Antler Gold CEO Christopher Drysdale said the company has decided to change its business model.
Drysdale said the approach now is to manage risk intelligently, enabling the company to pursue numerous opportunities and avoid dilution.
“We do that by doing early-stage greenfield exploration and offering it to partners. We’re not only getting the potential of short-term revenue generated in that option agreement, but we’re also getting long-term exposure through our exposure and either equities or a royalty on that asset,” Drysdale said.
He added that he hopes to be the most active greenfield exploration company in Southern Africa over the next few years.
Drysdale said Antler Gold does not want to be involved in only one major discovery but multiple significant discoveries throughout Southern Africa and retain a royalty on that property.
According to Drysdale, Antler Gold is the first company in Southern Africa to have the most active greenfield exploration team, extensive data set, and project-generating portfolio.
The new business model is to identify early-stage exploration opportunities and then do de-risking work, which includes not only early-stage exploration work but also making sure that the tenements are put in place, that the tenements have sufficient time to work and be de-risked, as well as having the environmental and other statutory requirements in place.
Once that has been implemented, Drysdale said, they will seek partners and enter an option agreement, allowing the company to move to partner-funded exploration.
“The company during that time would like to act as an operator during the first year, one that allows us to generate further income, but also, secondly, allows us to ensure that the work and the continuity of the exploration go into the ground, leading to higher success rates.
“Once we get into some exploration success, we form JVs, and depending on how we decide to move forward in that JV, we can go into the development and self-financing together with our JV partners in developing a mine, but we will always keep a royalty,” he added.
Drysdale said that royalty and a cash flow from the option agreement will allow the company to create value.
“If exploration fails due to it not stacking up from a geological sense of view, the project is terminated, and Antler will no longer have money put into it.
“If there’s exploration failure due to the option partner not following through, the project will then fall back to us, and then we have an opportunity to look for another partner,” he said.
Demonstrated potential
Drysdale said Antler Gold has managed to demonstrate the potential success of this business model and the potential that this business model will have for the shareholders in these first two quarters.
He said in February this year, Antler Gold announced that it had started our early-stage exploration program for our Paresis Gold project.
A month later, the company announced success in the peg and was awarded pending environmental clearances and further land packages within that area.
“A month later, we announced the option agreement with Fortress Capital. And that is our business model being displayed right there.
“Our option agreement with Fortress Capital was for a total cash and share consideration of in excess of five and a half million US dollars over three years and six million US dollars of project expenditure over three years,” he said.
Drysdale said Antler Gold identified an early-stage opportunity, secured the tenements and started doing early-stage grass green exploration.
“We consolidate and secure land packages, making it a district-scale opportunity that has the potential to host significant mineral deposits if they are there.
“Then, we find partners who fund the riskier exploration. During that time, we have recouped costs.
“We have allowed ourselves to maintain cash in our war chest. We are not going to the market and are doing highly diluted fundraising,” he added.
Furthermore, Drysdale said they would then turn into projects that the company could move off and sell to option partners to move along.
Antler Gold would also diversify by jurisdiction and commodity, allowing the company to act countercyclically in various commodity cycles.
“So when we can opt off our gold projects, the value generated will allow us to purchase or acquire peg projects that are not in vogue, such as potential earth or uranium projects or copper projects,” he said.
Enough projects to sell
Antler Gold recently optioned out to Fortress Asset Management the Erongo Gold Project for over US$11.5 million over three years and a 2% net smelter royalty across the project.
Drysdale said this is how the company manages its money, where it is spent to avoid overcapacitation and ensure it has enough projects to sell to move forward.
“So we must make sure that we never have more than two to four projects in each of these, from conceptual to pre-discovery, we can be efficient not only with our cash and our internal resources, but also be efficient with making these projects move through the exploration curve,” he said.
Drysdale said capital markets ability allows the company to negotiate strong deals and maintain exposure and security to secure our future potential revenue.
“But there’s also fiscal management; we look after our money and do what we say. We’re going to do it with our exploration dollars. This is in a lifestyle company.
This is an exploration company, and we’re extremely proud of it. So, it’s a rapid corporate snapshot,” he said.
