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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1 ®
Quarterly Issue No. 1 | 2017
contents
Publisher Uptick Mail Inc. #317—1489 Marine Dr. West Vancouver, BC Canada V7T 1B8 1.604.202.7841 Group Publisher Terry Tremaine
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Editor in Chief James Black Graphic Design Vanessa Fryer
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CEO’s Message
Free Digital Subscription Published by Uptick Mail Inc. on behalf of the Canadian Securities Exchange. To receive your complimentary subscription, please visit www.thecse.com and complete the contact form.
feature story
9 Irving Resources Unearthing exceptional gold and silver exploration opportunities in Japan
company profiles
12 Winston Gold Mining Good grades, cost profile put near-term production on the table
15 West Red Lake Gold Mines Top exploration team plans repeat performance in legendary Canadian mining district
18 Oriental Non-Ferrous Resources Development Seeing Mongolia as cornerstone of Asian mining strategy
21 Marapharm Ventures Diversifying across products, jurisdictions to find medical cannabis sweet spot
www.thecse.com @CSE_News
24 Versus Systems Preparing to play matchmaker between major brands, video gamers worldwide www.thecse.com | 5
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
CEO’s Message When I think about PDAC and the mass of activity that it brings to the Toronto Convention Centre every year, it is an encouraging reminder of the significant role that Canada’s public markets play in the global marketplace. Tens of thousands of attendees congregate every year to investigate, network, and deal-make at the world’s largest resource conference. This is no coincidence as Canada represents one of, if not the best environment in which to publicly organize capital for early-stage ventures. As the global hotbed for public venture capital, look no further than Canada’s role in the capital formation surrounding the nascent legal cannabis sector. The deal velocity has been staggering, and can be credited to exchanges RICHARD CARLETON, CEO like the CSE that have undertaken a measured and principled approach to Canadian Securities Exchange (CSE) the sector—first emphasizing prudent financial disclosure and regulatory compliance, but also remaining agnostic on the merits of the industry as the market organizes itself around the value proposition of the companies playing in the sector. We will be profiling more issuers from this sector in the next issue of the Quarterly. Further touching on the theme of being global—look no further than the mineral exploration companies profiled in this year’s special PDAC issue. From Mongolia to Montana, and Japan to Red Lake, Ontario there’s no corner of the globe that entrepreneurs aren’t willing to explore in hopes of finding the next great discovery. As with every PDAC, we are proud to profile and stand alongside the many CSE-listed companies that have leveraged the CSE as their global gateway to capital markets. With respect to this issue, you will notice some new features embedded in our articles. The first feature is obvious which is the “Company Snapshot” at the end of each article. These fundamental snapshots are provided as a quantitative view of the profiled company that when combined with the preceding narrative offers the reader a well-rounded view of the company as an investment opportunity. We would like to thank Ubika Research for their efforts in providing this data. Secondly, and more subtly, we have more clearly identified those companies that also carry a ticker symbol in the US on one of the OTC Market tiers. We have seen a healthy percentage of our companies pursue market access in the US via the OTC QB and QX marketplaces and thought it prudent to highlight this distinction, specifically for events such as PDAC that draw many delegates from south of the border! We hope you enjoy the issue and we hope to connect with you soon.
Kind regards,
Richard Carleton
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
feature story
Irving Resources
Unearthing exceptional gold and silver exploration opportunities in Japan By Peter Murray
hen one thinks of Japan, sushi, Shinkansen bullet trains and onsen hot spring resorts come to mind more readily for 99.9% of the population than precious metals exploration. But those famous hot springs are plentiful because of geothermal activity, and this special geological phenomenon in Japan has given rise to some rich gold mines in years past. The most impressive example in modern times is the Hishikari mine located on the southern island of Kyushu. Operated by Sumitomo Metal Mining Co. Ltd. (Tokyo Stock Exchange:5713), Hishikari is very high-grade in nature, averaging some 40 grams per ton of gold in its ore. Quinton Hennigh and Akiko Levinson
knew about the potential for exploration in Japan as they were building up ounces at the Springpole deposit in Ontario while running Gold Canyon Resources. Springpole developed into a resource of over 5 million ounces of gold before the company was acquired by First Mining Finance in 2015. As part of the deal, Gold Canyon spun out a new company with Levinson at the helm. She and Hennigh had for years agreed that if they ever started a new company, it would focus on Japan. The new vehicle was their chance and Irving Resources (CSE:IRV) had its direction laid out from the get go. As 2017 kicks off, Irving has a project portfolio with all the hallmarks investors like to see—multiple projects with high-grade gold
Quinton Hennigh
Akiko Levinson
www.thecse.com | 9
Originally published on Proactive Investors February 15, 2017.
