Gerardo 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: 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.
Gerardo Del Real: Now yesterday we talked about the current state of the gold market, and we talked about how sustainable this bull market we believe is going to be. Can you please explain for those that are new to the GoldMining Inc. story, can you 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?
Amir Adnani: Yeah. The GoldMining business model is one that has been executed and successfully done and realized substantial gains for investors in other commodities at other points in time. For example, in the 90s, you look at what Silver Standard did in the silver business by acquiring silver resources in the ground, basically being a real estate company, a developer company, where you are acquiring resource-stage projects that have been drilled off. Where you have a qualified or 43-101 resource in the ground, and during market downturns, these projects will be valued or trading in the market for less than the replacement value of the work that has been done.
You're basically buying things for cents or a dime on the dollar. This has also been successfully done by companies like Lumina Copper, who in early 2000 were buying pounds of copper in the ground and then successfully realizing a re-rating when the copper prices rebounded and without taking on exploration risk or too much development risk were able to create significant value for shareholders. Of course, for us, our primary focus as the largest shareholders of GoldMining ourselves — management, myself, and insiders, we own 25% of the company — we are strictly focused on value per share, increasing value per share, and making sure we have minimal dilution in how we grow the business.
We now have a seven-year track record, executing on a model, as I mentioned, previously done by the likes of Silver Standard or Lumina Copper, and that's what we set out to do in 2011. Starting in 2011, we have managed to complete a number of acquisitions in Brazil, in Alaska, now in Colombia where by combining total resources underground you look at where we are now in terms of our total resources of gold in the ground. We have in the measured and indicated category just about 9 million ounces of gold, and we have in the inferred category about 10 million ounces of gold in terms of our total global gold resources.
We've managed to spend about $50 million in acquisitions in stock that we've issued to make these acquisitions, and the companies or projects that we acquired, if you look at what the market caps of these companies or businesses were in 2011 or 2012, they would have been worth or trading in the market at well north of $500 million. You can almost see that the whole concept of buying on 10 cents on the dollar or cents-on-the-dollar type of thing. We just believe this is a mathematically proven and superior way of creating shareholder value. By buying at the bottom of the cycle, we're able to minimize dilution. We're able to aggregate and build a very large resource space that's diversified in three different jurisdictions, multiple projects so you don't have all your eggs in one basket. This manages risk better.
Now having had a six-year track record since our IPO, as I mentioned at the very beginning, you look at the performance of our company since IPO over a six-year period. We've seen a tough bear market. We've seen a bull market last year, so we've seen the good and the bad over six-years.... Standing here today since our IPO, we've outperformed all of our key benchmarks, industry benchmarks, including even a broad index like the S&P 500 over the last six years. We believe that our version of this acquisition model, and a lot of companies might try consolidation strategies but just because you're trying to consolidate doesn't mean it's going to work.
We believe now after a six-year track record or doing deals year-in and year-out, demonstrating rationale and logic in our acquisitions, demonstrating that our acquisitions are accretive, not dilutive. This is the key to this exercise. You have to make acquisitions where each subsequent acquisition increases your value of total resources and total gold in the ground on a per-share basis, more than the dilution that you realize. That's what's making it accretive. This is a mathematically superior way of doing things because ultimately, you're always building that value per share and you're not just growing for the sake of doing deals and consolidation.
Of course, if management and insiders have skin in the game, they care about dilution because it's coming out of your own pocket, so to speak. That's always been the hallmark of how we've managed to grow this business is that we've been so heavily involved as shareholders since founding the company, myself, and the rest of our team, and our board. That has been really the driving concept behind all of our acquisitions. Make sure that you're increasing your total resources on an accretive basis, and I think moving forward, the market, as long as it stays in this kind of territory where it's a bit of a lukewarm market; it hasn't taken off; it's two steps forward one step back and you have that window to make more deals, I think it's a fantastic situation for us to do more of what we've done in the last six years and having six years to demonstrate that the concept works. It works in a bull market; it works in a bear market.
In the bull market, you reap the benefits of what you've built because the market gives you significant re-rating on those ounces and resources that you're sitting on. In a way, Gerardo, it's about de-risking and enhancing what you acquire by doing consolidations that make sense. Look at the Titiribi-La Mina consolidation. Never before in the last five or six years were these two projects under one umbrella under one roof, and now that they will be, you realize an incredible amount of, again, technical and administrative synergies that will inevitably create a different project than what these two things were when they were two separate public companies in 2012 and thriving.
Bellhaven and Sunward Resources, the company that owned Titiribi, these two things in 2012, just these two companies that owned the La Mina-Titiribi projects that we now own, had a combined market capital of over $400 million. Now they're consolidated under one roof, and they're just one leg of our story out of a three-leg and three different countries situation.
