Proven Probable

Maurice Jackson:

Joining us for a conversation is Rauno Perttu, the CEO of Provenance Gold (CSE: PAU | OTC: PVVDF), which has some very compelling gold and silver projects throughout Nevada and Oregon. Before we delve into company specifics, Mr. Perttu, please introduce us to Provenance Gold and the exciting opportunity the company presents to shareholders.

Rauno Perttu:

Provenance Gold has three projects in Nevada that I think are all individually exciting, and one in Oregon that I believe is a game-changer. We have a project called White Rock in the North-Eastern corner in Nevada that I think is going to become a very serious major deposit. We have a project called Mineral Hill, which is a silver project that is potentially a large bulk mineable silver target. We have the Silver Bow in Southern Central Nevada that has a flow dome complex that I think is going to be a gold surface mine with deep potential for high-grade as well. And then we have the recently acquired Eldorado Project in Oregon, which has a proven drilled resource of multimillion ounce build right now at a higher-than-average grade for open-pit mines.

Maurice Jackson:

Let’s find out more. Mr. Perttu, please introduce us to your property bank, which is strategically located throughout Elephant country, regarded as the top jurisdiction for exploration and mining which is Nevada. Sir, take us to Nevada and introduce us to the flagship White Rock gold project.

Rauno Perttu:

The White Rock project was brought to us by Jerry Baughman of Desert Ventures, and it’s a royalty company, a very successful royalty company. We looked at the project. The reason we took it on was that Steve Craig, our project manager and expert for Nevada had drilled it for Kennecott years ago and loved the project. In that work that we did from historic data that we had acquired, we recognized that the property was much bigger than what was brought to us. So we expanded it to 258 claims, about 5,160 acres. In that acreage, we have an area of 3.2 kilometers by 1.6 kilometers that are virtually continuously surface-mineralized.

Rauno Perttu:

We started drilling on the White Rock in the spring of 2021. We put in 35 holes that added to 65 holes that were drilled historically, which all showed a bulk-tonnage, half a gram per ton gold system that appears to be continuous in sedimentary rocks. We are looking not only at the bulk tonnage potential, but we think at the end of our drilling program, we found first the feeder structure that will bring higher grades and increase the overall grade as we move forward.

Maurice Jackson:

Provenance Gold believes the geology of the White Rock mineral system has similarities to the geology of the nearby Black Pine gold system in Southern Idaho. Can you expand on that for us?

Rauno Perttu:

That is what intrigued me right off the bat. I’ve had a lot of background in thrust folding and thrust complexes. When I looked at the geology of the Black Pine of Liberty Gold there about 50 miles to the east, it was virtually identical. Their mineralization is within a thrust zone package. That thrust package is gold-mineralized. We are in, I believe the same thrust package, but we’re higher in the system, so we’re looking at a structure that is our arch dome. A dome is a structure that has been faulted as part of the doming and it’s formed by the thrusting underneath. So what we’re looking at is the same age rocks, the same lithology as the Black Pine. I believe a system that is going to repeat, as well as another area that we have to the west. We have two potential Black Pine-type deposits under control right now.

Maurice Jackson:

Speaking of lithology, can you share the historic exploration work?

Rauno Perttu:

The White Rock project was looked at by several companies, including Kennecott and they drilled widely spaced holes. The widely spaced holes had up to over 300 feet of continuous gold mineralization, and nobody ever put it together. The reason they never put it together is company A would come in and they would look at one part of the project. Company B would come in and look at a different one. When Steve Craig’s company, Kennecott, in which I was in senior management years in the past, came and looked at it, they were looking for a higher-grade system, which was in vogue at that time. They wanted at least several grams of gold per ton.

Rauno Perttu:

Today, by the way, the average grade of the Nevada mines is about half a gram, which is what the White Rock project is. So they left the project, even though Steve was intrigued and he hit one of his holes. It went 5.7 grams in one of the zones that we have not yet followed upon. The White Rock Project is going to continue to expand as we drill to the south, because the best surface shores, we have not yet reached with our drill rig. We began at the north end, towards the southeast until the weather drove us south.

Maurice Jackson:

May I ask this as well, you referenced that you began your inaugural drill campaign. How many pending assays are there still?

Rauno Perttu:

We have gotten all the assays for this season back already. That was 35 holes. We had a terrible problem with drilling that will not be a problem with a mine. As we came into the main gold area, we would run into open fractures, big cracks in the rock. The reason that becomes a problem is with the drill rig and the cracks in the rock, you can lose your drill steel, which we did on more than one occasion. We can also get stuck and back out because you don’t want to drill any further. We worked around that problem and we ended up with a solution going forward. But what we have outlined now is a gold area that is going to extend. We have extended it right now for about a kilometer and a half and we are planning on extending it another kilometer and a half heading southward into an area that has the best surface shores of any part of the property not yet drilled.

