Interview with David Reeves, MD of Calidus Resources (ASX:CAI)

Calidus Resources (ASX:CAI) is an ASX-listed gold exploration and development company. Its single focus is on the 1.25Moz Warrawoona Gold Project in the East Pilbara district of the Pilbara Goldfield in Western Australia. A PFS has been completed on the project, and an FS is currently underway. Reeves hopes that next year the company will be in production with a 100,000oz gold per annum gold mine. Calidus Resources is trying to take advantage of such positive gold market conditions. To put this into perspective, since the release of the PFS, the NPV of the project has tripled because of the gold price. The big growth opportunity appears to be a potential re-rate from Calidus entering production.

Reeves himself has qualified mining engineer with 30-years of experience in the mining industry. The remainder of the team has a variety of financial, mine construction and gold mining experience. It's a small team but appears to pack a punch.

How does Calidus Resources plan to finance the Warrawoona Gold Project off the back of a PFS, and how will it manage to get into production so quickly? Reeves thinks the FS (due to be completed this year) will solve any investor confidence issues and de-risk the project. In terms of financing, Calidus Resources has "started the debt process," and is looking at conventional banking debt, private equity debt and streaming/royalty companies. 70-90% will be funded via debt. Will an FS be enough to get things over the line on favorable terms?

Moving over to permitting, Reeves states Calidus is close on its environmental work after conducting 3 years of monitoring. Calidus has been dealing with referrals with the EPA and the Federal Government of Australia to deal with. The boards of the EPA has been given full responsibility for the decision, and should get back to Calidus in the next 4-months with a decision. The next permit will go to the minister to sign off, which will take a further few months. Then, Calidus resources needs to obtain all of its safety and operating permits through the Department Of Mines. Then a water license, full water license and construction license will need to be obtained. Reeves states the permitting timescale is outside his control, but Calidus is controlling everything they can to ensure a smooth, faster process. He hopes everything will come together by the end of 2020.

Calidus Resources has plenty of cash, and further cash available from 13% institutional shareholder, Alkane Resources. The project is relatively small, so does it have the excitement to deliver growth for shareholders? Is there enough to explore and develop elsewhere, or will it be time for M&A? Calidus Resources "certainly" wants to be part of something bigger, and is putting plans in place to grow its portfolio. Dinner or diner? Reeves is coy; his main focus is on getting the Warrawoona Gold Project into production, making cash, and getting things flowing. Everything should become a little easier then, as it usually does when cash gets moving.

Reeves himself holds 7.5% of Calidus Resources and obtained his shares through heavy cash investments. He bought more shares a few weeks ago, because COVID-19 discounts were "too good" an opportunity to miss. Several members of the senior management are also invested. Is the project undervalued because it is under the radar, or does it lack the excitement needed to attract investors? Reeves states this will all change once things get up and running at the Warrawoona Gold Project.

No field work currently needs doing and desk work is the order of the day. Waterboard drilling and additional exploration will need to be conducted later this year, but Calidus should have little trouble financing these operations.

What did you make of David Reeves? Is Calidus Resources under your radar, or has it climbed up to detection altitude?

Company page: https://www.calidus.com.au/

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