Talamore Mining

Thanks very much, and thank you for sticking around to the last talk at the end of a very long day. Talamore Mining is a really good example of what you can do when you take a really solid management team, a first-rate project, and really an unparalleled set of shareholders and backers led by Pierre Lassonde and his colleagues at Trinity Capital Partners, as well as Agnico Eagle and Newmont, and a number of major institutional investors that hold our stock. Forward-looking statements, you can read those at your leisure on our website.

In the Coffee Gold Project a few weeks ago when we were up doing a buy-side tour, it's very much fall weather up there. Talamore has had the Coffee Project for less than a year now, and I'll just walk back to about this time last year when we announced the acquisition of the Coffee Project from Newmont for a total compensation or total price of about $150 million US. That consisted of $10 million in cash, $40 million in equity in our company that now puts Newmont at about a 19% shareholder of ours, and then there's a $100 million deferred payment, which is due a year after commercial production.

What we got for that $150 million is three million ounces of some of the highest grade, best recovering open pit gold heap leach ounces anywhere in the world. In this case, in the Yukon, another 800,000 ounces of inferred resources that we're working very hard to convert to indicated. A very good leadership team and shareholder base, some very compelling PEA economics that I'll touch on briefly, and a feasibility study underway by G Mining Services, and that will be ready in February of next year, as well as a very extensive exploration program this year and in the coming years to explore our 70,000-hectare land package that extends well beyond the current Coffee Project.

We will be Yukon's next gold producer. And why do I say that so confidently? It's because the work that Newmont and Goldcorp did to advance this project after Goldcorp's 2017 purchase of Kaminak has put this project on the verge of a construction decision, and we plan to make that construction decision in the first quarter of next year and begin construction in the second quarter of next year when the snow starts to melt in the Yukon.

Between Goldcorp and Newmont, we estimate they spent north of 300 million US dollars on the project. They got it through the federal EA process, and that was a positive decision in 2022. They started the Yukon territorial licensing process in 2023. They got two IBAs in place with the two key First Nations on whose territory the project is located, the Tr’ondëk Hwëch’in and the White River First Nation, and both of those nations are very supportive of the project. We're doing a lot of economic partnerships with them, and that has been a huge benefit to the project in moving it through the remaining permitting process.

As well as all of that permitting and IBA work, Newmont also brought the project from 300,000 meters of drilling in 2017 to over 600,000 meters of drilling when we picked up the project last year. It's possibly the most drilled-out project I have ever seen in my life. In addition to all that drilling, they did extensive metallurgical test work, they did extensive engineering work, and really brought the project to where we can push it very quickly through a feasibility study.

Everything we're doing this year is aimed at supporting or getting us in a position to make that FID in Q1 of next year and move into production in Q2 with a two-year build that will have us producing gold, if all goes well, and everything always goes well in the mining industry when you're building a mine, that will get us in gold production in 2029. There are very few projects out there right now that can boast that kind of timeline, and that is really, really made possible by the confidence of our backers.

So a couple things we're working on this year. We are completing the road access to the site. At the moment, the only way to get heavy equipment in is by barge on the Yukon River. You can only do that for about two and a half, three months a year. Not really conducive to building a mine and operating a mine. So what we're doing is we're taking advantage of the existing road network that runs south from Dawson City through the historic Klondike Gold Rush placer mining district. If you ever watched that terrible TV show about the placer miners, that's exactly where it's filmed.

And those placer miners, there's over 100 placer mines active in that area. Every creek, every river has a placer mine on it, and they built that road network in order to get their haul trucks and their fuel and their people down there. So we're taking advantage of that road network. Of the 214 kilometers of road from Dawson down to site, only about 29 kilometers of that road have to be built from scratch. We're connecting up existing road network, we're improving some of that road, but the bulk of it is already there. That road network construction project, we got that through permitting and construction is well underway, and we should have that drivable to be able to start bringing equipment and fuel in by the coming winter.

The other thing we're doing is building someplace for all the construction workers to stay before they arrive, so we're putting in a 200-bed camp at the site. That will be ready by the spring. We're also building a 5,000-foot airstrip that will be able to handle much larger planes than we currently can. Right now, we can fly 17-seater planes into site. That's, again, not gonna work for a mine, so we're building a 5,000-foot strip. We'll be able to bring 40 to 50 passenger regional turboprop airliners in.

We are, as I said, completing the feasibility study. So we'll have a way to get heavy equipment in, a way to get fuel in, someplace for people to stay, a way to get people into site. G Mining Services, one of the best mine constructors out there, is not only completing the feasibility study, they're also supervising all of those early works, and they will go on to supervise the mine build as well. And that's a huge benefit to the company because they are a mine-building team, I think with no peers out in the industry right now.

