1911 Gold Targets Mill Restart by End of 2026, Closes $35.65M Bought-Deal Financing

0:00Thank you.

0:30Shaun Heinrichs: $35.6 million deal bought deal financing. Sean Heinrichs is CEO. Sean, welcome back to Mining Stock Daily. Hi, Michael. Great to be back here with you. Thank you. Let's start with that financing. You just closed$35.65 million that I mentioned at the top. You also have$25.4 million cash on hand as of March 23rd. Sorry, March 31st. What does the funding support, Sean? Thanks, Michael. Yeah. No. So the idea behind the funding was a largely a development driven financing. So there's a significant CDE or development expenditure component to that. and that is largely to support this kind of next 6 to 12 months of underground development required primarily for our test mining activities.

1:23So we've got several targets that people have been kind of hearing me speak about previously, but they're in the hinge ramp. They're also on the level 16 in the True North mine, and those require investments into initial ramp access, or pass and some delineation drilling into all of those target areas. And those form kind of our first four to five months of production starting late in the fall year coming up. We're actively developing into those areas now and we saw kind of a need for a near term additional cash to make sure we were well supported in that activity. There's a second component to the financing, which is that exploration dollars.

2:05and that is really to support a surface program primarily. There's additional areas around the mine lease where we see open potential for additional resource additions going into kind of a larger resource update in the fall. And then there were a number of target areas down in the southeastern part of the project. Ogama Rockland where we have an updated resource coming out soon. Gunnar and Tinney, both areas associated with a historic mine that produced over 100 ,000 ounces where we have done some drilling and we see some opportunity to do some additional drilling to continue to bring that one along in our long-term pipeline.

2:48Shaun Heinrichs: I wanted to get to the exploration results that you mentioned recently, but let's bring it up now because now that you have the financing, how are you kind of looking at in terms of advancing towards that restart that I mentioned at the top versus the drill results and the exploration drill results that you see coming in as well. So what's a sweet spot right now and also that you've got the financing here. How are you looking at deploying those resources towards development and also towards exploration? Great. Going back to October, we pivoted more towards infill drilling and in the case of these test mining areas, delineation drilling.

3:31And that work has continued. We had some results out earlier in the year on the hinge zone target off of level 16, where we'd completed delineation drilling. And then following that, we've moved the drill rigs over to do resource extension work, always targeting that first 12 to 24 months of mining in our current mine plan that we had developed, the conceptual mine plan as it is. and that has been ongoing. Now over the last several months, we moved a rig into one of the ramp mines, the hinge ramp mine and that has also been drilling primarily infill drilling on several test mining targets in that hinge ramp and those are areas that we will be mining here in the next several months as well.

4:15So the current rig count is three. Those three rigs are primarily focused on infill in areas that currently contemplated mining, and that's going to continue. So we will have a continuous stream of infill drilling over the next 12 to 24 months. Obviously, we'll always be doing 30 ,000 to 40 ,000 metres of drilling every year, drilling out that mine plant in advance of actual blasting of ore. So that activity will continue. But we will layer a component of exploration drilling on there. So you are going to see the addition of additional drill rigs, both underground and on surface. I guess if you wanted to put a ratio on it, you're looking at probably 70 to 75 % infill and delineation drilling and another 20 to 25 % of exploration-type drilling continuing to increase the size of the resource.

5:11Shaun Heinrichs: Now, in July, the BC Securities Commission did a review over PA. You subsequently filed an amended and restarted PA technical report Can you explain what happened? Not simply.

5:28So, look, this is, I don't want to say that this is a part of growing up, I guess, as a public company. This was our first prospectus deal, and it triggered a full-blown review of all our public disclosures. We were expecting, obviously, that there'd be some things that would come out of that process. And to say that really the primary issue was our recently published PEA is probably a good thing. We weren't having to go back to an MRE or any other disclosures and trying to clean those up. So the specific issue related to the PEA was that when you have a company like us where there's a significant amount of historical data, existing infrastructure, PEAs, which typically are premised around conceptual studies, it gets a little bit unclear.

