Today we're bringing on the CEO of Adventus Mining. I'm a shareholder in this company. It's actually one of my biggest holdings because I believe that it could be a ten bagger over the coming five or six years. Don't take this video as investment advice, and always do lots of your own research before investing any of your hard-earned money. And keep in mind there will be forward looking statements in this video. Thanks for joining me, Christian. I see, looking at the shareholder registry that you have Altius Minerals, you have wheaton precious metals. Now you have Ross Beaty. Any junior would dream to have one of those people as a shareholder. Those are some of the best capital allocators in the industry. How does a junior company like Adventus get all of those? A well positioned question. This all started with Altius Minerals. Prior to starting Adventus, I was an investment banker for ten years, and one of my best clients was Altius. Was involved in some way or form and advisory over the last five years before starting Adventus. And they're the ones who convinced me to leave investment banking to start Adventus. So that's how that started. Altius is a very good name in the business. We've been able to surround ourselves with good people, and we believe we've done the right thing time after time building a business. And when you do that, you attract other significant investors, or they're at least following you until something significant happens and they come in. So it doesn't come all at once. Normally, in this case, Adventus is around seven years old, but it comes through doing good work and having a product that people buy into. And in the case of Adventus, we have the highest grade undeveloped copper project in the world. So it's not a surprise that we've gotten a few more than just Altius. Why don't you give me the investment case for Adventus? Like looking forward, where is it today? What's it trading at? And how much do you think the company could be worth in the future? If you can answer that under securities laws, yeah. Well, when we started the company, we were a shell looking to build a base metals business somewhere on the planet. We were able to get our hands on this Curipamba project with the El Domo deposit. It was still in its infancy, call it pre PEA, but we knew it at the hallmarks of being a copper mine under any price environment. So over the last six years, we've spent about $80 million advancing it to a stage where we're ready for construction. It's not a big project, but it's very high grade, high margins would work in a $2 per pound copper environment, let alone where we are today. The best way I can compare this in terms of what it could be is there's a company called Sandfire Resources listed on the ASX, which is now a two plus billion dollar market cap company. You go back 13 years, and they started production on a volcanic massive Sulfide deposit, which is the same genesis of El Domo. So, El Domo is also volcanic. Massive sulfide deposit. It also has 10 million tons of 5% copper. So, in a normalized market, once we get this thing into production, I think it can support a billion dollar market cap. The expiration upside and what we do after that is another thing. But in the case of Sandfire, they used all that free cash flow that that mine generated to buy other assets and now build a significant mining company. Other comparables in the market that have similar life of mine free cash flow would be Silvercrest Metals, who your viewers might know. That's about an 800 million market cap company in production right now. And adriatic metals in Bosnia is a billion dollar market cap almost in production. So these high grade but small projects are doable as a single asset developer and create the free cash flow to build significant companies out of it. So we are extremely cheap. Right now, we're trading at a fraction of what our annual free cash flow could be. Probably trading around .15 to 0.2 times our net asset value. And we think it's a five to ten times return over the next five years. You mentioned El Domo, and you mentioned Curipamba. So is El Domo the mine and Curipamba is the district? Correct. Okay. And besides El Domo, do you have evidence that there's other VMS deposits in your land package? Because vms deposits are known to occur in clusters. So, besides the fact that they're known to occur in clusters, is there any other actual evidence? Yeah. No. Astute comment. Where we are in Ecuador, we're surrounded by other major companies doing exploration. We are surrounded by a joint venture that we have now with Anglo American, looking for major copper deposits of different type than volcanic massive sulfide. But our 22,000 prospective for volcanic massive sulfide deposits, porphyry, epidermal gold, and probably others. When we first started in the district in early 2017, we were really focused on exploration and development. At the same time, we flew airborne geophysics. We developed 14 exploration targets out of the geophysics. Since then, we haven't properly explored one of those 14, and within that one that we have partially explored. We've made a brand new VMS discovery four and a half kilometers away from El Domo. So it proved that geophysics works and improved that. There's another VMS system in the district. We're really just scratching the surface. What we decided as a management team is to focus on building el domo using all the capital we can in our connections to get that in production, to generate the free cash flow. And once in production, we can turn on five, six, seven drill rigs, and we'll make more discoveries