Agnico Eagle Backs Radisson with $57M Investment

0:15Matt Manson: Happy Tuesday, everybody. Welcome back into Mining Stock Daily. Jumping back into the gold market here. A little pullback here in the price of gold, but we're going to talk about probably top news this week here actually from yesterday, Nico Eagle taking a strategic investment into Radisson Mining with a$57 million Canadian investment, about 10 % of the company. So we're going to welcome our friends from Radisson Mining, CEO Matt Manson back onto the podcast. Matt, congratulations on this. All in all, a good day's work yesterday. Your stock was up 25%. percent yeah i know it's a very good deal and we were very happy that the market received it so well and understood what it was about so um yeah terrific uh terrific major milestone step for us yeah absolutely so maybe let's jump into it let's start with how this actually came together matt when did the those conversations with that nico eagle become serious and what was that original discussion about financing an underground program or did that idea develop through their own due diligence at O 'Brien?

1:27Well, you know, everybody in our business, you know, talks to everybody on a regular basis. And obviously that's very true, especially in Quebec and in the Abitibi. And, you know, we are, our project just off the highway in between Rwanda Rwanda and Valador is right beside other people's mines. One of which is a Nico Eagle with the La Ronde mine. We're literally three kilometers over the back fence from them. So, you know, obviously there's been a dialogue for a long while. I think the logical next step for our project is to go underground. You know, we're having great success drilling from surface.

2:07We're going deep and that drill program is going to continue on. 140 ,000 meters, eight rigs. we're going to keep on doing that but this actually allows us to establish a development schedule for the project and we're going to the$57 million investment supports a pretty comprehensive underground program including a ramp, all the associated surface and underground infrastructure a lot of validation work with the ramp geological continuity, ground conditions mining methodology we're going to be doing drives through through through mineralized zones so in the course of our discussion with an eco it became clear that the sweet spot here was to was to for an equal to come on board with an investment support that that schedule based work because it's important to get this ramp in and although while our journey continues in the project is getting bigger.

3:11Matt Manson: Matt, Agnico obviously knows the Abbott to be exceptionally well, but what did their technical due diligence look like in respect to O 'Brien? And do you believe ultimately what gave them that high enough conviction to write that big check? You know, I can't speak for Agnico. We're being very careful in all of our interviews not to try and speak for Agnico. They have got their own business, their own objectives. And what I'll say is that Agnico was an exceptionally professional company and anybody who's dealt with them understands that and and I have a I have a personal history with Agnico I was I was in their shop between about 2004 2006 running a diamond subsidiary company that they had at the time which was one of the predecessor companies for Stornoway Diamonds so I know a lot of the individuals there very well all the senior and equal people were cross-appointed down into my my little sub and And at that time, Agnico was a one mine company, and that mine was La Ronde in the Abatebe, the mine that's over the back fence of the O 'Brien project.

4:15So there's a lot of deep familiarity here all round with people and assets and the histories of things. And so, you know, absolutely, a company like Agnico does a lot of deep dive technical work, and they're well known for that. But at a more general level as well, there's a lot of personal familiarity with all of this and that creates a good sense of comfort, I think, for an investment of the size. And this is a pretty significantly sized investment, even for an eco-ego. I mean,$57 million is not a toe in the water. That's a strong statement of validation of Radisson and the O 'Brien project.

5:01Matt Manson: Yeah, I absolutely agree with you. I think not only has Agnico Eagle arguably become probably one of the best gold mining companies in the world as of recent years, but also maybe become on the other side of their business, some of the best strategic investors as far as major producers coming in, allocating capital towards development and exploration type. And so that does come with the premium by the market, and the market does appreciate it. We saw that in the returns in yesterday's market, as I mentioned, up 25%. But the makeup of this financing here, Matt, did come with the premium both from its previous close and that 20-day VWAP.

5:42Matt Manson: I'm just kind of curious if I can step into what those negotiations were like on your end. and you'll obviously you're wanting the best premium you can get free for your shareholders for the company agnico comes in wanting the best deal if they can get at the lowest price you know can you kind of just give us a sense of what that negotiation was was this kind of maybe something you know is there a structure to these deals now that everybody should live by when a major comes in and provides a premium to a strategic investment or is this something that really is kind of a hardline negotiations in the boardroom I think every situation is a little bit different.