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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
and silver showings, sound infrastructure, and a friendly jurisdiction to work in. Combine these attributes with good share structure and a healthy treasury and the Irving story has become an investor favourite. In November 2016, Irving raised just short of $6 million, with famed precious metals investor Eric Sprott personally providing the lead order. That leaves the company with over $7 million in the treasury, or to put it another way, all the financial runway it needs for well over a year to begin showing the world how rewarding precious metals exploration in Japan can be. “We are one of very few exploration companies operating in Japan,” explains Hennigh. “We are building relationships in the country and it is a very pleasant place to work.” Irving, though a local subsidiary, has thus far acquired three projects, all located on Japan’s northernmost island of Hokkaido. Each of the projects holds great promise from an exploration standpoint, but Omui is the one that excites Hennigh most at this early stage, and with good reason. Chip sampling off float boulders on the property returned assay numbers the company termed “exceptional”. The assays included samples of 480 grams per tonne (g/t) gold and 9,660 g/t silver, 143.5 g/t gold and 2,090 g/t silver, and others of similar quality. “Omui is a very high-grade epithermal vein system exposed at surface and there was limited mining there in the 1920s,” explains Hennigh. “We expanded our land position by filing for applications for additional tenements, and have also started to prospect beyond the historic Omui mining area.” Importantly, the exploration team has also found Omui’s rock to contain silica, a common element accompanying veined 10 | www.thecse.com
precious metal deposits, and critical to ore processing in Japan. The early results indicate rock at Omui being very low in toxic elements such as arsenic and antimony as well, suggesting any deposit outlined at the project could yield ideal smelter feed for domestic refineries. While Hennigh and Levinson will be spending quite a bit of time in Japan going forward, when not there they have teammates to rely on in the country who are second to none. Hidetoshi Takaoka enjoyed a long career at Sumitomo Metal Mining, helping to explore the Hishikari deposit and sharing credit for finding and developing Alaska’s world class Pogo gold deposit. “I’d say Mr. Takaoka is Japan’s best known geologist,” says Hennigh.
Irving also considers itself fortunate to be working with Haruo Harada and Mitsui Mineral Development Engineering Co., Ltd. (MINDECO) for assistance with permitting applications and other work with specific engineering requirements. Dr. Kuang Ine Lu, an Irving Resources director who earned a PhD in Economic Geology from the University of Tokyo, brings yet another experienced hand to evaluate projects and strategy based on years of local experience. Longer term, the plan at Irving is to prove up deposits from which to sell smelter feed to domestic smelters. Hennigh is quick to point out, though, that the company intends to move ahead in a methodical manner, so as to make the most of its financial resources and ensure
company snapshot
Irving Resources Inc.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
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We are one of very few exploration companies operating in Japan. We are building relationships in the country and it is a very pleasant place to work. —QUINTON HENNIGH
”
the highest possible likelihood of ultimate success. “We are looking to shore up our land positions in the next few months and then starting in May begin field work on the various projects,” says Hennigh. “Omui will be first, as it is our most advanced project and is giving us the best numbers. But we will explore Utanobori, Rubeshibe and possibly other projects we are considering with chip sampling, mapping, soil sampling and maybe some geophysics. This year will focus on refining targets and it will probably be 2018 when we are ready to get drills turning.” Interestingly, Hennigh says that experienced drill teams are available in Japan not only owing to mineral exploration but also because resorts and energy projects drill to tap hot springs throughout the country. They use core drills primarily, which is exactly what Irving wants so that it can preserve layers of rock and assess veining at various depths in detail. Shareholders will be happy to learn that the depths Irving envisions its targets at are not that daunting, with Hishikari’s deepest levels of 350m serving us a good indicator for a Japanese precious metals deposit. And because of Japan’s size and advanced development, project accessibility is not an issue. “Most areas in Japan are accessible by road and we don’t have to walk more than half a kilometer to any of the sites,” says Hennigh. The stars seem aligned to make 2017 an exciting year for Hennigh, Levinson and the rest of the Irving Resources team. With field work starting in a few months and early project showings nothing short of outstanding, the company is set to draw attention to a country whose potential for precious metals exploration has largely been overlooked.
(CSE:IRV)
• Extraordinarily high-grade surface samples grading up to 480 g/t Au and 9,660 g/t Ag collected at its 100%-controlled Omui project in Hokkaido, Japan. In addition, Irving discovered extensive gold-bearing hot spring deposits along a major fault structure that forms the northwest boundary of the 7 km wide, 12 km long Omui volcanic graben. In 2017, Irving plans to continue exploration activities with more systematic sampling and geochemical/geophysical surveying as it awaits the transfer of its mining license to be completed. • Irving has applied for exploration rights over multiple high-grade epithermal Au-Ag vein systems on the island of Hokkaido. Irving is looking to add 2-3 additional high quality projects to its portfolio currently comprised of the Omui, Utanobori and Rubeshibe projects. MINDECO, a subsidiary of Mitsui Mining & Smelting Co., has been assisting Irving with mining and exploration applications throughout the process.
