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New Found Gold – Turning Queensway Into a Gold Mine Transcript
Hello and welcome back to the Gold Newsletter channel. My name is Kai Hoffman. I’m the @JrMiningGuy over on X, and of course, your host of this channel. I’m joined in a few short seconds by Keith Boyle. He’s the President and CEO over at New Found Gold. If you don’t live under a rock, you might have heard of the company in the last few years. They’ve been impressing markets or the market with high-grade drill results in Newfoundland. Now, they’re going down the development track. They just announced a potential term sheet for US$75 million to be closed here mid-April. We’ll discuss with Keith, like, what are they using the money for, and how is the gold price impacting their business plan. Lots of questions for Keith.
Keith, it’s great to welcome you back on the program. Lots going on, not just on the metal side, but also with New Found Gold. Before we dive into some of the specifics, Keith, just give us a quick overview again.
Who is New Found Gold? – New Found Gold – Turning Queensway Into a Gold Mine Transcript
- Who is New Found Gold? - New Found Gold - Turning Queensway Into a Gold Mine Transcript
- Before we dive into specifics, just catch us up on the capital structure real quick as well. How much cash do you have right now, and how many warrants, options, and things outstanding? - New Found Gold - Turning Queensway Into a Gold Mine Transcript
- Run us a bit through, how has the business plan changed, perhaps, over the last 12 months? Also, what kind of effect did the gold price have? - New Found Gold - Turning Queensway Into a Gold Mine Transcript
- Do you have an overview of overall CapEx needed to bring Hammerdown up into production and then following Queensway? If you were to combine the CapEx, is it fair to do that?
- Run us a bit through the Queensway PEA highlights again as well. What are the KPIs and what should we be expecting from it? Has the acquisition of Maritime perhaps changed the scope a little bit as well?
- Are you planning on putting out any further studies moving forward? Do we expect a PFS to come out, because I know you're doing some more grade confirmation drilling here as well. Is that all for PFS or even FS studies here in the future?
- You're drilling with four rigs currently, is that correct? If you throw some parameters around it, how many meters are you planning to drill and all of that good stuff? What's the budget?
- What area are you most excited about for some new holds or for some wildcat drilling? - New Found Gold - Turning Queensway Into a Gold Mine Transcript
- Always good to follow along, so we can expect a frequent stream of drill results coming out of the company. How are you planning to announce those? Is there a strategy behind announcing drill results? Are you batching them? What can we expect?
- What currently makes you nervous the most there, Keith? If you were to think about the projects like Hammerdown, but also Queensway, is there anything that makes you nervous at all?
- What's your personal exit strategy here? Where do you want to take the company? What's your end goal, Keith?
- If you speak in 12 months' time, Keith, what are we going to talk about?
- What can we expect over the next three months? It sounds like there's a lot of news coming out.
Keith Boyle
New Found Gold, in the name Newfoundland, happens to have assets on the island of Newfoundland, the province of Newfoundland and Labrador. Our assets really comprise of an operating mine that we’re ramping up currently, the Hammerdown Mine, shipping or trucking its material to the Pine Cove mill, 100 kilometres away. We’re ramping up that production. We have the Queensway Project, which is our flagship project. It’s the one that has the high-grade core, and we’re on track to develop it with the targeted first production towards the end of 2027. With all of that, we’ve got a fantastic property package with lots of great targets that we will continue to explore and expand our resource base.
Kai Hoffman
Before we dive into specifics, just catch us up on the capital structure real quick as well. How much cash do you have right now, and how many warrants, options, and things outstanding? – New Found Gold – Turning Queensway Into a Gold Mine Transcript
Keith Boyle
As far as the capital structure, we’ve got 367 million shares fully diluted. Just in terms of warrants, if you want, it’s worth about $20 million to us, expiring many this year and then some again in later 2027. With cash at year-end, we had about CAD 60 million worth of cash in the bank.
Kai Hoffman
I mentioned in the intro, you used to be a discovery and exploration story, but that has changed here over the last 12 months. I think that term sheet that you’ve just signed really drives the point home.
Run us a bit through, how has the business plan changed, perhaps, over the last 12 months? Also, what kind of effect did the gold price have? – New Found Gold – Turning Queensway Into a Gold Mine Transcript
Keith Boyle
In December of 2024, there was a change at the board with a new chairman, Paul Huet, came on board. Right away, he went out looking for a new CEO. That was me. I started in January. The mandate was, let’s get the cash flow. We’ve got this great asset called Queensway, and we’ve got to take advantage of the high-grade gold that sits right at surface for us to get to cash flow and stop just the raise money, drill, raise money, drill.
What we embarked on through last year was putting out an initial resource, putting out a PEA. We raised $83 million during that period of time as well, put money in the coffers. We drilled 74,000 meters of drilling. 75% was to infill the resource and everything to do with the project, grade control drilling that we did, identifying where we would start mining that high-grade vein, as well as condemnation and geotechnical, etc. Another 25% of that drilling, however, was exploration.
