thunderbirds, won a national championship in 1982, and then graduated with an education degree.”
Mr. Sidoo spent the next five and a half years playing in the Canadian Football League for the Saskatchewan Roughriders and the BC Lions. At the time of his trade to the Lions, he was also working as a broker, and spent half a season juggling the two professions.
“I started building up my clientele base, looking at resource projects and tech deals. I know the real turning point in my career came when I moved to Yorkton Securities.
Mr. Sidoo’s career took off from there, and he spent six and a half years at Yorkton, becoming involved in a number of successful projects in the resource sector, working closely with many successful entrepreneurs in the mining sector.
“In 2000, our chairman of Yorkton Securities, Frank Giustra, decided to retire. He had a real passion for the film industry, so he decided to form Lionsgate Entertainment, which is now one of the largest and most successful film companies in the industry. When Frank left, Yorkton just wasn’t the same. I stayed there for about another year, then left Yorkton and put an investment banking company together on my own.”
At that time the oil and gas sector was very hot and Mr. Sidoo capitalized on some of the entrepreneurial contacts he had made over the last six and a half years in Denver, Colorado, convincing Pat O’Brian and his group to work with him on an oil and gas deal.
“They were basically building value for everybody else, and just getting a fee for doing that. So I convinced them to put some of their own acreage together that had a chance for some success. I was responsible for raising all the capital and help put the board of directors together and said let’s try and bring some value for you and our shareholders.”
It took about a year for this group to decide to work with Mr. Sidoo, having heard things about Vancouver which made them a little nervous to get involved. Ultimately, they went ahead and began working together forming a company called American Oil & Gas Inc.
“We had a few hits and misses,” Mr. Sidoo says. “Then the management team decided to acquire small acreage in North and South Dakota in a formation called the Bakken. Many majors were drilling in the area and were having some success. Subsequently management decided to get more aggressive and acquire more acreage. Each well they drilled on that acreage was successful and economic.”
“Every hole they were drilling was successful, so there was a point in time where either the company had to continue raising the money and keep drilling holes, or we look to sell the company. So management hired Tudor, Pickering in 2010 and eventually sold the company for just over US$630m to Hess Corporation.”
“I took many of the lessons I learned from sports and working with successful people at Yorkton when I built companies.” American Oil & Gas was the largest deal Mr. Sidoo was involved in that moved his career to a different level.
Mr. Sidoo’s next project was Advantage Lithium, of which he was founding shareholder, President and CEO. The company was eventually sold to lithium producer Orocobre in March of 2020 for over $100m.
In 2017, there was a big spike in the electric-vehicle (EV) market, with Tesla paving the way for a new era. There was plenty of international noise suggesting that EVs were going to become the new normal and most analysts agreed that the demand for electric vehicles was going to rise over the next ten years.
“Electric-vehicles are powered by a battery, batteries are fueled by lithium,” Mr Sidoo explains. “There were several startup companies that started going public on the TSX, as demand for lithium began to grow.”
Mr. Sidoo began to approach a few companies in Argentina looking for quality assets. He determined that Argentina was one of the better jurisdictions for Lithium exploration and development. One of these companies was Orocobre, which was being courted by many other companies about an asset called Cauchari – the company’s focus was building a facility and producing lithium in Olaroz so they had done very little work on Cauchari and were looking for a partner.
“Their partners didn’t want them to de-focus themselves from their production, so they left the exploration side alone. I convinced them, with my background and our network and the team that I was going to put together, that they should partner with me. So we formed a joint venture partnership with Orocobre where we owned 75% and they owned 25%.”
The first $5m from this venture went into exploration, and we eventually raised over $40 million dollars over two years. Advantage Lithium management took a small resource of 400,000 tons and increased it to just under 4.9m tons of LCE. In late 2018 the lithium market then began to top, and it became more difficult for small-cap companies to raise money.
