Interview with Alex Klenman, President & CEO of Nexus Gold Corp. (TSX-V: NXS)
"What makes you different?" It's the question we ask to gold exploration companies every single week, but it's a question we rarely receive a strong answer to. Was this interview any different?
Nexus Gold: a gold exploration and development company with multiple projects in Canada and West Africa. West Africa is a widely-discussed region as of late; investors can check out some articles from contributors on our website which outline the possibly elevated risk.
Nexus Gold has a market cap of C$5.4M and a share price of C$0.04. These are hardly big numbers, but can Nexus Gold offer the potential of exponential growth?
Let's start with the team itself. The management and geological team has a solid track record in gold exploration, discovery, and development through PEA to mining stage.
Moving into the numbers? Nexus Gold has C$500,000 in the bank today. Klenman is candid: exploration companies always walk a tightrope. Klenman puts the rapid decline in share price (from C$3.45 in Feb/17) down to a 10:1 consolidation.
He's been at the held of the company for just over 2-years, but involved for much longer, and Klenman is aware the company has had its problems. Q3/19 was the start of it, with "brutal tax losses" and traders driving the share price down. The primary gold assets are in Burkina Faso, but Klenman tried to diversify the portfolio by conducting some acquisitions in Canada; specifically, six 100% owned and controlled projects in three provinces. However, Klenman points to the reputation of Burkina Faso the reason the company has struggled. If this is the case, will investors be worried that Nexus Gold Corp. has very little control over this risk factor, and can do next to nothing to change the geopolitical situation? Klenman claims it is business as usual, but this is to be expected of an exploration company. Would a producer be more likely to be targeted? Klenman claims the large number of majors in the region serves as a reason for investors to feel more reassured.
Klenman claims there is a major difference to Nexus Gold Corp. Nexus Gold Corp. has no intention to bring assets into production. The management team will look for a buyer. They are explorers only.
Nexus Gold Corp. has spent around C$3M on its Burkina Faso assets, with multiple drill programmes, including at the flagship Bouboulou project, formerly of Roxgold. Klenman is committed to delivering a maiden gold resource at Bouboulou in 2020. Will producing a resource move the dial at all? Will the market care? Klenman says it will help solidify the value of the company.
What is the expectation for the gold grade and Resource size at Bouboulou? Klenman claims even bringing a Resource as small as 500,000oz at 1-3g/t will be enough to get majors paying attention for a potential takeout move. Will c. C$1,800 gold really allow Nexus Gold Corp. to succeed any more than other gold juniors?
In terms of liabilities, Klenman claims US$150,000 with no "hard obligations." US$150,000 isn't a lot, but relative to Nexus Gold Corp.'s cash of C$500,000, it is a meaningful sum. How will Nexus Gold go to market and convince investors to give them C$4-5M to get things moving in a decisive fashion?
Why would you choose to put your hard-earned cash into Nexus Gold Corp. as opposed to any other cut-price gold exploration company? What can Klenman do to ensure growth for shareholders other than producing a maiden resource in 2020? Comment below and we will respond.
Company page: https://nxs.gold/
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