Wallbridge Mining Company Limited (WM.TO) Earnings Call Transcript

Awesome. So I'm going to get into some housekeeping. I'll say first, good morning or good afternoon, depending on where you're signing in from today. I really appreciate everybody joining us, and I'm more than pleased to introduce Brian Penny, Wallbridge's CEO; and Mark Petersen, Wallbridge's Senior Geological Consultant for a digital town hall today. Gentlemen, how are you doing?

Excellent, and thank you for inviting us, Romeo.

Awesome. So the format for today is we're going to go through a number of questions from me, and then we'll be taking questions from the live audience. So folks this is an interactive event today. There's a chat button in the bottom right hand of your screen. Once we get through my questions, more than happy to hear from you guys. So please enter your questions at any time during the event and we'll try to get to them at the end. If for whatever reason, we don't get to your question today, I'm going to be sending them through to the Wallbridge team to make sure they get back to over e-mail, but we'll try to tackle as many of them as we can during the event today. The other thing to note in this event is being recorded. And the replay will be available because we're getting it done pretty early in the day today probably by this afternoon. So you'll automatically get that sent to your inbox. Please feel free to share it because at that point, the event is entirely public. So let's get right into questions.

I've got a list of questions for both of you. My first one is actually to Mark. My question really with almost 30 years' experience in the industry, what drew you specifically to Wallbridge?

Well, a few things. I'd say kind of starting from the outside working in, mainly, it was -- doesn't come along every day where an explorationist, no matter how many years of experience you've been in the game to have an opportunity to join a new and emerging gold discovery and development story in one of the world's premier gold provinces, the Superior province of Canada and the Abitibi gold province, which is kind of a central core to that. And so right there, great address, lots of gold. But also Wallbridge's land position strategically is really quite significant. They've already got in a relatively short amount of time since acquiring the Fenelon project only several years ago. They've already got 2 deposits with 1 million-ounce plus potential. And those are contained within a large contiguous land package that extends nearly 100 kilometers along trend -- along the same belt of rocks that hosts the Detour Lake gold mine, which is Canada's largest producing gold mine to date. In addition to that, the company has a strong balance sheet, is well funded and has a really strong, smart, focused and committed team of people with a lot of range. We've got both experienced mining professionals as well as some of the younger generation coming into the game who were really keen and really full of enthusiasm and energy, and it's just a real pleasure to be able to work with a team like this. And finally, it's just great to work with Brian. Again, we've worked together in the past. Brian has a profound amount of global mining experience and knows the capital markets inside and out. And he knows how to maintain a healthy balance sheet just through disciplined -- just disciplined and good financial management. So those are kind of the cornerstones from my perspective on what makes for a successful mining company regardless of whether it's at the earlier, middle or operational stages of its life.

I appreciate that. You're about 90 days on the job now, right, sir or somewhere close to that. Given that, what surprised you about Wallbridge's projects, I guess, particularly Fenelon, Martiniere?

Yes. I didn't -- I was aware of -- I follow all the stories. And I was aware of Fenelon peripherally, but not really in depth, but I think what really struck me once I got more close and personal with both projects and the broader package was Fenelon, it's really a relatively new discovery and in a very short time frame, Wallbridge had a small starter kit of a resource that a predecessor company or companies had fleshed out. And then Wallbridge acquired the property and put together the land position. But as they were building off the initial resource that they had, they very quickly and very smartly got on to some of the broader scale geologic controls. And suddenly, they had a multimillion-ounce gold system kind of a tiger by the tail. And I like -- everybody likes big gold systems. But what I really like about this one as well as Martiniere is it's a high-grade gold system. And strikingly, to me, it's one of the few -- I worked on quite a few gold systems over my time. This one, in particular, has -- and it's just a lot of visible gold that shows up. And that's always a great thing to have in the mix. And also Fenelon, you get high grades beginning right at very shallow depths, right at the top of bedrock and the system extends vertically down, it's been explored and delineated down at least 400 meters. It remains open at depth as these Abitibi gold systems typically do. So there's definitely upside for the future. But also what's quite nice about Fenelon is, yes, it's a multimillion ounce which bodes well for its long-term future. But right up on the front end, it has a high-grade core that looks to be very amenable to developing a nice-sized discrete, high-grade, high-margin underground mineable type of a resource. And that right there is -- that's just a great starting point. But then you shift over to Martiniere, which is a completely separate gold system to the west of Fenelon, some 30 or so kilometers. And that's -- that's not as far along on the exploration resource delineation path has Fenelon, but it definitely has all of the earmarks to be to offer the same type of size potential as well as high-grade potential and in some respect, some parts of it may even be -- be even higher grade. It's a different type of an animal geologically somewhat from Fenelon. But again, a nice 1 million-ounce potential and lots of room to grow it. And we've been drilling on both. But this year and right now, the main focus is on seeing what we can do to grow the size of Martiniere even more beyond what it is. So those 2 components right there are a really nice combination to walk into and be able to drive forward.

