| | | TUO ... Letter to shareholders from Berry Holmes. (Sorry about the formatting)
Hello to our Shareholders: There are a lot of very exciting things happening with Teuton at this time, and the following will bring you up to speed. The information provided is to clearly demonstrate that Teuton is not your normal junior exploration company. We operate Teuton as a real business that has assets and cash flow, which 99% of junior explorers do not have. They must continually go back to the markets for financing and that dilutes shareholder value. We are deeply committed to avoiding that situation.
Why? Because we are shareholders too. We also put a priority on minimizing future risk to our shareholders. That means we don’t waste money advertising and promoting every little thing we do trying to create some pump & dump market action. That is not who we are. We focus on building Teuton into a successful Prospect Generator that has – and will –survive any forecasted market chaos. Our long-term loyal shareholders understand this and have been patient as we plan our work and work our plan. SPECULATIVE RISK: We are disciplined in all our strategic decisions where we apply risk assessment and risk management. Take Treaty Creek as an example. To date the Goldstorm zone is growing rapidly under Ken Konkin’s expert exploration management and we expect that to continue--but that element of risk is still there. For our shareholders, our goal is to provide a de-risked opportunity that potentially offers a high return opportunity. As you will see below, Treaty Creek is our foundation asset and with each successful 150 metre step-out its value increases appreciably. The markets, most investors and institutions are not yet fully aware of what is happening at Treaty Creek. However, once Eric Sprott has completed building his positions in the companies that own Treaty Creek, I would expect that the powerful Sprott Brand will accelerate awareness of Treaty Creek’s progress. Beyond the above, the exploration and drill programs on our 100% owned properties show good potential to put some serious icing on our cake. This assumption is based on independent geophysical analysis. ABOUT TEUTON: Teuton as a Prospect Generator with 35+ years in the Golden Triangle has accumulated 30+ strategic high value mineral claims. Many of these properties have areas covered with snow and ice that have been rapidly melting away, a process known as “ablation”. There are many precedents in the Golden Triangle of large discoveries having been made due to recent ablation (melting ice and glaciers), among them the Granduc mine and more recently the Red Mountain gold deposit. The start of each new field season brings another chance for such a discovery on Teuton’s many properties. Teuton also owns two residential/industrial properties in Stewart that are instrumental in accommodating field crews and working on and storing drill core. These properties contribute to substantial operational cost savings. Some of the key points about Teuton are covered below and some are covered in the attached July 28th E-Letter if you haven’t previously received it. For the past several years Teuton has strategically focused the financial resources generated from option payments to build value, build value and build value. · First - the foundation of our plans is based on our confidence that the Treaty Creek discovery is the real deal. In our opinion success at Treaty Creek is a factor of continued drilling and having the right Exploration Manager in place – Ken Konkin -to productively and effectively manage a growing discovery. Ken was the project geologist that discovered the 25 million ounce Snowfields deposit and grew Pretium Resources Brucejack deposit into a producing gold mine. Dino and I were the ones that facilitated Ken joining Tudor. When Ken started his geology career, he worked with Dino at Treaty Creek. When I was a senior manager with VIH Helicopters, Ken and Pretium Resources were a long-term client. · Second –in 2018, Ken’s move to Tudor was delayed, so we (Teuton) hired him for the exploration season to apply his incredible Golden Triangle knowledge and experience on our stable of properties. During that same season we also invested a quarter million dollars in an innovative Geotech airborne ZTEM survey covering key Teuton properties, where $5 million in previous exploration had identified multiple zones of mineralization. That trend is known as the Del Norte Belt. The ZTEM geophysical survey data has proven to be a great investment that has identified a series of intense anomalies along a 20 km mineralized trend. One of the strongest of these anomalies—the “A-2”—will be drilled later this month. Several properties within this airborne survey will be put into Option Packages this winter and offered to qualified explorers, some of whom are already making inquiries. · Third – We knew that if we built Teuton into a ‘REAL’ value proposition that reflected our ownership position in the Treaty Creek discovery and our commitment to continue growing Teuton as a dynamic Prospect Generator, that our marketing profile would be raised by attracting the right investors. “If you build it… they will come” [Thank you Ray