for sure. And I suspect we'll double or triple the size of the mill and be operating for rather than 14 years, 30 years or more. Okay. And you mentioned that discovery was 4.5 from El Domo. Is that trucking distance to be able to bring ore to your mill that you're going to be building without too many additional costs? Good question. So, everything we know based on the geophysics and work to date shows that the ore bodies are near surface. That's a good thing. The El domo deposit is $400 to $500 per ton rock, and it costs you $50 to mine, process and general administrative costs. This new discovery, four and a half kilometers away, is even higher grade than that. It absolutely has the margin to pay for $10 more of trucking. But the whole district has a network of roads. Therefore, any discovery is fairly close to one. We've done a quick calculation that shows every million tons more of 5% copper equivalent. The same grade as El Domo, will generate another $80 million of NPV eight after tax. So it's very additive going forward, and you don't need to find much to get there. Okay, excellent. And you mentioned that your land package is very prospective for various kinds of discoveries, epithermal vms, or porphyry systems. Now, if I'm remembering right, that Wheaton stream only applies to VMS discoveries on your land package. That's right. Okay. Vms and only vms that can be processed within the mill that their cash is going to be used to build. So there may be a scenario where we find, like, a low grade VMS deposit, which requires economies of scale to make it work, and it doesn't work through the existing mill, then that might not apply. So that's a nice nuance that will be structured into the deal. Adventus recently merged with Luminex. We saw some dilution from that. But can you tell me the advantages that you see from that transaction? Well, it's true it's dilution, but I don't call it bad dilution if your net asset value per share increases as a result of a transaction. And we believe that the Luminex transaction has done that. So prior to the transaction, we might have been trading at 0.2 to 0.3 times our net asset value. Okay, we acquired a business that was trading at zero five times plus or minus their net asset value. So yeah, we've issued more shares, but now the combined business is trading at called zero point 15 times net asset value. So accretive from investment banking perspective, also from a dollar per pound in the ground perspective, as we're inheriting 8 millionoz of gold equivalent. So that answers part of your question. What it has created is a much more relevant platform with north of 100 million market cap, a much stronger shareholder base. The 18 million US that we raised, which was critical for us to get us into construction, was done on the best terms we could have gotten from the market, with long term investors, primarily from the Luminex side. And now combined, we have the second largest concession holding in Ecuador after sold. That's very attractive to third parties, and we think we'll be able to expose a lot of value out of that portfolio here in due course. Do you also get some mind building experience coming from that management team? Because we've seen a lot of capex blowouts recently, and Adventus is going into their first mine build here. And I would really love to see some very experienced people on the team. Can you tell me about who's coming over from Luminex that has that experience? And also tell me about who's going to be building the mine and what kind of experience they have. We started building our construction team after the feasibility study came out and the project financing came together early 2022. We have that construction team in place. Maybe not well known by the market, but we've got some stars in the positions. Two of them, Scott Mueller and Dustin Small, just came off. Prior to adventus building the La coipa mine for Kinross in Chile, on time and under budget. Scott was one of the chosen mine builders for Kinross and is a natural born leader. And in the case of Dustin, he's constructed multiple mines in the past. And within that we've got a whole kind of senior team and team below that filling those key positions. We actually plan to build this mine on a pretty heavy owner's team basis, so that we still have an EPCM contractor. But because there's not a lot of mines in Ecuador, we're relying more on our team to construct. Nonetheless, the Luminex team does bring some pretty good experience, primarily on the board. Luminex management team is more focused on exploration. Our team is more focused on construction, but we married the boards together, so the three new board members coming on. Marshall Kovall has spent his career doing projects in construction. Ron Hallis is a projects and operator guy, and David Farrell is a finance guy, but he just has and is sitting on the board of Fortuna Silver, which has just completed two mine builds over the last few years. Okay, you mentioned EPCM. I'm not familiar with that acronym. EPCM is engineering procurement, contract management. Okay, thanks. So this would be kind of the oversight of construction. Something I'd like to see with my investments is that management has a significant stake in the company. I would like to see management have significantly more ownership than their annual salary. If you're comfortable with it, could you tell me about how much stock you own, at what price you got that stock, things like that? Sure. My investment in Adventus is over 50% of my net worth, so probably answers your question. The average ownership price of the stock I own