Public Entrepreneur Issue 1 • 2019

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Letter from the Editor

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elcome to Public Entrepreneur magazine, our fifth issue and the start of our second year of publishing. We are thrilled with the positive response our magazine has received in its first year, and are excited to continue to bring our readers stories of entrepreneurs that inspire us to live up to the mantle of being Canada’s Exchange for Entrepreneurs.

Now that this magazine is officially part of an annual cycle, it’s important to acknowledge the inspiration for this “PDAC” edition. For those that aren’t familiar, PDAC is short for Prospectors & Developers Association of Canada. The annual PDAC Convention in Toronto is one of the largest and longest running mineral exploration conferences in the world. Started in 1932, the conference now boasts over 1,000 exhibitors, 3,500 investors, and over 25,000 attendees.

PDAC itself reflects the diversity of opportunities and impact the mineral exploration sector has on the global economy. The convention delivers spaces for thought leadership, networking, and promotion for all things related to mineral exploration (not to mention JAMES BLACK the myriad of hospitality events). It is especially noteworthy that the vast majority of the Editor-in-Chief companies on display are publicly traded in Canada and represent a healthy cross section Public Entrepreneur of geographical footprints and mineral asset types.

After having personally participated in this event over the past eight years, there are some clear signs that things are shifting in the industry. For example, the technology on display at exhibitor booths continues to highlight the influence of innovation on exploration techniques and analysis. The virtualization of mines, and the ability to share detail in a fully 3D rendered environment, continues to pop up across more booths every year.

Another trend that isn’t so obvious is the underlying youth movement across the sector—both from the financial and operations side of the business. Look no further than this issue’s cover story about “The New Faces of Mining.” A new generation of geologists, explorers, bankers, and promoters are beginning to exert influence over an industry that still operates as a bedrock for the Canadian capital markets.

From our perspective at the CSE, we continue to see robust capital formation take place in the mining sector. Over 40 new mineral exploration issuers chose to list with us last year, and the sector continues to have the highest population count on the exchange. Issuers in the space quietly raised $217 million dollars across 221 deals in 2018. While investment activity may seem relatively humble compared to other sectors (ahem cannabis), in reality the movement of capital reflects genuine interest in the space. Exploration dollars are always hard to come by, but the evidence that this capital is being raised and put to work bodes well for companies seeking out the next great discovery.

Several companies that contributed to the aforementioned stats are featured in this issue—covering a breadth of asset types and geographical plays ranging from the Yukon, Idaho, and as far as Japan. We hope you ‘dig’ this issue and be sure to visit us in person at the Investor’s Exchange at PDAC if this magazine finds you in time, or follow our adventures on and off the show floor on our social media channels!

Sincerely,

James Black Editor-in-Chief Public Entrepreneur

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PART ONE

James Rogers, Shauntese Constantinoff, Sean Kingsley, and Angela Johnson

THE

By Katie Lewis

NEW FACES of

MINING Engaging the millennial investor in mining opportunities

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hey’re young. They’re powerful. And that wave of influence is growing—quickly.

Meet the millennial investor. Now, the catch: getting them interested in investing in the mining and metals industry. It’s a relatively untapped investor demographic, on the back of a tough half-decade in the space.

But the potential for opportunity is growing, and this group of investors is demanding more of the industry: from more connectivity to increased transparency (and beyond).

Public Entrepreneur spoke to three up-and-coming millennials who are helping push the space forward.

Tell me a bit about your background. How did you get involved in the mining industry?

AN I began my professional career as a financial auditor while simultaneously

completing the Chartered Professional Accountant designation. Later, I transitioned to investment banking, joining Dundee Securities, which recently became Dundee Goodman Merchant Partners, a mining-focused merchant bank. The clientele and deals I’ve been involved with have always exclusively been mining.

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DELREY

METALS CEO Morgan Good is bullish on materials supporting innovation in energy storage, EVs and the steel of tomorrow

By Dennis Fitzgerald

D

elrey Metals Corp. (CSE:DLRY) is a growing mineral exploration company powered by a focus on battery metals.

