#4 Digging for Dollars: Managing Tail Risk & Smart Money Capital Allocation

[upbeat music] So Sterling Metals, you have, you know, your -- you, um, promise to put out news every two to three weeks, and it's easy, uh, when it's so cheap to drill where you are right now.

Um, yesterday, you put out news extending your high-grade core of the MEPS copper zone, drilling forty-four meters of 1% copper equivalent, including eighteen meters of 2% copper equivalent.

So now you are showing that this core, you know, is, uh, is stepping out, and I, I think this is more to the west of the initial discovery now.

So why is this important in the context of what you're putting together?

This is a very much a, like, a, a drill and show story right now.

So you've got this kinda...

You had our discovery where there was this wild bornite zone where you had, you know, the nine meters of 7% copper, your seventy meters of 1.4, your two sixty of a half, and then you had that crazy gold kick, right? And we kinda step...

If, if you use that as kinda center ice, and you step outwards from that, um, and it's not really center ice, but if you use it like that, then this is about three hundred, three hundred and fifty meters to the west.

And then we've also drilled three hundred fifty meters to the east of that discovery.

And there's kinda two things that are happening.

You get this bulk tonnage scenario that's emerging, where you get copper from surface, and, you know, lots of that rock has, has, has copper in it, um, where the background is, you know, lower grade, but still, but still gonna be something that's profitable at that, at operating costs where you're at in a bulk tonnage scenario.

But then you get this wildly consistent high grade or higher grade, right? And you get...

It's, it-- If you look at the cross-section, if you look at the section, it, it continues from one side to the other, and it runs from, you know, you got this forty meters of one, you got this twenty meters of two kinda thing, and then that ramps up in the middle where it gets a little bit more higher grade.

That's where you get your ten of five or six and stuff like that.

And then it just keeps going as it goes.

So, and it's completely horizontal in the, in the stratigraphy.

So what that really does is it, it allows you, in a bulk tonnage scenario, to have a higher grade portion that you could selectively mine at the beginning to pay back your project.

And the reason that that grade matters so much at the beginning is because all your costs get paid, and then it's just all operating margin.

And so your cash flow models are way better.

Your return on capital is way better.

Your IRR is way better.

And I think that it's, it's really interesting that you have such a long strike of kinda the same thing.

And if you look at the pictures, like, you get wildly fun-looking rocks still.

Um, and so it just kind of reinforces that there's sort of this bulk mono- model being created.

And you still have all of these rocks where you're like, "What is the source of these rocks?" Right? You look across and it's like critical mass where there, there's something driving this forceful copper that's pushing up, right? And so we always look across the lake at Duluth, which is four and a half billion tons of 0.6, which is the same age.

[upbeat music] So Sterling Metals, you have, you know, your -- you, um, promise to put out news every two to three weeks, and it's easy, uh, when it's so cheap to drill where you are right now.

Um, yesterday, you put out news extending your high-grade core of the MEPS copper zone, drilling forty-four meters of 1% copper equivalent, including eighteen meters of 2% copper equivalent.

So now you are showing that this core, you know, is, uh, is stepping out, and I, I think this is more to the west of the initial discovery now.

So why is this important in the context of what you're putting together?

This is a very much a, like, a, a drill and show story right now.

So you've got this kinda...

You had our discovery where there was this wild bornite zone where you had, you know, the nine meters of 7% copper, your seventy meters of 1.4, your two sixty of a half, and then you had that crazy gold kick, right? And we kinda step...

If, if you use that as kinda center ice, and you step outwards from that, um, and it's not really center ice, but if you use it like that, then this is about three hundred, three hundred and fifty meters to the west.

And then we've also drilled three hundred fifty meters to the east of that discovery.

And there's kinda two things that are happening.

You get this bulk tonnage scenario that's emerging, where you get copper from surface, and, you know, lots of that rock has, has, has copper in it, um, where the background is, you know, lower grade, but still, but still gonna be something that's profitable at that, at operating costs where you're at in a bulk tonnage scenario.

But then you get this wildly consistent high grade or higher grade, right? And you get...

It's, it-- If you look at the cross-section, if you look at the section, it, it continues from one side to the other, and it runs from, you know, you got this forty meters of one, you got this twenty meters of two kinda thing, and then that ramps up in the middle where it gets a little bit more higher grade.

That's where you get your ten of five or six and stuff like that.

And then it just keeps going as it goes.

So, and it's completely horizontal in the, in the stratigraphy.

So what that really does is it, it allows you, in a bulk tonnage scenario, to have a higher grade portion that you could selectively mine at the beginning to pay back your project.

And the reason that that grade matters so much at the beginning is because all your costs get paid, and then it's just all operating margin.

And so your cash flow models are way better.

Your return on capital is way better.

Your IRR is way better.

And I think that it's, it's really interesting that you have such a long strike of kinda the same thing.

And if you look at the pictures, like, you get wildly fun-looking rocks still.

Um, and so it just kind of reinforces that there's sort of this bulk mono- model being created.

And you still have all of these rocks where you're like, "What is the source of these rocks?" Right? You look across and it's like critical mass where there, there's something driving this forceful copper that's pushing up, right? And so we always look across the lake at Duluth, which is four and a half billion tons of 0.6, which is the same age.