• Joint-venture agreements with Japan Oil, Gas and Metals Corporation (JOGMEC) for copper and rare earth elements (REE) exploration projects in Tanzania (33%), Madagascar (10%), and Malawi (33%), Africa. JOGMEC is a government organization established under the Japanese Ministry of Economy that oversees exploration activities alongside subcontractor MINDECO.
financial analysis
Irving Resources has strong investor interest with its completion of three private placements in 2016 for total proceeds of $6.7mm. Irving currently has a strong cash position of $6.7mm making it well-capitalized for future exploration activity as it awaits a final approval of its licenses. MARKET DATA (CSE:IRV) Price (February 17, 2016 close) 52 Week Range Market Cap (mm) Shares Outstanding (basic, mm) Free Float Average Daily Volume (3 months) TOTAL DEBT (mm) Cash & Short-Term Investments (mm) Total Assets (mm) HEADQUARTERS
$0.860 $0.105 – $1.18 $27.4 31.8 65.9% 29,230 $– $7.15 $9.21
Vancouver, British Columbia, Canada
TOP SHAREHOLDERS 2176423 Ontario Ltd. Akiko Levinson, President, CEO, and Director Adrian Day Asset Management Eric Sprott All figures in CAD unless otherwise stated. Source: Thomson Reuters (9/27/2016)
POWERED BY
17.52% 6.47% 5.66% 4.83%
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winston gold mining
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Winston Gold Mining
Good grades, cost profile put near-term production on the table By Tom Howard
Originally published on Proactive Investors February 16, 2017.
H
igh grade, low cost and near production: three qualities that should endear an exploration company to any gold mining investor. Throw in an experienced management team and you’ve got what many would see as the complete package. With its two assets and strong mining team, Winston Gold Mining (CSE:WGC), which raised C$545,000 when it listed on the CSE last March, appears to tick all of these boxes. While it is still in the early stages of developing its Gold Ridge property in Arizona and its namesake Winston project in Montana, the company holds historic data (particularly on the latter) which suggests both projects have more than a fighting chance of success. Winston is located near Helena, Montana—an area with a rich mining history dating back to the 19th century. The district is reported to have produced 100,000 ounces of gold from only 150,000 tonnes of ore back in its heyday at an impressive average grade of 22.8 grams per tonne (g/t). A quick look at the records will tell you that the Custer mine—which lies within the Winston property—was a major contributor to that figure. Similarly, the Gold Ridge project near Willcox in Arizona yielded some good grades in the past, too.
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“It was acquired from some people we know very well. It’s also a historic mine, but not quite as prolific as the Winston claims,” explains the company’s Chief Executive Officer Murray Nye. The Gold Prince deposit on the project was mined sporadically between 1932 and 1996 and produced 22,000 ounces of the precious metal from multiple veins, averaging almost 12 g/t. The low price of gold back in the eighties forced the previous owners to move out of the property, but Nye’s interest was piqued by what was left behind. “What we liked about that was that it had a lot of development done already. They had set up two drill stations underground and we went down and checked it out and they were both in good shape,” he explains. “Both the drill stations were ready to go and drill below the level they were mining, so we thought there was a pretty good opportunity to start some bulk sampling or test-mining there on a near-term basis.” This is exactly what Nye and his team look for when assessing potential projects. “We’re after properties that we believe can get to a development or bulk sampling stage as quickly as possible because the investors
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Murray Nye
Core Shed
who we’ve aligned ourselves with are looking for that kind of opportunity and we think we’ve found a couple of assets that fit those criteria.” Given that it only acquired Gold Ridge at the back end of last year, not much additional work has been carried out at the property. The company’s primary focus has been on its flagship Winston property. “We think it has more opportunities in terms of tonnage,” says Nye. The project had around 630 holes drilled down to around 100 metres or so as the previous owners tried to assess the potential for an open pit operation. They estimated it could be host to around 500,000 ounces of gold, potentially more. “That’s not 43-101 compliant but it certainly gives us an indication that there are some pretty good gold values in the property and many of them were very high grade,” says Nye. The CEO and his partner Mike Gunsinger think the real potential of the Winston project lies in the untested geology further below ground.
“Our thinking is—and three geologists have also told me this—that this project is better suited to underground mining. What we’re doing now is drilling underneath where the old workings are.” Recent results would seem to back up this theory. In January Winston appeared to locate a “high-grade gold vein which could be amenable to underground test-mining.” Drilling along the Edna-West vein, as it has now been called, yielded grades of 8 g/t up to 44 g/t. The bonus of these high grades is that it would make the project relatively low-cost. But it’s not just the grades that make Winston such an exciting project; the fact that the infrastructure is already in place is also a plus-point. “There’s a major highway within a half-mile of the property and there’s a major power line running right through the middle of it,” says Nye. “The elevation is also low by Montana standards so Winston would lend itself to year-round operations.” The plan is to carry on drilling here for
“
The gold market, in my opinion, is a place to have a serious look right now—it bottomed out but now seems to be back on an uptick.
