Black Dragon Gold Corp (ASX:BDG): Interview with MD Gabriel Chiappini

 

Black Dragon Gold (ASX: BDG)

We spoke with Gabriel Chiappini, Managing Director of Black Dragon Gold (ASX: BDG), about the significant upside from the company’s 1.6 million ounce Salave Gold Project in the Asturias mining region of northwestern Spain.

Salave was the subject of a favourable Preliminary Economic Assessment in 2019 and is currently awaiting environmental approvals to proceed.

We also talked about the drilling that has just started at the Padbury Gold Project in the North Yilgarn Craton of Western Australia.

Full transcription below.

 

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Transcription

 

Stuart: Hello and welcome to “Stocks Down Under.” My name is Stuart Roberts and I’m one of the co-founders of our service. And joining me on the morning of Wednesday the 24th of May, 2023, from Perth is Mr. Gabriel Chiappini, who is one of the directors, and in fact, now managing director of Black Dragon Gold (ASX: BDG). Gabriel, good morning. It’s very early for you. It’s about 8:30 in the morning, I think.

Gabriel: Good morning, Stuart. You know, I’m an early starter, so this is, I’m already three hours into my day. So thank you for entertaining me.

Stuart: Yes. About a year ago, you stepped up to be managing director of Black Dragon Gold. I knew to pay attention at that point. You and I first met way back in 2003, when Clinical Cell Culture started to get moving. You were, I think, the company secretary and a director if I recall.

Gabriel: Yeah, I had various roles and, you know, Clinical Cell Culture was a great company, still is a great company. And, you know, as…

Stuart: As of which in medical, it’s delivered on what you and your colleagues hope it would achieve.

Gabriel: Yeah. It’s gone to a billion-plus market capitalization, you know, into the North American market, which we first tried to penetrate back in the late 2000s. Yeah, correct.

Stuart: Right, right. So, when I look down the roster of companies you’ve been involved in since either as an advisor or in any other capacity… All right. Stocks go up, stocks go down, and you look like you like the adventure of the game. But let’s talk about a few of the Black Rock Mining. Now, there’s $1 Billion worth of potential value about to break out, in that company. And full disclosure, I’m a shareholder of that one. And Gabriel, I think you still got your stock too.

Gabriel: Correct. Correct.

Stuart: Right. Okay. So, they’re just awaiting financing in the last of the uptake and the Mahenge Graphite Project will be a thing, in which case it’s gonna be a heck of a lot higher. I suspect that it is now.

Gabriel: It’s just around the corner, you’re right.

Stuart: You chaired that company for the best part of a decade if I recall.

Gabriel: Look, I was on the board, I was chairman for a little bit of that period. Richard Crookes is now chairman of Black Rock Mining. I certainly helped with this story and the growth phase, and putting the assets together, and identifying assets, and developing and building the board. And we’ve got a…you know, I still call it “we” because I’ve spent so much time there, but Black Rock has got, you know, a fantastic CEO in place and it’s in really good hands. And as you’ve mentioned, Stuart, it’s just two strokes of the pen one dealing with POSCO and Offtake, which is well underway and then funding it. And graphite’s a difficult commodity to fund because it’s not mainstream, but I have no doubt that the team will get the money to develop it. The model is really good and robust, and I’m a true believer in Black Rock Mining like you are and will continue to hold. So, onwards and upwards.

Stuart: So then there’s in Invictus Energy, we’re all waiting for the really big money to roll there, but Scott McMillan has been proved more right than wrong, in terms of the vast gas resources in Southern Zimbabwe.

Gabriel: Yeah. Look, Zimbabwe as we always say when people throw the Zimbabwe hand grenade down the corridor when we try and promote the company, is, you know, it’s a bit spicy for some people. So look, we wildcatted a well last year, and we’ve proven there’s a working petroleum system in the Cabora Bassa, which a lot of people thought was unattainable. So, we’ll have another swing at another well. And this time, you know, we think we’re gonna have an appraisal well as opposed to an expiration well. We’ll invest another $20 million to $25 million on that well, and this time the chances of encountering at work, hydrocarbon at surface and getting it as a commercial discovery, we think the chances are a lot smaller given that we spent and gathered a lot of data from the first well.