6:22And again, I'm not going to speak for Agnico, but from our perspective, we took the view that we were selling 15 % of the company. There's a 10.45 % ownership in common shares out the gate. And then there's a half-warrant here that's quite typical in Agnico portfolio investments like this. That gives them a line of sight up to about 14.9%. So we took the view that we were selling 15 % of the business. And so what number are we comfortable at, right? We're very sensitive to the fact that we raised capital in the market as recently as me. And that was a charity flow-through deal where the subscribers at the back end of that, the institutional buyers on the street who were buying the common shares were paying a dollar, right?

7:14So this is an up round from that coming quite soon after that deal as well. So we didn't want anybody who'd invested in that deal to feel as though somebody else was getting a better deal. And this has been a choppy market over the last three months, as we all know. And so all of us have gone through a bit of a roller coaster ride in the last three months with our share prices. So I think what we announced on Monday morning has landed very well. I think it's landed very well for all parties. It is an upround from me. I think, in my opinion, and Nico are getting very, very, very good value here.

7:56And I think our shareholders are getting very good value. And most importantly, it sets us up now to do some really important work, which is going to, I think I said in the press release quote, you know unlock the full value of the project and that is we've got strong treasury to drill as as as broadly and as aggressively as we think we can eight rigs currently turning it's a big drill program and and we've also now got a very healthy treasury to start this important schedule critical and mining critical piece of exploration infrastructure this underground decline and that double-barreled approach here is what's going to drive future value in the company.

8:41Matt Manson: You and I have chatted about that in past conversations here this year, Matt, about the potential of going underground. This certainly unlocks that opportunity to move forward with that. And so maybe let's focus a little bit on the technicalities of that underground access. And what do you feel, and obviously I think I kind of know the answer, but I feel obligated to ask, but what can an underground exploration ramp tell you about the deposit that you know surface drilling for another 100 ,000 meters of just wouldn't be able to do so the most important thing in any high-grade narrow vein deposit like o 'brien is continuity of mineralization so that that drives everything so it drives the amount of infill delineation drilling you have to do to get a mineral reserve and to do stock design it drives how you design stops it drives how you how much underground mine development you budget it creates the expectations for uh for production rate and gold production from the project right so it is the most important technical criteria to separate deposit now we're we're starting with a running with a running start because we've got the old mine right beside us and all of the data from the old mine right and and we've even trenched some of these mineralized zones at surface.

10:04So we've got a really good sense of the continuity of mineralization and the continuity of grade. But that is the number one thing that you're looking for. The second thing you're looking for is ground conditions, right? This is probably going to be long-haul stopping. And so what minimum widths are you dealing with? What sort of dilution are you going to get in the hanging wall on the foot wall? That, again, talks to stop design, stop productivity, numbers of stops, the amount of underground mine development, and productivity expectations. So those are the two big ones from a technical point of view that you are doing with an underground decline.

10:38And thereafter, you know, once we've actually looked at continuity mineralization, once we've looked at geotechnical ground conditions, we're then thinking about mining methodologies, what mining methodologies are most productive and most advantageous given these situations. And then, of course, there's, you know, you can set up underground drilling platforms. If you're doing detailed delineation drilling, if you're you know if you're 300 meters below the surface which is probably where this ramp's going to end up then you're you know you're that's a lot more practical and a better situation for filling the gun drilling so all those things kind of go into that program as i said we're starting with this you know what what i'll say also trevor you know we're actually not calling this a bulk sample right we didn't see in the press this was a bulk sample because we we feel we've got a very good handle on the metallurgical characteristics of this deposit.

