Interview: GoldMining Goes Shopping Before Gold Resumes Ascent to $1,800

Written by Gerardo Del Real
Posted May 1, 2017 at 7:20AM

Publisher's Note: Amir Adnani is one of the best executives in the mining space. He took the now NYSE-listed Uranium Energy Corp. from concept to production in five years. Fortune magazine distinguishes Mr. Adnani on its ‘40 Under 40, Ones to Watch’ list of North American executives. He was selected as one of “Mining’s Future Leaders” by Mining Journal, a UK-based global industry publication. As the Chairman & Founder of GoldMining Inc., Amir is now busy building what has already become one of the largest gold resource portfolios in the junior mining space. Our own Gerardo Del Real recently caught up with him to get his thoughts on the current gold market and the investments he's making to benefit shareholders. Full Disclosure: GoldMining is one of 10 gold stocks I released over the weekend as a buy to make right now. You can get all 10 here. Enjoy the interview.

To your wealth,

Nick Hodge Signature

Nick Hodge
Founder, Outsider Club


Gerardo Del Real Editor Photo 110Gerardo Del Real: This is Gerardo Del Real with The Outsider Club. Joining me today is chairman and founder of GoldMining Inc. (TSX-V: GOLD)(OTC: GLDLF), Mr. Amir Adnani. Amir is an entrepreneur and a mining executive. He is the founding CEO and the director of Uranium Energy Corp., an NYSE-listed uranium mining and exploration company. Under his leadership, UEC moved from concept to initial production in the U.S. in just five years, and he's developed a pipeline of low-cost near-term production projects. Amir is a frequent speaker at prominent conferences around the world. He holds a Bachelor of Science degree from the University of British Columbia and is a director of the university's alumni association. Amir, thank you for joining me today.Amir Adnani GoldMining Uranium Energy Corp

Amir Adnani: Hi, Gerardo. Nice to connect with you and catch up.

Gerardo Del Real: I appreciate your time. Now the last time we spoke, GoldMining Inc. had made its first entrance into Colombia by acquiring the Titiribi Project. Now just a few weeks ago you announced your second major transaction in Colombia, an important one: The buyout of Bellhaven Copper & Gold, which is a transaction that significantly expands your land package in Colombia in the very prolific Mid Cauca Belt. I'd love to go over the details and why this is an important transaction for GoldMining Inc., but first, I'd love your take on the current state of the gold market. We talked a bit off the record about the market. I'd love to hear your thoughts on it.

Amir Adnani: I'm somewhat bipolar when it comes to the gold price and how it makes me feel when I look at it on a day-to-day basis in the sense that longer term, I'm really a very strong believer of the fact that we're going to see gold prices — at the very least — retrace their steps higher to their levels from 2012 and the highs that we got to in that $1,900 range. I think everything from the amount of monetary easing that's been going on in the world, the inflationary pressures that are going to ultimately kick in and drive real interest rates into deeper negative territory, to geopolitical issues and tensions all around us. I think there are enough factors developing out there that are real that will eventually get us there.

As much as I'm a believer in higher gold prices and believe in gold as the ultimate storer of value and as the ultimate way to preserve and create wealth. As someone who is building a business today purely geared towards making acquisitions at the bottom of the cycle and making accretive acquisitions, I love these pullbacks that we see in the gold price. It just continues to give me a prolonged window - it gives GoldMining and our team and our company a longer window to do deals like we just did in Colombia with this Bellhaven acquisition that you alluded to.

In the near term, this is perfect for us, and I think this is a great way for us to continue doing what we've done for six years now as a public company, seven years since the company was founded, and to really demonstrate that this acquisition model of ours executed the way GoldMining has been executing, has been a phenomenal way to create value. If you look at our performance since IPO, our company's shares have outperformed our various benchmarks, including the S&P 500. You look at that performance, and I think it's a great validation of the acquisition strategy as executed by us, and these pullbacks in the market I think are just fantastic for us to keep getting bigger.

Longer term, Gerardo, how can we not recognize, how can we be blind to the fact that the policies of the Trump administration are inflationary? These are going to drive real interest rates deeper into negative territory, as I mentioned. There are various geopolitical issues out there from North Korea to the humanitarian crisis in Syria. All of these are just going to create more geopolitical tension and crisis out there that will be positive for gold. But at the same time, these are also real issues that need to be addressed that we're facing in the world. Let's see how the rest of this year pans out. I think also, you and I are speaking today as of the end of April. These first-quarter GDP numbers also didn't look too good.

Gerardo Del Real: Correct.

Amir Adnani: You just look at that and start to think about what kind of rationale the Fed's going to have to be able to raise rates here. You've got the president of the U.S. talking the U.S. dollar down. It's just a bizarre, bizarre situation in my opinion.

Gerardo Del Real: Let me ask you this, Amir. You mentioned the retracement of the gold price back from the $1,900 level. Obviously, GoldMining Inc. is positioned for a sustainable gold bull market. Do you believe that once we retrace back to those levels that we go past that and that we do that on a very sustainable level for years, the way that I believe the gold market would develop?

Amir Adnani: I believe we do, and I think we will see that. When you look at just again how much we've seen in terms of expansion of the balance sheet of the world's top four central banks, you look at the U.S, you look at Europe, China, Japan. Just the balance sheet expansion of these top four central banks alone should correlate to a gold price closer to $1,800.

Gerardo Del Real: Correct.

