Calibre Mining is a Canadian mining company focused on the acquisition, exploration, and development of gold properties across the Americas.
What explains the disconnect between gold prices and gold mining companies’ equities?
I think there are a couple of reasons. One, there are a lot more passive products now that people can invest in to get exposure to gold, such as ETFs and various indexes. These allow investors to buy a basket of equities or physical exposure to gold, without actively picking individual stocks and building a portfolio.
Another reason is that a younger generation views cryptocurrencies as a safe haven asset. Capital that would have been in a gold equity is now potentially in crypto. Additionally, macroeconomic cycles are slowing down. Throughout history, we have seen that gold performs differently during various cycles. The current situation with more monetary policy control means we see shorter cycles with significant volatility. This might put fear into investors, making them question the need to own gold equities when they can invest in physical gold or gold ETFs.
Given all that, how have you adjusted your strategy to attract investment?
Calibre's approach is somewhat unique. In 2019, our team decided to buy an asset in production instead of going through the long process from exploration through development, permitting, and construction. This strategy allowed us to avoid the slow, monotonous cycle that can take 10 to 20 years.
Companies that are in production but cannot find more gold at their current operations have to continuously invest in exploration or turn to mergers and acquisitions.
We started by acquiring assets from B2Gold. This acquisition got us into production right away, attracting a new suite of investors. We immediately adjusted our approach by deploying and evolving a hub and spoke operating strategy which unlocked significant value, generating higher operating cash flows and enabling us to reinvest cash flow into expansion and exploration. With this approach we were able to attract analysts and institutional investors.
The major difference today is that almost everyone has access to online banking and trading accounts. This means that individuals now manage their investments, relying on their own research rather than solely on investment advisors. This shift means that publicly traded companies must adapt their marketing strategies. Most mining companies still follow old methods, presenting in front of small audiences. We take a broader approach to marketing, considering our stock as a product. We do extensive marketing in print, digital media, and any platform that might reach potential investors.
What is it like to operate in Nicaragua?
The current environment, though perceived as challenging, has not significantly hindered our operations. The country is very receptive to the mining industry and welcomes the benefits responsible mining brings. The country has established clear mining laws and regulations and has encouraged, over the past 30 years, responsible foreign investment in the sector. Many of the communities in which Calibre works are long-standing mining communities, with mining families that date back generations. Successful collaboration with local authorities and communities has been key.
Maintaining a social license to operate and grow requires that we engage openly with stakeholders to build transparent, productive, sustainable and mutually advantageous alliances, generating shared value and benefits. In Nicaragua, 95% of Calibre’s direct employees are Nicaraguan nationals, and of these over 80% are from communities located immediately around the mines. Calibre is committed to significant social investment in the communities where we operate, focusing on sustainable projects to improve health, education, livelihoods, and infrastructure.
Tell us more about your diversification strategy.
Diversifying our portfolio was important to continue our strategy and progress to unlock value for shareholders. We acquired a 40,000-50,000 ounce heap leach mine in Nevada, which is considered one of the best places to operate gold mines according to the Fraser Institute. This move was a stepping stone to growing our business and diversifying our assets. This mine currently has a smaller heap leach operating profile; however, there is significant exploration potential within a 200 km2 land package.
Our core group continues to evaluate opportunities and mergers to unlock share price performance. Our track record demonstrates our ability to do this, now, with Calibre, as we did with our last company, Newmarket Gold, which merged with Kirkland Lake Gold in 2017 to create a +500koz per year producer which had significant share price appreciation to a valuation of $10 billion. To further Calibre’s growth, we acquired Marathon Gold. This acquisition was timely, as Marathon had permitted the Valentine Gold Mine and was 40% through construction, and had five million ounces in Canada, a top-tier mining jurisdiction. Investors prefer safe, known places like Canada, which offer well-established rule of law and democracy. This strategic diversification strengthens our position and aligns with investor preferences for stability and growth.
You expect to begin production next year in Canada. How big will it be?
Based on Marathon Gold's engineering work and feasibility study results from Q4 2022, we expect to produce around 195,000 ounces a year for the first 12 years of a 14-year reserve life. The reserves are 2.7 million ounces within the pits, although some material isn't classified as reserves. Operating a mine involves adapting to real-time conditions rather than strictly following a feasibility study. We anticipate that we'll be mining this operation for much longer than 14 years due to the extensive exploration potential and total current resources of 5 million ounces in all categories.
Would you say that you uphold the same environmental standards in Nicaragua that you would in Canada?
Absolutely. We adhere to international codes and standards, as well as local and federal mining legislation, ensuring our environmental and operating practices are of the highest standards. It is a critical focus for us. In addition to our environmental stewardship, we emphasize social and governance aspects, such as employing locally to benefit communities and stakeholders.
Where do you see Calibre in a few years compared to other gold mining companies?
Over the next 12 months, our focus is on delivering the Valentine asset. By Q2 2025, we will start production, commencing ramp-up to commercial production. As Atlantic Canada’s largest open pit gold mine, it will deliver significant value through the delivery of gold, and through exploration potential across the multiple fault zones within the 250 km2 land package.
Our track record includes merging New Market Gold with Kirkland Lake Gold, creating a larger, more robust producer. We aim to replicate that success with Calibre, possibly diversifying into copper. Our goal is to create value for shareholders through strategic mergers and acquisitions, unlocking the potential of our share price. Buying the Canadian asset for $250 million, which should be worth $2 billion once productive, reflects our commitment to growth and shareholder value.
