Sprott Money Manager: Why Mining Investors Fail & What Works
Summary
Investment Strategy: Steve Todorok emphasizes a strategy focused on early-stage exploration, aiming to invest when promising discoveries are made and exit before market valuations become unsustainable.
Track Record: Todorok has been employing his investment strategy since 1987, with a history of successful investments in new discovery plays, although he does not track specific performance metrics like CAGR.
Discovery Investment: He highlights the importance of identifying significant discoveries early, even if it means paying a premium, as these can lead to substantial returns, citing examples like Aurelion and Felo Corp.
Portfolio Management: Todorok suggests maintaining a concentrated portfolio of around 10 companies, focusing on those with strong potential discoveries and solid management teams, rather than diversifying excessively.
Geological Expertise: He stresses the advantage of having geological expertise in evaluating mining investments, noting that understanding drill results and geological reports is crucial for identifying promising opportunities.
Market Dynamics: Todorok advises being patient and waiting for significant discoveries, as these can occur infrequently, and emphasizes the importance of monitoring market conditions and company developments closely.
Risk Management: He warns against investing in early-stage companies with little proven potential and highlights the importance of jurisdictional risk, advising caution in politically unstable regions.
Management Evaluation: A strong management team with a track record of success is vital, and Todorok suggests looking for companies that strengthen their teams as discoveries progress to ensure successful project development.
Transcript
Today on Resource Talks, a geologist who manages hundreds of millions of dollars is hopefully going to save me from chasing overpriced discoveries and uh instill some sense into my ever growing excitement for this bull market in mining equities. Geologist in question is Steve Todorok. He is one of the most senior managers at Spat and he's got a focus on early stage exploration with a simple goal in mind. show up when the rocks do and then disappear before the market cap turns into fairy dust, which should always be your expectation when speculating in the early stages of the mining cycle as uh we so often get reminded. And uh before we get into the conversation or any of that, Steve, though, thank you so much for your time today. >> Thanks for having me. >> The pleasure is mine or will be mine hopefully as as you attempt to uh save me from myself here. But uh just briefly for people watching or listening, if you want a summary of this conversation and all the other interviews that we do on resource talks, go to resource talks.com. There's a free newsletter. It goes out once a week with a bullet point summary of all the conversations from the week. Before Steve, before we get into any of it all, I I see a lot of people with horrible track records being interviewed a lot out there and and I've done it as well. Drank the Kool-Aid, believe the beautiful words before. So, I've decided on a new opening question here um that I'm going to ask you. Do you or have you actually made money by doing what you're about to be preaching here today? And what's kind of your long-term track record if you have? >> Yes, I've been employing the same strategy for quite a while. Um Rick Rule hired me 22 years ago, so that was about 2003. And uh I started doing what I'm still doing today probably about 1987. Um three friends of me started a little investment club and uh myself was a geologist, my friend was a geologist. Uh his partner was a mining engineer and then I had another one of my partners that was non-technical and we decided to uh start a little investment club and let's do what geologists do. We'd we'd go out and stake some mining properties and then try and option them and and joint venture to some juniors and get some shares and cash payments and then uh we all agreed that we'd contribute $50 a month into the investment club to start building up cash. The goal being to start buying stocks and pretty quickly we um optioned a couple of the mining properties getting some cash. got lucky. A few of our stocks went up, so we sold those and sure we decided it wasn't wasn't making a lot of sense to keep adding $50 a month to the club. So, we stopped that. But before you know, we had a nice little pot of money and kept optioning some properties. And um for whatever reason, when it came time to buying stocks, by default, I tended to be picking most of the stocks and they tended to be what I call new discovery place. and uh you know we were in Boise Bay you know Diamond Fields and things like that. So I I literally started, you know, employing that strategy back in 1987 in that little club. And, you know, so by the time Rick offered me a job in 2003, I'd been doing it kind of for 15 years. >> Uh while I was running two my own junior mining companies and the other guys went partners in the club said, uh, for some reason you're pretty good at picking the good stocks, but you don't like to sell. So you pick them and we're going to decide when to sell them. And uh they all funny funny way how it all ended there. One day I was I'm from Cameloops in British Columbia and it's where I was born and raised and everything and I grew up skiing there at the mountain today. It's called Sun Peaks and I'd go up visit my parents and come back to Vancouver to go to work Monday morning. I kept telling my partners, "You guys got to go skiing up there one day. It's just spectacular. You know, Whistler is buying the resort. They're going to develop the whole And so they all went up there one weekend and they came back and kind of made the announcement that we had such a good time. We've made a decision. I said, "What's that?" Well, we've decided that we should sell all our stocks and buy a lot up there and build a big ski um chalet type of thing. We're going to call it the miners in and it was right at the bottom of the ski. You go very top of the hill right on the longest run right into our back door and jump in a hot tub type of thing. And I said, "Really? You want to sell all our sal?" Yep. done deal. We've all agreed. Okay, I wasn't expecting that one. We actually had Brix in there >> before it blew up. We made good money on Brix. Just call that whatever kind of luck you had. But I like to point to other ones like Diamond Fields that we had and some other stocks like that. So, um, you know, my my approach is what I like to say is the most exciting thing and most rewarding thing to investing in in the mining industry is if you can get a little exploration company that makes a brand new, you know, big or good-looking discovery. >> Those are all things I do want to talk about. What is that? Do do you track your like a kagger or something like a long-term track record or something that you you've tracked? because mining mining often times t takes away more than than what it gives. So what what's that mean for you? >> Try rewarding that again just so I >> well I'm I'm essentially asking about a kagger so a compound annual growth rate and and what kind of the the returns have been over time. Um because again mining although it can give a lot it also it can take away a lot. So, uh, yeah. Is that something like a long-term track record? Is that is that something you've tracked? >> I don't really keep keep record of anything like that. I, you know, I just know that, you know, if I'm in the good ones, and I'm usually one of the first guys to get into those brand new good-looking stocks. Um I don't I can't I can't give you any kind of you know record type of thing. But one of the one of the things um why a lot of people miss the the really good new discoveries is because you just look at a stock chart. You know as soon as they announce a good hole, the better the drill hole, the strong the stronger the stock's going to react. Most people the investing rule number one is don't chase a stock that's exploded. Mhm. >> My sort of come back to that is well I guess you're going to miss most of the good new discoveries because you're not going to announce a really good discovery drill hole the stock shoots up. It's not going back lower than where it was so you can say I'm buying it on sale. That's not going to happen. Never does. That's exactly what I want to talk about today actually because um it's essentially just to set the stage essentially $20 million company prints a beautiful assay table multiple well over 100 grand meter intercepts in their market gives it a 100% jump in the share price on day one I start beating myself up for missing out and start thinking of you know chasing what looks like the next big thing probability though still says that I I should you know I shouldn't be and that it wouldn't be uh But every you know not so often really it is it is the next big thing it does happen. So how do I how do I know if it is worth chasing and and you know paying that premium which could be 100 or 200% as we just recently saw. >> Well in the case of Aurelion for example back I think that was around 2008 they were 50 cent stock. They announced that first drill hole. It was just spectacular and within three days the stock was trading at $3. >> You know I I was putting phone calls in. I didn't know anybody in the company. I was trying to get a hold of the CEO. I know he's busier than busy. Everybody's new best friend. He finally returned my call 3 days later and stocks at $3. I like what I heard. And I just started buying stock at $3 a share. So, you know, that's up 500% from what it was before. I didn't think twice. I just said, "Start getting your position. It's the first drill hole. They got two years of drilling ahead of them if this thing grows into what I think it's going to be." and two years later it was $30 a share when Ken Russ took him over. So yeah, I would have loved to get in 50 cents or a dollar, but I didn't even think about it. It's just like get over like I've done that, you know, many times. Felo Corp. Um I'm not allowed to talk about any current company names I've got my clients invest in, but I can talk about previous ones that are all this same sort of approach. Um, I think when Felo announced their discovery drill hole down in Argentina maybe four years ago, four and a half years ago now, the first drill hole was something like a,000 m of 1% or 1,800 m of 1%. You know, it's a giant drill hole. And uh, instantly the stock's up around $45 I think when I started buying into it. And I bought a lot between five and $7 a share. And at the end of the day, BHP and Lundine took them over in the 20s, something like 25, $28 a share. Um, so I look back at it and yeah, it would have been nice to get in at three or four, but getting in at five or six is very rewarding. >> Could you because essentially what I'm looking for here is how do you know? Because Fruto del Norte and like then these things are they're they're an exception to the rule, right? Like most of these things, even after a big candle is printed and even after a beautiful asset, they're not going to turn into the massive, you know, takeouts and let alone mines eventually. So, how do you know what to chase is essentially what I'm asking here. >> Well, I' I'd rather be really patient and wait for the next big discovery. Like when I get a a felo type of drill hole, um, you know, that's really wide, really high-grade, consistent throughout the interval type of thing. Uh, I have a saying that giant drill holes are usually only in the middle of giant deposits. You don't find giant drill holes in the middle of small to mediumsiz deposits. So, if I've got that extra confidence that we've got the making of a giant, you know, my confidence level goes up a lot and I'm prepared to pay more. You know, I if I'm getting into something5 to $7 a share, I'm not looking to hit a home run. You know, I'll take a double. You know, if I feel really good that we're going to double our client's money or triple it, I'm happy. We're gonna we're gonna buy more dollars worth of that stock at $5 than if it was at a dollar. >> I just got more confidence. >> Is that a a rule there? Is that what you're generally looking for? And and is a double even worth the risk of exploration? Wouldn't it have to be more in order to comp your risk there? >> If I buy 5 to$10 million of stock for my client in one company and it doubles, we just made $10 million. That's I'm h I'll do that deal every day long. Yeah, I think um you're putting me to shame there when we start talking about sizes, so uh might as well leave that out of the conversation. But uh it might be >> Well, that's my clients collectively, you know, so I've got quite a few clients. >> But is there is there any numbers that you could put to it like u great thickness plus true width or something else that you can see and recognize as a you know quick and and dirty sort of numerical rule where you see it and you're like, "Okay, yep, I'm going to buy that. Well, at an absolute minimum, I want to have a very high level of confidence that we're on a discovery drill hole that we got a shot at 1 to 2 million ounces. And I'd much rather was at least 2 million because again, if I go in there and I buy a lot of stock, I got a problem. How am I going to get rid of it? What's my exit strategy? So, I want I want to have very high level of confidence that somebody bigger is going to come along and take over this company that's made the discovery. I don't usually like to hear that the little company that's made discovery is going to build the mine themselves because the management team probably hasn't built mines. You know, I've seen it lots. We we're watching it every day where, you know, a company has a deposit and it might be 2 million, 3 million, 5 million ounces, and they're going to strengthen the management team. You know, bring people in that have the right skill set to build a mine. My concern there is when when you're putting that team together, it's more likely their first time ever acting as a team. Whereas you think of Newmont and Barrack and Tech, they've got teams of people that you know will move around the world building a new mind for them that it's the same team that's been working together doing it 10 15 times. Um it's a you know it's a big it's a big task building a mine and the slightest mistakes can be fatal you know. So that's why I don't like to see you know little companies building mines. Um, so again it's, you know, if somebody announces they've got 10 m of 5 g gold or 10 m of 10 g gold, to me that's I'm probably not interested. That's how you make small deposits. You know, it's it's either if it's 10 m of 10 g, it's going to have to go a long way. You almost a sheet of paper. It's going to have to keep going and going and going along strike or the trend and then down deep to build up millions of ounces. And that can happen. You know, you look at Mag Silver. Um, that was a very continuous deposit, but in general, it just makes my job easier. The the wider that discovered drill hole, the better. >> What is What's that breaking? Like, you don't want 10 meters. What do you