Judson Culter, CEO of Rover Metals, speaks with Maurice Jackson of Proven and Probable about his company’s exploration plans for its Northwest Territories project.
Maurice Jackson: Joining us for our conversation is Judson Culter, the CEO of . We last spoke in August, and since then, Rover Metals has commenced drilling on the high-grade (ROVR:TSX.V; ROVMF:OTCQB)Cabin Lake Gold Project located in the Northwest Territories of Canada.
Before we begin, Mr. Culter, for first-time readers, who is Rover Metals?
Judson Culter: Rover Metals is an exploration company focused on precious metals. And right now, we’ve got two gold projects, and we’re advancing the resource potential of our existing gold projects, so that’s our focus for the next six months.
Maurice Jackson: Judson, I’ve noticed that Rover Metals is gaining a lot of attention in the market. Why is that?
Judson Culter: The price of gold has been a catalyst; also, Rover has a known historical resource at 14 grams per tonne gold, and we’re drilling it to the next level. So speculators are starting to pay attention, not just to our company, but I think of the sector as a whole.
Maurice Jackson: And you’ve also got the infrastructure and hydro. Can you expand on that for us?
Judson Culter: Our signature asset, Cabin Lake, is 120 kilometers northwest of the city of Yellowknife, which is a major hub for mining in northern Canada. We’ve got an all-season road that is being built by the federal government. The existing highway infrastructure takes us 40 kilometers to our project, then there’s a nice road if needed in the winter. There’s nearby hydro that exists already. And then you’ve got other proven projects, gold projects actually, to the north of us that all-season road is being built for. So we’re sort of building our project on the back of existing infrastructure and infrastructure coming online.
Maurice Jackson: That’s one of the virtues of having a good brownfields exploration play. Judson, what is the driving thesis for Rover Metals in regards to the Cabin Lake Gold Project?
Judson Culter: Well, it’s a high-grade project historically, and it’s an iron formation, a traditional formation, but we believe there’s also a quartz-based system that is bringing the high-grade gold into the system. And the hypothesis is we’ve seen the iron formation wrapped through the project like a radio wave if you will. It’s roughly 800 hectares in size, and this radio wave wraps through the project. And we think the grades and the gold that’s hosted along strike and at depth. And part of this drill program is to better understand the historical resource, relocating it, that’s a big part of it, as well as developing the resource model for future drilling.
Maurice Jackson: The geology mirrors some other projects. Who do they mirror?
Judson Culter: Based on our understanding, we think that this could be a, let’s just say, like a Lupin Mine, which is formerly in the Northwest Territory, it’s now Nunavut, or the Homestake Mine in South Dakota. Those are traditional iron formation, hosted gold deposits.
Maurice Jackson: Please provide us with some historical background on the Cabin Lake Gold Project, which dates back to the 1940s.
Judson Culter: Yes, that’s when drilling first started there. I think more recently the major drilling was done by Freeport McMoRan and Aber Resources in the mid- and late 1980s. But there hasn’t been geophysics, outside of our work, which was done in 2018; there hasn’t been any drilling for 33 years. So here we are starting Labor Day weekend, we’re going in there and drilling again, so it’s exciting.
Maurice Jackson: You referenced the drilling. You did some in 2018. You’re commencing it right now. And what were the results from the exploration that increased the confidence in the Cabin Lake Gold Project?
Judson Culter: So we’ve logged three holes now. It’s been a little bit slow going just initially because of the amount of overburden. We’ve had to drill anchors for the drill pad, so that’s why, even though we started Labor Day weekend, we weren’t running a night shift either, now we have a night shift. And so we’ve got three holes completed and logged.
Where there’s been deviation, in terms of when they drilled in the 1980s, they used a much smaller drill rig, and it’s much smaller core. So we now figured out that the historical holes deviated from their planned angle, so they ended up being shallower. Rover has been able to adjust all the historical data in our current program, and the good news is that, after the second hole, we learned about that deviation. So the third hole did intersect the mineralization that we were targeting, as did the first hole.
So what we’ve been able to relocate is those historical intersects and now plan the rest of our program accordingly. And we don’t have the results assayed from those two holes that did intersect the target. But what we are seeing is they’ve hit a very similar log intersect on what’s known to run as high grade across very similar widths and lengths.
We have roughly 15 meters on each of the holes that have intersected sort of a disrupted, high-sulfidized quartz iron formation, and that’s going to help us. We’ve got roughly seven more holes to go on the program. And so the good news is we’re on target at this point.
Maurice Jackson: Just to summarize, we’re dealing with an underground, early-stage brownfield exploration gold project with the historical high-grade resource next to a new cobalt gold mine. Now, the location in and of itself makes the opportunity quite interesting. Is the goal to sell the project or develop it into a commercial-scale mine?
