Equitas has turned around before. Having missed on results when it was a nickel deal, the company quickly pivoted when a South American gold company became available that could turn it from an explorer to a producer in quick time.
That’s when I first met the new CEO, Chris Harris, and heard about his big plan to barge into small scale production sooner rather than later, using a debt stream to finance the move while keeping dilution to a minimum. The plan was to use Cartesian Royalties for a $6m revolving gold prepayment facility and equity finance package, and start upgrading facilities to the point where it could pay for itself.
I don’t hate ‘start it small and move quickly’ mining plans as a rule. Integra Gold (ICG.V) has done well with such a plan. But Harris’ plan was not well met by insiders and shareholders.
While the stock had its moments in the months following, moving from $0.05 to as much as $0.12, EQT eventually deflated like a kid’s balloon in the corner of the living room, slowly falling back to earth, shriveled and forgotten.
Enter Dr. Alan Carter, a PhD with a specialty in gold geochemistry, and a director and co-founder of Peregrine Metals which sold to Stillwater for US$487 million. He was also founder of Magellan Minerals, and a four-time gold discoverer, including one that is set to become Brazil’s third largest mine.
Dr. Carter is an imposing figure. He’s made his bones in mining many times, has no time for small talk, cuts right to the chase and makes his points with well-considered, tough to argue against words.
“I was a director when Harris came aboard and, frankly, I wasn’t a fan of his plan,” says Carter, a British expat with extensive experience in South America.
“I thought it was too early to go into debt, and that with a few more pieces of work done, the Cajuiero project [Equitas’ go-to play] could be much bigger and easier to finance. There’s no panic, we don’t have to go to a place where you need to produce quickly to pay off your debts. We have a mining permit, but no PEA. The ounces aren’t sexy enough to make people sit up and take notice yet. So let’s get that done and keep the risk low.”
Carter speaks Spanish and Portuguese, and owns some 9 million shares in EQT. That’s a lot of shares to sit on while the price shreds over several months, but he sees value in a place previous management didn’t; in the 11 other projects the company currently holds.
Yes, 11. Harris managed to add a few assets into the mix, and the mix is now strong.
“I’ve gone for a long look through all the other prospects under Equitas, and I found a couple that I think are outstanding,” he tells me. “Why we wouldn’t move some of those forward is beyond me, so with Chris having health issues, I’ve taken on the role of interim CEO with a view to fleshing those out and moving Cajuiero forward.”
Carter stepping up as CEO is not something he does for fun. The man has a lot on his plate and moves in rarefied air in North American mining circles. Serving currently on the board of Anfield Gold and Equitas, he was also, until very recently, President and CEO of Magellan, which Anfield acquired in May. Back in the day, he traversed South America with Rio Tinto and BHP Billiton, where he was responsible for the commercial aspects of that company’s global portfolio of nickel and diamond exploration projects. He is a rock star, in the geological sense of the term.
Equitas is an odd place for a guy like Doc Carter to land, in that the public view of the deal is that it’s beaten, unproven, risky, that it’s changed course too many times, and that it lacks a direct focus.
But bringing Carter aboard was a move that specifically addresses those concerns, by bringing a bazooka to a knife fight.
“All of these projects we have, they’re in cow country, so they all have great access. There’s some gems in the portfolio so I plan to have a lot of work being done and a lot of news coming. It’ll be a constant stream of delivering on our promises and showing the work as we do it.”
That’ll be helpful to me, as a guy working with Equitas to keep their news front and centre. EQT was the first company to sponsor this site when it was brand new, so it’s been frustrating watching newsflow dry up and the price come down over the last several months.
Dr Carter makes great pains at pointing out, while he disagreed with the debt financing, Harris didn’t do a terrible job – just a different job than he would have done.
“The market didn’t like what they saw, and that’s seen in the share price. But we’re just two different guys. [Harris] was a metals trader, I’m a geo, so we see different things when we look at the same page. I see those ignored projects, which is how Equitas was treating them, as being really strong potentially, while Chris was focused on the one and making that happen sooner rather than later. It’s just a question of how you get there, and I think we’ll get there in a much bigger way by widening the scope.”
Equitas now plans to move through their asset portfolio and farm out anything non-core, but keep several projects within that core group that are likely to show quick progress. A half million dollar raise is planned, bringing in just enough cash to get the wheels turning which, it’s hoped, will bring more interest in the stock and make futures raises more lucrative.
From a news release this week:
In the short term, the Company is planning an aggressive exploration program at several of these projects including Crepori and Nova Canaa. The Company also intends to offer a number of projects for joint venture and at the same time capitalize on its experience within the region and ramp up its efforts at identifying and acquiring other projects which have the potential to become significant gold mines.
“The formula for Cajuiero is simple,” says Dr Carter; “We get the PEA, we bring our ounces up, we bring the grade up. There’s been around 7 million ounces produced in the region, so we’re not reinventing the wheel. Just do the work, keep the market informed, and show progress constantly.”
He’s keeping the market informed, alright. Three news releases in eleven days, and the stock has already started to march upwards. Carter just put out news about surface gold values moving up at the Crepori project, so the plan to quickly work the side projects is clearly well underway.
I hold Equitas stock and have bought more, because, frankly, putting Carter at the wheel is like putting Cristiano Ronaldo into a Sunday pub league football team. You can’t stop him from scoring. You can only hope he stays with you long enough to win a championship.
— Chris Parry
FULL DISCLOSURE: Equitas Resources is a founding sponsor of Equity.Guru, and the author owns stock in the company.