We were following up on a new target that was discovered in late 2004 called Dropkick.
It had some success there with some really nice grades, so we followed that up last year and announced some of those results in the fourth quarter. Through that period, the one thing that we did identify was to get Queensway to production, we needed to find a mill that we could truck the initial ore to from a smaller mine. What we did was embark on a discussion with Maritime Resources, which culminated in the acquisition of Maritime Resources in mid-November of last year. Since mid-November, we’ve had the Pine Cove mill. We’ve also had the Nugget Pond gold circuit that is a 700-tonne-a-day gold circuit.
For us, the business plan, once we put our hands on that, now the destiny, if you will, was in our control. With the recent financing that you just mentioned, Kai, the US$75 million, or I’ll convert it to CAD 100 million just for round numbers, Canadian. That was a big step in our initial CapEx. For those that remember the PEA that we put out last year, the initial CapEx to build Phase 1 is CAD 155 million. We have that, and then we’ve got Hammerdown that’s ramping up production.
We released a few weeks back the preliminary economic assessment on the Hammerdown property as well as Pine Cove property as a whole. What was identified was that the production out of Hammerdown over the next couple of years was going to be about 50,000 ounces. 50,000 ounces at a much higher gold price, as you’ve pointed out, will generate significant cash flow upwards of in the neighborhood of $100 million per the PEA. That’s at $4,000 gold. We feel very good about the position we’re in to quickly advance Queensway.
Kai Hoffman
You got a bargain there, of course, buying Maritime, I think, with those numbers. 50,000 ounces is quite substantial, actually.
Do you have an overview of overall CapEx needed to bring Hammerdown up into production and then following Queensway? If you were to combine the CapEx, is it fair to do that?
Keith Boyle
The nice thing about Hammerdown is that, yes, there’s CapEx requirements to bring it into production. However, it’s also producing as we’re ramping it up and then into commercial production later this year. The cash flow from the operation should offset the capital that is required to be spent this year at Hammerdown.
Kai Hoffman
Run us a bit through the Queensway PEA highlights again as well. What are the KPIs and what should we be expecting from it? Has the acquisition of Maritime perhaps changed the scope a little bit as well?
Keith Boyle
The PEA, it outlined a phased approach. We were looking at starting a mine at 700 tonnes a day, focused on the high-grade core. That 700 tonnes a day, averaged over the first four years, was 9.6 grams per tonne, which would then generate about 69,000 ounces a year, averaged over those first four years. When you look at that production profile, however, the grade profile for those four years, we start the first two years at above 12 grams a tonne, and then the last two years of that Phase 1 dipped below 9 grams a tonne. That’s where it averages out at 69,000 ounces a year. The first two full years of production at Queensway Phase 1 were targeting 100,000 ounces a year, at an all-in sustaining of less than US$1,300. For that, there’s a capital cost of CAD155 million to bring that into production.
One of the aspects that we did have was, we were restarting, or we had assumed an amount of capital to restart the Nugget Pond gold facility, the gold circuit. Now that we’ve decided to move the gold circuit over to Pine Cove, and change the Pine Cove circuit over and then expand Pine Cove, that will require additional capital at the mill. However, we did assume that we were going to buy an equipment fleet and do owner mining. We’re going to go with a contract miner and not have to purchase that equipment. There’s a bit of a trade-off there, but all-in-all, the CapEx is going to come in slightly higher than the CAD 155 million, but nothing material.
Kai Hoffman
Are you planning on putting out any further studies moving forward? Do we expect a PFS to come out, because I know you’re doing some more grade confirmation drilling here as well. Is that all for PFS or even FS studies here in the future?
Keith Boyle
We’ve really focused on Phase 1, getting that to a feasibility level amount of work. However, we still have Phase 2 and Phase 3, which requires a significant amount of metallurgical test work that we’re doing this year. In order to get to a feasibility level, we still have a bit too much work to do. What we’re planning to do is, issue an updated technical report in the third quarter, which will include Phase 1, 2, and 3 again. However, the details of Phase 1 will be of a much higher quality, closer to a Fe’s level quality, if you will. That’s really on the back, as you mentioned, of the grade control drilling that we did. The results of that grade control drilling really confirmed for us the high-grade nature of the core, the consistency of the high-grade nature of the core. Over that area, that’s 60 meters long by 35 meters deep by 40 meters wide, it’s an equivalent of about a year’s worth of production. Once we start executing at Queensway, we’ll know what we’ll be doing.
Kai Hoffman
You’re drilling with four rigs currently, is that correct? If you throw some parameters around it, how many meters are you planning to drill and all of that good stuff? What’s the budget?
