Interview with Michael Allen, President & CEO of gold explorer, Eclipse Gold Mining (TSX-V: EGLD)
Not quite cookie cutting, but they’re definitely baking cookies…
Eclipse Gold Mining started trading in February 2019. It is a Nevada-focussed exploration play that is hoping to extract the full potential from its “left-behind” gold-silver Hercules Project.
Perhaps the most impressive thing to consider when dissecting the Eclipse Gold Mining story is the management team. The group at Eclipse Gold is responsible for 10 successful takeovers/exits that generated a total in excess of US$4,588,000,000 as well as several growth stories such as Sandstorm Gold Royalties and Equinox Gold. In one of their most impressive recent plays, in 2018, the team sold Northern Empire Resources, the company it had founded and developed, for C$117M from a C$10M outlay. If this is indeed “part 2” of the Northern Empire story, investors might have become dewy-eyed. However, each project stands on its own merits, regardless of the prestige of the management team. So, how does this Eclipse Gold Mining stack up?
What is the risk model here? Allen was keen to stress that he is a businessman above all else. As regards whether the project will be discovered for a major, explored or developed, Allen is open to all options that will return shareholder value. Does this flexibility show a lack of clarity, or is it a smart way to approach a volatile market?
The next 3 years will be all about delineating and expanding resources as the exploration phase continues. In the last year of the phase, the project will enter the engineering phase: studies and a PEA/PFS? At any time during this cycle, and if profitable, Eclipse Gold Mining will be ready to make a swift exit.
What does the project itself look like? Scale is absolutely key, and this is the centre of Eclipse Gold Mining’s marketing: scale = value. The company is looking to conduct RC drilling on 4 targets (3-4 holes per target), so it should have a resource to publish in the near future. The company has around C$5M today. Will COVID-19 affect the burn rate? Allen is acutely aware of the situation but doesn’t expect a huge impact. Eclipse Gold Mining is on course to end the year with around C$1M in the treasury. By the end of the drill program, Allen hopes the full scale of the gold resource at Hercules becomes apparent. The G&A cost is around C$1M per year.
Allen himself has put C$150,000-$200,000 into Eclipse Gold Mining, a figure he says is meaningful for him. Management owns around 45% of the company: a strong figure. In terms of remuneration, Allen remarks that it is a fairly standard compensation package and that directors were paid nothing when Eclipse Gold Mining was private. Hopefully, the team isn’t trying to make up for this, though we doubt it. We will look into the figures. The only ‘big’ shareholder is a small Canadian fund.
In terms of potential raises, Eclipse Gold Mining is readying itself for a financing whenever the opportunity arises. Allen believes the market will give credence to RC drilling numbers, though we’re not so sure.
What did you make of Michael Allen? Is Eclipse Gold Mining a gold junior you’d invest in? Are you a big fan of the Northern Empire Resources story? Comment below and we will respond.
And a FREE ‘Not A Mug’ Crux Investor mug to the first person to guess the song name and artist featured in the title of this video! (One mug per person).
2:31 – Company Overview
4:58 – Business Plan: What Type of Business are They?
9:11 – Standing Out in the Crowd: Why Choose Them Over Any Other Gold Company?
10:58 – Plans for 2020 and Company Financials: Cash Position, Plans for the Money and Burn Rate
16:01, 31:53 – The Future: Next Phases for the Business amid the Covid-19 Outbreak
21:33 – Lessons From the Past: Experiences from Northern Empire Applied to Eclipse Gold
25:35 – The Team and Company’s Background: Who’s Driving Eclipse Gold? Skin in the Game and the System of Remuneration
30:25 – Big Shareholders and Potential Raises
Company page: https://eclipsegoldmining.com/