New Found Gold (TSXV:NFG) - Meet the Team - Hashim Ahmed

Newfound Gold: A CFO’s Perspective on Transition & Financial Discipline

Key Concepts:

• Capital Allocation: The process of distributing financial resources to different projects or areas within a company.
• Operational Readiness: Preparing an organization for the distinct processes required in exploration, development, and production phases.
• Financial Discipline: Implementing robust financial processes and controls to ensure responsible capital management and sustainable growth.
• Phased Approach: Breaking down a large project (like mine development) into smaller, manageable stages to reduce risk and improve capital allocation.
• All-in Sustaining Cost (AISC): A metric used in the mining industry to represent the total cost of producing an ounce of gold.
• CCAA: Companies’ Creditors Arrangement Act – a Canadian law allowing companies to restructure debts.

Introduction & Background

Hashimmed, the recently appointed CFO of Newfound Gold (joining approximately 3 months prior to the interview), brings 20 years of experience in the mining industry. His career began at Barrick Mining Corporation, followed by a significant role at Jaguar Mining, where he led a successful turnaround, increasing the company’s market cap from $30 million to over $500 million. He also held CFO positions at Nowhere Royalty (acquired by Mattella) and Manderlay Resources (acquired by Alcane), providing him with expertise in both operational finance and capital markets. He emphasizes his experience navigating challenging jurisdictions, highlighting the value of a favorable location like Newfoundland.

Newfound Gold: The Brief & Opportunity

Hashimmed identifies three key factors that attracted him to Newfound Gold: the favorable jurisdiction of Newfoundland, the immense prospectivity of the asset (110 kilometers of strike with less than 10 kilometers explored), and the opportunity to implement financial discipline as the company transitions towards production. He views the asset as “multi-generational,” capable of exploration for decades to come. He notes the company is transitioning from explorer to developer, a significant shift in scale and complexity.

Balancing Nimbleness & Financial Processes

A central challenge Hashimmed addresses is balancing the agility of a junior exploration company with the need for robust financial processes. He aims to implement processes that are both nimble enough to support ongoing exploration and durable enough to scale with development and eventual production. He stresses the distinct processes required for each phase – exploration, development, and production – and the importance of proactively developing these processes before each transition. He believes Newfound Gold’s pace of development (potentially two years from exploration to production) necessitates this foresight.

Building a Multi-Generational Finance Team

Hashimmed emphasizes the importance of building a strong, long-term finance team within Newfoundland. He acknowledges the need for mentorship, given the relatively young talent pool in the province, and intends to leverage his 20 years of experience to develop the team’s capabilities. He aims to create a finance function that can operate effectively even without his direct involvement in the future, signifying a successful long-term build. He states, “I’d be very happy if after 3 four years I look back at this asset and it can function on cruise control even even without a CFO.”

Financial Discipline & Capital Allocation

Hashimmed defines financial discipline as establishing processes that force management to rigorously review each capital decision, document it properly, and obtain appropriate approvals within a defined governance framework. He details the implementation of an approval for expenditure process and a segmented capital allocation approach, categorizing capital into:

• Health & Safety/Environment: Essential spending.
• Growth Capital: Investments to expand operations.
• Contingent Capital: Funds allocated based on operational cash flow.

This “bucket” approach allows for focused monitoring of spending within each category. He prioritizes tracking net cash generation over traditional metrics like cash cost or all-in sustaining cost, believing it provides a clearer picture of financial health and reduces “noise” in the numbers.

Collaboration & Alignment Between Technical & Financial Teams

Hashimmed advocates for the finance function to act as a “problem solver” and “risk identifier,” fostering trust and alignment across the organization. He believes that shared access to the same data and KPIs (“looking at the same HIM sheet”) is crucial for making consistent, informed decisions. He emphasizes that trust and alignment are interconnected.

Navigating a Favorable Gold Price Environment

While acknowledging the current favorable gold price environment, Hashimmed cautions against complacency. He points out that inflation driving up gold prices also increases costs. He stresses the importance of cost control and focusing on net cash generation to avoid making poor decisions based on temporary market conditions. He notes, “today's gold environment is very forgiving…but the same inflationary environment that's taking the gold price up is also taking your cost up as well.”

Phased Development & Risk Mitigation

Hashimmed highlights the strategic decision to pursue a phased development approach for the Queensway project. This approach offers several benefits: disciplined capital allocation, reduced construction risk (particularly with the recent acquisition of Maritime Resources and its Pine Cove Mill), and the opportunity to learn from each phase and apply those lessons to subsequent stages. He views the acquisition of Maritime Resources as a key step in reducing construction risk.

Long-Term Vision & Legacy

Hashimmed’s ultimate goal is to build a sustainable, long-term organization that can thrive independently of any single individual. He envisions a company with strong foundational processes and a capable team that can continue to develop the asset for generations to come. He states his pride would come from building a team and processes that allow the asset to continue functioning long after his and others’ involvement.

Conclusion:

Hashimmed’s appointment as CFO of Newfound Gold signals a commitment to financial discipline and strategic capital allocation as the company transitions from exploration to development and production. His focus on building a strong team, implementing robust processes, and adopting a phased development approach aims to mitigate risk, maximize value, and establish Newfound Gold as a sustainable, multi-generational mining operation. He emphasizes the importance of operational readiness and a collaborative approach between technical and financial teams to ensure a successful and responsible development of the Queensway project.