Maurice Jackson:

Well, before we leave the White Rock, what work is currently being conducted there, sir?

Rauno Perttu:

We are right now having Steve and a couple of his assistants working on getting a 43-101 presentation to show the resource as it stands at the moment. Beyond that, we are also putting together a detailed structural picture. What we’ve found is that the dome itself is mineralized in sedimentary rocks, but the higher grade portions are in the feeder structures that bring the mineralization into those dome structures. The detailed geology is starting to fall into place when they go back in and look at the chip tray.

Maurice Jackson:

Leaving Nevada, let’s visit Oregon where Provenance Gold has announced that it has expanded its footprint with the newly acquired Eldorado property, which hosts not one, not two but three historic resource estimates. Mr. Perttu, congratulations.

Rauno Perttu:

Thank you.

Maurice Jackson:

Please acquaint us with the Eldorado property beginning with the location. And what can you share with us about the historic resource estimates?

Rauno Perttu:

The reason that we got into the Eldorado Project was A, because Jerry Baughman impressed with our work on White Rock. And so he offered the Eldorado Project, which was being looked at hard by a major, and we got first rights ahead of the major, which I was very pleased with. The Eldorado Project is in Harnett County, in the Eastern part of the state, near Nevada. It’s in the county that contrary to Western Oregon is very friendly to mining and is treated separately from the permitting difficulties that you hear about in Western Oregon. Allow me to back up. I have a good friend who’s the chief regulator for Oregon who has now just retired, unfortunately. But he told me that Oregon was misconstrued by the outside world.

Rauno Perttu:

He said you can permit a mine in Eastern Oregon, and that there is one that is being mined or permitted successfully right now. And he said we should be tackling this before everybody recognizes the error or their ways and this is a great area to be in. So we tackled the project. We were stunned to find out that it had three estimates by Billiton Minerals and ICan Minerals in the past. They had drilled 142 holes done trenching and testing historically, maybe 30 years ago. Those results originally on 150 holes were on the order of about 800,000 ounces. Then Ican took the data and drilled 50 more holes and expanded the resource to about 2 million ounces at a grade of 0.22, better than half a gram by considerable.

Rauno Perttu:

And then they did one more re-estimate on the Eldorado Project a little bit later that jumped the area that they were comfortable with to 4 million ounces at a grade of 0.22 ounce per ton. The geologist who worked on that project told us, because he’s still around and still working, he was surprised to find that it was open in every direction. That resource is not going to stay at 4 million ounces in his estimation. It’s going to expand considerably.

Maurice Jackson:

That’s encouraging to hear. Well, that may answer my next question. But what has your team excited the most about the Eldorado property?

Rauno Perttu:

Two things. First of all, it has higher-grade portions. It has places that go to as high as an ounce per ton. It’s a system that when they drilled it, they cut off most of the holes at 500 feet. They were not looking for feeder structures. What has happened since then is we have seen that the mineralization continues on down. It continues outward. We have a property where we can start at a much higher grade but have an overall grade that’s better than, 0.2 ounce per ton, which is unusually high for an open-pit these days.

Maurice Jackson:

All right. You have three historic resource estimates. Does Provenance Gold have a timeline on when the Eldorado property will become 43-101 compliant? And how will this come to fruition?

Rauno Perttu:

We recently had a record snowpack in the Northwest, so that’s going to possibly slow us down a few weeks. But as soon as the snow is out and we can get it permitted, the permitting process will be no longer than 30 days. But we will be putting a drill rig on site. That drill rig will focus on twinning some of these historic holes so that we can make those holes compliant. As you may know, 43-101s have a different set of rules than they did before, 43-101s. All of these holes were drilled before 43-101 requirements. What we plan to do is to verify those holes, even though they were drilled for internal use by very reputable companies using very good labs, so we’re comfortable with the results. We’re planning on drilling possibly 15 to 20 confirmation holes and using that data to then compile a 43-101 that will verify those resource estimates that were done in the past.

Maurice Jackson:

And maybe this is too early to tell, but how many meters will that be sir, of drilling?

Rauno Perttu:

It’s a little early off the top of my head, but take 20 holes at an average depth of 600 feet, and there’s your number.

