Maurice Jackson: Joining us for conversation is Tim Johnson, the president and CEO of Granite Creek Copper Ltd. (GCX:TSX.V). Pleasure to be speaking with you today regarding the value proposition before us in Granite Creek Copper. Before we delve into project specifics, Mr. Johnson, please introduce us to Granite Creek Copper and what is the opportunity you present to the market?
Tim Johnson: Granite Creek Copper is a member of the Metallic Group of Companies; that's a group that identifies what we see as undervalued opportunities. In Granite Creek Copper's case we've acquired a large brownfields land position in the Minto Copper Belt in Yukon, Canada. It's a type of thing that you can acquire at the low part of the market, which we think we are for copper, and we only see upside from here. We have assembled a team of professionals who can advance a project and we've acquired a significant land position.
Maurice Jackson: Take us to the Minto Copper Belt and provide us with some historical context on the region.
Tim Johnson: Well, it's an interesting region. At one time it was held by a single junior mining company, United Keno Hill Mines. It did quite a bit of exploration in the belt. It was part of the discovery of the two major deposits in the belt, which one of them is now in operation, the Minto Mine, that was recently purchased by Pembridge. And the other one is the Carmacks Copper Project that is held by Copper North.
Granite Creek Copper sits right between them. Our ground, even though was held by this group, hasn't seen any significant exploration since the early 1980s. So we were able to acquire a really unique property that wouldn't normally have been available.
Maurice Jackson: To really appreciate the opportunity before us in the Stu Copper Project, which is your flagship project, share with us some of the resources and reserves from the Minto mines and the Carmacks deposit.
Tim Johnson: The most important number, in our context regarding the Minto Mine, is 3.9 million tonnes Proven and Probable. And the significance of that is that provides them roughly a four-year mine life with their current reserves. They do have some resources that they could probably convert, but we see them potentially running out of ore fairly shortly.
And then to the south of us, right adjacent to us, is the Carmacks Project and, again, they have a small deposit. They've got about a seven-year mine life as contemplated by a 2016 PEA. We don't see that as being big enough. So we are strategically positioned very well to potentially provide mill feed for two mines, one to the north of us and one to the south. The one north of us is within about 25 kilometers, and the one to the south of us is right adjacent to our claim boundary. So any success that we have, we have potential partners to look at things. So we view both scenarios favorably.
Maurice Jackson: The Yukon is attracting a lot of investment. Who is investing there and why?
Tim Johnson: The majors in the past few years have taken another look at the Yukon. Newmont Goldcorp is in there in some of the gold spaces, Coeur Mining is in there and I think what you're going to see over the coming years is more interest in the Yukon. I mean one of the reasons for that, it's a great jurisdiction to work, they’re very forward thinking, they're inviting investment. The Yukon government is one of the promoters of the mining industry itself, and they spend a lot of time and resources to try attract investment in into the region.
Maurice Jackson: There are some strategic advantages that Granite Creek Copper has over its peers that are exploring for copper with regards to brownfields exploration. They're very important to know for our audience here, please share them with us.
Tim Johnson: We feel, and this is the philosophy of the Metallic Group itself, that we've acquired a land position that if a major was where we are in the copper space, they would have acquired it. So, if a major held the Minto Mine, for instance, we have the ground that they would be looking to acquire to expand their resource. That's not the case here. In fact, there are three different juniors, one that's got an operating mine, and one in near-term production and ourselves within a space that you would really see a major consolidate at some point.
And we think that one of our major advantages is that as we develop resources and our neighbors to the north and south, we think at some point there's going to be a critical pound in the ground number that's going to attract the big companies, the big copper companies, that are going to have to take a look at the belt.
Maurice Jackson: Mr. Johnson, introduces to your flagship, Stu Copper Project, and share some of the project highlights with us.
Tim Johnson: After we acquired the Stu Copper Project, we also acquired a historical database that was developed by the previous company, United Keno Hill Mines that I mentioned before. We've done some compilation work on that database and we've also signed datasharing agreements with our neighbor to the south. And by consolidating that data we're starting to get some new, interesting ideas about our project. We recently completed a soil compilation that identified four significant multi-kilometer targets, and that was without putting any boots on the ground.
That was just taking the old data, getting it into modern GIS software and reviewing what we had. We've acquired over 5,000 soil samples, historical, most of them copper. So a lot of the work that we're doing now is having to look at that, going back in, doing multi-element sampling just to see if the gold and the silver that we know is in the system can be advanced along with copper. Historically, there are some significant high-grade drill intercepts in the order of 2% to 2.5% copper, as high as 3% copper over 13, 14 meter intercepts. So not long, but significant grade.
Maurice Jackson: Granite Creek Copper has a database of historical data including drilling, trenching, geophysics and geochemical sampling. From those results, what makes Granite Creek Copper confident that they have the next major copper discovery in the Yukon?