Amir Adnani: That's based on some published research by the good folks over at Deutsche Bank, for example, that did that analysis, and it's quite compelling when you look at that. There's a sustainable case based on the amount of monetary easing and cheap money and basically next-to-nothing cost of capital that we've been printing and printing and printing since 2008, and at some point, that has to reconcile with a long-term sustainable higher price in gold to basically factor in for what we've done on the monetary side. I absolutely believe this is more about a longer-term higher price of gold, which will be very much supported as being a sustainable higher price.

Gerardo Del Real: Well, that would be a big positive for GoldMining Inc. Let's talk about the latest acquisition. You mentioned using the downturns to make deals that frankly are very opportunistic and very shareholder friendly. The latest is the acquisition of Bellhaven and the La Mina project. Now La Mina is a high-grade gold porphyry copper project. Can we talk about what made the project attractive to you?

Amir Adnani: Yeah, a number of things. First of all, our last three acquisitions, including this deal with Bellhaven that we've announced, have focused, as you've noticed on gold-copper porphyries. The theme of going after gold-copper porphyries in our last three acquisitions has to do with four variables here. Size, the fact that you have these gold-copper porphyry deposits being significant contributors of gold and a very important source of copper as well in the world. They tend to be bulk mineable, conventional metallurgy, and major mining companies need these long-life, low-cost mines to deliver the kind of growth they're looking for. They tend to be company makers. This has been our focus.

Staying within that focus... You know that we made acquisition of the Whistler Project in Alaska, a gold-copper porphyry project. Then Titiribi late last year in Central Colombia, and now Bellhaven, which is just six kilometers south of Titiribi. That's where this project just checks so many boxes for us in terms of synergies at many levels besides the fact that it's a great deal and some of the shareholders of Bellhaven, including management, that we can add to our team which are complementary and additive. To back up, if you look at what we did in Brazil starting out, we focused in one area, Para State in Brazil, and we made a consolidation of four projects in that state.

That was really the case that we've always believed in, which is if you're in the acquisition model, if you're pursuing consolidation strategy as we are, you want to have certain synergies amongst multiple projects that you can create in certain geographic areas. We did that successfully in Para State. We were looking to do that in Central Colombia after we acquired the Titiribi Project. Takes a while to put good deals together. This certainly did, but it was the obvious deal to do. Again, you just had to sit there, look at a map and see that all right, here it is. Five or six kilometers south of Titiribi there's one of the highest-grade gold-copper porphyry project in terms of the resource they had published in the Americas, and so with great exploration targets and targets to follow-up on.

One of the last holes drilled, which is not included in the resource report for Bellhaven, at an area called La Garrucha, had an intercept of 270 meters grading over 1 gram per tonne of gold and 0.13% copper. It's about a 1.2 gram per tonne of gold equivalent, so some fantastic numbers. In terms of being accretive, well, only 6% dilution, Gerardo, to GoldMining shareholders. You look at the overall resources that we had with the project at La Mina, the name of Bellhaven's project, plus a number of gold-copper porphyry targets for follow-up drilling including a very stellar intercept in that area, La Garrucha, that I talked about.

You look at the management of Bellhaven, Dr. Paul Zweng, for example, who was the CEO and the largest shareholder of this business, his last two companies were sold for a combined about $1 billion, and so a very successful entrepreneur and geologist who ran exploration activities for BHP in South America. We also get IAMGOLD as a shareholder who comes onboard and becomes a shareholder of GoldMining upon completion of this acquisition, and you end up for the first time consolidating two projects and all the exploration ground in between that we've applied for licenses for between Titiribi and La Mina. We end up now with one of the larger consolidated land packages in Central Colombia, where you have two separate 43-101 reports over 10 different targets that are for follow-up drilling, and where drilling has already happened.

You have follow-up drilling and activity on epithermal targets, porphyry mineralization and resources, surface rights, buildings, geologic synergy, engineering synergy, administrative synergies, and Gerardo, almost 200,000 meters of diamond drilling that has taken place already that we're going to be reevaluating and reassessing as we're looking at this whole thing as one big project now. It's very exciting, gives us a real leading position and portfolio in Central Colombia. That's why I can't wait until the deal closes, which is expected for the end of May.

Gerardo Del Real: Excellent. Now you mentioned the resource in place, and you have a historic preliminary economic assessment (PEA), Amir, so it's fairly advanced. Do you plan on updating that and incorporating some of that drilling? You obviously see exploration potential. You mentioned the multiple deposit types and the multiple targets. Is there a plan to update that PEA or further drilling on the property?

Amir Adnani: There are, and so as I mentioned in terms of next steps here, the first step is the closing of the transaction as I mentioned. That's expected for end of May. After that, we would look to follow up on several of these prospects for drilling over at the La Garrucha area that we talked about. In total about five different zones where you have drill-ready targets and you would follow up on the last round of drilling that Bellhaven had done in 2013. It would make more sense to do that follow-up drilling, analyze the results, hopefully have that lead to a new updated resource, perhaps a new maiden resource for the La Garrucha area. Then you assemble all of that and bring it into an updated PEA, and that would become something that we would look to do on the back of some additional follow-up drilling that we would plan to do at this project.


Tune in tomorrow for Part II of this interview. 

Today focused on the current state of the gold market and how sustainable we believe this bull market is going to be.

Tomorrow, we'll explain GoldMining's business model and how it provides leverage by adding ounces at a significant discount, and ounces that in theory are going translate to leverage in a better gold market. 

Until then, here is our most recent gold research, which culminates in Nick's Top Ten list of gold-related investments to make now. 

Get it by clicking here.

Click here for Part II of this interview.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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