6:14because now you're mixing in a lot of actual data with a lot of benchmarking and looking at peer companies and those types of things. And I think the lesson we learned and what came from the BC Securities is that we needed to tighten up the disclosure in the PEA and the news release, obviously, that we put out prior to that to make it clear to the readers that there is a significant component of inferred resources in our report. And even though there are significant parts of the report that sound like actuals, in fact, they are still estimates and they should be taken as estimates. And that needed to be clearer in parts of the writing.

6:53So a little bit of, you know, for us, you know, learning and working through a process with the Securities Commission in terms of, you know, providing this additional cautionary language around some of the numbers in there. That said, nothing fundamentally changed in the report. The numbers were remain the numbers, you know, the calculations, the mine plan, none of those aspects were challenged. It was more just putting in additional language to be clear around the estimates that were involved.

7:25Shaun Heinrichs: Sean, I'm going to lean on you because you do have a background in finance, and I just kind of want to go back again to the top where we talked about the financing that you announced in late July.

7:45Shaun Heinrichs: $59 million is what you're saying, and then total life of mine is at$478 million in the PEA that we mentioned. What specifically is this tranche funding? Well, the tranche funding is partly to fund aspects of that$59 million. So the$59 million is a point-in-time estimate of what it would take to restart the mine. But on top of that, like you said, there's also a significant development expenditure requirement that's in there as well. And in there is the development required to support the first couple of years of mining activities. Now, originally, our hope was that we would be able to fast track certain areas in the underground and accelerate some production coming out of there to help fund some of that development activities.

8:36But as we got in the underground and realized that it was going to take us longer to dewater the lower areas of the mine, which would restrict our access to certain ore movement mechanics, the ore pass, the loading pocket, being able to skip from level 26, which is the main area for moving ore, we weren't going to be able to process ore early. and so therefore some of those costs had to be borne by our shareholders through a financing that originally hadn't been contemplated. Now, this is work that would have had to be done either way. It's more a matter of the mechanics of how we had to fund it.

9:17So we weren't able to test mine. We still needed to do the development that was contemplated both in the PEA and as part of our test mining program this year. So we went out to the market and had a successful raise in funding. Now, obviously, it took a long time to close, but that was, again, going back to that, you know, working through the mechanics of our PEA to make sure that it was, you know, acceptable to the BC Securities Commission. There were no concerns with respect to the investors that were in the financing itself.

9:46Shaun Heinrichs: Let's talk about the number of shares that you have out and dilution. So with the raise and with the warrants, the raise that you just announced in the warrants and the options, the fully diluted share count for 1911 is around$419 million. How do you think about this stage of dilution relative to getting True North back up to production? I think at this stage, the dilution is, the share count is about where, you know, it should be in the longer term. I don't see it changing a lot at this stage. We will probably need to fund some exploration in the future. We may not be in a position to fund it from our operational cash flows.

10:28So I'm not going to say there's never going to be another equity raise, but certainly they're quite nominal at this stage. We are well-funded. And what we will do in the future is as we reach kind of cash flow profitability, we will look to decrease the share count, that mechanism. And I've seen that successfully done in other mining operations. And that's certainly part of our goal is to bring that number back down to a reasonable amount. But I think at this stage, it's probably about where, you know, the maximum it should be at this point.

10:59Shaun Heinrichs: Talking about other operations, I wanted to talk about similarities with West Red Lake Mines. Just because the True North Complex, 1911's True North Complex, which you're restarting, is quite close to West Red Lake operations. West Red Lake, I think, is just to the east of you by, you would know better, probably 100 kilometer-ish. That's correct. You're both restarts. However, West Red Lake is further ahead and now producing. can you talk about looking at the way they finance what they're doing and also what they did in terms of their production what do you see that they did that you're kind of borrowing from uh so i mean in terms of the the life cycle yeah they're they're approximately about a year ahead of us uh maybe a little bit more um in the type of mine itself there's some similarities in the two mines, but there are also some significant differences.

