Gold & Silver: A Lot Further To Go | John Waldie on Investing in the Precious Metals Bull Market
Summary
Market Outlook: Gold and silver prices are on an upward trajectory, with gold reaching $3,800 and silver at $46.5, indicating a bullish market for precious metals.
Investment Strategy: SCP Resource Finance is experiencing high deal flow, with five to six deals a day, reflecting strong market activity and investor interest in the precious metals sector.
Sector Insights: The Beaver Creek Conference plays a crucial role in deal-making, with increased activity following the event, highlighting its importance for explorers and developers.
Investor Trends: There is a growing interest from family offices and international investors in gold and silver, driven by the need for diversification and potential high returns.
Company Performance: In the past 18 months, returns in the sector have ranged from 50% to 400%, with some positions experiencing significant growth due to strategic investments and warrant structures.
Market Dynamics: The generalist investor is beginning to show interest in precious metals, suggesting further potential for market growth as more investors diversify from traditional tech stocks.
Future Projections: SCP anticipates gold prices to reach $4,000 and silver $50 within six months, with potential for even higher gains if key price levels are breached.
Event Highlight: The upcoming global silver conference in Toronto, featuring key industry speakers, aims to provide deeper insights into the silver market and investment opportunities.
Transcript
We're still heading higher. Um, that's the bottom line. The gold and silver prices are clearly moving in the right direction. Um, and the equities are now starting to respond to it. Um, but we've got a lot further to go. [Music] If you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Assets Alliance at hardassallalliance.com. Greetings. My name is Trey Reich of Wealthon and we're here today with uh one of our favorite partners from SCP Resource Finance up in Toronto, John Waldy, who heads up their private client family office business and has been doing the same thing for SCP and SPAT if I'm not mistaken for a quarter century. So, uh, you've been through a few cycles and obviously it's pretty front page news that, you know, gold's up to 3,800 and I I actually noticed silver is now 46 and a half. I have to check it on a daily basis. It seems to be going up about 50 or 50 cents or a dollar a day, but um, you know, our viewers have heard a little bit about the firm and what you do. Uh we spoke a bit yesterday and I thought I would just jump in with sort of a bench clearing uh question. So on a scale of one to 10, how hot is SCP's business right now? It's a 12. It's it's off the scale that really um it's very exciting to be part of this. uh you know it even as recently as the last interview which I think was just maybe 6 weeks ago um the movement since then has been dramatic um as you stated correctly were at 3,800 um gold and now silver has just gone it's now catching up and it's it's as we thought it's probably going to exceed the run in in gold. Silver alone today is up 3.6%. um on the near-term future it was actually 47 and change um and I felt that when it was going to break through 40 it was going to run very hard very quickly and that's exactly what's happened. So it's it's also nice to be right when when you see sort of technical levels being broken um and uh further upside. So it's been extremely busy. um we're all um quite tired but tired in a good way because um things have gone very very um well for our client and for our business. So, I was just talking with Justin Chan, the head of research in London uh a few few minutes ago and he was telling me about uh you know the deal flow that comes through SCP and can you give us an idea of you know when you have a fever pitch like this are you seeing one deal a week or Yeah. So, we're in terms of where we're all where we're at within a selling group or a syndicate or a co-league depends, but certainly in terms of the deal flow on the street overall, I'm seeing five to six deals a day. Um, but that's the entire street that's within our vector. um in term of if we're sort of co-lead or lead um you know in in August we there are a couple of days that we're doing two or three a week which is remarkable that we're co-lead on um and they're coming fast and furious. So overall I would suggest there's probably one um deal every seven days on average um throughout the entire summer which is unusual and of course continuing through into September. Um and there's always a little bit of a lull around Beaver Creek and then it picks right up again right after Beaver Creek and we're seeing that again happening now. Um an awful lot of placement and people are raising money when the sun is shining and the hay is growing. Beaver Creek as John's referring to for viewers is uh you know there's really two big gold conferences each year. which is sort of in February, March, and then six months later in September, the Denver Gold Forum has its big conference, and just ahead of that is the Beaver Creek Conference. Can you explain a little bit about what Beaver Creek's all about? It is basically where all the different players, all the different issuers and investment bankers get together um and you know they they basically are exchanging um business cards and and exchanging their story to the investment banker um and and then from that there would be an awful lot of deal flow that stems from that. And so it's a hu it's a huge conference um I think that's over five days in total and uh a lot of work gets transacted on the back of that but the market cap of the companies is is below the majors correct yeah yeah it's more in our faith which would be you know explorers and developers yeah it's not for the majors the majors don't need to attend that the producers don't need to attend that so do you attribute some of the September flow to meetings that happened there? I mean, is it that simple? Everybody gets together and then they do stuff. Absolutely. Absolutely. You you see a big uptick and we're seeing that right now. Um and then there's also a big rush to make sure that the those are looking to raise that they've got some material catalyst to prevent to to the banking side at that conference and they see a lot of that too. So you'll see a lot of uh drill driven um results. you'll see a lot of major catalysts sort of big push ahead of that. Um yeah, so it's you know people talk about PDAC for the retail which is largest conference of of a type in the world here in Toronto. Um but yeah, Beaver Creek is important. So, in the years that I've been following this, when you start to see a bunch of deals like you guys are seeing, at least in past cycles, it has been a sign that maybe things are getting ahead of themselves or the market is starting to finance more questionable projects or that type of thing. But it doesn't seem to be slowing down this time around. Why do you think that is? Because I think we're still heading higher. Um, that's the bottom line. I don't think we're we haven't hit that um insane, you know, we talked about uh exponential type of um share prices yet. Um the gold and silver prices are clearly moving in the right direction. Um and the equities are now starting to respond to it. Um but we've got a lot further to go. There's we're just starting to see news articles talking about the generalist investor. um you know, your typical individual um especially in the state beginning to pay attention to preal equity and that's been completely almost negligible to zero. Um and now we're starting to get people paying attention um people thinking that they were just invested in in tech stocks and uh the large cap on on the NASDAQ that are now think oh well let's look at some gold stocks. Um, so that's just starting and Rick Rule likes to say that if you can get up to a traditional level, mean level of like 3% of a generalist. Um, having that in their portfolio up from like zero to 0.5 up that just you can do the math. I mean that fix life of increase in buying capacity on the retail side that could be potentially buying precious metal equities. So we are at at just starting to get indications that that's occurring now. So in say the past couple of years it would be fair to say that investors that have been interested in SCP's deal flow have been have a tendency to have been directed managers like gold managers like a John Hathaway and hedge funds that are focused on the sector and certain uh private equity investors say in London. But uh the retail investor really hasn't been present over the past couple of years. Isn't that the case? The past decade um especially in the US. Yeah, you'll see that Canadians are more comfortable, certain um countries are more comfortable that Australians are more comfortable investing in gold and and mining equity um because a big part of our industry are in that space. So, uh, Canadian or Australian have been investing in this area for a lot longer, um, and are more comfortable. So, their allocation is typically much higher. Um, but even then, um, you know, Canadian or Aussies have been investing in other in other sectors and now they're returning and full as as they should be. