Lumina Gold Featured Interview with CEO Marshal Koval and VP Scott Hicks TSXV:LUM OTCQX:LMDGF

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B2B (00:01): Our guests today are Marshall Koval, President and Chief Executive Officer, and Scott Hicks, VP Corporate Development and Communications at Lumina Gold. Lumina Gold Trades on the TSX Venture Exchange under the ticker LUM and OTCQX symbol LMGDF. Good day gentlemen. Thank you for joining us today on B2B Interviews.
B2B (00:34): I thought you might begin with a brief introduction and overview of the company.
MK (00:40): Lumina Gold is part of the Lumina Group. It was a group founded by Ross Beaty. Originally, it was Lumina Copper Company back in 2003/ 2004 with a view that copper would move from 85 cents up to a couple dollars. It went right through that and up to about $4.
Anyway, we raised about $275 million in market and returned about $1.6 billion to shareholders. We had several copper projects in mining friendly countries and basically, after we dispositioned all those projects, Caserones Mine was one of them and then Taka Taka is a development project that First Quantum has.
We decided to turn our focus with the management team to the gold space, so we entered Ecuador in 2014 and acquired Cangrejos and that was a project discovered by Newmont, which had no reportable resource on it at the time.
Through all the drilling work that we did in publishing from 2014, publishing a 2020 PEA, we have about 17 million ounces of gold in all categories and about 2.2 billion pounds of copper.
Basically, right now, Cangrejos is at the prefeasibility stage. We just finished a 36,000-meter drilling program in the field. We're doing the engineering work and we're advancing the prefeasibility study, looking at having that published in April timeframe in 2023. Scott, you might just want to run through some of the results of the 2020 PEA, just to give a high-level overview here.
SH (02:28): Where this project sits today, it's a massive project. As Marshall said, it has both gold and copper. It's about 80% gold by revenue, 20% copper by revenue. It's 25 year mine life that incorporates two large scale pits. It'll eventually be an 80,000 ton per day project, so it’s quite large. 
It's the 37th largest gold deposit by resource size in the world and it'll produce just under 400,000 ounces of gold a year on average for those 25 years. We expect the net of the copper byproduct to be in and around $600 an ounce, which makes it a first quartile asset by cost per ounce.
We're excited with the way the project's shaping up so far and we've completed about another 36,000 meters of drilling in the last 12 months to take it towards a prefeasibility study that we expect early next year.

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Transcript

0:01

Good day and welcome to another B2B exclusive. Our guests today are Marshall Koval, President and Chief Executive Officer. And Scott Hicks, VP Corporate Development and Communications at Lumina Gold. Lumina Gold trades on the TSX Venture Exchange under the ticker LUM and OTCQX symbol LMGDF. Good day gentlemen. Thank you for joining us today on B2B Interviews. Hey, Todd, thanks for having us. Appreciate the time and interest of your viewers. Gentlemen, I thought you might begin with a brief introduction and overview of the company. Lumina Gold is part of the Lumina Group. It was a group founded by Ross Beaty. Originally, it was Lumina Copper Company back in 2003/ 2004. with a view that copper would move from 85 cents up to a couple dollars. It went right through that and up to about $4. Anyway, we raised about$275 million in market and returned about $1.6 billion to shareholders. We had several copper projects in mining friendly countries and basically, after we dispositioned all those projects, Caserones Mine was one of them and then Taka Taka is a development project that First Quantum has. We decided to turn our focus with the management team to the gold space, so we entered Ecuador in 2014 and acquired Cangrejos. and that was a project discovered by Newmont, which had no reportable resource on it at the time. Through all the drilling work that we did in publishing from 2014, publishing a 2020 PEA, we have about 17 million ounces of gold in all categories. and about 2.2 billion pounds of copper. Basically, right now, Caserones is at the prefeasibility stage. We just finished a 36,000 meter drilling program in the field. We're doing the engineering work and, and we're advancing the prefeasibility study, looking at having that published in April time-frame in 2023. Scott, you might just want to run through some of the results of the 2020 PEA, just to give a high level overview here. Where this project sits today, it''s a massive project. As Marshall said, it has both gold and copper. It's about 80% gold by revenue, 20% copper by revenue. It's 25 year mine life that incorporates two large scale pits. It'll eventually be an 80,000 ton per day project, so quite large. It's the 37th largest gold deposit by resource size in the world and. it'll produce