The Best Place to Be If You're in the Gold Business
Publisher's Note: I often bring you interviews with management of companies I've been following or that I recommend or own. This one is all of those. Allegiant Gold (TSX-V: AUAU)(OTC: AUXXF) is the recent spinout from Columbus Gold. Members of Nick's Notebook funded it privately before it began trading. Allegiant has a suite of projects in Nevada that it will be drilling this year. One of those projects already has a gold resource on it. The drilling is being led by Andy Wallace, who, over the last 35 years, has found or cofound eight gold mines. Not discoveries... but mines. He thinks he's going to find more. I'll let Chairman Robert Giustra tell the rest of the story.
To your wealth,
Nick Hodge: Hi this is Nick Hodge with the Outsider Club. I have for you today, on the phone, Robert Giustra. He's the chairman of Allegiant Gold (TSX-V: AUAU)(OTC: AUXXF), which trades on the TSXV under the ticker AUAU and recently they got listed on the OTCQX under the ticker AUXXF. This is a really exciting discovery and drill program in Nevada, and I'm glad to have Robert on the line. Robert, thanks for joining us.
Robert Giustra: It's good to be here. Thank you.
Nick Hodge: So, I want to jump right into the team because when it comes to exploration I think people are very, very important. It's not every day that someone finds a mine. I think the prospects are something like one in one thousand targets becomes a mine and the gentleman you have as the CEO of Allegiant Gold has found several mines and so that's why I think it's important to bet on Andy Wallace, who is with Cordex. Can you tell us a little bit about Andy Wallace? His days at Cordex and some of the projects that he's discovered?
Robert Giustra: Yeah, Andy's a principal of Cordex. He took over management of Cordex in 1984 and Cordex was formed 10 years earlier by his partner John Livermore. Together, over the next 35 years they found nine deposits, gold deposits in Nevada, eight of which are major gold mines. Prior to founding Cordex, John Livermore, Andy's partner, found the Carlin Mine and the Carlin Mine is the reason Nevada is the best place in the world to be if you're in the gold business, it really started everything.
Yeah, so his track record is exceptional. He works exclusively with Allegiant; he doesn't work with anybody else. So we have 100% of his time and his efforts and his expertise.
Nick Hodge: And so, just to put a cap on it, he found the five-million-ounce Marigold Mine, he found the 12-million-ounce Stonehouse Lonetree Mine, and he also found the Daisy Mine and could you convey for the listeners and the readers, how excited he is about the projects that he's seen that are in Allegiant’s portfolio?
Robert Giustra: Yeah, you're right, he found those deposits. He's responsible for half of Cordex's discoveries himself, and I should also add before I answer that question, Nick, that on his staff he has people that are legends in their right. Like Pete Chapman, who also found three gold mines in Nevada. So we're actually talking about the combined track record of a team is about 13 or 14 gold mines in Nevada, which is unprecedented. What is he excited about now? Andy's not a guy that visibly gets excited, he's pretty reserved, but he's pretty stoked, I'd say, about the potential of the Eastside deposit, which is a discovery. It's got a long way to go to be a mine but he thinks it's gonna go the distance. And in his opinion he believes it's as large, the mineralized gold system there is as large as Cripple Creek, Colorado or Round Mountain in Nevada, both of which have produced 15 million ounces of gold.
Round Mountain, in fact, you can see from the Eastside property. You stand up the property, you'd look across the valley, and it's right there. The largest heap leach gold operation in the world. The other project, which is earlier stage, which we call the discovery opportunity, is called North Brown and North Brown is a target in a geological setting that's been known to hold very large gold deposits in Nevada. Andy has seen four like that his entire 40-year career and three of them ended up being major gold mines. That one's pretty early stage and it's never been drilled, but we're gonna drill it in late spring. It sits right on the Battle Mountain front.
Nick Hodge: Let's talk about Eastside first. As you mentioned, it is a discovery, it has a pit constrained and inferred resource of 721,000 ounces of gold, but you guys are really gonna drill that thing this spring and early this year. You have a 20,000-meter campaign underway at Eastside and some of the results are already coming in. Just this morning you announced results, 42.7 meters of nearly 2.5 grams per tonne gold. Can you talk a little bit about the program at Eastside and how you guys are looking at these early results?
