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Keith Boyle – Director & CEO of New Found Gold
Hi. I’m Keith Boyle. I’m the CEO at New Found Gold. New Found Gold has assets on the Island of Newfoundland in the province Newfoundland, Labrador. Our flagship property, the Queensway Gold Project is advancing based on our PEA of last year and is advancing through permitting.
Right now, we are advancing the Hammerdown Gold Project, ramping up the mine to commercial production and fine-tuning the Pine Cove Mill. All that with a large exploration package that we are now exploring with a 90,000-metre drill campaign.
Matthew Gordon – Family Office Investor: Keith, good to see you. I saw the Hammerdown press release come out. It reads to me like a company has moved from explorer into operator mode. We don’t need to talk to you about discovery questions per se, but what I wanted to get out of today’s conversation is trying to determine whether or not you believe that you will be able to consistently deliver tonnes-grade recoveries and ultimately cash flow from Hammerdown and Pine Cove to fund the Queensway project, because ultimately that’s the money-spinner for you, isn’t it?
- Matthew Gordon - Family Office Investor: Keith, good to see you. I saw the Hammerdown press release come out. It reads to me like a company has moved from explorer into operator mode. We don't need to talk to you about discovery questions per se, but what I wanted to get out of today's conversation is trying to determine whether or not you believe that you will be able to consistently deliver tonnes-grade recoveries and ultimately cash flow from Hammerdown and Pine Cove to fund the Queensway project, because ultimately that's the money-spinner for you, isn't it?
- Matthew Gordon: Just sticking with Hammerdown, if we don't mind, you talk about commercial production. Can you define what that actually means in terms of throughput recovery, grade profitability, et, cetera?
- Matthew Gordon: Again, I'm reacting to the press release, because it was quite detailed and kind of fulsome and a lot of moving parts here. I could sit and talk to you about grade control reconciliation and throughput and mill performance, et, cetera. But the thing which I'm sort of struck by is the kind of building up of the team. We always talk about transition from explorer into producer. Building up of this team, building up of the, not just management team, I'm talking about operational team on the ground. Can you sort of talk to that as part of the kind of mining preparedness, et, cetera, that you're looking at?
- Matthew Gordon: I appreciate what you're saying in terms of hiring and appointing key personnel, which is obviously important to you. But there's some big numbers in there in terms of the additional personnel on the ground, in terms of new personnel on the ground, as part of this kind of build team. Can you talk to what's that looking like on the ground, and when does that all kind of come together?
- Matthew Gordon: Obviously, it's hard to kind of focus in on this. I just think it's the difference between- it talks about on paper and the reality on the ground. Because, when you picked up the mill, you were looking for operational efficiencies. You weren't rushing into perhaps you're picking up where the previous company left off. Likewise, with the people here, you're talking about them eventually, potentially, going on and getting Queensway up and running. But when you look to this sort of training process and this onboarding of all these new people, how long does that take? What's it involve? And, again, what's it actually look like on a day-to-day basis?
- Matthew Gordon: I was trying to remind investors that, when companies kind of ramp up to nameplate capacity, it's not necessarily all hardware. It's the people involved as well. In terms of the senior management, have you appointed everyone that you need to appoint now, certainly for obviously Hammerdown initially, but also moving on to Queensway quite quickly?
- Matthew Gordon: How much of that work is obviously continuing to optimize what you bought? Because, obviously, there's a bit of an outlay for that. There's expectations, you kind of rush on into it. But you saw some opportunities to optimize, obviously, around the economics ultimately. What does that look like?
- Matthew Gordon: Okay. So I want to be clear. You've practically doubled the mill performance, the mill throughput, I should say. Is that going to be sustained at these increased rates, or is that something that you still need to do some work on?
- Matthew Gordon: In terms of how the kind of money flows, because obviously, you kind of picked up a big exploration play, you've made this acquisition. But just again, remind us of the kind of sequencing that you have done. Obviously, this acquisition is a big part of that to kind of unleash the potential of Queensway. Can you talk actual dollar terms, what it means for Hammerdown?