want? 100 meter intercepts at least, or how do you see that? >> Well, I got into an Australian gold discovery that I'm still into, you know, back in 2018. The discovery drill was the fifth hole they drilled was 250 m of 5 g gold. Easy. This is going to be a big deposit and you know 6 years later it's being built into a mine. >> Yeah, that's fair. Rare though, too. I mean that I mean when we see something like that, everyone recognizes >> you got to be patient. I don't need to be getting into new stocks all the time. I got my favorite list of stocks and I'm happy just to sit and wait. They they perform. you know, you always want to own the best stocks. The best ch stocks always lead the charge and they've gone up. You know, they're really high priced right now. Um, it almost kills me to have to sell any of those positions to buy something new. But I've I've recently been doing it a couple times, but not much. I almost have to close my eyes when I push the sell button. >> I do always want to own the best stocks, but it feels to me like the best stocks don't want me owning them because they always seem to be so elusive. At least for me. What how many would that be? Like how many companies would you own at a time though? >> Maybe 10. >> That's good. Yeah, that's a good talk to me a little bit more about that because I'm seeing and I think the more the more this bull market grows and and people start coming into it from from other sites, they might think like, oh, I need a diversified portfolio, 50 positions, 160 positions. Why 10? >> Just it's a good number. I feel comfortable following and monitoring. I go visit, you know, all the projects that I own stocks in. My clients like to know that Steve the geologist has gone out and stood on the property and looked at the drill core, licked the rock, talk to the young geologist learning the new technology that they're using and applying. That's my ongoing education for the most part and I love it. >> In your experience though over these years, how many good discoveries are there every year to get into? Well, I used to say we're lucky if we get two to three good-looking new discoveries a year. Um, you know, just thinking recently there's been two new discoveries in the last couple of months in Western Canada. Um, neither of them have giant written all over them. Neither of them are like a feloc corp quality for size and grade, but uh because of where they're located, um they got a pretty good chance of, you know, ending up being something quite significant. So, it goes in spurts. You know what I do? Like, you know, I I'm the kind of guy that, like I say, patience is a virtue for me. I've just got to every morning I get up, I scour all the news releases in Canada and Australia scene. Is today the day that we've got, you know, some no-name little juniors and announce what I think is a good-looking discovery drill hole? Usually it's not the day and it only happens a couple times a year. But what I also like to be reading is that juniors are financing. They're raising money to go do exploration because we need all the more companies that are exploring increases the chance we're going to get a new discovery. M how >> you know having said that most new significant discoveries are going to be deep. So we we need to mostly realize on geohysics and geohysical surveys you know getting better and better being able to see deeper and deeper in the ground you know and then all we got is anomaly but you got to drill it and hope it's not graphite. >> How uh how old are you now Steve? >> 67 >> when so so 2003 you were you were 47. What about before that? Were you a patient man before that or is that something that comes with age? >> Well, I went to university in Vancouver starting at 18 and uh I worked every summer, you know, through university for mining companies. I took two years off. I worked in an underground copper mine driving those big yellow trucks up near camels for a couple years to learn that part of the business. And and then um when I graduated like within maybe 5 years, I became a partner in a geological mining engineering firm. So we do exploration work for other juniors and one junior forgot to pay their bill one day. They said they had the money to go drilling. We went drilling and where's the money? Well, we didn't have it. So we ended up inheriting that company and I stuck my hand up in there and said, "I'll run it. I'll be the president." And that's how I got started in junior mining companies, >> you know, acquiring projects from companies like Bareric and um Newmont and Nanda doing joint ventures majors. Did private placements in my juniors and and whatnot. So I did that for I think 12 or 13 years until Rick called me one day in 2003 asked if I'd consider crossing the street and I I started looking at the phone. He said, "Are you kidding? Guys that run junior companies do not like stock brokers. We got to raise money with you guys and that's never a pleasant experience." But I said, "Sure." >> Who's a better stock picker? You Rick? >> Uh very different. Rick's not a geologist. Um, he's got a lot more money than me. He's got a a good rolodex. Um, so he uses our rolodex. Um, I'm happy with what I do in my track record. >> That's a very political answer. I'll take it. I'll leave it at that. Uh, I was I was only just half kidding though when I asked it. But uh I want to go back to what you said earlier about made a note about a discovery where like you said like they drilled five holes and then you started getting interested. You you can't really get into or really even form an opinion on what a good discovery is going to be off of one hole though, right? Can you or how many holes would you want to see before you size up a position? >> Well, go back to Aurelion um in their Fruit of Delta Nord discovery. I think it was their 43rd hole they drilled in 3 years that was the discovery drill hole in Fruit of Del Norti. You know, they they'd identified and probably delineated a smallest lowgrade deposit. So, they knew there's gold in the area in the rocks and they just kept going and drilling different targets and until they hit on the 43rd hole. Um, this company in Australia, they drilled four holes. They were just newest, which is now gone, taken over by Newmont. New Crest had actually drilled a hole I think in 1994 and they got something like 100 meters at 3 g gold, you know, starting 400 m below surface. That's pretty deep. But these guys literally did some, you know, modernday geohysics and said, "Hey, they should have moved over a little more." And I think they moved 50 m away and they hit that 250 m 5 g gold. And the rest is history. It's an 8 million ounce deposit now with nice copper in it and it's wide open at that. It's going to be a 20 million ounce deposit one day, I'm sure. You know, so that again the bigger that interval that was 2505 250 m of 5 g gold that's a big interval you know. Yeah, I would have liked to see 500 or a,000 but that's that's good enough to get me excited. >> But you said 50 m step out. Is that enough? Does it depend on the system that's below the feet or like Yeah. How do you how do you how do you judge a step out that's large enough? What's a large enough step out that would get you excited? Well, I guess they they thought that that old New Crest hole was pretty good. Maybe they just clipped the edge of it or they didn't drill it deep enough. Maybe it stopped the mineralization. Remember the gold price back in 1994 when that hole was drilled um was pretty low. Like it was probably around $400 an ounce, you know. So, you're you got a drill hole, it's 100 m at 3 g gold at $400 gold and it's starting 400 m below surface. Not good enough. That's why they just walked away and left it. M um when they came in in 2018 now we probably had I don't know $15,700 gold that 100 m of 3 g is looking like it's worthy of followup. So they just geohysics said hey let's just move over a little bit and drill a deep hole right through it and you know the rest is history. >> What is that something you would or what would get you excited when you see a step out like this? You know you've seen a hole you kind of like it. Um, you know, it might be 70 80 m of, you know, a couple of grams. Let's call it two 2 and a2 g. >> This doesn't do much more for me. >> Well, I was thinking if if they follow it up with something, it could do like as you mentioned at the beginning, it could do something for you if it's like a continu continuous sheet, right? So if they do a 200 meter step out and they come out with a similar intercept, does that get you interested or does the step out have to be? >> It does, but you don't you don't tend to step out 200 meters. You know, when you got some uh say 250 m of 5 g of gold, you're moving over maybe 100 m. >> Might be only 50 m to play it safe. Just until you get, you know, five or six holes into it. So you start to get a better feel for what's there, what you're dealing with, what the orientation is. You're not seeing the grade. Is it kind of similar in all the holes? Um but in you know big porefree deposits like say the fileo corp I think I mentioned that they were taking over that was a big success story you know when you've got a a really big porefree copper deposit usually with gold in it you can step out 150 200 m you know for starters they've probably done a big IP geohysical survey and if you've got a number of holes in it that geohysical anomaly you can almost assume is all mineralized so a lot of companies will as quick as they can. They want to identify the the footprint of the overall deposit. So, do big step outs 150 200 m. Uh but in the early days, start out closer spaced. You know, if if you know it's a porefree, 100 m spacing is pretty good. Um you might come back and and do some 50 m holes. If there's some other structures in there that you want to get a little better handle, but you're not going to start just drilling the deposit a prior copper 50 m step outs all the time. That's a waste of money. You don't need to do it. Mhm. >> You know, define the the overall footprint size of it first. >> Right. Just listening to you speak here. Um, if I didn't know you're a geologist, I would by now. But what if what if what if someone's not? I mean, most of the speculators in this space won't be geologists. Is there is there hope for them? Can you know can we do it or >> not much? Everybody says, "Is there one book that I can get to reach?" David know as much as you. I want my money back. I put almost 50 years into this career. I spent a lot of money, you know, getting to where I am right now. You can't possibly learn it. Um, you know, go if you can go out and look at projects and see the rocks, talk to the geologist, but that that's taken up the geologist and the company time. They don't they don't want to say, "Okay, will you take the day off and give this guy a tour around? He's uh trying to learn something about investing." They don't. It's too expensive. So, you know, it's really hard for, you know, people like yourself to get on, you know, good projects tours. Um, the better the project, they want the top analysts or top investors coming out. Um, when I went down to see, um, Felo Corp and Lundine Mining, then another high-profile one today. I went down to look at their project two years ago, and I think there's 75 people on the tour. I'd never been on a tour that big. >> But we're talking the London Group and Great Discoveries, you know, they want everybody coming out to see this thing so that everybody goes home and either writes up doing good research or, you know, new updates type of thing or investors that are going to go home and, you know, buy lots of the stock type of thing. So, it's hard for, you know, the layman to get on a tour like that. Um, it's just too expensive to put all one of these site visits together. So, you know, you want to do that as ideally as much as you can. Um, or there's I think there's only one newsletter out there that's written by a geologist that's got experience. So, you want to have someone like that in your corner or you want to have someone like me in your corner that's, you know, been a geologist for quite a while doing this for quite a while. And there's very few, like, like I said, there's only one newsletter that's got a geologist involved. Um, so be to be trying to do this on your own like I've I've been sent over a thousand list of people's stock list to for me to value them. I'd just shake my head saying who the heck is helping you? Obviously nobody. >> I wouldn't touch most of the stocks on these list and they're they're some of them are really lengthy stock lists. So you that's that's the first thing that's wrong. You don't need 50 stocks. >> You're not giving me much hope, Steve. I was hoping for hope here. Uh but I well, as as a money manager, there would be a caveat there and a bit of a bias. I understand you almost have to say these things, but what if I did have a gun to my head? I got to make it in this space. I have to manage my own money. What do I look out for? What do I spend my time paying the most attention to? Is it a specific deposit model or free IOCG? VMS is something else in particular or is it is it a specific jurisdiction? What do I what do I pay attention to? >> Well, the first the first thing every investor in this space should own is a lot of the big boys. That should be your cornerstone investment. So, the big royalty companies, the big mining companies, you know, and once you got them, that's your cornerstone. You got you've got good exposure to gold and silver and copper type thing or uranium if you want it. and then go down the ladder, you know, take some of the smaller ones, you know, you know, call it small mining companies, not the mid t, you know, just somebody that's actually mining gold, you know, mining silver, making a making some profit, cash flow. Um, but when you go down to companies that all they can say is we've got an exploration project, you know, we've done some drilling, but we haven't hit anything yet. um they want you to buy their stock and they're hoping somebody will finance them, but when it's really early stage, it's like you're rolling it the the dice and you know, you can say uh bet on management in previous track record. Well, I can tell you, you know, management that's done it before doesn't always do it again. you know, there's just they if if a management team's had success and they're going out to start a new company, going to look for a new project, uh people will call them up and say, "Hey, I know who you are. You've had success before, then we will you look at our project and theoretically if you don't have a good project to bring them, they're not going to let you in the office." So they tend to get to see the best projects that are available out there or they can make some phone calls uh to major mining companies and you know a lot of the guy top s top success people have worked for majors and they've got friends in the majors so they might call them up and say hey do you have anything sitting on the shelf uh that you're not working that might be a good fit for us and that happens. Um but it's you know it's getting harder and harder to find good projects you know so that's where it goes back to we