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Montage Gold

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September 17, 2024 at 11:10 AM (MDT)|Broadmoor Hotel & Resort

Martino De Ciccio

Chief Executive Officer

Martino De Ciccio has over 15 years of experience in the mining industry with a strong value creation track record and significant knowledge across strategy, capital markets, corporate finance, and ESG, coupled with a profound understanding of the African mining landscape.

Martino most recently served as Deputy CFO and Head of Investor Relations at Endeavour Mining (LSE: EDV, TSX: EDV), a position he assumed in January 2023. He joined Endeavour Mining in 2015 as Vice President, Strategy and Investor Relations. He played a pivotal role in Endeavour’s transformation from a $250 million market cap company to a FTSE100 listed company and one of the largest gold producers in the world. During this time, he garnered more than 25 investor relations achievement nominations, including numerous awards for best-in-class investor relations in the gold industry and across all sectors.

Prior to joining Endeavour, Martino played a key role in growing La Mancha Resources from a $20 million market cap which culminated in a $500 million take-private offer. As Strategy and Business Development Manager, he then helped lead the private company’s transformation from an emerging gold producer into one of the largest gold investment funds with cornerstone holdings in Evolution Mining and Endeavour, which was recognized with an Emerging Leader Award. Martino currently serves on the Board of Directors of Northisle Copper and Gold (NCX: TSXV) and Bluestone Resources (BSR: TSXV).

Martino earned a B.Com in Finance from McGill University in Montreal, Canada and is a CFA charterholder.

