Ridgeline Minerals: Why Is the Market Giving Its Exploration Assets No Value?

0:16Trevor Hall: All right, everybody. It has been quite some time since we've heard from Ridgeline Minerals and CEO Chad Peters. Quick note, they do trade on the TSX Venture with the symbol RDG. It's been a few months, actually. I'm pretty sure the last time, Chad, you and I chatted was after the all-cash deal that you sold a few projects in for$32.7 million Canadian. What have you been doing the last few months? Good to see you. You're right. It has been a while. So we've been actively drilling our Selena project that entire time. Yeah. Been badly wanting to get news out to the market, but the last, we're drilling an initial three-hole stretch of holes across the original self-flight discovery that we made last year.

1:05And our third hole is a wedge off of the discovery hole. So what that allows us to do is essentially start about 1 ,500 feet down the parent hole and then throw essentially the equivalent of like a doorstop, a metal doorstop in the hole, cement it in. and then you put your rods down and you drill off that. It actually glances off of that doorstop, if you want to call it that, and glances off and creates a new hole. And so if you start at 1 ,500 feet and your target's at 3 ,000 feet, you end up with about, call it 150 to 200 feet of separation between the two holes by the time you get down to 3 ,000 feet.

1:39So that's the idea is save cost, drill a hole quicker by not having to drill that first 1 ,500 feet in theory. In reality, what's happened is the wedge failed on us on the first pass. So the cement actually just ended up the water in the hole from running drill fluids down. It actually ate away at the cement. The wedge twisted within the hole and we had to pull back out and re-drill that hole. So luckily that's being done. We're wedging again. That's being done at South 32's expense, which we like. Obviously not having to fund that ourselves. But it has delayed the completion of the program, right?

2:15So we're very excited about this whole I think it's got a ton of potential to start showing some real growth to this original discovery Which was a single hole But it's taken longer than we like so that's why you and I haven't talked yeah

2:27Trevor Hall: Yeah, well, but we've always known Selena's not an easy yeah project to drill But can you remind us what is this strategy for this program? What will success be defined? Yeah, no, for sure. So when we made this original discovery last year, we announced a single hole drilled two and a half kilometers away from the outcropping discovery, which we call chinchilla oxide. We'd been working on that for five years when we owned the project 100%. So 32 came in and did a deal with us in late 24 to chase this sulfide target, which was a deeper target closer to the porphyry. The whole drill, we drilled and hit the main main drill program hit up to I think the consolidated thickness of massive sulfides was over 25 meters across two, three different intercepts.

3:15Hit up to, you know, 17 meters of 10 % zinc, 40 grams silver, 0.2 gold, 0.1 copper. So not quite enough grade to get the market excited, but a massive proof of concept to the South32 team reminded them a lot of the early days of the Taylor discovery, right? So although the market didn't get too hot and bothered over it, our partners, who are the largest silver-zinc developers in North America at the moment, they're very excited about it. So we're drilling that now. I guess you could say success for this year and what I think will actually start changing the market's opinion of this discovery is to drill multiple holes, wedges off of this, start showing that, okay, we have 300 or 400 meters of continuous strike north to south would be the idea.

3:57and we're hitting multiple thick lenses of master sulfide. Hopefully the grade's improving because we think it will as we vector towards the right part of the system. So, yeah, I think the success is starting to show that this actually has some tonnage potential. It's not just a single, right now it's a single intercept, right? It's not showing multiple intercepts. It's not showing scale. I think that changes.

4:16Trevor Hall: Okay. South 32 is pretty dang close to that first$10 million earn in. Yeah. What happens after that? Yeah, so they're going to be at about 9.2 by December 31st. That includes what looks like an additional wedge hole that we're going to be drilling there. So we've already gotten a budget increase from three holes to four holes. I think they also want to, before they hit that 10 million mark, they want to get as many intercepts into the target to understand which way they want to go. Because like you said, they have kind of two doors they can walk through after the completion of phase one. So you complete phase one, which is$10 million US over five years.

