Continental Gold (TSX: CNL; OTCQX: CGOOF), Interview with Paul Begin, CFO: High-Grade, Multi-Million-Ounce, Precious-Metal Project Scheduled for Production in Early 2020
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 7/27/2017
Continental Gold (TSX: CNL; OTCQX: CGOOF) is a development-stage gold mining company,
with a portfolio of high-grade and high impact exploration and development properties in
Colombia. Their flagship Buriticá project is a high-grade, multi-million-ounce, precious-
metal project scheduled for production in early 2020. We learned from Paul Begin, CFO of
Continental Gold, that with recent investments from Newmont Mining and Red Kite the
company is well-funded to initiate construction of the Buriticá mine and initiate
aggressive drill-programs throughout its portfolio of properties. According to Mr. Begin,
Buriticá is a very large project, with tremendous growth potential, and their other
exploration targets are also very promising.
Higabra Valley
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News,
interviewing Paul Begin, CFO of Continental Gold.
This is a really exciting time for Continental Gold; you have a great project, you
have funding and you have your plans to move forward. Please give our readers/investors an
overview of Continental Gold; what your plans are, what your goals are, et cetera.
Mr. Paul Begin: Continental Gold is Toronto-based, with high-grade Colombian
assets. We’ve advanced our flagship property called Buriticá over the last eight years or
so. We've built it from an exploration target to a large, high-grade deposit. Resource-
wise, we have 8.98 million ounces of gold plus silver in all categories (28.49 million
tonnes) at roughly ten grams per ton, and on a reserve basis we have 3.71 million ounces
of gold (13.72 million tonnes) at 8.4 grams per ton gold. If your readers/investors want
more detailed information, they can go to our website.
It's a large resource, open both at depth and to the west, so it has plenty of room for
growth. We're advancing that now with exploration drilling resuming after a few years off.
We published a feasibility study in early 2016 and just raised US$250 million in secured
debt from Red Kite. We've also recently closed an equity transaction, raising US$109
million from Newmont Mining and s US$25 million from Red Kite. So, we have plenty of
funding, and construction activity is underway. Long lead items have been ordered and
we're targeting production for the first half of 2020.
Dr. Allen Alper: That sounds great. Could you tell our readers/investors a bit of
what differentiates your property from others?
Mr. Paul Begin: There are a number of factors; first and foremost, it's a large
deposit with tremendous growth potential - it's open at depth and to the west.
Additionally, we have other very promising exploration targets in and around the Buriticá
area. Buriticá has straightforward metallurgy and most of the ore body is located above
the valley floor, so we will have gravity working to our favor. In summary, it’s a rare
combination of size, grade, growth potential and straightforward metallurgy. It's also
rich in infrastructure, literally right off the Pan American Highway and there is an
abundance of human resources around as well.
Dr. Allen Alper: Sounds excellent! Could you tell me a bit about your background;
the teams and the Board?
Mr. Paul Begin: I've been with the company now for nearly seven years. I started
when it was just a drill target. I met Ari Sussman through a mutual friend of mine. Ari is
the founder of the company. He launched the business in 2010. He has a long history
throughout South America and decided he wanted to open business in Colombia. He had met
most of the mining people in Colombia - which weren't that many back then - and met an
individual named Bob Allen. Bob had a company that controlled many hectares in Colombia -
roughly four million hectares of exploration potential grounds. Ari convinced him to put
his high-grade targets into a company and let Ari run the company and take it public.
Ari's got a long history in mining. Our Chief Operating Officer is Don Gray. Don is a
seasoned operator who just recently came off from building Tahoe's Escobal mine in
Guatemala. He was the first guy on the ground in Guatemala and stuck with the project,
right through commercial production.
Our President is Mateo Restrepo, a Colombian from Antioquia. We recently recruited
him from Glencore. Previously he worked in the Colombian government so he has strong
government ties and is a local here from Medellin.
