The junior gold mining segment is one with a lot of names. Standing out from the crowd can be difficult. However, for retail investors the right junior miner can be, well, gold. Particularly if you can get in early, before mines start producing and the share price inevitably rises.
One such mine could be Premier Gold Mines Limited (PG:CA) , a company with five properties and partnerships with some of the biggest companies in the business. Unlike many of the other companies in its segment, it has cash on hand and a diverse portfolio of properties to rely on. We got a chance to talk with the company’s President and CEO, Ewan Downie, about the present and future for Premier Gold Mines.
EQ: Why don’t you start by giving us a little background for Premier Gold Mines?
Ewan Downie: Premier Gold Mines was formed in 2006. It was a spin out of a company that I founded called Wolfden Resources (WLF:CA) . Wolfden was involved in both gold and base metals. Premier became the gold arm as a free spin-out to our Shareholders, and Wolfden, that was subsequently taken over in 2007, focused on base metals. The majority of the board of directors that we had at the original Wolfden remain on the board of Premier today. The company trades on the TSX and we've been quite active over the last decade making acquisitions and growing what we hope is one of the big gold businesses of the future.
EQ: You have a number of projects that are currently underway, most of which involved proven resources. What would you say to potential investors with regards to the current position of the company within its life cycle?
Ewan Downie: I think Premier is in the development stage of its life cycle. We started as a pure exploration company, made significant discoveries, and we have now delineated significant resources on multiple projects. Going forward, we are currently making the transition from being an explorer to a developer and expect our first gold production by late this year.
Typically if you look at the life cycle of a mining company, there is often a lull in the share price following initial exploration success and mining. When a company becomes a miner, the share price often ramps up on what is often referred to as a producer re-rate. We think that Premier is in advance of that period by about five or six monthsas the company makes the formal transition to producer status through our South Arturo joint venture project later this year or early next. I think right now is that quiet time in our company's history, but the biggest part of our future is yet to come. Furthermore, Premier is very unique in the junior mining sector in that, rather than a having a single asset where the future of our company being won or lost on the success or failure of that one asset, we have five high-quality assets that we're advancing right now.
EQ: Which of those assets would you consider to be the most exciting?
Ewan Downie: I think they're all very excited for different reasons. The South Arturo Project is primarily because it is in development now, with the site under construction. South Arturo is operated by our partner Barrick (ABX) and will be the first project in our portfolio to produce gold. Behind that, we have the Trans-Canada Property, which is a joint venture with Centerra Gold (CG:CA) that is in feasibility and permitting right now. Trans-Canada is operated by our joint venture company called Greenstone Gold Mines. In Red Lake, our Rahill-Bonanza Property is being advanced with both surface and underground drilling by our joint venture partner Goldcorp (GG) .
While Trans-Canada and Rahill are expected to be our next two in the pipeline for development, we continue to advance our other projects. We recently acquired a 100% interest the Hasaga Property, located in the heart of the Red Lake camp from Goldcorp and we are having some very substantial exploration success there right now. Hopefully, that will translate into market excitement and share price appreciation going forward. We're also advancing our 100%-owned McCoy-Cove Project in Nevada as well. We hope that these two assets will drive the future growth of Premier.
EQ: Your Company has a number of key partnerships with some of the major players in the mining industry. What can you say about your partners, the agreements that you have in place, and how they benefit the value of your company?
Ewan Downie: We do have five projects that we're active on and, especially in the current market environment where it's really tough to raise money, for us to advance five properties simultaneously on our own would be pretty difficult. We’re fortunate to have partners, in my view. Three of the five properties are operated in joint venture with larger existing gold mining companies, and two of those three are operated by the major.
When you look at Premier you might say “hey, they've got a lot on their plate with five projects. How do they handle advancing five projects?” We have a lot financial resources already invested, there’s a lot of funding being invested by our partners, and some of these properties are being operated by other parties. Technically, we really only operate two of our five properties. I think that’s the big benefit of having the partnerships, it spreads the risk and it reduces the amount of cash outlay we require in order to advance our projects.
EQ: The price of Gold has shed some of its value in recent weeks, even going under $1,100 briefly. Do you guys have a lot of exposure to price fluctuations on the market for gold?
Ewan Downie: We're not producing until year end, and the main ramp up in production of our first mine will be in the middle of next year. On a daily basis at present, we are not exposed to the price of gold at this point. Obviously, gold shares are affected by the gyrations in the gold price, but technically for us, the gold price today does not affect anything. It will affect us once production starts.
I’m a big believer that the US dollar is strong right now because the world's fiat currencies are in disarray. It is essentially the best of a lot of bad currencies and, at some point, we're going to see cracks in the dollar, especially with the stifling debt load for the United States. I think we'll see the gold price bounce back. If that happens in the next 6 to 12 months, the timing will be perfect for us.
EQ: What do you think investors should be on the lookout for from your company over the next year or so?
Ewan Downie: Our Company is making its transition from explorer to producer, and at the same time, we're a company that is very active with the drill bit. I believe that Premier will create significant value this year through continued exploration success, resource development, and mine development.
There are a lot of catalysts coming up in the next 12 months that include production in Nevada. We’re looking for a positive feasibility study for the Trans-Canada Project and continued success from drilling in Red Lake with either Goldcorp or on our own project. Given that our company has about $90 million in cash whereas most juniors are almost out of money, we're one of the best-positioned companies from a financial perspective to continue to grow in the resource space and, you never know, if the right opportunities come along you may see us do something else in the next several months.
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