49 Metals is an Australian-listed explorer whose flagship is the Gold Mountain project, a low sulphidation epithermal gold and silver system about 5 km southwest of Tonopah, Nevada, in the Walker Lane. The company is earning up to a 75% leasehold interest and has two earlier stage projects nearby, Sinter and Buffalo Canyon, both currently on the back burner. In this interview, I asked the CEO about the results of the maiden 7,500 m RC program, what the newly found high grade zone means for targeting, the treasury and earn in obligations, and the risks around continuity and dilution.
TL;DR
They drilled 22 holes, have assays back for 16, and hit what they believe is a structurally controlled feeder zone in hole 9 (27 m at 8.3 g/t gold) and again in hole 16, roughly 40 m apart, which is the entire basis for the change in thesis from broad low grade oxide to a high grade corridor inside a larger system. Five or six holes are still at the lab and Carter said he expects those back within about two weeks. There is A$6.8 million in the bank against a market cap of roughly A$7.8 million, so the stock is trading close to cash, which he attributes to a weak Australian junior market rather than anything company specific. He was clear that no resource comes before follow up drilling, which is planned for Q4 of this year, and that a JORC resource is a next year story at the earliest. He also confirmed they will need to raise capital before completing the US$4 million earn in spend, but not for roughly another year.
What have they done for shareholders lately?
They completed their maiden 7,500 m RC program, 22 holes in total, and got back what he says are the strongest intercepts in the project’s history, headlined by 27 m at 8.3 g/t gold. He said the geochemistry in that intercept was completely different from anything else on the property, with elevated levels across most elements, which is why they read it as a feeder structure rather than another isolated gold occurrence. They also drilled the deepest hole on the project to date. Separately, they are working through the historic data in the background to see whether the non JORC oxide resource (just under 500,000 oz at roughly 0.5 g/t) can be brought to JORC standard, and a couple of holes from this program clipped the edge of that resource and should add ounces. Bottle roll tests are running on some of the current assays. I asked what they learned from the old operators and he said the useful part was the logging, which points to gold sitting at the contact between the Oddie Rhyolite and the underlying tuff, something he says was not documented before and is now driving targeting.
How much money do they have and what are they spending it on?
They had A$6.8 million at the end of last quarter, against roughly 82.5 million shares out and a market cap of about A$7.8 million, so essentially trading at cash. That money came from the A$10 million IPO at 20 cents, which closed in late February with trading starting 31 March. No warrants, which is the Australian structure, but roughly 5 million unlisted options and 6.7 million rights are outstanding. Carter said they are fully funded for the next drill program and probably the one after, depending on size, and do not need money any time soon. Spending priority is clearly the drill bit at Gold Mountain, with Sinter and Buffalo Canyon getting little to nothing in the near term. On overhead, he said marketing is deliberately restrained and corporate costs are low, with a shared office in Subiaco. On the earn in, they need to spend US$4 million to reach 51% within four years, then complete a PEA or PFS level study to get to 75%. He acknowledged that the Australian dollar to US dollar exchange rate means the current treasury will not cover the full US$4 million, so a raise is coming, likely around this time next year or shortly after.
Upcoming catalysts
On the technical side, the five or six outstanding assays are expected back within roughly two weeks, followed by a release, and then a broader interpretive release summarising all drilling to date and what management thinks the system is. There is also possible metallurgical data from bottle roll tests, and work in the background on converting the historic oxide resource to JORC, which he said would not produce a resource statement before next year. Operationally, the next drill program is targeted for Q4 this year, smaller but more focused, with hole count, metres and whether to use diamond or RC still being decided internally, and no permitting delay expected since most of the ground is patented. On the corporate side, management is considering whether to publish a formal exploration target, but Carter would not commit to it. He also flagged that a takeover approach is a real possibility if the assays keep confirming the thesis, though he thinks there is more work to do first.
Risks in the next months
The near term risk is that the pending assays do not confirm the feeder zone, since the whole rerating case rests on two intercepts about 40 m apart and he was upfront that you cannot tell visually with gold and he does not want to speculate. He also said the system has been overprinted more than once and is structurally complex, so continuity along strike, at depth and in true width is the core geological unknown. Holes 10 and 11 already failed to extend structures at depth, which is a reminder of how quickly the picture can change. Financially, the stock trading at roughly cash while a raise is required before completing the US$4 million earn in means dilution risk at a low price if the market does not cooperate, and he pointed to a weak Australian junior market, a softer gold price and local tax changes as things outside his control. Water access in Nevada was raised and he said it is not an issue yet but would become one at development stage. On timing, the earn in has a four year clock, and he said they would stop spending rather than drill for the sake of it if the results do not justify it.
49 Metals CEO Interview
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