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. And Wealthy together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. and you're of course uh focusing on Canadian investors, we'll be able to bridge that gap. Uh hopefully at some time, you know, when the SCP, wealthy joint venture uh is approved by FINRA, but we're awaiting our approvals. That'd be fun to get some attention down in the United States. But in terms of the Canadian investors that you're uh representing and dealing with, you've noticed uh started to notice an uptick in sort of family office and individual investors. Yes, very much so. Um and it's not just Canada, it's international as well. So out of Europe, um but the family offices have been a new sector or a new a new buyer into the space. um where they've been traditionally quite uh conservative and but now they realize that it's important to have an allocation to to gold and to silver and that's been a big increase in the last 18 months. Yeah. And it's not it's not letting up either. It's just increasing and just to give people uh you know a parameter. So Nvidia spoiled everybody right because it goes up every day and it's 4.4 trillion all that. But when you get into the real world, you know, if you make 50% during a year, uh, you know, on a stock in the stock market, that's a pretty damn good return, right? But in the gold sector, given the leverage of the beta to bullion and especially in the part of the sector that you guys deal with, um, while you obviously, you know, past performance is no prediction of future performance and all of those disclaimers. Can you give us a general idea of you know what's a possible return? What's the top return? What's the range of returns that you're seeing in some of these deals in the current environment? Yeah. So the range of returns um within our sector can be like in the last 18 months on the low side would be 50%. On the on the high side 400%. Um, and as you could imagine, and I was just looking at uh a position, um, a large position that I have on my uh, in my book of business, and um, we we bought the position uh, two years ago as a unit financing. Um, and that position is now up seven and a half times um, in value because it came as a unit. So, I don't know if your investors are familiar with um buying placements, but often when you buy a placement, you get a share and you'll get a half warrant or a full warrant. And if the stock um does well, the half warrant or full warrant become extremely valuable and really sweeten the the type of return. So, in this case, the underlying was up four and a half times. Um but that warrant kicking in made a 7x return and it's still we still hold the position and um again more really good fundamental result today and the top 15% today alone. So what's just what sector is it? Is it a gold company? has a gold um latestage um developer that will be in mine in um probably 18 to 24 months here in Canada. And uh are the warrants are you still holding them in warrant form or have you exercised those? I haven't we haven't exercised them yet. Um we'll probably start to exercise them. They expire out um in August of 25th. So we have lots of time to do that but might be nice to exercise when they are the stock must be significantly above the exercise price. Correct. The exercise price is 70 cents. The stock is trading at$ 270. Gotcha. Okay. So it's $2 a So does the company need that money? Do they want people to do it? No. They're well financed. They don't need it. It's all for their upside. Um but the company is doing a major drill program. So, they don't need this. They're funded. And if they do need to raise money, they can also do um they can do a flow through or Yep. And we all know Rick Rule's number one rule is to get a warrant. Um he's been talking about warrants for two decades and points out that's the difference between a great return and a sup super return. True. But there is um I think there is some advice to give your audience that if you've got a full warrant and I know I Rick will disagree with it but if you have a full warrant that's good for five years um that's a little bit too good. So um warrants are often looked at sweetener and if the sweetener it may not be the best company. Is that what you mean? That's what I'm saying. The sweetener says too high, too rich. Um, usually you would get a half warrant, good for two years, not a fiveyear warrant for a full warrant. Got it. So, half a warrant for a couple of years, uh, limited visibility, good idea. Full warrant for as long as you want, bad idea. I I think that's my my take. Yes. It's just too uh too much. And Yeah. Now, uh, you you deal with Canadian investors currently, but, uh, if you, if you were licensed in the US, which we're trying to accomplish, can US investors participate in those placements with the warrant? Yes, they can. Yeah, they can. What are limitations on selling or liquidation or holding period? There is there there is a legend that's put on private placements and it's a six-month um hold and then you have to what's called scrub the legend in order to be in a position to dy and that take some time to uh to remove that legend. So it's in Canada typically there's a fourmonth hold um on a private placement and the US the thick month um and then a lightning removal process and when you mentioned the scrubbing is that through the transfer agent or through the issuer or how does that get taken off? Well there are a few steps in that process and that's done usually through uh through clearance. Um yeah and it have to go back to the issuer as well and it can take a month or it can take months and it depends you have to have all the different parties cooperating and and willing to do it and respond in a timely manner. Interesting. Yeah. Um and uh in terms of of you know how far this market has gone um are you getting nervous yet or how do you stay calm or you know what are you looking for on gold and silver? What what do you expect for the next 6 to 12 months? Well, I sort of touched on it. Uh I think that we're, as I said last time we met, I said we're in the second or third inning. Um I think we might be in the fourth inning now, but I think we've got a lot of game to play and um I think a good indicator of that is what I mentioned was is the generalist investor. Um they're not they're not here yet. Um not here at all. But when you have the generalist investor um talking like they're taxi driver that bought this great gold stock um yeah like they did back in the tech boom in 99 um then I think you've got the makings of a bubble. We aren't even there yet. You're you're getting some you know um business news channels talking about gold and they're falling out. They they have to follow all the different vectors but you we're not there yet. We're not we don't have the general. So um it's difficult to generalize valuations in your sector because by definition explorers and developers don't have earnings. They're consuming capital burning capital and they require new capital to get the project built. That's the sector that you guys are focused on. in the larger cap uh sector. I've noticed recently that you know prices are sort of gravitating up to about one times NAV in the very generous 5% discount that most sellside firms look at this. But so in other words, gold stocks at the beginning of the year were historically cheap and now there's they're trading back towards the the historic range, you know, of in relation to the gold price itself and the NAV of the underlying company. And from here, uh, I would say, you know, roughly there's another 100% to go. What I mean by that is we were severely undervalued. Now the PS have come up sort of NAV gold relation but there's a whole another sector from just gold really staying at this current price much less going higher is that the way you look at it well you're again you're talking about the large um mega producers or large cap producers um and certainly you're not wrong and they're always in that sub sector um the large cap there's always a lag to the price of gold. Um, and so you see gold appreciate significantly over the last 12 months. It takes those producers two or three or even four quarters for that to trickle down to their bottom line and their net earnings. Um, and so we're just beginning to see some of those returns come in and on the back of that then their share price starts reacting. So in terms of your typical playbook um it's traditionally been traditionally been um you look at the at the majors first and then the intermediates then the juniors and then the explore code and and the first to move typically have been the majors and then trickling all the way down and two quarters later each you know as you go downstream um to the smaller cap then they start to move following the big fish. That's traditionally what's been happening. The big fish in this case, um, a couple of them have had they couldn't get out of their way because their cough pressures are so high. So they're they're brighter. They've been in the paloo box mostly um for the last couple years and