need as many juniors um getting funded as possible so that they're going out doing their thing exploring all over the world um you know doing geoysics doing soil sampling and drilling anomalies we need the anomalies drilled to get these brand new discoveries >> well you're bringing up geoysics which is also maybe an interesting point as you said geohysics is going to become a more more of an important tool even more so than it is right now. What are you looking for? Any any any basic lines that you can you can point me toward or Yeah. What are you looking for when you see, you know, a geohysical news release? >> Well, I just like to hear and know that there's anomalies being developed because that's what you're going to drill, you know, and that's where you're hoping you're going to find some metal in that anomaly type of thing. So, I don't I I can never get excited looking at a geohysical anomaly. All I can say is, okay, it looks like the last one or the other ones I've seen 15 of them. Go drill them all. >> You know, try and pick the best part. Have your geophysicist tell you where he believes the strongest part of the anomaly is to drill the first hole and that's how you start. >> Yeah. Yeah. Well, tell me some we touching on geoysics. It's like we found a new easy to pause. There's still lots to find out there, but they're getting deeper and deeper and deeper, which means we've got to keep improving the geohysical surveys that we have to be able to see deeper and deeper to find those anomalies. >> Well, you make up interesting points there, and that kind of ties into what you said before, is like it's really hard for, you know, retail speculators to do this on their own. But then at the same time, and I joked about it before, but it's true. I mean, you're not you're not exactly impartial, right? You you you essentially get paid if people believe they they can't do it alone. and uh convince me you'd hold the same view I if your compensation didn't depend on it. Why why is it true? Tell me stories or tell me mistakes that you've seen people make or Yeah, talk to me about that. >> Well, investing in in companies that don't deserve to be invested in is not a good idea. U you know, every every one of these juniors has a IR promotion department. Their job is to try and convince you to get you to buy the stock. And so they're going to they're going to set up meetings with you and management and their geologist to tell the story. Um it's somehow you've got to be able to see through it all. Um but I don't know anybody. I certainly can't go look at a early stage project that hasn't been drilled and say this is the one. This has something extra special on it. It's like you got to show me the drill hole. There's there's no shortcuts. >> Mhm. What what what are some mistakes that you see in in reviewing those? What did you say over a thousand portfolios that you've reviewed from retail speculators? What are the what are the mistakes that we make most often? >> Just buying way too many uh really early stage uh companies that that you know their projects just haven't seen much work on it. You can you can paint the prettiest picture out of nothing. You know, like when when these juniors are telling you the story, they they can paint such a picture, they they baffle you. You know, you you don't know what they're telling you. You don't understand. You don't have the geological experience. >> Yeah. But outside of that, then what is like too many positions? That's kind of the obvious one. Is there another one? Is it like when you see people taking on too much jurisdictional risk or you know investing with the wrong people essentially or another mistake that you kind of see is is a common thread throughout portfolios that don't make money. >> Well, jurisdictions uh I think is a pretty important one like um I I don't like to go into some countries, you know, juniors working in countries I just don't feel, you know, is is good country risk. Um, you know, I'm investing my client's money, so I've got to factor that in. You know, how how comfortable do I am I prepared to go there as a geologist and walk around the property or am I worried about my safety? Um, things like that. And, you know, we saw in Panama what the Panama government did a couple years ago to Hudson Bay, you know, basically shutting the copper mine down after they spent seven or eight billion dollars building it. Well, I wasn't a Hudson Bay shareholder cuz I didn't like the country risk, you know. So, we're especially if you're a small company, an early stage junior, and you're going into a high-risisk country. Um, I don't like to see that you, you know, again, I'm waiting. They'd have for me to invest in that company. It would have to be one spectacular drill, you know, because then I'm betting that at the end of the day, a major is going to come in, take them over, and it'll be their country risk probably. Well, but talk to me maybe a little bit more about the mistakes you see people making in in in their portfolios when it's like retail investors. You know, you said again too many positions, but what else? What's kind of the most common mistake that you've seen people who lose money make? >> Maybe turning that around a little bit, you know, trying to help those investors, you know, what they should be, you know, trying to focus on what they're investing in. um you know, go with management teams that have done it before, got good track records. Um that's not foolproof, but it's a heck of a lot better than um you know, you just blindly picking stocks because you might, you know, read over a news release and think it's good um you know, good management teams have done before. They're probably geologists or they've got a geological team involved that's, you know, helping make the company decisions. So, um, you know, whether it's betting on the Londines, you know, for example, you know, groups that have been around a long time, had a lot of success, that's that's not a bad idea to follow them. Um, there's another kind of company that Rick Rule and some other people like called the prospect generator type of company where you've got a good group of geologists running in a a company and they're out um doing geohysical surveys and soil sampling and prospecting the inexpensive surveys to try and identify anomalies. and they'll try and joint venture those properties out or sell them and keep a royalty so that other companies that that have money will go out and do that exploration and do the drilling. Um your prospect generator type of company usually has a number of projects that uh are ideally you know being optioned out and being drilled. So if you you know if they got 10 properties hopefully five are optioned out and five of the properties are going to get drilling done on it. um you know that's better than just blindly picking stocks. So you know there's a number of prospect generated type of companies out there. Get a basket of those wouldn't be bad. Um those are probably the two wisest ways for you know layman investors to invest in follow good management teams and prospect generators. >> What about yourself? What are some of the mistakes that you made along that uh career? now over over 20 years. Eh, so yeah, what are some of the what are some of the mistakes? I mean, you you mentioned some of the wins there. What are some of the stuff that you you didn't make money on and what did you learn from that? >> Okay, it's more than 20 years. It's close to 50 years from when I started going to university become a geologist. So, it's been quite a while. Um, you know, the I guess I I've I've done it myself like when I was running my own junior companies. Um, uh, Bareric took over another big company called Lac Minerals and Lac Minerals had a property in Alaska. Um, and, uh, there was known VMS mineralization on the project and, uh, the guys with lack actually went out and drilled in a new anomaly and had a really good looking drill hole. I think it was about 50 m of 8% copper and 7% zinc. that that's a pretty nice width and those are really good grades. And um you know I knew the guy I knew Beric and I knew the exploration manager for Bareric and I called him up and said, "Hey, you know, I don't think that's a a bareric type of property. It's copper and zinc type of thing. If you're going to be selling it, can I try and acquire it?" And I didn't tell him why. It was because of that drill hole. Well, he probably knew why I wanted it, but I I don't think I brought that drill hole up at all. And I ended up, you know, beating out a couple other bigger companies to get it. Gave them a better offer. And we were excited as heck. We went out there with the drill and just stepped all around that that one hole at 50 m, 8% zinc and copper type of thing. And we missed on all four holes drilling around and say, "How did that happen?" That's what we call a one hole wonder. You drill a really good hole and it just whatever didn't go anywhere. Um, so I've drilled that hole myself. And so when a company, you know, they might announce that brand new discovery and I get in, um, I don't think it's really happened again that bad, but they might get a couple holes drilled around the the first good hole and then it fizzles away or it gets fault. And faults are your worst enemy. >> You can be drilling for 6 months, you know, keep growing bigger and bigger, maybe a year and then you move the drill over and there's a big fault and it's faulted away. So what you found isn't big enough. It's almost like you just wasted a bunch of money and time drilling this. It didn't get big enough. It's not going anywhere. It's staying right where it is in the ground. >> That definitely happens and you just can't you can't really predict when that's going to happen. You just have to hope it all, you know, plays out together. Ideally, if there's that geohysical anomaly and you're just marching along drilling, you ideally want to drill off that whole geohysical anomaly and you know, if there's a fault, you should see a fault offset in the geophysical anomaly. That might give you, you know, an idea where to go drilling. Um, sometimes it just doesn't work out. You know, everything's going good and you drill it off and drill it as big as it gets and it's just not quite big enough for whatever reason. H I thought my mother-in-law was one of my biggest enemies, but I'm going to add faults to that list now as well. The list just keeps getting longer and longer. Does uh I was actually hoping you'd say that overpaying was one of your mistakes where like you maybe got too excited on a discovery. You paid too high of a sum, never got taken out, the market ran out of breath, and you kind of had to exit at at, you know, a lower price. Because I think that does happen a lot and and that might be a topic to touch upon as well. How do you know that you're not overpaying? How do how do you even value a discovery? Is it back of the envelope, you know, size math that you're doing there? Or how how do you know how much to pay for a discovery? >> Well, you know, if if it looks like if it's a if it's a big or really big looking discovery drill hole, um it's going to grow into something bigger. You rarely get just that one hole or just a couple of holes. usually it's going to grow into something significant. Um, you know, there's one example in Australia where uh a company made a real nice uh PGM discovery and uh at the initial time of drilling when they first started out, the PGM prices were good. And then about a year to year and a half later, you know, the stock was going higher and higher and higher and then uh PGM prices just tanked really quick and the stock came down and uh you know I couldn't predict what PGM prices were going to do. So, you know, I basically, you know, I sold some up over I think it went ultimately $8 and I sold some at $6 to get into something else, but I I kept most of it. And when PGM prices went down, it went down too to the point where I said, "Okay, it looked like PGM prices are staying low for a number of years. I'm getting out of the stock." So, that I couldn't I didn't see that coming. Um, you know, you just I'm not good at predicting uh metal prices in the future type of thing. I don't think anybody is. >> Yeah, that's uh >> you know, sometimes they just don't work out for a variety of reasons, but metal prices, you always have to be worried about that too that you know, we none of us want to see gold tank here in the next month type of thing. not only will but things like that you can >> and essentially if you do want to do this long term you have to ensure that you can make money in any market and and a good discovery always gets bit up even if it even if it isn't in a bad market right because often times I would see you know track records being posted during bare during bull markets to be like oh year to date I'm up that much I'm outperforming everything and everyone but it's like let's look back at you know the last five or six year track record let's say if you made money during a bare market Okay. Um, >> two examples we we did experience. You know, my approach, my strategy, you know, during the bare market, I think it was around 2015, 2018, Reservoir Minerals made their big copper uh, gold discovery in Serbia. That was a home run. The stock went probably 50 cents. I think well over $10 before they were taken over. And I waited, you know, they announced their Discovery Drill Hole around the stock jumped up to a dollar. That's when I got in between a dollar50 and I rode it till they were taken over around $10 a share. About the same time, Fish and Uranium and their early partner Alpha Minerals announced their uh uh discovery in Saskatchewan and that was a good success story. Uh but those were almost two of the only mining stocks that went up during that bare market. And it again, you know, the world needs metal every day we wake up. If metal prices are down, you just got to have better grades, better quality deposit. But those were two examples where, you know, if an investor owned both of those, they made good money. They probably owned other stock, too, that they lost a lot of money on. But, you know, that that approach does work, the new discoveries, if they're good. >> Yeah. How would your approach be different if you're not managing other people's money, but just, you know, your your own portfolio as a geologist? What would you do differently? I I I love this. You know what I do is jolly. You know, there's nothing more exciting than being involved in in a brand new exciting discovery. So, like I'm involved in, say, 10 different companies. Most of them are discoveries. I get up and that's all I follow is the good companies. I'm just looking for news or I'm going to look at their projects or I'm talking to management. Um, you know, you don't need a guy like me to follow, say, Newmont or Franco, Nevada. That would bore me to death. That's just number crunching. >> Yeah. What about the portfolio building thing? Like would it still be 10 companies? Would you how would you position size and and >> I'd rather have a short list, >> you know, you because if you have 50 stocks, you know, and you get one or two good winners, you probably have small positions in all 50 