High Grade Gold & Antimony: Inside One of the World’s Most Exciting Discoveries with Michael Hudson

Rob, pleasure to be here. Thank you for having me.

Yeah, sure. I'm a geologist, a trained geologist, and my passion is discovery. So that is really what's driven a lot of my career. I'm a country Victorian, so I've come back to where it all started, literally. I grew up next to Sunday Creek, our project, and I'm fifth generation from that town. So I'm ready for it in my mid to late 50s, and probably wasn't earlier in my career. I started my career and was well trained in Broken Hill, which is one of Australia's bigger underground mines, and was there for six years, five or six years, and then a little bit around Australia. Got sent off in the mid-90s overseas and had a wanderlust to travel. So made discoveries through Pakistan and Peru. Lived there for four years and still working on and off there. I can't get Latin America out of my system completely, and then a lot of time — 20 years in Europe — working through Sweden and Finland, and lots of discoveries from the periodic table: gold and lead-zinc and rare earths and graphite, a number of different things. And then at the start of COVID, saw the opportunities in North America because I had 25 years in the Canadian and North American market, seven companies I've floated across there, and saw everything that was happening in my backyard. My wife and I made the decision for the family to be based in Melbourne while I traveled. And so I'm getting on a plane doing that, and the money is coming back to Victoria from the North American market. And so I bought back into projects that I'd owned 20-plus years ago in the Victorian goldfields, and then the last three or four years has been building this asset. Sort of all come back to where it all started.

Absolutely. Yeah, I've been a foreigner for a lot of my life, and I've loved living and working in different cultures. But ultimately you're never part of a project because you're from away, and you try and learn how to operate and bring in key people around the project who are local. But genuinely I can say here I am, and it's 60 km from Melbourne, and we've got one of the most exciting gold projects on Earth, and here we are in the backyard. So I'm either — I joke — I'm either very smart or very slow, taking 30-odd years to find the best gold discovery in my career was back to where I literally just went to primary school and looked over the project.

Sure. As you mentioned, it's dual listed, ASX and TSX. It's a discovery that was made under a series of old mines. The project's called Sunday Creek. It was mined from the 1870s to World War I. It is gold and antimony — 80% coming from the gold, 20% coming from antimony in terms of recoverable value. As I mentioned, it is one of the most exciting gold discoveries on Earth in terms of just the drill hit rate. You can look over the last couple of years through our news flow and you won't see anything else like it on Earth. And we've got an exploration target out there. We put 130 km of drilling into it at 2.2 to 3.2 million ounces at between basically 8.5 to 10.5 g gold equivalent. So a multi-million, 10 g deposit is basically what we've got. And it's getting bigger. We've got 11 rigs there. We're going to 24 by the end of the year. We've got 100 people working on the project now. It's going to 200 people by the end of the year. It's just one of those magnificent things that exploration can deliver, and Victoria's done it again now with Fosterville being the best gold mine on Earth from about '18 to '21, and another key discovery has come out of this field. So it's essentially underpinned by everything that Sunday Creek is, and we're racing to take what was an exploration project now to pre-development, and we're going underground. We've been permitted to go underground with a decline. All that work's happening. So we've got lots of surface work and trucks and lots of activity. It's moved on from the simple exploration project it once was.

Yeah, it's a really interesting question. So with any discovery, it's a wall of worry that you have to get over at various points, and there's always walls of worry. So I see my job in many respects as overcoming those walls of worry and then going from one to the next. So initially it was seen that Victoria was difficult to form modern ore bodies because it was thought everything was nuggety. But as I mentioned, Fosterville and Sunday Creek, and also another project between us, Costerfield, have a very different geology than what made Victoria famous — Ballarat and Bendigo in the 1850s. So it's those new type of deposits, and they are geologically newer — they're 70 million years younger — that make for these very economic or reconcilable deposits. That's number one. So the overwhelming weight of evidence is we put 130 km into this and that we can put detail drilling and it stacks up, and we're hitting high grade, high grade, high grade, and not just having one hit. So the continuity is demonstrated. So that wall of worry is gone. The other wall of worry is always around permitting in Victoria, because arguably it's been the worst place in Australia to permit a mine for the last 30 years, and then all of a sudden it's become, over the last couple of years by the stats, the best place to permit a mine. Four mines have been permitted. Our decline was permitted in four months, and it would have been two months if we were better. So the government's way ahead of us in terms of it being systematically processing things. So there's the walls of worry, and then the minability is now the wall of worry and how we're going to mine it. And we're going through all that with the mining engineers, and we're very confident this will be a very productive mine, and hence going underground and demonstrating that is a key part of that aspect. So it's the overwhelming weight of data moving past that initial discovery hole, and then demonstrating that it can be a project that you can permit and actually develop. So it is momentum, and we're really running here to keep that momentum working. And then you can't beat just basically good geology, right, that hangs together, and that's the first principle, and then the softer side of permitting. And I suppose they're the two aspects to answer your question simply.