Dr. Allen Alper: That sounds like a great team you have there. Experienced,
powerful, great backgrounds. Sounds excellent! Could you tell me a little bit about your
capital structure?
Mr. Paul Begin: With the equity raise we just did with Newmont and Red Kite, it is
roughly 187.9 million shares outstanding. There are an additional 8.8 million warrants and
8.4 million options outstanding. The exact numbers are available on our website.
Dr. Allen Alper: Where is your stock being traded?
Mr. Paul Begin: The majority of our stock is traded on the TSX.
Dr. Allen Alper: And could you tell our readers/investors how it is operating in
Colombia?
Mr. Paul Begin: Actually, it's very good operating in Colombia. Colombia is by far
the most right-wing-thinking country in Latin America. If you compare it to some of its
neighbors, it's night and day. They've elected a right-wing government for close to 50
years now. It's never been politics that has been the problem in Colombia; it's always
been security. And with the recently announced peace deal with FARC, there is a continuing
trend of improved security conditions in the country. So it's actually great to operate
here. Colombia has a judicial system that is separate from its political system and
foreigners have the exact same rights as its citizens or local companies; thus, the
company is actually well-received. I think it's becoming more and more well-known within
the business community that Colombia is a place to invest, particularly now that it's
opening up from a security point of view.
Dr. Allen Alper: That's excellent. What you're doing must be the right thing since
you're getting such strong support and investment from Newmont. Newmont is a great
company.
Mr. Paul Begin: Yes, we were very excited about the prospects of Newmont becoming
a 19.9 percent shareholder for a number of reasons. Newmont is a very well-respected
company, as you mentioned, with a large market cap and a balance sheet that has the
flexibility to do things.
More importantly, Newmont doesn't go around the industry making these kinds of
investments on a regular basis. The amount of due diligence that Newmont performed prior
to making the investment was astronomical. It far surpassed the due diligence that our
lenders did prior to committing their $250 million. Very senior people from Newmont came
to Colombia, toured the project and talked to the local, departmental and national
governments. We feel it's a bit of a validation of the project and of us, quite frankly,
so we're pretty excited to have them on board.
We're plan to leverage our relationship with Newmont and their technical
expertise. We've formed joint management committees with Newmont where they can assist us
in the actual build-out. The more technical expertise and experience we can have on our
side, the better.
Dr. Allen Alper: It's excellent to have Newmont involved, both technically and
financially. They are highly respected and they bring that respect to any company they
endorse. Excellent! What are the primary reasons our high-net-worth readers/investors
should consider investing in Continental Gold?
Mr. Paul Begin: I think there are a couple factors. Number one, the project speaks
for itself. This is a very special project; they don't come around very often. Size,
grade, straightforward metallurgy, strong social license - all these things are working in
its favor. Unless you tick all the right boxes, any project could fail. You could have a
great project with straightforward metallurgy, but if you don't have a social license,
then forget about it, right? It's not going to happen. Fortunately, Buriticá ticks all the
boxes, so that's first and foremost. The second is that our valuation is extremely
compelling right now. If you look at our P/NAV compared to our peers, we are trading at a
significant discount and I think the reasons for that are because of the recent GDXJ
rebalancing; we were hurt badly by that. That's over now and we should start seeing a
recovery; we should start seeing our valuation trading more in line with our peers.
I consider our peers to be Pretium and TMAC. Both are trading just below 0.8 or0
.9 NAV and we're trading as low as 0.4 NAV – these are approximations - so there is a
significant valuation gap there. Yes, they are further advanced than we are but, as we
progress building this mine, that valuation gap should start to close.
Dr. Allen Alper: That's excellent. There are some very strong reasons for our
high-net-worth readers/investors to consider investing in Continental Gold. Is there
anything else you'd like to add?
Mr. Paul Begin: I appreciate having the opportunity, Dr. Alper, to share
Continental Gold’s progress and promise with you and your readers/investors.
http://www.continentalgold.com/
Paul Begin
+1-416-583-5617
+1-877-273-8228
p.begin@continentalgold.com
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