Tim Johnson: Our compilation work has shown some significant multi-element targets. We are currently doing geophysics work to focus those targets and identify high priority drill targets. We know, based on the work of other operators in the belt, that a certain type of geophysics, induced polarity, that we're using works quite well. We're using known technology and we're compiling known data and developing new targets. So, we think we've got a really good chance of developing significant resources, either for our neighbors to the south, or our neighbors to the north, or even a standalone operation should we develop enough.
Maurice Jackson: What can you share with us regarding soil anomalies?
Tim Johnson: Our recent compilation effort showed four large regional targets. One of them was new to us; it was in the data, but not obvious because different operators had held it in different broken up land ownerships over the years. Once we started to compile the data and realize where the data was in reference to the claim boundaries, we were able to actually develop a significant new target, our northeast target, as well as ones that are close to our southern claim boundary with Copper North.
Maurice Jackson: Now you somewhat addressed my next question, which was a two-fold question, which is have you identified drill targets and are you actively drilling there now?
Tim Johnson: We're not actually drilling now, and when we acquired the property there were actually some pretty good drill targets from previous operators. However, we felt that a compilation effort, a review of the data and really wrapping our heads around what we had, before we rushed to drill, was the best approach. I think a lot of juniors, they rushed to drill to try and show what they've got, and I think that can be very dangerous. We're comfortable with the compilation that we're doing and the ground work that we're doing this year to develop drill targets to be drilled as soon as we can next season.
Maurice Jackson: Let's discuss some important topics germane to the project, beginning with reversionary interest. Are there any on the project?
Tim Johnson: There is a net smelter return on the project, other than the NSR we hold a 100% interest. It was acquired for stock. When we did the acquisition, Granite Creek had been a shell and we cleaned it up, put new management in place, and acquired this project. So other than the NSR, we have no obligations other than maintaining the claims in good standing by doing sufficient work on them on an annual basis.
Maurice Jackson: We're going to get into some numbers later in this discussion, but from a capital expenditure standpoint, what is your largest expense, and at what cost?
Tim Johnson: Well, our largest expense will be drilling. You know, we envision a $1.5 to $2 million drill program next season. Our current exploration is in the $200k to $300k range and we expect that to develop significant targets for us for next season's drilling program.
Maurice Jackson: Are you fully permitted?
Tim Johnson: We are fully permitted on about half the claim block, the southern half of the claim block. The northern half permits are underway. They're with the Yukon government now. We don't see a lot of problems getting the permit to the stage that we need for exploration. And then, as we move towards development, there's another permitting process to go through.
Maurice Jackson: We've discussed the good, let's address the bad. What can go wrong and what is your action plan to mitigate that wrong?
Tim Johnson: I think the biggest risk for us and our shareholders this time is the near-term price of copper. We see a little bit of weakness right now, but we don't think that's long term. We think in a 6 to 12 month timeframe that's going to turn around. We see significant shortfalls in the copper market moving forward. So, we think that's the biggest risk.
A possible mitigation would be look to another project, but we're quite happy with the one we have; this is going to continue to be our flagship project. If the copper prices continue to stay soft, we will look at reducing our expenditures to preserve capital, but, long term this is where we want to be.
Maurice Jackson: Switching gears, let's discuss the people responsible for increasing shareholder value. Mr. Johnson, please introduce us to your board of directors.
Tim Johnson: As president and CEO and director of the company, my background is logistics and project management. I've been in the public company space for almost 10 years now. Prior to that I ran a service company that had large projects in northern British Columbia, so I'm good at keeping things on track and on budget. Mike Rowley is also a director. He is president, CEO of Group Ten Metals and part of the Metallic Group. He's been in a public space for about the same time, 10 to 12 years. He's focused on his company, but also provides critical advice.
Another director of ours is John Cumming. John is a securities lawyer who's been practicing in Vancouver for a very long time. And the last director is Francois Lalonde. Francois is an investor and businessman, an engineer. He lives in Montreal and provides us access to some of our potential investors there. So we've got a pretty well-rounded board.
In addition to that, because we are part of the Metallic Group of Companies, we access personnel such as Greg Johnson, who has a track record of taking resources and expanding and developing them. He is ex Novagold, and the CEO of Metallic Minerals, and we have access to some of his compatriots who were involved in that operation and many others. And, because of our association with the Metallic Group, we share geologists and geophysicists and professionals that we don't have to pay their full salary because they're spread amongst the group. So, the group is an opportunity for us to cost save and to access some of the personnel that we normally wouldn't be able to, with a company our size.
Maurice Jackson: Well, good stewards of capital. Always good to hear. Who is on your management team and what skill sets do they bring to Granite Creek Copper?
Tim Johnson: Our management team includes individuals who were formally part of Metallic Minerals and when we formed the Metallic Group, we accessed them. So our geologist, Debbie James, does a lot of work for us. Scott Petsel does a lot of work for us. Again, these are individuals who have experience developing resources, taking small, underdeveloped resources and expanding them. We also have personnel with Debbie, including Lauren Blackburn, who have extensive experience in the Yukon, understand the Yukon geology and the ways of working with the Yukon government and local First Nations as, well.