4:52They're going to hit 10 million US over three years, so they're really accelerating the spend. First door is they can choose to spend an additional 10 million US over an additional three-year period, after which they would get 80 % ownership of the project. We would retain a 20 % fully carried interest to commercial production. So when you think about that, that's pretty huge, right? The Taylor Deposit is a$3 billion build. they say that Selina is the closest analog to Taylor they've ever come across so even if it was half that to build, a billion and a half dollar build and we don't have to spend a dollar to get there, I think that's massive value so that's door A, door B is they can choose a 60-40 joint venture and then we would continue from that exploring on a pro rata basis so if there's a 10 million budget we would have to fund 4 million of that in the door B scenario right?

5:45In either situation, they have to give us a$500 ,000 US balloon payment at the closing of phase one. So if they choose to elect to move forward in either scenario, it's a half million dollar balloon payment to Richland.

5:59Trevor Hall: Okay. I want to talk about, you got$33 million in the bank. So we had$33 million when we closed the deal. It was an asset sale, so there was tax liabilities associated with it. We had quite a bit of write-offs that we were able to apply. But we're sitting on a cash position after paying our 2027 land payments and all the other things that go along with running a company. We're sitting on$25 million in cash right now and an additional$3 million in securities. $25 million in cash with a market cap of$28 million? Yes. Oh,$28 million Canadian. Yes. So basically your valuation is cash in the bank? Yes.

6:33Trevor Hall: No love for Selena. No love for Big Blue. Nothing, yeah. We're getting zero value for any of our assets. Why do you think the market is... How can this be? You know what the tough thing is? Prior to us doing the deal with NGM, we had a$20 million EV. We had less than a million in the bank, and we were trading at$22 million valuation,$21. Now we have$25 million in the bank plus another$3.5 million in marketable securities, and we're trading at$28. Honestly, I can't really explain why. We've gone from getting, I'd say, a premium valuation for our assets when we didn't have much cash in the bank to then being down to, you know, essentially a negative EB or a zero, right?

7:16So it's been a frustrating situation for sure. I think that we traded up to a 40 million market cap when we announced the deal and things were looking really good. We had the drove program going for Selena and then this downturn of the market hit. And just like everybody else, we've taken a 25 % haircut over the last kind of three months, right? Right.

7:35Trevor Hall: Okay, so anything updates from Big Blue? Nothing at the moment. So the main point is we're just trying to focus on Selina right now. We want to understand how big can Selina be first, and then we start planning our exploration strategy for 2027. So I'd say that 27 Big Blue is very much a part of our exploration strategy. I'd love to drill some holes to follow up on that initial maiden drill program. I mean, we proved the concept. There's bonanza grain, scar and mineralization down there. We hit 0.6 metres of 3 ,200 grams silver, 0.7 % copper, and 2.6 % tungsten directly underneath that historic mine that produced 90 ,000 pounds of copper in the early 1900s.

8:15The same host rocks that host Selina are about 200 metres beneath this intercept. So the obvious thing is to chase that high-grade fault that's feeding that one intercept, chase it down into the same rocks as Selina where we get 30 to 50 metre thick intercepts, and I think that's really exciting. We're just waiting. I think right now it's impossible to get drills. So I was lucky to get the drill program for Selena. You talk right now like four mile, I think there's 22 drill rigs drilling at four mile alone right now.

8:43Trevor Hall: They're hoarders. Yeah, literally. Yeah. But like when you think about it, if you need a deep hole rig that can drill a thousand meters, which is maybe 10 % of the rigs available in Nevada, 20 % of the rigs available, they're all at four mile right now. And those companies are not taking rigs away from NGM to go drill for a little company like us. So I'd say that to drill Big Blue, we need to plan six months in advance to get that drill rig out there. So that'll be a spring and summer thing of 2020. All right. So you have all this cash in the bank. Yep. Other than Big Blue, how are you allocating the capital?

9:19Trevor Hall: Are you looking for opportunities? Are you just going to sit on the cash? You know, I think, where does Richline live in 2027? Yep. I think we've always been adamant that we never want to be a lifestyle company. So we're certainly not going to sit on the cash for any length of time. We're actually between interest and the management fee that we receive at Selina right now. We're cash flow positive. So we're going to end the year with a higher cash position than I'm quoting you today. So we're actually cash flow positive. Heading into next year, there's a few things we want to see. 100 % discovery on Big Blue.