Keith Boyle
We drilled 74,000 meters last year. We started drilling only in May. We started with four drills, they ramped up to six, seven drills, and then we ramped back down once the winter hit, because there are areas further afield, if you will, that just takes too much work to keep the drill going. We started with four drills right at the start of the year, and we’ll be ramping up to six, seven drills again this summer.
Similarly, later fall, ramp back down. I would expect that it’ll be a higher number than 74,000 meters in the 100,000 meter range is what we’re targeting. The percentage, 60% really project-related, because we’re upgrading the Phase 2 and some of the Phase 3 inferred material, but 40% will be looking at and testing new targets on the properties.
Kai Hoffman
What area are you most excited about for some new holds or for some wildcat drilling? – New Found Gold – Turning Queensway Into a Gold Mine Transcript
Keith Boyle
No, it’s not really wildcat. We’ve got a reason to be putting a hold there. What we have is, of course, we’ll continue at Dropkick, outline an area there that’s not in the resource now, but is really shaping up to be something worthy of follow-up. Next, we’ve got lots of good targets over on the JBP fault, which is a parallel fault zone to the Appleton Fault Zone to the north.
We’re testing the Bullseye property, which is just north of our resource area. It’s an area we acquired from Exploits in the fourth quarter of last year as well. We’ll be drilling that area out along the Appleton Fault to follow up on some targets that are there. As well 65 kilometers to the south, there was an area that had been previously drilled. It looks extremely interesting that needs follow-up drilling. That’s at Queensway.
We acquired the Hammerdown and Pine Cove properties, and no exploration had been done there in many, many, many years. Maritime just didn’t have the money to focus any exploration drilling, and there are some fantastic targets there as well. Our exploration team has taken on those properties now and we’ll be looking to put a drill on there later this year.
Kai Hoffman
Always good to follow along, so we can expect a frequent stream of drill results coming out of the company. How are you planning to announce those? Is there a strategy behind announcing drill results? Are you batching them? What can we expect?
Keith Boyle
What we’d like to do is, accumulate enough from a given program that when we do release it, that we can put the context around what these results mean to the reader. There’s no strategy per se. It’s just that we could release the assays as they come, but we’d be releasing them and it wouldn’t mean anything to the reader. I think it’s most important to the investors that we put a framework and a context around the release, which is what we’ve been doing up till now.
Kai Hoffman
What currently makes you nervous the most there, Keith? If you were to think about the projects like Hammerdown, but also Queensway, is there anything that makes you nervous at all?
Keith Boyle
I’ve got so many of these experience lines that I’ve seen quite a bit. All the things that we’re seeing now are pretty typical of where we’re at. Things are unfolding pretty much the way they should. We’ve got Hammerdown that’s ramping up. It’s all about how do you mine narrow vein gold in an open pit. The poor guys at site, the struggles that they deal with every day as an operation, they’re just pretty normal in the grand scheme of things. The development at Queensway, we’re working with our EPCM contractor, WSP. They’re starting to get momentum on issuing now the procurement packages and the contract requests for the development of both, the expansion of the mill and development at Queensway. There are lots of things happening, but everything really in context of a developing company.
Kai Hoffman
What’s your personal exit strategy here? Where do you want to take the company? What’s your end goal, Keith?
Keith Boyle
There’s so much value in the drill bit to be had. We’ve got such a great exploration property that our first priority is to generate that value for shareholders. Like you say, exit strategy. Well, every company is for sale at the right price. That’s a shareholder decision. My job is to really put the best value forward, so that the shareholders maximize their return. The way to do that is get into production, get some cash flow, start that high-grade going through the mill as soon as we possibly can, and find new deposits.
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Kai Hoffman
If you speak in 12 months’ time, Keith, what are we going to talk about?
Keith Boyle
We’re going to be that much closer to Queensway going into production. We’ll have had a ramp-up of Hammerdown done, and now we’ll be at a run rate of production, so we’ll have a better sense of what Hammerdown will actually deliver. We might be sitting here talking about a new discovery that Melissa Render, our President, will have made.
Kai Hoffman
What can we expect over the next three months? It sounds like there’s a lot of news coming out.
Keith Boyle
There is. We’ll be closing on the financing that we just announced, the $75 million US debt package. We’ll be applying for our environmental assessment certificate permit in April. We’ll be amending some permits at the mill, so that we can start converting the mill over to the leach circuit and then expanding it. As well, starting to break ground, starting the construction, all followed by drill results that will be coming through the year.
Kai Hoffman
It’s still a bit of a discovery play, but it is turning into a developer. Really curious to see how the market is going to rate this story moving forward, because there’s a lot of discovery potential left, and I know that from personal experience. You wonder why I know that? Because we sold him one of our projects when I was director at Labrador Gold, so now you know. It’s been a while, and I’ve stepped off that board, what is it over 12 months ago. Thank you so much for tuning in. Take care.
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