Awesome. Appreciate it. Next question and great questions in the chat, by the way, I will certainly get to the ones that I've seen so far. One question just for both of you. I'm going to start with Brian. A lot of people called Canada, 13 jurisdictions in the trench coat just because of our different working province to province can feel. With your major projects in Quebec, what would you consider the advantages or challenges of working in [ Quebec ]?

Thank you. And Quebec is one of the most favorable jurisdictions on the planet to work in. The latest Fraser Institute study ranks Quebec as #5. I believe Quebec should be #1. The government financially supports exploration in the far North to the tune of a 38.5% cash refund when you file your tax returns for qualified exploration expenditures that are not financed from Quebec flow through. Quebec flow through, the subscribers would get that benefit. As you can see, recently, we received a check for $8.1 million. And that is this refund for the 2023 tax year. That will go into our coffers, and that will be part of our program in 2025. In addition, we have great support from our local communities, whether it's the ton of Matagami, with our First Nations partners, the Waskaganish, Washaw, Sibi, and the Abitibiwinni First Nations. We have predevelopment agreements with the 2 Cree communities. We're working on one with the Algonquin community and great relationships. We have biweekly meetings with the communities. We're operating as if we have PDAs with the 3 groups. We share the economics equally, and we're working early to develop a long-term relationship. One of my challenges, and this is me personally is I grew up in [ Sabre ]. I have the equivalent of about great 10 high school French knowledge. And with a lot of the traveling, I'm doing, I'm about to subscribe to some services. So when I'm leaving Toronto and driving up to Fenelon, I've got 4 hours of uninterrupted French tutorial. So my goal is to improve that, it's later on in life, I'm not a linguist, but I'm sure I can get a lot better than I am today.

That's great. I'm in French reading Tintin, so that's always available. I'll throw it to Mark, your experience is working in Quebec and what you think of working in the jurisdiction?

Yes. Well, I worked in a number of places throughout the Americas, a bit of time in Australia. I never really had much opportunity to work with project in Quebec until now. But what strikes me, I guess something I've always known, but now I'm seeing it experiencing it firsthand that it's a very friendly mining jurisdiction. It's got deep roots in Canada's mining history and we'll continue to grow those roots. And with that, it comes with the benefits of having good access to the resources you need for mining exploration and development and ongoing operations. And those are the tangible physical resources, but as well, a very deep pool of very experienced professional talent and skilled trades in the mining sector. And it's just committed to continuing along that path as one of the premier jurisdictions in Canada and in the world for mining. And not just gold mining, but that's what we're focused on, but certainly other things as well as we're seeing in other parts of the mining sector. In terms of challenges, I'm mainly a technically focused guy. I do think about the economics of things a lot because that's really what drives everything. But from my perspective, and it's not unique to Canada, I think it's more just unique to working in the north. Yes, obviously, you've got -- it's more remote, so you've got some logistical hurdles that you just need to deal with, and we deal with them well, but it's a factor. And more specific to geology and one of the reasons Fenelon project and the entire Detour Fenelon trend has remained less explored relative to other parts of the Abitibi, is that we're exploring under cover. There's not a lot of bedrock exposed at the surface. So we have to use more advanced, more indirect methods to guide us in determining where we want to go and explore it. So we're leveraging that to maximum effect. But it certainly presents a challenge, but it's not -- it's not unique to Northern Canada. This is just a trend in the industry overall. And we'll continue exploring undercover will continue to be a trend going forward. So we're managing to it. But finally, I think the thing that I was less familiar with, but really nice bonus is -- and I really mean this, culturally, even though when you go to Quebec, I don't speak French, hopefully, I will pick it up as I progress along here. But the people are just so genuinely open friendly and wanting to help, no matter -- it doesn't matter what you're doing. It's just a really welcoming place to just spend your time and to work. So that I didn't expect, but I thought I should mention it because from a personal perspective, having worked in many places. It's one of the better places I've come across to put my time in.