”
— M U R R AY N Y E
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ompany snapshot
Winston Gold Mining Corp.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
(CSE:WGC | OTCQB:WGMCF)
• Fast, low-cost gold production is expected as the Winston project, an under-developed and high potential project located in the historic gold mining district of Montana. The sites have year round access to paved roads, excellent infrastructure, and are located in a mining friendly jurisdiction. Phase II drilling and sampling is now underway to test and expand the custer vein. • Recently acquired Gold Ridge project includes the retired Gold Prince, Gold Ridge, and Dives mines. Gold Prince produced 22,000 ounces of Au from multiple gold veins averaging 11.79 g/t but was closed in 1996 when the copper smelter was shut down. • Experienced management team with considerable experience identifying and developing high-grade underground mines. Director of Operations, Harold Gunsinger, has over 5 decades of experience restarting mines and overseeing all aspects of operations from exploration to mine development and planning. Mr. Gunsinger’s past turnaround successes include the Kennecott Copper mine, Mussel White mine, and Renabi— which was later sold to Barrick. CEO, Murray Nye, worked alongside Mr. Gunsinger to re-open the Drumlummon Gold Mine in Montana, bringing the mine to production in 2010 on time and under budget—but asset was lost to a proxy battle. Additionally, Max Polinsky, the President, CFO and Director, also worked on the Drumlummon Mine, where he successfully brought it back to profitable production. Mr. Polinsky previously served as a CFO and Director of RX Exploration.
financial analysis Winston Gold Mining has a solid balance sheet with no debt, and a working capital of $1.9mm as at September 2016. Including drilling, Winston’s cash burn rate is expected to be approximately US$400-500k per month. Currently, the Company is awaiting Phase II drilling program assay results for intercepts at the Edna-west and the parallel vape. Winston anticipates capital expenditures of $5.0mm for its drilling campaign, and expects to raise additional capital within 2017. MARKET DATA (CSE:WGC) Price (February 17, 2016 close) 52 Week Range Market Cap (mm) Shares Outstanding (basic, mm) Free Float Average Daily Volume (3 months) TOTAL DEBT (mm) Cash & Short-Term Investments (mm) Total Assets (mm) HEADQUARTERS TOP SHAREHOLDERS Winston Realty LLC Maxwell Polinsky, President, CFO and Director Murray Nye, CEO and Director Darwin Porterfield, Director All figures in CAD unless otherwise stated. Source: Thomson Reuters (9/27/2016)
POWERED BY
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$0.165 $0.1 – $0.64 $4.8 28.9 72.6% 247,587 $– $2.17 $2.51 Winnipeg, Manitoba, Canada 12.09% 5.36% 4.65% 3.45%
another few months and then go underground, with a view to getting into production within two years. “If we were to start something [underground] eight months from now, you’d be doing the development which would probably take another eight months,” explains Nye. “Depending on how long the vein is and what you’re mining it would at least take you another eight months to develop that into a shrinkage stope operation. “So within a couple of years—maybe a year and a half—you’d be in a production scenario if everything went to plan.” “Our goal is to develop underground access and gradually ramp up to a 300 tonne per day test-mining stage. If all goes according to plan we believe we could achieve this for about CDN $10 million. Of course the ultimate number of ounces produced will depend on the average grade recovered.” That’s not a lot in mining terms, but it is a tough ask for a fledgling business. But that there is where the experience and connections come in. Winston is the second mining company Nye has headed over the past decade, and before that he was involved in financing projects, while Gunsinger has over 50 years of mining experience to draw upon. So they know mining money people and are also pretty well up on the laws and regulations, especially in Montana. “Operationally we’ve got a very experienced mining team and management is key in this. We’re very familiar with the state, the regulations there and we have very good relations with regulatory bodies,” says Nye. The one thing Nye can’t control is the price of gold, although things are starting to look up here too. “The gold market, in my opinion, is a place to have a serious look right now—it bottomed out but now seems to be back on an uptick,” the Winston CEO says. Is this another box ticked for Winston Gold Mining? Very possibly.
West Red Lake Gold Mines
west red lake gold mines
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Top exploration team plans repeat performance in legendary Canadian mining district By Giles Gwinnett
A
“We would, say, take a company of $20 million market cap and develop the project for a transaction that could be worth a couple of hundred million dollars. That’s what we’ve done before and that’s what we’re working towards now,” he said, adding that it’s a two- to three-year strategy. And this team certainly has form. Entrepreneur Tom Meredith is Executive Chairman. He was formerly head of VG Gold, where he worked with West Red Lake’s exploration manager, Ken Guy, and took a $3 million market cap firm to the point where it was sold to Goldcorp founder Rob McEwen in a transaction valued at approximately $200 million. Meanwhile, Kontak was formerly president of Victory Gold Mines, where Meredith and Guy were also involved. It owned a former open pit east of Timmins that was later sold and is now part of Osisko Mining. The team (including Meredith, Guy and Kontak) took on West Red Lake in 2014 during the gold bear market, sorted out some legacy issues, and in February of 2016 filed a NI 43-101 inferred resource estimate for the Rowan mine target of 1.087 million www.thecse.com | 15
Originally published on Proactive Investors February 14, 2017.
nyone who knows anything about Canadian gold mining will be familiar with the legendary Red Lake Gold District in Ontario. It’s home to the Red Lake mine, one of the world’s most prolific mines owned by one of the biggest producers of the yellow metal: Goldcorp. The district has produced over 30 million ounces of high-grade gold, and other major operations in the area include the Madsen and Starrett Olsen mines, owned by Pure Gold Mining, and Goldcorp’s Red Lake, Campbell, and Cochenour mines. Well on the way to making its own mark in the district is junior explorer West Red Lake Gold Mines (CSE:RLG). The company’s 3,100 hectare property hosts three former producing mines, lies just 20km from Goldcorp’s Red Lake mine and boasts a management team that is expert in bringing gold projects to the point where they are bought out by bigger producers. “We explore and develop gold projects—outline a gold deposit or what could be an underground mine in the case of our present project,” explains president John Kontak.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
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You have to dig less rock out of the ground, you have to transport less rock to the mill and you have to crush less rock at the mill to get the gold.