12:02History, obviously there's some parallels in the history of these two projects, and they do sit in close proximity to each other in the same greenstone belt. Now, when you look at the way that project was funded, it benefits somewhat from the presence of significant shareholders in there and was able to obtain debt early on in order to help fund the project, but then did return to market a couple of times following. And surprises shouldn't be surprising, not to be cute, but when you are going back into an old mine, there's expectations around what is in there, and those expectations are not often met.

12:50sometimes to the positive and sometimes to a negative. So I think, you know, everybody should realize that West Red Lake had a lot to turn around. And, you know, Pure Gold, that was our predecessor, had made significant investments, primarily on surface. But there wasn't a lot of exploration drilling and, you know, advancements in the underground that should have been done. And so West Red Lake took a lot of that on. um so you know the funding surprises um obviously while unfortunate i think they were meant to be and it's setting them up to be you know productive and profitable in the future and so these are these are smart choices to make smart choices to make early on we're obviously taking a lesson from that we're trying to do everything possible right now to drill out areas that are critical to our success in this first several years um and we're funding that obviously somewhat at the expense of our shareholders right now, but the longer term return from that activity is going to be significant and meaningful.

13:50And I think the first evidence of that for our shareholders in particular is going to be, you know, we come out with an updated resource in the fall. It's going to show just how effective our drill program has been in terms of adding significant amounts of ounces, but also improving the quality of the ounces. You know, so I think I kind of ran around your question a little bit there, but there's obvious parallels both in the, you know, the approach, but also the style of financing these projects. I wish I had Frank Juscher behind the company. I do not. But I think, you know, we have a good shareholder base and that has enabled us to be equally successful in our fundraising efforts to date.

14:32Shaun Heinrichs: The rest of 2026 is looking very busy for 1911 Gold. As you mentioned, I think when I was looking at your timelines. I saw two MREs that you were working on. I think that was one that was specific to one of your zones. And then also you're looking at one that was going to be global. There's all of the drilling that you're going to do in terms of, it's all the drilling that is going to need as you kind of work towards your next studies, the restart of the mill at the end of the year. Step back, what do you want investors to focus on in terms of what you consider to be the major milestones in the months ahead?

15:13That's a great question. Just to put everything in context, our business model has always been that there's a centralized milling facility sitting in the middle of a very prospective greenstone package. With areas that are fully permitted for mining activities right now. So our barriers to production are minimal. But the opportunities will come through the regional exploration program. And that's something that's going to be showcased by one of the first MRE that you were referencing, which is going to be our Ogama Rockland resource. And this is a project area that sits about 70 kilometers away by road.

15:58and there is road access there. That sits close to a power line. So there's power, likely power access readily available there. There's historic mining there and there's historic mining elsewhere on our project as well. But this is going to be the first example of how a satellite deposit could be fed into the centralized mill economically. And it shows the opportunity around the entire project area. So when you're looking ahead to the rest of the year, you're going to see a sequence of resource updates, Algama Rockland satellite resource, potentially feeding that mill, adding higher grade resources to there.

16:40You're going to see additional drilling in the underground, showing the potential of the new zones. The four with that last news release that we put out, the four new zones close to the mine, all with significant upside potential. An updated global resource update in October or early November, showing everything on site, potentially showing higher grade, certainly going to be a much larger resource and higher quality resource in there. And then all interspersed in there is going to be significant operational updates with respect to commissioning the mill, commissioning the crushing circuit, development progress in the underground.

17:21starting to talk about what kind of ore is being put on the ground waiting for the mill to turn on and then obviously you know in december we're going to start to get into now we've started the we're starting to bed the ore in there putting low grade followed by higher grade and we'll start to get some actual production going into 2027 sean thanks for speaking with mining stock daily thank you very much michael appreciate it the information presented should not be considered investment advice. Mining Stock Daily and affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein.

17:57Please do your own research or speak with a licensed financial representative before making any investment decisions.