Maurice Jackson: Let's get into some numbers. Please share the capital structure for Granite Creek Copper.
Tim Johnson: We've got 35.7 million shares issued and outstanding, fully diluted 68 million. Roughly 37% to 38% of that is held by insiders and other people close to the company. So, we're fairly tightly held, and with a significant holding of the insiders.
Maurice Jackson: How much debt do you have?
Tim Johnson: We have no debt. We're currently about $700,000 cash positive.
Maurice Jackson: What is your burn rate?
Tim Johnson: Our burn rate is about $20,000 a month.
Maurice Jackson: Are there any redundant assets on the books that we should know about?
Tim Johnson: No, there are not.
Maurice Jackson: Are there any change of control fees and if yes, what is the compensation?
Tim Johnson: The change of control fees to the CEO is six months' salary.
Maurice Jackson: Is management charging a consulting fee for any services?
Tim Johnson: Other than the CEO, I draw a salary, there's no other management charges to the company.
Maurice Jackson: In closing, multi-layer question, what is the next unanswered question for Granite Creek Copper? When can we expect the response? And what determines success?
Tim Johnson: Big question is when do we drill? That is going to depend on the current ground programs going on, geophysics and soils, and of course the weather. We will likely have to do another raise in order to fund that drill program. But that's the next question that we're looking at.
Maurice Jackson: What keeps you up at night that we don't know about?
Tim Johnson: I think the markets, really. Where copper is going, how long we're going to see these slightly depressed prices and when we're going to see a turnaround. We rely heavily on where copper price is going and the perception of the market.
Maurice Jackson: Mr. Johnson, last question. What did I forget to ask?
Tim Johnson: Well, I don't know that you've got to ask it more like I forgot to mention it. What I forgot to mention is the nature of the two projects to the south and to the north of us. To the south of us, the Carmacks Project is an oxide copper project. To the north of us, the Minto Mine is a sulphide mine. The significance of this is that one mill can't process the other's material. We know that there's some limited oxide at Minto and we know that there is some limited sulfide at Carmax, and we have both.
So, we could potentially see a scenario where trucks were shipping both ways. It would be picking up sulphide material from us delivering it to the mine to the north. Picking up oxide material from them, maybe some more from us, and delivering it to the mind to the south. So, the belt is really a significant consolidation potential with an oxide mill in the south, potentially, and a sulfide mill to the north and us in the middle. We think that's a great scenario.
Maurice Jackson: And how does grade fit into the narrative?
Tim Johnson: This is some of the highest-grade copper in Western Canada, at Minto and potentially on our ground, and even the oxide resource to the south. So even though the tonnages are quite a bit smaller here than you would see, say, for a big porphyry system, the grade makes up the difference.
Maurice Jackson: Mr. Johnson, for someone listening that wants to get more information about Granite Creek Copper, please share the website address.
Tim Johnson: www.gcxcopper.com.
Maurice Jackson: For direct inquiries, call (604) 235-1982 or you may email [email protected]. Granite Creek Copper trades on the (TSX.V: GCX).
Before you make your next bouillon purchase, make sure you call me. I'm a licensed representative for Miles Franklin, precious metals investments, where we provided a number of options to expand your precious metals portfolio, from physical delivery, offshore depositories, precious metal IRAs, and private blockchain distributed ledger technology. Call me directly at (855) 505-1900 or you may email [email protected].
Finally, please subscribe to provenandprobable.com for Mining Insights and Bullion Sales.
Tim Johnson of Granite Creek Copper, thank you for joining us today on Proven and Probable.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.[NLINSERT]
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Granite Creek Copper. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Granite Creek Copper is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Metallic Group of Companies, Group Ten Metals, Metallic Minerals and Granite Creek Copper. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Metallic Group of Companies, Group Ten Metals, Metallic Minerals and Granite Creek Copper. Please click here for more information.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Group Ten Metals, Metallic Minerals, Granite Creek Copper, Coeur Mining and Newmont Goldcorp, companies mentioned in this article.
Proven and Probable LLC receives financial compensation from its sponsors. The compensation is used is to fund both sponsor-specific activities and general report activities, website, and general and administrative costs. Sponsor-specific activities may include aggregating content and publishing that content on the Proven and Probable website, creating and maintaining company landing pages, interviewing key management, posting a banner/billboard, and/or issuing press releases. The fees also cover the costs for Proven and Probable to publish sector-specific information on our site, and also to create content by interviewing experts in the sector. Monthly sponsorship fees range from $1,000 to $4,000 per month. Proven and Probable LLC does accept stock for payment of sponsorship fees. Sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. You should not make any decision, financial, investments, trading or otherwise, based on any of the information presented on this forum without undertaking independent due diligence and consultation with a professional broker or competent financial advisor. You understand that you are using any and all Information available on or through this forum at your own risk.
Images provided by the author.