it's taken them a while to get a free pass. They've almost got like a 10 minute or a game misconduct from the market. um whereas the smaller cap and the explore codes and developers have responded very strongly to and they've outperformed the majors. So in our space um which is the explore co and developers which are smaller cap they've done they've outperformed um in a significant way but I think now the majors are going to start responding um and they they best because if they can't make money at these prices um they never will. So it's been a little bit inverted in terms of that. Um so when you look at sort of price to NAV generally for the producers and maybe the mid tier, uh what is the um metric or ratio that you might encourage viewers to look at to measure where we are in the cycle of explorers and developers? What what do you look for? uh how the gold is valued in the ground per ounce or what are the metrics that are relevant? So in our space the most relevant metric is is the price of the underlying. So the price of gold and silver and that will drive everything. Um because in our space we don't have producers. Um we do have a few but um but most of our state is had explore code and developer and and so for that you have to look at resources um how many what the growth of that resource base um measured indicated and inferred um how are they converting that into a mining inventory in other words reserves where that where are they moving on their studies from pea toff uh to DFF in other words um preliminary economic assessment to preliminary feedability study to definitive feasibility study to um investment decision where are they at and all those those are the important metrics in our space and how they're progressing um then there's all sorts of other things we have to rely on on our analyst terms of metallurgy how the structures hold together are are is the is the structure um cohesive enough to be to be a mine on or is it all nuggy then it doesn't make sense doesn't hold together. Those are that where we spend most of our time on the on the the deep um uh diligence in terms of um doing the research and understanding the the deposit. Um and then obviously jurisdiction is important and really important is the actual management team and who's driving this and how sophisticated they are and have they done it before and how well we know and trust them. So that was an enormous amount of ground that you just covered. So backing up, if you could give a layman's explanation a little bit more than you did about the difference between a resource and a reserve in the gold or precious metal mining industry. Yeah. In layman's terms, it's a matter of confidence. And so when you're typically drilling, you're drilling at at far out spaces that you just you're drilling at 50 meter um intervals. So your confidence level is low and so that would be potentially called an inferred resource. And so what you want to be able to do is drill with higher level of confidence. And that means you're moving from your preliminary feasibility study towards a definitive feasibility study. And it just means you are very confident of what you actually have in the ground. In other words, your spacing is tight and you know what you've got. If you try to go ahead and produce a mine on a wide space drill um program, you're going to get in big big trouble. And we've seen that in the past. We've seen mines fail because they've prematurely made a decision to to actually produce without um proper drilling and proper mind. So, this is very interesting. And again, you probably think we're beating a horse here, but when you talk about 50 mters, how how narrow do the drill spacings have to get before your confidence is high? Now, I know that's a variable question, right? different deposits, uh whether it's an open pit, low grade, or a high grade underground with veins. How how close do the uh do the drill spacings have to get? Uh well, about 25 meter um is a good um at a good interval, right? Yeah. And and how much do each one of these holes cost? Depends how deep they are. And uh so generally you start out I mean if you're looking at an open pit style um program you're going down to 200 maybe 250 mters from surface um which you can do usually fairly well and um but if anything below that then you're getting more into the underground. But um a lot of this will depend on the actual um geology that's what's there. you can do it, you know, and again, this is what I referred and and use and leverage our our analysts and our economic geologists um to explain all of that engineering work to me. Um my investors certainly don't rely on my my great power, they rely on our team's great power and so I certainly uh leverage that. So, I I guess what I was trying to drive at was when viewers hear about a gold company that is drilling in Tanzania and they have a a big like they have three drill holes that they release phenomenal results from. What I'm trying to get to is that doesn't really mean that much over the long term and that you al always have to take that in context of the fact that you need another hundred holes you know or 50 or whatever the number is to make sure you know that you have what you have and that's the process of building a resource and right resources are measured in thousands of tons right hundreds of thousands of tons and you have an assumption about grade correct right? You you usually want to convert them into ounces and then you have a grade. Um but when you're doing drilling, it's so important that you have a proper analyst looking at what those results are. You can get a headline which could be crazy like 100 meters at an ounce per ton. Um and okay, well that's very interesting. And then you do a deeper dive and you find out that it's not true width. In other words, they went right down the vein. Mhm. And it looks really long, but if actually it has no width to it. It's only like half a meter wide. It's it's called a director hole. In other words, it's a great it's a great headline and the stock could move to the unsophisticated buyer. And that's why you've got to be able to what's the true width? Um does this hold together? And that's why you need a team of um well seasoned analysts to uh to interpret that the headline the headline can be a very dangerous thing to follow unless you right and then uh to build the reserve quality or category you have to have what's called a qualified party I I think it's called QP yeah qualified person that does that work um that will look at your resource and then reserve and sign off on it. Yeah. And you have to make all these assumptions about the price of oil, the price of copper, what you're going to do, how you're going to do it, etc. And then they have what's called a bankable feasibility study at the very end. Yeah. Right. A bankable or a definitive feasibility study. Correct. Which is right at the very end. And from that you create all your economics. So you'll figure out where your it's called an ASIC all in sustaining costs which is supposed to include all costs um of production and that will give you you know your your benchmark of what it will cost per ounce to produce. So if you've got gold at 3500 and you've got an ASIC of 1500 you've got a $2,000 per ounce margin. Um, and the reason that you would get involved in this very difficult, cost intensive, long-term business is, as my sort of final run through resource reserve for our viewers, the gold in the ground when it's a resource and you're drilling a couple holes could be 25 bucks an ounce, but by the time you get through uh, you know, your pea and your preliminary uh, feasibility all the way to the end, that gold could be valued at $400. $ an, right? So that's what you you go what as you're developing more confidence as as you you're developing that resource moving towards a reserve you're also rerating the multiple you're doing at the NAV. Um so when you're at an early stage it could be a 0.2 times um price to NAV. Um and then as you're developing more confidence then we will be rerating that um towards a 0.6 six even a 0.8 or if it's a basically a producer then you could be at one to 1.2 um depending on if it's silver gold or whatever that um that mine is doing. But and that's how you see the price u of the shares um escalate over time as you near being a actual producing mine. And in this process, that's why being involved with a company that's bringing a mind on life is really the only, you know, capital creation part of the secular opportunity of rising gold prices, right? That's where the leverage comes is revaluing that gold in the ground as as you do the development of the mine. And then the last thing that's exciting is before we leave this is when the gold price goes up because the assumptions for gold ounces to be included in the reserve are fairly strenuous. And what are major gold companies valuing their reserves at now? It's what 2,200 or something like that. It's each year it goes up a bit. Yes. And it's very conservative. But each time the gold price goes up, you can move from resources ounces that become profitable at the new price. And that's another place where you get leverage in gold