Why Ridgeline Sold Its Carlin & Cortez Portfolio for C$32.7 Million

0:17Chad Peters: Welcome back to Mining Stock Daily, everybody. Continuing right along, more big news out this morning from Nevada and our friends at Ridgeline Minerals. They do trade on the venture exchange with the symbol RDG and on the OTCQB with RDGMF. The company announced a$32.7 million Canadian transaction and the sale of their Carlin and Cortez Trend Gold portfolios to their partners at Nevada Gold Mines. Just to be noted, they have been in partnership with Nevada Gold Mines on a couple of projects. Well, this solidifies that and brings in a healthy amount of cash into the public. It's a major strategic pivot for Ridgeline.

1:01Chad Peters: So we're going to jump right into this with CEO Chad Peters. Chad, this is probably some of the biggest, most meaningful news that company's had in quite some time. So congratulations. Yeah, thank you. No, we're really excited. You spent years assembling and advancing these projects on the Carlin and Quartez trends. So was building them for an eventual sale always part of the strategy here? Yeah, it's definitely been, if you look at our, I mean, if anyone were to look back at, you know, multiple iterations of our deck over the years, it's always been pretty clear at the forefront, right? That we never wanted to get married to assets.

1:38The goal was to, you know, find great projects, consolidate districts, and then bring in partners to help explore them. And, you know, in this case, two of the four projects being transacted on, Swift and Blackridge, as you mentioned, were already in partnerships with Nevada Gold Mines, pretty mature partnerships at this point, right? I think 16 and a half million U.S. have been spent over the two projects in the last, over the last four years. And then we also did a deal on our Atlas project, which is a very small oxide gold play that we drilled a few holes on last year, hit some low-grade smoke, but didn't really get anyone too excited initially.

2:17And then our Bell Creek project, which is kind of a small, again, another kind of posted stamp, but very strategic project adjacent to Nevada Goldmine's Renn deposits. So I think it was the right call consolidation. I mean, our goal has always been to make, you know, you always want to make that life-changing discovery, right? You want to be Great Barrier. You want to be Snowline, that, you know, phyllo. But, you know, there's also the reality that, you know, exploration is a really tough business. And the goal is to get as much money in the ground as quickly and efficiently as you can while diluting your shareholders as little as possible.

2:51And in this case, we did that. We saw$16 million US go in the ground, which was more than our entire market cap of the company prior to announcement of the sale today. At zero dilution to us or our shareholders, we saw some positive expiration results, but we didn't have that knockout success drill hole yet. We were still able to monetize the entire portfolio for a very significant sum. I mean, a 26 % premium to our market cap on announcement today. but that's on an adjusted basis it's more like 150 % premium because we actually did the transaction constituted less than 50 % of our of our book value of our assets on paper so so yeah I'm really happy with it I think that it cashes us up I'm never going to raise money again essentially life a company is the plan and we're set up to get really aggressive we can start accelerating exploration start doing a bit of work on our own projects and you know continue to support the partnership at uh selena so i see a big smile on your face is that a good thing or is that well

3:55Chad Peters: no i just i mean i i think both of us know when you say we never have to raise again is usually the kiss of death in this sector right like we've heard this before and which probably means a raise is coming next week i'm just kidding i don't know should i should i also say we're an elephant country and right right right you know we're fully funded to build the mine is that is that like the next few cliche statements I'm supposed to make. We can have some fun with this on a good news day. Chad, let's talk about the timing of this. $32.7 million, obviously incredibly a meaningful outcome for a company your size and also shareholders such as myself.

4:40Chad Peters: What made today the right time to monetize these assets rather than continuing to advance them yourself or on the ongoing platform you have been with your partners? No, that's a really good point. And I've been asked that question a few times already. And there's never a perfect time to do a, you'll talk to a lot of folks that have done deals over the year and rarely does a deal materialize at the time. Like, all right, I'm ready to do this, right? And so the first thing was, is we had a willing partner that was willing to actually talk at, discuss a potential transaction with NGM. But the other thing is these deals had somewhat not fully run their course, but they were pretty mature at this point.

