From Royalties to Real Assets: Smallwood, Awram, and Jay Martin

Summary

• Market Insights: The podcast discusses the consolidation trends in the royalty and streaming industry, highlighting the merger between Sandstorm and Royal Gold as a significant move in the sector.
• Company Highlights: Wheaton Precious Metals and Sandstorm Royalties are featured as key players in the royalty and streaming space, with Wheaton's innovative streaming model being emphasized for its partnership approach with mining operators.
• Investment Strategies: The importance of focusing on high-quality underlying assets in royalty and streaming deals is underscored, with a preference for long-term investments that offer substantial optionality and growth potential.
• Geopolitical Considerations: The discussion touches on the impact of geopolitical dynamics, particularly the role of China in the global commodities market and the implications of ddollarization trends on international trade.
• Future Outlook: The podcast anticipates a bullish market for precious metals, with expectations for gold prices to potentially reach $10,000 by 2030, driven by concerns over US dollar stability and increasing demand for hard assets.
• Innovation in Financing: New financial structures in the mining industry, such as the adjustable threshold mechanism in streaming deals, are highlighted as innovative approaches to providing flexible capital solutions for mining projects.
• Sector Opportunities: The podcast identifies Central Asia and Saudi Arabia as promising regions for exploration and development, citing supportive government policies and rich geological prospects.
• Industry Challenges: The conversation addresses the challenges of maintaining competitive advantage in the royalty and streaming sector, emphasizing the need for continuous reinvestment and strategic partnerships.

Transcript

We're recording live on air at IM Mark here in the mighty Sydney, mate. Your favorite city in Australia. >> Why do you put on a voice when you come to Sydney? >> It's the conference voice. Big energy, mate. >> Yeah. No, your voice normally runs out by day three of conferences. Um, mate, I'm pumped. We We've got a couple of uh couple of conversations that we teed up in preparation for our trip here to Sydney. Carson, our editor, legend. You've mashed them all together. Money minds are going to watch an amalgamation of three conversations that we've we've just had with two royalty companies and one real assets big finger. >> Absolutely mate. So we've got uh Randy Smallwood coming up who runs Wheaton Precious Metals. This is a huge company. This is a huge huge company that flies a bit under the radar where we come from just like the whole streaming and royalties industry does here in Australia. >> Behemoth. >> Behemoth. But as uh as Randy has said in the past, 42 employees, $47 billion market cap, not so bad at all. >> It's a decent ratio. >> And then we've got David as well who we who we speak with. He was one of the founding partners of Sandstorm Royalties. Now, Money Miners might have seen that they had a fantastic transaction. They just got bought by Royal Gold. So, new business coming out of the back of that after this big sort of deal that they've done. And again, lovely to to sort of dig into how they sort of think about royalties, about asset lives, about MPVs. >> That's just a teaser. That's just a teaser. And then Jay Martin, mate, a fellow podcaster who hosts some pretty some pretty wicked conversations with people, like you said, in the the hard assets in the geopolitical kind of realm. So, wisdom in there. >> Yeah. Always pops up on my recommended to watch feed. I'm sure you've seen Jay Martin on your uh YouTube feed before as well, mate. Um it's great. Three great conversations. We've uh we've had great fun here at IM Mark. Time to clock off and have some beers, I reckon, mate. >> Here we go. >> Um yeah, deal like deal completed. Sandstorm Royal Gold. New Royal Gold, I should say. Um >> pretty like interesting amalgamation of of two two companies. uh Sandstorm with a you know phenomenal kind of history in in in in a brief period of time going from a shell to now what was valued at $3.5 billion in this takeover it's a strange feeling saying goodbye to to what would have been a pretty formidable part of your life >> listen absolutely I think from my participation in this industry I mean I've been in the industry for a long time since uh about 1993 but I think I'm really mostly defined by my experience experience in Sandstorm and what Sandstorm's been. So, for sure, it's a weird feeling. It's a weird feeling to take a look at these notes from all these banks saying we're discontinuing coverage of Sandstorm after really all these years. >> At least it's at least it's not a SA's coverage, you know? It's >> Yeah, I know. Exactly. At least it's not S. So, so that's the thing is that at least you kind of it feels it feels a little bit more like you're you're going out. I don't think we're at the top of the market, but certainly it's better than kind of, you know, relinquishing yourself in the bottoms of the market because you just can figure out how to make things work in the company. >> Well, it was structured in a in a share way so that you guys can sort of participate. >> We demand it. We we made sure that it was going to be part of the shareway because listen, we're real big believers in what this new royal gold looks like. You know, the real backstory is, and I don't know if you guys want to get into it now, but please, >> um, the, uh, the backstory is is that we had talked to Royal Gold a number of times. Listen, the bottom line is in North America, we don't have that many royalty streaming