”
— J O H N K O N TA K
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ounces at 7.57 grams per tonne (g/t) gold. West Red Lake has three former mines on the property—the Rowan, Red Summit and Mount Jamie mines. The latter two are owned 100% by the company, while Rowan is 40% owned by joint venture and funding partner Goldcorp. Rowan is currently the focus of attention, where the company is operator and over 500 holes have been drilled to produce that NI 43-101 estimate. The Rowan project consists of two main exploration targets. At the former mine, the goal is to significantly increase the resource to allow for a long mine life. Then there’s blue-sky potential at another target, a structural intersection where two regional gold-bearing structures meet. “That’s what happened to Goldcorp,” exclaims Kontak. “It found a zone and that took it from a junior to a multi-billion dollar company.” It’s worth noting here that Goldcorp’s Red Lake mine produced a whopping 375,700 ounces of the precious metal in 2015 alone. The geology of the Rowan mine is a fairly simple archean greenstone, Kontak explains, whereas the intersection target is more complicated, involving folding rocks. However technological advancements in exploration nowadays means finding that “needle in the haystack” is increasingly plausible. West Red Lake started drilling again at Rowan in January, having completed two programs last year, and plans to start a campaign every quarter while releasing assays from the preceding program. The near-term aim is to expand the existing resource and in the future to upgrade into the higher-confidence “indicated” category. The resource is open at depth and to the east and west, and there’s a 12km strike length so there is plenty of opportunity to work at increasing it, though there’s no specific time set for the release of the next estimate. “This could be turned into an operating underground gold mine,” Kontak said of
oriental non-ferrous resources development
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Oriental Non-Ferrous Resources Development Seeing Mongolia as cornerstone of Asian mining strategy
Originally published on Proactive Investors February 23, 2017.
By Peter Murray
C
overing an area larger than Peru yet with a population of just 3 million people, Mongolia is the most sparsely populated country on earth. It is also a beautiful and fascinating nation, with traditions established before Genghis Khan founded the Mongol Empire in 1206 influencing lifestyles to this day. While mindful of its rich culture, Mongolia is easing into the modern economy with commercial-scale mining leading the way. How could it not when minerals comprise some 80% of the country’s exports?
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Mongolia’s most famous mine is undeniably Oyu Tolgoi, the copper-gold behemoth operated jointly with the Mongolian government by Rio Tinto subsidiary Turquoise Hill Mining since 2013. But the country is home to other mines as well, such as Centerra Gold’s Boroo mine, a historic gold mine whose modern-day output began in March 2004 and continued until September 2012, though with a stoppage of just over a year beginning in November 2010. Oriental Non-Ferrous Resources Devel-
opment (CSE:URG) and its leadership team were attracted to the country for the same reasons as other companies—high-quality projects, proximity to Asia and a favourable permitting environment, to name a few. The driving force behind the company’s strategy and operations, founder and director Youliang Wang, explains that the concept for Oriental Non-Ferrous Resources Development dates back some 20 years to when he was a banker at China Construction Bank, where his responsibilities included overseeing loans to Chinese mining companies.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Founder, Youliang Wang
Attracted by the scale and variety of opportunity in Mongolia, Wang first invested in a dairy business, eventually broadening into other agricultural businesses as complements. Given his background in mining finance, though, it was only a matter of time until he created a plan to move into this sector. In 2013, Wang and his team immersed themselves in the Mongolian mining community, working with consultants and local exploration teams to examine various properties. The result was the company’s current land package, prospective for both industrial and precious metals. Oriental Non-Ferrous Resources Development’s properties are located in the Bornuur district in the TÖv Aimag, or Central Province, of Northern Mongolia. Its package spans roughly 1,050 hectares, comprised mostly of the Kharganii am-1 Molybdenum Property. “Our licensed area is situated in the North Khentii tectonic belt and we have encountered gold, copper, molybdenum, tungsten and silver on its grounds,” says Wang. “The projects are located 24km northwest of Centerra Gold’s Boroo deposit and 15km east of their Gatsuurt gold deposit.” Since acquiring the Mongolian projects, the company has completed extensive trenching
and geophysical work, geological mapping, ground magnetic surveys and polarization gradient surveys. “Our initial phase of exploration drill work has contributed to a database that contains approximately 3,501 drill core samples and 29 trench samples that were assayed for molybdenum,” says Wang. “This includes a current program which encompasses 29 holes for a total of over 11,630m.” Wang explains that many of the holes have multiple intersections of molybdenum mineralization above 0.05%, with several intervals of between 1m and 2m exceeding 0.5% Mo. The best hole yielded a 3m length averaging 2.413% Mo. Wang notes that the Mongolian permitting environment is very reasonable, with the various licenses Oriental Non-Ferrous Resources Development holds typically being extendable for up to 30 years. P&E Mining Consultants of Toronto was recently chosen to complete a NI 43101 report for the company’s Kharganii am-1 Project, which will reflect results from the current drill program and associated metallurgical test work. A concurrent evaluation of the preliminary economics of the molybdenum deposit is also planned.
