Letter from the CEO

The more I visit Jim and the team at our Laiva Gold mine in Central Finland, the more convinced I become that Laiva Gold has the potential to be a $1 billion company. Its size and scale makes this the largest gold mill in Europe with scope to expand from 2.2Mtpa to 3.5Mtpa. Its large gold resource is open in all directions and with an estimated AISC of around $1,400, Laiva Gold could become a very generous dividend play.

Jeremy Gray (CEO) and Jim Jackson (GM)

SRK reported 2 million ounces in its 43-101 in 2014 using an average gold price of €950 per ounce compared to todays price of €2,200. If you watch Roberto on this leapfrog session you can see the potential to double that because very little drilling has reached down more than 150 metres. Of the 3,636 holes drilled in this rich orebody since 1951, less than 5% has been actually mined and the average depth of the drilling is only 45 metres. Of the handful of 200 metre holes drilled in the past, all of them ended in mineralisation with grades seemingly improving at depth.

When you compare this to the 300-600 metre deep holes drilled at our Urucum Complex at Tucano Gold by Great Panther between 2019-21 it makes me think we probably have 3-4 million ounces at Laiva Gold. To get to that resource we would need to do a lot more drilling, although right now our preference is to pay dividends instead. In a strong gold price environment we can add more ounces by remodelling the pit with a lower cutoff to recover more tonnes and ounces to increase the mine life and ensure long term employment in the wonderful District of Raahe.  

2.2Mtpa Gold plant

In reality, we probably have nearly as many ounces as the exciting Rupert Resources (TSX : RUP) that sits 600km north from us in the Arctic Circle, with a market cap of $C760 million (but still trading well below its true intrinsic value). The big difference between us and Rupert is that we have a world class mill that is ready to switch on.  

Rupert has 2.6moz in their open pit model at an average grade of 2.2 g/t. We have 2.0moz at 1.45 g/t. Rupert plans to build a 3.5Mtpa mill (same size as our Tucano mill) which will probably cost $1 billion once it is permitted. Our Laiva Gold mill cost US$400 million to build in 2010-11 and this video link shows the early work in the summer of 2010. To build Laiva today would cost at least $500 million but take years to permit and build. Click here to see a tour of the mill with Jim.

Percy Scholtz (Mine Manager) with Jim at our CIL tanks

These big numbers compare with our current valuation of only $C42 million and hopefully gives our investors comfort that they have significant upside in this strong gold price environment. Click here to see our latest presentation which provides very conservative production forecasts on page 7.

What makes Laiva really great is that the previous operators stockpiled 3 million tonnes of low grade material next to the mill. Last week we climbed to the top of what we call “Mt Everest” and had to smile thinking there is probably $100 million of gold in this neatly stacked source of incredibly low cost gold – see our Linkedin video here. Every month the value of this stockpile goes up as the gold price rises. The other amazing thing about Laiva is that it is in Finland – the greatest country in Europe.

10 Storey enclosed shed protects operation from cold weather

We currently have 150,000 tonnes of mined material with good grade ready to process through the mill and will add another 200,000 tonnes of the low grade material to give us the first 3 months of feed to build up the gold in circuit. By the summer, we hope to take delivery of our Komatsu fleet to then start mining in the North Pit when we have 24 hour sunlight. We will not mine the South Pit this year as we will have have plenty of feed from the North Pit and the low grade stockpile.  

Plenty of near-mine drilling intercepts need to be followed up on. Within 500m of the pits, we have holes that include 5.45m @ 7.17 g/t, 3.68m @ 2.32 g/t and 18.47m @ 1.69 g/t. One area of particular interest is the area we call New Hope, sitting just 300m from the North pit. The mineralisation looks to continue from the North pit to New Hope and will be one of the areas we first focus on when exploration drilling resumes in 2025 on a small scale.

Base Camp at our “Mt Everest” 3Mt low grade stockpile

Since we acquired Laiva Gold in November 2022, the gold price has risen over $700 per ounce. When we bought Laiva, we received a lot of criticism because Europe was in the middle of an electricity crisis and gold sentiment was terrible. Today electricity prices have fallen about 95% and Finland boasts some of the cheapest power in Europe.  

If gold prices remain strong the business has the potential to make about €4 million a month when it reaches its Phase 1 production rate of 4,000 ounces a month. As we push the mill towards 6,000 tpd, our Stage 2 target is 6,000 ounces a month. Being such a large mill makes this business very leveraged to rising gold prices. This will hopefully give us plenty of optionality to distribute a significant portion of free cashflow as future dividends.

In reality Laiva Gold is arguably the joint winner as the most astute acquistion in the gold industry in recent times given we paid C$31 million for this wonderful business in November 2022. The other gold medal winner is our Mina Tucano purchase in November last year and we are really excited to restart both mines in this rising gold market. One thing for sure is that both Laiva and Tucano have a lot of gold, large mills and long mine lives that would cost well over $1 billion to build today.

We are enjoying strong interest in our Laiva Gold 80 cent round which compares with the C$12.50 a share replacement value should we try and build the business today. The 2 million ounces of gold trade at only 1% of our current valuation. With just 55 million shares fully diluted we think we will re-rate strongly when we go public in Q3’24. We have learnt from leaders in the industry that a tight share structure is the key to achieving a $C20 stock longer term.


Jeremy Gray | CEO

Jim.Jackson | General Manager

Edward.Balme | Head of IR

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