companies. They're big companies. They're all very big companies, but there's really just six big companies out there. There's a number of smaller ones that are interesting and have been doing some good work and fill a role there. Uh but we've all kind of had just about the same management team of those six companies since the beginning. We've all known each other as these companies have emerged. Things like Triple Flag as they've come up. Uh those companies have been we've known the management. We've known all of them. So there we've always talked we we know each other implicitly. We understand how everybody does deals. It was royal in us that we're talking most frequently over time. even 10 years ago plus, we would talk to their former CEO who's Tony Silver, and touch base every once in a while, talk about what our future plans were, where we wanted to go, what we were. Um it was really just this last time which came together actually relatively quickly as of effectively March of of this year where it's felt like it was another one of those touch points but then um it it became abundantly clear that Royal was very very interested in moving forward in investigating this a little bit forward. >> Where does the kind of consolidation go from here with the industry? It's already fairly consolidated like you said there. Listen, you know, in the end, the beauty of a royalty or streaming company is that consolidation can happen really easily in these assets. Honestly, I there there's very little need for a management team of a royalty streaming company. you know that I've always told people this that if uh the entire senior management of Sandstorm all died on a plane crash next day the stock price would go up because we wouldn't be in a position to waste any more money on bad deals or anything because the underlying assets the beauty of what it is is those underlying assets operate completely independently of where management sits. So consolidation, I think, is almost a little bit limitless between all of these companies. I don't think you can get a company that's too big that just does royalty in streams. I think we've kind of proven that before. We at Sandstorm, we had, you know, we had done five, we had bought five other companies in our history up to this point uh prior to selling to Royal Gold. And uh we would have been content to continue down that path. And uh but honestly when I see what's going on and where it is, I think it's just a matter of right time, right place for these companies to figure out how to combine and consolidate even further. Sandstorm's inquisitive nature like eased in the you know like leading up the the couple of couple of years leading into this um transaction. Was that is there an implicit statement there on how you evaluated valuations in the sector? You were more happy to be acquired than doing acquiring yourself. >> Well, I think for us the challenge for us was is that we were kind of in a little bit of an awkward space. We weren't quite big enough to do these billion dollar size transactions. uh in that space. We weren't really small enough to make these $50 million transactions accretive to us as well too or meaningful to our shareholders. I still like listen I still always like doing small deals. I like them doing whatever based on the underlying asset quality underlying asset but we were in a bit of an awkward space. We didn't have a lot of capital available to us because we had done some big big acquisitions in 2022. We're paying down the cash flow. were with our cash flow paying down debt. So we were in that space where we were looking to do you know some type of transaction but we couldn't really make these big having you know a two plus $2.5 billion or $2 billion market cap and uh not being able to do really $500 million size deals that was going to be a challenge for us and there wasn't a lot that were in that space. there's been more deals kind of in that billion dollar size transaction level and a bunch of deals again that are in that smaller. So we were I think concerned that we would struggle to really get the transactions done that we wanted to that were going to make sense which meant listen just hang on grow size see how that portfolio developments which is a great market that we're in right now to see those types of things development develop however we we uh when we were presented with this ability to combine with Royal We brought something to the table that was really important to them which was growth to 2030 and a long life beyond that. They brought like a tremendous amount of cash, a big portfolio of assets that even though they're mature, they still have a relatively long life associated with them. So when we looked at it from that perspective of okay, well, what are we bringing to the table? What are they bringing to the table? It made a lot of sense right there, right out of the gate because we brought that lock that big growth over this period where we're seeing higher and growing and rising commodity price environments and we brought that really strong big back end of these big projects that were going to last for decades and decades. That of course these are important components of any good royalty and streaming company get those maximum multiples. When you think back about the the journey, it was 18 years you were from from >> Pretty close. Yeah. Pretty close from the shell at least. Yeah. >> Yeah. What are the sort of like two or three big sort of moments whether they're transactions or you know where you might get might get close to the brink that kind of defined the uh the story in creating billions of dollars in in value. >> Yeah, I think when you look back there's there are a