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

Years experience in the mining industry, the strong value creation, track record and significant knowledge across strategy, capital markets, corporate finance, ESG and Africa. Welcome Martino, thanks Don for the intro and thank you for assisting today. Just to provide a bit of update as to how we got to Montage first. So as some of, you know, I was with Endeavor for nearly 10 years. In fact, most of the team at Montage were with Endeavor for quite some time. Early last year, we're looking for what's the next opportunity? The fun part was, you know, being entrepreneurial and, and building a large company and we wanted to recreate that success with a new vehicle. So I was putting my hand up for various opportunities. Last year, met with the Lundin family that we've known for quite some time and they quickly became a parent of saying, hey, why not build a new Africa gold producer with the Lundin family? So why Africa, I mean, West Africa itself has become the largest gold producing region globally first for discoveries in the last decade. And it's really one of the only places in the world right now where you can go from first drill hole to production in less than seven years. Endeavors have found, you know, two assets that have been put into production into that time frame. So we see big value creation potential of being focused in the region of of Africa, looking at the team we brought on board. So as I mentioned, I was with Endeavor in La Mancha for nearly 18 years, Sylvia who sticks out in the audience in the nice pink suit was with me at Endeavor for nine years before that with La Mancha. So we've been working together for 13 years. when she joined La Mancha, she joined, et it had two years, mine left, left, found 8 million ounces, then found La Fi, which is now in production. And most recently, Tande Gua 4.5 million ounces. So 15 million ounces to her and her teams in 10 years in Cote d'ivoire. So we're very pleased to have her on Petr. Petr was with Endeavor for 10 years, built four mines within that span. So NMA AGB Hyundai and then, et so Petter led the due diligence process for us. So we had the ambition of creating a multi acid company, but we didn't know where to start. So, in fact, after this conference, last year, I officially resigned from Endeavor, met with Petter. We set a due diligence team and we started to scan Africa for assets. So we looked at about 20 different opportunities at various stages, early stage and production companies where you can recapitalize the, the show register, swap out the management team and use that as a base. So we're very pleased to have Petter on board. Pierre was also with Endeavor for nearly 1015 years. He was the one responsible for most of the permitting that was done in Cote d'ivoire and has been instrumental in our permitting process and constant or CFO was the regional CFO of Kinross in, in charge of Mauritania, Chile. And before that Russia, so he's Ivorian. We're building our office in IBI Jong where he's going to be based along with the finance team projects team and exploration team on our board is Ron. So Ron is the chair. he's our chairman. He's also the CEO of London gold. So the London is really putting their stamp on on Montage. Rick who was the previous CEO is on our board. So the previous team has been very supportive of the succession planning put in place here to progress, Montage, looking at our shareholder base. So Lundin is at 20% we brought Zing on board in August. Our view was we don't need another strategic at the table unless they're able to bring some sources of funding. That's better than what Montage can have access to in a stand alone basis. So they came in at 9.9 and are helping us as well on the funding side. So what they've offered is not being put in competition with, with others. We raised 35 million C ad in February when we joined. And what we said was the next rounds of financing. We do need to be for the project construction. So the best window to launch our construction is November after the rainy season and we've been running quickly to be able to achieve this timeline. So we raised 100 80 C ad so 130 us earlier this summer. and that's helping us now to start ordering long lead items and we expect to start early works in October, November time frame. So what's our goal here? Our goal is to build a multi, multi asset company focused in Africa. We're starting with a great portfolio with our K project in Cote d'ivoire, cote d'ivoire is one of the highest rated countries in Africa. It had high GDP growth is a diversified economy. They issued a bond earlier this year, double B minus, that was the highest rated bond in Africa. So we're very pleased to have a high quality asset in the top jurisdiction in Africa. Beyond this, our goal is to build an exploration pipeline and a project pipeline so that we can source organically the next project to be able to build after our Kony project. So we view, you know, the success that endeavor was between 2015 and 2020. And in that period, AG was built, Hyundai was built and et was built. And those assets initially showed profiles of 100 50,000 ounces per year. And because of the exploration success, they're now showing 300,000 ounces per year and that's what we want to replicate here a bit on our project. We're located in the northern part of Cote d'ivoire. And what's starting to be a real mining district to the south of us is Fortuna Mine Seguela to the north of us, is Tongo Barrack and singe from Perseus where we're located where three mineralized trends converge which means that there's strong geological potential in in the area. Earlier this year, there was an updated feasibility study published. So the previous one had just a Coney deposit. They then updated it for the Go Bogo deposit, which is higher grade. So what this shows is three hun 300,000 ounces of production on average over the first eight years, $1000 per ounce as E and at current go prices, an after tax return of at least 60% that's now showing to 2300 RN PV of over 2 billion with Endeavor. I got used to looking at life in four quadrants. so you know, get assets in that bottom right box plus 10 years. Mine life below industry average cost. And from a screening perspective, we saw that the K project screens quite well across mines in West Africa. So the key question I of course had was how can low grade be low cost? So when you take a look, it's 1 g per ton over the first eight years, but it's also 1 to 1 strip ratio. So what do you prefer? 1.2 g at five or 6 to 1 strip or 1 g at 1 to 1 strip? So the third column shows if you take the grams per ton moved, regardless of whether it's or or waste, it starts to screen very well, I guess against producing acids in West Africa. But it also has other factors going for it. The ore is, is soft which means that it costs you less to mine and less to process electricity costs in Cote d'ivoire is 13 cents versus over 35 cents in neighboring countries because Cote d'ivoire exports energy. So we have the benefit of low strip, low or hardness, low energy costs, but also volumes. So economies of scale on the plant size with 11 million tons. It's a large plant but it's not a large mining operation because of the low strip ratio. So all of that means that we have unit costs that are very low looking at the mind plan. So we have 16 years, mine mine life the first three years or higher over 330,000 ounces because we're blending the high grade gabon deposit with Kate because we're mining over eight years and processing over 16. That's why the production profile declines after year nine. So the opportunity that we see today is to be able to add more satellite deposits right from year one of production. So to be able to boost production in the first years to between 3 6400 ounces and to maintain at least 300,000 ounces over 10 years. So to do that, we have 35 targets that have already been identified. So we knew these tenements very well because the tenements to the north here of King used to belong to La Mancha, which became Endeavor and Ringold which became Barrack. So endeavor, Barrack formed AJ V for the tenements to the north. And as soon as the 5 million ounces were identified at K that JV was injected into Montage. So there's over 35 targets that have already been drill tested. But in de and Barrack, we're chasing million ounce plus deposits. Whereas in our, in our case, what we need is high grade smaller deposits that are closer to the plant. So we've done 30,000 m of drilling between April and July. What that drilling is showing is the potential to hi to identify and delineate resources by year end. So we expect to publish new resources by year end, we've just launched this week, a 60,000 m drill program. So 90,000 m in total, that's nearly the same amount of drilling that went into the Kate deposit. We've been moving quickly. So when we first were looking