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Update on an excellent gold opportunity
In June, we suggested MX Gold Corp to you. At the time, it was trading for CAD$0.24; today, it’s trading for CAD$0.37 (up 54%).
The market has completely missed this one, which is why we are going to be able to continue to accumulate shares at a deeply discounted price.
MX Gold Corp. (TSXV: MXL & US: MXLGF) owns a mining operation in British Columbia that will commence production in a matter of just a few months.
According to their president, who just left $15 billion Gold Corp., MXL will begin production this winter!
Bert McPherson has been managing mines for 37 years, and he’s the ultimate implementer for these advanced-stage projects.
Here is my recent interview with Bert and his CFO, Ken Phillippe.
(00:01) Daniel: Greetings, and thank you for joining us at FutureMoneyTrends.com. I have a special interview for everybody. This past week, we updated everybody on MX Gold Corp. It trades on the TSX Venture, under MXL, and on the OTC, under MXLGF. It’s had a massive breakout here, it’s the one to watch, I believe, for the rest of 2016. This is a near-term gold producer. They had massive news at the end of June, but it really became official only in the past 48-72 hours, as you listen to this. The man we’re interviewing today worked for Barrick Gold, Kinross, most recently was a mine manager for one of Gold Corp’s most profitable mines. This man is a mine manager, project developers, and really the guy you need to successfully implement a gold mine. And he literally just left a $15 million market cap company to manage this less than $15 million market cap, and I say less than $15 million Canadian. We have two guests, Bert McPherson, who is the president of MX Gold Corp., and we also have Ken Phillippe, who is the CFO. Bert and Ken, thank you so much for joining us.
(01:26) Ken: Thank you, Daniel.
(01:28) Bert: Yes, thank you. Good morning.
(01:29) Daniel: Bert, let’s start with you, sir. First off, thank you so much for being on the show. You’ve had a chance to go to the property while you were looking at potentially becoming the president. Now you’re back at the project. This is your first interview, so we have an exclusive interview, and I thank you for that. You’ve had a chance to go there a few times to see the project. What are your personal expectations for this small gold junior company, because I think it’s significant that you didn’t have to do this, but now you’ve come in and you’ve come to manage this specific mine. What are your personal expectations?
(02:09) Bert: My personal expectations are to deliver consistent results to the shareholders of the company. My due diligence involved a technical review of the mine itself. The mill and the [unintelligible] in our part of British Columbia is an absolute gem. It is a once-in-a-lifetime opportunity, in my opinion, to be able to bring the two properties together. And from what I have been able to learn, we have a management team that has been and is coming in place that is absolutely staggering, and I am absolutely convinced that we will deliver on a consistent basis. I’m not finding what I would call project flaws. And for a property and a company at our stage to not be able to find those flaws is just—it’s an incredible feat that’s happened.
(03:12) Daniel: Ken, you’re the CFO. Are there any major obstacles before production can begin for MX Gold, any major permits, any vote from the locals, anything investors should know about?
(03:26) Ken: Well, you know, we’ve been doing community meetings for the last few months now and so far, so good. We’ve had no hitting our heads against the wall with anybody. The ministry has been great. We’ve got a few more ministry meetings coming up this month and early in September. We believe that everybody is on-site. When we’ve been submitting our work permits and all of our programs, nobody has nay-hayd them. Everybody has been gung-ho and they want to see the employment in British Columbia. And after the smaller companies turn into a bigger company, at one point in time, I know that when the mine was running… when it was a molybdenum mine, it employed almost 200 people in British Columbia, and that’s a lot of people to employ, so when you’re driving around and when you’re buying equipment or buying fuel or talking to the local community, you’ve got a lot of people cheering for us and really wanting to see us opened. You know, when we went and did a property visit in Revelstoke and stayed at one of the hotels, the person running the front desk said “oh, my brother used to work there,” “oh, my sister used to work there.” It was one of the things that the community needs again, just because it’s all smaller town but it’s all built historically off of silver and gold. They need to see this employment, so they’re all for it. It’s been a very positive event for us.
(04:58) Daniel: Well, and these are great paying jobs as well. Bert, once production begins… first of all, when do you expect production, and once production does begin, what is the next step for the company?
(05:11) Bert: We will begin production in two states. We’ve got permitted and I expect that we will proceed within a month and a half period between the first week of November and it’s going to be delivered for Christmas. We expect to be in full production, plus the mine going in January. And there’s some baseline studies to acquire that are ongoing now. We’re prioritizing the two more detailed permits… but other than that, we just have to make sure we’re getting good at what we’re doing. The biggest obstacle that I see is mining dilution because we’ve got the [unintelligible] upon us up the road and then we really want to be milling [unintelligible[. We’re very confident in what we’re going to be seeing in the mines.
