Ucloudlink Group Inc (UCL) 2021 Q3 法說會逐字稿

And thanks very much for the Denver Gold Group to host us. Obviously, during these very difficult times. It's excellent to get back and on the circuit and to come back to some sense of normalcy. I will be making forward-looking statements throughout this presentation. So we have the North Island project, which is situated on Vancouver Island in British Columbia.

We're just adjacent to the BHP island copper mine. Our project boasts approximately a CAD1 billion project NPV and approximately 20% IRR as defined by our PEA released in March. We are approximately 62% copper at approximately 33% gold. So think of this as a medium-sized copper project with a massive gold credit.

Our objective is to rapidly develop this project in the most sustainable manner possible. We're situated in British Columbia, which is one of the top-tier jurisdictions in the world, not only for mining, but also for that sustainability threshold and permitting. So we really are focused and committed to ensuring that we go through the right steps to get this project forward as quickly as possible in the most responsible way.

We have exceptional leadership with proven track record with over 200 years of experience within the management and the Board group, finding, developing, and operating mines across the world. And on the exploration upside, which is as equally important in terms of project development. We've committed to a -- 10,000-meter drill program, fully funded to explore our vast 50-kilometer strike area.

So our strategy is predicated on the thesis that we are going to be in a massive copper deficit in the next 10 years. Numbers up and floating around has been approximately seven to eight million tons deficit by the end of this decade. To put that in context, that's approximately [eight-seven ask indeed is] and the reality is those types of projects don't get developed in one decade. They get developed in many decades. So our key focus is to ensure that our project gets developed well within that decade.

So in terms of our profile, we are a growth company. Simply put, but there is opportunity for exponential growth for our share price, and that's underpinned by the very, very strong shareholder base that we currently have. Management and insiders own approximately 16% of the registered over 20% on a fully diluted basis.

We have a strong cash position of approximately CAD7 billion as of last quarter. We have absolutely no warrants that would restrict our growth trajectile, and we're currently covered by three analysts still is one of them, Michael Gray and Chris Thompson at PI. So as I said, we have over 200 hundred years of collective mining and capital markets experience.

And this was culminated by our leader Dale Corman, Chairman and Founder, who's best known for obviously discovering, developing, and selling Penasquito for CAD1.2 billion. The objective was to collect a group that have the qualifications and the experience of a major, but to be as nimble as a junior. So that's effectively what we have today. And as we continue to de-risk the purchase project, we will continue to add onto the team.

In terms of the project highlights I went through briefly, but it's approximately CAD1.1 billion NPV8 after-tax project. The CapEx is approximately CAD1.4 billion with a 3.9 payback. This is all done at a CAD3.25 copper. Copper today, I think is approximately CAD4.40 last I checked.

So lots of room to grow clearly. Our indicated resources is 4.7 billion pounds of copper equivalent. If you want to look at this from a bull context, given that over 33% of our revenue was gold, that's approximately 9.3 million ounces in the indicated category, an additional 3.8 billion pounds of copper equivalent in the inferred, and that's a essentially a 5.6-million-ounce gold equivalent number.

Clearly, there's lots of potential in the district and our established infrastructure centers around our positioning right next to the BHP Island copper mine, which, as you could see, is in the lower right-hand quadrant. Island copper is a very similar style deposits as are similar grade similar tonnage was in production for 24 years.

All that existing infrastructure exists, including roads, access roads, power and Port Hardy, which is the central hub, which was the central hub for BHP. And still is a central hub for many of the other industries, including forestry in the area.

So the Port Hardy is in the -- on the east right-hand side of the map. It's approximately 30-minute drive to the BHP Island copper mine, it's approximately 50-minute drive from the northern end of our tenements, which is defined by the gray outlined area. The project PEA is defined by Red Dog and Hushamu, which is in the blue.

Our exploration activities as defined by the labels in the copper colored North West Expo, Goodspeed, Macintosh, and Pemberton Hills. And to give you context of the infrastructure and the simplicity of this, all. We are only about 25 kilometers from the island copper mine, which has already a permitted deep-sea water port, which is arguably the closest deep-sea water port from continental America to Japan. Which is where they sold their concentrate to Sumitomo.

It was a copper moly concentrate. That's where we're contemplating as well. So as you can see, we are in position A. as it relates to developing a mine. And the key to this, as we all understand in Canada and especially in BC, is agreements and understandings and consultation with our First Nation partners.