Gerardo Del Real: Excellent, excellent. Now you mentioned the lukewarm market, and despite that lukewarm market, you currently are trading near the $1.80 level, but analysts have price targets in the $4 range, $4 Canadian. You also mentioned value per share, right? How does GoldMining compare to its peers on a gold-per-ounce basis?
Amir Adnani: I think the analysts that cover us look at our total resources and assign various multiples for an ounce of gold in the ground. I think they also look at the fact that two of our projects now, our Sao Jorge Project in Brazil and our project in Bellhaven, La Mina, which again, after closing will be in our portfolio, that those two projects also have historic PEAs, preliminary economic assessments, and hence some of these analysts might be looking at the value with projects that are a bit more advanced with the historic PEA, assigning a higher multiple maybe to M&I, or measured in indicated resources, and also recognizing the very large inferred resource base that we have. I think today with the total of 8 million ounces measured in indicated category, the total of 10 or 11 million ounces in the inferred category, and that's just gold only, on a gold equivalent basis because remember I mentioned we've been acquiring gold-copper porphyry projects.
I believe there's another 5 million ounces of gold-equivalence in copper resources that I'm not even acknowledging when I'm talking about our gold-only resources. Now just 5 million ounces of gold equivalent resource in copper is more gold than most junior resource companies have, and here we're not even acknowledging it. The bottom line is I think on a EV ounce or enterprise value to ounce of gold in the ground we're trading at a very attractive multiple or valuation right now. Part of the consolidation or acquisition strategy is that as you focus on acquisitions, you're spending less time de-risking assets, and so as a result, I think you realize more upside for those resources when the market re-rates them, when you switch focus on developing those assets.
That's part of the excitement as to why you have such a great leverage and optionality to the higher gold price. Because again, you're trading on the low end of the multiple compared to other companies that are single asset, just focused on that one asset and de-risking that one asset and have created more value around those ounces today. I think that's what we saw in 2015 coming out of the bottom of the gold market, if you look at our performance in 2016 where we had a decent gold market, GoldMining, as you know, and some of the newsletters associated with you have covered the story very well, it was one of the best-performing gold stocks last year.
I think when you look at that, you can see why there's such a great demonstration of that out-performance that the stock was able to have and will do again when you end up in a bull market for gold and that leverage and optionality to such a big resource space is unparalleled. It's difficult to match that with smaller deposits.
Gerardo Del Real: Now, Amir, people ask me all the time, "What do you think about Amir?" I often use the phrase, "He's a gifted deal maker." You've been very opportunistic. You've made some great deals. You mentioned the out-performance of several benchmarks. What's the cash position with GoldMining Inc., and are you looking at other deals, Amir?
Amir Adnani: We have about $20 million of cash on hand. We have no debt, and as I mentioned, insiders own 25% of the company. You've got a very organized capital structure, major shareholders like Sprott Asset Management, the people over at KCR Funds with Doug Casey, Marin Katusa, Ruffer Gold Fund, which is one of the largest gold funds out of London, U.K., and BrazilInvest, who's the oldest investment house in all of Latin America. They've completed about $16 billion of investments in Latin America. They're great partners and backers in both Brazil and Colombia, and they own about 10%. The chairman of the bank sits on our board of directors. You see just a very diverse group of stakeholders all with vested interests and very involved along with our management group.
To answer your second question, we're working on more acquisitions, Gerardo, just sticking to our knitting, sticking to what we're good at in terms of identifying these deals at the right time in the market and executing them. I would expect to deliver more, and I believe we'll continue delivering more as long as we see the weakness in the gold market and that's the environment for us to be productive.
Gerardo Del Real: Absolutely. Amir, I want to thank you for your time. Is there anything else that you'd like to add?
Amir Adnani: Stay tuned and we've got a brand-new website with our GoldMining.com. Have a look at that. There's new information there. As you know, our company was called Brazil Resources previously, and as we expand it beyond Brazil and ended up in Alaska and Colombia, we needed a name change, so with the new name GoldMining, GoldMining.com, we have more information there that you can take a look at to become familiar with the new face and brand of the story. Yeah, I'd love to come back and talk to you more as we make more news and acquisitions and talk more about how things are progressing.
Gerardo Del Real: Well, I'd love you back on, Amir. It sounds like it's going to be a busy rest of the year for you as far as news flow goes, so hopefully we have you back on soon. Thank you again very much for your time, Amir.
Amir Adnani: Thank you, Gerardo.
Hope you enjoyed my interview with GoldMining Chairman Amir Adnani.
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