Amir Adnani Interview Part 2 | How to Bank Gold Assets at a Discount

Nick Hodge interviews the GoldMining (TSX-V: GOLD)(OTC: GLDLF) about recent gold acquisitions in Colombia and Alaska.

Publisher's Note: Click here for Part I of my interview with GoldMining Inc. (TSX-V: GOLD)(OTC: GLDLF) chairman Amir Adnani.  Part II picks up with an overview of the acquisition of Bellhaven, in Colombia, and their La Mina Project as well as GoldMining’s northwestern territories acquisitions with Yellowknife and Bluesky.


Nick Hodge 
Founder, Outsider Club

Nick Hodge: Just in the past couple of months here, you've made some acquisitions that I've covered and I've written about. The first is one down in Colombia. You were able to consolidate the Mid Cauca Belt by acquiring Bellhaven and their La Mina Project, which is one of the highest-grade projects down there. You've also got the management team that came with it. Can you explain to me more about why you made acquisition and why the addition of Bellhaven's management team to your team is so valuable?

Amir Adnani: Well, part of what we wanted to accomplish in Colombia was very much the same kind of strategy that we had in Brazil. We went into Brazil and it started with having local partners and the understanding of a specific area within Brazil in Pará state where we were able to just put together four different projects with 43-101 resources and build a strong portfolio there. In Colombia, it was the same thing. It was leveraging our partner in South America, Brazil investors, the oldest investment bank and investment house in Latin America with investments in Brazil and Colombia. One of our board members lives in Colombia. In addition to having a strategic financial partner, having some in-country know-how, we felt it was a jurisdiction we wanted to make a real move in.

Next came identifying opportunities where it wasn't just going to be one acquisition but that a sequence of acquisitions can create a district. So, we have to go back and look at the acquisition we made late last year of the Titiribi Project, which gave us our first kind of toehold into Colombia, into the Central Cauca Belt. And now with the acquisition of Bellhaven, we have created really one of the largest district plays in central Colombia, in this very exciting gold-copper porphyry belt, the Mid Cauca Belt. I say it's exciting and I've got proof that demonstrates that other companies as big as Newmont thinks it's exciting. Just in the last few weeks, Newmont has now invested a substantial amount of money, over a hundred million dollars, into Continental Gold.

AngloGold Ashanti has two or three different development-stage projects in this area. Iamgold has entered into various exploration projects here. Iamgold now becomes a shareholder of our company because they were a shareholder of Bellhaven. So, I love the fact that there's real regional activity in this Mid Cauca Belt and that we now have as a result of where two acquisitions consolidated what becomes one of the largest district plays in central Colombia, where we have two different 43-101 reports totaling almost 12 million ounces of gold-equivalent resources in all categories and 10 different drill-ready prospects within our land package that we can follow up on and we plan to follow up on.

You look at some of the people that also join us as a result of this acquisition of Bellhaven. The CEO of the company, Dr. Paul Zweng, who is the head of exploration for BHP Billiton in South America, sold his last junior resource company for over a billion dollars of value. So, this is a real proven individual. He becomes a member of our technical advisory board moving forward and one of our largest shareholders moving forward. We mentioned Iamgold. So, this checks many boxes. It enhances and unlocks value for a previous acquisition in Titiribi. It creates a leading district play in the central Colombia belt. You look at the acquisition, the total acquisition cost of Titiribi and Bellhaven has happened now for less than $30 million in stock. Bellhaven and Sunward Resources, the two companies that we acquired...

Nick Hodge: That's right.

Amir Adnani: ... were public companies in 2012 at 15 or 16 hundred dollar gold. Their combined market cap was over $400 million.

Nick Hodge: You're able to get it for ...

Amir Adnani: Less than $30 million in stock. So, that's the kind of difference we're talking about that it's the same project, same geology, same rocks, but at two or three hundred-dollar difference in the gold price tends to cycle can create that much of a gap in delta and the value of the asset. I love being able to do deals like this. I don't think there's any other industry in the world where you can get that much of a difference in valuation just because of a two or three hundred-dollar difference in the underlying commodity price.