today is over a dollar a share, and I have about 2.2 million shares which have been paid up for. I have a significant option, and RSU package options are only worth something if the share price goes up. Unfortunately, in these difficult markets, it's gone down, and most of those options have been expired. In the case of RSUs, living in Canada, we get taxed at 54%. So you're really subsidizing a tax man. So it's not really a life changing piece of business. Our management team, for the most part, are in their 40s. Everyone has built mines or financed mines in larger institutions or companies, and they've come over to Adventus to create an entrepreneurial company. So for many of them, it's the first time in a junior mining company, and they're obviously taking a big risk to do that for themselves and their families. And so the stock comp is important, but none of these people are individually rich, so we're hoping to make our first riches out of Adventus. Okay, excellent. Something that concerned me as a shareholder is that Adventus was already trying to figure out how to get totally funded to build the El domo project. And now with the merger with Luminex, you have all of these other exploration projects. Are you guys going to be spending money to explore those other exploration projects at the same time? Are they just going to be sitting there? Are you going to joint venture them, or what's the plan there? Yeah, the focus of the company going forward is entirely on executing on the construction of El Domo. There is a carrying cost for the enlargement exploration portfolio of twelve properties. That's approximately two and a half million us a year, including the patent payments of the twelve projects. One of those currently is a joint venture with Anglo American, and there's approximately a million and a half dollars cash payment a year. So that can net off to two and a half, but it's still a cash draw. We believe that those properties are worth multiples of what we paid for, but a little bit harder to put a pin on what that value is, as most of them don't have resources, they're just expiration targets. What we think we're good at, and Luminex was good at it too, is finding joint venture partners to take on these projects where they're spending to probably earn a majority interest. But we're carried to a certain extent to new discovery. Our goal in the next year. So sometime in 2025 is to have that exploration business self sufficient from a capital perspective and hopefully money flowing into the construction side of the business. And having four to six call it, I think that's a fair goal. Four to six of those projects joint ventured with majors having them being drilled While we could construct El domo. so adventus standalone was a binary outcome of build or not build. Now with Luminex, I think you'll see four to six projects being drilled for new discovery. So optionality plus we have 8 million oz of gold equivalent now, which is excellent leverage to the gold price. And at approximately where the gold price is today, the NPV five after tax, the combo project is about $800 million us. So that is multiples of what we paid for already. Okay, do you have an idea of what NPV eight would be on the condor? My guess, it would go down to 600 million. It's more than El domo. Okay, can you tell me about the funding gap? Like how much money you're going to need to build El domo, how much money you have and have already coming from Wheaton, and then what's left over there and what might be some of the places that you could possibly fill that gap? Yeah. The closing of the Luminex transaction coincided with their final environmental permits and secondary permits. So this is an excellent time for us to source the last piece, and it's not a lot. When we arranged the project financing on the project in 2022, we had most of the capital arranged between packages. With Wheaton and Trafigura, our capital cost has increased about 15% since then. But those Wheaton and Trafigura packages still cover over 75% of the capital costs, which is much more gearing that you would see in a traditional mining project, where traditional project debt financing is 60%. Because of that increase in capital costs, we need to find another $30 million to start mobilizing for construction, which we hope to do in May. And then there's another $35 million requirement at a later date. But we can spread it out over two pieces. We have quite a bit more flexibility now with the permits, but also the Luminex transaction. Try to source that. And what we're trying to do here is to maximize net asset value in order to get there. So one bucket would be selling or doing some kind of significant transaction involving cash on some of the exploration projects. We have more debt capacity in the project than what we've arranged in a currency. Currently, we got $45 million of senior debt. We could potentially go up to 90. So we're talking to four groups on that. We do not have a mining company in our shareholder register. So we could bring in a major company with an equity investment of the premium and perhaps satisfy at least the first 30 million by doing so. And I wouldn't discount M and A as well. It may seem unlikely, but there are current producing companies with one, two, three mines that are generating free cash flow, have a very strong balance sheet, have an operating team, but no growth and no construction. And some of those companies are trading more cheaply than Adventus. So imagine a merger of equal. In that kind of scenario, it would unlock value of both sides and significantly derisk the execution