stocks. >> So, if you get one good winner, you got 40 other ones that aren't doing anything. So, if you have a shorter list, it's more concentrated. you can have bigger positions in them so that if you get a winner, it's going to count. >> Do you when when you take on positions and and also talk to me about whether or not that would be different if you were just managing your own money, would you buy all at once or do you size up as kind of proof starts coming in and is is you know, as there's more proof in the pudding, I suppose. Well, I commonly if if there's a brand new discovery I like, I'll commonly get my clients a first trench in a stock right then and then, you know, 3 months later, 6 months later, as the company's doing more drilling, as I'm gaining more confidence that we're moving in the right direction, that there's going to be a happy ending, I'll keep buying more trenches. I think I was just checking this out on a few of my stocks a week or so ago and I think I bought I ended up buying um sorry I ended up buying six trenches over maybe four or five years. Um you know the first the first trench was obviously the cheapest that they got in and the latest trench was the most expensive but they're making overall they're making money on all of it. They've just got a bigger position now. So that's that's very common. And I rarely will buy, you know, that first trench and that's it. >> What does that look like though? First trench. Is it 10, 25%, 50%? What does that look like? >> Um, it really depends on the size of my client's account, you know, cuz I've got small small clients and I've got very large clients. So, you know, the bigger clients are going to get a bigger position >> in percentage, you mean? So, if it's a bigger portfolio, you'd put what? 20% as a first branch. And if it's a smaller position, you do 10 or what would that look like? >> Something like that. It's not a hard fast rule. >> Okay. So, it's more art than science then, >> you could say. I guess it depends. You know, is there any cash in the account? Um, am I losing faith in a in a stock that I feel better in the new one that's going to help me, you know, decide? Um, it it really isn't a, you know, if I if I've got a new stock and I want all my clients to own, I literally go through every account and try and fit it in there, you know, according to the size of the account. >> How do you keep more cash during a bare market versus a bull market or vice versa? I've had my clients fully invested for the last three to four years. Looking back, that was a good thing to do. >> Is that going to change? Is that >> so quick? Gold has gone up so quick. So m, you know, so much that, you know, if I would have had 10 or 20% cash sitting there two years ago waiting for a pullback, we've had no pullbacks. >> Yeah. Is that about to change though? Do you are you going to start rotating more toward cash or or doing any kind of moves like that in the portfolios? >> Well, the first thing that would be really alarming is if I start seeing central banks selling a lot of their gold, I might think that we're nearing the end. That would make me nervous. I don't think I have to worry about that. >> But but that would be it. So, you would essentially still follow it a bit, you know, top down. you would still kind of look toward the gold price for guidance uh before before going more more to cash. Is that right? >> Yes. >> Okay. >> Yeah. >> Yeah. >> Yeah. You know, I'm always when I say every morning I get up, I'm looking for the next new discovery. I'm also looking for the next one, you know, whatever that might mean, something that is really positive that I think is going to offer, you know, multiple catalyst to push a share price higher. One of the one of those examples we've seen it happen a couple times over the last few years when Newmont took over Newrest. New uh the surviving bigger company Pneumont announced that they're going to be selling six gold mines producing gold mines. They're too small for Newmont. Barracks just done the same thing recently. And um you know if a little company buys that producing gold mine just about every one of the examples uh that have bought it they were just an exploration company the day before and once they buy that producing mine now they're significant producer. That's really exciting. That's very material. And we've seen what the share prices have done in some of these companies. They've you know more than tripled since they got the the acquisition. So, I've gotten into a couple of those um right after the deal was announced and that's turned out to be a good uh investment and you know that's that's not exploration at all. Both usually what's happening the mines were sold. They were being neglected by the previous owner. They just thought they're they're getting long on the tooth or they're running out of gold and they've got bigger fish to fry. They've got new other new projects that they rather put their time and energy into. um thinking and those will be longlasting mines. So they're prepared to let them go and and the new companies come out and say they've been they've been neglected. There's been no drilling going on. U the best place to look for new goal is right in a mine type of thing. So I've gotten into a couple of those which is nothing what I normally have before. You know I've usually been all about the discovery place. >> Yeah. What is but >> that's not going to happen very often because you don't you don't see two big companies merging very often. It's very rare. You know in the recent one tech and Anglo American merging neither company has any really small mind. So I don't I don't think anything will be sold out of that merger. >> You said you wake up every day and and you go looking for that next big discovery. Where is that discovery going to come from? Is it I mean the Yukon's hot right now. Is it Finland's hot as well? Where where where do you expect it to come from? Where do you see a lot of good work being done? >> Well, I don't I don't lose sleep over wondering where it's going to happen. I know there's exploration happening around the world. So, believe me, if one of these companies drills a discovery drill hole, they're going to tell you and me and the rest of the world about it. You know, today's communication, it's easy to get the word out. Um, I would love a big new gold discovery in Nevada, but the problem is Newmont and and Barrett pretty well owned. There's a couple of small companies down there, but I would love a really good Carlin style discovery in Nevada. >> Um, I'm okay with discoveries in British Columbia. They tend to be, you know, pfrey copper gold deposits and they tend to be low grade. I'd rather have high grade. Um but you know if it's significant and it's close to infrastructure that that should work out okay and I like south some South American countries but you're always deris down there and I like the potential of Mexico but you know the government runs sometimes it's in power is you know you don't always have a good sleep at night. >> Yeah. Does the the drilling cost matter to you? Uh you're mentioning Nevada. That's one of the more expensive jurisdictions to to drill. So would you be looking for more potential there because of that? And and would any of that matter to you? >> Not really. Um again, if if you got a really good Discovery drill hole, everything's going to be fine. The stock's going up. They should be able to raise money at a higher price than their last one. Um, you know, hopefully if they are kind of remote, that that might mean in the Yukon especially, there's helicopters involved and they're really expensive. So, if you can get to a point where you've got a lot of money, maybe you can build a bit of a road in there or land an air strip for landing. Um, but sometimes it's just part of the cost of doing exploration. Again, when we say we found all the easy deposites, that's the easy ones to get to. You know, now we're having to go out more and more remote increases the chances of of needing helicopters. And like I said, that's that's a big budget having to you got to use a helicopter to move the drill rig around. That's expensive. >> Sure is. I uh I spent some time in the Yukon this summer and and the rough range that I heard coming from there was about 2 and a half to $45,000 per flight hour of the of the helicopters. And that's for sort of the light to medium helicopters if I remember correctly. So it can get really expensive if you're hauling like grow rigs and and wood for the drill pads and everything else. So um yeah, the cost of the jurisdiction does matter. I mean I I I I I speak to Craig Perry every now and again. He always says uh size of the price, cost of the test, chances of success. That's essentially what he's checking when he's looking for, you know, one of these big discoveries. Do you have a framework like that? Uh that's kind of, you know, like a catchy tune almost. Um yeah, kind of a list or checklist like that. >> Not really cuz I'm I'm not really paying attention to where juniors are exploring. I'm just waiting for that first drill hole. Then I'll then I'll consider where the jurisdiction is. That's when it that's when it matters to me. >> Um yeah, I barely keep track of juniors. Like when I go to some of these conferences and there's lots of early stage juniors there, for the most part, I'm not meeting with them. I'm just going to see, you know, my favorite companies that are in attendance or, you know, I've got friends I haven't talked to for a long time. I want to maintain those relationships. And, you know, I'll usually sit down and and hear their stories. But for the most part, I'm not just going to go walk up and start talking to some company I've never heard anything about. It's like, show me the drill hole. you know, when when you get a drill, hole, phone me and you won't need to call me because it'll be in a news release. >> What else I suppose matters? And so far, I know you almost have to run here, Steve, but we've we've been talking about essentially the rocks and what makes a good discovery, but but you know, bad managers can destroy a really good discovery even even after the fact, you know, on capital raises and everything else. I mean, there's so many ways that this could go wrong. What are some of the traits that you're looking for when you're looking for, you know, a good manager where you're like, "Okay, I I like the rocks. This is going to be the discovery that I want to deploy capital in, but now I also want to have the right people." What are the right people? What are you looking for? >> Well, I I guess I've said a number of times, scam artists don't make discoveries. Scam artists are going to raise money and they're going out on the expense trip. They're going to go to lots of conferences, things like that. their heart's not really in it to find new deposits. So, if somebody drills a discovery drill hole, it's good. I'm going to give the the person or the group credit right out of the gate. They're obviously they did something right. Their heart was into it. And then, um, you know, there's a few times where a good discover is made and pretty quick management realizes or shareholders realize, big shareholders realize that we've got to strengthen the management team. Life has changed. we've got to start adding good uh quality people to the team that's going to bring bring respect from the marketplace that helps raise money. Um you know and and we see that more and more as as a discovery is turning into a real deposit. The team always gets strengthened and you know cuz when they get ready to start doing peas and feasibility studies uh the market want knows that there's good competent people on team that have done it before. So that tends to, you know, sort itself out and and if they're not taken over and the feasibility study says it should be good, well then um if they don't get taken over, you start bringing in mindbuilding people to add on to the team so that you know they got a better chance of actually pulling it off and building the mine without any mistakes. And you can you can have that happen like it happened to Silver Crest and after building the mine, operating it for 2 years out of left field for whatever reason, Cordelane mine comes along, takes them over. You know, it's uh so you get you always get those I I can't think of an example while we're talking where a good discovery was made and and it was a sloppy management team that went all the way. you know, they always get strained because guys like me, you know, if you're a significant shareholder and we've seen this game before, you start voicing your opinion, say, "Hey, you know, bring some new people in." >> What should those new people have though? Is it or what is it that you're looking for that that I could kind of objectively, you know, leave the art out of the equation because I I don't have 50 years of experience. And so, how do I how do I measure it objectively or how do I I judge it objectively? Am I looking for skin in the game? Am I looking for for for something else? Again, uh a track record of success. Uh do they need 20 years of experience or Yeah. How do you how do you judge it objectively? >> Well, if you know, if you got that good discovery and they've strengthened the team and you got a geologist or mining engineer or somebody that's, you know, been involved in a number of discoveries, you know, non-technical, but he's got technical people around him. That should give you comfort right there. um you you like to know that they do they do have skin in the game. They're good shareholders so that you know the share shareholders are all aligned. That's a good thing. It's not always required but uh it always helps. >> Yeah. Does a good management team always have to consist of at least a couple of geologists? Is it when you look at management? >> I sure like to see at least one on the board. >> Okay. anything in particular there that you're looking for when you say one on the board? Um, >> well, ideally a good experienced geologist that's that's worked a number of at least the type of deposit that they're drilling, >> but if he's worked on, you know, most geologists work a variety of deposits, but you you definitely want experience on the one that you're dealing with, whether it's porefree or VMS or gold only. Well, again, Steve, I know you have to run here and I've written down a couple of things that we could make a whole podcast off off of this conversation. Um, I really do appreciate your time. What am I forgetting to ask you though here on on a first pass conversation? What else do you want to leave me with? >> Brian, get some help. you know, like uh there's there's not there's not many places to go for for help, but you know, I know there's a newsletter out there that's written by a geologist. Um uh track that one down would be my first recommendation. And you know, keep learning doing what you are, but you you just can't there's so much to to know in this business that you can't possibly do it just with a doing it for a little while. It's hard. >> Yeah, it sure is. really do appreciate time and hopefully we can do this again soon. But thank you so much for sitting down with me today. >> Okay, thanks for the time.