It's hard to overrate a welcoming community for sure. I've got one for Brian. And this is a question that we got -- a couple of questions via e-mail. The stock has seen some shorting recently. Curious what you think the source of this is and what it means for both holders, the security and prospective investors?

Well, how you can answer that question is recently, our stock has traded between $0.095 and $0.11. We have good support around $0.095 and resistance at [ $0.11. ] Our short position is less than 0.25% of our issued and outstanding. So on face, it's not a big problem, it's not the 1.8 million shares, and it continues to decline. We continue to follow the [ Save Canadian Mining group ] with respect to their paper on naked short selling. We believe this is a regulatory matter, but if the industry can put pressure on the regulators to deal with this, that would be good news as well. We did support them with a donation in the fall of 2020. We're monitoring the situation, and we're learning like everybody else as this project moves on.

Awesome, appreciate it. One question. So I know we already talked about it because we were talking about Quebec, but last week, obviously, you received a [indiscernible] Quebec for a tax refund. And obviously, congratulations, the speed of the delivery is great news. I'm curious where that money is going in 2024. And I guess I'll throw it to Mark sort of as a way to give a geological work plan for the rest of the year?

Well, can I tell you where the money is going to go first? Let us talk about the plans for 2024.

Please, please.

We closed the quarter with a strong cash balance. With this refund, which came very early this year. Usually, we get it in the fall, September, October. This year, we got it quickly, which thank you to the Quebec Revenue Service for sending us money. With that, we're earmarking to close the year with 14 -- roughly $14 million to $15 million in the bank. That is earmarked for 2025. So this money is not going into the ground this year, it will go into the ground next year. Mark has a program for 2024, which we'll discuss further. But assuming -- as we figure out our program for next year, assuming that we have a similar size program, the delta between $21 million and $14 million is financeable even in the most challenging markets. So we're not going to blow our brains out this year. We've got a steady-hand approach, and that money will finance the start-up and probably half of the year, if not more than that next year.

Okay. Helpful context. Thank you. Now I'll turn it to Mark for that kind of exploration updates and what's coming in...

