Interview with Peter Gianulis, CEO of Allegiant Gold (TSX-V: AUAU)
Allegiant Gold is a gold exploration play in North America; specifically, Nevada, Utah, Arizona and New Mexico. Allegiant Gold owns 100% of 10 'drill-ready' gold projects in the U.S, 7 of them in Nevada. Allegiant Gold's flagship Eastside project is the main focus. The company's Bolo project has provided it with some degree of income, leaving the company with around US$500,000. 6 other projects with discovery potential have been drilled since April 2018, and several more are planned for drilling.
What are the 5 key parts of Allegiant Gold's philosophy?
1.) Focus - If you have something promising, focus all of your energy and capital on it; farm out the rest to get cash flow coming through the door.
2.) Keep a low G&A/cash flow burn on the company. Farming out projects helps with this.
3.) Accretive dilution. Even the utterance of dilution can give gold investors nightmares, but Gianulis claims Allegiant Gold's plans minimise dilution, even if it means doing nothing in the short term.
4.) Jurisdiction. There is no doubt that North America is a superb jurisdiction for gold companies, especially in comparison to Latin America.
5.) Having skin in the game. Having management buying shares and holding a large ownership position. This is proven by large insider buying in the last few years.
Gianulis has been in the hot seat for just 6 months, but has been at Allegiant Gold for around 12 years. The rest of the management team appears to have decent gold mining credentials.
The share price has been largely stagnant, even before COVID-19 grabbed the mining sector into a stranglehold. What are the numbers saying? Cash in marketable securities? US$500,000-600,000. Allegiant Gold obviously needs to go to market before doing anything meaningful, but nearly every gold explorer we have spoken to is in the same boat. Capital is extremely expensive and hard to come by right now. How will Allegiant Gold stand out from its gold peers? Gianulis claims Allegiant Gold is positioned with a much lower risk profile than most explorers: the company has a confirmed large and open resource in a safe jurisdiction. The early-stage metallurgy is solid, and Allegiant Gold has a 1.2Moz resource base to expand. Allegiant Gold still carries exploration risk, but considerably less than other exploration companies that have no idea what they have.
Gianulis claims the resource is extremely economical, even in a lower gold price environment of US$1550/oz. However, he was unable to state a total number of ounces for the potential of Eastside. Investors will make of that what they will. The overhead, minus land holding costs, is currently US$30,000-35,000 per month. Allegiant Gold earns US$550,000 per annum on its farm-out projects. This could be critical if Allegiant Gold wants to hold off on raising expensive capital for the time being. Gianulis claims the money is currently being spent on permitting and studies. We hear this a lot but would like to know much more detail; it's investor money after all.
Gold investors will be hoping for some catalyst moments in 2020 for Allegiant Gold, but this is going to be very difficult while COVID-19 is this obstructive. It will all depend on how effectively Allegiant Gold deploys its small amount of capital, how well it can continue to develop Eastside, and how well it can market itself to investors whose sentiment has been obliterated.
In terms of remuneration, Gianulis claims a "very small" salary of US$7000/month. That's not too bad for stagnancy, but he needs to start pushing the share price up soon or investors will be restless.
Company page: https://www.allegiantgold.com/
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