Sprott Money Manager: Why Mining Investors Fail & What Works
Summary
Transcript
Today on Resource Talks, a geologist who manages hundreds of millions of dollars is hopefully going to save me from chasing overpriced discoveries and uh instill some sense into my ever growing excitement for this bull market in mining equities. Geologist in question is Steve Todorok. He is one of the most senior managers at Spat and he's got a focus on early stage exploration with a simple goal in mind. show up when the rocks do and then disappear before the market cap turns into fairy dust, which should always be your expectation when speculating in the early stages of the mining cycle as uh we so often get reminded. And uh before we get into the conversation or any of that, Steve, though, thank you so much for your time today. >> Thanks for having me. >> The pleasure is mine or will be mine hopefully as as you attempt to uh save me from myself here. But uh just briefly for people watching or listening, if you want a summary of this conversation and all the other interviews that we do on resource talks, go to resource talks.com. There's a free newsletter. It goes out once a week with a bullet point summary of all the conversations from the week. Before Steve, before we get into any of it all, I I see a lot of people with horrible track records being interviewed a lot out there and and I've done it as well. Drank the Kool-Aid, believe the beautiful words before. So, I've decided on a new opening question here um that I'm going to ask you. Do you or have you actually made money by doing what you're about to be preaching here today? And what's kind of your long-term track record if you have? >> Yes, I've been employing the same strategy for quite a while. Um Rick Rule hired me 22 years ago, so that was about 2003. And uh I started doing what I'm still doing today probably about 1987. Um three friends of me started a little investment club and uh myself was a geologist, my friend was a geologist. Uh his partner was a mining engineer and then I had another one of my partners that was non-technical and we decided to uh start a little investment club and let's do what geologists do. We'd we'd go out and stake some mining properties and then try and option them and and joint venture to some juniors and get some shares and cash payments and then uh we all agreed that we'd contribute $50 a month into the investment club to start building up cash. The goal being to start buying stocks and pretty quickly we um optioned a couple of the mining properties getting some cash. got lucky. A few of our stocks went up, so we sold those and sure we decided it wasn't wasn't making a lot of sense to keep adding $50 a month to the club. So, we stopped that. But before you know, we had a nice little pot of money and kept optioning some properties. And um for whatever reason, when it came time to buying stocks, by default, I tended to be picking most of the stocks and they tended to be what I call new discovery place. and uh you know we were in Boise Bay you know Diamond Fields and things like that. So I I literally started, you know, employing that strategy back in 1987 in that little club. And, you know, so by the time Rick offered me a job in 2003, I'd been doing it kind of for 15 years. >> Uh while I was running two my own junior mining companies and the other guys went partners in the club said, uh, for some reason you're pretty good at picking the good stocks, but you don't like to sell. So you pick them and we're going to decide when to sell them. And uh they all funny funny way how it all ended there. One day I was I'm from Cameloops in British Columbia and it's where I was born and raised and everything and I grew up skiing there at the mountain today. It's called Sun Peaks and I'd go up visit my parents and come back to Vancouver to go to work Monday morning. I kept telling my partners, "You guys got to go skiing up there one day. It's just spectacular. You know, Whistler is buying the resort. They're going to develop the whole And so they all went up there one weekend and they came back and kind of made the announcement that we had such a good time. We've made a decision. I said, "What's that?" Well, we've decided that we should sell all our stocks and buy a lot up there and build a big ski um chalet type of thing. We're going to call it the miners in and it was right at the bottom of the ski. You go very top of the hill right on the longest run right into our back door and jump in a hot tub type of thing. And I said, "Really? You want to sell all our sal?" Yep. done deal. We've all agreed. Okay, I wasn't expecting that one. We actually had Brix in there >> before it blew up. We made good money on Brix. Just call that whatever kind of luck you had. But I like to point to other ones like Diamond Fields that we had and some other stocks like that. So, um, you know, my my approach is what I like to say is the most exciting thing and most rewarding thing to investing in in the mining industry is if you can get a little exploration company that makes a brand new, you know, big or good-looking discovery. >> Those are all things I do want to talk about. What is that? Do do you track your like a kagger or something like a long-term track record or something that you you've tracked? because mining mining often times t takes away more than than what it gives. So what what's that mean for you? >> Try rewarding that again just so I >> well I'm I'm essentially asking about a kagger so a compound annual growth rate and and what kind of the the returns have been over time. Um because again mining although it can give a lot it also it can take away a lot. So, uh, yeah. Is that something like a long-term track record? Is that is that something you've tracked? >> I don't really keep keep record of anything like that. I, you know, I just know that, you know, if I'm in the good ones, and I'm usually one of the first guys to get into those brand new good-looking stocks. Um I don't I can't I can't give you any kind of you know record type of thing. But one of the one of the things um why a lot of people miss the the really good new discoveries is because you just look at a stock chart. You know as soon as they announce a good hole, the better the drill hole, the strong the stronger the stock's going to react. Most people the investing rule number one is don't chase a stock that's exploded. Mhm. >> My sort of come back to that is well I guess you're going to miss most of the good new discoveries because you're not going to announce a really good discovery drill hole the stock shoots up. It's not going back lower than where it was so you can say I'm buying it on sale. That's not going to happen. Never does. That's exactly what I want to talk about today actually because um it's essentially just to set the stage essentially $20 million company prints a beautiful assay table multiple well over 100 grand meter intercepts in their market gives it a 100% jump in the share price on day one I start beating myself up for missing out and start thinking of you know chasing what looks like the next big thing probability though still says that I I should you know I shouldn't be and that it wouldn't be uh But every you know not so often really it is it is the next big thing it does happen. So how do I how do I know if it is worth chasing and and you know paying that premium which could be 100 or 200% as we just recently saw. >> Well in the case of Aurelion for example back I think that was around 2008 they were 50 cent stock. They announced that first drill hole. It was just spectacular and within three days the stock was trading at $3. >> You know I I was putting phone calls in. I didn't know anybody in the company. I was trying to get a hold of the CEO. I know he's busier than busy. Everybody's new best friend. He finally returned my call 3 days later and stocks at $3. I like what I heard. And I just started buying stock at $3 a share. So, you know, that's up 500% from what it was before. I didn't think twice. I just said, "Start getting your position. It's the first drill hole. They got two years of drilling ahead of them if this thing grows into what I think it's going to be." and two years later it was $30 a share when Ken Russ took him over. So yeah, I would have loved to get in 50 cents or a dollar, but I didn't even think about it. It's just like get over like I've done that, you know, many times. Felo Corp. Um I'm not allowed to talk about any current company names I've got my clients invest in, but I can talk about previous ones that are all this same sort of approach. Um, I think when Felo announced their discovery drill hole down in Argentina maybe four years ago, four and a half years ago now, the first drill hole was something like a,000 m of 1% or 1,800 m of 1%. You know, it's a giant drill hole. And uh, instantly the stock's up around $45 I think when I started buying into it. And I bought a lot between five and $7 a share. And at the end of the day, BHP and Lundine took them over in the 20s, something like 25, $28 a share. Um, so I look back at it and yeah, it would have been nice to get in at three or four, but getting in at five or six is very rewarding. >> Could you because essentially what I'm looking for here is how do you know? Because Fruto del Norte and like then these things are they're they're an exception to the rule, right? Like most of these things, even after a big candle is printed and even after a beautiful asset, they're not going to turn into the massive, you know, takeouts and let alone mines eventually. So, how do you know what to chase is essentially what I'm asking here. >> Well, I' I'd rather be really patient and wait for the next big discovery. Like when I get a a felo type of drill hole, um, you know, that's really wide, really high-grade, consistent throughout the interval type of thing. Uh, I have a saying that giant drill holes are usually only in the middle of giant deposits. You don't find giant drill holes in the middle of small to mediumsiz deposits. So, if I've got that extra confidence that we've got the making of a giant, you know, my confidence level goes up a lot and I'm prepared to pay more. You know, I if I'm getting into something5 to $7 a share, I'm not looking to hit a home run. You know, I'll take a double. You know, if I feel really good that we're going to double our client's money or triple it, I'm happy. We're gonna we're gonna buy more dollars worth of that stock at $5 than if it was at a dollar. >> I just got more confidence. >> Is that a a rule there? Is that what you're generally looking for? And and is a double even worth the risk of exploration? Wouldn't it have to be more in order to comp your risk there? >> If I buy 5 to$10 million of stock for my client in one company and it doubles, we just made $10 million. That's I'm h I'll do that deal every day long. Yeah, I think um you're putting me to shame there when we start talking about sizes, so uh might as well leave that out of the conversation. But uh it might be >> Well, that's my clients collectively, you know, so I've got quite a few clients. >> But is there is there any numbers that you could put to it like u great thickness plus true width or something else that you can see and recognize as a you know quick and and dirty sort of numerical rule where you see it and you're like, "Okay, yep, I'm going to buy that. Well, at an absolute minimum, I want to have a very high level of confidence that we're on a discovery drill hole that we got a shot at 1 to 2 million ounces. And I'd much rather was at least 2 million because again, if I go in there and I buy a lot of stock, I got a problem. How am I going to get rid of it? What's my exit strategy? So, I want I want to have very high level of confidence that somebody bigger is going to come along and take over this company that's made the discovery. I don't usually like to hear that the little company that's made discovery is going to build the mine themselves because the management team probably hasn't built mines. You know, I've seen it lots. We we're watching it every day where, you know, a company has a deposit and it might be 2 million, 3 million, 5 million ounces, and they're going to strengthen the management team. You know, bring people in that have the right skill set to build a mine. My concern there is when when you're putting that team together, it's more likely their first time ever acting as a team. Whereas you think of Newmont and Barrack and Tech, they've got teams of people that you know will move around the world building a new mind for them that it's the same team that's been working together doing it 10 15 times. Um it's a you know it's a big it's a big task building a mine and the slightest mistakes can be fatal you know. So that's why I don't like to see you know little companies building mines. Um, so again it's, you know, if somebody announces they've got 10 m of 5 g gold or 10 m of 10 g gold, to me that's I'm probably not interested. That's how you make small deposits. You know, it's it's either if it's 10 m of 10 g, it's going to have to go a long way. You almost a sheet of paper. It's going to have to keep going and going and going along strike or the trend and then down deep to build up millions of ounces. And that can happen. You know, you look at Mag Silver. Um, that was a very continuous deposit, but in general, it just makes my job easier. The the wider that discovered drill hole, the better. >> What is What's that breaking? Like, you don't want 10 meters. What do you want? 100 meter intercepts at least, or how do you see that? >> Well, I got into an Australian gold discovery that I'm still into, you know, back in 2018. The discovery drill was the fifth hole they drilled was 250 m of 5 g gold. Easy. This is going to be a big deposit and you know 6 years later it's being built into a mine. >> Yeah, that's fair. Rare though, too. I mean that I mean when we see something like that, everyone recognizes >> you got to be patient. I don't need to be getting into new stocks all the time. I got my favorite list of stocks and I'm happy just to sit and wait. They they perform. you know, you always want to own the best stocks. The best ch stocks always lead the charge and they've gone up. You know, they're really high priced right now. Um, it almost kills me to have to sell any of those positions to buy something new. But I've I've recently been doing it a couple times, but not much. I almost have to close my eyes when I push the sell button. >> I do always want to own the best stocks, but it feels to me like the best stocks don't want me owning them because they always seem to be so elusive. At least for me. What how many would that be? Like how many companies would you own at a time though? >> Maybe 10. >> That's good. Yeah, that's a good talk