Yes. So we're about halfway through the year, of course. And so far this year, we've drilled a little more than half of the planned drill meters for the year. We expect by the end of the third quarter when the field season comes to a close, we expect to have completed on the order of 20,000 to 23,000 meters of drilling. What we've achieved so far in the first quarter was our initial program at Fenelon, which was really a continuation of a broader drilling campaign that began about the beginning in early 2023 to do some kind of infill -- combination infill and short step-out drilling of the Fenelon resource. We completed about 2,300 meters in the first quarter. And that pretty much rounded out, I think, the objectives that were set out at the beginning of 2023. We released those results a few weeks ago. I was quite pleased with what they demonstrated and further confirmed was we have high-grade mineralization that's showing up in a cluster of I'd call them sheeted vein swarms without getting too technical. But they start right up near the surface. So we've confirmed the great continuity or added confirmation to the great continuity of the near-surface portion of the resource. In addition to that, the deeper portions of some of the same drill holes provided additional confirmation of grade continuity in that higher-grade core that I mentioned earlier. And then we also -- this time around, it was -- 2,300 meters was not a big campaign. But we did take a stab at a couple of step-out holes. One of them closed things off in an area way on the foreign Northeastern edge of the resource, where we already knew continuity was a bit sketch here. That was in the original part of the resource that was there with Fenelon when Wallbridge arrived. But the other hole gave us a couple of additional 100 meters of strike extent to the deeper Tabasco and Area 51 contact zones which definitely will merit some follow up down the road. So after we finished with the Fenelon campaign, we transitioned over to Martiniere. We actually doubled up, we had 1 drill to start with. We added a second drill at Martiniere. And we just recently completed our Phase I program at Martiniere, which was on the order of 10,000 meters completed, that went very fast. And that drilling was primarily directed at doing a bit of infill and incremental step-out resource drilling, but also to collect material -- mineralized material that will be used to go toward metallurgical process test work that will feed into our ongoing technical studies that my colleague, François Bol, is spearheading. So we've done a fair spread of metallurgical drilling through the Martiniere resources, it's early defined. And in parallel with that, we did drilling to collect data for geotechnical and geomechanical rock mass characterization work that François needs to put together a PEA level kind of a mine plan for Martiniere. So that work is pretty much done. Coming up actually next week, May is almost gone, believe it or not. We will be heading back out with the drill to start work on some of our high-priority regional targets that our team has identified. Right now, we will be starting in an area in between Martiniere and Fenelon. Working on some -- some areas that really haven't been much drill tested before at all, but we're seeing very, very good indications out of the geophysics and some of the regional geologic compilation work that's been done. So that's going to be happening, coming up in June. And then come mid-July. We'll be going back to Martiniere for Phase 2. Now Phase 2 will be more oriented toward more the earlier-stage exploration step out to try to grow the resource beyond what we can see right now in front of us. And we've already had done a little bit of that on the tail end of the Phase 1 program that's given us some real encouragement on what we're seeing in the drill core. And then come later in August. Once we wrap up Phase 2 at Martiniere, we will have a Phase 2 regional drilling campaign. And on that one, we will be moving to targets to the west of Martiniere, where currently, we can't do any work because there's a hiatus and drilling for a portion of our property while we let the Caribou calving season run its course. They were there long before us, and we have to respect them. They're very important members of the community. But we will be going back out west of Martiniere and some high-priority targets out there. And in terms of news flow, I would expect -- I'm expecting to have all the final results of Martiniere Phase 1 drilling in hand and ready to release around mid-July, I think, is what we're looking for. And then come toward the back end of Q3 in September, we should -- I would expect we would have the results of Martiniere Phase 2. And then the results of our regional program, both around that same time frame and then the last part of the regional program, probably in early Q4. So that's what it's looking like right now. We're tracking very well in terms of performance to budget, which is always a good thing. We haven't had any surprises there. And yes, our team is staying on top of all of the various moving parts that drive one of these programs.

Awesome, appreciate that update. My next question, I had a version of it, but [ Glenn Westerhoff and the Chad ] has a better version of it. So I'll simply ask is. He says it looks like we're into a new bull cycle for golds, this question for Brian. How is Wallbridge positioned to capitalize on this upward momentum? And what are the target goals we want to achieve to see investments grow in value?

Well, it's something we -- I've been in this business for almost 40 years now. My most -- my first senior role was CFO of Kinross in '93, so 30 years. I've seen cycles. I remember $250-dollar gold like it was yesterday. What I can say is that what I'm seeing right now is the valuations are starting to return to the senior producers. And they will be the first to benefit from the higher metal prices because it immediately impacts their earnings and cash flow. Then it will trickle down to the middle producers and ultimately to the junior explorers because we're the furthest away from monetizing that. There is a time lag. This has been repeated over the 3 decades I've been involved, and it is very similar. Will the money filter down into the juniors early next year, later this year, well, the market will determine that. Mark's got a great plan. We have a great team. We have a great property position, 830 square kilometers. We're focused on advancing that project. Our biggest goal is in early 2026, sooner if we can get it done quicker. We will publish a combined PEA for Martiniere and Fenelon because the 2 properties are 30 kilometers apart. There are definite synergies. We're doing a lot of trade-off studies on Fenelon, looking at Martiniere as well. So that is our midterm news flow. And then in the -- in between, we will be looking at one thing that Mark didn't mention was the net results should come out in the fall of this year, sometime. So you've got a good idea of our news flow until next year. And then obviously, in the fall of the year, we'll put out our business plan for 2025 on where we're looking to advance our approach. But I'm excited. I think this is a great opportunity, things we need to look at, do we go back and look at the CapEx and build a more scalable plan that makes financing easier yet to be determined? But we're looking at everything right now with the goal of improving the overall economics of the project when we put together this combined PEA in early 2026.

