Junior mineral explorers tend to rush out news of their discoveries and their resource estimates. A 43-101 Resource Estimate encourages a company’s investors and, in theory, makes it easier to raise money to continue development. But the market has to be able to hear the news.
For years, CEO Philippe Cloutier and Cartier Resources (V.ECR) have been urged to undertake a 43-101 resource estimate for their exploration work at the Chimo mine, 45 kilometers from Val d’Or. Their retail investors wanted one, their peers thought they should do one and more than a few funders wanted to see the estimate before committing funds. Cloutier resisted.
In an earlier interview with Motherlodetv.net Cloutier pointed out that once you publish a 43-101, the resource estimate it contains acts as a bit of anchor. If you report a small resource, even if you later expand that resource, that first number sticks in the market’s memory.
It is also a reflection of Cartier’s culture said Cloutier in an interview from the Beaver Creek Summit. “We’re conservative types,” said Cloutier. “Chimo Mine is a brown field project and there is a wealth of historical data which holds us to a high degree of accountability. We have to get the resource estimate right.”
All of which makes the announcement that Cartier has commissioned a 43-101 report very intriguing. Why now?
“A 43-101 gives the market a way to evaluate a company and a project,” said Cartier. “The last two years of drill results were not noticed due to unreceptive markets, now that we’re at the beginning of a bull run in gold, we think a maiden resource estimate for the project will sum up our efforts and help rerate our company.”
Cloutier has always been about shareholder return and by doing a 43-101 at this stage in what looks like a gold rally, Cartier is giving shareholders a traditional measure of the Chimo project’s resource.
The fact is that Cartier would not have initiated a 43-101 if it expected a small number for its resource. Cloutier and his team must have seen something in their results and data which suggests a decent sized resource. While Cloutier could not comment directly on what that “something” is he did say, “ I think the results of all our drilling in the last two years warrants this next step.”
By getting the work underway on the 43-101 now, Cloutier is confident that the report will be finished by the end of Q4 2019.
“We’ve had the hand brake on,” said Cloutier. “We knew that this was a project with a few “aces up its sleeve” namely proximity to infrastructure and qualified workforce as well as a wealth of historical data from past production to refer to moving forward.”
Interestingly, Cloutier sees the initial 43-101 as the beginning of a process. “This resource estimate will focus only on the central zone and not the work, which is ongoing in the north and south zones. These will be completed in 2020.”
“I see Cartier as having three pillars going forward,” said Cloutier. “First the 43-101, then adding resources as we are able to include the north and south zones and hopefully from additional drilling. The second pillar should include results stemming from various engineering studies. And finally a third pillar would include results from completion of Phase three drilling which was suspended in June this year.
Obviously, the M&A game that gets going in a positive gold market cannot be discounted “but we have limited control on that” comments the CEO of Cartier. A large or mid-tier gold producer, looking to add ounces to reserves with a low CAPEX, is likely to be interested in acquiring the Chimo mine. While the mine is currently flooded it is a lot cheaper to dewater the existing shaft than it would be to sink a new one.
“To that end we have recently built an excellent data room,” said Cloutier.
Flatteringly, Cloutier has read my book, Gold 3000 | Silver $60.
“Reading your book you have a chapter about what to look for in a junior company,” said Cloutier who has apparently memorized my list. “Activity? Lots. Stage of Development? We have discovery and we’ll have a 43-101. Infrastructure? We’re 45 kilometers from Val d’Or, good roads, power, and a 900-meter shaft with drifts already dug. Management? We’re pretty experienced. Shares Outstanding? Less than 200 million fully diluted. Call the CEO? I take every call. We tick all the boxes.”
With those boxes ticked what is the future of Cartier?
“What I liked about your book is that you say that there is tremendous leverage in junior explorers and developers in a bull run,” said Cloutier. “Which is true. For big companies like our investor Agnico Eagle to double they would have to go from about $75 a share to $150. Could happen but more than that is unlikely even in a big rally. For a little company like Cartier seeing 10x would only take us to $2.00. In a big rally that is not unrealistic. As for our downside, it is pretty minimal unless the entire market goes south.”
Cartier and Cloutier are anticipating a bull run. The announcement of the commencement of the 43-101 is highly strategic. So is the anticipated completion date of late in Q4 2019. A “respectable” 43-101 resource will be announced as the bull is beginning to run. More drill results, additions to the resources at Chimo, engineering studies – all these are calculated to give the company a steady, positive, news flow right through the second quarter of 2020.
Cloutier has been savvy enough to hold off on his 43-101 until the market is ready to hear good news. For Cartier, now is the time to reach out to retail investors with a fully worked out, brown field mining story. A year ago, no one was listening, now they are.