By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
Stephen G. Roman, Chairman, President and CEO of Harte Gold (TSX: HRT, FSE: H4O, OTC: HRTFF): Completed a $25 Million Bought Deal Financing, Accelerating Exploration and Development Program at Sugar Zone and Building a Processing Plant (PDAC Booth # 2820)
We interviewed Stephen G. Roman, Chairman, President and CEO of Harte Gold who was awarded the honor of “Prospector of the Year” for 2016 and has received the “Bill Dennis Award” from the Prospectors & Developers Association of Canada (PDAC) in March, 2016. Harte Gold Co(TSX: HRT, FSE: H4O, OTC: HRTFF) is a Canadian mineral exploration and development company focused on their 100% owned high-grade Sugar Zone property located in Ontario, 80 kilometers east of the Hemlo Gold Camp. The company just completed a $25 million bought deal financing, which will allow them to accelerate and complete engineering and design of their own processing plant. This financing will also allow Harte to expand exploration beyond Sugar Zone and start drilling the rest of their land package. Currently, the company is conducting the 70,000 tonne Advanced Exploration Bulk Sample mining operation and generating their own cash.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Stephen G. Roman who’s Chairman, President and CEO of Harte Gold Corp. Could you tell our readers what’s new at Harte Gold Corp? I see you recently have more funding to carry on your drilling and you’ve had some very good drill results.
Mr. Stephen Roman: Yes. Thank you Dr. Alper for calling. Yes, we made an announcement recently that we have just completed a $25 million financing with Cantor Fitzgerald and Appian Capital. They provided funding to the company on a bought deal basis. This will allow us to accelerate our exploration and development program on the property. Currently we are doing a 70,000 metric ton bulk sample, which is being processed by Barrick Gold. Barrick is about 80 kilometers from our site. We currently ship approximately 500 tons a day to Barrick for processing.
With this new financing, we will be completing engineering and design to build our own plant as well as accelerating our exploration program. The initial target is a million ounces at the Sugar Zone Mine. You may recall, we have an entire greenstone belt staked and we control about 30 kilometers by 10 kilometers in this land package, which is under-explored. With this recent financing, we’ll be able to accelerate the exploration and add additional drill rigs.
We have also announced a new discovery just north of the Sugar Zone mine. Currently we’re calling it “The Middle Zone” but we will probably come up with a better name as it develops. In the meantime it gives everyone a good idea of where it’s located, about 500 meters farther north of the Sugar Zone and between there and another discovery we made called, The Wolf Zone.” This is a three kilometer strike length from the Sugar Zone to the Wolf Zone. This middle area has been under-explored. So over the summer, we completed a large geophysical program, deep IP, Induced Polarization, which outlines resistive and conductive areas in the rock. We’ve been following up on the geophysics now with drilling and have made this new discovery.
We feel there is a good chance of making a number of new discoveries on this property as we continue to explore. Of course, with our own mining operation, we are currently generating positive cash flow. In association with a strategic investor coming in, we expect that 2017 will be a pivotal year for Harte Gold and development of the mine, as well as discovering additional gold resources on the property.
Dr. Allen Alper: That sounds excellent, really great, you are in an excellent position! You have a great gold resource and great financial backing to move forward with it.
Mr. Stephen Roman: That’s right.
Dr. Allen Alper: Could you tell me a little bit more about your plans for 2017?
Mr. Stephen Roman: Right now there are a number of plans on the go. One is the larger regional scale exploration. That’s a number one priority. Number two is exploration and infill drilling around the Sugar Zone deposit itself. We want to move the resource up into the Measured and Indicated category from the Inferred category. Of course, we’ve been doing bulk sampling mining that moves the upper area into a proven reserve category. We’ll be completing an updated PEA, a preliminary economic assessment, as well as a pre-feasibility study as part of the work we’re doing in 2017, and reclassifying the resource. It’ll be a big improvement on the gold resource we have at Sugar Zone, but the market, the street, wants to see this project grow in size, so that’s why we’re going to be doing a lot of work on the regional exploration and extending the size of the deposit.
Dr. Allen Alper: That sounds excellent! Could you refresh the memory of our readers on your award-winning background and also your team?