Great. Thank you. Now Mark, bear with me because I know you already answered this question to some degree when you outlined your plan. But not to put too fine a point on it, what is the next major milestone for Wallbridge on the exploration side? And when can investors expect additional drill results this summer, just to reiterate?

Yes, sure. Yes, in terms of news flow and drill results, as I mentioned, the next batch should be coming out in mid-July to cover off on Martiniere Phase 1. And then in early to mid-September, I would expect the balance of results from our Martiniere Phase 2 and a bit of our regional program results in terms of news flow there. In terms of the next significant milestone, I think it would be a combination of just what comes out of -- what comes out of our exploration news flow. But in tandem with that, as Brian mentioned, the results of the metallurgical test work that we've initiated along the technical studies front. So what really impresses me again about Wallbridge is it's not a one -- it's not a one deposit type of an exploration story at all. It's really an early-stage exploration junior play, but with an already built in and moving pipeline, beginning with Fenelon, being the more advanced, Martiniere not too far behind it. And then the regional -- the regional upside piece that we're not turning our back on. In fact, we're giving it our full attention as well. So it's really those 3 legs on the stool that I think underpin the Wallbridge story and why it's kind of -- in a way it's unique in terms of what's out there in terms of its stages of development and the upside potential that it still offers at multiple stages on the curve.

Great. Next question is for Brian. And again, thanks for your question in the chat. We're just about to get some almost through, I promise. But this question for Brian. What's your current cash balance? And when are you likely to need to undergo a financing next?

Well, as I mentioned earlier, we closed the quarter with a strong cash balance. We got the $8 million. I don't like to talk about nonpublished cash balances because it is a bit selective. But I did guide you to -- we're looking to close the year with $14 million in the bank. And if we propose a $21 million program against next year, there's a $7 million deficit that we will look to finance between now and mid next year.

Great. Last question, I think, for just, Brian. Curious what Wallbridge's broad philosophy is when it comes to stakeholder engagement in the region? And do you anticipate any roadblocks as you move towards a PFS and FS?

We got in early. We meet with our partners regularly. Every 2 weeks, we have a meeting with our Cree partners and at least once a month with our Algonquin partner. We are truly partners, 25% of our workforce comes from the First Nations communities. We have great support right now from them. As we get into an [ IBA ] and other things, we're investing to make that process streamlined going forward. Our biggest challenges were in the middle of nowhere and the logistics of getting materials and supplies, and we have a camp environment, so organizing that and it's about it.

Last quick question for both of you before I get into the audience questions. I appreciate everybody's patience. Really, what are you most excited about going into the second half of this year. I'll start with Mark.

Well, I'm really pleased with what we've achieved so far, not only in the execution, but the results that have already started to come through. Exploration is -- it really is a results-driven -- results-driven process, and we're getting very strong positive results, we continue to get them. So I'm quite pleased with that. And yes, I'm really looking forward now that we've kind of taken care of some of the more predictable, call it, infill resource drilling at Fenelon and Martiniere. What I live for is really to grow resources and create more value. And as we turn our attention to the regional program and step-out exploration at Martiniere, that's really kind of the tip of the fund sphere, if you want to call it, give it a name, that's what all exploration geos what really drives us is creating value, creating opportunities that didn't exist for people in the past and just making that next discovery.

I might use tip of the funds here in the future. It's very...