Kinsella, Field of Dreams]. Teuton is a well-known name in the industry and the above values attracted the Sprott Brand to come on board. Since then our achievements and market exposure have grown commensurately. Mr. Sprott recognized the under-valued potential of our 20% carried interest in Treaty Creek and our 1% NSR that covers the discovery zone; that, plus royalties we have on exploration properties optioned to Pretium resources and several other junior companies. · Fourth – Mr. Sprott (Eric) had first approached us regarding a potential financing in 2018, but we could not come to terms at that time. He re-approached us again in 2019 and we agreed to a private placement at a 25% premium to market price, with his total involvement (shares plus warrants) limited to just over 10% of the Company capital. Eric wanted a 20% position, but Dino held true to his anti-dilution philosophy, which I fully supported. Eric has the option to increase his position to 20% by purchasing shares in the retail market. · Fifth-- Teuton is also due to receive (subject to TSX approval) additional Tudor shares from our amended option payment agreement bringing our current total to 2.975 million shares of Tudor. This give us a highly liquid reserve of over $2 million in shares, held in our multi-company stock portfolio. More information on Teuton Option Agreement payments and share positions with Tudor and Pretium is available in our July 6, 2019 news release. Beyond the above fiscal items, Teuton is scheduled to receive another $1,890,000.00 and 600,000 Tudor shares over the next 3 years. · Sixth – Our 2019 exploration budget is $500,000. We just received $400,000 from Pretium in July (received) and will shortly receive an additional 775,000 shares of Tudor Gold. This, in addition to the $787,500 received from our just completed private placement (of which Mr. Sprott took $562,500) means the Company will be taking in much more than it is giving out. We expect to be reporting another year with earnings per share at the end of 2019. · Seventh – With 30+ properties of which 9 are presently under option, Teuton is the Dominant Prospect Generator in the heart of the Golden Triangle. This winter we will be focusing our attention on creating attractive property option packages based on our 2018 ZTEM geophysical results and the results from our 2019 exploration programs. Best of all… we get to keep and explore the best properties in-house. · Eighth – Eric recognized that the market cap ratio between Tudor and Teuton is out of whack. This presents an opportunity with incredible upside potential for him and his group. Our Treaty Creek ownership position is 1/3 of Tudor’s position. However, Tudor has more than 3 times as much fully diluted stock outstanding. That creates a ‘market-cap ratio’ where we should be trading at the same price, especially considering that Tudor will need to dilute more of its capital as it continues to fund 100% of exploration costs at Treaty. Nor does it consider our 1% NSR. That… plus the collective asset values of our stable of properties, optionee shares and property royalties. · Ninth – The time for marketing has come. We will be exhibiting at VRIC and PDAC (subject to availability) now that our exciting story is beginning to unfold. An active and professionally managed Prospect Generator model is a system that provides a positive annual revenue stream. In Teuton’s case these revenues generally cover all our annual operating and exploration costs. This means we don’t have to go to the market as often (if at all) to raise capital that is dilutive to our shareholders. The Sprott private placement was the first financing Teuton has done since 2016. Teuton is recognized by its peers as being one of the best managed junior resource companies on the TSX. It came out of the recent 5-year chaos that crippled most of the junior explorers, with all 30+ properties intact, and a positive cash flow. In 2016, Teuton actually posted a $0.10 EPS, which is unheard of for a junior explorer. Our working capital is managed under a disciplined budgeting program that keeps annual admin and overhead costs to a minimum. TEUTON OPERATIONS PERSONNEL: Dino Cremonese, Pres/CEO: is an engineer who also holds a law degree. He manages the exploration programs during the in summer from our Stewart facilities and handles 95% of annual administration, legal, regulatory and compliance work. Barry Holmes, Director Corporate Development and Communications is a former commercial helicopter pilot and MBA with 12,500 accident free flight hours and 7 years in a senior management position with Canada’s largest privately-owned helicopter charter company. He also spent 3 years as a stockbroker in the mid-1980s. Both operate from independent home offices equipped with the latest technology communications tools. Between them they have a combined 7+ decades of knowledge and experience in the Golden Triangle complimented by professional networks that span the history of all the major exploration programs in the area. Don’t hesitate to contact me if you have any questions. Regards, Barry Barry Holmes Director Corporate Development and Communications Tel. 778-430-5680
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