Papua New Guinea (PNG) might not be well known to mining investors in North America, but the jurisdiction has a history of discovering and building major mineral projects, such as the Porgera Gold Mine that has produced more than 20 million ounces of gold to date.
Australia-based Adyton Resources (TSX-V:ADY, OTCQB:ADYRF) Corporation is developing gold and copper resources in the mineral-rich jurisdictions of PNG. Adyton owns two priority and five pipeline projects in the region, with a combined gold resource of more than two million ounces and growing.
Adyton CEO Frank Terranova has extensive experience as a director and executive for a wide range of Australian and international publicly-listed companies, including holding the position of chief financial officer and then managing director of Allied Gold PLC.
In an exclusive interview, Terranova told Proactive how the company plans to enhance shareholder value and why he believes Adyton is one drill hole away from a company-transforming opportunity.
Proactive: Adyton Resources (TSX-V:ADY, OTCQB:ADYRF) has had remarkable technical success since listing in February 2021, increasing its gold resource from 1.2 million ounces to 2.0 million ounces. Is there still plenty of upside left in the projects?
Frank Terranova: From the outset, we were always very confident that the geology within the PNG and Pacific Rim of Fire would deliver results. We were confident that we could almost double the resource with our first drilling campaign. And we think we could almost do the same second time around. TPacific Rim of Fire is renowned for world-class, Tier-1, very large mining and resource projects. We truly believe that both on Feni and the Fergusson Island, there is plenty more upside in that regard.
Now, evidenced by my success in a previous life with Allied Gold and the Simberi and Gold Ridge projects in PNG and the Solomon Islands, the region is simply a function of investment in exploration. The more you drill, the more you will find on the basis that it's a disciplined, systematic approach. That's what we have undertaken and, hence, that's the results that we've delivered. And we truly think we own 100% of two multi-million-ounce projects.
Recently we had notable success on the Feni Project with a substantial copper result. It vindicates our view that we truly believe there is a Tier 1 asset that resides on Feni and we are keen to take a closer look.
The strategy of having two projects and not one is not common for junior companies. Why did you take this approach?
Strategically from the outset, we wanted to provide investors with optionality, two styles of deposits, one being near-to-medium-term cash flow on the Fergusson Island. And then that style of project that every junior mining investor likes being Feni Island, which is one drill hole away from a company-transforming opportunity.
Now we've undertaken drilling on both. We've had genuine success at Ferguson Island. At Feni, we are really still getting to know the system, despite the 1.4 million ounces plus, we believe there is a copper porphyry-style deposit at depth. But like anything, exploration in PNG, is not about luck. It's about access to capital and consistent exploration in a methodical and systematic approach. It is not luck. It's not chasing the ‘Hail Mary’ style of exploration.
We know and we are 100% confident that the more drilling you do the answers continue to grow. The debate may be, are these projects too big for a junior and should they be owned by a larger company? Well, that's a first-world problem.
Your current major shareholder, an ASX-listed company that spun the assets out, holds around 40% of Adyton stock. What is their intention with these shares?
The major shareholder, which holds a 40% stake in the company, is Mayur Resources. Mayur spun Adyton out of its own portfolio of assets. Mayur is an industrial minerals and renewable energy company with assets in PNG and they have been quite supportive. But Adyton has clearly been non-core and was non-core, and hence the spin out.
Now they own 40% of the company and as part of that spin out, it is their publicly-stated intention to distribute those shares to their own shareholders. From that side of things, their register is quite tight. So there won't be 10s of 1,000s of shareholders that we will inherit.
But nonetheless, a lot of their register is truly sophisticated investors in global stocks and, therefore, already understand the profile of these assets because they were once owned by them. So from that perspective, it is perceived as an overhang in the share price. A lot of the North American potential investors, to be fair, don't like it. They would rather have 40% of the company owned by someone who is committed to the gold and precious metal sector. But it is what it is, and we'll continue to watch that space and how it progresses.
Your share price has had some headwinds, what do you put this down to?
Despite the wonderful exploration success that we have had, both on Fergusson Island and Feni, the share price has been truly disappointing from a management standpoint. Now, there are a couple of contributing factors which we can point to. The story is yet not very widely known within the broader Canadian and North American market, it's a new story.
Secondly, the structure and the manner in which we listed the company, in hindsight, was genuinely complex, but we chose that path because it was the fastest way to list at that point in time. Now, we did raise $10 million and we specifically raised $10 million because that's what we thought it would take to truly demonstrate the potential of these assets.
But, with the benefit of hindsight, which is always a wonderful thing, of the $10 million raised I would say $5 million was from high-quality, long-term strategic investors. The remaining $5 million, though, I would describe as momentum-style investing, the style of money that comes and goes very quickly, and at times can be quite disruptive to junior companies, particularly those who haven't had a long history of being listed on the market.
So we did have a bit of disruption on the register. The gold price has been quite a challenge and we're not alone in that space. We truly believe, longer-term, that the assets are legitimately valued much higher than where we're currently trading, which is around $3 to $4 per ounce of gold. And that provides two scenarios for investors at the moment.
One is that we are probably on everybody's radar as an M&A target. But secondly, the upside is genuinely extraordinary. So from that standpoint, it is disappointing that the share price has underperformed. We've had a few headwinds that have not gone our way. But the longer-term investors understand that investing in PNG and looking for Tier 1 projects requires a medium-term outlook, and given the previous track records of other companies and the three or four year time horizon that it takes to really unlock value and have it appreciated by the market, we see that Adyton will be no different to those style of stories.
Contact Sean at sean@proactiveinvestors.com