So the metrics of the mine itself, it's -- as I said, a copper-gold porphyry system, it's a 62% copper distribution, approximately 33% gold on an equivalent basis, we're essentially above average as it relates to gold, copper-gold porphyries being mined today in BC. And our objective, obviously, once we get this into production is to be the second largest copper gold porphyry in BC.

So just give a little bit more detail on the PEA. What makes this project really, really work. One of the three things is the strip ratio. So the strip is approximately 0.7 to one. That's a one of the industry leading numbers and certainly in BC, one of the lowest numbers that has been advanced in BC.

The mine life is 22 years, which if you think of this as a copper project, 22 years is an intermediate size and energy immediate mine life project, but from a gold perspective, 22 years of 100,000 ounces of production per year is very, very significant. We've sized it to a 75,000 ton per day operation, and that was intentional.

I think that from our perspective, we think that that is the right size for this project for us. Clearly, there is expandability options in the future, but this is a very, very attractive and meaningful starter pit for anybody.

In terms of our sensitivities, it's a very highly levered to copper prices you put in context, as I said, the PEA was done at a CAD3.25 copper price. Every 25-cent movement in copper price increases the NPV by about CAD300 million, which is extremely significant.

So, in terms of how I'd like people to look at this company is that this growth opportunity is really unprecedented. We are at a point where we have an economic study, we have defined over 5 billion pounds of copper equivalent. We are significant we are material 600 million tons of resources, and we are trading currently at a sub 0.1 times net asset value as defined by analyst consensus.

And just to put that in context, that's less than 10% of our intrinsic value and our -- the NAV, we believe, is the most relevant metric given that it does encapsulate everything that I'm talking about, not only from a grade perspective, but from a access to infrastructure, access to power, access to community support.

And so we have one of the lowest [all-in sustaining] costs around, as defined by the next slide. So this just gives you a little bit of a glimpse of why this project works so beautifully on a strip ratio basis. Red Dog is the project that informs the first six years of our 22-year mine life.

And as you can see, it's predominantly, if not almost exclusively ore. The second project that informs the remainder of the 22-year life is Hushamu. And overall, the strip in addition to Red Dog is approximately 0.7 to one.

In terms of capital intensity, it's not too dissimilar to the size of our deposits. It is a moderate capital intensity project. And again, we are on the lower end of the capital intensity scale because we do have access. We don't have to build roads. We don't have to build powerlines that we literally can get to our project from Vancouver south terminal in about one hour.

It's approximately an hour of flight and about a 15-minute drive. So it's a very, very well-positioned project, which speaks to the modest capital intensity. As I mentioned before, this is a slide that compares us on an operating cost basis across projects globally. And if you were to obviously include the gold credits, we are within the lowest quartile of operating projects globally.

So this is really important factor for me in terms of why I joined in October. This was -- in identifying projects and opportunities. From a personal perspective, I wanted to ensure that the infrastructure and the baseline was available to develop a project in the most sustainable fashion possible.

And that not only includes carbon footprint, but it includes engagement within communities. Communities have to be supportive. They cannot be abrasive or dismissive of a project if you are to be successful moving it forward. And so we have that we've got in BC, we've got 100% access to clean power, which comprises of hydroelectric and wind power.

In fact, we have one of BC's largest windfarms, just to the north of our property as a 99-megawatt capacity, which one could presume we can access as we go into project development and construction.

And then in terms of making the footprint smaller, I think I associated 75,000 tons per day decision to this -- This is a key decision factor for us as it relates to defining the right size of the project, not only that, but also being able to repurpose other existing pieces of interest structure that exists through the BHP Island copper operations.

So in terms of our exploration upside, this is all pure exploration. We are not and we've committed to 10,000 meters, a fully financed drilling program this year. And it's all towards exploration. None of it is [in fill]. So the way we've compartmentalized it is in the blue. This is the North Island project expansion. So that's essentially making our project bigger and better. And that comprises of drilling at Red Dog and Hushamu.

And then in terms of new discovery, just we are focused on North West Expo, Goodspeed, Macintosh, and Pemberton Hills. So we are currently drilling on Red Dog and North West Expo. We are on North West Expo right now. The idea for North -- I'm sorry, Red Dog is the deposit sits on top of a hill. We're looking down-dip to see whether or not it's been displaced to the southeast. So we should be receiving those results shortly.