Maurice Jackson:

Leaving the Eldorado property, sir, please introduce us to the third compelling project in your portfolio, Mineral Hill, which looks to be endowed with tons of silver.

Rauno Perttu:

Mineral Hill is an odd property. I wasn’t taking it very seriously until I went out and saw it and we acquired it because it’s a ridge that was mined for high-grade silver starting in 1868. That mining continued until the 1930s. When they started it, they were getting silver at the grades of about 140 ounces per ton, which is remarkable. As they ended mining, they were in 25 ounces per ton material, which by the way, the reason for the high grade was because it was secondarily enriched, which silver does. When they got out of that secondary enrichment zone, the average grade of that zone was about 25 ounces per ton. Well, their waste rock, and there’s a copious volume of waste rock on the property, a stunning amount of waste rock on that property, averages about 120 grams between three and four-ounce of silver per ton on bulk testing that was done before our coming in.

Rauno Perttu:

If one compares that to a project like Coeur’s Rochester Mine, which is mining a half-ounce silver per ton, and you can see where three, four-ounce silver per ton is a very economic number on a bulk tonnage situation. We have a road that needs to be widened and improved, and we’re going to get a drill rig in there probably toward the end of this coming summer because our priorities are the two aforementioned projects, and putting some confirmation holes into that silver structure. The reason I like Mineral Hill is the mineralization is focused on a thrust fault that’s standing on its end. That thrust fault has a zone of mineralization about 300 feet, a 100 meters wide, a lot associated with it. That zone is about a kilometer north, south. We think that there’s no reason to have chopped off the mining in the old days, other than the fact that they ran into groundwater problems, which would not be a problem today.

Maurice Jackson:

I’m assuming that you’ll be twinning these holes as well.

Rauno Perttu:

Actually, in that area, we don’t need to. When you see that property, it looks like Swiss cheese. There are huge workings in there and the twinning holes isn’t going to do us any good. What we’re going to do is put angle holes across that thrust fault working our way downhill. The deposit is on a funny little Hog’s back ridge like this, which actually for mining is going to be wonderful because of the strip ratios. But anyway, we’re going to drill from the side holes coming on in through the thrust zone and chase it down that way.

Maurice Jackson:

Interesting. Leaving Mineral Hill, sir, introduce us to your fourth and final project, the Silver Bow, which seems to be the perfect compliment to Mineral Hill.

Rauno Perttu:

The Silver Bow is about 50 miles east of Tonapah, Central South Nevada. Its gold system has been looked at by a lot of companies, but nobody put it together. We came in there and recognized that the whole district, which is about 4 miles long and a couple of miles wide, is part of the same system associated with the Caldera. When we looked at it, we recognized that the geologists that had drilled it in the past in one spot or another spot had never put the package together because they didn’t understand the geology. The geology is a Caldera complex. Within it, there are flow domes, which are piles of rhyolitic volcanics that are associated with a lot of the gold discoveries in Nevada, big discoveries. What we are going to look at is going too a flow dome complex that we’ve identified that has surface sampling of a breccia zone that is all economic potential for open-pit grade up to multi-gram for an open pit potential.

Rauno Perttu:

Yet at the same time, there are swarms of veins that cross this flow dome, this volcanic pile. Those flow dome structures, the veins, are associated with the boiling zone. Those boiling zones in Nevada have been the host for some very high-grade and elsewhere in the world, very high-grade gold discoveries. We’re excited to test the boiling zones of these vein structures as well as look at the bulk tonnage of the breccia zone that already has economic surface numbers across the big area.

Maurice Jackson:

Have drill targets been identified and what is the plan moving forward?

Rauno Perttu:

Drill targets have been very much identified. We’ve done the geology on Silver Bow. We know where the main structures are. We’re planning on setting up and drilling across those vein structures. If we can do it right, we’re going to be drilling some of those holes through that breccia zone that we already know is gold-mineralized and into the veins’ forms, hopefully at their boiling zones. That’s going to be a fun, exciting program.

Maurice Jackson:

I’m looking forward to it. Now, before we leave the property bank, multi-layered question, what is the next unanswered question for Provenance Gold? When can we expect a response? What determines success? And when can we expect news flow?

Rauno Perttu:

First of all, on news flow, the two news stories that are coming up are going to be the 43-101s that are going to take the next two, three months to complete. The next major news flow that we’re going to get is going to be when we start doing the twinning at Eldorado because that’s going to, I think, get eyes on us. When you have holes that you can drill that are up to multi-gram for several hundred feet and continuously in gold, which the historic holes had, then that’s going to catch attention. Especially because we’re confirming a potentially a multimillion ounce resource.