couple of big turning points I think for us. Um I think one of the real key ones was in 2015, the end of 2015, we had done a transaction with Yuma Gold. This is where we got a copper stream from Chapata. We got a silver stream from uh Sarammoro in Argentina. And then we also got this weird optionality bit that was on the Mara, what's now today the Mara project in Glenor's hands. So uh to me that was a big difference. That was the first time we had really done a big over hund00 million size transaction. It was at a very very low part of the commodity cycle. There was just so little equity and so little financing capabilities out there. But it was a stretch for us. It worked well for us. It really created a lot more mass within our portfolio than what we had had before. And it gave us a lot of good production. It gave us good exposure to copper and at that time between kind of 2015 and 2020 that was a real renaissance of the copper price as well too. So we ended up doing very very well. That was just really kind of luck of timing. That was a really key part for us. But of course I think probably the most important thing for us was these transactions in 2022. We it was a big risk. We had acquired both Nomad a public royalty company that was based out of Canada and then BCore. Basecore was a private owned by both Ontario Teachers Pension Fund and Glenor. Those were two big chunks that was over a billion dollars worth of transactions for us. And it will really set us up for attachment to these really long live big projects like Antimina uh and uh uh Antimina in a couple of different ways and into some of these other bigger projects like Plat Reef which would really cement this really long-term um base of assets that are going to have multiple decades associated there with their life. on on the flip side and I mean in your business shot selection is is everything because you write a pretty chunky upsiz check and if there's if there's no return associated with it or or the return doesn't quite match what you evaluated then that's um it's consequential for for shareholders. >> So on the flip side what was >> the the best deals you didn't do the ones the ones you were happy to they're happy to you know not write the check in the end but maybe you got close. Yeah, listen, it's there there were certainly a couple of them. I don't really want to kind of poke holes at some of these things, but yeah, there were a couple of deals that had popped up that for sure. Um, you you're you're glad that you kind of dodged the bullet on some of these things. That being said, from really 2012 onwards, we spent a lot of time just focusing on quality of these underlying assets. You know, listen, the interesting thing about the royalty streaming business is that it makes sense to those real spreadsheet junkies. Like if you're a CFA, if you really been working in investment bank, you take a look at what our model looks like and on the spreadsheet it looks extraordinarily. You kind of input these numbers from the feasibility study. You kind of crank out this, you see what it looks like, and then you can figure out really quickly what you think your return on is. All of us who have been in the mining industry though understand that it's way different than just taking a big bag of money pushing across the table and saying, "Hey, I got a royalty and streaming company." You really have to focus on the quality of those underlying assets. You know, a key principle I've been talking about for royalty and streaming companies is that we're really that ultimate long-term investor in these projects. So what's important, you know, you're going to outlive probably the owners and the management of this company. You're going to outlive almost all of the equity investors that are going to be at rotating in and out of that. You're going to outlive any of the debt that's on these projects. So what you really need to be certain about is the underlying quality of the asset. To me, that's always been the important part of it is focusing on it. Maybe there's some hair around the management team. Maybe there's some hair around how the government is dealing with in that particular jurisdiction. But I think what a a long-term proven fact in this industry is that you pick and you latch on to those really high quality assets that on a technical basis, eventually you're going to get some kind of good payout on it as long as you can, you know, keep your your association with that project. That's the other challenge too is that that's not as always the the easiest thing in the world to do in the space. But that's the important part of really kind of figuring out how these transactions in the future are going to work for you and how you look at them. >> Yeah. That that optionality dynamic that's something Tra and I have have spoken about a lot lately and there's there's a number of fantastic CEOs in the business that really underscore how optionality is often undervalued. How has your thinking on that like evolved over the 18 years? Is that something you felt like you appreciated and that might have been your edge coming into the business that other people are underappreciating? >> Certainly. I mean that goes back to like even in so in 2013 we did this transaction with Enterty the open pit mine that turquoise hill now Rio is operating but the joint venture area that was around where the block cave would really kind of start not even start getting developed in but it certainly expand into know it so it was clear like right from the beginning it's no it's not like I had some kind of magical X-ray glasses to see this. Everybody knew that as you got onto that joint venture ground, this area was going to be the