Mr. Stephen Roman: Okay. I’ve been in the mining business my entire life. My father started a company called Denison Mines Limited. He discovered the world’s largest uranium deposit in a town that he built with Rio Algom called Elliot Lake, Ontario in the 50’s. The Denison Mine was the largest uranium mine in the world at the time. I grew up in that environment, and started working underground at Denison when I was 19, and earned my Ontario Mining Certificate by going through the training program there and then eventually studied geology in university.
In 1991 I started my own Mining House. One of our big successes was the Gold Eagle discovery in Red Lake Ontario, which we made on a property I controlled. That’s Northwestern Ontario. I sold that project to GoldCorp. for $1.5 billion in 2008. In 2009 I was approached by the shareholders of Harte Gold, who wanted me to take over that company and move it forward. When I took on the project I put a new Board and Management team together and acquired the 51% property ownership held by Ned Goodman’s Corona Gold Corp. We refinanced the company and moved it forward. We tripled the resource on the property and put the mine into production.
This is one of many projects that I’ve done in my career, but clearly it’s one that’s right on the front burner now and we expect it to grow significantly over the next few years.
Dr. Allen Alper: That’s an excellent record of accomplishment. That’s very, very good! Really very good! Could you tell me a little bit about your share and capital structure?
Mr. Stephen Roman: We’re traded on the Toronto Stock Exchange, Senior Board. We have about 500 million shares outstanding fully diluted and approximately $140 million market capitalization. One of our newest large shareholders is Appian Capital that just came in with a large placement. Most of our shareholders are retail investors, who followed me into the project after I did the Gold Eagle transaction. We are widely held, and we expect our share prices to continue to move as we discover more gold and advance our project.
Dr. Allen Alper: Excellent! What are your thoughts on what’s happening with the global gold market?
Mr. Stephen Roman: I think the gold market is tied to what’s happening with the US dollar and global economics. Because Mr. Trump was elected as the new President there’s been a strengthening of the US dollar, which has had an effect on all of the commodity markets, particularly the gold market. I think longer term the gold market looks ready to move higher, because geopolitically, Europe seems to be unraveling. The Euro zone looks week. Most countries like Canada, United States and Euro Zone have run up their debt to unbelievably high levels. I think gold, as an alternative currency, governments can’t print, has a real place in the future. I think gold prices are under a little bit of pressure currently, but I think the gold price will be moving back up over the next few years.
Dr. Allen Alper: That sounds reasonable.
Mr. Stephen Roman: Our project at Harte Gold is high grade. An average grade for most gold mines in the world is typically around one gram. Ours is around 10 grams per tonne. With 10 time’s higher grade, we can mine fewer tons to achieve our production. Our costs are in the US $600 range per ounce so we have a large margin. We do get paid in US dollars, and of course our costs are in Canadian dollars, so we get a 30% bump in our profitability just because of the exchange ratio at this point in time.
All in all, it makes the project even more attractive. Of course we’re right in the middle of three producing mines. One of them Barrick Gold, the other is Richmont Mines and the other is Wesdome. We are an attractive target for many gold companies as we continue to develop this project.
Dr. Allen Alper: That’s excellent. What are the primary reasons our high-net-worth readers/investors should consider investing in your company?
Mr. Stephen Roman: There are a number of reasons. One, Ontario is a very favorable mining jurisdiction. Number two is our permitting has gone very well and we expect to have our commercial production by September, 2017. Number 3, we will be moving forward with our own milling solution. We will be a stand-alone mining operation not dependent on custom milling. Number 4, the growing resource on the property; the exploration potential here is tremendous and we expect to find more than one deposit on our property. From an investor’s point of view, our shares now are currently trading around 36-38 cents Canadian. It’s a prime opportunity to buy undervalued shares at this point in time. That would be my synopsis.
Dr. Allen Alper: Excellent reasons for our readers and investors to consider investing in Harte Gold. Is there anything you’d like to add Stephen?
Mr. Stephen Roman: Well Allen, I think that covers the story at this point in time. Of course I appreciate your call and your interest. I look forward to updating your investors and readers regularly so we should stay in touch. We will have a lot of news coming out during 2017 on our project.
Dr. Allen Alper: Sounds great!
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Toronto, ON M5C 1B5