In a recent interview in August with Kitco News, Chantelle Schieven, Head of Research at Murenbeeld & Co recommends keeping an eye on the asset as the market is extremely oversold , and that a turnaround is coming soon. Over the past year, gold has been on a decline, even hitting 12-month lows, as the US dollar is at a record high. As Chantelle Schieven concludes: “So is now the time to dump your gold stocks or pick some up while they’re on sale? … the evidence is overwhelmingly for the latter, and investors who choose to sell or already have sold their gold shares could be missing out on the next big gold run-up.”
The subject of today’s CEO interview is Derek White, President and CEO of Ascot Resources Ltd. (TSXV:AOT; OTCQX: AOTVF) is a junior exploration company focused on re-starting the past producing historic Premier gold mine in British Columbia’s Golden Triangle. With C$14 million in cash as of June 30, 2018, no debt and new management with a proven track record of value creation for shareholders, Ascot Resources is positioned to start production in the near future. Let’s see what Derek has to say about the state of gold investments and the company’s flagship gold project in the world famous Golden Triangle located in British Columbia, Canada.
1. Ascot Resources is a junior mining company which has been in business for quite a long time, but since last year the company has changed a new management team that transformed the company completely. So what attracted you to join Ascot? And can you state the significance of the new management team for this gold company?
The new management has good track record of re-starting mines with a high level of historical infrastructure. The value proposition is to reduce the upfront capital and seek to have a high return given the low up-front capital. Ascot has a mine with a lot of historical infrastructure and high grade which the new management finds very attractive. The new management team have built and operated a lot of mines and that adds a whole new dimension to value creation for Ascot, which focused solely on exploration in the past.
2. The Golden Triangle in BC is one of the hottest gold exploration area plays in recent years, why do you think Ascot is one of the most attractive companies in this crowded region?
The golden triangle is a big area but has challenges with access and infrastructure. Ascot is located at the southern end of the golden triangle near the port of Stewart BC, which creates a lot of cost advantages for Ascot. There have been three past producing mines on the property with infrastructure already in place. saving the Company time and money compared to other companies that have to build from scratch. Another advantage that we see, is that only 30% of the property has been explored, giving us ample additional exploration targets.
3. What are the positives and challenges in mining here in the province of BC? And what major risks will Ascot be facing in moving forward with these projects?
The positive aspects of mining in BC are:
- Geologically well-endowed with high-grade gold and lots of growth potential, especially in the golden triangle
- A strong history in mining and lots of mining and exploration expertise
- Politically stable with established regulatory bodies
- Benefits from the weak Canadian dollar to improves cost effectiveness
The challenges in BC and challenges that Ascot will face are
- Having enough time to develop enough resources to maximize the throughput of the mill. This is being addressed by more exploration drilling on our numerous targets and the acquisition of Silver Coin property; located perfectly between the Premier Mill and the Big Missouri area
- Increasing the tailings capacity for the existing tailings dam facility expanded production. Ascot is working with a consulting engineering firm, Klon Crippen Berger to expand the tailings capacity significantly
- Systematically assessing the enormous database and exploration targets. We are addressing this using the IP geophysics as a tool for quickly evaluating exploration targets
4. Can you explain about the rationale behind recent acquisition of the Silver Coin property from Jayden Resources and Mountain Boy?
The Silver Coin was a mine that produced and fed the Ascot mill in 1991 when it was operating. The mineralization at Silver Coin is the same as the Big Missouri and Premier material and can be processed concurrently. The mine has a ~1200 m development and portal that is very close to the Ascot mill and can utilize our existing haul road distance to the Premier Mill is 8km via the Big Missouri Haul Road. The northern edge of mineralization at Silver Coin and the southern edge of the mineralization at Big Missouri are less than 1000m apart. There is a large synergy value that helps to maximize the feed to the mill. The timing of the transaction works well because we can include the resource in our current engineering studies.
5. What are the important milestones of Ascot that the investors should look for in the next 12 -18 months?
- Oct 2018: closing of the Jayden and Mountain Boy transactions and additional drill results
- Q4 2018: completion of the Ascot engineering study and the ordering of the long lead time items for the mill restart
- Q1 2019: application for the mines act amendment permit
- Q4/2019/Q1 2020 start production
6. Gold equities have been underperforming as a group comparing to most other sectors, what do you think are the reasons behind this trend?
Gold tends to work countercyclically to the US dollar. The US dollar and the US equities especially tech stocks are at a record high and the Fed is raising interest rates. However, the US and other countries are printing a lot of money and this should eventually lead to a devaluation of the USD and rise in gold prices. Gold equities have also suffered because a lot of capital has been invested in gold indices or ETFs and valuation of gold companies, especially gold junior companies is very appealing right now.
7. Looking at Ascot’s management team, including yourself, we see a lot of years of combined experience. In what ways can this experience be translated to shareholder value?
The number one way the new team can increase Ascot’s value is to work towards a restart of the mine to produce cashflow as quickly as possible. The new management team has re-started mines before and this can be done again at Ascot. The second is to maximize the tonnage to the mill and maximize the return on the low level of capital required to re-start operations. This can be done through both expansion and development of resources and acquisition of resources like Silver Coin near the mill
8. Further to that, your team has seen a number of revolutions of the mining cycle. What do you think we are today in the cycle?
The most money made in the resources industry is to buy low in the down cycle (like now) and wait until the commodity prices are higher before selling. These cycles repeat themselves every 10 years and seems to happening again. One thing we have learned from the past is do not try to pick the very bottom just get near the bottom and the long term returns are usually very good.
NAI500 would like to thank Mr. White for taking the time to do this interview. For more information about Ascot Resources Ltd., visit their NAI500 Profile.
Disclaimer: NAI is being compensated for this article. Materials contained in this article is for information purposes only and is not intended to constitute an offering of securities in any jurisdiction. Nothing on this article should be construed as an offer, solicitation or recommendation to buy or sell products or securities.