Borealis Mining: Gold Production Today, Sandman Next

0:16Kelly Malcolm: All right, it's a real pleasure to welcome Mr. Kelly Malcolm here, CEO of Borealis Mining Company. They do trade on the venture with the symbol BOGO and on the OTCQB with BORMF. MF. Kelly, welcome to Colorado, a Beaver Creek Precious Metal Summit. Unlike anything you've actually had to present here a while, it's been a huge year for you guys. It is a wonderful conference. It's a big year for us. And honestly, our big thing we're talking about here is that we are now, we talk about junior gold mining companies. We are actually a junior gold mining company. We're mining. We're going to be making lots, relatively lots of money, pouring lots of gold.

0:54Kelly Malcolm: You're not a microcap junior explorer. We are a junior gold producer. That's got to feel good. It does feel really good. Yeah, yeah, yeah. You've restarted mining at Borealis, generated record quarterly revenue of just over$6 million U.S., reported from the previous quarter. What has the operation taught you about the difference between the restart plan on paper and actually operating a gold mine? There's a lot of lessons in these things. and particularly when, and this conference is fun because you meet such a funny mix of people. You'll meet with mining companies, meet with big fund managers, meet with guys that are 70, have done this 25 times before.

1:34But the question that always comes up is, oh, you just started in February. How's it going? With a little laugh because it's much more challenging than one would have expected on paper. But it's ironed out now. We're ticking. We're firing all cylinders. The biggest hurdle or the biggest thing that I learned was putting rocks on a heat bleach pad that's already been in operation. So we're about 120 feet above ground. It takes a lot longer for that gold to make its way through the pad than it would in a lab setting. So our ore, for example, is 90 days, it's a proper leach cycle from when you first start introducing cyanide to when you get your expected recovery, which is 73 or so percent for us in oxides.

2:24in reality because the the fluids have to work their way through that huge pile of rock crush material um and and other water that's already in the pads you're kind of introducing this beautiful high grade uh gold fluid into a huge diluted ocean of rock and water it took a lot longer for um for what we call the pls or the the pregnant leech solution grade to start cranking up so that was definitely one of the bigger bigger um experiences we we knew it we expected it but just living it i was like okay we're we've really got to start cranking this thing up so that was one um just optimizing the plant little things yeah yeah contract contractors

3:09Kelly Malcolm: are expensive is something i've learned as well so is are you confident like do you feel like things are moving steadily and progressing steadily day to day you're not like wondering you know okay what kind of surprise is going to hit my inbox when i wake up tomorrow morning or is it somewhere in between where are you at right now we're now in a position where i'm not i'm happily you're sleeping happily promoting borealis at the conference now you're sleeping there's uh we're we're very comfortable teams dialed in um everyone's owning their their respective divisions departments jobs and uh people are are dialed in so um no major concerns right yeah okay so let's I do want to talk about that heap leap operation obviously pre-existing you didn't have to actually construct a new one lots of advantages but where does that give you the greatest capital advantage where does it create optional you know other limitations somewhere else so well the limitation we just talked about there that the negative factor of going back into an old heap is that it's going to be it'll take longer to get the gold out than starting fresh right on a liner, putting your oar in, and getting recoveries in 90 days.

4:18It's a longer process. That will decrease once that big mountain of rock and water becomes less barren. There's a lot less of that just rainwater that's been in there and more gold solution. So I don't expect that to be a problem going forward. Certainly the benefit is just like you said, it was an immediate, okay, we're turning on the cyanide today, putting on crushed rock. we would one of the things that we'll be talking about to the market in the future and putting some numbers around it is we will be probably working to construct a new heap leach pad in the next year or so or two because coming into a pad that's already had some ore on it you're limited with how much extra you can put up top so we're looking at some point to build it probably another 10 to 12 million ton heat bleach pad.

5:07We might end up doing some secondary pads. There's methods you can do where you put your high-grade material on like a mini pad beside the other one and rapidly get payback on those ounces. So we're looking to optimize. I'm sorry, I ran away on your request. No, no, you're all good.

5:24Kelly Malcolm: I mean, but you open up a little bit of can of worms, or do you have to permit an extra heat bleach pad? What does that? We're permitted to expand, So we've got about a total of 10 million tons of allowable capacity on our pad that we have right now, with about 3.5 or so million tons remaining capacity. We're permitted to expand it in certain areas, get another 2 or so million, but we would have to, yes, permit, and we started that process to permit an additional pad in the vicinity. Okay, all right. Shouldn't be that onerous. Sure. Obviously, you've had a number of conversations between last spring when the restart started and where we're at now.

6:09Kelly Malcolm: Has the conversation or how does your market kind of feel of where you're at? Is it still kind of a restart story or how close are you to kind of that steady state gold operation now? Still a bit of a show me, I think. Like, if I look at comps, like Sierra Madre is a good example. If you look at them, I'm not sure if you follow that. Yeah, we just had Alex Langer on over there. So great story. And I look at that as an analog to where we are just a year, basically a year ahead of us. And you look at them, it took them kind of two quarters of proving to the market. HelioStar, same thing. Two real quarters of saying, look, we're actually making money.

6:47We expect that this is going to continue. and heat bleaching in particular, you can tell that the company will be making money based on the work in progress inventory and the financials. So it kind of gives you a guide to what's to come. So that's something that sort of more sophisticated funds are looking at with great detail, asking questions about PLS grades, how things are coming, ramp up. And they're sort of putting their future looking hat on. And I think certainly other investors are saying, I need the financials to validate that this is working. Particularly for us who don't have a reserve statement out.