It has acquired the Star, Porcher, Blackie and Peneece vanadium properties in British Columbia and intends to review and acquire other projects showing potential for materials used in strengthening alloys for steel and titanium, as well as energy storage and electric vehicles.

Last year, the company completed Phase 1 work at the Sunset property in British Columbia, which showed a significant new cobalt, copper and zinc anomaly. Delrey has an option agreement to purchase a 100% interest in the highly prospective property.

On the heels of raising $1.5 million in Delrey’s October IPO, Chief Executive Officer Morgan Good is excited about the company’s prospects. Public Entrepreneur caught up with him and got his take on mining, finance and commodity prices.

How did you get into the corporate world?

I was born into a stock brokerage family. Several of my relatives were floor traders, brokers, promoters or financiers.

Growing up, I played competitive golf at Point Grey Golf &

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Country Club in Vancouver, where those relatives and other supporters gave me a deep understanding of money and the stock market. As a teenager, I had a serious interest in finance and venture capital.

What are your company’s most important projects?

All of Delrey’s current projects are important, particularly our recently acquired vanadium- focused assets. Of those, the Porcher and Blackie properties have unique features that jump out. We’re initiating geophysical work and airborne magnetic surveys on all four of the vanadium projects and are keen to see Phase 1 results. From there, we’ll be in a much better position to decide next steps. I think it’s worth mentioning that we are in advanced stages of making a strategic acquisition that could add significant value to the Delrey story.

Delrey’s Sunset project is near the Whistler Blackcomb ski resort. Do you ever have time for outdoor activities such as skiing or hiking?

When I travel for business, which is quite frequent, I like to try and enjoy activities that are consistent with the parts of

Morgan Good

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one end to the other. This has been the case for many millions of years. So, Japan has seen a long history of hot spring formation, and we are looking for paleo hot springs—basically old hot springs that would have carried gold up to surface.

As a result, deposits in Japan are relatively shallow. Usually when you find an old hot spring, at surface what you see is a terrace of silica, a silica sinter. It is kind of a flat body of silica deposited by the hot springs. From the feeder below, cracks in the ground fed the hot spring water through, and that’s where the gold forms. These deposits are present within a couple of hundred meters of the surface.

We’re interested to know about your top projects and why you chose them as the focus of your exploration.

QH The Omu Project is in northern Hokkaido. Omu is centered on a volcanic system that was active about 12 million years ago. We have a history on the property of not only volcanism but extensive hot springs. There are at least three major centers where hot spring waters have surfaced. One of them is at the Omui mine, which is an historic mine that produced maybe a ton of gold in the 1920s.

It was very high grade and has seen little, if any, exploration since.

The second area we are focused on is the Omu sinter. This is a new discovery that we made a few kilometers due north of the Omui mine. The system is intact, basically preserved in its entirety. The silica sinter is on top and we believe there is potential to find highgrade veins underneath like we see at the Omui mine. It has never been drilled or tested and is thus a brand new exploration target.

The third area is in the western part of the Omu property. It is called Hokuryu. Like Omui, it is an historic mine and produced a few tons of gold. It was shut down during the Second World War, well before its resources were mined out. We are a little deeper into the system, as the sinter has weathered away—we are down into the vein system beneath it. There are pieces of vein at surface with an average grade of 50 grams per ton gold and 500 grams per ton silver. It is a very rich and promising new target.

I love the story you told once about finding a project after noticing interesting rocks in a local garden. Can you each share with us a favorite story about your exploration work in Japan?

the biggest thing since Ben Hur,” and then you get into the field and it’s disappointing, you know they embellish. Then there are geologists who are low key. They’ll say, “Oh, there is something kind of interesting,” but then you get out in the field and it’s the biggest thing ever.

One of our advisors is a gentleman by the name of Hidetoshi Takaoka. Two years ago, we went to Sado Island to visit an historic mine. The mine has a tourist shop in front with a box of rocks you can buy as souvenirs. I picked one up and Mr. Takaoka said, “We can find one better than that. There is a creek near the mine and pieces of ore have washed down the hill over the years.” We crawled down this steep valley just in front of the mine, and after about five minutes at the creek, Mr. Takaoka reaches down and picks a rock out. We crack it open and it is literally full of gold. I knew then that he tends to understate things. It is one of the nicest specimens of epithermal vein I have ever seen.

