Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
With two 100%-owned, shallow, high-grade properties in Canada churning out results and millions of dollars in the bank to keep the drills turning, Balmoral Resources is taking advantage of elevated nickel prices and a quiet junior mining backdrop to turn investors’ heads. President and CEO Darin Wagner shares his focus for moving both projects forward.
Management Q&A: View From the Top
BTV/The Gold Report: Please explain the focus of Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX).
Darin Wagner: Our principal focus is on our Detour Gold Trend project. That’s located in the northern end of the Abitibi Greenstone Belt, in central Québec. We’re right across the border from the massive Detour Gold deposit in Ontario, which is now happily producing multiple bars of gold every day. We control 80% of that belt and own the property outright. We’re not beholden to anyone, which is a good thing in a tough market.
BTV/TGR: Please share some of the results you’ve had.
DW: We are focused on two principal projects. Martiniere is a high-grade gold discovery we made about two years ago. We have been working on building it out toward its initial resource. It’s a multi-component system, so there are numerous shallow zones of high-grade gold mineralization.
We also have an exciting new discovery on our Grasset property about 40 kilometers away. It is also 100% owned and another shallow, high-grade discovery, but this one is a little different. It’s a nickel-copper-platinum group metals (PGM) discovery, which is very timely given the fact that the nickel market is on fire right now. It’s one of the few commodities that is really performing well. The PGM kicker also helps since North American PGM sources are always highly sought after.
BTV/TGR: Why is the nickel market so hot today?
DW: The nickel market is always a relatively tight market. Economic nickel deposits are rarer than gold deposits. There are never a lot of nickel plays out there. More recently you’ve had commotion in Indonesia, which supplies over 20% of the nickel market, the restriction of supply similar to what we went through in Canada a few years back at Voisey Bay where the government wants smelting done in-country. Indonesia doesn’t want to be shipping raw ore to China so it has banned exports. That’s really constricted the nickel market. Recent problems in Russia and New Caledonia have tightened the nickel supply even more. This market is always close to balance so it doesn’t take much to make prices increase 50%, as we have seen this year.
BTV/TGR: How has Balmoral performed in the market relative to your peers?
DW: Since January, we’ve had a great run. We came into the year off fairly heavy tax-loss selling in December at around the $0.35 mark. The stock has hit highs of $1.40; it is currently trading in the $1.30-$1.35 range. It’s been a great win for an awful lot of folks, which is really nice in this market. It’s meant that we have caught a lot of attention in a very quiet market.
We used the same approach as with West Timmins Mining in 2008. We were one of the few companies actively drilling through the lows in 2008 and so one of the first to emerge in 2009. We took the risk to spend our money and stay active when others weren’t. It’s paid spectacularly for shareholders so far this year much as it did for our shareholders in West Timmins Mining previously.
BTV/TGR: What is your financial position?
DW: We’re in strong financial shape. We have about $7.3 million ($7.3 M) in the treasury today. On June 20 we will close a bought-deal private placement, which we completed at a 59% premium to the market at the time it was announced. The private placement will bring in another $4.5M, and another $1.5M in warrants could come in between now and October. We are seeing them cashed on a semiweekly basis. That would bring us up over $13M. We’re in great shape on the financial front. It means we can go and execute our programs. We don’t have to be worried about capital. Certainly we’re opportunistic on the capital front, but it just leaves us that much stronger than so many of our peers.
BTV/TGR: What is the plan for the remainder of the year?
DW: For the rest of the year our focus is on those two projects, the high-grade nickel and the high-grade gold. We’ll have drills turning by mid-June on the nickel side, about two weeks after that on the gold side. Drills will be there through the summer so there will be aggressive drill campaigns on both. We look forward to filling up inboxes with good news.
Our focus in this tough market is on growth and expansion. We have to continue to recognize that this is a difficult market, but if our drilling will drive valuation for the company we will be aggressive on that front. Both systems are still open so they can expand rapidly. With the winter drilling having returned spectacular results from both sides the BAR has been set high (pun intended) but we are very confident we can build on the new base here.
BTV/TGR: How do you feel about where you are today as a company?
DW: We couldn’t be happier about where we are right at the moment. We recognize it’s a tough market for the resource sector, but we’re clearly outperforming by a large scale. We have two great projects and a land package of almost 700 square kilometers behind that to generate more opportunities. With the financing in place to turn the drills, we’re looking forward to a really exciting summer. We hope to continue the successful roll that we’ve been on.
BTV/TGR: Thank you for your time.
Darin W. Wagner, president and CEO of Balmoral Resources Ltd., is a professional geologist with 20 years of exploration and corporate development experience. Wagner spent the first 10 years of his career with two of Canada’s largest and most successful exploration and mining companies, Noranda (now Xstrata), and Cominco (now Teck), as a project geologist and manager in North and South America. Wagner became president of Sydney Resource Corp. in September 2005 and helped engineer the successful merger between Sydney and Band Ore Resources to form West Timmins Mining Inc. in 2006. He then served as a president, CEO, director and Qualified Person for West Timmins Mining through the discovery of the high-grade Thunder Creek Gold Zone in Timmins, Ontario, and the acquisition of West Timmins by Lake Shore Gold in an all-share deal valued at $424 million, which was completed in November of 2009. Wagner currently serves as a director of Druk Capital Partners and as a technical and/or corporate adviser to several other publically listed resource companies including MAG Silver Corp., Abzu Gold Ltd. and Metals Creek Resources Corp.
Read what other experts are saying about:
Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.
DISCLOSURE:
1) Taylor Thoen conducted this interview for BTV/Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report. She owns, or her family owns, shares of the companies mentioned in this interview: None.
2) Balmoral Resources paid Streetwise Reports to transcribe and distribute the interview.
3) Balmoral Resources had final approval of the content and is wholly responsible for the validity of the statements. Opinions expressed are the opinions of Balmoral Resources and not of Streetwise Reports or its officers.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.
Streetwise – The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.
101 Second St., Suite 110
Petaluma, CA 94952
Tel.: (707) 981-8999
Fax: (707) 981-8998
Email: [email protected]