“
Mongolia has a rich mining tradition, and we hope Oriental Non-Ferrous Resources Development will in time be able to play a lasting role.
”
—YOULIANG WANG
www.thecse.com | 19
ompany snapshot
“
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
Oriental Non-Ferrous Resources Development Inc. (CSE:URG)
• URG owns 100% of Tunshan Xiangdong Co., Ltd., a Mongolian mineral exploration company, with mineral properties totaling 1,115 hectares. The mineral properties are located in Bornuur, Töv Province, Mongolia. • Letter of Intent signed to acquire Maple Beauty Global Limited. The acquisition will be paid for by issuing 25.0 million shares of URG at a deemed price of $0.80/share, or an acquisition price of $20.0mm. • Eugene Beukman, CEO and President of the company, has held multiple senior executive and board positions at law, pharmaceutical and resource companies. These companies include Avion Gold, which was bought out by Endeavour Mining, and Emerge Resources, which completed a reverse takeover with Vaxil Bio in February of 2016. Mr. Beukman has over 30 years of experience in the acquisition of assets and joint ventures.
financial analysis As at September 30, 2016 and 2015, the Company had no producing properties, and consequently no operating income or cash flows from operation. Having raised $200k in December 2016, the company has little room for any additional exploration work at its properties, and will require further financing within the year. An additional source of capital can stem from 5.0 million outstanding and exercisable options.
MARKET DATA (CSE:URG) Price (February 17, 2016 close) 52 Week Range Market Cap (mm) Shares Outstanding (basic, mm) Free Float Average Daily Volume (3 months) TOTAL DEBT (mm) Cash & Short-Term Investments (mm) Total Assets (mm) HEADQUARTERS
$– $0.17 $1.94
Richmond, British Columbia, Canada
All figures in CAD unless otherwise stated. Source: Thomson Reuters (9/27/2016)
POWERED BY
20 | www.thecse.com
$0.900 $0.265 – $1.20 $69.6 77.4 – 343
Our licensed area is situated in the North Khentii tectonic belt and we have encountered gold, copper, molybdenum, tungsten and silver on its grounds. —YOULIANG WANG
”
The properties being situated within a recognized gold belt, Oriental Non-Ferrous Resources Development is also gearing up to initiate a property-wide evaluation of potential gold targets. The work will include mapping, prospecting and IP geophysics. Expansion of the property is also under consideration. “The North Khentii gold belt has an extensive history of mining both alluvial placer and bedrock gold deposits,” says Wang. “After discussions with geologists from P&E, we are looking to evaluate high-potential targets within the property for gold mineralization.” Wang says Oriental Non-Ferrous Resources Development is also evaluating both merger and acquisition opportunities and possible project procurements, the longer-term objective being to develop a portfolio of Asia-based projects diversified across various mineral types and regions. Time will tell where these expansion efforts lead, but for the time being there is plenty to be excited about in Mongolia. The country has only been an internationally accessible mining jurisdiction since the mid-1990s, and if one considers what the industry has been able to accomplish in the last decade between new discoveries and active operators, Mongolia holds its own vis-à-vis many more mature mining jurisdictions in other parts of the world. “We have long believed in the viability of mining projects in Mongolia, and when the projects in our current portfolio came to our attention, we thought what better way to get involved in the space than to make investments in some of these great projects, and then look to take them public,” Wang concludes. “Mongolia has a rich mining tradition, and we hope Oriental Non-Ferrous Resources Development will in time be able to play a lasting role.”
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
marapharm ventures
Marapharm Ventures
Diversifying across products, jurisdictions to find medical cannabis sweet spot By Peter Murray
etting in on the ground floor of an exciting new opportunity is one well-acknowledged path to success. Marapharm Ventures (CSE:MDM) CEO Linda Sampson likens it to finding a “once in a lifetime opportunity” and believes that is exactly what her company is moving forward with as it draws closer to operations at multiple facilities focusing on the medical cannabis industry. Marapharm is taking a different approach than many of the other companies in the space, diversifying its portfolio across geographic regions and business types, and doing so in a way that marries its corporate strengths with the needs of different markets. It is a plan that at once helps manage risk while increasing the degree of success Marapharm and its shareholders can potentially realize. Marapharm is advancing cannabis production opportunities in British Columbia and Nevada, and will also serve as landlord of a large facility in Washington State. It plans to not only grow cannabis but also process harvested material into products such as oils and edibles in jurisdictions where this is permitted. Production,
processing, landowner, future retailer—put a check mark in the vertical integration box. Fortunately, when it comes time to ship product, Marapharm’s boss is an experienced marketer. Sampson, originally from South Africa, enjoyed a career before agreeing to head Marapharm that saw her re-brand struggling companies and help turn their operations successful in relatively short order. Sampson also worked with commercial property developers to conceptualize projects, consult with designers to ensure details were right, and market them afterward. Sampson’s skillset is being put to good use at Marapharm, which leans on her for real estate, market research, and strategic planning insight to name just a few challenging aspects of the fast-moving, big money industry that is medical cannabis in North America. Marapharm has an application before Health Canada for a production facility in the picturesque city of Kelowna—also home to Marapharm’s head office—that has passed the Security Clearance www.thecse.com | 21
Originally published on Proactive Investors February 23, 2017
G
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
“ CEO, Darcy Bomford
Marapharm Ventures building in Las Vegas, Nevada
Las Vegas gets 50 million visitors a year, and on November 9 the state voted to move forward with legalization, so that adds another aspect to the value of what we have there.