Nick Hodge: Well, you've certainly been able to capitalize on it and you mentioned the 43-101 reports. La Mina came with over a million ounces indicated, but there's even more that you get with that because there's potential exploration upside. So, there's various deposits and zones that they have, but one called La Garrucha has hardly been explored. There've been a couple holes that returned mineralization, but that provides something for you to really sink your teeth into going forward.

Amir Adnani: It'll definitely be an exciting catalyst for us as one where we typically don't like to go and spend money at this point in the cycle to prove up resources. We rather buy them, but this is an exception. The sixth, last holes drilled there in 2013 before the company ran out of money, Bellhaven, were stellar results. I mean, you're talking about 270 meters of over one gram per ton gold and .13% copper. I mean, stellar, stellar results that you would want to follow up on. We feel confident. This would be an area at La Garrucha that with some minimal exploration expenditures, we'll be able to establish a maiden resource there. We'll see, but these are the types of things that as we assess our portfolio and we have a very extensive portfolio now, from time to time, we'll be able to allocate a better cash to enhance and increase resources organically. With $20 million of cash on hand, no debt, we definitely also have the balance sheet where from time to time, we can spend again a million or a million and a half dollars on a drilling program to prove up resources quickly. So, both options are there.

Nick Hodge: Speaking of extensive resource portfolio, by the way, almost a month after you acquired La Mina in Colombia, you were out with more news that you're expanding your territorial reach. You came out with these northwestern territories acquisitions with Yellowknife and Bluesky. What was the thinking behind that one?

Amir Adnani: Well, Canada, especially Canada's north, has been on our radar screen for a long time. You look at the amount of money going into Canada's north between Yukon, Nunavut, and Northwest Territories, but ...

Nick Hodge: The acquisition of Kaminak.

Amir Adnani: Kaminak with Goldcorp, Agnico-Eagle has committed over a billion dollars to Canada's north in terms of their capital expenditure program. So, knew we wanted to get into this area. We just needed the right opportunity and we found the right opportunity. These projects that we have acquired there come with over 200,000 meters of diamond drilling. You just think about the replacement value ...

Nick Hodge: And how much it cost per share.

Amir Adnani: We're picking it up for basically four million shares in our company and that's less than 4% dilution. So, it's quite exciting. It's a nice toehold into Canada's north and to Canada's region. The low holding cost, geopolitically stable ... Again, at a time when there's increasing interest in this region by majors and junior companies as well. So, we'll have more news as well about this latest news and acquisition of these projects in the Northwest Territories. I expect over the next six months there should be quite a bit of active news flow pipeline from the combination in using Colombia with the follow-up work we're going to do with the Bellhaven acquisition, the work that we're doing with our latest acquisition in Canada.

And perhaps, new exciting acquisitions as the gold price continues to linger below $1300 or so, that gives us a fantastic window to find the types of deals that we've done. We got a six or seven-year track record now that shows we get deals done and we've been executing on the vision and the resource space keeps getting bigger. We're now ... in our total global resources over 11 million ounces gold equivalent and measured and indicated and 13 million ounces inferred. That's a big portfolio.

Nick Hodge: You've got 24 million ounces of gold equivalent.

Amir Adnani: That's a resource space that can go up next to any company that is in the sort of mid-tier pre-production junior space. It's definitely one of the biggest portfolios in the Americas. The vision was to create a powerhouse and we're definitely on our way. We're building it very a substantial company here.

Nick Hodge: You've got 24 million ounces of hold equivalent. You've got catalysts ahead with looking at the reports of potentially drilling La Garrucha as you just alluded to, perhaps even more acquisitions in the near term as you continue to execute on this land-banking strategy. So, Amir, congratulations to you and congratulations to your team, and obviously, to shareholders who have been along for the ride. It's been fantastic. Thanks for taking a couple minutes to update us today.

Amir Adnani: I appreciate it, Nick. I look forward to connecting with you again soon.

This interview was filmed in Vancouver on the sidelines of the International Metal Writers Conference. Watch part one here

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