And then in terms of the Northwest Expo, this is the new discovery area where we're following up on some significant high-grade gold intercepts that we've historically seen. And from what it seems right now, it's still within the copper porphyry CMGSMB system so we're excited about those results coming out in short order.

So in terms of the next steps here, there's a lot of things in the area. And I appreciate that some people think that we should be focused on one or the other. But for us, the key part of our strategy is to ensure that we maintain the optionality, not only in terms of advancing our project forward as quickly as possible for which we have initiated the critical path items and have Board approval to finance or not finance permit. You have to earmark CAD1 million of our treasury towards the development of the project, but also to ensure that we are aggressively accelerating our exploration 10,000-meter program for which we will systematically issue our results as they come in.

In addition to that, we are going to be advancing our metallurgical program in terms of recoveries of the gold and silver as part of the pre-feasibility study work. And then we will also continue our baseline studies as it relates to starting the clock of marching towards our environmental impact statements.

And probably key to all this is engaging with our communities and our First Nation partners to ensure that they have the input into project at this stage. And so I think I hope what we'll see is in the next little while is some formalization of that participation. So that I think I'll stop there and leave it -- Taylor, to see if there's any questions.

Great. Thanks a lot, Sam. Excellent presentation. We'll open it up now for questions if anybody from the audience has any, you can ask them now.

Okay. I've got a couple. Talking about the the exploration drilling that's going on, Hushamu obviously, is where the bulk of the resource is. Is the drilling there focused on kind of expanding that resource or is it really more exploration focus their kind of a bit further away from where the main resource areas?

Yes, it's twofold. So the drilling will be focused on expansion of the deposits of the deposit we know is a tilted porphyry system that essentially dips to the Southeast. And so that's where we're drilling. The step-out drills hopefully will confirm and we can show a fairly quickly a significant expansion of those resources.

The second part of the who should move exploration program is to continue on surface sampling around the South Macintosh area. So if you can imagine this, so I guess I can't see it anymore, but the topography of of our property it's covered with top cover. So, the way that's one of our geologist explained, if this thing existed in Chile, it will be drilled like Swiss cheese.

We can't do that, obviously because we don't have the same visibility topographically, as you would in Chile. And so every time there's an exposure there in our surface partners, Western Forest Products exposes through roadwork. That's an opportunity for us to go after that exploration aggressively. And so that's what we're doing to at Macintosh that would be considered as part of the new discovery segment.

Great. And then in terms of looking for more higher-grade areas, Red Dog obviously has a little bit of a bump -- are there -- is there evidence of other areas of higher grades that could be pulled in potentially earlier in the mine plan that boosts the economics?

Yes. So I think the high-grade areas right now is from historical drilling. We've associated with the Red Dog and North West Expo as you mentioned. There has been historically drilling at Northwest Expo that indicates a one gram per ton intercept over 100 meters. So this is something that we're clearly going after and defining the not only the size, but also the trend of the deposit.

And then, of course, there is a higher-grade zone within Hushamu that BHP, back in the day was considering effectively trucking that ore to their mill, which is again only 25 kilometers away, which we will certainly explore in greater detail.

And there are areas to the North of Hushamu that also warrants a little bit more discovery. The other -- Greenfields exploration program that we have been very focused on, obviously through not only through ourselves but our joint venture partnerships in the past with Freeport, is the Pemberton Hills deposit. So this is a massive system where you see a 3.5 by 1.5 kilometers, highly altered [lithograph].

We've essentially gone through the drill programs this year, identifying a concentrating on one and a half kilometer of target area, but what we found out through that drill program is that deposit has been tilted. It's a massive system. The [lift the cap] goes for about a kilometer deep.

And what we believe is a very, very large system is there, but it's going to be a depth. So we're going to be looking at that area quite aggressively based on the information that we've gathered this year. But that would, in my mind, constitute just based on the size of the system based on the size of this highly altered [LiffeClear] would warrant something that would be a quite significant. But again, early stages, Greenfields at this stage.

Fantastic. And with that, we are just about out of time. So I would like to thank Sam Lee, for presenting Northisle Copper and Gold to us this morning.

Thank you very much and thank you very much. Have a good day.