TNR Gold Corp (TSX-V:TNR, OTC:TRRXF) executive chairman Kirill Klip joined Proactive to discuss the company’s transition into a cash-flow-generating royalty business and the major catalysts surrounding the Los Azules copper project in Argentina.
Klip described 2024 as a crucial year for TNR Gold, marking its graduation from a project generator to a royalty-focused company.
A key milestone is the upcoming definitive feasibility study for the Los Azules copper, gold and silver project, operated by McEwen Mining. TNR Gold holds a royalty on the entire asset.
Klip added that TNR Gold recently released a corporate update reviewing M&A opportunities in the royalty space, and suggested the company's royalty holding could be valued up to $30 million based on comparable deals.
Proactive: Hello, you're watching Proactive. Joining me is TNR Gold Executive Chairman Kirill Klip. Kirill, very good to speak with you and lots to talk about today. Let's start off with TNR Gold's graduation from a project generator to a cash-flow-generating royalty company.
Kirill Klip: Thank you for having us today. You are putting it exactly right. This year is very important and crucial for TNR Gold. The royalty story is that we are building the green energy metals royalty and gold company, and this year we are graduating from a project-generating junior mining company into a cash-flow-generating royalty company. For us, of course, the hope is that it will bring further crystallization of our valuation in the marketplace and will be the catalyst also for our share price performance.
And I suppose one catalyst, a really big milestone, is the definitive feasibility study that is expected to be published in July, and that's for McEwen’s Los Azules copper project in Argentina?
Yes, this is correct. As you know, TNR Gold is holding royalty on the entire giant Los Azules copper, gold and silver project. Rob McEwen’s team is doing a wonderful job over there. They just announced that they are applying for Argentina's investment incentive scheme, which could be very beneficial for the economics of the project. We are all looking forward to this feasibility study because the preliminary economic assessment was released in 2023, and a lot of things are moving in a positive direction. So we hope to see them finally confirmed by the company in the official release of the bankable feasibility study.
Even before it, the project already attracted a lot of industry attention. Of course, the giant automaker Stellantis invested more than $275 million into the project. Rio Tinto joined it with their Newton tech venture, Newton, this $100 million investment. Rob McEwen, being Mr Goldcorp, would like to compare all projects to the equivalent in gold resources, and he's talking that if you convert all metals contained in the Los Azules copper project, we are talking about $55 billion worth equivalent of a gold deposit.
You mentioned the preliminary economic assessments, and that did show a solid economic case for Los Azules. Do you think the feasibility study is going to increase the project's size, Kirill?
Yes, yes, this is an extremely important question, and this is what we are all looking for. We are actually looking that it will be potentially quite a substantial increase in all resources of even this already massive copper, gold, and silver deposit. What is important here to mention is that in the preliminary economic assessment, which was released in 2023 in July, only the drill holes were modelled up to December 2022. So we are looking forward to a lot more drill holes being included in the new modelling, plus we can already start thinking about maybe even a future potential discovery.
Rob McEwen was talking that three kilometres to the east, they found a new very intriguing copper porphyry target and they are testing it. So we could be, in the future, even talking about future discovery. Of course, even the preliminary economic assessment delivered solid economic numbers. I didn't mention here that with the latest increase in recovery of copper just by 3%, we can start talking about increasing annual production from 175,000 tonnes per year to 180,000 tonnes per year. They are talking here about LBMA copper plate, which is also very important. The magnitude of this giant deposit is that we are talking now in the preliminary economic assessment about 27 years of life. Even before this hopefully new increase in resources, this project already was among the top largest undeveloped copper deposits — among the four largest undeveloped copper deposits which do not belong to majors — with almost 11 billion pounds of copper in the indicated category and almost 27 billion pounds of copper in the inferred category.
And I see there's been rumour that there could also be an IPO of McEwen Copper, either in New York or in Toronto?
Yes, yes, yes. We are celebrating this very interesting announcement by Bloomberg, after Bloomberg reporters talked to Rob McEwen. So basically now we are waiting on a few major steps in the development of this deposit, which of course will de-risk and bring further catalysts for valuation of our royalty holdings. So first of all, it is the feasibility study, like we discussed. Very important will be when the project is accepted into the Argentine investment incentive program. Now Rob McEwen is talking about the IPO, maybe as soon as the end of this year, depending on the market conditions.
And if you ask me, I am still wondering why Rio Tinto will not really step in. It's the second-largest mining company in the world. BHP just stepped into development of giant copper deposits in Argentina with London Mining Group. So for me, it would be very natural if Rio Tinto, who knows all the details of this deposit better than anybody else, will step in and maybe start developing and building this mine, because they have enough expertise with Newton, of course. They already invested $100 million and they have the balance sheet in order to build this project. So we are looking forward. It will be a very interesting year with Los Azules copper.
Kirill, maybe give us your thoughts on the M&A activity in the royalty space, and potentially what this spells for your own valuation?
Yes, you're asking a very interesting question. Of course, all our shareholders and potential investors should study very carefully our news release released yesterday. We released our corporate update with a strategic review of the developing M&A opportunities for TNR Gold, but hopefully we will discuss it with you next week.
So M&A activity, particularly in the royalty space, is getting very hot. We are receiving a lot of interest. Now I can talk about it after the news release being issued yesterday, so everybody should read it. Here I’ll just say a couple of words about potential valuation for the Los Azules royalty which TNR Gold holds. Rob McEwen was talking about potential valuation for his royalty of over $100 million based on the Solgold deal with Osisko Gold in Ecuador. It would be equal to TNR Gold valuation potentially as high as $30 million for our royalty holding. But we can touch on these details next week in our new update.
Quotes have been lightly edited for clarity and style