to me a little bit more about that because I'm seeing and I think the more the more this bull market grows and and people start coming into it from from other sites, they might think like, oh, I need a diversified portfolio, 50 positions, 160 positions. Why 10? >> Just it's a good number. I feel comfortable following and monitoring. I go visit, you know, all the projects that I own stocks in. My clients like to know that Steve the geologist has gone out and stood on the property and looked at the drill core, licked the rock, talk to the young geologist learning the new technology that they're using and applying. That's my ongoing education for the most part and I love it. >> In your experience though over these years, how many good discoveries are there every year to get into? Well, I used to say we're lucky if we get two to three good-looking new discoveries a year. Um, you know, just thinking recently there's been two new discoveries in the last couple of months in Western Canada. Um, neither of them have giant written all over them. Neither of them are like a feloc corp quality for size and grade, but uh because of where they're located, um they got a pretty good chance of, you know, ending up being something quite significant. So, it goes in spurts. You know what I do? Like, you know, I I'm the kind of guy that, like I say, patience is a virtue for me. I've just got to every morning I get up, I scour all the news releases in Canada and Australia scene. Is today the day that we've got, you know, some no-name little juniors and announce what I think is a good-looking discovery drill hole? Usually it's not the day and it only happens a couple times a year. But what I also like to be reading is that juniors are financing. They're raising money to go do exploration because we need all the more companies that are exploring increases the chance we're going to get a new discovery. M how >> you know having said that most new significant discoveries are going to be deep. So we we need to mostly realize on geohysics and geohysical surveys you know getting better and better being able to see deeper and deeper in the ground you know and then all we got is anomaly but you got to drill it and hope it's not graphite. >> How uh how old are you now Steve? >> 67 >> when so so 2003 you were you were 47. What about before that? Were you a patient man before that or is that something that comes with age? >> Well, I went to university in Vancouver starting at 18 and uh I worked every summer, you know, through university for mining companies. I took two years off. I worked in an underground copper mine driving those big yellow trucks up near camels for a couple years to learn that part of the business. And and then um when I graduated like within maybe 5 years, I became a partner in a geological mining engineering firm. So we do exploration work for other juniors and one junior forgot to pay their bill one day. They said they had the money to go drilling. We went drilling and where's the money? Well, we didn't have it. So we ended up inheriting that company and I stuck my hand up in there and said, "I'll run it. I'll be the president." And that's how I got started in junior mining companies, >> you know, acquiring projects from companies like Bareric and um Newmont and Nanda doing joint ventures majors. Did private placements in my juniors and and whatnot. So I did that for I think 12 or 13 years until Rick called me one day in 2003 asked if I'd consider crossing the street and I I started looking at the phone. He said, "Are you kidding? Guys that run junior companies do not like stock brokers. We got to raise money with you guys and that's never a pleasant experience." But I said, "Sure." >> Who's a better stock picker? You Rick? >> Uh very different. Rick's not a geologist. Um, he's got a lot more money than me. He's got a a good rolodex. Um, so he uses our rolodex. Um, I'm happy with what I do in my track record. >> That's a very political answer. I'll take it. I'll leave it at that. Uh, I was I was only just half kidding though when I asked it. But uh I want to go back to what you said earlier about made a note about a discovery where like you said like they drilled five holes and then you started getting interested. You you can't really get into or really even form an opinion on what a good discovery is going to be off of one hole though, right? Can you or how many holes would you want to see before you size up a position? >> Well, go back to Aurelion um in their Fruit of Delta Nord discovery. I think it was their 43rd hole they drilled in 3 years that was the discovery drill hole in Fruit of Del Norti. You know, they they'd identified and probably delineated a smallest lowgrade deposit. So, they knew there's gold in the area in the rocks and they just kept going and drilling different targets and until they hit on the 43rd hole. Um, this company in Australia, they drilled four holes. They were just newest, which is now gone, taken over by Newmont. New Crest had actually drilled a hole I think in 1994 and they got something like 100 meters at 3 g gold, you know, starting 400 m below surface. That's pretty deep. But these guys literally did some, you know, modernday geohysics and said, "Hey, they should have moved over a little more." And I think they moved 50 m away and they hit that 250 m 5 g gold. And the rest is history. It's an 8 million ounce deposit now with nice copper in it and it's wide open at that. It's going to be a 20 million ounce deposit one day, I'm sure. You know, so that again the bigger that interval that was 2505 250 m of 5 g gold that's a big interval you know. Yeah, I would have liked to see 500 or a,000 but that's that's good enough to get me excited. >> But you said 50 m step out. Is that enough? Does it depend on the system that's below the feet or like Yeah. How do you how do you how do you judge a step out that's large enough? What's a large enough step out that would get you excited? Well, I guess they they thought that that old New Crest hole was pretty good. Maybe they just clipped the edge of it or they didn't drill it deep enough. Maybe it stopped the mineralization. Remember the gold price back in 1994 when that hole was drilled um was pretty low. Like it was probably around $400 an ounce, you know. So, you're you got a drill hole, it's 100 m at 3 g gold at $400 gold and it's starting 400 m below surface. Not good enough. That's why they just walked away and left it. M um when they came in in 2018 now we probably had I don't know $15,700 gold that 100 m of 3 g is looking like it's worthy of followup. So they just geohysics said hey let's just move over a little bit and drill a deep hole right through it and you know the rest is history. >> What is that something you would or what would get you excited when you see a step out like this? You know you've seen a hole you kind of like it. Um, you know, it might be 70 80 m of, you know, a couple of grams. Let's call it two 2 and a2 g. >> This doesn't do much more for me. >> Well, I was thinking if if they follow it up with something, it could do like as you mentioned at the beginning, it could do something for you if it's like a continu continuous sheet, right? So if they do a 200 meter step out and they come out with a similar intercept, does that get you interested or does the step out have to be? >> It does, but you don't you don't tend to step out 200 meters. You know, when you got some uh say 250 m of 5 g of gold, you're moving over maybe 100 m. >> Might be only 50 m to play it safe. Just until you get, you know, five or six holes into it. So you start to get a better feel for what's there, what you're dealing with, what the orientation is. You're not seeing the grade. Is it kind of similar in all the holes? Um but in you know big porefree deposits like say the fileo corp I think I mentioned that they were taking over that was a big success story you know when you've got a a really big porefree copper deposit usually with gold in it you can step out 150 200 m you know for starters they've probably done a big IP geohysical survey and if you've got a number of holes in it that geohysical anomaly you can almost assume is all mineralized so a lot of companies will as quick as they can. They want to identify the the footprint of the overall deposit. So, do big step outs 150 200 m. Uh but in the early days, start out closer spaced. You know, if if you know it's a porefree, 100 m spacing is pretty good. Um you might come back and and do some 50 m holes. If there's some other structures in there that you want to get a little better handle, but you're not going to start just drilling the deposit a prior copper 50 m step outs all the time. That's a waste of money. You don't need to do it. Mhm. >> You know, define the the overall footprint size of it first. >> Right. Just listening to you speak here. Um, if I didn't know you're a geologist, I would by now. But what if what if what if someone's not? I mean, most of the speculators in this space won't be geologists. Is there is there hope for them? Can you know can we do it or >> not much? Everybody says, "Is there one book that I can get to reach?" David know as much as you. I want my money back. I put almost 50 years into this career. I spent a lot of money, you know, getting to where I am right now. You can't possibly learn it. Um, you know, go if you can go out and look at projects and see the rocks, talk to the geologist, but that that's taken up the geologist and the company time. They don't they don't want to say, "Okay, will you take the day off and give this guy a tour around? He's uh trying to learn something about investing." They don't. It's too expensive. So, you know, it's really hard for, you know, people like yourself to get on, you know, good projects tours. Um, the better the project, they want the top analysts or top investors coming out. Um, when I went down to see, um, Felo Corp and Lundine Mining, then another high-profile one today. I went down to look at their project two years ago, and I think there's 75 people on the tour. I'd never been on a tour that big. >> But we're talking the London Group and Great Discoveries, you know, they want everybody coming out to see this thing so that everybody goes home and either writes up doing good research or, you know, new updates type of thing or investors that are going to go home and, you know, buy lots of the stock type of thing. So, it's hard for, you know, the layman to get on a tour like that. Um, it's just too expensive to put all one of these site visits together. So, you know, you want to do that as ideally as much as you can. Um, or there's I think there's only one newsletter out there that's written by a geologist that's got experience. So, you want to have someone like that in your corner or you want to have someone like me in your corner that's, you know, been a geologist for quite a while doing this for quite a while. And there's very few, like, like I said, there's only one newsletter that's got a geologist involved. Um, so be to be trying to do this on your own like I've I've been sent over a thousand list of people's stock list to for me to value them. I'd just shake my head saying who the heck is helping you? Obviously nobody. >> I wouldn't touch most of the stocks on these list and they're they're some of them are really lengthy stock lists. So you that's that's the first thing that's wrong. You don't need 50 stocks. >> You're not giving me much hope, Steve. I was hoping for hope here. Uh but I well, as as a money manager, there would be a caveat there and a bit of a bias. I understand you almost have to say these things, but what if I did have a gun to my head? I got to make it in this space. I have to manage my own money. What do I look out for? What do I spend my time paying the most attention to? Is it a specific deposit model or free IOCG? VMS is something else in particular or is it is it a specific jurisdiction? What do I what do I pay attention to? >> Well, the first the first thing every investor in this space should own is a lot of the big boys. That should be your cornerstone investment. So, the big royalty companies, the big mining companies, you know, and once you got them, that's your cornerstone. You got you've got good exposure to gold and silver and copper type thing or uranium if you want it. and then go down the ladder, you know, take some of the smaller ones, you know, you know, call it small mining companies, not the mid t, you know, just somebody that's actually mining gold, you know, mining silver, making a making some profit, cash flow. Um, but when you go down to companies that all they can say is we've got an exploration project, you know, we've done some drilling, but we haven't hit anything yet. um they want you to buy their stock and they're hoping somebody will finance them, but when it's really early stage, it's like you're rolling it the the dice and you know, you can say uh bet on management in previous track record. Well, I can tell you, you know, management that's done it before doesn't always do it again. you know, there's just they if if a management team's had success and they're going out to start a new company, going to look for a new project, uh people will call them up and say, "Hey, I know who you are. You've had success before, then we will you look at our project and theoretically if you don't have a good project to bring them, they're not going to let you in the office." So they tend to get to see the best projects that are available out there or they can make some phone calls uh to major mining companies and you know a lot of the guy top s top success people have worked for majors and they've got friends in the majors so they might call them up and say hey do you have anything sitting on the shelf uh that you're not working that might be a good fit for us and that happens. Um but it's you know it's getting harder and harder to find good projects you know so that's where it goes back to we need as many juniors um getting funded as possible so that they're going out doing their thing exploring all over the world um you know doing geoysics doing soil sampling and drilling anomalies we need the anomalies drilled to get these brand new discoveries >> well you're bringing up geoysics which is also maybe an interesting point as you said geohysics is going to become a more more of an important tool even more so than it is right now. What are you looking for? Any any any basic lines that you can you can point me toward or Yeah. What are you looking for when you see, you know, a geohysical news release? >> Well, I just like to hear and know that there's anomalies being developed because that's what you're going to drill, you know, and that's where you're hoping you're going to find some metal in that anomaly type of thing. So, I don't I I