Q&A with Khalkos Exploration (V.KAS) President and CEO Dominique Doucet
Can you describe your company and say what it does?
Khalkos Exploration Inc. (TSX: V.KAS, Stock Forum) is a new junior mining exploration company specialized in Northern Quebec, mainly Nunavik and some parts of James Bay. Khalkos’ mission is to discover world-class base metal and gold deposits. We generate our own exploration projects, and we are pioneer explorers of Quebec.
What distinguishes your company from others in your space?
Khalkos has an experienced geological team with an expertise on exploring regions that have never been explored before. Our team’s efforts have led to the discovery of numerous gold, silver, copper, zinc and molybdenum showings and occurrences in Quebec.
Can you explain why you have chosen to work in Quebec?
According to many Fraser Institute annual surveys, Quebec is one of the best places to explore in the world. Northern Quebec is in our own backyard, it is close, we have a really strong knowledge on all matters relating to regional geology, native people, logistics, mining and environmental regulations and so on. We also get an excellent exploration incentive through government subsidies on exploration work spent there, such that for every hard dollar spent on exploration, we get a cash return of nearly 40 cents. Many geochemical, geophysical and geological regional surveys done by the provincial government are being available to the public as well as a very large cutting-edge geo-scientific data bank. All these factors giving a cheap but very competitive advantage for a grass root explorer.
What are your flagship projects?
We have two projects that we’re very excited about. The first is our gold-copper property called Nanuq, located in Nunavik, Quebec, where we just completed a first prospecting program. Numerous quartz-carbonate veins or veinlet-vein systems were discovered within outcrops or boulders. Some rock grab samples yielded up to 35 g/t in gold, 39 g/t in silver and 4.4%.
The second project is our Murdoch Property, located in the Labrador Trough. Centered on a geological formation that underwent little or no exploration, the Murdoch property holds a potential for significant zinc and/or copper SEDEX type deposits. Our prospecting teams discovered boulders yielding grades between 5.6% and 17.5% in zinc. Also, we have recently signed an agreement with Virginia Mines, who will be investing $4.3 million to acquire 55% of the project. That includes a firm $1 million investment in the next 18 months, which will most probably include a drilling campaign this summer. Drilling is currently underway.
What are the main challenges that you face in operating your business?
One of the primary challenges is raising money, and doing so at a reasonable share price to avoid any unnecessary dilution. This has been increasingly difficult for junior mining exploration companies as the markets haven’t been very favourable for us. On the other hand, we successfully completed our IPO in December 2011, when a lot of other IPOs failed. We continually try to expand our network of potential investors, and always prioritize activity that would help the share price, both on the short term and long term, in order to raise capital at decent prices.
Who are the major shareholders of Khalkos Exploration?
Khalkos Exploration is a spin-off of Sirios Resources Inc. (TSX: V.SOI). As such, Sirios currently holds nearly 30% of all of Khalkos’ shares outstanding. Other shareholders include Dios Exploration, which was another of Sirios’ spin-offs, and funds such as Pinetree Capital, Sodemex, Sidex, also hold important shares of the company. Overall, we estimate that nearly 60% of all of Khalkos’ 18 million shares outstanding are tightly held in trusted hands, such as private investment funds, government funds, mining exploration companies, trusted individuals, and insiders.
What is your cash burn rate?
We pride ourselves in keeping our overhead costs at industry-low levels. We want as much of the money we raise to go into exploration projects on the field, rather than redundant administrative expenses. We try to spend at least $1 million on exploration per year, which ideally includes at least one drilling campaign, and we spend no more than $300k a year on administration, marketing, professional fees, and so on.
What kind of experience do you bring to the table?
Khalkos’ team has over 30 years of exploration experience and over 20 years of specialization in northern Quebec exploration, particularly in the James Bay area. Through the years, the team of Khalkos established a reputation of having exceptional integrity in both the finance and geological communities.
Disclosure: Khalkos Exploration is a Stockhouse client.