11:30We're not going to go in and trial minus stope here. We are going to be recovering mineralized material because we're going to be driving through vein zones. We don't have a reserve, so I'm not allowed to say ore. I call it mineralized material. So we're going to be driving through vein zones that have mineralized material and bringing this to the surface, and it'll get processed and there'll be a gold recovery. But that's not the purpose of this. It's not a bulk sample per se. It's an advanced underground the exploration program let's get underground let's get to grips with the mineralization and the mining conditions and get that well understood before you know we're putting the pin in the wall and how this is going to be mined and there's lots of deposits out there that have kind of skipped some of these steps if i can say in the past and kind of run into problems the focus has been on well let's build the mill and let's get that started and we know what we're doing we just get started with the mining and chuck some more into the mill and off we go and that often that skipping process i think you know causes problems sometimes you know uh in our case it's it's gonna be a big focus on the mining starting of the mineralization continuity geotechnical ground conditions getting all that squared away as early as we possibly can okay so with all those inputs

12:44Matt Manson: need to be accounted for it seems like you have a pretty good idea of location design uh for this ramp is this something you guys have already kind of figured out where it's going to start and where it's going to end up yeah i mean what we set up in ladison which i'm very proud of is is the capacity to do live iterative work all the time as the drilling is progressing so dave rosser vp exploration has a live geological model and and we we know every drill hole updates it and we know all the time exactly where we are with the model and the numbers of our project right so um uh in-house and that's an important exploration capacity and tool at the same time we've got in-house mining engineering capacity that is doing live iterative mine design flown from that live geological model so we're doing we've got a full mining model with with with all the bells and whistles that is iteratively changing as our model grows so having both so we know at any moment kind of where we are in how this project's going and and that's that's really good and um so along along with that yeah we have already done a lot of preliminary design work on where on at the portal would be where an underground ramp would go, what ore zones, mineralized material zones are we targeting, and what kind of costs of schedule are we looking at.

14:24And that was important to know because if we're going out and doing a financing with the likes of Enico Eagle to support that work, we've got to know that the numbers and the dates kind of work for us, right? So that works in good shape. and you know we didn't just wake up one morning and decide we're going to do underground exploration program there's quite a lot of work that supports this direction it's not always something we're talking about publicly out there right we tend to be like any other companies where they're talking about drill results and the growth but there's a lot of professional working on in the background and and that will support then the permitting that has to happen I will see also Trevor this company was already permitted for this type of program uh back in 2018 the company went out and did a full permitting exercise and got the permit on an underground advanced exploration program didn't pull the trigger on it it wasn't the right time uh the permit was extended i think once and then it was let go because the company just wasn't at the stage where that was something worth doing now now's the time so we've got some we've already We've got the water treatment plan already designed.

15:36We've got a lot of design work that's coming off the shelf here. And there's a track record with the ministry in Quebec, with the permitting, with the regulators on a successful permit application to do this type of work. So that, again, all de-risks this whole sort of exercise. All right.

15:54Matt Manson: So if the company originally let that permit lapse, do you go back to square one to get this re-administered permit? Or is it a lot easier than that because it already once has been providing? We will go by, it's easier to go back to square one and just come up with, you know, there'll be a new design and a new set of criteria. Any work like this also has to come with a reclamation plan that comes with the permit. So that has to be, you know, redefined as well. So we'll just do it again. But the message is that the concept of doing an advance on the grant exploration program of this project has already been successfully permitted and approved at the regulatory level.

16:46So we're not really losing sleep over that aspect of things. We'll do it all correctly as it should be done. But it's, again, garretted to get confidence to do a deal with Anika Weagle to do this type of work because we have that track record.

17:00Matt Manson: All right, absolutely. All right, let's, I do want to kind of go back. This news hit, and you're kind of in the middle of this 140 ,000 meter surface drill program here that's been funded through your current treasury. Does that at all change or evolve because of Agnico's strategic investment, or is it just kind of head down and keep going with that surface program while you're advancing the underground access? no change no change it it's it's eight rigs the 140 000 meters is what's scheduled to go into the middle of 27 it will probably continue after that and it's all step out we're not trying to back track and infill we're not focused on the quality of a resource right now we're just focused on the quantity so it's getting a lot of inferred resources um but we're hitting with about 80 percent success rate we have this table and all of our drone results press releases that show you the hits and and a hit is a intercept three grams per tonne or better in core length because we know that's going to true up to be something above two grams per tonne which is our cut off of the resource so we're heading about 80 percent at the time we're getting good continuity within a couple of we did an explorational webinar a few weeks ago we were trying to sort of demonstrate the continuity we're seeing in the mineralization and dave ross was showing you that live lead frog model So very confident about that.