”
—LINDA SAMPSON
phase and is now in the in-depth Review phase. But moving faster thanks to different local rules are facilities in the US state of Nevada. Here, Marapharm is looking to be a major player in the Las Vegas market for medical, and soon recreational, cannabis and processed cannabis products. “Marapharm owns a company called EcoNevada which holds a 204,000 square foot cultivation license and a 16,000 square foot processing license,” explains Sampson. “And at another Nevada project we own the land with no debt, have an option to purchase 85% of the production license for $250,000, and then can acquire the remaining 15% for $1,000,000. When you consider the three licenses together it totals about 304,000 square feet, which is the equivalent of six and a quarter football fields.” The holder of the latter license is businessman Kurt Keating, an award winning organic cannabis grower who will work with Marapharm on its Nevada projects as general manager. But Keating’s role does not end there. Being a Washington resident, Keating obtained a license in that state and will use it to operate a facility that would be situated on 13 acres of land Marapharm has the option to purchase. It already accommodates a 28,000 square foot building used as a cultivation facility and the plan is to expand that footprint. Companies from outside of Washington State are not permitted to hold local growing licenses, and with Marapharm hailing from Canada that means it can’t be the licensed grower at the Washington site. The strategy is thus to purchase the land, build and outfit the 22 | www.thecse.com
facility, then lease it to Keating and other growers for their own production use. A departure compared to being the actual grower, but still a use of capital that generates a good return and diversifies both the company’s asset holdings and revenue model. “Part of Kurt’s Washington license allows for unlimited processing,” says Sampson. “There is a building next to the production facility that we can turn into a processing center. We can equip it so as to maximize processing potential to be operated as a turnkey facility. For people who hold cultivation licenses but not processing licenses, we can allow cultivation on our property and then they can use the processing facility after harvests.” Sampson says Nevada will be the company’s biggest cultivation center, as well as the one that receives the majority of the marketing budget. “The Nevada medical market is unusual in that it is a reciprocal state—if you are a medical cannabis user from another jurisdiction you can bring your card to Nevada and they will honor it,” explains Sampson. “Las Vegas gets 50 million visitors a year, and on November 9 the state voted to move forward with legalization, so that adds another aspect to the value of what we have there. I think our involvement in Nevada represents a giant step forward for our company.” Looking out over the next 12 months, Marapharm intends to forge ahead with its application in Canada while completing the build-out at its Washington site. In Nevada, the company wants to get production up and running sooner and use its processing facility to create edibles and other
company snapshot
Marapharm Ventures Inc.
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
(CSE:MDM | OTCQB:MRPHF)
• North American cannabis industry could exceed $40B per year by 2020. A total of 23 States have legalized medical cannabis, and 8 States, as well as, the District of Columbia have legalized recreational cannabis use in the U.S. On the other side of the border, Canada has proposed that it will introduce recreational cannabis use legislation in the Spring of 2017. • In Canada, Marapharm’s MMPR application has passed the security clearance stage, and is currently in the review stage. If approved, Marapharm will lease an 11-acre property in Kelowna, BC, and become a licensed producer of cannabis in Canada. • In the U.S.: Nevada—Marapharm owns and has control of over 300,000sq’ of cannabis cultivation and processing, and has begun groundwork for construction on the 7 acres owned by the company.
CEO, Linda Sampson
products suited to the local market. “We anticipate that the Nevada market will be more focused on processed products as opposed to the actual cannabis, as they can be used more discreetly,” says Sampson. Reflecting the different regulatory atmosphere, the Nevada sites actually face April deadlines to begin operating, so Marapharm is working to have initial 5,000 square foot facilities functional on each within the prescribed time frame. “They are OK with us having a smaller building but with the intent to move ahead with a bigger structure at a later date,” Sampson says. Marapharm also has designs on California, not to mention automated vending machines, that, using proprietary biometrics for identification purposes, would be used where regulations allow. It is a strategy of diversification, integration, but focus on a young, growing cannabis industry—the pieces appear to fit. “It is not often a chance like this comes along—it is kind of like the gold rush,” Sampson concludes. “We just feel so honored at the opportunity to be in on the ground floor and be working in good jurisdictions with great people. I think the future looks very bright.”
Washington—Marapharm has entered into an agreement to purchase the 13.6 acres, currently leased by the company. The property is specifically zoned for cannabis business use. The plan is to renovate the buildings, and bring the existing 30,000 sq’ cultivation license to maximum production. A second building will be developed into a processing facility to accommodate the tenants unlimited processing license.
