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A very precise exploration strategy
that is focused on Quebec virgin land and a strong financial situation has made Virginia
Gold Mines positioned as the leader in exploration in Quebec
Mining
Gold, Copper and Nickel Exploration
(VIA – Toronto)
Virginia Gold Mines Inc.
116, St-Pierre, Bureau 200
Quebec, QC Canada G1K 4A7
Phone: 418-694-9832
Andre Gaumond
President and
Chief Executive Officer
Interview conducted by:
Lynn Fosse
Senior Editor
CEOCFOinterviews.com
August 2004
BIO:
André Gaumond, Geological Engineer
President and CEO
Mr. Gaumond is a graduate Geological engineer of
Laval University. He obtained a M.Sc. in Economic Geology at the Polytechnique School in
Montreal.
From 1981 to 1987, Mr. Gaumond worked as a consultant
for various mining companies such as Noranda, SOQUEM, Quebec Government and Eldorado
Nuclear. From 1987 to 1990, he went on as a mining analyst for financial institutions in
Montreal namely Pemberton Securities and Midland Walwyn. In 1990, he joined Corpomin
Management Inc. as a technical and financial advisor. In 1995, he was appointed President
of the Quebec Prospectors Association. Mr. Gaumond was also awarded two important prizes
that are the Prospector of the Year1996-1997, presented by the Quebec Prospectors
Association, and the Resource Award presented by the Ordre des géologues du
Québec in 2001.
Since 1992, Mr. Gaumond is president and CEO of Virginia Gold Mines. Since January
1993 he sits on the board of Vior. He is also a director of the Prospectors and Developers
Association of Canada (PDAC) and the Canadian Institute of Mining, for Quebec. He is
also a member of the Ordre des ingénieurs du Québec.
Company Profile:
Virginia Gold Mines Inc. (TSX: VIA) is a mining exploration company with its head office
in Quebec City, Canada. Long regarded as a leader in the Province of Quebec and one of the
largest landowners in northern Quebec with 2400 square kilometers, Virginia works
relentlessly on many projects in various stages of development in order to develop mineral
resources. Many of Virginia’s projects involve partnership agreements with major and
junior mining companies, such as BHP Billiton, Noranda/Novicourt, SOQUEM and Globestar
Mining. These exploration partners contribute to over half of Virginia's annual
exploration budget.
Strengthened by an exploration team recognized as being one of the best in Canada,
Virginia has strategic alliances with many consultants and universities that participate
in the development of its projects. Virginia is constantly on the lookout for world-class
deposits or new mining camps and Quebec, noted for its exceptional mineral potential, also
offers political stability, one of the best geoscientific databases in the world, and a
multitude of incentives programs aimed at mining exploration.
With a proven history of discoveries and high auriferous potential, Quebec offers
exceptional soil for prospecting auriferous deposits. This is why about 70 % of Virginia’s
projects are gold projects. While the majority of Virginia’s portfolio remains
dedicated to gold, fully one third is allocated to base metals and the continuing search
for platinum-palladium.
CEOCFOinterviews: Mr.
Gaumond, I know that you’ve been at Virginia Gold Mines for quite sometime, what is
you philosophy and strategy and how has that changed over the years?
Mr. Gaumond: “Our
strategy has been the same since the beginning. When we reorganized Virginia Gold Mines we
wanted to be an important player in Quebec. Our exploration strategy is defined in five
points. First, we are focusing on one specific territory, namely Quebec, so we are not
spread out. Because of that focus we have developed an expertise, which is our second
point and that expertise is now recognized all across North America. Because of that
expertise we’ve attracted the attention of major mining companies, giving us the
opportunity to sign deals with these important partners. So number three in the points
defining our strategy is the fact that we are encouraging partnerships and that is why we
have a lot of great players with us. Point four is that we have a diversified portfolio of
properties; by focusing and exploring Northern Quebec we have found many different things.
We take what Quebec offers us, which means that if we go in a territory and we find gold,
we will explore for gold, if we find nickel, we will explore for nickel. That is why we
have a diversified portfolio of properties. The fifth point is that we try to have a solid
financial situation in order to be able to guarantee that we will explore over a long
period of time. We want to have a strong financial position when its time to negotiate
with partners and when we need to react rapidly to a new discovery in Quebec.”
CEOCFOinterviews: Why is Quebec a good place to be focused?
Mr. Gaumond: “It is recognized by the Fraser
institute as one of the best places on the planet to do exploration and mining and there
are many reasons for that. One of them is obviously the potential; hundreds of mines have
been found in Quebec, so there is already a track-record. There is lots of expertise here
because of that track-record, because of the history, the Quebec government is really pro
mining. Through several tax incentive programs they help us to share the risk in
exploration and reduce such a risk. Very attractive in Quebec is the infrastructures;
there are large hydroelectric dams, roads and mining infrastructures. This all points to
Quebec as being pro mining and a very good territory to make discoveries and build mines.
On top of that I should mention that for most of the Quebec territory, there is a treaty
that has been signed with the First Nations, which means that the access to the
territories is very easy.”
CEOCFOinterviews: Tell me about the projects that you have
going now.
Mr. Gaumond: “We have five projects that are priorities
for us. We have already discovered two gold deposits and that’s important because we
have resources in these two gold projects, one is called La Grande Sud and the other is
Poste Lemoyne. On top of these properties we have announced an amazing base metal
discovery this winter. It’s a poly-metallic, zinc, lead, copper, silver project and
we just optioned this project to Noranda Inc. (NSYE: NRD, TSX: NRD). Virginia Gold is the
operator and Noranda has to spend $8.25 million, to earn 50% interest, it is the largest
deal that we’ve ever signed. We really like the partner and the size of the deal
shows the potential of the property and the significance of the discovery. We also have
two new gold discoveries, one is called Eleonore and the second is called Corvet, on which
we are planning to spend lots of dollars, including drilling, this summer. So these are
the five main properties from which we will probably generate a lot of exciting results in
the months to come.”