Judson Culter: The short term goal is to prove it up. Rover Metals is one of the newer entrants into the Northwest Territories in terms of a publicly traded mining junior. And if we do our job right, which is just getting to work, prove up that resource, I mean, we’re hoping to get to 85,000 ounces Inferred here from the small program of 1,100 meters, and then go back in there in Q1 and expand on that resource.
The M&A cycle that’s coming in this sector, we can go through the list, but let’s go with, Gold Terra Resources and , all companies right on our doorstep that are five times our market cap plus. Long-term we would want to be taken out via M&A. But for now, delineate our projects further and prove it up. I don’t want to necessarily lose my job at the moment.
Maurice Jackson: All right, switching gears, I’ve had the opportunity to interview legendary investors, Bob Moriarty, Rick Rule, Doug Casey, Jayant Bhandari, just to name a few. And one of their top criteria in deploying capital wasn’t the latent material on the ground, it’s the people. And Rover Metals has done a remarkable job by having in place serially successful industry leaders with your board of directors, your management and technical teams. Let’s discuss the teams that make the Cabin Lake Gold project come to fruition beginning with the top. Who is on Rover Metals board of directors and advisors?
Judson Culter: Our board of directors is a seasoned group of northern miners. Beginning with Lou Covello, he is mostly retired, but he loves rocks and loves the north and loves geology and loves exploration. So he’s still involved with us. And he’s no longer running Aurora GeoSciences, which was formerly Covello, Bryan, and Associates, but he’s with us and he’s with a few other northern explorers and water boards in the Northwest Territories. And brings with that great years of relationships with the First Nations government.
Keith Minty. Keith is a seasoned mining engineer. He’s worked on projects all over the world, did a stint in Yellowknife at the Giant Mine. Another great guy to have on our team. We do have a secondary asset that is immediately adjacent to the Giant Mine, so Keith’s involvement also on that project is key to us.
And then we’ve got Eugene Hodgson. Eugene’s father, Stuart Hodgson, was the former commissioner, so Eugene politically is very well connected for us. And that’s important because we’re doing a lot of social endorsement for our project at an early stage and getting just buy-in from the community and our neighbors. And in this case, in Cabin Lake’s case, that’s the First Nations, so all that stuff is really important, shepherding the process of a mining project.
Our advisory team is set up also for new deals and new projects and M&A. Bob Schafer, a very well-known name in mining, especially U.S. mining, is this very senior guy at Kinross, has had about three discoveries to his name internationally. And now, we’ve looked hard at Nevada, and we would still like to get a project in Nevada. And so, as we gear back up after this exploration program, in Q1 of next year when the border hopefully is a little more friendly, we could start taking a run at some gold projects in Nevada again.
Maurice Jackson: How about management? Let’s start with the CEO, Judson Culter. What makes him qualified for the task at hand?
Judson Culter: I guess I cut my teeth in the mining industry as the CFO and sort of co-founder at Dolly Varden Resources. I’m a CPA and I’ve learned all of the inner workings of running a public company and a publicly traded mining junior. So that allows us to run lean in terms of corporate securities costs, corporate secretary legal, financial statement filing. And just having learned the business now in the last 10 years, working with junior miners sets us up to be very patient and methodical and have a very low burn rate and just build the company consistently over time.
And we’re still out there, we’re still listed. 2019 was a lean year for us, but we’re still standing. And I think that’s pretty representative of how we’re going to continue to chip away.
Maurice Jackson: Speaking of lean, let’s discuss some numbers. Please share the capital structure for Rover Metals.
Judson Culter: This financing, as announced this morning, has now closed, so we’ve got 70 million shares outstanding. We are fully financed. We just raised $1.2 million.
Maurice Jackson: And is that all the cash and cash equivalents that you have currently?
Judson Culter: We’ve got some bonds that are related to our exploration permits and there’s like about $120,000 in restricted cash.
Maurice Jackson: What is your burn rate?
Judson Culter: Our burn rate’s about $50,000 a month. And that includes some of these conferences that are now virtual, that includes marketing, that includes CFO, myself, and outside of exploration season. So our budget for this program that we’re drilling is $700,000 to $750,000. So our burn rate is increased between now and the end of October, if you will, but thereafter it’s roughly $45,000, $50,000 a month,
Maurice Jackson: How much debt do you have?
Judson Culter: We have $40,000 on a federal government interest-free loan, so that’s interest-free for two more years, about a year-and-a-half, so just taking advantage of some free money, free credit.
Maurice Jackson: Nothing wrong with it. All right, you just referenced financing. Who financed the project, and who’s financing the project, I should say, and what is their level of commitment?
Judson Culter: We’ve got, of the $1.2 million only about 20% of that was from existing shareholders. And Canaccord Genuity, there’s been four brokers, well, I mean, there’s more like six, but four key brokers that liked our story. The geologist that reviews a lot of their mining assets internally at Canaccord liked the project, and so it passed the sniff test. And then, we’ve got four really good names in the brokerage community at Canaccord.