of building el domo. So those are some of the options we have. We are deep into it already. I'm optimistic shareholders will be pleased with their outcome over the next four months. Regarding those companies that you mentioned that already have cash flow, those that you're talking to, are they copper companies, precious metal companies? Well, when you look at Curipamba, our metal mix in order in terms of revenue contribution, is copper, gold, zinc, silver and lead. So the simple answer to your question is mines covering those metals. But generally, we're looking at gold producers, copper producers, copper producers, copper gold producers. Can you tell me about the permits you recently received an environmental license and also a tailings permit. Are there any more that you need to get, and what are the ods that you're going to get them, and when could you possibly start construction? Obviously a forward looking statement here, but you would think with getting an environmental permit and a tailings permit, and we have some water permits that the rest of the permits would come. We've been working on this for years. We expect to file permits over the next few months. The key authorization that is left for us is the conversion of a license on the concession from an expiration license to an exploitation license. We expect that in the next few weeks. Okay. And then the rainy season ends in April or end of April or something like that. After that. Yeah, end of March, early April. What I'm saying publicly is that we don't feel like the project is rate limited anymore by permits. It's more on that final cash combination between the exploitation license, the end of the rainy season, and sourcing. $30 million should lead to a mobilization decision. And we're hoping for that in Q2, but currently targeting May. Okay, excellent. I noticed you have some significant ecuadorian shareholders. Does that help move these projects forward? Like, I live in Mexico, for example, latin american country. And here, if you have those kind of people, they typically have lots of connections and can typically move stuff forward more quickly. Is that kind of how it is there? It certainly doesn't hurt our view. Entering Ecuador in, I'll call it early 2017, was to always maximize ecuadorian ownership, ecuadorian employment by default, ecuadorian dollars at stake in the project. We're visitors in the country, so if we can work with Ecuadorians and have Ecuadorians speak favorably about us and trust us, that's the best chance for success. Does it actually practically lead to front of the line or other benefits? Not so sure, but definitely we built something unique in terms of the mining business. Is there anything else that I missed that you think you would like to share with my subscribers about the upcoming El domo project and where the company might go in the next couple of years? Things like that? Yeah, I think for your listeners that don't have a position in the stock, it's an awesome time to enter. I talked about the last six years and all the money we spent and all the derisking we've done with all of that. We're trading at an all time low. And Luminex, by the way, is trading at an all time low as well. The big de risking, of course, is that environmental permit that's behind us. When you think about everyone talking about copper being the commodity you need to invest in the future, and this huge deficit that's going to happen somewhere between 2025 to 2030, why wouldn't you invest in a mining company that has the highest grade undeveloped copper project? So the best economics likely in the copper development space, the next one to get built, production expected exactly in that time frame where copper should hit all time highs, and then just take your pick for copper price. Do a quick math. 50 million pounds a year times your copper price that you want to use. I like to use $8 times to make it simple. $2 a pound, all in sustaining costs, including the stream. So $6 margin. So six times 50 is $300 million a year of EBITDA. 14 year mine life. Current market cap today is 75 million us. That kind of investment thesis, you will not find in any other mining company on the planet. And you can buy it today at an all time low. Yeah, I think it's a killer value today. Now, you mentioned EBITDA. What about after tax? Like in that scenario, what would the aftertax take for adventist be? It's approximately 40% tax burden. So that would be $180,000,000 of free cash. And then you have to subtract the project financing facilities that are there at the time, which pins if you pay back the debt or not. But say, take another $40 million off that. So $140,000,000 a year. In that scenario, of free cash, you would have paid back the debt almost instantly, like in the first year under that pricing scenario, even then, 140 versus a free cash, versus a 75 million for each year versus a 75 million market cap. Okay. Yeah, I mean, this is why I'm invested in it, because I expect copper to go crazy in the coming years. And also, it's one of the highest margin projects out there, and it's going to be the next one to get built. Like you said, if people have any more questions, who can they contact at Adventus? And what's that contact information? Yeah, I'm as transparent as they get. That's how we connected. Just the other day, you cold connected with me. So my contact details are at the bottom of all press releases and a corporate presentation. My email is christian@adventusmining.com my direct phone number to my mobile, well, it's on there as well. I'm also on Twitter and LinkedIn, so feel free to contact me.