5:23I mean, the phase one of each of these deals was a$10 million U.S. spend or$20 million U.S. spend at SWIFT and a$4.5 million U.S. spend at Blackridge. SWIFT had already spent$15.5 million U.S. of that$20 million spend. Once NGM spent that full$20 million, which was slated for the end of this year, they became the 60 % majority owners of that project. And so the risk, you know, the balance that we had to strike was, you know, I've seen this happen time and time and time again, where a junior does a deal, they become the minority partner, and then they get diluted out, right? The company, the major company uses that as leverage to slow walk the development of an asset.

6:07And then in this case, you know, like, look at what's happening in the Cortez district. The four-mile discovery, which is currently, well not discovery the deposit um that is owned by by barrack which is the majority owners of ngm um that's a generational gold discovery it is the best gold mine on the planet bar none and that is going into development it will certainly end up moving into the ngm uh you know hands in one way or another um and that project is taking all the oxygen out of nevada right all the drill all the people everybody and their dog is working on either silicon or four mile. And so the risk that we ran was that if the last$5 million in spending this year at Swift did not deliver something truly meaningful, and I'm talking, it would have had to have been a two or a 300 gram meter intercept.

6:56If it didn't deliver something like that this year, that project was likely going to get slow walked for the next five to seven years while they put four mile into production. Because NGM's goal here, our goal was to get somebody to spend And hard to come by high-risk dollars on deep exploration holes at SWIFT. So we brought in NGM. Their goal was to try to consolidate as much ground as they could. Unfortunately, my timeline and Ridgeline's timeline and discovery timeline doesn't match NGMs. They're happy if they make a discovery in the next 15 years. I needed to see a discovery in the next six months.

7:31And so when you have those competing timelines, I think what we were able to do is we were able to leverage what remaining leverage we had left with knowing that they had really good that the project had delivered some pretty positive results we were able to use that as a basis to start negotiating with them we have a really good relationship with these guys I mean I've been working on and off with NGM and previously Barrick since 2015 so same guy that I did the deal with in 2015 with a different company that's the guy I was talking to on this deal so it was a good negotiation it was the right time where we could get maximum value for a set of early stage exploration assets.

8:10I mean, the best drill intercept of all four of those projects was a meter of 10 grams. I kind of say like, I could go to 50 different projects in Nevada, historical projects, and pick out a meter of 10 gram drill intercept and not one of them would I be able to get NGM to spend a penny on, right? In acquiring. So I'm happy with how we were able to, you know, the strategic nature of the land positions, the work that had been done to date, all of that led into allowing us to negotiate what I think is a very positive outcome for the company. Yeah.

8:42Chad Peters: Let's talk about really how this kind of puts another chapter in the Ridgeline and the evolution of your strategy here, Chad. You know, since day one and since I have been a shareholder and you and I have chatted about this over the years about really how you've had to evolve and maybe choose a different pathway for the company than you were originally planning when your inception when you were starting this company in your garage. And now we're starting to see really kind of the formation of a project generator type of business model here, right? I mean, any company, any quote unquote project generator who can successfully go find projects, development to a point to get some partnerships and then eventually sell them off and add value for their shareholders.

9:30Chad Peters: I mean, that's what success looks like for a project generator. What isn't involved in this deal is really some sort of like royalty kind of trade or deal within that. Why was that maybe not included in getting this off your books? No, definitely. That's a good point. I mean, so when you talk about the evolution of a company, I think if you take a step back, the way Ridgeline originally founded out of my garage was we were truly just a straight explorer. We owned all of our projects 100%. We were going for the big moonshot. And because of that, when we acquired our assets from another prospect generator, AMX Royalty, which is now Elemental Royalty, they paired a royalty off of each of those assets.