CEOCFOinterviews: Will you be working with a partner to
extract the metals?
Mr. Gaumond: “It is a case by case situation, so we can
not say in advance what we are going to do. We could certainly bring a partner that would
help us develop it, we could sell it to the partner if the price is right, it could be a
takeover situation or we could decide to put it into production alone and become a
producer. It depends on the price of metal at the time, the grade and the size of the
deposit, the location of the deposit and the amount of dollars that will be needed to put
it into production. There are so many factors including the market at that time, which
make it impossible to say what we will do at this time.”
CEOCFOinterviews: As you said, Quebec is a very big place,
how do you decide where to look?
Mr. Gaumond: “There is no magic recipe, so it’s a
complex question that requires a complex answer, but let’s say that it’s a
combination of experience, expertise in the area, the fact that there is good geology, we
use geo-chemical and geo-physical techniques and state of the art technologies. So it’s
a recipe made of many ingredients, but at the end of the day what we do is we cover very
important territories, see if the geological potential of the area is good and then
pinpoint specific areas and then hopefully end up with good technical success on the
ground. It is a long and quite expensive process. Deposits hidden in the ground are very
small if you compare the size of these deposits to the immensity of the territory.
However, mother-nature gives you different tips, geo-physical tips, geo-chemical tips and
geological tips and you have to trace back the location of these hidden deposits.”
CEOCFOinterviews: Tell us about the newer technologies that
you are able to use.
Mr. Gaumond: “We are using the MegaTem technology, the
V-TEM technology, these are airborne technologies, we are also using Deep E-M technology
and ground geophysics. We are using a lot of new technologies in order to pinpoint targets
within the immensity of the territory. We are also using a lot of glacial displacement
technologies, we try to find indicator minerals from glaciers in the soil and trace back
the source of these minerals back to the deposit.”
CEOCFOinterviews: Has the current economic climate where
people have looked at base metals positively helped in you funding,? How have you
been able to maintain the position you have with so much capital?
Mr. Gaumond: “We have $18 million in cash and no debt,
so this is quite good for a junior explorer and obviously the quality of our partners, the
quality of our properties, the fact that we are focused and the fact that we’ve
managed quite well the liquidity over the years, have help us to raise money over the
years. To answer your question, the fact that we have had a good mining market over the
past two years, has help us to raise additional dollars last year. So the market always
helps to raise and maintain a good financial situation and that’s exactly what
happened over the last two years.”
CEOCFOinterviews: There a lot of junior mining exploration
companies, why should people be investing with Virginia Gold Mines and what should they
know that might not come to the surface when they first look at the company?
Mr. Gaumond: “We are very efficient with the reputation
of being able to do a lot of work with one Canadian dollar; we have a spectacular
portfolio of properties, a track-record of discovering deposits and that definitely shows
you the quality of the team. There aren’t a lot of companies that find deposits like
that. We have .50 cents in cash per share, so the stock is trading at $1.10 and that gives
you a value of .60 cents per share for the company. We already have close to a half a
million ounces of gold in resource and a huge potential to add to that resource. The fact
that we have lots of partners spending millions on our properties, which means that we are
sharing the risk in exploration with other companies, helps us to reduce the risk in
exploration. For example our budget this year is $9.2 million, so that makes us the most
active explorer in Quebec. Of that $9.2 million, Virginia’s contribution, our cost,
will be $2.8 million, so you can see that we have a beautiful leverage. The rest will be
financed by partners and by the Quebec government through incentive programs. We have $18
million in cash and we are spending $2.8 million of our own money, so we can last for a
long time with that. Having a $9.2 million 2004 exploration budget means that we are going
to generate a lot of results. Eventually these results will get the attention of the
financial community. If we continue to increase our resources and to sign deals with
majors like we’ve been doing over the years, we feel that the price of our share will
perform accordingly. In addition, Virginia Gold Mines is the main landowner in Quebec and
land position is very important because around the world all of the good potential land
for finding mines is controlled by companies. If you control large land positions in a
very promising territory you control the territory and that by itself represents a great
value since all of the majors are very anxiously looking for new deposits.”
CEOCFOinterviews: It seems like things are really coming
together.
Mr. Gaumond: “Yes!”
CEOCFOinterviews: As CEO, what are some of your daily
responsibilities and what would you say is your role?
Mr. Gaumond: “I have a diversified role that includes
negotiations with the majors, taking care of the market, promotions, signing agreements,
acquisitions, raising dollars, approving budgets and dealing with the new regulations, I
also visit periodically our project in the field. We also do tours of information with the
native community and we attend several gold mining shows to tell our story to all the rest
of the world, New York, San Francisco, Europe, Toronto, Vancouver...”
CEOCFOinterviews: In closing, what would you like readers to
remember about Virginia Gold Mines?
Mr. Gaumond: “The territories up north are totally
virgin, totally unexplored and we are convinced that this is the future of the mining
industry. We have a very precise exploration strategy, we are focused, we have a great
land position, we have a good reputation with a lot of cash, we are very active with good
partners with lots of credibility. Partners gave up the operatorship and they fund the
exploration activities, so they provide the dollars and we do the work. This is very
unusual for a junior mining company because usually the majors want to be the operators.
Altogether that defines what is Virginia Gold Mines.”
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