9:54I think that could actually be meaningful. We're assessing staking opportunities, our team, to add more ground in Nevada, start building back up that portfolio. But the third kind of door, if you want to call it that, is we're seriously considering M &A opportunities as well. So there with the kind of cash position we're sitting on, there's been a lot of inbounds from some very, very interesting companies that I think could be... Do they want

10:16Trevor Hall: the cash or do they want the project? Well, so they want both. That's the thing, right? So they see the undervalued nature of what we have at Selena and they also love the cash position. So I think it's a two-part and what we're we've had lots of people reaching out that are just interested in cash that's not interesting to us but there are a couple groups that have reached out that have some very very good assets that are also seeing the same kind of essentially negative value you know they're trading in a in a similar spot to Ridgeline and in those kind of situations that really could be like a not to sound like a cliche here but like the one plus one equals three that always hear right like that's the scenario where you got two great companies good assets the combined story is is a stronger story than than both apart and i think that we're certainly interested in that option as well so the whole goal is is we didn't sell we didn't go sell this cash just sit on it i think you want to judge was this a good deal well it largely depends on what this company looks like 12 months from now right if we're a 200 million market cap 12 months from now and we use this cash as a springboard to get there then i think that we did well with the cash if If we're sitting at a 30 million market cap and my wages went up 50 grand a year and I'm just traveling around first class, that's a pretty big warning sign, right?

11:24Which certainly is not what's going to be happening. But we could go down that door. That's not of interest to us.

11:29Trevor Hall: Special dividend to said shareholders? You know, I messaged that when we first did this deal as an option that we were interested in. What really came back from shareholders, and I've kind of canvassed our main shareholder base. The common theme back was we didn't invest in you for a 7 cents a share dividend. right we came we invested to actually see you guys go build something go make discoveries and get a market cap that matters so did not get a lot of positive feedback on a special dividend cash people want to see us do something with it okay you hold 17 of spartan metals is that a strategic uh position or is that something you potentially could monetize it started as a strategic position i'd say um we really like the victorial asset that they brought into the fold after like obviously we love the Eagle project that was the project we sold them to get that stake.

12:20Victorio is the largest tungsten deposit in the United States and the PEA that they did back in 2015 was like a 95 million NPV at$200 tungsten. Now we're talking about$2 ,700 tungsten and then you start doing the math right I think the PEA that they're working on now is gonna be substantial and I think that that's gonna see a big change to their market cap and a re-rate and that would be where we go from strategic to potentially start to monetize that position, especially if we can bring in maybe some strategic shareholders, a friendly deal, block trade to help out the Spartan guys. So, yeah, I like that a lot.

12:54I think we're going to bring in some cash through Spartan as well in the next 6 to 12 months.

12:59Trevor Hall: Okay. So it kind of feels like the name of the game for Ridgeline. Shareholders need to practice a little patience here, wait for the drill results from Selena, and then more definition of what a 2027 exploration pipeline looks like for Big Blue. But, you know, markets are impatient. Obviously, we know that. So what does the rest of the year look like for 2026? If we can get my ideal scenario here is we're drilling a wedge off of the discovery hole. If that hole were to hit, I'm going to put a visual, not visual assays, but a visual exploration update. I'm going to say, here's the results of the first two holes.

13:38assay wise here's the third hole here's pictures of the intercept we hit x meters of sulfide you

13:44Trevor Hall: know here's how it compares to the discovery hole I'd want to be able to do that to give that kind of that guidance to shareholders that would be hopefully in the next two to three weeks and then on top of that then like you said kind of an end of year here's what our strategy is moving forward it's kind of the idea okay all right good to see you man yeah you too I know you had a hell of a time getting in. That was pretty wild. I'm glad you're here. All right. Ridgeline Minerals does trade on the venture with RDG and on the OTCQB with RDGMF. They are partners of the podcast. I'm also a shareholder of the company and we will be back with more here from Zurich.

14:21Trevor Hall: Stay tuned. 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. Please do your own research or speak with a licensed financial representative before making any investment decisions.