10:18So Bell Creek, Black Ridge, Swift, although Bell Creek was actually from a separate prospector, but that person also got a royalty on the original consolidation deal that we did with them. So essentially, each of these projects was already encumbered, right? It was hard enough to get NGM to even agree to do an earning agreement with a royalty attached to it, let alone adding additional royalties on the way out the door. So the way our deals were originally structured with the carried interest and no royalty, followed by this cash buyout with no royalty, was strictly a result of the fact that when we acquired the company or when we acquired these assets they already had royalties on it and then as we evolved and changed our business model to being more of a prospect generator focus it took those royalties out of play for us so moving these assets out of the portfolio cashes us up it allows me to parlay that cash back into staking new projects which are royalty free and then that allows me to then start applying royalties to them so that i'd say the next evolution of this is like look at our eagle deal that we did with uh spartan uh spartan metals, the tungsten play.

11:24We were able to both get a 20 % equity stake in Spartan, which has gone up, we've seen 1500 % return on the stock since we did the deal. And then on top of that, we also got a 1 % royalty on all metals on the project. So that is the classic prospect generator approach. That is what we're now doing and able to do with our own 100 % generated projects. But you could almost say that the deals we have with NGM and with Selena were kind of that, they're the last, you know bits of our company from the early days when we were still fully focused on doing our own exploration and as such had already given up royalties on the projects to acquire the ground so yeah it's uh i would have loved like i mean honestly the the best long-term value we could have gotten from this would be that same cash deal plus a one percent royalty on all the projects i mean that would have been just that would have been unbelievable right and that is our focus as we continue to grow more uh acquire more projects but that was the uh you know each deal is unique And in this case, we had to work around those existing royalties.

12:23All right.

12:24Chad Peters: So you kind of hinted towards answering my next question that really is on the capital allocation, what you do with the money now that you have an extra$32.7 million Canadian. So are you thinking, like, will the company go out there and try to acquire more projects to put into the portfolio? Yeah. I mean, that's the exciting part. I mean, look, even with our stock is up 38 % today, which is exciting. Thank you to all our shareholders who are excited about the deal. That's even today after that 38 % run, we're still trading$3 million under our cash and securities balance of 36 million Canadian.

13:01Like just put that in perspective for a second, right? We're getting zero value for the fact that we have a$20 million US joint venture with South32 on a significant CRD discovery that is being drilled today. so if you're buying the stock right now you're getting it you're getting the it for cash and securities you're getting all that expiration and over 15 million dollars of money that's gone into that discovery at selena over the years uh for free so i think it's a great opportunity and yes we're already i mean mike and gabe are out today putting stakes in the ground so um you know like i would stack mike and gabe up i mean they're just incredible geologists so they're you know before this deal even closed, you're like, all right, what are we doing next?

13:42I'm like, well, guys, we actually have cash. Let's go, you know, let's, those projects you love for the last two years that we've kind of held off on in a tough market, let's go after them. So we're staking new ground. We're going to double down on the, on the, on this hybrid exploration model. I really like our big blue projects still. We had really encouraging results out of that made and drill program last year, where we drilled 0.6 meters of 3 ,200 grams silver, 0.7 % copper and 2.6 % tungsten on a made and drill program underneath an existing mine and we weren't able to follow up on it due to cash constraints.

14:15So those constraints are off. We have the ability to drill holes on our own projects. We're going to be staking more ground. And frankly, with a treasury like we have, I think it opens up a lot of very, very interesting opportunities for whether it be M &A, whether we consider a special cash dividend back to shareholders. I mean, look, everything's on the table. We're going to do what's right for the shareholders and we're going to try to make sure we do what's right from a, you know, a tax efficient basis too, right? I'm not just going to, we want to be very strategic about how we deploy this capital and we want to make sure we're using it, using it the best we can.

14:49So yeah, I think it's going to be an exciting fall for us.