- Matthew Gordon: Which then leads on to , what does that look like for the company as a whole?
- Matthew Gordon: Obviously, that Hammerdown has fundamentally changed your development strategy for Queensway. Does the management team continue to kind of assess the opportunities in the market? You know, in a high-priced gold environment like this, we'll forget the last three weeks have been quite painful, but do you continue to kind of assess some options as to how you develop out the entire land package as a whole? Because there's a big exploration still, a component still to be done here, or is this just focus on the build and we worry about the rest when it comes?
- Matthew Gordon: Well, Keith, I just wanted to kind of catch up with you with regards to the press release. Obviously, there's a lot in there to chew on. I suggest people do read that. And we will catch up with you again soon, perhaps on a little bit of this drawing component and Phase 2 as well, so appreciate your time today. Thank you.
Keith Boyle – Director & CEO of New Found Gold:
Well, yes, it is the money-spinner. Queensway is and will be the cash flow generator. Let me back up and just say that we did buy the Hammerdown Gold Project, in particular for the Pine Cove Mill and tailings facilities. That was so that we could accelerate the advancement of Queensway to production, which we are now targeting towards the end of next year. We never really thought of Hammerdown as the cash flow producer for funding of Queensway. What we did, though, think about was Hammerdown is ramping up, will be in commercial production next half of this year. What we saw when we announced our PEA earlier this year was a run rate of 20,000 to 25,000 ounces a year at CAD 2,500 all-in sustaining. That’s a CAD 40 million to CAD 50 million a year cash flow generator, which for us was it will pay the G&A and it will pay exploration.
So, basically a self-funded exploration program. And then, that’s why we went and raised the CAD 220 million to then put Queensway into production.
Matthew Gordon: Just sticking with Hammerdown, if we don’t mind, you talk about commercial production. Can you define what that actually means in terms of throughput recovery, grade profitability, et, cetera?
Keith Boyle – Director & CEO of New Found Gold:
Well, commercial production, there’s lots of different definitions, and it’s really retrospective. Once you’ve achieved it, you then say you’ve done it. And so, for us in particular, it’s really hitting our mill rate in the PEA. We have 700 tonnes a day, the recoveries in the high 80s, and as well the consistent grade from the mine. And because of it being a narrow vein deposit, grade control is what’s critical. And the team that we’ve built on site has done a great job. And we’re just now getting into, what I would call, getting close to that steady state, where we’re able to generate enough material to send to the mill consistently. And it’s really because, when you’re ramping up an open-pit you start with a hill. And as you reduce the size of the hill, you’ve got to establish that floor, so that it then becomes consistent. And we’re almost at that point now, which is why we say, that’ll be the commercial production tick.
Matthew Gordon: Again, I’m reacting to the press release, because it was quite detailed and kind of fulsome and a lot of moving parts here. I could sit and talk to you about grade control reconciliation and throughput and mill performance, et, cetera. But the thing which I’m sort of struck by is the kind of building up of the team. We always talk about transition from explorer into producer. Building up of this team, building up of the, not just management team, I’m talking about operational team on the ground. Can you sort of talk to that as part of the kind of mining preparedness, et, cetera, that you’re looking at?
Keith Boyle – Director & CEO of New Found Gold:
So, at Hammerdown, we built a really good team, operational team, starting with, of course, Rob Assabgui, our COO. But more importantly, our mine manager, Mark Ross, who was at Queensway prior, because he is a Newfoundlander. He’s from Springdale, and so he came on board with the view of being part of our growth.
So, he went over to Hammerdown, became the mine manager and has done a great job in this ramp up period. And we’ve recently promoted him to General Manager of Mines, because we want somebody to now take what they’ve learnt and move it over to the Queensway development. And similarly, the procedures for grade control and grade control drilling and mining, that too will be brought over with Mark and some of the team.