(06:17) Daniel: Ken, if a private business, a private company… I looked at this analogy so many times in the bear market. If a private company was going to come in and they wanted to write a check to build the mill… we’re not even talking about the gold assets, but just the mill, what would the size of that check look like? And I want listeners to keep in mind that the entire market cap of MX Gold Corp. is currently under $50 million Canadian. So what is the mill worth? I mean, you’re talking about years of permits, construction, everything from utilities to all the equipment. What is that worth? What is the value of that?
(07:02) Ken: Well, Bert, you were there yesterday, but we went up and did a site visit about two weeks ago… you know, again, if you were to rebuild this, we have guys saying as high as $200 million and a good five years of trying to get your tailings done. And as you know, time is money. But, you know, I would say it’s a good $150 to $200 million to replace this. This is a 1,000 to 2,000 ton/day operation that was shut down in 2012, and it’s in mint condition. The other thing is, too, when we acquired this asset, Daniel, and this is the thing I like, being the CFO, it came with a $50 million tax swap, so as you understand, with our production schedule, we believe we’re going to produce tax-free for a year and a half. With that being said, as well, which we didn’t go over yet, is the cost of production. In our PA, which we updated PA just recently, 780 Canadian to this gold out of the ground because this grade has such a high grade gold, copper, silver component, and it’s wide, so dilution’s not a factor at these wide, at these thermal deposits. We believe that with $780 cost all-in, that’s everything, and gold’s sitting right now, I see it’s up another $5 today, 1356.50, times that by 1.3, you’re looking at CAD$1700-1800 gold. So we’re going to make close to CAD$1000 per ounce.
(08:44) Daniel: That’s incredible. So it’s a low cash cost producer, production is literally this year. It will fully commence in 2017. Bert, you’ve been in the business for 37 years. There’s a lot of investors listening to this show, it’s the first time they’ve been investing in gold or gold stocks. I wanted to ask you: how did the bear market that we just came out of compare to previous decades? And with that statement, do you also agree and believe that we are now in a confirmed bull market?
(09:20) Bert: Yes, I do. I went through my own personal contacts, the people I do my due diligence with, the interest is starting to come back into the gold sector. You know, I think it’s top to bottom and across the board, being in Canada, and being in this part of Canada, I [unintelligible] of the sector interest we’re in a good political jurisdiction and we’re in a good geographic area within Canada. And people want to invest. People always want to invest in gold, and they just had to wait out the cycle, and I think we’re now coming ready to do it.
(10:08) Daniel: Ken, in closing, for investors looking at MX Gold Corp., you know, all the newsletters are coming out with all these gold picks, it is a bull market. What separates MX Gold Corp. from the other companies in your category? … Ken?
(10:29) Ken: Uh, sorry, it just cut out there. What was that? What separates MXL from the rest of the gold companies?
(10:37) Daniel: Yeah, so if an investor is looking at MX Gold Corp. or they’re looking at another company that, let’s say is nearing production or exploration, what makes MX Gold Corp. stand out for you?
(10:51) Ken: For me, it’s the… again, the low cost of going to production. We’ve battled through the CAPEX multiple times, we’ve had everybody go over the CAPEX for the last year, we’ve fine-tuned it. The amount of money to go into production for this project is so limited… everything’s been developed – the mill’s sitting there, it’s turn-key, it’s ready to go. Minute amount of money to get that boring gold bars. The minute amount of money to get into the gold because there’s two-and-a-half kilometers of underground development at the Willow project for our gold deposit. It’s just… all the money’s been spent by the majors. Like again, if I go into the mill that Eric Sprott fund raised somewhere between $20 million and $40 million to build that mill. You’ve got Noranda, British Petroleum. They’ve spent all the money for us. That’s the opportunity here for us; we’ve come in and we’ve gathered assets that are worth over $200 million, not including the deposit, obviously the deposit puts us through the roof, but you’ve got everything done for you, Daniel, that’s the main thing. And then you’ve got gold prices cooperating with you. You’ve got the cost of our delivery of the gold… I just can’t see a better fit. And now, we have management… Bert, this is where I’m going to give you a bit of kudos. We’ve got management that has done this for decades of putting mines into production. So I think that we’ve got the assets, we’ve got the management, and it’s very undervalued, the stock price right now, so I think we’ve got the perfect combination.
(12:35) Daniel: Alright, Bert McPherson…
(12:37) Bert: Something else that sets us apart from exploration properties or that are near production… we’re ready, and I think that, along with the assets and management team is just… we’re ready. Our biggest rift in time right now is industry governmental, regulator vacation. September 8th. Honestly, we’re worried that our September 8th meeting might get shuffled by a couple days forward or backward, you know, [unintelligible] because of vacation. [unintelligible] a couple days up there discussing, you know, timeline process, and trying to make sure we can deal with anything with respect to our timeline, and that right now is set up to… is the highest potential to adjust our gold and date [unintelligible].
(13:42) Daniel: Bert McPherson, president of MX Gold Corp., and Ken Phillippe, the CFO of MX Gold Corp. You can buy shares on the TSX Venture, under MXL, or on the OTC, under MXLGF. Gentlemen, thank you so much for being on the show for us today.
(14:01) Ken: Thank you very much.