can never get excited looking at a geohysical anomaly. All I can say is, okay, it looks like the last one or the other ones I've seen 15 of them. Go drill them all. >> You know, try and pick the best part. Have your geophysicist tell you where he believes the strongest part of the anomaly is to drill the first hole and that's how you start. >> Yeah. Yeah. Well, tell me some we touching on geoysics. It's like we found a new easy to pause. There's still lots to find out there, but they're getting deeper and deeper and deeper, which means we've got to keep improving the geohysical surveys that we have to be able to see deeper and deeper to find those anomalies. >> Well, you make up interesting points there, and that kind of ties into what you said before, is like it's really hard for, you know, retail speculators to do this on their own. But then at the same time, and I joked about it before, but it's true. I mean, you're not you're not exactly impartial, right? You you you essentially get paid if people believe they they can't do it alone. and uh convince me you'd hold the same view I if your compensation didn't depend on it. Why why is it true? Tell me stories or tell me mistakes that you've seen people make or Yeah, talk to me about that. >> Well, investing in in companies that don't deserve to be invested in is not a good idea. U you know, every every one of these juniors has a IR promotion department. Their job is to try and convince you to get you to buy the stock. And so they're going to they're going to set up meetings with you and management and their geologist to tell the story. Um it's somehow you've got to be able to see through it all. Um but I don't know anybody. I certainly can't go look at a early stage project that hasn't been drilled and say this is the one. This has something extra special on it. It's like you got to show me the drill hole. There's there's no shortcuts. >> Mhm. What what what are some mistakes that you see in in reviewing those? What did you say over a thousand portfolios that you've reviewed from retail speculators? What are the what are the mistakes that we make most often? >> Just buying way too many uh really early stage uh companies that that you know their projects just haven't seen much work on it. You can you can paint the prettiest picture out of nothing. You know, like when when these juniors are telling you the story, they they can paint such a picture, they they baffle you. You know, you you don't know what they're telling you. You don't understand. You don't have the geological experience. >> Yeah. But outside of that, then what is like too many positions? That's kind of the obvious one. Is there another one? Is it like when you see people taking on too much jurisdictional risk or you know investing with the wrong people essentially or another mistake that you kind of see is is a common thread throughout portfolios that don't make money. >> Well, jurisdictions uh I think is a pretty important one like um I I don't like to go into some countries, you know, juniors working in countries I just don't feel, you know, is is good country risk. Um, you know, I'm investing my client's money, so I've got to factor that in. You know, how how comfortable do I am I prepared to go there as a geologist and walk around the property or am I worried about my safety? Um, things like that. And, you know, we saw in Panama what the Panama government did a couple years ago to Hudson Bay, you know, basically shutting the copper mine down after they spent seven or eight billion dollars building it. Well, I wasn't a Hudson Bay shareholder cuz I didn't like the country risk, you know. So, we're especially if you're a small company, an early stage junior, and you're going into a high-risisk country. Um, I don't like to see that you, you know, again, I'm waiting. They'd have for me to invest in that company. It would have to be one spectacular drill, you know, because then I'm betting that at the end of the day, a major is going to come in, take them over, and it'll be their country risk probably. Well, but talk to me maybe a little bit more about the mistakes you see people making in in in their portfolios when it's like retail investors. You know, you said again too many positions, but what else? What's kind of the most common mistake that you've seen people who lose money make? >> Maybe turning that around a little bit, you know, trying to help those investors, you know, what they should be, you know, trying to focus on what they're investing in. um you know, go with management teams that have done it before, got good track records. Um that's not foolproof, but it's a heck of a lot better than um you know, you just blindly picking stocks because you might, you know, read over a news release and think it's good um you know, good management teams have done before. They're probably geologists or they've got a geological team involved that's, you know, helping make the company decisions. So, um, you know, whether it's betting on the Londines, you know, for example, you know, groups that have been around a long time, had a lot of success, that's that's not a bad idea to follow them. Um, there's another kind of company that Rick Rule and some other people like called the prospect generator type of company where you've got a good group of geologists running in a a company and they're out um doing geohysical surveys and soil sampling and prospecting the inexpensive surveys to try and identify anomalies. and they'll try and joint venture those properties out or sell them and keep a royalty so that other companies that that have money will go out and do that exploration and do the drilling. Um your prospect generator type of company usually has a number of projects that uh are ideally you know being optioned out and being drilled. So if you you know if they got 10 properties hopefully five are optioned out and five of the properties are going to get drilling done on it. um you know that's better than just blindly picking stocks. So you know there's a number of prospect generated type of companies out there. Get a basket of those wouldn't be bad. Um those are probably the two wisest ways for you know layman investors to invest in follow good management teams and prospect generators. >> What about yourself? What are some of the mistakes that you made along that uh career? now over over 20 years. Eh, so yeah, what are some of the what are some of the mistakes? I mean, you you mentioned some of the wins there. What are some of the stuff that you you didn't make money on and what did you learn from that? >> Okay, it's more than 20 years. It's close to 50 years from when I started going to university become a geologist. So, it's been quite a while. Um, you know, the I guess I I've I've done it myself like when I was running my own junior companies. Um, uh, Bareric took over another big company called Lac Minerals and Lac Minerals had a property in Alaska. Um, and, uh, there was known VMS mineralization on the project and, uh, the guys with lack actually went out and drilled in a new anomaly and had a really good looking drill hole. I think it was about 50 m of 8% copper and 7% zinc. that that's a pretty nice width and those are really good grades. And um you know I knew the guy I knew Beric and I knew the exploration manager for Bareric and I called him up and said, "Hey, you know, I don't think that's a a bareric type of property. It's copper and zinc type of thing. If you're going to be selling it, can I try and acquire it?" And I didn't tell him why. It was because of that drill hole. Well, he probably knew why I wanted it, but I I don't think I brought that drill hole up at all. And I ended up, you know, beating out a couple other bigger companies to get it. Gave them a better offer. And we were excited as heck. We went out there with the drill and just stepped all around that that one hole at 50 m, 8% zinc and copper type of thing. And we missed on all four holes drilling around and say, "How did that happen?" That's what we call a one hole wonder. You drill a really good hole and it just whatever didn't go anywhere. Um, so I've drilled that hole myself. And so when a company, you know, they might announce that brand new discovery and I get in, um, I don't think it's really happened again that bad, but they might get a couple holes drilled around the the first good hole and then it fizzles away or it gets fault. And faults are your worst enemy. >> You can be drilling for 6 months, you know, keep growing bigger and bigger, maybe a year and then you move the drill over and there's a big fault and it's faulted away. So what you found isn't big enough. It's almost like you just wasted a bunch of money and time drilling this. It didn't get big enough. It's not going anywhere. It's staying right where it is in the ground. >> That definitely happens and you just can't you can't really predict when that's going to happen. You just have to hope it all, you know, plays out together. Ideally, if there's that geohysical anomaly and you're just marching along drilling, you ideally want to drill off that whole geohysical anomaly and you know, if there's a fault, you should see a fault offset in the geophysical anomaly. That might give you, you know, an idea where to go drilling. Um, sometimes it just doesn't work out. You know, everything's going good and you drill it off and drill it as big as it gets and it's just not quite big enough for whatever reason. H I thought my mother-in-law was one of my biggest enemies, but I'm going to add faults to that list now as well. The list just keeps getting longer and longer. Does uh I was actually hoping you'd say that overpaying was one of your mistakes where like you maybe got too excited on a discovery. You paid too high of a sum, never got taken out, the market ran out of breath, and you kind of had to exit at at, you know, a lower price. Because I think that does happen a lot and and that might be a topic to touch upon as well. How do you know that you're not overpaying? How do how do you even value a discovery? Is it back of the envelope, you know, size math that you're doing there? Or how how do you know how much to pay for a discovery? >> Well, you know, if if it looks like if it's a if it's a big or really big looking discovery drill hole, um it's going to grow into something bigger. You rarely get just that one hole or just a couple of holes. usually it's going to grow into something significant. Um, you know, there's one example in Australia where uh a company made a real nice uh PGM discovery and uh at the initial time of drilling when they first started out, the PGM prices were good. And then about a year to year and a half later, you know, the stock was going higher and higher and higher and then uh PGM prices just tanked really quick and the stock came down and uh you know I couldn't predict what PGM prices were going to do. So, you know, I basically, you know, I sold some up over I think it went ultimately $8 and I sold some at $6 to get into something else, but I I kept most of it. And when PGM prices went down, it went down too to the point where I said, "Okay, it looked like PGM prices are staying low for a number of years. I'm getting out of the stock." So, that I couldn't I didn't see that coming. Um, you know, you just I'm not good at predicting uh metal prices in the future type of thing. I don't think anybody is. >> Yeah, that's uh >> you know, sometimes they just don't work out for a variety of reasons, but metal prices, you always have to be worried about that too that you know, we none of us want to see gold tank here in the next month type of thing. not only will but things like that you can >> and essentially if you do want to do this long term you have to ensure that you can make money in any market and and a good discovery always gets bit up even if it even if it isn't in a bad market right because often times I would see you know track records being posted during bare during bull markets to be like oh year to date I'm up that much I'm outperforming everything and everyone but it's like let's look back at you know the last five or six year track record let's say if you made money during a bare market Okay. Um, >> two examples we we did experience. You know, my approach, my strategy, you know, during the bare market, I think it was around 2015, 2018, Reservoir Minerals made their big copper uh, gold discovery in Serbia. That was a home run. The stock went probably 50 cents. I think well over $10 before they were taken over. And I waited, you know, they announced their Discovery Drill Hole around the stock jumped up to a dollar. That's when I got in between a dollar50 and I rode it till they were taken over around $10 a share. About the same time, Fish and Uranium and their early partner Alpha Minerals announced their uh uh discovery in Saskatchewan and that was a good success story. Uh but those were almost two of the only mining stocks that went up during that bare market. And it again, you know, the world needs metal every day we wake up. If metal prices are down, you just got to have better grades, better quality deposit. But those were two examples where, you know, if an investor owned both of those, they made good money. They probably owned other stock, too, that they lost a lot of money on. But, you know, that that approach does work, the new discoveries, if they're good. >> Yeah. How would your approach be different if you're not managing other people's money, but just, you know, your your own portfolio as a geologist? What would you do differently? I I I love this. You know what I do is jolly. You know, there's nothing more exciting than being involved in in a brand new exciting discovery. So, like I'm involved in, say, 10 different companies. Most of them are discoveries. I get up and that's all I follow is the good companies. I'm just looking for news or I'm going to look at their projects or I'm talking to management. Um, you know, you don't need a guy like me to follow, say, Newmont or Franco, Nevada. That would bore me to death. That's just number crunching. >> Yeah. What about the portfolio building thing? Like would it still be 10 companies? Would you how would you position size and and >> I'd rather have a short list, >> you know, you because if you have 50 stocks, you know, and you get one or two good winners, you probably have small positions in all 50 stocks. >> So, if you get one good winner, you got 40 other ones that aren't doing anything. So, if you have a shorter list, it's more concentrated. you can have bigger positions in them so that if you get a winner, it's going to count. >> Do you when when you take on positions and and also talk to me about whether or not that would be different if you were just managing your own money, would you buy all at once or do you size up as