So, it’s really using Hammerdown to lever in an understanding, because as a new company, all this stuff is brand new, whether you get a bunch of experienced people together, you all kind of learn something new together. And so, by doing it on Hammerdown first, we’re really going to hit the ground running at Queensway.
Matthew Gordon: I appreciate what you’re saying in terms of hiring and appointing key personnel, which is obviously important to you. But there’s some big numbers in there in terms of the additional personnel on the ground, in terms of new personnel on the ground, as part of this kind of build team. Can you talk to what’s that looking like on the ground, and when does that all kind of come together?
Keith Boyle – Director & CEO of New Found Gold:
Well, we hired 50 new people by the end of the second quarter. And really, it was over 90% of those new jobs were from Newfoundland and Labrador. And so, right now, we’re really focused on having people that can drive back and forth. We’ve got a total workforce of 264 people, 76 of them are our employees and 188 contractors. But that contractor, he’s local to Hammerdown, actually local to Hammerdown Mine, so we’re all the employees drive in and out of King’s Point and Springdale and other small communities within an hour there. So, we’re quite proud of having built that team, and we’re getting ready to start ramping up Queensway as soon as we get through our permitting.
Matthew Gordon: Obviously, it’s hard to kind of focus in on this. I just think it’s the difference between- it talks about on paper and the reality on the ground. Because, when you picked up the mill, you were looking for operational efficiencies. You weren’t rushing into perhaps you’re picking up where the previous company left off. Likewise, with the people here, you’re talking about them eventually, potentially, going on and getting Queensway up and running. But when you look to this sort of training process and this onboarding of all these new people, how long does that take? What’s it involve? And, again, what’s it actually look like on a day-to-day basis?
Keith Boyle – Director & CEO of New Found Gold:
Well, I’ll back up to when the previous company, I’ll say, promoted Hammerdown, the Mine as being very close to production. And when we took over, we said, hang on, it takes a bit longer than that. Having had that experience a few times, it takes a bit longer to build up a team and have them learn the deposit. So, that’s why we said it was going to take this first half of the year to get up to speed and learn these things and fill the team out. And so, like I said, we are just finishing actually the hiring of people this quarter to round out the entire team. And then, we’ll be able to, like I said, move on to Queensway, but with those learnings that we’ll have done at Hammerdown.
Matthew Gordon: I was trying to remind investors that, when companies kind of ramp up to nameplate capacity, it’s not necessarily all hardware. It’s the people involved as well. In terms of the senior management, have you appointed everyone that you need to appoint now, certainly for obviously Hammerdown initially, but also moving on to Queensway quite quickly?
Keith Boyle – Director & CEO of New Found Gold:
Well, at Queensway, now we’ve appointed Mark as the General Manager of Mine. So, he’ll look after both, Hammerdown and Queensway. They’re small open pits. And like I said, it was really getting the team at Hammerdown up and running. Now, his job is to build the team at Queensway with the knowledge that we can then pull from what we’ve learned at Hammerdown and not have to start from zero, and that will take us into probably the fourth quarter, I would say, where we will then be able to start some early works. We’re anticipating, getting through the permitting and having our early works permit in and around that time.
Matthew Gordon: How much of that work is obviously continuing to optimize what you bought? Because, obviously, there’s a bit of an outlay for that. There’s expectations, you kind of rush on into it. But you saw some opportunities to optimize, obviously, around the economics ultimately. What does that look like?
Keith Boyle – Director & CEO of New Found Gold:
I think, I understand what you’re trying to ask. In our PEA of last year, we showed Phase 1 at Queensway, where we have a CapEx of CAD 155 million to get to production. A couple of things we did change from that scope was firstly, that we’ve decided to expand the Pine Cove Mill. So, double the size of it to accept Queensway and really accelerate the permitting timeframe or the ability to process Queensway.