And then finally, we're completing the territorial permitting process. We got one of the permits, which was a whole series of permits to complete the road. We wrapped that up in the last couple of weeks, and that road building is well advanced. The next two permits we need are effectively our mine operating license, which in the Yukon is called a quartz mining license. That's given out by the Department of Energy, Mines, and Resources. That one is moving along very well, and we've been told by the government that we should expect that sometime towards the end of this year.

The other license we need is called the Type A Water Use License. That just governs water use and discharge. That's handled by the Yukon Water Board. That process, again, has been in place since 2023. We just finished the public comment period about two weeks ago. We're now in the response period. And in the meantime, the Yukon Water Board will schedule a public hearing. We had hoped that public hearing would be before the end of the year. Now it's looking like just because of capacity issues, it's gonna bleed into the new year. That's fine. The hearing typically takes about a week, and assuming everything goes well in the hearing, the Yukon Water Board usually takes about two months after the hearing to issue your license as well as the reasons for decision. So again, aiming to get everything in place ahead of that construction decision in Q2—sorry, in Q1, and then the start of construction in Q2.

There is interestingly funding available for the construction of that road. There's almost a $400 million Canadian fund called the Resource Gateway Fund that's designed to fund roads into resource areas. So we're talking to the government now about potentially being able to recoup some or all of that close to $100 million cost of building that road.

Again, strong First Nations. This is key to doing anything in the Yukon, and this is where we really benefited from the work of Newmont and Goldcorp. They got the two key First Nation IBAs in place, again, with the Tr’ondëk Hwëch’in since 2018, with White River First Nation since 2021, and that's made a huge difference to our ability to advance the project through permitting.

The resource itself is an extremely robust resource. It's been drilled, and drilled, and drilled again. Thank you, Newmont, for that. Again, 3.8 million ounces total, three million ounces of inferred, 800,000 ounces of indicated, very high grade, 1.15 grams per ton. That's probably an order of two or three times higher than the grade of most oxide heap leach deposits out there today.

Right now, we're only looking at mining the upper 200 meters or 250 meters of that deposit. We know from drilling that the deposit extends to at least 700 meters in depth and that everything below 200 to 250 meters is almost completely untested. We know that the oxide extends deeper. We put in 11 holes this year. We're still waiting on assays on those. We have not put any holes into the sulfide resource. And if you look at a really good comparison, Camino Rojo, Orla's flagship mine in Mexico, you know that underneath these oxide systems, you can have very, very substantial sulfide deposits. We have one hole that goes down 700 meters and hits that sulfide. That's a future project.

There's a lot of upside potential too. If you look at that circle there on the left-hand map, the left-hand circle, you'll see the Coffee deposit. The Coffee deposit, all three million ounces of M&I, 800,000 ounces of inferred, sit within about 10% of that 70,000-hectare land package. That's a 40-kilometer long land package along the key Coffee Creek fault. That's the controlling fault for all of the mineralization in this area. And in addition to the Coffee deposit itself, where again, we think there's a lot of upside potential there, there are two other mineralizing centers there that we're very excited about.

The most relevant one at the moment is the Sugar target. That's the one down to the right there circled. That is a golden soil anomaly with the same geochemistry and the same footprint as the Coffee deposit. And interestingly, it only has 12 drill holes in it that were put in years ago by Kaminak. They drilled north-south. We went in this year, we put five core holes in using oriented core, and we discovered that all of the mineralization there runs north-south parallel to the earlier Kaminak drill holes. So we put our holes in east-west. We're still waiting on results, but what we are seeing is very deep oxidation there, so it may be there's good potential that we find something that looks very similar to the Coffee deposit. We're also testing a number of deposits in and around Coffee with an eye to future near-term additions to the oxide inventory that could go straight into that mine plan.

Coffee is a really simple project. It's an absolute bog standard open pit heap leach mine. There's nothing unique about it except that it's in the Yukon. And so the one thing we're gonna have to do as we build and operate this mine is we're gonna have to allow for the seasonality up there, the logistics, and for the temperatures. We're not breaking any ground with a cold climate heap leach. Fort Knox, Kinross has been heap leaching at roughly the same latitude across the border in Alaska for 25 years without any difficulty whatsoever. So we know it's possible. We know Brewery Creek operated for a number of years further north than us in the Yukon. And so again, nothing particularly complicated about this.

One of the great things about it is that the recoveries are really, really amenable to very strong margins. We're looking at an average of about 77% in overall. In the oxides, which will be the first things we mine, 87% average recovery from the column tests. That's an incredibly high recovery, and we don't have to crush particularly fine. We'll be crushing somewhere between 38 and 50 millimeters. Those are basically pebble-sized crushing. So again, fairly low cost.