at Montage, there was really three key questions. One technical aspect. So check two, how can we get it permitted? And three the fin how, how we gonna get this finance? So we talked about the technical aspects on the permitting front. I I met the Minister of Mines before joining Montage to see what level of support there was for this project. Of course, he was thrilled with, you know, new management team, great shareholder backing and ambitions to move forward. This is a big investment for the country plus 700 million and they've been very supportive. We met the president who put Montage at the national agenda level. So long story short, we got our environmental permit awarded awarded to us in April and in July, we got the mining permit awarded to us. So compared to our base case assumption, this was at least six months ahead of schedule which has allowed us to get strategics on board quicker, get the financing done quicker and ultimately launch construction quick, more quickly. What's interesting with the permitting as you see here is that we've permitted the full area between K and Gabon. So there's a number of targets that we're currently drilling that are already in the permitted area. So our goal is to get these targets into resource mode by year end into next year, so that we can have satellites coming right from day one of production from some of these targets. So looking ahead at upcoming catalyst, we expect to publish some exploration news flow. So the drill results from the last 30,000 m program and later this year, the resources first resources from some of those targets, we expect to start early works in Q four and we expect to wrap up our financing as well by Q four. So just a word on our financing, it's been a very competitive process. We had 16 financing offers on the table as of April May after we launched a formal process and it's become even more competitive given the higher gold price environment, the lack of projects of this scale and the fact that we then raised the equity required. So we have scenarios on the table that show is being fully funded based on the equity that's already been raised this asset because of its quick payback period a year and a half at current gold prices, 6060 plus percent after tax ir it means that it can absorb a lot of leverage. So we're very careful of how we're funding our first build because as I keep telling our team, if we have to dilute ourselves by 25% more today, it means that the next project rather than finding 4 million ounces, we need to find 5 million ounces to be at the same level on a per share basis as today. And that is of course compounded after you have one, you know, 23 or four projects. So things are moving fairly quick on our side. But what we see with Montage, of course is the opportunity to create a multi acid company focused on Africa. So we're starting with a great project that we're moving quickly. And the longer term ambition is to be able to build a Greenfield projects, be able to source projects organically. And we have an in house construction team that's able to deliver and that showing that they're able to deliver on time and on budget. So with that, we still have time for some questions. Yeah, that you're right, Martina, we do have a few minutes left. So if there's any questions from the audience, please raise your hand and the microphone will be brought over to you. OK. So Martino looking at the cost of con, I mean, you've got Asic that's you know, below 900 bucks an ounce really puts you well within that lower 25% quartile. You know, and that threshold's probably moving higher over time. What, what are some of the things that Kate that contribute to that low cost. I think you had touched on the the soft door and other things if you could just kind of reiterate those sure several factors. First, low strip ratio, 1 to 1 strip ratio. So one of the lowest strip ratios in West Africa. So it's big bulk mining. The king deposit is 300 m width that that starts on surface. So it's basically you take everything as you see here and and you put it into the plant. So you don't have the risk of you know, sometimes when it's higher grade, it's narrow veins, you end up having dilution strip ratio that is erratic here. It's 1 to 1 strip ratio over the life of mine. The rock is soft so it costs you less to mine less to process energy cost is half the price in Cote d'ivoire as neighboring countries because it exports energy. and with 11 million tons per year and the plant size, you have economies of scale. So there's a number of factors. The the best way to keep those costs low is to be able to find higher quality ounces. So what we're focused on is adding resources that are over 1 g per ton, which would displace 0.5 0.6 g per ton from our king deposit. So that's how we anticipate to keep costs competitive across the life of mine, ok? And obviously, you know, you come from endeavor mining, you have a playbook of how they've realized value. One of the things I know, Ian's been talking about in presentations is how the throughput rate at Hyundai and et is, has gone up 80 90% since its original nameplate. When you have this large land package. I think I even did the math one time. It's almost half the size of Prince Edward Island. How do you size the mill appropriately? And, and you know, are you anticipating upon exploration success, maybe visibility to increase throughput in terms of land package. We have the largest land package in West Africa close to what would be a processing facility. So there's a, you know, big opportunity to add satellite deposits here in terms of sizing the plant 11 million tons is the right size based on what we have today. I would rather swap out and push out low grade material rather than looking at investing further today to further increase the plant size. Of course, the team that we have on board is the team that has built ET and Hyundai and B which have been performing, you know, day one, both, all those three plants were 20 30% above nameplate. So we would expect some similar type of of success on on our side, what we're looking to do with the flow sheet is to improve its construct ability and operability. So we've made a number of changes to the flow sheet. Specifically, we're looking to add an oxide circuit which would give us the opportunity to bypass the HPGR for oxide softer material. So right now in the mine plant, there's only 70,000 ounces of oxide, but some of the success that we're having is oxide deposits and you want to have that flexibility in your plant to be able to treat different or types. OK. And when we think about Africa, the the sentiment from generalist investors has varied. but an important distinction that you made in your presentation is that you're in Cote d'ivoire and Cote d'ivoire is different from some of the other jurisdictions that have faced some challenges. So how would you maybe persuade a generalist investor or get that message across to investors that you can't just kind of broad brush all of Africa with one stroke. But, but Cote d'ivoire has its own competitive advantages that you may benefit from correct the landscape. Of course, is very different in Cote d'ivoire versus its neighbors. Cote d'ivoire has a diversified economy which means that, you know, when the country needs money, there's many sectors in which to pull on rather than just mining and its neighbors where there's been issues. It's not a diversified economy and gold represents some of its largest, in fact, the largest export which provides, you know, puts a lot more pressure on gold mining companies when we first started in Cote d'ivoire, et was the only mine in, in operation. And today there's eight mines in the country. There's been three builds in the last three years. So, t Ato's mine for tuna's mine and endeavors mine. And now what's interesting for us is that we're the only mine to come into construction within the next few years. So it means that as well from a montage perspective, there's no risks of being able to get skilled labor in in country from a currency standpoint, the region has been very stable because it's backed by it's, it's basically pegged to the Euro with the same central bank fiscal and monetary policies tend to be well aligned within within West West Africa. And from a security perspective, there's been no issues in Cote d'ivoire. So we can go to site with with effectively no, no security escorts, which you definitely can do in some of its neighboring countries. So, I mean, there's been, you know, Cote d'ivoire is now the success story of Africa, not just West Africa. Abi itself is booming. business has been moving away from Accra and Dakar into Abi. So for any of those that you know, are looking for a holiday destination in Africa, I would urge you to go to Abdon. Thank you again. So that's Montage Gold. Thanks again, Martino. Thank you. So much.


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