And then the second thing was, we were going to buy our own fleet of equipment at Queensway instead of contract mining. And having learned what we learned at Hammerdown, we’re better off to just start with a contract miner, get that bugs worked out, and then we can bring a fleet of equipment and hire our own people. So those were the two things, and we’re right now in the midst of updating our capital cost, but it’s within the range of what PEA had mentioned. And like people saw in April, we raised CAD 220 million in order to execute on Queensway Phase 1, get to production end of ‘27.
Matthew Gordon: Okay. So I want to be clear. You’ve practically doubled the mill performance, the mill throughput, I should say. Is that going to be sustained at these increased rates, or is that something that you still need to do some work on?
Keith Boyle – Director & CEO of New Found Gold:
So, Pine Cove, currently planned for 700 tonnes a day that Hammerdown is feeding it. We as part of the CapEx that we’ll be spending over the next year-and-a-half call it, is the CapEx to double the size of Pine Cove. So, we have to actually execute on that, and that is required to then accept the Queensway ore at 700 tonnes a day also and we’re fully funded to get there.
Matthew Gordon: In terms of how the kind of money flows, because obviously, you kind of picked up a big exploration play, you’ve made this acquisition. But just again, remind us of the kind of sequencing that you have done. Obviously, this acquisition is a big part of that to kind of unleash the potential of Queensway. Can you talk actual dollar terms, what it means for Hammerdown?
Keith Boyle – Director & CEO of New Found Gold:
As I mentioned, Hammerdown, a 20,000 to 25,000 ounce a year producer, somewhere in the CAD 2,500 range. In the PEA, we saw the first three years of production at Queensway Phase 1, in that 70,000 to 80,000 ounce a year level. Fortunately, for the first couple of years, we’re going to be processing higher grades in the 12 to 12.5 gram a tonne range. And that’s targeting more of the 100,000 ounces. So, for the first couple of years, we’re targeting about 100,000 ounces a year at CAD 1,300 all-in sustaining. So, at today’s price of gold, even the reduction of that price, we’re in the neighborhood of CAD 300 million.
Matthew Gordon: Which then leads on to , what does that look like for the company as a whole?
Keith Boyle – Director & CEO of New Found Gold:
Well, then as the company as a whole, then what we’ll do is use that cash flow to expand Queensway, build a mill at Queensway, a larger mill, and targeting the 150,000 to 175,000 ounces a year at Queensway. So that we combined as a company start approaching or targeting that 200,000 ounces a year and really be a significant player in the gold market.
Matthew Gordon: Obviously, that Hammerdown has fundamentally changed your development strategy for Queensway. Does the management team continue to kind of assess the opportunities in the market? You know, in a high-priced gold environment like this, we’ll forget the last three weeks have been quite painful, but do you continue to kind of assess some options as to how you develop out the entire land package as a whole? Because there’s a big exploration still, a component still to be done here, or is this just focus on the build and we worry about the rest when it comes?
Keith Boyle – Director & CEO of New Found Gold:
No. We did announce a few days ago, last week. We did announce that we were expanding our drill program to start testing the number of targets we have on the property. Remember now, we’ve got a property that’s 110 kilometers long. That’s the size of the Abitibi. The Abitibi generated or has generated over 70 million ounces, a total endowment of what? 113 million, I think, to-date mined and what’s still there. I’m not saying that that’s what we have, but that’s the scale of property that we have, and we’ve got some really good targets to follow up on.
Our historical cost is just under CAD 100 an ounce discovery. So, when you look at some of the M&A deals that are getting done now, we’re better off to turn the drill bit and find our own ounces. And that’s what we signaled to the market just last week, that that’s what we’re going to do under Melissa Render’s guidance, who’s been the one that’s helped us find the ounces so far.
Matthew Gordon: Well, Keith, I just wanted to kind of catch up with you with regards to the press release. Obviously, there’s a lot in there to chew on. I suggest people do read that. And we will catch up with you again soon, perhaps on a little bit of this drawing component and Phase 2 as well, so appreciate your time today. Thank you.
Keith Boyle – Director & CEO of New Found Gold:
Thanks for having me.
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