Rauno Perttu:

I think you have to wonder what is our long-term plan? Well, obviously for a junior to advance major projects like this, we need help or partnership or takeover. And being as we already appear to have snatched Eldorado from the jaws of a major, I think we’re going to have an interest as we move forward in that takeover. Our goal is to make as much money for the shareholders as we can in the nearer term, which means the next year to two years, not long-term.

Maurice Jackson:

Now leaving the project site, let’s discuss some important topics germane to your projects. Are your projects 100% owned or do they have earning options?

Rauno Perttu:

Right now we have an option on Eldorado. That means that we will be paying $2 million over five years. And we have a hundred percent ownership with the retained royalty. On White Rock, we are paying $250,000 over five years and we will own a hundred percent with a retained royalty. For Mineral Hill and Silver Bow, we have very cheap deals that will result in us taking them over the next seven years and five years.

Maurice Jackson:

Now we’re going to get into some numbers later in this discussion, but from a capital expenditure standpoint, how is infrastructure on your projects?

Rauno Perttu:

They all have by standards elsewhere in the world, good infrastructure. By Nevada standards, you go off paved roads onto a dirt road for a distance and you’re there. So they’re accessible by drillers and by drill rigs right now. There are motels within driving distance, the whole package. So access is not a problem compared to working for instance, in Northern Canada.

Maurice Jackson:

Are you fully permitted?

Rauno Perttu:

We are fully permitted as we need to be. Our permitting will take place as soon as the snow is gone at Eldorado. We have confirmed that there will be no problem in permitting our drilling program there. On White Rock, we are permitted and we are adjusting the permits now for the next round drilling, which is not going to be any hurdle whatsoever. So there’s no hurdle that we see in permitting on any of the four projects.

Maurice Jackson:

Speaking of hurdles, we’ve discussed the good, let’s address the bad. What can go wrong and what are your action plans to mitigate that wrong?

Rauno Perttu:

The worst thing that can go wrong is gold price can go in the toilet, which I don’t believe. The other thing that we can run into is any changes in the national regulatory system regarding mining. I don’t know if that’s a risk, but that’s a risk anywhere in the world. As far as our projects, I don’t see any major downside because we have the funding to drill these projects. We understand the geology. And overall, it’s about as good a bet as you’re going to get. I think a far safer bet than somebody like Bitcoin.

Maurice Jackson:

Switching gears, let’s introduce your board of directors and management team who run the majority of the company’s operations on a day to day basis, beginning with your board of directors.

Rauno Perttu:

The two people that have been doing most of the work within the board of directors are Rob Clark, our president, and myself.

Maurice Jackson:

On the technical side you have Steve Craig what skillsets does he bring to the table?

Rauno Perttu:

He’s an outside consultant, but he’s an integral part of the company. I’ve known Steve for 30-plus years. When he was exploration manager for Nevada and Kennecott, I was director of business development. We got to be friends. I trust him. He does really good work. He’s been involved in discoveries across Nevada. I think that he will agree with me a hundred percent that we have two discoveries in the making right here.

Maurice Jackson:

Who is Rauno Perttu, and what makes him qualified for the task at hand?

Rauno Perttu:

I have my degree’s in Geology, and I began my career in my early 20s. I am now an old fart and I have been working in Geology my entire career in various positions. I’ve made discoveries, including a major gold system in Montana. I have served in senior positions including director of business development for Kennecott. I have looked at properties around the world. My forte, I think, is actually in deciding whether a project is going to be economically developable. That’s because I have had training from my first boss who was a geological engineer, who said that your position as a geologist for Pacific Power, is not to be a geologist but to make money for the company. I’ve always remembered that. And he taught me how to evaluate from a mining standpoint projects.

Rauno Perttu:

I have always followed up on that. If you’re going to have a mine, you have to cover all the red flags. You can’t hide them. You have to face them. That will be your first way of deciding whether it’s a good or bad project. If you have a great project, but it’s in the middle of Yellowstone Park, you’re not going to do anything with it. So we went down that road and we have used those criteria in our company. If we have a project, we know it’s developable, we learned from the Yukon that even though everything else was right, if the cost is going to be prohibitive and the season is going to be short for a junior, that’s not the place to be. Therefore, we switched immediately when we made that discovery and are in a place you can work year-round. The costs are very good on a development and exploration basis.

Maurice Jackson:

Well, I admire the veracity and the perfect blend of that geological and business acumen. It all comes together right here in Provenance Gold. How about the boots on the ground? Who do you have on your technical team?