Some of the highlights from the PEA that we put out quickly in the early part of this year. The PEA was based on some pre-feasibility work and engineering that Newmont had done. They had an 80% completed PFS in the data room. We took those numbers based on some very, very detailed engineering, based on material offtakes, based on actual vendor quotes. We inflated those from 2024 up to 2026, put those into our PEA, and you can see some pretty impressive headline numbers there.

$2.2 billion US after-tax NPV, $3.7 billion at the time what was spot, around $5,000 gold. Average annual gold production of 217,000 ounces per year. In the first five years, as we mine the highest grade, best leaching material, that jumps up to 250,000 ounces, so very, very quick payback. Thirteen-year mine life and an AISC just under $1,400. CapEx, we have two CapEx numbers there. The 634 is the direct cost of CapEx for the project. The higher number includes a significant component of contingency, as was appropriate for a PEA. And it also doesn't allow for things like equipment financing from the manufacturers, as well as potential rebates from the government. So very, very compelling economics. We'll obviously update these as we get the feasibility study done.

Because this project is so close to being in production, we can, if everything goes right, be in production by 2029. We think there's a real potential for a significant near-term re-rate. If you look at the enterprise value of the company right now, we're looking at around a billion dollars Canadian. And then if you look at comparable Canadian mining projects in high-quality jurisdictions in a similar production range, you look at the significant potential increase in NPV there. So we think there's a significant potential re-rate as we move closer to production.

The pathway to production, I talked a bit about this. We're hoping to be able to put an FID in place in Q1 and then start construction in Q2. Two-year construction window. The feasibility study will flesh out that construction schedule a bit more, and first gold production in 2029.

We recently announced a financing package. This is a very unusual project, and it really reflects the confidence that our backers and our shareholders have in the management team, in the project, in the work that's been done. Not many companies have put their complete mine build financing together before the feasibility and before the final permitting, but we did that in July. So that consists of $150 million in an equity financing. It consists of $400 million in debt, secured debt that's mostly being held by our key shareholders. We're probably gonna bump that debt piece up to $450 million because of the demand for it. And then we've also put in place, or we will put in place, an accelerated warrant exercise program that will bring in about another $90 million. So of that $650 million direct capital cost, we'll have raised about $690 million relative to that. So we're extremely well-financed. We got rid of that financing overhang, and that's because of the quality of our shareholders.

Capital structure, you can see Pierre Lassonde and his partners at Trinity own about 20%. Management and board owns about 7%. Agnico, 8, Newmont, 19. Institutional shareholding, quite significant. Very tight share structure, and you can see the analyst coverage there below. I think there's seven analysts covering us at the moment, with target prices ranging from 14 to 16 dollars. Thank you very much. Happy to answer any questions.

Okay. If we don't have a question, I might just jump on with one. A lot of work's been done on the project before. So as you're going through these studies, it'd be just interested to see how you're putting, I guess, your mark on the project and what you're doing differently from previous expectations.

Yeah, it's a good question. So what are we doing differently from the previous studies? And the answer is actually very little because the project is so far along the permitting path that there's not really a lot of room to make changes to it right now without derailing the permitting process. So we're doing little tweaks. We're playing with the crush size, playing with where the pieces sit within the permit boundaries, but no real major changes because we wanna push this to production as quickly as possible.

Sorry, Tim. How much of a write-off did Newmont take on this?

Sorry? I didn't quite...

How much of a write-off has Newmont taken on this? How much of a write-down did they take on it?

Yeah. I couldn't say, actually. I'm not [chuckles] privy to Newmont's accounting, so I honestly don't know. If you back it up a bit, the project was purchased in 2017 by Goldcorp for I think $520 million Canadian. We paid—and this is important—we paid a face value of $150 million US for it. But the $40 million equity piece that we gave Newmont is probably worth about $200 million right now. So you've gotta look at how Newmont looked at this, much the same way with the Orla purchase of Camino Rojo. Goldcorp took $15 million in equity in Orla and never bought another share, and when Newmont took them over, never bought another share, and they sold that equity piece last year for over half a billion dollars. So I think that was the thing that attracted Newmont to this deal, is the potential to ride the equity as the company re-rates.

Thank you. Got it. Just your opinion on, or maybe you can say why, but why did Newmont sell it then?

Yeah. I think if you look at Newmont, particularly since some of the recent acquisitions and mergers that they've taken place, it's just a little small for Newmont. Two hundred and fifty thousand ounces a year is probably... And I know that it wasn't an easy decision for them. It was on again, off again, on again, off again that this project was on the market. And I think at the end of the day, it was just a tiny bit too small. But they saw the ability to realize quite a bit of value by taking an equity stake in a company with strong backers that they have a track record of working with in the past, and that they knew they could realize the advancement of the project, and so basically make their money that way.

Okay. If there are no further questions, please join me in thanking Tim for a—

Thanks, everyone.

—very interesting presentation. [audience applauding] All right. Thank you everyone. That concludes this session. Thank you again for your attendance.