Robert Giustra: Yeah, the objective at Eastside is pretty straightforward. The deposit is open in most directions and the objective was to test the western extension where we didn't have any outcrop and that was pretty key. We announced those results this morning as you pointed out, Nick. That's exactly what we were hoping for. We stepped out as much as 300 meters to the west and are intersecting long intercepts of gold mineralization. Same type of hole, same sort of grades. So the deposit is growing, the objective with the current program, which is underway, is to double the resource inside the pit. We don't think it's unrealistic to see a couple million ounces in the next resource estimate after this round of drilling. And importantly, we're aiming to reduce the strip ratio to about three to one or under three to one. If we achieve what I just described, which are all reasonable assumptions, there isn't a gold mining company in the world with that deposit.
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Nick Hodge: Yeah, I mean, over a million ounces in Nevada is something that catches a lot of people's attention and I'd be remiss if I didn't note that. I've seen some other companies that have similar-sized assets in Nevada that are fetching much higher valuations. So I'd have to say if Allegiant gets to that point that then they'd be significantly undervalued as it is right now. And it's not just Eastside as I understand it, because there's multiple discovery opportunities afoot here. Can you talk a little bit about the blue sky? You mentioned North Brown but you guys are drilling many more projects, so there's multiple discovery opportunities.
Robert Giustra: We are. Just to close the loop on Eastside before I address that, you're right, a million-ounce deposit is attractive. It's one thing to have a million-ounce deposit, which is not gonna get any bigger, and it's another thing to have one that's just the start. So we think we're gonna have two million ounces after this next round of drilling in the pit and that's just the start. We've only drilled about 20% of the actual deposit in about 1% of the entire property, which is district scale. So moving on to the other assets. We have 14 projects, 11 of them are in Nevada, backed by the more advanced Eastside and the others are what we refer to as discovery opportunity. That might be a little misleading at first to say discovery opportunity because it might suggest that it's really grass roots, but those projects are not grass roots. They have well defined drill targets with gold at surface. So all the early work has been done, all the geochem sampling. Some properties have geophysical surveys on them where necessary. All the mapping, all that work's been done and in fact, five of the properties have drill permits and bonds in place and are ready to go.
We're gonna drill eight of those, what we call discovery opportunities in the portfolio and all that drilling’s gonna happen this calendar year. So that is really exciting 'cause the reason Cordex has been so successful is because they prospect, they define drill targets in geological settings that are known to host big deposits in Nevada, and then they drill. And if you don't drill you don't make discoveries. So realistically, what I think's gonna happen if you drill eight projects that are selected by Andy Wallace in his backyard, Nevada, something pretty major is gonna come from it and it's pretty exciting for all that to be happening this year.
Nick Hodge: Well it's very exciting. Like you say, you don't make discoveries without putting the truth machine to work. There's a reason it's been named the truth machine and you guys are doing it on a massive scale. Like I say, 20,000 meters in Eastside and then drilling several other prospects with high-priority targets by Andy Wallace and not to mention district-scale potential. So I'll leave it to you to wrap up, Robert. Is there anything else you'd like to add? Is there anything else we missed?
Robert Giustra: We can probably talk for an hour, there's so much to say about this company, but our board of directors is exceptional. We've only been listed exactly a month, just a few days over a month and we made a promise late last year, prior to the listing that we were aiming to put together an exceptional management team and I think we've over-delivered. Goldcorp is the second largest gold company in the world and their CFO, who resigned just a few months ago, is on our board of directors. Prior to Goldcorp, he was a CFO of Newmont. Another director, his name is Russell Ball, another director, a Norm Pitcher, Norm is the former president of Eldorado, which has a billion-dollar market cap. So we've really over-delivered on the board of directors. We've got quite a tight share structure with only 50 million shares outstanding. We're in the right place, with the right team and importantly, because you can have all those things and if the timing's not right it doesn't mean anything, it's at the right time. For the first time in 10 years, since 2008, there's now an appetite for gold exploration and so you're gonna hear a lot from us this year. There's gonna be a lot of news flow.
Nick Hodge: And discoveries are being rewarded in the market in a big way. It's one of the reasons I had the accredited investors at Nick's Notebook participate in the placement when you guys did the spin out from Columbus. Like you say, it's the right team, it's the right place, it's the right time. One thing we didn't mention is that I believe you also have third largest on the Nevada database behind Barrick and Newmont if I'm not mistaken. So you have the data as well. I wish you best of luck as you continue to drill and Robert, thanks for coming on. If there's anything else you'd like to add, go ahead.
Robert Giustra: Thanks Nick, I think we covered everything. It was a pleasure to be invited. Thank you.
Nick Hodge: Thanks so much. If you guys wanna hear more about Allegiant Gold or see the presentations or anything like that, you can go to AllegiantGold.com. Thanks Robert. Take care.
Robert Giustra: Cheers.
Call it like you see it,
Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.
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