7:25So it's really relying on quarterly production to determine kind of future value.

7:32Kelly Malcolm: Q3, Q4, and actually probably Q1 next year after a full... Are very important. Very important after a full year of production. Okay. All right. Well, let's be sure to maybe follow up on that one as the quarters progress. But also looking into the future, let's talk about Sandman here. It's doing a drill program along with some other detailed engineering permitting work. Give us the laydown or rundown of Sandman. Sure. Lots of fun. And just like last beaver crate, Sandman draws a lot of attention. It's a really, really cool asset. Ultra low capex. We're doing a lot of work right now on that. We've got a drill rig spinning.

8:08Should have some assays out, I hope, in the next two, three weeks or so. kind of funky geometallurgy holes on the margins of deposits that are interesting. We're quite excited about what we're seeing, which is always a good thing. Engineering is going well. Permitting work, we've initiated discussions with the BLM for something called a baseline needs assessment form, where they look at what you have, look at what you're hoping to do, and give you a general idea of what they'll need to see to approve a permit. So it's pretty hard to hold me the timelines on getting a permit approved, but we do anticipate that we'd be in a position to submit the final permit for the first phase of Sandman in the first calendar half of 2027.

8:57Kelly Malcolm: Oh, wow. Yeah, we're getting there. How much of that work can be funded organically through Borealis? We anticipate all of the preparatory work. When we get to the mine build, it'll depend on Treasury. I expect a significant portion will be funded from existing cash flows. That said, it's a beautifully high IRR project. When you look at the economics, it's really simply debt financeable. That's a no-brainer deal for any of these debt providers. So looking at cost of capital, if there's something cheap out there, maybe do a bit of it, maybe half in debt or a quarter in debt and the balance from cash.

9:40I don't think we need to issue any equity to build that. Certainly not to do any of this prep work that we're doing right now.

9:48Kelly Malcolm: Okay. You've got an operating asset, a development asset, both in Nevada. And we're hungry for more. Okay. Well, that's where I was heading. Yeah. So part of this conference, we've been, when I've been to this conference with other companies, typically you're going to the producers looking for capital. That's really what you're looking for, a buyout of capital. I meet with these guys and I'm like, what do you have that doesn't fit your portfolio anymore? Any ideas, anything of interest? So I had some really good discussions here. We've also got some really, we've had some meaningful ongoing discussions ahead of this thing as well.

10:27Kelly Malcolm: You're shopping. M &A is hard. It's a disappointing business because you get close to things and they fall apart at the nth hour. That's happened to us a few times now. Yeah, yeah, yeah. Hopefully through no fault of mine. But we're looking, we're hungry. I don't love where our stock's trading right now. I think in an ideal world, it might happen later on, but you strike when the deal's in front of you if we can get something attractive done. It seems like moose pasture is pretty expensive right now because of the market, right? But look at, not to say it's moose pasture, but look at even just the financing for Osisko Critical Miners, if you saw that,$250 million for early-stage assets out in...

11:10Kelly Malcolm: Does it price like a small to mid cap, just getting off the ground, producer looking to grow? Are you capped to where you can acquire new properties? Does it make more things out of reach? Yeah. The biggest word everyone talks about when they look at a capital structure is dilution, how to avoid it. You can dilute the heck out of your share structure on a very accretive transaction. So you have to look at overall deal accretion. Like you look at someone like Discovery Silver, for example, that bought the Timmons Complex, annihilated that structure, and their stock went up 10x. Is that a dilution?

11:53No, that's a beautifully accretive, wonderful deal. You look at Hemlo, you look at, what was the one that I just saw? StrikePunk. I don't know if you noticed that deal, but that little micro cap. It was a big one. buying a big deal, a surprisingly big thing. For them, dilutive is all heck, but a wonderful, creative transaction for them. So I'm cognizant of that, but I'm not shopping for half a billion dollar companies or assets right now. And I'm, yeah, there's limits.

12:21Kelly Malcolm: So what's on the checklist of a project you'd give serious attention to to acquire? Obviously, not so much down the line where it's over expensive, but maybe not so early where it's, you know, zero. You nailed it. So you're going to pay up for something that's permitted, something that there's only a few of them. You can probably name them on one hand in Nevada, Permitted Feasibility Study that's modern. You pay up, and I would pay up for something like that, if I could get my hands on that. But ideally, it's something either previously permitted or previously mined, something that has a pathway to near-term production.

13:02and a modern resource. I don't even care about modern economics because you can do that modeling yourself quite easily. Chad GPT will do it for you if you want. Don't tell anyone. But it's, yeah, something further along that can do kind of 30 to 100 ,000 ounces would be the snack bracket we're looking at.

13:24Kelly Malcolm: All right. Kelly, thanks so much for your time. Thank you. It's great to be reconnected. It's been a long time since we've caught up with the Borealis story. Obviously, an important number of quarters on the way, and then obviously expiration permitting at Sandman. Let's hopefully maybe touch base later this year and get another update. Absolutely. Yep. All right, Borealis Mining Company does trade on the venture with BOGO and on the OTCQB with BORMF. 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.

14:02Kelly Malcolm: Please do your own research or speak with a licensed financial representative before making any investment decisions.