Rauno Perttu:

Right now, our main technical is Steve Craig and myself. We have brought in other geologists as we need to on a part-time hiring basis. When we were drilling, we had two geologists that we brought in to sit on the drill rigs with Steve’s supervision and my supervision of Steve. The two of us, by the way, have a combined history in the mining business of more than a hundred years. We have both had extensive experience in both discovery and property development in Nevada.

Maurice Jackson:

Well, let’s get into some more numbers here. Please provide us with the capital structure for Provenance Gold.

Rauno Perttu:

Provenance right now, we have about $1.3 million in cash. That is all we want to take in right now because we are very concerned about not diluting the company to maximize share value. We have little less than 80 million shares outstanding right now and about 33 million warrants. We’re trying to keep that number in that kind of a very manageable level moving forward. We’ve been offered a lot more money, but we don’t want to take it until we need it. And by the way, one of the main reasons we don’t want to take it is we think our company is highly undervalued. When you have two potential multimillion ounce projects, two other promising projects, and you’re trading at what we’re trading at right now, there’s something wrong with that picture. I think it’s going to be corrected when we do our confirmation drilling at Eldorado.

Maurice Jackson:

I have a Rolodex of names in the space here that are very well recognized. That’s the very reason why I we are speaking with you because they feel the same way.

Rauno Perttu:

Oh, good.

Maurice Jackson:

All right, sir. How much debt do you have?

Rauno Perttu:

Zero.

Maurice Jackson:

And what is your burn rate?

Rauno Perttu:

When we are not drilling, our burn rate is less than about $20,000 to $30,000 a month. The reason it’s a hard number is you have payments on claims. You have all these other things that come up. So our burn rate is, call it $30,000 a month, but it fluctuates completely with what’s going on with the program and the timing for paying our claims. In the United States, you pay claims on the first day of August. It’s not a large number, but it’s a number that hits once a year.

Maurice Jackson:

What percentage ownership does management have and who are the major shareholders?

Rauno Perttu:

Management owns about 15%. But not only do we have that ownership, but a lot of the early stock is also in friendly hands. We are very comfortable that we are in control of the company until we decide that we want to make a deal with a major.

Maurice Jackson:

What is the float? I believe it was around $58 million. Is that correct?

Rauno Perttu:

Maurice Jackson:

And are there any redundant assets on the books that we should know about?

Rauno Perttu:

No.

Maurice Jackson:

Are there any change of control fees and if yes, what is the compensation?

Rauno Perttu:

No, there aren’t.

Maurice Jackson:

That’s impressive. If readers is not aware, that’s quite impressive. Very commendable, sir. And is management charging a consulting fee for any services?

Rauno Perttu:

No. Rob and I are taking modest salaries as of recently. But other than that, no fees other than paying the consulting fees for Steve Craig as a regular outside consultant.

Maurice Jackson:

In closing, sir, what keeps you up at night that we don’t know about?

Rauno Perttu:

I sleep very well.

Maurice Jackson:

Good to hear.

Rauno Perttu:

But what is frustrating to me right now is the fact that we have not gotten the recognition that I thought would be coming our way for having the package that we have and for the higher quality package we have.

Maurice Jackson:

Well, I remember offline, you were talking about your desire to leave a legacy. Do you want to expand on that?

Rauno Perttu:

I am, as I said an old fart and great health and all the rest of that. Nevertheless, I want to leave something that is worthwhile, that I can be remembered for and I can feel very happy about. So to me, Provenance is that vehicle. I think if we can make Provenance a very successful company, I will die happy. And Steve Craig, by the way, who’s almost as old as I am, has the same feeling, that this is our last hurrah. I hate that term, but that’s what it is. And we’re going to make it a good one.

Maurice Jackson:

Last question, sir. What did I forget to ask?

Rauno Perttu:

Probably any embarrassing questions and I can’t think of anything embarrassing, so I think you did a good job.  I would encourage readers to visit our website: www.provenancegold.com and or please call Rob Clark for additional inquiries at 1-250-516-2455.

Maurice Jackson:

Mr. Perttu, it’s been a pleasure speaking with you today. Wishing you and Provenance Gold the absolute best, sir.

And as a reminder, I’m a licensed representative for Miles Franklin Precious Metals Investments, where we provide a number of options to expand your precious metals portfolio from physical delivery, off-shore depositories, and precious metal IRAs. Call me directly at 855-505-1900 or you may email, maurice@milesfranklin.com. And finally, please subscribe to provenandprobable.com, where we provide mining insights and bullion sales.