equities. Right. Yes. So we're using a long-term goal price at 3,000 an ounce. Okay. To to drive our economic models. But but but yeah, as the gold price goes up, you know, companies with resources see them transfer to reserves. So it's just another part of the inherent leverage in the gold miners. Do I h I have that correct? Right. Yes, you do. Yeah. Okay. So, and um in terms of the team u can you give us like you mentioned I I the phrase that I would use when you were talking about the importance of metallurgy etc is even when you have all this information you still don't know if the mind's going to make money. And that's where I think the judgment of the SCP team comes in. Can you talk a little bit about that? Right. Um so we try and um use all the different departments and personnel to create our our core list of names. So you we have investment bankers. So you think of just bankers that are doing um looking at economic models, but they're mostly actually engineers. So they understand the geology as well as understanding how to you know project uh financial models. Um our analysts are not just geologists, they're they're economic geologists. So they know how to do economic studies and and so that those two teams are all come together um and they have we have what's called a new names committee um and where they all have to make their own arguments as to why they like a certain company and why they don't like a certain company. And to make it through that process, there has to be consensus um for our for our firm to accept a new name that it will then be a core name that we follow and that we will put out research on that we've given the thumbs up to that potentially we could raise that company money should they need to raise money at some point in the future. So we're we're a small boutique and expert in able to are able to do that. Whereas if you go to a large bank-owned firm, there's no way they can do that type of um sitting around a table and coming up with agreement and convent. And how many names are on your covered list? Approximately 30. Um and is that usually the the number? Is it higher than It's been lower. It's the the number has been expanding a little bit. Maybe it was 25. It might even be 35 right now. Um, it has been expanding during this time. Um, and then then names will be removed once they're acquired or taken over or they're producing and they're outside of our our scope. Um, and we need to look for new names. And so a lot of the the challenge now is the lowhanging fruit. If you look for example in Canada at what are going to be the next mines in the next couple of years that are late stage, it's really only two or three names that are coming online. Um there are lots of interest. What are those names? Um well we have uh first mining and schema. Uh those are probably going to be the next two that are going to be uh mines and they're working towards that. So there are some um permits that have to be granted in the case of um the first mining and then uh Skina is well along it's it's uh the road to um to production and uh so but in order to get to that stage it can take eight years um to get to that stage from drilling to getting uh indigenous um nations to sign on um everywhere in Canada is required except in Newf Finland. um you have to get all these agreements in place and and in any developed world it takes a very long period of time and that is why we like certain jurisdictions in Africa which you can get um from drill um to end production in 2 to 3 years not 8 to 12 years and so that's why you see an awful lot of interest in countries like Kivoir and Guinea which our jurish who we follow and like and you'll see all majors are producing there. And it's it's fascinating to see how quickly you can develop a large and profitable reason. So when you look at the when you look at the 35 names that are in your core group, um what percentage of those might be exposed to M&A activity? Are they too small or No, no, no, not at all. Um so we have right now um in that core list I can think of four names that are we flagged as takeover candidates. Um and we're highly convicted uh that they will be taken over. Um and in those cases they would have a strategic investor that would own 19.9%. Um, in other words, they're ready. When they hit 20%, you have to make a proposal. Um, the engagement is then over. You have to either decide if um you're going to take it over or announce your intentions. So those ones um for example we we're we like a a company that's um in Malawi in Africa that's natural root and um they've been partnered with Riotinto now um for some time and Riotento have been working on the property doing tests um to develop if they're to help them decide if they're going to take it over or not. It's our view that they will. Mhm. Um and they uh once the DFS definitive feasibility study has been um reported then Rioento has 180 days to make a decision on that. And as another part of SCP's business, I should mention um Phil Martins, who's the uh head of investment banking in London, keeps a very low profile. Um, but we do want to mention that Phil's out there uh with files on all of these uh companies and has been involved in SCP has been involved in some of these deals as well. Correct. Oh, yeah. Absolutely. We were involved in that company mentioned um from the very uh onset. Uh we were on site. We our analysts go to these properties all the way around the world. Um and um the day that uh one of our analysts showed up to Rick Ru's conference in the morning, he had already been up to tenants uh on a on a site visit that morning and then that afternoon he was down in in Florida. Um our our team tracks an awful lot of air miles that you brought up an interesting point about West Africa. Is there a part of the world that you're most excited about? Is that it? Is Africa the next decade of of deposits? Well, certainly it is, but you also have to be very careful what country you're dealing with in Africa. Um, so, you know, there's been an awful lot of issues with Ivanho and the DRC um they've um with the with the Houthis and rebels um and corruption in certain parts. Then you've seen what's happened in Mali um with the government holding hostage of the Resolute Board um literally holding them for ransom which they actually acquies to and um those those were very very serious issues um and so now um those countries are areas you really don't want to get involved in. Mhm. So you have to be careful. But because you can go from drilling to development so quickly in some of these countries in Africa, you do have to pay attention. Um but they are some of them are discounted um in terms of valuation due to jurisdictional risk. So that's another area that you have to look at. Excellent. So, this has been a great update on SCP's business, but I have to since you said it's the fourth inning, I have to put you a little bit on the spot so that you squirm a bit. Give me a yearend uh target for gold and a year-end target for silver. Calendar year end. Yeah. Or pick another time frame. What do you What do you most What are you most comfortable? Well, let's I I think in six months um I think we're at 4,000 gold. Okay. And um I think we're at 50 silver. Mhm. And those numbers could be could be low on especially on the silver side. If again when I said we broke if we're going to break through 40, we're going to run and we have that leaves the silver price really gone. If we break through 50 on silver, it it goes even higher. Um we're having a silver conference um here in Toronto. Um and um and Eric is going to be our keynote speaker. um and he's going to um dazzle with his projection in terms of silver price. Mhm. Now, he's a huge silver bull, so you can take that as a caveat, but um I understand that it's a triple-digit number. It's not a two-digit number. And many Wealthy On viewers have probably been getting my messages on their voicemails uh and in their emails. I've been reaching out to quite a few personally and I want to underline what John just said that on Thursday the 23rd at the Shangrila Hotel in Toronto uh we have an all day presentation starting with Mr. Sprat, Mr. Silver uh at 8:00 in the morning and I will tell you I've seen him speak at least 10 times and he's almost as good as Rick Rule but uh he's he's very very good and his assistant Connor O'Brien I think is going to be there. He's also presents different stats about silver that are silver doesn't get covered very well. So there's not a lot of information out there. There's not a lot of analysis about the industry. It's a byproduct etc. But Connor and and Eric have all the access to, you know, what's really happening with volume trends and that type of thing around the world. So, they're fun to listen to. We have Maria Smnova, who everyone knows as uh Mrs. Silver. Um, she's going to be speaking at lunch from Sprat. And we have 14 producers. I would say Pan-American is is the largest. And Michael Steinman will be there and first Majestic and then we move down through uh another 12 producers, a lot of which are in the core of the SCP family. So, and for folks who can't be there uh in person on the 23rd, uh we'll be doing a virtual replay uh which will be on Saturday, October 25th. Uh and I assume it will be a similar hour 8 to 5ish. And uh for Wealthy viewers who are interested in attending the conference either in person or virtually uh please make an effort to get in touch with us, you can get in touch with me, trey. Uh and I'll get you registered. So we're very excited about that conference. Look forward to seeing you up there and uh John, thanks for your time. We'll check back with you in another six weeks. Very good. Well, we'll see you soon. and we'll see you at the conference and and next month. Terrific. Thanks, John. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealth.com/free. Thanks so much for joining us. We'll see you again next time. [Music]