just under 400,000 ounces of gold a year on average. for those 25 years. We expect the cost net of the copper byproduct to be. in and around $600 an ounce, which makes it a first quartile asset. by cost per ounce, so we're excited with the way the project's shaping up so far., We've completed about another 36,000 meters of drilling in the last 12 months. to take it towards a prefeasibility study that we expect early next year. The company is certainly on the move now in gaining momentum. Educate us a bit more, if you would, in terms of the infrastructure as well as the. political climate within this region as it relates to resource development, production, et cetera. Cangrejos is in El Aro province in Ecuador,and it has a long history of. Mining in that province. El Aro is the gold, so there's been mining of gold on small. and medium scale all the way back to the colonial times, pre-Spanish atuall, so there is a knowledge of mining in the area. The infrastructure overall is good. There's an airport close to the project, there are good paved roads. and all that sort of infrastructure and there's a workforce in the area. I think basically, if you look at Ecuador, when we entered the country in 2014, it had a real punitive fiscal and regulatory regime. Lauren line was the oil industry, which had been their primary industry in the country. Fast forward to today, the fiscal regime has improved significantly. and it's attracted a lot of foreign direct investment. Two major mines have been built, the Mirador Mine. Which is the copper mine, and Fruta del Norte, which produces. over 400,000 ounces of gold a year, so, the investment climate on the macro level. in Ecuador has improved significantly since we've been there. They've lowered tax rates, royalty rates, and in our direct area in El Oro province, we have good support with local communities. Obviously, a real key to advancing any project is your social license and that goes on every day. ou can't take any of that for granted, but we've we've done well with the local communities. We've provided jobs, education, a lot of help in the communities with healthcare, particularly during the Covid crisis, so if you look at the local framework. that we operate in, we're in a pretty solid position in that area. Then maybe just building on what Marshall's saying, we're in a pretty unique position. For a large scale [inaudible] project. When you look at these things across the Andes, usually it's lacking in something, whether it'sfar from port infrastructure, maybe it doesn't have power, maybe it doesn't have good road access. or labor force. Like Marshall was saying there, we do have a good labor force around our project. The big one for us is we're, we're 40 kilometers from a deep sea port. and that port already is geared up to ship copper concentrate, which would be our main product from the mine, out of it. The other large scale open pit mine in Ecuador that's called Mirador, they're trucking their copper concentrate over 300 kilometers across. the country to go out of this port that we're 40 kilometers from. Ao that's a huge cost advantage for the project to be able to get the copper concentrate. Out in a very low cost fashion. The other big advantage is the hydro power in Ecuador. Obviousl,y energy's very topical these days, Todd. A lot of places in the world are experiencing extreme energy price inflation. In Ecuador, we have hydro power. It's below seven cents a kilowatt hour. and it's stayed stable. since we did our study in 2020. Energy's obviously a massive input for a large scale project like this and we have lots of it there available in country, so it's a huge advantage. The company has certainly well positioned and poised in that regard. Gentlemen, elaborate a bit more in terms of how the company is presently positioned. in terms of strategic or joint venture partners and will the company, in fact, look to M&Aactivities moving forward in the near to midterm? We don't have any joint venture partners currently and we often get asked. If there are existing royalties on the project as well. There are no existing royalties on the project. We own a hundred percent of this, as it stands today, with no existing royalties on the project. The group's strategy in the past, Todd has always been to de-risk. these projects through the many stages and really solid technical work. Obviously, that's Marshall's specialty and Leo as well, and they've been with the group since 2003, so they've done this many times. Right now we're going towards PFS and that's a pretty pretty high level of study, as far as the amount of work that's gone into it. We've been working at this since 2014 plus all the prior drilling on the projec, so we think that we're going to. be at a point post PFS here where a lot of the major companies around. the world are going to have to take a look at this, because it is that scale of projects and there's not a lot of these. things out there. So the group's history really is, you know, looking to sell and and getting value back. to shareholders through M&A. What is the short term