Well, there's two renaissance factors for Victoria in terms of the renaissance that we're seeing here around the gold industry primarily, but the mining industry as a whole. One is that difference, at least in geology, that the best deposits on Earth can form here and they get better at depth. And so Fosterville was first, Sunday Creek is number two. So lightning has struck twice. So that's renaissance number one, and understanding how those deposits work so we can work out where there's more of them, not only internally at Fosterville or Sunday Creek, and then perhaps more around the state. So that's number one, renaissance. Number two, and that feeds to success, right? And so people see the success and the wealth and the great jobs that come out of something like Fosterville that's been now there for a long time, employs 800 people, and Kinross is a great company. And then that leads to political success, and the local member for Fosterville is now the premier of the state, Jacinta Allan. She knows and understands and has seen mining firsthand, that it can be a good industry, that it's not just a bunch of people pillaging the earth and trying to make a buck. There's genuine people trying to operate effectively and do the right thing at every point. So it's an industry that can be supported. And then of course the critical minerals overlay has helped hugely for society, bringing that the milk actually comes from the cow, or the antimony goes into the circuit board or whatever it may be. So people get the linkages now much better than they have for the last 30 years of my career. So it's success breeds success. It's actually having politicians who understand and leading from the very top down to create systems that work and empowering the bureaucracy to make those decisions and knowing they can make them with the support of the leadership. So I've seen effective government work very well here in that respect.

So there's two ways to create value in our business. One is market value, and that's more the hope, and that's discovery and making it bigger. And then there's fundamental value, which is converting the rock that you've discovered into economic rock and then extracting it and for many years producing returns on investors' money. And these very high-grade deposits are incredibly high margin. I mean, you look at Fosterville and the wealth that it created, and waiting to see what some of the studies that come out of this project over the next year or so are going to show. So I think that's a key point. The other key point is around people. Now, it's always around the people and how you can attract the right people through the various stages of the project. So we've gone from an R&D company, which is exploration, to now an R&D company, because we're still exploring. We never stop exploring. You know, we're putting holes, you know, a kilometer and a half under this thing, and we've only drilled it in the first kilometer. So we're demonstrating it gets bigger that way. This core area that we've drilled over 1.4 km actually extends, you know, that way for 10 km. So we're never stopping exploring. So we must keep that R&D, and you know, I love paying geologists to look out windows and think and to find more. But equally then we're bringing in these engineers who are much more rigorous and systematic and have a very different culture to execute on the development, and that's the push and the pull that the transition of these pre-development companies always have. And it's just finding the right people, actually — those that aren't fully foot on the brake, but equally not just foot on the accelerator. And you've got to find that right mix. And we've got a chief of staff here that I know we've spoken about, because people are your business, and we've spoken a lot about how to build teams. And I thought only politicians had chiefs of staff, but you need it when you're building one of these to understand getting the right people in at the right time.

Well, there's nothing better in life for me than getting out there and in the day, whatever day it may be, in the morning you go out and see the drill hole that changes your life and the life of many people around a discovery. So there's nothing more thrilling than making that. There's a lot of failures in between, if you like, and I don't see them as failures — they're learning experiences, and we can't second-guess nature perfectly. But it's a wonderful career in that respect. And the capital markets are a terrible place to fund the business of exploration because money goes on and off through the cycle. What you really need to do is pay geologists, like I say, to look out the windows, have small dynamic teams, no more than seven or eight specialists ideally, and then fund them through their concept and their idea, and don't turn dollars on and off because all that IP gets lost if you lose people. So the business of exploration we only fund through the capital markets, but it's not necessarily the most ideal market or most ideal form to do it. And then it's always about having that humbleness to know what you don't know, but having the confidence to go for it when you've got a sense that it's there. And then the moment you start trying to prove it's not there, run a mile — run a mile quickly. So it's just having the judgment in those circumstances, and you can start to see systems as they develop when you know they are special. And it's happened a number of times in my career that, yeah, this is something very different, whether it's the alteration or the number of intercepts that you're getting. You know, the first hole at Sunday Creek was a surprise on the upside, and it never really has stopped in that respect. You know, and when you start drilling deposits out — like we're still making Sunday Creek bigger, but a lot of the infill holes are actually working and building this project. Now, if it was going the other way — and that's what you want to see, it's getting better — but if it was going the other way, it would be a real lump in the throat, and that's when you want to leave quickly too. So it's at every point you're trying to de-risk it. But yeah, they say geologists who make discoveries can make more, and I sort of didn't really understand that when I was younger in my career. But you just — I think it's just that fine sense of seeing lots of rocks, seeing when you know a mineral system is special and different, going for it. Don't listen to people around you necessarily all the time, but be humble enough to listen to people as well. So it's that fine balance that — there's not one single recipe, but you've got to have the confidence to go for it and humility to understand when you're going to be wrong, I think.