California—The company is doing due diligence on a couple of licensing/property opportunities in the state, meanwhile, it has locked down a cannabis delivery company servicing the 500,000 resident strong Coachella Valley with expansion underway into Arizona and Nevada.
financial analysis
In relation to its licensed production space in the U.S., Marapharm is working toward commencing cultivation in April 2017, with harvest and first sales to begin 3 months following. Subsequent to the latest financials, warrants were exercised for total cash proceeds of approximately $7.8mm, improving Marapharm’s balance sheet, to a cash balance of $4.5mm, as well as $1.5mm invested in Veritas Pharma Inc. cannabis research. The Company also paid its mortgage balance and buildings for Nevada, and currently has no debt. MARKET DATA (CSE:MDM) Price (February 17, 2016 close) 52 Week Range Market Cap (mm) Shares Outstanding (basic, mm) Free Float Average Daily Volume (3 months) TOTAL DEBT (mm) Cash & Short-Term Investments (mm) Total Assets (mm) HEADQUARTERS TOP SHAREHOLDERS Corey Klassen, Director and CFO Linda Sampson, Director and CEO All figures in CAD unless otherwise stated. Source: Thomson Reuters (9/27/2016)
POWERED BY
$1.400 $0.15 – $2.50 $95.3 68.1 99.1% 300,958 $0.30 $0.018 $4.56 Kelowna, British Columbia, Canada 0.59% 0.29%
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versus systems
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
CEO, Matthew Pierce
Versus Systems
Preparing to play matchmaker between major brands, video gamers worldwide
Originally published on Proactive Investors February 22, 2017.
By Peter Murray
T
he precise number depends on the source you choose, but multiple surveys indicate that people spend hundreds of millions of hours playing video games every week. And that’s just in North America. Considered another way, the Super Bowl and its famously expensive commercials attract around 110 million viewers in the United States, yet that occurs just once a year. Clearly, then, video games are media—and immersive media at that—with millions of people engaged at any given moment. And most players pack enough disposable income that brands want very much to reach them. The billion-dollar question is how to introduce a level of commercial marketing into the gaming environment such that
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it makes a positive impression on behalf of a brand, as the last thing you’d want to do is turn gamers off by being intrusive or annoying. Versus Systems (CSE:VS) is confident it has the answer, and it revolves around encouraging both avid and casual gamers to opt into an environment where products and brands are featured in a way such that players become eager to interact. Gamers are naturally competitive, so the idea of offering the chance to play for more than just an ephemeral digital points total makes sense. Playing for valuable prizes introduces a new degree of meaning to the activity, and it is this dynamic that is enabling Versus Systems to draw interest from an
increasing number of brands searching for new ways to market their products. “We’ve created a platform that does two things,” explains Versus Systems CEO Matthew Pierce. “First, it allows publishers and developers to offer prizes within their games to drive engagement. It makes them more fun to play and the idea that you can compete for everything from downloadable content to physical goods to energy drinks and concert tickets is an enormously powerful opportunity. “The second thing it does is allow brands to be part of a promotions engine for ingame advertising and connect those brands to players and spectators. Our belief is that if you make it fun to try to win prizes and
THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 1
“
When we get out into the market and people see how exciting this is as an engagement engine, I think we’ll soon have to scale up to put this in more and bigger titles. — M AT T H E W P I E R C E
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make it aspirational, and you find products that players actually want to play for, that is a really rich opportunity.” The origin of Versus Systems is a fascinating story and helps explain not only where the core idea came from, but why the company is positioned to succeed in a business with immense challenges, both technical and legal. Pierce is a Stanford graduate who started his own companies and worked for large consulting groups. Versus Systems was founded in a technology incubator Pierce worked in, but it was an incubator with a twist. Not only was it full of programmers and engineers with incredible skills and entrepreneurial zeal, but its main backer was a law firm, and this is the team’s secret sauce, if you will. “The thesis was to work in areas that took advantage of the partners’ strengths,” says Pierce. “We thus wanted ideas that were technically complex, and we also needed the regulatory landscape to be complicated because we had access to tremendous attorneys. We are versed in the entertainment space and thus wanted to keep things in that sector. The first company we incubated was Versus and it is the best project I have ever worked on.” Players who want to compete on the Versus platform must first download an app to their phone or computer so they can log into the community. Once in, a player finds that the Versus experience is additive and does not interfere with their fun by adding the conventional overlay of monetization approaches common to many games these days. Rather, Versus enables players to determine the parameters of interaction themselves. “You log into your game and a new set of menus appears when you go to play,” explains Pierce. “Players can choose to play for money, for physical goods, or for downloadable goods. You can also decide if you want to play one on one, or perhaps one on five where the top three players win a prize. And gamers often like to play people they have invited because it means something if they can beat them.” The beauty of the business model from the Versus Systems perspective is that the company does not have to make large financial outlays in order to attract users to its platform. As it aligns with popular games, players will naturally find Versus and its competitive options on their own. For game developers, the appeal is a platform that is a total solution, managing prize and competition details for players, while also addressing www.thecse.com | 25