NxGold (TSX-V:NXN): enhancing shareholder value
A Vancouver-based junior gold explorer listed on the TSX Venture, NxGold is an exploration and development company focused on pursuing high grade gold opportunities in world-class mining districts.
A lawyer with over 25 years’ experience in exploration and mining, Chris McFadden is NxGold’s President and CEO. Mr McFadden spoke recently with The Canadian Business Quarterly about the benefits of mining in world-class districts, the company’s experienced and committed team, and the exciting opportunities NxGold is pursuing to enhance value for shareholders.
Early-stage gold exploration
Since its inception in 2016, NxGold’s primary focus has been on two gold exploration projects. The first is the Kuulu project in Nunavut, Canada, and the second is the Mt. Roe project, located in the Pilbara region of Western Australia.
“You probably couldn’t find two more diverse climates in which to operate,” Mr McFadden says. “In both cases we’re in early-stage gold exploration, and we’re looking for high-grade gold, large volume deposits, which would lead to mining operations eventually.”
The route towards these projects has been a long one. After years working in the mining industry, Mr McFadden moved into a more entrepreneurial space, founding a company called NexGen Energy Ltd with NxGold’s current Chairman, Leigh Curyer.
“It was a uranium exploration junior based in Canada. NexGen had some extraordinary success in discovering the Arrow project, and along the journey of building that company over the last 7 or 8 years, we picked up a shell company.”
The world-class Arrow uranium project is a project in Canada which, according to a PEA released in July 2017, is expected to produce 18.5m lb uranium per year over an initial 14.4-year mine life, greatly surpassing the production of the world’s biggest uranium mines.
The shell picked up by NexGen from a previous transaction was soon sitting in its corporate structure without a specific purpose. It only became clear what to do with it when a shareholder bought forward a proposition.
“He said he was impressed with how we worked, and how the company had achieved its success, and he mentioned that he had a gold exploration project in Nunavut, and he was keen to explore the possibilities of entering a transaction around that project.”
Towards the end of 2016 the transaction was completed. The result was the formation of NxGold, with the company entering into an agreement with that NexGen shareholder to work on the Kuulu project in Nunavut.
The company has since added the Mt. Roe project, and now finds itself in an excellent position to push forward with its exploration. Although both projects are still at an early stage, the hope is high for significant results.
“As an explorer, I would like to think we’re on the cusp of making a discovery. That’s the exciting part of what we do. We take a very systematic approach to exploration. We’ve had success with NexGen, and we’re using the same methodology, the same discipline. We don’t madly and blindly pursue exploration just for the sake of it.”
The two projects being undertaken by the company have been carefully chosen for their suitably, with both being considered amongst the best districts in the world for mining, sharing conditions that make them perfect for exploration.
Kuulu project: Nunavut, Canada
“One of the areas that I would say to shareholders provides great opportunity is what we’ve got at Kuulu in particular,” Mr McFadden says. “Once we gain access to that project, we’ve got significant exploration potential for a discovery there.”
Although the plan is to progress both projects at the same time, the project at Kuulu is currently delayed, as the company waits on an outstanding surface license renewal with the local Inuit association.
The Nunavut region in northern Canada is not currently producing a significant level of mining output, but its potential to do so is huge. A distance of just 40km away from the town of Rankin Inlet, the region is well set up to be prosperous in the future.
“Rankin Inlet is on the western shores of Hudson Bay, in Nunavut. That town is the epicenter of mining development in the area. A company called Agnico Eagle has been operating at Meadowbank for a long period of time, about 80km from Rankin Inlet.”
Agnico Eagle is in the process of constructing a major operation at the Meliadine mine, situated roughly between the NxGold project and Rankin Inlet. Both operations benefit from being served by excellent infrastructure and support networks.
“There’s an airport [at Rankin Inlet] that’s serviced by jet planes from Winnipeg on a daily basis, there’s a port there that operates in summer months. There’s a workforce, there are trained people, there are mining services groups there.”
These groups are interested in expanding their operations with other companies, and the local community is likewise keen to see training and employment for its youth. It is an area that is extremely supportive of mining.
The Agnico Eagle project is of particular importance to NxGold’s plans. A large high-grade deposit that is soon to be in operation, the impressive work at Meliadine bodes well for good mining along trend to the west.
“We’re on the same structure as Meliadine, the same sort of rocks, fantastic soil anomalies, and really strong results in boulders at surface, very high gold assays from those boulders – beyond 400 grams a ton in some cases.”
Having been underway for a number of years, the Nunavut project has drill-ready targets, meaning drilling can start as soon as the necessary license is secured. All signs point to successful mining in the region, promising to significantly enhance value for shareholders.