vision for Lumina Gold? Where do you see this company two to three quarters out? Basically,. what we're doing right now is we're continuing to add value. De-risk, understand the economics of the project better. and advancing sort of the permitting and interaction with the government. One of the key things when you look out into early next year. when the PFS is completed, you're able to go to the government and. negotiate an exploitation protection agreement, which basically sets all your. fiscal terms, your royalty rates, your tax rates, duties for imports, repatriation of capital, all that tuff into a framework. You negotiate once you have the PFS in hand, which we we're looking in. the April time-frame or early in the second quarter. You go and negotiate the term sheet that locks in those things so. that you can use them in your feasibility study. Then, in parallel with that, you can start some of your permitting related to advancing the project. We're continuing to move the project forward, de-risking it and moving it towards. production stage or at least to the PFS stage or the prefeasibility stage. We'll make decisions along the wa,y after we have the PFS, if we continue on with. the feasibility study or where we go. That's the near term catalyst that we're looking at. Indeed. Let's change gears now and talk a little bit more. About the leadership in place here. What more can you tell us now. about this present board and management team at Lumina Gold? The Lumina Group was founded by Ross Beaty and Ross' is awell known entrepreneur. And company builder in the mining sector. I joined him in 2004, early 2004. At the time, he had built Pan American Silver. He had a view to build copper development company and that was Lumina Copper. We have board members that have been with the group quite a long time. Don Shunka is independent board member, the head of the audit committee. He comes out of Raymond James and strong financing background. Michael Steinman's, the CEO of Pan American Silver is on the board. We have Steven Stow who is with Ledcor. He was the senior guy in Ledcor. [inaudibl] who is CEO of oOcéano in Namibia, so we have a strong technical and finance capabilities on our board. Lyle Broughton, our corporate counsel, is on the board as well. Then, when you shift down to the management team, Scott's the newest guy. to the group, and he's been with us five years, but most of the senior management. team has been together for15 years. A couple of them only ten years, but really strong technically in finance and capital markets. Gentlemen, briefly in closing, let's recap, if you would leave us with a few quick points here. Why should investors consider a long- term position in Lumina Gold? We know that right now, the commodities markets, are down significantly. If you look at all the developer space, whether it's in Latin America, North America or other jurisdictions, our valuations are way down. If you look at any metric on Cangrejos, if you look at ounces in the ground per cost, we're way down there as well. I think what it represents right at the moment is we have a team that's capable. of advancing this project and moving it forward to a good conclusion. Right now, we're trading about a hundred million Canadian, which is pretty close to a 52 week low, and a lot of our other junior developers are in the same position, so it gives you a real good entry point in the long t-erm. This team's been together a long time, we have a good success record and. we're doing everything we can. We just have our head down, we're advancing and de-risking this project and moving it towards. development and, ultimately at some point, production. I think for your viewers, Todd, if they have a view like we do that. The Fed's going to get to an end point here pretty soon with what. they can do on interest rates, reach the upper bound and then. potentially have to turn around, we think there's going to be some. strong performance out of gold. Obviously on the copper side, mines everywhere are. depleting and grades are reducing, so the world's going to need more copper. We're fortunate that it is 20% of our deposit. We think Ecuador has been, andontinues to be under the radar, have a discount to the rest of the market, is continuing to improve its mining culture and is certainly stepping up. compared to some of its Latin America American peers. We think that discount will go away over time, so we think we have a great asset in a country that's getting better every year and, as Marshall said, it's one of the lowest valuation across the development sector, so we think, now's a great time to step in for people. That is certainly a very interesting investment opportunity. Gentlemen, it was a pleasure speaking with you today. T. Hank you for joining us on B2B interviews. Thanks, Todd. Thanks very much. Our guests today have been Marshall Koval, President and Chief Executive Officer. And Scott Hicks, VP Corporate Development and Communications at Lumina Gold. Lumina Gold Trades on the TSX Venture Exchange under the ticker LUM and OTCQX symbol LMGDF.