Gold & Silver: A Lot Further To Go | John Waldie on Investing in the Precious Metals Bull Market
Summary
Transcript
We're still heading higher. Um, that's the bottom line. The gold and silver prices are clearly moving in the right direction. Um, and the equities are now starting to respond to it. Um, but we've got a lot further to go. [Music] If you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Assets Alliance at hardassallalliance.com. Greetings. My name is Trey Reich of Wealthon and we're here today with uh one of our favorite partners from SCP Resource Finance up in Toronto, John Waldy, who heads up their private client family office business and has been doing the same thing for SCP and SPAT if I'm not mistaken for a quarter century. So, uh, you've been through a few cycles and obviously it's pretty front page news that, you know, gold's up to 3,800 and I I actually noticed silver is now 46 and a half. I have to check it on a daily basis. It seems to be going up about 50 or 50 cents or a dollar a day, but um, you know, our viewers have heard a little bit about the firm and what you do. Uh we spoke a bit yesterday and I thought I would just jump in with sort of a bench clearing uh question. So on a scale of one to 10, how hot is SCP's business right now? It's a 12. It's it's off the scale that really um it's very exciting to be part of this. uh you know it even as recently as the last interview which I think was just maybe 6 weeks ago um the movement since then has been dramatic um as you stated correctly were at 3,800 um gold and now silver has just gone it's now catching up and it's it's as we thought it's probably going to exceed the run in in gold. Silver alone today is up 3.6%. um on the near-term future it was actually 47 and change um and I felt that when it was going to break through 40 it was going to run very hard very quickly and that's exactly what's happened. So it's it's also nice to be right when when you see sort of technical levels being broken um and uh further upside. So it's been extremely busy. um we're all um quite tired but tired in a good way because um things have gone very very um well for our client and for our business. So, I was just talking with Justin Chan, the head of research in London uh a few few minutes ago and he was telling me about uh you know the deal flow that comes through SCP and can you give us an idea of you know when you have a fever pitch like this are you seeing one deal a week or Yeah. So, we're in terms of where we're all where we're at within a selling group or a syndicate or a co-league depends, but certainly in terms of the deal flow on the street overall, I'm seeing five to six deals a day. Um, but that's the entire street that's within our vector. um in term of if we're sort of co-lead or lead um you know in in August we there are a couple of days that we're doing two or three a week which is remarkable that we're co-lead on um and they're coming fast and furious. So overall I would suggest there's probably one um deal every seven days on average um throughout the entire summer which is unusual and of course continuing through into September. Um and there's always a little bit of a lull around Beaver Creek and then it picks right up again right after Beaver Creek and we're seeing that again happening now. Um an awful lot of placement and people are raising money when the sun is shining and the hay is growing. Beaver Creek as John's referring to for viewers is uh you know there's really two big gold conferences each year. which is sort of in February, March, and then six months later in September, the Denver Gold Forum has its big conference, and just ahead of that is the Beaver Creek Conference. Can you explain a little bit about what Beaver Creek's all about? It is basically where all the different players, all the different issuers and investment bankers get together um and you know they they basically are exchanging um business cards and and exchanging their story to the investment banker um and and then from that there would be an awful lot of deal flow that stems from that. And so it's a hu it's a huge conference um I think that's over five days in total and uh a lot of work gets transacted on the back of that but the market cap of the companies is is below the majors correct yeah yeah it's more in our faith which would be you know explorers and developers yeah it's not for the majors the majors don't need to attend that the producers don't need to attend that so do you attribute some of the September flow to meetings that happened there? I mean, is it that simple? Everybody gets together and then they do stuff. Absolutely. Absolutely. You you see a big uptick and we're seeing that right now. Um and then there's also a big rush to make sure that the those are looking to raise that they've got some material catalyst to prevent to to the banking side at that conference and they see a lot of that too. So you'll see a lot of uh drill driven um results. you'll see a lot of major catalysts sort of big push ahead of that. Um yeah, so it's you know people talk about PDAC for the retail which is largest conference of of a type in the world here in Toronto. Um but yeah, Beaver Creek is important. So, in the years that I've been following this, when you start to see a bunch of deals like you guys are seeing, at least in past cycles, it has been a sign that maybe things are getting ahead of themselves or the market is starting to finance more questionable projects or that type of thing. But it doesn't seem to be slowing down this time around. Why do you think that is? Because I think we're still heading higher. Um, that's the bottom line. I don't think we're we haven't hit that um insane, you know, we talked about uh exponential type of um share prices yet. Um the gold and silver prices are clearly moving in the right direction. Um and the equities are now starting to respond to it. Um but we've got a lot further to go. There's we're just starting to see news articles talking about the generalist investor. um you know, your typical individual um especially in the state beginning to pay attention to preal equity and that's been completely almost negligible to zero. Um and now we're starting to get people paying attention um people thinking that they were just invested in in tech stocks and uh the large cap on on the NASDAQ that are now think oh well let's look at some gold stocks. Um, so that's just starting and Rick Rule likes to say that if you can get up to a traditional level, mean level of like 3% of a generalist. Um, having that in their portfolio up from like zero to 0.5 up that just you can do the math. I mean that fix life of increase in buying capacity on the retail side that could be potentially buying precious metal equities. So we are at at just starting to get indications that that's occurring now. So in say the past couple of years it would be fair to say that investors that have been interested in SCP's deal flow have been have a tendency to have been directed managers like gold managers like a John Hathaway and hedge funds that are focused on the sector and certain uh private equity investors say in London. But uh the retail investor really hasn't been present over the past couple of years. Isn't that the case? The past decade um especially in the US. Yeah, you'll see that Canadians are more comfortable, certain um countries are more comfortable that Australians are more comfortable investing in gold and and mining equity um because a big part of our industry are in that space. So, uh, Canadian or Australian have been investing in this area for a lot longer, um, and are more comfortable. So, their allocation is typically much higher. Um, but even then, um, you know, Canadian or Aussies have been investing in other in other sectors and now they're returning and full as as they should be. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. And Wealthy together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. and you're of course uh focusing on Canadian investors, we'll be able to bridge that gap. Uh hopefully at some time, you know, when the SCP, wealthy joint venture uh is approved by FINRA, but we're awaiting our approvals. That'd be fun to get some attention down in the United States. But in terms of the Canadian investors that you're uh representing and dealing with, you've noticed uh started to notice an uptick in sort of family office and individual investors. Yes, very much so. Um and it's not just Canada, it's international as well. So out of Europe, um but the family offices have been a new sector or a new a new buyer into the space. um where they've been traditionally quite uh conservative and but now they realize that it's important to have an allocation to to gold and to silver and that's been a big increase in the last 18 months. Yeah. And it's not it's not letting up either. It's just increasing and just to give people uh you know a parameter. So Nvidia spoiled everybody right because it goes up every day and it's 4.4 trillion all that. But when you get into the real world, you know, if you make 50% during a year, uh, you know, on a stock in the stock market, that's a pretty damn good return, right? But in the gold sector, given the leverage of the beta to bullion and especially in the part of the sector that you guys deal with, um, while you obviously, you know, past performance is no prediction of future performance and all of those disclaimers. Can you give us a general idea of you know what's a possible return? What's the top return? What's the range of returns that you're seeing in some of these deals in the current environment? Yeah. So the range of returns um within our sector can be like in the last 18 months on the low side would be 50%. On the on the high side 400%. Um, and as you could imagine, and I was just looking at uh a position, um, a large position that I have on my uh, in my book of business, and um, we we bought the position uh, two years ago as a unit financing. Um, and that position is now up seven and a half times um, in value because it came as a unit. So, I don't know if your investors are familiar with um buying placements, but often when you buy a placement, you get a share and you'll get a half warrant or a full warrant. And if the stock um does well, the half warrant or full warrant become extremely valuable and really sweeten the the type of return. So, in this case, the underlying was up four and a half times. Um but that warrant kicking in made a 7x return and it's still we still hold the position and um again more really good fundamental result today and the top 15% today alone. So what's just what sector is it? Is it a gold company? has a gold um latestage um developer that will be in mine in um probably 18 to 24 months here in Canada. And uh are the warrants are you still holding them in warrant form or have you exercised those? I haven't we haven't exercised them yet. Um we'll probably start to exercise them. They expire out um in August of 25th. So we have lots of time to do that but might be nice to exercise when they are the stock must be significantly above the exercise price. Correct. The exercise price is 70 cents. The stock is trading at$ 270. Gotcha. Okay. So it's $2 a So does the company need that money? Do they want people to do it? No. They're well financed. They don't need it. It's all for their upside. Um but the company is doing a major drill program. So, they don't need this. They're funded. And if they do need to raise money, they can also do um they can do a flow through or Yep. And we all know Rick Rule's number one rule is to get a warrant. Um he's been talking about warrants for two decades and points out that's the difference between a great return and a sup super return. True. But there is um I think there is some advice to give your audience that if you've got a full warrant and I know I Rick will disagree with it but if you have a full warrant that's good for five years um that's a little bit too good. So um warrants are often looked at sweetener and if the sweetener it may not be the best company. Is that what you mean? That's what I'm saying. The sweetener says too high, too rich. Um, usually you would get a half warrant, good for two years, not a fiveyear warrant for a full warrant. Got it. So, half a warrant for a couple of years, uh, limited visibility, good idea. Full warrant for as long as you want, bad idea. I I think that's my my take. Yes. It's just too uh too much. And Yeah. Now, uh, you you deal with Canadian investors currently, but, uh, if you, if you were licensed in the US, which we're trying to accomplish, can US investors participate in those placements with the warrant? Yes, they can. Yeah, they can. What are limitations on selling or liquidation or holding period? There is there there is a legend that's put on private placements and it's a six-month um hold and then you have to what's called scrub the legend in order to be in a position to dy and that take some time to uh to remove that legend. So it's in Canada typically there's a fourmonth hold um on a private placement and the US the thick month um and then a lightning removal process and when you mentioned the scrubbing is that through the transfer agent or through the issuer or how does that get taken off? Well there are a few steps in that process and that's done usually through uh through clearance. Um yeah and it have to go back to the issuer as well and it can take a month or it can take months and it depends you have to have all the different parties cooperating and and willing to do it and respond in a timely manner. Interesting. Yeah. Um and uh in terms of of you know how far this market has gone um are you getting nervous yet or how do you stay calm or you know what are you looking for on gold and silver? What what do you expect for the next 6 to 12 months? Well, I sort of touched on it. Uh I think that we're, as I said last time we met, I said we're in the second or third inning. Um I think we might be in the fourth inning now, but I think we've got a lot of game to play and um I think a good indicator of that is what I mentioned was is the generalist investor. Um they're not they're not here yet. Um not here at all. But when you have the generalist investor um talking like they're taxi driver that bought this great gold stock um yeah like they did back in the tech boom in 99 um then I think you've got the makings of a bubble. We aren't even there yet. You're you're getting some you know um business news channels talking about gold and they're falling out. They they have to follow all the different vectors but you we're not there yet. We're not we don't have the general. So um it's difficult to generalize valuations in your sector because by definition explorers and developers don't have earnings. They're consuming capital burning capital and they require new capital to get the project built. That's the sector that you guys are focused on. in the larger cap uh sector. I've noticed recently that you know prices are sort of gravitating up to about one times NAV in the very generous 5% discount that most sellside firms look at this. But so in other words, gold stocks at the beginning of the year were historically cheap and now there's they're trading back towards the the historic range, you know, of in relation to the gold price itself and the NAV of the underlying company. And from here, uh, I would say, you know, roughly there's another 100% to go. What I mean by that is we were severely undervalued. Now the PS have come up sort of NAV gold relation but there's a whole another sector from just gold really staying at this current price much less going higher is that the way you look at it well you're again you're talking about the large um mega producers or large cap producers um and certainly you're not wrong and they're always in that sub sector um the large cap there's always a lag to the price of gold. Um, and so you see gold appreciate significantly over the last 12 months. It takes those producers two or three or even four quarters for that to trickle down to their bottom line and their net earnings. Um, and so we're just beginning to see some of those returns come in and on the back of that then their share price starts reacting. So in terms of your typical playbook um it's traditionally been traditionally been um you look at the at the majors first and then the intermediates then the juniors and then the explore code and and the first to move typically have been the majors and then trickling all the way down and two quarters later each you know as you go downstream um to the smaller cap then they start to move following the big fish. That's traditionally what's been happening. The big fish in this case, um, a couple of them have had they couldn't get out of their way because their cough pressures are so high. So they're they're brighter. They've been in the paloo box mostly um for the last couple years and it's taken them a while to get a free pass. They've almost got like a 10 minute or a game misconduct from the market. um whereas the smaller cap and the explore codes and developers have responded very strongly to and they've outperformed the majors. So in our space um which is the explore co and developers which are smaller cap they've done they've outperformed um in a significant way but I think now the majors are going to start responding um and they they best because if they can't make money at these prices um they never will. So it's been a little bit inverted in terms of that. Um so when you look at sort of price to NAV generally for the producers and maybe the mid tier, uh what is the um metric or ratio that you might