kind of proof starts coming in and is is you know, as there's more proof in the pudding, I suppose. Well, I commonly if if there's a brand new discovery I like, I'll commonly get my clients a first trench in a stock right then and then, you know, 3 months later, 6 months later, as the company's doing more drilling, as I'm gaining more confidence that we're moving in the right direction, that there's going to be a happy ending, I'll keep buying more trenches. I think I was just checking this out on a few of my stocks a week or so ago and I think I bought I ended up buying um sorry I ended up buying six trenches over maybe four or five years. Um you know the first the first trench was obviously the cheapest that they got in and the latest trench was the most expensive but they're making overall they're making money on all of it. They've just got a bigger position now. So that's that's very common. And I rarely will buy, you know, that first trench and that's it. >> What does that look like though? First trench. Is it 10, 25%, 50%? What does that look like? >> Um, it really depends on the size of my client's account, you know, cuz I've got small small clients and I've got very large clients. So, you know, the bigger clients are going to get a bigger position >> in percentage, you mean? So, if it's a bigger portfolio, you'd put what? 20% as a first branch. And if it's a smaller position, you do 10 or what would that look like? >> Something like that. It's not a hard fast rule. >> Okay. So, it's more art than science then, >> you could say. I guess it depends. You know, is there any cash in the account? Um, am I losing faith in a in a stock that I feel better in the new one that's going to help me, you know, decide? Um, it it really isn't a, you know, if I if I've got a new stock and I want all my clients to own, I literally go through every account and try and fit it in there, you know, according to the size of the account. >> How do you keep more cash during a bare market versus a bull market or vice versa? I've had my clients fully invested for the last three to four years. Looking back, that was a good thing to do. >> Is that going to change? Is that >> so quick? Gold has gone up so quick. So m, you know, so much that, you know, if I would have had 10 or 20% cash sitting there two years ago waiting for a pullback, we've had no pullbacks. >> Yeah. Is that about to change though? Do you are you going to start rotating more toward cash or or doing any kind of moves like that in the portfolios? >> Well, the first thing that would be really alarming is if I start seeing central banks selling a lot of their gold, I might think that we're nearing the end. That would make me nervous. I don't think I have to worry about that. >> But but that would be it. So, you would essentially still follow it a bit, you know, top down. you would still kind of look toward the gold price for guidance uh before before going more more to cash. Is that right? >> Yes. >> Okay. >> Yeah. >> Yeah. >> Yeah. You know, I'm always when I say every morning I get up, I'm looking for the next new discovery. I'm also looking for the next one, you know, whatever that might mean, something that is really positive that I think is going to offer, you know, multiple catalyst to push a share price higher. One of the one of those examples we've seen it happen a couple times over the last few years when Newmont took over Newrest. New uh the surviving bigger company Pneumont announced that they're going to be selling six gold mines producing gold mines. They're too small for Newmont. Barracks just done the same thing recently. And um you know if a little company buys that producing gold mine just about every one of the examples uh that have bought it they were just an exploration company the day before and once they buy that producing mine now they're significant producer. That's really exciting. That's very material. And we've seen what the share prices have done in some of these companies. They've you know more than tripled since they got the the acquisition. So, I've gotten into a couple of those um right after the deal was announced and that's turned out to be a good uh investment and you know that's that's not exploration at all. Both usually what's happening the mines were sold. They were being neglected by the previous owner. They just thought they're they're getting long on the tooth or they're running out of gold and they've got bigger fish to fry. They've got new other new projects that they rather put their time and energy into. um thinking and those will be longlasting mines. So they're prepared to let them go and and the new companies come out and say they've been they've been neglected. There's been no drilling going on. U the best place to look for new goal is right in a mine type of thing. So I've gotten into a couple of those which is nothing what I normally have before. You know I've usually been all about the discovery place. >> Yeah. What is but >> that's not going to happen very often because you don't you don't see two big companies merging very often. It's very rare. You know in the recent one tech and Anglo American merging neither company has any really small mind. So I don't I don't think anything will be sold out of that merger. >> You said you wake up every day and and you go looking for that next big discovery. Where is that discovery going to come from? Is it I mean the Yukon's hot right now. Is it Finland's hot as well? Where where where do you expect it to come from? Where do you see a lot of good work being done? >> Well, I don't I don't lose sleep over wondering where it's going to happen. I know there's exploration happening around the world. So, believe me, if one of these companies drills a discovery drill hole, they're going to tell you and me and the rest of the world about it. You know, today's communication, it's easy to get the word out. Um, I would love a big new gold discovery in Nevada, but the problem is Newmont and and Barrett pretty well owned. There's a couple of small companies down there, but I would love a really good Carlin style discovery in Nevada. >> Um, I'm okay with discoveries in British Columbia. They tend to be, you know, pfrey copper gold deposits and they tend to be low grade. I'd rather have high grade. Um but you know if it's significant and it's close to infrastructure that that should work out okay and I like south some South American countries but you're always deris down there and I like the potential of Mexico but you know the government runs sometimes it's in power is you know you don't always have a good sleep at night. >> Yeah. Does the the drilling cost matter to you? Uh you're mentioning Nevada. That's one of the more expensive jurisdictions to to drill. So would you be looking for more potential there because of that? And and would any of that matter to you? >> Not really. Um again, if if you got a really good Discovery drill hole, everything's going to be fine. The stock's going up. They should be able to raise money at a higher price than their last one. Um, you know, hopefully if they are kind of remote, that that might mean in the Yukon especially, there's helicopters involved and they're really expensive. So, if you can get to a point where you've got a lot of money, maybe you can build a bit of a road in there or land an air strip for landing. Um, but sometimes it's just part of the cost of doing exploration. Again, when we say we found all the easy deposites, that's the easy ones to get to. You know, now we're having to go out more and more remote increases the chances of of needing helicopters. And like I said, that's that's a big budget having to you got to use a helicopter to move the drill rig around. That's expensive. >> Sure is. I uh I spent some time in the Yukon this summer and and the rough range that I heard coming from there was about 2 and a half to $45,000 per flight hour of the of the helicopters. And that's for sort of the light to medium helicopters if I remember correctly. So it can get really expensive if you're hauling like grow rigs and and wood for the drill pads and everything else. So um yeah, the cost of the jurisdiction does matter. I mean I I I I I speak to Craig Perry every now and again. He always says uh size of the price, cost of the test, chances of success. That's essentially what he's checking when he's looking for, you know, one of these big discoveries. Do you have a framework like that? Uh that's kind of, you know, like a catchy tune almost. Um yeah, kind of a list or checklist like that. >> Not really cuz I'm I'm not really paying attention to where juniors are exploring. I'm just waiting for that first drill hole. Then I'll then I'll consider where the jurisdiction is. That's when it that's when it matters to me. >> Um yeah, I barely keep track of juniors. Like when I go to some of these conferences and there's lots of early stage juniors there, for the most part, I'm not meeting with them. I'm just going to see, you know, my favorite companies that are in attendance or, you know, I've got friends I haven't talked to for a long time. I want to maintain those relationships. And, you know, I'll usually sit down and and hear their stories. But for the most part, I'm not just going to go walk up and start talking to some company I've never heard anything about. It's like, show me the drill hole. you know, when when you get a drill, hole, phone me and you won't need to call me because it'll be in a news release. >> What else I suppose matters? And so far, I know you almost have to run here, Steve, but we've we've been talking about essentially the rocks and what makes a good discovery, but but you know, bad managers can destroy a really good discovery even even after the fact, you know, on capital raises and everything else. I mean, there's so many ways that this could go wrong. What are some of the traits that you're looking for when you're looking for, you know, a good manager where you're like, "Okay, I I like the rocks. This is going to be the discovery that I want to deploy capital in, but now I also want to have the right people." What are the right people? What are you looking for? >> Well, I I guess I've said a number of times, scam artists don't make discoveries. Scam artists are going to raise money and they're going out on the expense trip. They're going to go to lots of conferences, things like that. their heart's not really in it to find new deposits. So, if somebody drills a discovery drill hole, it's good. I'm going to give the the person or the group credit right out of the gate. They're obviously they did something right. Their heart was into it. And then, um, you know, there's a few times where a good discover is made and pretty quick management realizes or shareholders realize, big shareholders realize that we've got to strengthen the management team. Life has changed. we've got to start adding good uh quality people to the team that's going to bring bring respect from the marketplace that helps raise money. Um you know and and we see that more and more as as a discovery is turning into a real deposit. The team always gets strengthened and you know cuz when they get ready to start doing peas and feasibility studies uh the market want knows that there's good competent people on team that have done it before. So that tends to, you know, sort itself out and and if they're not taken over and the feasibility study says it should be good, well then um if they don't get taken over, you start bringing in mindbuilding people to add on to the team so that you know they got a better chance of actually pulling it off and building the mine without any mistakes. And you can you can have that happen like it happened to Silver Crest and after building the mine, operating it for 2 years out of left field for whatever reason, Cordelane mine comes along, takes them over. You know, it's uh so you get you always get those I I can't think of an example while we're talking where a good discovery was made and and it was a sloppy management team that went all the way. you know, they always get strained because guys like me, you know, if you're a significant shareholder and we've seen this game before, you start voicing your opinion, say, "Hey, you know, bring some new people in." >> What should those new people have though? Is it or what is it that you're looking for that that I could kind of objectively, you know, leave the art out of the equation because I I don't have 50 years of experience. And so, how do I how do I measure it objectively or how do I I judge it objectively? Am I looking for skin in the game? Am I looking for for for something else? Again, uh a track record of success. Uh do they need 20 years of experience or Yeah. How do you how do you judge it objectively? >> Well, if you know, if you got that good discovery and they've strengthened the team and you got a geologist or mining engineer or somebody that's, you know, been involved in a number of discoveries, you know, non-technical, but he's got technical people around him. That should give you comfort right there. um you you like to know that they do they do have skin in the game. They're good shareholders so that you know the share shareholders are all aligned. That's a good thing. It's not always required but uh it always helps. >> Yeah. Does a good management team always have to consist of at least a couple of geologists? Is it when you look at management? >> I sure like to see at least one on the board. >> Okay. anything in particular there that you're looking for when you say one on the board? Um, >> well, ideally a good experienced geologist that's that's worked a number of at least the type of deposit that they're drilling, >> but if he's worked on, you know, most geologists work a variety of deposits, but you you definitely want experience on the one that you're dealing with, whether it's porefree or VMS or gold only. Well, again, Steve, I know you have to run here and I've written down a couple of things that we could make a whole podcast off off of this conversation. Um, I really do appreciate your time. What am I forgetting to ask you though here on on a first pass conversation? What else do you want to leave me with? >> Brian, get some help. you know, like uh there's there's not there's not many places to go for for help, but you know, I know there's a newsletter out there that's written by a geologist. Um uh track that one down would be my first recommendation. And you know, keep learning doing what you are, but you you just can't there's so much to to know in this business that you can't possibly do it just with a doing it for a little while. It's hard. >> Yeah, it sure is. really do appreciate time and hopefully we can do this again soon. But thank you so much for sitting down with me today. >> Okay, thanks for the time.