C.NIGEL LEES - SAGE GOLD INC (SGX:TSX)
CEO Interview - published 12/26/2005
DOCUMENT # ADC631
C. NIGEL LEES, President and CEO of Sage Gold Inc., has over 25 years' experience in the British and Canadian investment and banking industries with C. Tennant & Sons Ltd. (UK) and as a Research Analyst with Dominion Securities (now RBC Dominion Securities) and as a Partner and Director of several investment firms including MacDougall MacDougall and Mactier, Saunders Hatt (now Nesbitt Burns) and Managing Director of LOM Associates. In addition, Mr. Lees is a past member of the Toronto Stock Exchange Listing Committee. He was one of the founders of Emtech Ltd., a company whose business was the transfer of technologies from the former Soviet Union, and President and CEO of Sunblush Technologies Inc. (Fresh Xtend), a publicly listed company with worldwide rights to a patented modified atmosphere packaging technology. Mr. Lees was a Founder of TVX Gold (now Kinross Gold), a significant gold producer in North and South America, and served on the Board of Directors for 19 years. He is currently the President and owner of C.N. Lees Investments Limited, an investment and consulting company, and President, CEO and Director of Sage Gold Inc., a precious metal exploration company with properties in Ontario, Quebec and Nevada. Additionally, Mr. Lees serves on the Board of Patricia Mining Corp., which has a joint venture with Richmont Mines to place Patricia's gold deposits in Ontario into production and URSA Major Minerals Incorporated, whose nickel copper platinum deposit in Ontario is currently subject to a joint venture agreement with North American Palladium and Falconbridge Limited and Yamana Gold Inc., a significant gold producer and explorer in South America, listed on the TSE, AMEX and LSE (AIM).
Sector: PRECIOUS METALS
TWST: What is Sage Gold?
Mr. Lees: Sage Gold is a North American exploration company. We concentrate primarily on gold and other precious metals, and our exploration properties are in the most attractive mining places in North America: Ontario and Quebec in Canada, and Nevada in the United States.
It's a company that was revived from a previous shell and was financed and reorganized. We consolidated the shares and changed the name to Sage Gold. The name is not because we think we are wise, but because of sagebrush, which grows in Nevada. The company's principals, both Directors and management, have enormous experience in the mining exploration business. Two of the Directors are from the Noranda Group and are involved as Directors in other public companies. One of our Directors was a Mining Analyst, headed up an investment firm in Canada and was a senior member of a team in the UK. I was the Founder of a company called TVX Gold, a gold producer primarily in Brazil, and then became an international gold player. TVX Gold has merged into a company called Kinross. So as a group, we've got a lot of experience. We have exploration properties in the key gold producing areas in North America.
In the case of the Canadian properties, most of them are centered in the Timmons, Kirkland Lake, Malartic and Val d'Or areas. We have one property in Ontario and six in Quebec. In Nevada, our properties are primarily in the Carlin Trend area; four of the properties are in the Southern Carlin Trend area, and two of the properties are north of Carlin. One is between the Midas and Ivanhoe mines, and one is further north, close to the Idaho border.
TWST: What are your priorities for Sage Gold over the next 12 to 24 months?
Mr. Lees: We've organized our priorities based on what we think are the most prospective properties. Number one is the Kerrs property in Ontario. We recently successfully drilled about 3,000 meters of diamond drilling there. We plan to fill out that drilling program in late January during the winter where we can actually drill on the lake if we choose to do so. We want to drill between 5,000 to 10,000 meters. In Nevada, we are in the Southern Carlin Trend area but the elevations are over 5,000 feet where it snows in the winter. Therefore, the late spring or summer season is the exploration season. We have drilling permits on two of our properties; one is Pony Spur and the other is the Dike property. We expect to be drilling one of those at the beginning of the 2006 exploration season. We are in the process of discussing a joint venture with potential partners on some of our other properties in Nevada, Ontario and Quebec. We want to concentrate on three or four properties at a time, but no more.
TWST: Would you discuss the position of Sage Gold and how much of an impact energy costs, labor and environmental regulations have on your goals and strategies?
Mr. Lees: Sage Gold is a small gold exploration company. As such, we are not mining yet; hopefully we will be soon. So the cost of fuel and mining does not directly affect us. We are very conscious about the environment. We are in Nevada and while it's pro-mining, Nevada is very conscious of the environmental issues, so it's something we are sensitive to. It's also true in Ontario. It's going to be a bigger and bigger issue in the future. The whole industry is fraught with higher costs. We are seeing it impacted in the fact that drilling costs have been going up and the availability of drills has diminished enormously.