“We decided we better monetize the asset,” Mr. Sidoo says, “and we sold it to our partner Orocobre for just over $100m in an all-stock transaction. As a group we are very proud of the fact that we’ve had two significant buyouts in our career.”
Having worked from the ground floor developing multiple companies and taking them all the way through to sale, Mr. Sidoo still credits his early days playing sports for giving him the drive to succeed.
“I modelled success of creating these companies on three pillars – acquire good assets in a hot sector; secondly, you’ve got to have good people (good teammates; people who understand the area, have built companies before), and the third thing is, you’ve got to be able to have the capital to build these assets.”
Mr Sidoo believes he has shown over the last fifteen years that he can create strong shareholder value. He has now turned his attention to BMEX Gold, utilizing many of his old contacts to help make it a success.
“It’s a very hot gold market,” Mr Sidoo says. “I’ve probably been looking for a year now for quality assets. I could have settled for some marginal assets, but we decided we wanted to make sure we could have an asset that had a resource on it, and another asset that had a lot of upside potential in a good area. We were able to find some very good assets in Quebec.”
Canada has proved to be an easy area to do business in, with an amicable government open to gold exploration. Mr Sidoo has enlisted Dylan Sidoo, who was a part of the team at Advantage Lithium, to help with business development. Another colleague from the board, Peter Espig, has also moved over to BMEX Gold as well as Dr. Mark Bustin.
“One of our key additions to BMEX gold is VP of Exploration, Martin Demers. Martin was the key geologist who developed Hecla Mining company that was taken over by Aurizon Mines Ltd. for US $796m.”
The company has also been successful in raising enough capital to get started, recently doing a seed round of $900k, and is preparing to start a $6-9m raise, which the company is completing through a combination of charity flow-through and private placement.
“We’ve brought along some of the same teammates in putting this company together,” Mr Sidoo says. “We’re pretty excited about BMEX coming out of the gate – the company has two strong assets, a very experienced team and is funded well.”
BMEX has acquired two assets in Quebec – the first is called King Tut, in the prolific mining area of the Abitibi region, and the second called Dunlop Bay.
“AMEX Exploration is a publicly listed company on the TSV who’s main property is 60km from King Tut. AMEX has gone from 8 cents to a high of $3.50 on some very good drill results.”
BMEX’s King Tut asset appears to be on the same fault line as AMEX. BMEX will begin an aggressive drill program in October of 2020 on King Tut.
“King Tut has 122 contiguous mineral claims that cover over 5200 hectares. The company’s second asset is Dunlop Bay. Dunlop Bay has 76 contiguous mineral claims that cover over 4200 hectares. Like King Tut, Dunlop Bay is strategically located around producer Glencore, a major gold producer.
“In October and November of this year management is going to drill a 2,000m drill program at Dunlop Bay and 3,000m drill program at King Tut.”
BMEX Gold has two very good assets and an experienced management team, an aggressive drill program in 2020, and is well funded. If investors are bullish on gold then companies like BMEX gold are ones they should follow.
“You would think that when the company begins drilling in October, they’re going to have good results to announce in November and December. It’s exploration – you never know what Mother Nature’s going to give you – but we’ve ticked off a lot of the boxes trying to reduce the risk.”
With both King Tut and Dunlop Bay, BMEX’s ultimate goal is to validate very good historical drill results from the past to build a significant resource on each asset.
“When investors are looking at investing in a company,” Mr. Sidoo concludes, “they should look at the sector. If your bullish on gold, you think the upside is there, that’s where you should consider investing some of your money. What I want to say to investors is when you are looking into investing to a small-cap gold company – look at the management team involved, review the assets closely, and determine if the company is well capitalized.”
Entering a hot market with the right team and the right assets is likely going to ensure a lot of future success for BMEX Gold and Mr. Sidoo, who has already proved himself perfectly capable of creating strong value for shareholders. Find out more about BMEX Gold (TSXV:BMEX) by visiting bmexgold.com.