14:52Chad Peters: Very good. Do you feel now that these projects are off the books that there's, I mean, you just talked about how you're not getting hardly any value, if any at all, for the work being done We're still, we're trading below, yeah, trading below cash and securities today. So do you feel like your market is just been beholden to said discovery at the Chinchilla zone at Salina that you and South 32 are going after so heavily? Yeah. Yeah. Well, you know what? I think, yeah, I think we have. I think it's been a tough thing, right? Like we marketed Salina really hard. We were really, you know, our maiden program last year, we marketed it hard.

15:32We felt we were going to make a discovery. we delivered a significant sulfide intercept on a blind target and it just didn't quite catch the market's attention. We really got hammered for that. So I think a lot of shareholders have been a little bit gun shy since it's kind of been a bit of a wait, you know, show me kind of scenario for the company. I think that doing this deal shows our shareholders, hey, look, our business model's working. We're able to monetize assets. We're minimizing dilution and we're still going after that big discovery, right? We still have exposure to what I feel is our highest potential asset at Selena.

16:05It's the most advanced. If we're correct, and South32 and our partners, we go out and we find the next Taylor deposit. I mean, that's a huge win for everybody, right? So I'm pretty excited. I think that maybe this might shine a little bit more light back on the company and folks might take a second look at us with this, right? Like we've crystallized some real value. We still have exploration potential. We're going to go generate more projects. So I think maybe we'll start re-rating a little bit. I'd like to see us, you know, I think it's very reasonable to think that, you know, hey, we should at least re-rate to a modest premium off of cash and securities, right?

16:44So, and then it is still very much a wait and see, I think, from Selena.

16:49Chad Peters: All right. Give us a sense of if you are out there, if your boys are out there staking right now, you know, what is the challenging competitive nature of staking claims in Nevada right now? Is people still gung-ho? Yeah, it is tough. You know, the thing that we have going for us is the CRD, like SCARN polymetallic space is still fairly wide open. There is groups that are competing groups to ours, but I like to think my geos are a heck of a lot sharper than theirs. So typically when we go to new districts and areas, we don't see many other posts in the ground. So we're going after old historic districts, mine in the 1800s, early 1900s.

17:30That's what the old timers went after back in those days, right? They were going after gaudy, high-grade silver, high-grade copper. And that's what these polymetallic CRDs, that's how they outcrop its surface, whereas a gold system can sometimes be a lot more subtle. So that's the trick, I think, is you go after what the old timers were finding, and then you build a geologic model around that. And that's what we're doing on a few different districts right now. Okay.

17:54Chad Peters: I guess maybe while I have you, I probably should have asked this before, but can you give us an update? how is drilling going at selena right now at south 32 any update you can share with us yeah we just we just finished hole one um we're on well the hole 55 we're into hole 56 right now still above target um i think it's going to be a really good year we're stepping out across multiple you know we're kind of drilling almost a triangle between hole 54 and our discovery hole which was hole 53 last year still very wide spaced you know two 300 meter step outs but It's starting to tighten up a little bit and trying to, trying to chase the higher grade mineralization.

18:31So we'll see what, see what the drill program brings. I think that three holes is our kind of starting point with, and so 32 being pretty clear that, you know, any exploration success at all will probably just be in the rigs, keep running the entire summer. So yeah, we'll have news out before, before Beaver Creek and it'll be good. All right. Perfect.

18:50Chad Peters: All right, Chad. Congratulations. Good to connect with you on a day when good news is out and the stock's up 32%. But yet the market cap's still below cash and securities. What a market. I'll be on the phone all day. I hope to rectify that here over the coming weeks. But reminding people what a good buy it is right now. But yeah, we've had various few days where I've put out news and the stock also happened to be up and to the right. So this is the nice day. Yeah, awesome. All right. Ridgeline Minerals, again, trading on the venture with RDG and on the OTCQB with RDGMF. Chad Peters, we'll talk to you again soon.

19:30Chad Peters: Thanks so much. Thanks, Pat. See you.

19:37Chad Peters: 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.