encourage viewers to look at to measure where we are in the cycle of explorers and developers? What what do you look for? uh how the gold is valued in the ground per ounce or what are the metrics that are relevant? So in our space the most relevant metric is is the price of the underlying. So the price of gold and silver and that will drive everything. Um because in our space we don't have producers. Um we do have a few but um but most of our state is had explore code and developer and and so for that you have to look at resources um how many what the growth of that resource base um measured indicated and inferred um how are they converting that into a mining inventory in other words reserves where that where are they moving on their studies from pea toff uh to DFF in other words um preliminary economic assessment to preliminary feedability study to definitive feasibility study to um investment decision where are they at and all those those are the important metrics in our space and how they're progressing um then there's all sorts of other things we have to rely on on our analyst terms of metallurgy how the structures hold together are are is the is the structure um cohesive enough to be to be a mine on or is it all nuggy then it doesn't make sense doesn't hold together. Those are that where we spend most of our time on the on the the deep um uh diligence in terms of um doing the research and understanding the the deposit. Um and then obviously jurisdiction is important and really important is the actual management team and who's driving this and how sophisticated they are and have they done it before and how well we know and trust them. So that was an enormous amount of ground that you just covered. So backing up, if you could give a layman's explanation a little bit more than you did about the difference between a resource and a reserve in the gold or precious metal mining industry. Yeah. In layman's terms, it's a matter of confidence. And so when you're typically drilling, you're drilling at at far out spaces that you just you're drilling at 50 meter um intervals. So your confidence level is low and so that would be potentially called an inferred resource. And so what you want to be able to do is drill with higher level of confidence. And that means you're moving from your preliminary feasibility study towards a definitive feasibility study. And it just means you are very confident of what you actually have in the ground. In other words, your spacing is tight and you know what you've got. If you try to go ahead and produce a mine on a wide space drill um program, you're going to get in big big trouble. And we've seen that in the past. We've seen mines fail because they've prematurely made a decision to to actually produce without um proper drilling and proper mind. So, this is very interesting. And again, you probably think we're beating a horse here, but when you talk about 50 mters, how how narrow do the drill spacings have to get before your confidence is high? Now, I know that's a variable question, right? different deposits, uh whether it's an open pit, low grade, or a high grade underground with veins. How how close do the uh do the drill spacings have to get? Uh well, about 25 meter um is a good um at a good interval, right? Yeah. And and how much do each one of these holes cost? Depends how deep they are. And uh so generally you start out I mean if you're looking at an open pit style um program you're going down to 200 maybe 250 mters from surface um which you can do usually fairly well and um but if anything below that then you're getting more into the underground. But um a lot of this will depend on the actual um geology that's what's there. you can do it, you know, and again, this is what I referred and and use and leverage our our analysts and our economic geologists um to explain all of that engineering work to me. Um my investors certainly don't rely on my my great power, they rely on our team's great power and so I certainly uh leverage that. So, I I guess what I was trying to drive at was when viewers hear about a gold company that is drilling in Tanzania and they have a a big like they have three drill holes that they release phenomenal results from. What I'm trying to get to is that doesn't really mean that much over the long term and that you al always have to take that in context of the fact that you need another hundred holes you know or 50 or whatever the number is to make sure you know that you have what you have and that's the process of building a resource and right resources are measured in thousands of tons right hundreds of thousands of tons and you have an assumption about grade correct right? You you usually want to convert them into ounces and then you have a grade. Um but when you're doing drilling, it's so important that you have a proper analyst looking at what those results are. You can get a headline which could be crazy like 100 meters at an ounce per ton. Um and okay, well that's very interesting. And then you do a deeper dive and you find out that it's not true width. In other words, they went right down the vein. Mhm. And it looks really long, but if actually it has no width to it. It's only like half a meter wide. It's it's called a director hole. In other words, it's a great it's a great headline and the stock could move to the unsophisticated buyer. And that's why you've got to be able to what's the true width? Um does this hold together? And that's why you need a team of um well seasoned analysts to uh to interpret that the headline the headline can be a very dangerous thing to follow unless you right and then uh to build the reserve quality or category you have to have what's called a qualified party I I think it's called QP yeah qualified person that does that work um that will look at your resource and then reserve and sign off on it. Yeah. And you have to make all these assumptions about the price of oil, the price of copper, what you're going to do, how you're going to do it, etc. And then they have what's called a bankable feasibility study at the very end. Yeah. Right. A bankable or a definitive feasibility study. Correct. Which is right at the very end. And from that you create all your economics. So you'll figure out where your it's called an ASIC all in sustaining costs which is supposed to include all costs um of production and that will give you you know your your benchmark of what it will cost per ounce to produce. So if you've got gold at 3500 and you've got an ASIC of 1500 you've got a $2,000 per ounce margin. Um, and the reason that you would get involved in this very difficult, cost intensive, long-term business is, as my sort of final run through resource reserve for our viewers, the gold in the ground when it's a resource and you're drilling a couple holes could be 25 bucks an ounce, but by the time you get through uh, you know, your pea and your preliminary uh, feasibility all the way to the end, that gold could be valued at $400. $ an, right? So that's what you you go what as you're developing more confidence as as you you're developing that resource moving towards a reserve you're also rerating the multiple you're doing at the NAV. Um so when you're at an early stage it could be a 0.2 times um price to NAV. Um and then as you're developing more confidence then we will be rerating that um towards a 0.6 six even a 0.8 or if it's a basically a producer then you could be at one to 1.2 um depending on if it's silver gold or whatever that um that mine is doing. But and that's how you see the price u of the shares um escalate over time as you near being a actual producing mine. And in this process, that's why being involved with a company that's bringing a mind on life is really the only, you know, capital creation part of the secular opportunity of rising gold prices, right? That's where the leverage comes is revaluing that gold in the ground as as you do the development of the mine. And then the last thing that's exciting is before we leave this is when the gold price goes up because the assumptions for gold ounces to be included in the reserve are fairly strenuous. And what are major gold companies valuing their reserves at now? It's what 2,200 or something like that. It's each year it goes up a bit. Yes. And it's very conservative. But each time the gold price goes up, you can move from resources ounces that become profitable at the new price. And that's another place where you get leverage in gold equities. Right. Yes. So we're using a long-term goal price at 3,000 an ounce. Okay. To to drive our economic models. But but but yeah, as the gold price goes up, you know, companies with resources see them transfer to reserves. So it's just another part of the inherent leverage in the gold miners. Do I h I have that correct? Right. Yes, you do. Yeah. Okay. So, and um in terms of the team u can you give us like you mentioned I I the phrase that I would use when you were talking about the importance of metallurgy etc is even when you have all this information you still don't know if the mind's going to make money. And that's where I think the judgment of the SCP team comes in. Can you talk a little bit about that? Right. Um so we try