most prolific ore that you were going to find in that Oy togoy area. You go to the south of really where it was the Suga 18 million ounces established kind of let's call it by 2009 2010 on on a project that wasn't finding a place in the mine plan yet, but you know it totally is going to it's clear. And so thinking about that optionality, we did that transaction. We got killed by the market. Our investors hated it. They thought it was terrible. In fact, we had we were at the Beimo conference in uh Florida that year when it got announced. We had one investor come up to say how could you do that deal? How can you do a deal where cash flow is not coming for another 12 or 15 years? And uh I justified it by saying listen you this is going to be one of the most important like top three most important copper projects in the world that's getting developed. It's the only copper mega project in the world that is getting being built developed and built over maybe a 10-year period or so. So yes it takes a long time to get it but when you're associated with something like this and a royalty your your payout on that is going to be enormous. that m mattered almost nothing to him. That same investor though came up to us just two three years ago and said I was totally wrong. You guys that was maybe the best deal that you guys did because for that $20 million investment that we're making off of that that royalty just the royalty portion of it will pay that much for perhaps for a 80y year was probably 80 year mind life on that. So, you know, that's the thing I think that that, you know, royalty companies do trade at a really high valuation, but I would certainly argue that it's still lower when you factor in that optionality aspect of it and how these projects and the extraordinarily excellent way that a royalty captures optionality in a project. Um that's I think you know that's really why royalty companies I think trade at discounts to really what mining companies are because you get all that optionality you get all that upside on these projects without having to be exposed to that capex issues the shutdown issues the uh cost issues associated and cost inputs into it to me they're still dirt cheap compared to actual royalty companies is even though they trade those high multip multiples. >> The royalty companies sound like far more enjoyable companies and businesses to run. I'd certainly rather own one. For every for every billionaire we've got in Australia that became a billionaire by virtue of creating a a mining company, we've got more that actually got rich from owning royalties. And um yeah, I just I just wonder like zoom out big trends happening in in the royalty space um in general and and and sub you know since since the announcement of the deal with royal gold it's undeniable the amount of attention and and thought and focus there is on Tether's clear entrance into the the industry by virtue of their um their stake in in Elemental support of the merger with EMX. Tether might be the only business in the world that has a lower cost of capital than some of the best royalty companies out there. um you know they've certainly got comparable headcount per revenue. Uh it >> I just I just wonder if you think that >> like what what what do you think Tether's going to do? What do you think the underpinninging trends are for the royalty businesses in general, the public listed ones? >> Yeah. Well, listen, I think you you hit the nail on the head there and and I didn't really realize how successful Tether's business model was until really I think it was actually your podcast that I really that that somebody sent to me and I really kind of started understanding what their position was. But yeah, their model is really extraordinary. Um, as I've uh as that deal got announced and I started to get to know them a little bit more, I really listen, I think they're they're hitting the nail right on the head for their business model, too, which is really this struggle with fiat currencies, this really strong belief in hard assets, a link to resources one way or another. And uh I think they identified it and when they did uh their dive into the mining industry, they looked at it the right way. They said, "Listen, mining is a tough tough industry. It is filled with all sorts of minefields that you just not only are you, you know, there's just so many problems that you can't predict what those potential problems are going to be. But the royalty and streaming part of it is just so much more effective way at attaching it. They understand that idea of the optionality that that really is captured by the royalties. They understand really that lack of risk associated with it because you don't have that exposure to the single and they love the diversification of it. I think it's it's it's going to have a huge impact in our space. It has already it still will have a whole impact on the on the space and mining. >> Last one for me, David. Um if you could own any royalty in the world, you're giving it for free. It's got to be an existing royalty and it's yours. You get to keep it. >> What is the best royalty in the world to own? >> Boy, um that's a that's a good question. I have thought about this for sure. When I think about the royalties uh that are in that were sitting in P Sandstorm's portfolio that I really liked. I really like those Zoe Togo royalties that are on that joint venture area because that links you to because to me that's a project that probably operates for 100 years plus if I wanted to really kind of leave a legacy to a family to an institution to somebody holding on to something like that and who knows like where's the price of gold going to be 50 years from now where's