You have tremendous partners in Japan. Tell us about them and how they have contributed to your success.

AL How Irving started was that Quinton and I worked for a com-

pany called Gold Canyon and that merged with another company.

What was left in Gold Canyon was a joint venture in Africa with the Japanese government mineral agency called JOGMEC. We worked in Africa with Mitsui Mineral Development Engineering Co. (MINDECO). They are probably the top engineers in Japan for mining and exploration. We had already worked together for about 10 years, and when Quinton and I asked MINDECO engineers if they could help us if we did work in Japan, they said they’d assist in any way they could. It has been amazing to have a built-in team from the beginning that is likely the best in Japan.

And previously Quinton mentioned Hidetoshi Takaoka. He is the one who recommended we look into the Omu project. He was chief geologist for Sumitomo Metal Mining and found the Pogo mine in Alaska for Sumitomo.

If Irving puts projects into production, your plan is not to build a mill or facility onsite yourself, but rather to supply smelters, is that correct?

QH The rock is rich in silica, and silica is needed by smelters as an

AL Those rocks were actually being used at a kindergarten in an ornamental fence. Our team went to the school and asked where they’d found them. They guided us to the location and that is how we located the sinter. The town wanted to get rid of the rocks because they planned to build something else. They put up a poster saying, “Anyone who wants these, please take them.” We said, ”Yes, we’ll take them!” And now some of them are in our office. They were just going to throw them away.

QH I usually judge geologists by comparing what they talk about to what you see in the field. In other words, if they say, “This is

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agent called flux. Flux is added to copper, zinc or other concentrates and it helps retain heat in the furnace—it acts as an insulator to keep heat in the molten material. It also extracts some of the nastier elements—it takes out iron and other things. So, silica is very important to the smelting process.

In Japan, they use perhaps a couple of million tons per year. Traditionally, Japanese gold mines have supplied the sinter for smelters, but as gold mines have diminished in Japan, this has become less and less so.

When the ore is added to the furnace as flux, gold and silver come straight out into the copper matte, and they recover them through

Dr. Quinton Hennigh

further refining in the smelter—they are a byproduct of the smelting process.

We thus saw a huge opportunity. If we find a high-grade deposit we feel it is easy for us to integrate into the smelter flux market in Japan. It saves us from building a mill, which is capital intensive and requires more permitting.

AL When Omui was in production they shipped ore to the Kosaka smelter back in the 1920s. Kosaka remains a large smelter today in full operation. When we spoke to them two years ago, they said that if we were to make a discovery they would welcome our supply.

You have a busy 2019 planned—tell us about the first half of the year and how it sets up the activity in the second half.

QH For this year, we are working on get-

ting our drill program lined up in Omu. We brought a drill rig from Canada and a drilling company we worked with in the past is seeking visas for some of its drillers.

Once we get those, we can start drilling, I suspect some time in March. The drill program should last most of the year, say from March to October. We will probably test the Omu sinter first and the Omui mine second.

We are also going to conduct trenching and bulk sampling at the Omui mine site.

We plan to open up some of the veins with excavators and not only study the geology but extract a bulk sample, say up to 1,500 tons. The plan is to ship the material to the Kushikino mine and smelting complex in Kyushu. They are prepared to handle our material and we are planning on selling it to them directly.

Other than that, our focus will be ear-

lier-stage exploration on Hokuryu, which is on the Omu property, and we are also going to undertake greenfield prospecting and mapping on our other projects in Hokkaido.

Is there anything we have missed?

QH We are one of a handful of exploration companies that have waded into Japan recently, but I would put us at the head of the pack because we have very good relations with the entire Japanese mining community—government, the mining companies, regulators, the towns. We built this company purely to operate in Japan. We have a good Japanese team. I think we are in the best position to make a discovery in Japan.