So that’s de-risked. That’s on its way to becoming, hopefully, the next oil and gas producer in Southern Africa. And there’s a dire need for power and power generation and, you know, the ability to produce either gas and/or condensate. So, you know, that is a really good play. And obviously, I’m happy to talk about Invictus, but I know we’re here to talk about Black Dragon Gold. So, I’d be delighted if you roll a few Black Dragon Gold questions my way.

Stuart: Let’s get on with Black Dragon Gold. Now, the point is Gabriel knows to pick companies with a long shelf life that generally move in the right direction. Black Dragon Gold can move a little bit faster than those two, I think. Flagship Project, the Salave Gold Project in, Asturias Region of Northern Spain, interests me a lot. You’ve got a sizable resource there. We’ve completed the environmental impact assessment and, hand on any holy book you care to name, that’s been a pretty thorough document, right?

Gabriel: Yeah, yeah. Look, I mean, you’ve done your research to it. So, yeah, look, you know, we’re patient. And Salave is so patient that the first time and the last time Gold was poured in Salave was about, you know, 2,000 years ago, and that the folks that were pouring the gold had Roman sandals on and had centurions at the front of their cavalry. And unfortunately, that was the last time gold was dug up and poured out of, you know, Salave. So, it’s a story that’s been 2000 years in the making. And I hate to sort of, you know, put throwaway lines, but we think we are the next producers of gold at Salave in Asturias in Northern Spain. It’s a mining jurisdiction.

A lot of work has gone into it. Black Dragon Gold is the ninth owner of Salave Gold. It’s had some illustrious owners, including Rio Tinto, Anglo American, Rio Narcea. The previous owners were a group called Asturias Gold, and that they acquired the asset out the Lundin Group out of Canada. So the Canadians were the prior, the most recent owners before the current incarnation, which is Black Dragon Gold. And, you know, you are correct. We’re at the sort of final stages of getting the project permitted, which would unlock, you know, tremendous value. We’ve already got a mining license in place, so we don’t need to then apply for a mining license that is traditional, you know, in countries like Australia. So, the last part of the jigsaw is the EIA, as you said, Stuart.

Stuart: Right. So, jumping beyond that, then we’ve got the makings of potential goldmine. Now, tier one jurisdiction with a long mining history, and a system that works in terms of, you know, major mining companies operating in the country. I think, for example…I’m just looking at my notes here. You’ve got, Highfield, for example, or Infinity Mining, the original Rio Tinto, the mine is a Spanish mine, that gave its name to a company we all know and love. So we’re just waiting on that. Now, we don’t know when that environmental approval is gonna come back, but at that point, what’s the next stage of the development of Salave?

Gabriel: Well, I just wanna touch on just the timing because it is…I can’t give you a date, you’re right. But what we’ve been working with and working together with both of our advisors in country and the bureaucrats, and government is, you know, obviously, trying to ensure that we’ve got a document that’s bulletproof, and the EIA is a substantial document. The timeframe was to get the document lodged late in 2021, and then go through a public consultative period, which expired. And we got back, you know, probably in excess of 1,500 queries, which we then responded to. So that, we kicked that into play again, in May of last year. And then the government had four to five months to respond, which would’ve taken us to September, October of 2022. We’re now in May of 2023.

And the reason I wanna reflect on the date May, 2023, is that there’s an election both at regional level and local level. And unfortunately, what we’ve been told, and now it’s fortunate because it is May, is that no decision will be made on the EIA until the elections have been held and cleared. So we’re at that point now where I think we can start to be a bit more positive about the landscape in Asturias being…what’s the word…less political because Salave was a political football in the last election. So, we’ve maintained a bit of dignity and sort of remained a small target, not that we are troublemakers, but we just wanted to ensure that we played with a straight bat, both with the EIA and with the bureaucrats, and the politicians over there to ensure we stayed out of the news flow.