It's tougher to get drills. You have to plan quite a bit ahead, and frankly, the mining business has been through such a long dry period that there haven't been a lot of geological graduates over the last 15 to 20 years. So there are not a lot of people in the pipeline, and capable technical people are sometimes very hard to find. Overall, even though we have the gold price at almost $500 an ounce and gold shares have gone up over the last few years, the. junior shares have not gone up materially in the last year and a half to two years. I think that they are just waiting for the right leadership from the senior and medium-sized shares. Then, more junior shares will take on a better glow. The senior shares have been impacted a lot by much higher costs.
While the profitability at $500 is certainly better than $400, I think the gold price has to go up a bit more to make it a really exciting business.
TWST: Introduce us to two or three of the key individuals in your top-level management team.
Mr. Lees: Bill Love is our CFO, but he is also a geologist. He started off with a fairly interesting experience. He was on the team that discovered Hemlo, which is one of the more exciting discovery stories in Canadian mining history. Bill has been involved in the mining financial business for many years. He has expertise in both the financial and geological areas. I mentioned my own background before in the mining business. I was also in the financial business, and I'm on the Board of three other publicly listed mining companies. Patrick Mars is the Chairman. He was also the Chairman of First Marathon in London, England. He started his career as a Mining Analyst. He was very much concentrated on the senior mining companies and is well regarded and well known in the industry. Beyond that, we have several very competent consulting geologists in Nevada, based out of Elko, and also in Canada. We have two or three very experienced consultants who are very familiar with our Kerrs property. The Kerrs property is near Lake Abitibi, and we have just completed a drilling program that was previously drilled by Noranda, where they found a lot of gold mineralization in the drill holes, although not of commercial grade. In our last drilling program, we managed to extend the Green Carbonate Zone that they discovered, increased the grade, and we found a new mafic replacement zone. We have extended the area of potential mineralization enormously. There are great parallels between the kind of ore that we are finding, both the green carbonate and the mafic replacement ore, and a very famous mine in Canada called the Kerr Addison Mine, which was in business for about 50 years. It was a very prolific and profitable mine. So we are very hopeful that we can outline additional resources and further define the potential deposits in our followup program in 2006.
TWST: What historically has been the shareholder base with Sage? Has that base itself undergone any changes?
Mr. Lees: Not particularly. We are about 25% primarily owned in Europe and 75% owned in Canada. Other than having some smaller, more adventurous institutions as shareholders, the stock is primarily held by individuals.
TWST: Investors are faced with gold at record highs and a choice between finding investments directly in gold or companies that are involved in the gold industry. What would you suggest doing?
Mr. Lees: I think one should own both the commodity and the shares. They definitely go up and down together, but the direction and dimension of them is not necessarily simultaneous. Often, the gold shares will lead bullion on an up or down move, and the kind of investment and shares that you have depends on when they move as well, whether it's in the senior, medium or junior category. In a bull market, you get the most leverage by owning shares. Normally, there are two plays. One is when bullion changes direction, which it did about three or four years ago when it turned up. The shares performed very well off the bottom, and a lot of the junior shares performed very well for two years. I believe the bullion will go higher and the smaller capitalized stocks will eventually outperform the seniors and the medium-sized stocks. But I think most wise people will advise people to have a broader portfolio and go for both the shares and some bullion.
TWST: What would compel investors to include Sage in their current portfolios and longer-term investment strategies?
Mr. Lees: I think the primary reason is that everything is a question of relative value. The capitalization of Sage is about C$4.5 million. If somebody looks at our portfolio of exploration properties, including the Kerrs and our position in the Carlin Trend with our Nevada properties, we think the shares are substantially undervalued on a relative basis. There is an opportunity for potential success in areas where there are world-class mines, which are very favorable environments to do exploration and mining.
TWST: Are there any thoughts that we haven't touched on that we should look at?
Mr. Lees: Being an exploration company, we always have an appetite and a need for raising money to conduct exploration programs. So I think that's going to be a necessity on an ongoing basis. In Canada, there is an attractive program of flow-through shares, which are tax-effective shares, and luckily there is a fairly large pool of capital available to finance Canadian exploration. So that's very much in the future. We will also be looking at additional listings on exchanges, whether they are in Europe or elsewhere, to broaden our appeal to international investors.
But our mission is to concentrate in significant gold areas where we feel very comfortable about the jurisdiction and prospects.
TWST: Thank you. (DWA)
NIGEL LEES
President & CEO
Sage Gold Inc.
365 Bay Street
Suite 500
Toronto, Ontario M5H 2V1
Canada
(416) 204-3170
(416) 260-2243 ' FAX
www.sagegoldinc.com
email: info@sagegoldinc.com
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