and um use all the different departments and personnel to create our our core list of names. So you we have investment bankers. So you think of just bankers that are doing um looking at economic models, but they're mostly actually engineers. So they understand the geology as well as understanding how to you know project uh financial models. Um our analysts are not just geologists, they're they're economic geologists. So they know how to do economic studies and and so that those two teams are all come together um and they have we have what's called a new names committee um and where they all have to make their own arguments as to why they like a certain company and why they don't like a certain company. And to make it through that process, there has to be consensus um for our for our firm to accept a new name that it will then be a core name that we follow and that we will put out research on that we've given the thumbs up to that potentially we could raise that company money should they need to raise money at some point in the future. So we're we're a small boutique and expert in able to are able to do that. Whereas if you go to a large bank-owned firm, there's no way they can do that type of um sitting around a table and coming up with agreement and convent. And how many names are on your covered list? Approximately 30. Um and is that usually the the number? Is it higher than It's been lower. It's the the number has been expanding a little bit. Maybe it was 25. It might even be 35 right now. Um, it has been expanding during this time. Um, and then then names will be removed once they're acquired or taken over or they're producing and they're outside of our our scope. Um, and we need to look for new names. And so a lot of the the challenge now is the lowhanging fruit. If you look for example in Canada at what are going to be the next mines in the next couple of years that are late stage, it's really only two or three names that are coming online. Um there are lots of interest. What are those names? Um well we have uh first mining and schema. Uh those are probably going to be the next two that are going to be uh mines and they're working towards that. So there are some um permits that have to be granted in the case of um the first mining and then uh Skina is well along it's it's uh the road to um to production and uh so but in order to get to that stage it can take eight years um to get to that stage from drilling to getting uh indigenous um nations to sign on um everywhere in Canada is required except in Newf Finland. um you have to get all these agreements in place and and in any developed world it takes a very long period of time and that is why we like certain jurisdictions in Africa which you can get um from drill um to end production in 2 to 3 years not 8 to 12 years and so that's why you see an awful lot of interest in countries like Kivoir and Guinea which our jurish who we follow and like and you'll see all majors are producing there. And it's it's fascinating to see how quickly you can develop a large and profitable reason. So when you look at the when you look at the 35 names that are in your core group, um what percentage of those might be exposed to M&A activity? Are they too small or No, no, no, not at all. Um so we have right now um in that core list I can think of four names that are we flagged as takeover candidates. Um and we're highly convicted uh that they will be taken over. Um and in those cases they would have a strategic investor that would own 19.9%. Um, in other words, they're ready. When they hit 20%, you have to make a proposal. Um, the engagement is then over. You have to either decide if um you're going to take it over or announce your intentions. So those ones um for example we we're we like a a company that's um in Malawi in Africa that's natural root and um they've been partnered with Riotinto now um for some time and Riotento have been working on the property doing tests um to develop if they're to help them decide if they're going to take it over or not. It's our view that they will. Mhm. Um and they uh once the DFS definitive feasibility study has been um reported then Rioento has 180 days to make a decision on that. And as another part of SCP's business, I should mention um Phil Martins, who's the uh head of investment banking in London, keeps a very low profile. Um, but we do want to mention that Phil's out there uh with files on all of these uh companies and has been involved in SCP has been involved in some of these deals as well. Correct. Oh, yeah. Absolutely. We were involved in that company mentioned um from the very uh onset. Uh we were on site. We our analysts go to these properties all the way around the world. Um and um the day that uh one of our analysts showed up to Rick Ru's conference in the morning, he had already been up to tenants uh on a on a site visit that morning and then that afternoon he was down in in Florida. Um our our team tracks an awful lot of air miles that you brought up an interesting point about West Africa. Is there a part of the world that you're most excited about? Is that it? Is Africa the next decade of of deposits? Well, certainly it is, but you also have to be very careful what country you're dealing with in Africa. Um, so, you know, there's been an awful lot of issues with Ivanho and the DRC um they've um with the with the Houthis and rebels um and corruption in certain parts. Then you've seen what's happened in Mali um with the government holding hostage of the Resolute Board um literally holding them for ransom which they actually acquies to and um those those were very very serious issues um and so now um those countries are areas you really don't want to get involved in. Mhm. So you have to be careful. But because you can go from drilling to development so quickly in some of these countries in Africa, you do have to pay attention. Um but they are some of them are discounted um in terms of valuation due to jurisdictional risk. So that's another area that you have to look at. Excellent. So, this has been a great update on SCP's business, but I have to since you said it's the fourth inning, I have to put you a little bit on the spot so that you squirm a bit. Give me a yearend uh target for gold and a year-end target for silver. Calendar year end. Yeah. Or pick another time frame. What do you What do you most What are you most comfortable? Well, let's I I think in six months um I think we're at 4,000 gold. Okay. And um I think we're at 50 silver. Mhm. And those numbers could be could be low on especially on the silver side. If again when I said we broke if we're going to break through 40, we're going to run and we have that leaves the silver price really gone. If we break through 50 on silver, it it goes even higher. Um we're having a silver conference um here in Toronto. Um and um and Eric is going to be our keynote speaker. um and he's going to um dazzle with his projection in terms of silver price. Mhm. Now, he's a huge silver bull, so you can take that as a caveat, but um I understand that it's a triple-digit number. It's not a two-digit number. And many Wealthy On viewers have probably been getting my messages on their voicemails uh and in their emails. I've been reaching out to quite a few personally and I want to underline what John just said that on Thursday the 23rd at the Shangrila Hotel in Toronto uh we have an all day presentation starting with Mr. Sprat, Mr. Silver uh at 8:00 in the morning and I will tell you I've seen him speak at least 10 times and he's almost as good as Rick Rule but uh he's he's very very good and his assistant Connor O'Brien I think is going to be there. He's also presents different stats about silver that are silver doesn't get covered very well. So there's not a lot of information out there. There's not a lot of analysis about the industry. It's a byproduct etc. But Connor and and Eric have all the access to, you know, what's really happening with volume trends and that type of thing around the world. So, they're fun to listen to. We have Maria Smnova, who everyone knows as uh Mrs. Silver. Um, she's going to be speaking at lunch from Sprat. And we have 14 producers. I would say Pan-American is is the largest. And Michael Steinman will be there and first Majestic and then we move down through uh another 12 producers, a lot of which are in the core of the SCP family. So, and for folks who can't be there uh in person on the 23rd, uh we'll be doing a virtual replay uh which will be on Saturday, October 25th. Uh and I assume it will be a similar hour 8 to 5ish. And uh for Wealthy viewers who are interested in attending the conference either in person or virtually uh please make an effort to get in touch with us, you can get in touch with me, trey. Uh and I'll get you registered. So we're very excited about that conference. Look forward to seeing you up there and uh John, thanks for your time. We'll check back with you in another six weeks. Very good. Well, we'll see you soon. and we'll see you at the conference and and next month. Terrific. Thanks, John. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealth.com/free. Thanks so much for joining us. We'll see you again next time. [Music]