And I’ll just rattle a few names off. Rob Reynolds, a senior broker in Vancouver, of course, his brother, Paul, was former CEO. Bernie DeGroot at the Calgary office likes the project. Ray Martin in Vancouver, he’s been a big supporter. Tevis Michaud. And we’re going to continue to build that relationship at Canaccord. I’m heading to Toronto this week, and we’re wanting to appoint Abingdon Capital, which is an exempt market dealer in Toronto. Neil Johnson runs the shop there. Hoping to appoint them to our advisory board and continue to build our retail brokerage support in Toronto on this coming trip.
Maurice Jackson: Leaving the institutions, who are some of the major shareholders?
Judson Culter: Early-stage, legendary mining investor “Tookie” Stuart Angus, he’s a large shareholder and early backer. Ashwath Mehra, chairman at. He’s participated continuously in each of our financings since our IPO financing when he first got involved, and that was in June 2018. He’s a very large shareholder now. And Keith Minty; Keith is our president and one of our directors. He’s been a big supporter since the start, really since we got on going on the IPO route in 2017. So three great shareholders.
Maurice Jackson: Judson, based on the data available, what type of value proposition do we have in comparing the current market price with what you believe the price can and should be?
Judson Culter: I’d have to stay safe harbor on this comment in terms of forward-looking statements. But the unpublished historical resource from all of our data at Aber Resources and also Freeport McMoRan suggests an 85,000-ounce high-grade gold historical resource. So this program, we’re hoping to move that up to an Inferred category.
So let’s just say hypothetically there are 85,000 ounces during the last supercycle in mining, the valuation could be as good as $100 US per ounce. So that would suggest that we should be like a $12 million US company. We’re not. We are, on a good day right now, $4.5 million, $5 million US market cap company. So I think we’re undervalued. I think there’s a really good opportunity in the market to buy. And we’re hoping to start getting our core assayed into the market here in October.
Maurice Jackson: Multilayered question, what is the next unanswered question for Rover Metals, when can we expect a response, and what will determine success?
Judson Culter: Maurice, you always got to hook me. I mean, again, right now today, we don’t know what we don’t know. The good news is the sulfidation intersects that we were hoping to get on this program, we’re getting them. We are trying to get a better understanding of what’s hosting the high-grade gold on this project, and we’re wanting to get an Inferred resource out to the market.
And so, that’s really what we’re doing in the next three months. And I think a lot of our success will be predicated on the ability to raise another financing before the end of the year. In Canada, we have that charities flow through sort of tax-advantaged way to raise money for exploration drilling. So the hope is that we’ll be able to raise a good portion of the November financing at 30% premium to market close, so non-dilutive. And I think that being able to put away a good size financing by the end of Q4 and get back to drilling at Cabin Lake in January/February, that’s our goal and that’s our focus.
Maurice Jackson: Do you have a target as far as how many meters if you were to have the opportunity to drill in January?
Judson Culter: Our goal would be 3,000 meters. The way the iron formation, the best way I can think to describe it without having a graph behind me is like a radio wave just wrapping throughout the claim. And there’s only really been two locations here on the iron formation that have been drilled. The 3,000-meter program would continue at depth. Iron formations run deep. As we press released this morning, our hole number 3, we stopped drilling at 91 meters, and it was still on the iron formation. So obviously, if that runs on the assays, we’ll get back in there, re-drill to depth. But we need to test the continuity of this iron formation.
Also, if you go to our website and you look at the presentation materials, there are three or four nose folds, and that’s where you can get two to three times the high-grade. And so, that program in January/February is going to continue to test those nose folds and those hinges to see if they do run with higher than that 14 grams per ton that we know exists already.
And if we’re lucky, we may even assay one in the Andrew South zone if we don’t continue to have problems with overburden on this program and we stay on budget, we will hopefully be able to task one of those four nose folds. But certainly, by January on that 3,000-meter program, we’ll be testing that as well.
Maurice Jackson: Last question, sir, what did I forget to ask?
Judson Culter: Maurice, you never forget to ask. You got it all. They call it Proven or Probable for a reason, right? So you’re grilling me over here, so I think we got it covered.
Maurice Jackson: Sounds good. Mr. Culter, if investors want to get more information about Rover Metals, please share the contact information.
Judson Culter: Just please visit our website at www.rovermetals.com. And you can visit the Contact Us page and be in touch with us that way.
Maurice Jackson: As a reminder, I’m a licensed broker for Miles Franklin Precious Metals Investments where we provide unlimited options to expand your precious metals portfolio, from physical delivery, offshore depositories, and precious metals IRAs. Call me directly at (855) 505-1900 or you may email [email protected].
Mr. Culter, thank you for joining us today, and wishing you and Rover Metals the absolute best, sir.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
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