18:23And we're going as deep as we possibly can. We're not worried about debt. And because we think because of the infrastructure around us, the mining infrastructure around us, we feel that everything we find down to the deepest we can drill from surface has value, has potential, has prospects for future mineral development. and they're payable ounces, given what's around it. So we're going as deep as we possibly can. And, you know, 2.3 million ounces was the number in our resource update back in March. And we've guided to an exploration target that if we're successful, we'll see that resource be between 3 and 4 million ounces to 2 kilometers depth.

19:09And we haven't walked away from that guidance at all. Quite probably the opposite. We're getting more and more confident about that. And, you know, we're kind of seeing opportunity for the higher end of these ranges, right? So, and that's the two kilometers depth. So, we're full steam ahead on that type of drilling. It's successful and we're pushing forward on that as before.

19:30Matt Manson: Yeah. Okay. My last question for you, Matt, and I'm hoping you can just maybe editorialize here on where we are within the general gold market and specifically on M &A within this cycle. You know, we've seen these producers, these gold producers are just raking in cash hand over fist because of the price of gold. Their allocation, what they're doing with those earnings is not similar. I mean, it's not what they did in 2011, overspending on early stage exploration. But we are seeing some mergers. We're seeing a little bit more of these high swing strategic investments. Obviously, Radisson being one of them.

20:10Matt Manson: You've seen a few cycles here in gold markets here, Matt. Maybe this being a bellwether, or it's just another indication, an anecdotal indication. What does this say about the gold market? What are the major producers doing with this capital now that they have probably the best environment for producing gold that we've ever had? You know, every year we all schlep down to Denver for the shows at the end of September. and we do Beaver Creek, and then the Denver Gold Show happens the week after. And at the Denver Gold Show, you get the bigger buy side guys and the bigger precious metals producers meeting up.

20:52And there's always some theme that comes out of Denver, right? And it is the marching orders that the buy side guys are giving the expectations that they're creating of the bigger producers in the precious metals business as to what they want to see. And you hear what the buzz is coming out of Denver. and I have seen many cycles and I remember cycles when it was all about balance sheet repair. You guys have got too much debt, fixture balance sheets. And I remember cycles when it was all about margins. You guys haven't made any money for us for years, right? We want to see, you know, stop doing these big mega projects.

21:27We want to see margin, right? We want to see grade. So every year is a little bit different. I think we'll see what this year is going to be but one of the realities of what's happened over the last say 12 months is the gold price has driven the cash the treasuries and the cash balances on these companies to levels that they've never seen before right and i don't think there's any gold mining company that's struggling right now out there in terms of their treasury right and uh you know it's not a very good time if you're a lender to the precious metals business because nobody needs to go out and get debt other than a corporate revolver maybe so um uh you've got to imagine that that then the expectation this year at denver is going to be where's the growth coming from and shared buybacks and dividends are great but you know company x over here has got a better pipeline than you so what are you going to do about it so uh let's see what happens at denver denver will tell us what the theme is going to be because i i do think it's buy side driven very often right and uh and let's see what the device guys are telling the the larger cap CEOs this year.

22:38I think it's going to be something around where's the growth and where's the pipeline and shows execution on a healthy pipeline.

22:46Matt Manson: All right. Well, maybe that's a deep, we'll have a debrief conversation, you and me in our next one here, Matt, following that, because that's just a month, almost about a month away here. You know, so we'll be on the docket for another update, probably come late September, early October. So that'd be a good conversation, a debrief of what you learned at from both Beaver Creek and Denver Gold. Let's leave it at that. Yeah. Thanks, Robert. Congratulations, my friend. Radisson Mining trades on the Venture Exchange with RDS and on the OTCQX with RMRDF. Matt, always appreciate the conversation. Always a great time.

23:22Matt Manson: Thanks for coming on. Thanks for having me. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.