Golden Shield Resources (CSE:GSRI, OTCQB:GSRFF) has expanded its project portfolio with the acquisition of Tucano Gold, including its Mina Tucano gold mining operation in Brazil.
In conversation with Proactive, executive chairman Leo Hathaway highlighted Tucano’s high-grade gold deposit and potential for both open-pit and underground mining.
He also noted that the acquisition provides Golden Shield with near-term cash flow to fund its exploration project Marudi Mountain in Guyana.
Proactive: Major news talking about an acquisition of Tucano Gold. So, take us back a little bit and set this up. What did you like about this particular company?
Leo Hathaway: I actually visited Tucano in 2016 and I've always liked the deposits there. I love the potential that it has. The upside. The grade it has. It's a high-grade gold deposit, both open pit and underground in northern Brazil. It was an operating mine. It's been put on care and maintenance. But Tucano is a private company, and they are a very short way out from production. So it's a near-producing gold story, I don't know one more exciting. So, they are in the same belt as Marudi. They like the potential at Marudi.
So this is this is really an almost perfect marriage of two similar deposits at different stages. With Tucano we have near-term cash flow coming that we can use to explore Marudi, organically, and we’re in a unique position to explore the belt. Tucano itself comes with a 2000 square kilometer land package that has seen very little exploration. It’s both a production and a discovery story. And for all of those reasons, I'm very excited by it.
So, Mina Tucano is set for restart in Q4 of this year. Money that you make from there will then be able to fund exploration everywhere else, is that accurate?
I can't really speak for what the new company will decide to do, but from Golden Shield's perspective, we really like Marudi. We like what we have there. We see lots of targets and lots more to do. But as a single project junior miner in the current market, it's difficult to raise funds. So, to have a company with cash flow, with a budget at their discretion they can assign to Marudi, gives current Golden Shield shareholders continued exposure to Marudi, which is, I hope, why they got involved and it also gives them exposure to a near-term production story, which in this market is getting a lot of recognition.
So how will this work as far as management teams are concerned? Can you talk us through that or is that still all to be worked out?
It's all to be worked out. We wanted to get the news out as quickly as possible. What I can say is that both the management teams have a very good working relationship. This deal was incredibly easy to do. There's a lot of goodwill on both sides. As you heard me say, I'm very excited by Tucano. I would love to be involved with that if they would like me to be. It's yet to be decided, but there's a lot of synergy between the management teams and as I say, a lot of goodwill. And I think we're all pushing in the same direction.
For Golden Shield, what are the advantages here?
The cost of capital for Marudi had got high for Golden Shield. We keep putting out great news for a result of great drill results. But the market has been tough. So, this gives shareholders a way to get continued exposure to Marudi and in addition exposure to a hot new production gold story in a manner that I hope isn't too dilutional. It holds an awful lot of potential for future value creation.
Quotes have been edited for clarity and style