Stuart: Absolutely.

Gabriel: So, yeah.

Stuart: You wanna be able to show the government, both local and at regional level, that you’ll be a good corporate citizen. That environmental management will be first class, that there’ll be jobs created in the Asturias region, which is, let’s face it, not the most prosperous region of Spain, right?

Gabriel: 100%. And there’s a dearth of jobs for young people, and obviously, we certainly don’t want to be, you know, highlighting all of the negative issues in Asturias, but, yeah, you know, we’ll be looking to employ 200 people directly on the mine, in the development, plus indirectly another 2000 jobs. And there is a dearth of jobs for youth. The youth unemployment level in the region’s quite high. And, you know, it is a depopulated region, unfortunately. So, you know, we do wanna have a social license in the region. And we’ll be looking to roll out some other CSR-styled initiatives post-elections. So, you know, we are quietly confident that the tide is starting to turn in our favor, but, we’ll just wait. Like you said, I can’t give you a time as to when the decision will be made, but we think, we’re quietly confident that we’ve done everything we’ve done to get the right pieces in place, and to engage, you know, respectfully with the politicians and bureaucrats.

Stuart: So at the moment, if you look at Black Dragon Gold, there’s no value at all virtually for that price, I need a magnifying glass to see the EV per resource ounce for Black Dragon. Now, that could change because we do have a bit of excitement to keep the shareholders interested down here while we wait for the environmental process in Spain to get done. Talk to us about Padbury, that interesting new project you’ve just laid your hands on near Meekatharra, up in the Murchison region.

Gabriel: Yeah, no, excellent point. You know, the company, when I got appointed as the CEO, one of my initial goals was to diversify the portfolio away…not away from Salave, but, you know, obviously, every company has a timeline in place to ensure that there’s, you know, new exploration phases that come through beyond your mature assets. So Salave is a mature asset. However, Padbury is one opportunity that came across my desk through some contacts I’ve met, locally. And we bought the project from a syndicate of well-known explorers and gold mining chaps like Ian Murray, Darren Holden, and a few other chaps who have got a group called Odette [SP].

Stuart: Ian Murray, the man with a golden touch. So, you’ve…

Gabriel: The golden.

Stuart: …got a real providence project there.

Gabriel: And Darren Holden is got a great reputation as well. And there’s a few other people behind the scenes who have asked not to be named. But look, we bought that really cheaply, for the exact reason you’ve highlighted, which is to get into an early stage exploration play, something that the Aussie market, given we’ve got Aussie investors on…we’re on the ASX, they want to see and touch, and be in the same time zone, and we’re a bit patriotic like that. So, we bought the asset in July of last year. We did some geochem testing, which identified some really interesting anomalies from point of view that it matched. And I’m not sure if you’ve seen our presentation, you probably have, but we’ve had prospectors on site and they’ve collected an abundance of surface nuggets. And, you know, when it was sold to me though, the guys, you know, use the term, a field of nuggets and, you know, it’s not quite a field of nuggets, but there is an accumulation of nuggets at surface.

Stuart: I’ll take just the regular surface because they were pretty high-grade. Even if there were nuggety, that was fine by me.

Gabriel: No, correct. So, we’ve now…I’ll leap forward. We’ve done a really good goechem analysis, which indicated to the geological sort of experts that there’s a potential for an intrusion-related gold system/structure at source below the surface, which could explain why there’s nuggets at surface. And, you know, mostly some of that could be, you know, transported alluvially. But, our geochem analysis tried to remove the nugget effect via the CSRIO ultra-fine assay technology. So, it really removes the nugget effect. And what we’ve discovered is that the pathfinders and vectors in and around that sampling program gave us a strong indication that there is an intrusion-related gold structure at, you know, below the surface. And, you know, we’ve got Top Jewel at the moment just doing a first pass maiden resource. We’re only doing a tiny program at the moment because this is a data-gathering exercise. So we’ve got 10 holes being drilled this week. There was an announcement that went out yesterday. The early sort of feedback from site, and this is not market sensitive, but the early feedback from site is that the structures we’re seeing sort of co-relate with what we’ve told the market that, you know, we think there’s a good host source for gold, via, you know, granite in gold expression, and we’ve told that to the market. So, we’ll wait for the asset results to come back. We’ll wait for the final drill holes to be drilled, and there’ll be an announcement hopefully sometime next week to provide everyone with an update.