Mt. Roe project: Pilbara, Western Australia
As it waits for the license needed to move forward with the Kuulu project, the company is currently focusing efforts on the Pilbara region. “In terms of work on the ground,” Mr McFadden says, “the Mt. Roe project in Western Australia is progressing.”
“The Pilbara region is home to the Australian iron ore industry, where majors such as Rio Tinto and BHP, as well as Fortescue Metals, produce huge volumes of iron ore for export to global markets, and in particular the Asian markets in China, Japan and South Korea.”
Between these three main producers, and several others in the region, there are around 600m tons of high-quality iron ore going out of the Pilbara region each year, making it one of Australia’s leading export earners.
“So the Pilbara, over the last fifty or sixty years, has become perhaps the premier mining district in the world in terms of value of production and volume of material that’s going out. There’s a very mature and well-established mining industry in that area.”
This long history of mining success means there is significant infrastructure already in place in the area, comprised of ports, rail, power generation, as well as an incredibly strong mining support sector.
“It’s a highly successful area in which to be operating,” Mr McFadden says, “so as a small explorer in the area, we’re able to take advantage of this fantastic infrastructure and support services that are in the region.”
Located 30km south of the coastal town of Karratha, the Pilbara region provides access to an airport running daily flights to the capital of WA, Perth, as well as being home to the Port of Dampier, from where large quantities of the iron ore mined in the region are shipped.
“There’s all the surrounding support services and infrastructure, that means that our project can be managed and operated from Karratha, and things are cheap there because of the volume of material that’s coming in.”
In the Pilbara, the company is not yet at drilling stage. More groundwork is needed over the coming months, following which there will be drill targets in place by the end of the year, putting the two projects at a comparable stage of exploration maturity.
“We have nuggets [of gold] at surface. You can bend down and scrape with your fingers, and pick out nuggets very close to surface. The potential we have there is to find the source of that gold. We’re already halfway there, we know we’ve got gold.”
In addition to the surface nuggets, there is also gold visible within the soil stream sediment sampling, over an extended strike length. The next step is therefore to narrow down the samples to provide more precise information.
“[We’ll] use that with the geophysics we have, and the mapping, and the metal detecting, to determine where exactly we’re going to drill, and hopefully we find the actual source of that gold that we’re finding at surface.”
In safe hands
With a vastly experienced management team and a board with significant contacts and experience in a number of sectors, NxGold is well placed to deliver significant value to current and potential shareholders.
“One of the key members of any exploration team is the Vice President of Exploration. Our VP Ex is a gentleman called Darren Lindsay. A highly experienced gold geologist, he has over twenty years of experience in mineral exploration across a number of continents.”
Mr Lindsay adds real value to the exploration team, having worked for both junior and major companies, such as BHP, Miramar and Kodiak Exploration, at various project stages. He has also worked extensively across Canada, including significant previous experience in Nunavut, with lots of exploration success.
“Our CFO, Janine Richardson, likewise has over 30 years’ experience in mining. She’s been involved in the gold industry in particular, with companies like Placer Dome, Rio Alto Mining and others. So again, vast experience and a very safe pair of hands.”
The company’s board boasts an equally impressive array of experienced members, starting with Chairman Leigh Curyer, an integral part of NxGold’s formation. Mr Curyer trained as an accountant, but has since amassed many years’ experience in mining.
“[Leigh] has been involved for a long time in very strategic roles. He’s a former CFO of Southern Cross Resources, which became Uranium One, and he’s also been in the private equity business. He ran Accord Nuclear Resources, reviewing global uranium assets for First Reserve, and has extensive experience in uranium in particular.”
Also on the board is Toronto-based Director Richard Patricio, a strategic thinker with a string of connections in the Toronto capital markets, connections that have proved beneficial for the company in helping raise money in Canada.
“Trevor Thiele is head of our Audit Committee,” Mr McFadden says. “His experience has largely been in major Australian agribusiness companies, like Elders. He’s been involved in IPOs, capital raisings and corporate reorganizations.”
Last but not least on the board is Perth-based Director Karl Laufmann, who has a strong background working in the Australian capital markets, giving him great experience with junior miners in the country.
This impressive team has already proved its worth in creating value for shareholders. The company is currently in excellent financial condition, putting it in the perfect position to complete the two exciting projects it’s engaged in.
“We’re currently funded – we have approximately $4m of cash. We completed a capital raising in June, that was very successful. We’re funded for the work that we want to do this year and into next.”
The company has approximately 81m shares outstanding, with 47m warrants, meaning there are about 135m shares on a fully-diluted basis. There is no debt and several other assets, including securities, making the company’s total working capital around $4.5m to $5m.
“We’re very much a results-driven and value-adding group that looks to enhance shareholder value,” Mr McFadden concludes, “and we believe we have that potential there with these two projects.”
Find out more about NxGold by visiting www.nxgold.ca.