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MEGUMAGOLD A fresh take on the gold exploration model for Nova Scotia

By Giles Gwinnett

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grade nuggety style quartz-hosted gold, which is quite expensive he province of Nova Scotia already has a rich gold mining herto extract and it’s hard to build models off of that type of mineritage, but new theories and modern exploration technologies alization. Atlantic Gold, here in the province, has shown that the are re-awakening interest in the jurisdiction’s huge potential. disseminated model of low-grade, bulk tonnage is really where It was the site of one of Canada’s first gold camps and prothe projects that are economically viable are duction of the metal dates back to around going to be found.” the middle of the nineteenth century.

Without getting too technical, the reason Between 1862 and 1927 almost a milfor the geology is this: glaciation in Nova lion ounces of the precious metal were Scotia caused the softer rock on the top to extracted from the province. erode, exposing the harder outcrops, which In those early days, however, the focus was on high-grade, narrow vein deposits. We are really aggressively excited those early explorers because the gold was often visible in the quartz veining Today, the emphasis has shifted with the drilling them.

If it’s there exposed at surface. discovery of disseminated mineralization Disseminated mineralization, on the othwith bulk-mineable potential. we are going to find it. er hand, often cannot be seen and is scattered The move started with the discovery of across large areas at a lower grade but could shales at the Touquoy deposit, where a compotentially exist throughout the massive antipany called Atlantic Gold has now commisREGAN ISENOR cline structures within the Meguma Terrane. sioned a highly successful open pit mine.

Although such mineralization can’t be seen, exploitation of Now another firm—explorer MegumaGold Corp. (CSE:NSAU), the gold is simple and cheap—simply digging the source rocks which takes its name from the Meguma Terrane where the original out of the ground from an open pit, while cheap processing gold rush took place—is getting in on the act. It has acquired 11,205 methods can also be used. claims totaling more than 170,000 hectares, many of which are Although the company doesn’t plan to put a deposit into adjacent and along trend from the Touquoy deposit. production itself, Meguma wants to emulate the success of its Meguma’s Chief Executive Officer, Regan Isenor, explains, neighbor Atlantic Gold.

“Typically in Nova Scotia, everyone was always after the high-

“

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The latter’s Moose River Consolidated gold mine has the lowest all-in sustaining cost per ounce mine in the world—between US$540 and US$588—mainly due to the low strip ratio.

Meguma is currently in the middle of a 20,000 meter reverse circulation (RC) drill program focused on 10 highlight targets, whittled down from an original 40, which were identified from a major airborne geophysical and Lidar survey.

Isenor highlights that the company’s targets are predominantly on ground that has “never been tested before,” which is exciting as he believes disseminated gold could be present throughout the province.

He aims to have completed 10,000 meters of drilling by mid-summer, before stopping to have assays returned for evaluation ahead of a larger program, consisting of diamond drilling to focus in on the most exciting targets and RC rigs for more regional exploration.

With enough money in the bank to fully finance the current drill program, specifically around $5.5 million, Meguma hopes to succeed in Nova Scotia where others have had to throw in the towel before.

“People have come in and they’ve had an idea of what a particular model could look like, but they haven’t been funded well enough to actually really test these targets and that’s what we are doing,” says Isenor. “We are really aggressively drilling them. If it’s there we are going to find it.”

MegumaGold was previously called Coronet Metals and was run out of Vancouver by mining executive Theo Van der Linde, with a tailings project in Nevada.

He became aware of the Meguma land package and could see the opportunity. Coronet struck a deal to buy a large land package in the historic gold district and Isenor was brought in as the CEO when the company name changed last June.

The operations base was also moved to Bedford in Nova Scotia and the firm started to raise capital for exploration.

Van der Linde remains as president at the company.

Despite its early stage, MegumaGold has big goals as it looks to play a major part in Nova Scotia’s paradigm shift in the understanding and potential of its gold deposits.

Isenor reckons his company stands at the exciting beginning phases of people understanding that this disseminated style of mineralization is really where the future lies and is the economic mining model for Nova Scotia.

“People never really evaluated any of these targets for this disseminated style,” he explains, adding that often such geology was considered by miners to be mere waste rock. New theories indeed.

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