Stuart: What’s interesting about that is that a lot of the fields in in the Murchison were originally discovered with a nuggety kind of surface, but that was in the 19th century. Here we are in 2023, and history might be repeating itself in that regard.

Gabriel: Completely underexplored, this area. So, first time a drill bit has been put into this ground, there was a local prospector on site who’s got his own, for want of a better word, a prospector’s mining license. He’s been stripping away, you know, pits at surface and he chases 10 grams a ton, gold. He’s got a little sort of crushed grind, backyard wheelbarrow operation where he’s told me he’s produced 10,000 to 20,000 ounces in the last four years.

Stuart: Okay. So…

Gabriel: It’s real. It’s real. So, we hope it’s the next discovery, right? But fingers crossed, and we’ll just wait for the results to come back, Stuart.

Stuart: Right. So, a great, suite of opportunities here. We’ve got the Spanish opportunity to put my Spanish flag in there. So we’ll wave a flag for Salave up in Asturias region. And that happens when that happens. And we’ve got some interesting and very exciting early-stage work at Padbury from the projects that you picked up last year. So a lot to be interested in for Black Dragon Gold. Gabriel, well done in terms of your stewardship of this particular resource.

Gabriel: No, no, thank you. Look, I know we’re running outta time. I just wanna touch on what you said, which is you need a magnifying glass to work out, you know, the ounces or the carry in our market cap. Look, our market cap is $8 million and, you know, we can’t shy away from that. So, if I was an investor, the way I’d be looking at us is, if it’s bust, we go back to shell status and you can put a number on what an ASX shell is worth with a $1 million in the bank, you know, call it $3 to $4 million. So, your downside maybe 50%, your upside is a rerate with a Salave Gold Project that’s got $2 million ounces at 4 grams a ton, measured and indicated, ready to roll out, ready… You know, you asked me earlier on in this chat, “What’s the next phase for Salave Gold?” It would be to look at a final feasibility study. We don’t know if there’s gonna be partners out there that will want to buy into the project once it’s derisked, you never know, given gold is certainly in the news flow. You know, if a bid comes, that’s great, but we’re not here to sell the project, we’re here to develop the project. So that’s next for us, Stuart, in Salave. And the upside from Padbury is exciting as well. So, yeah, if I was to punt some stocks, this would be one. I know I’m CEO, but I’d love to punt my own stock and I bought some shares last week together with the chairman.

Stuart: Right, exactly. That’s Paul Cronin over in, London, well known…

Gabriel: Correct.

Stuart: …in resources identity. Associated with…

Gabriel: Correct.

Stuart: …Adriatic Metals was Paul Cronin?

Gabriel: Yeah, yeah. Paul is founder of Adriatic Metals, he’s taken that company and we’ve got a rockstar board, I hate using that term, but we’ve got a rockstar board. Paul’s taken Adriatic from pre-discovery to production, first sort of production at Rupice, in Bosnia will happen next quarter. And Alberto Lavandeira, our other director is the CEO and managing director of Atalaya that runs Rio Tinto. Both companies are approaching $1 billion market cap in their respective markets.

Stuart: That’s Rio Tinto we were talking about before?

Gabriel: Correct. Correct.

Stuart: Yes, of course.

Gabriel: Correct, correct.

Stuart: So, you don’t attract this sort of talent, onto a company, no matter what its size, unless they’re onto something. So, I’m encouraging people to go take a look at this one.

Gabriel: Absolutely, absolutely.

Stuart: Gabriel Chiappini, thanks for joining “Stocks Down Under.”

Gabriel: Stuart Roberts, it’s always a pleasure and I look forward to our next catch-up. Thank you so much.