it going to be 20 years from now I don't know what it will be but I know that production is going to come from that the other one is also So these valet royalties um that we owned in the portfolio as well too. So their royalties on Valet's northern system and now the southeastern system is kicking in. These were created when CVRD was spun out as a governmentowned entity to a private entity and these royalties kind of sat around. To me those are extraordinary royalties. Again you know some of the best iron ore in the world. It's going to operate forever. You're always going to need high quality iron ore and that's where it's going to come from. You're going to get payment out of that. To me, those are two really extraordinary royalties that would just they would that they're just going to produce a tremendous amount of cash flow over the next 30, 40, 50, 60, 80, 100 years. putting your your geologist hat back on. What are the the one or couple jurisdictions or parts of the world that you're most excited about and just turn to their prospectivity and underexplored nature? >> Yeah. Listen, I I think the two areas that really have my eye upon them are Central Asia all the way kind of from Usbekistan to Kazakhstan and then Saudi Arabia. To me, these are really interesting jurisdictions because they're really opening up their door. They're allowing work. They're allowing. They they've understood really, especially places like Kazakhstan. Kazakhstan really understands well what it takes to really for a junior company to really come in explored, start developing something that's going to be meaningful. Projects coming out of Kazakhstan on the copper side are going to be gigantic. They're going to be really remarkable coming off of there. in Saudi Arabia. What I really like about the geology that they have there because I've been a big fan of the Arabian Nubian shield for for decades. Uh I know some of those VMS deposits that come out of there, man. Really remarkable. You're going to find these 100 million ton plus VMS deposits that might be sitting at multiple percent copper plus the gold projects that are in there too. To me, I think these are good jurisdictions and but they have these collaborative governments. governments that really not only are allowing you to really kind of do work and understand that timeline that it takes and the the the issues behind that exploration process because you're spending so much time and so much money and shrinking that timeline down is such a huge enormous help for these companies because I am really passionate about this idea that junior explorers need access to capital in building that and the Saudi government too really good at encouraging. Not only that, but they're providing grants for the exploration, for the development and that support to really get projects through that first really difficult over that first difficult hump and then getting into that development phase. I think those are two great jurisdictions that both have the geology and the support from the government. I think they're great. >> Yeah, heaps of exciting stuff happening there. Last question. You've had an awesome 18-year spell. What is next for for you and the team at Sandstorm? Yeah, Lee, listen, it's it's we this was a clean cut from royals. So, we've got to go back. We've got to start thinking about what the next things we're going to do. Royalty companies and streaming companies, I think, are great. They're wonderful. My skill set, our skill set, I think, works really best when the market isn't nearly as prolific with capital and availability to it. So I think uh time is now is to sit back, start dreaming about what the next best investments anywhere in the world might be. Maybe kind of foster some of these these assets forward. Uh but maybe there is a royalty or streaming company, but it's probably several years off before I start that up again. >> Beautiful. Thanks a lot for your time today. >> Thanks you guys. Really appreciate being here. thousands of mining services companies here at uh at IMARK as there is every year and you go to every single exhibition you speak with these mining services businesses every time I I learn about a new company mate I'm just reminded by how awesome Sandy ground support is like I just they're just the reference point in my head I can't get out because it's phenomenal they're a phenomenal business run by a phenomenal team led by Derek Herd >> the 1 billion euro man Derek Herd yeah having a lot of conversations here about how mining's going underground the the future tech that's driving mining, all these sorts of things. And we know Sanvic ground support are the champions made spend a lot of money on R&D so they can make your operations safer. They can make the ground support even better so that you can get more tons out of the ground. And that's all thanks to the uh the the powerful team that they have headquartered up in Newcastle, but hundreds of employees all around Australia and the uh the whole world, don't they? >> It's actually in the name. Ground support. >> Ground support. >> That's what they do. >> Mining industry support is what they do. Go D Go DSi. Go standard ground support. Go Derek. Randy Smallwood, thank you so much for for for joining us. We've been >> truly a pleasure. Thank you. >> Pleasure is all ours. We're um yeah, I mean there's there's you can go down a rabbit hole studying the the history of royalty companies and um one thing you learn pretty quickly is the prevalence of streaming and Weaten pioneered the streaming model which has become tremendously successful um over the course of you know recent history. Why why is streaming so effective and why did it take Weaten to sort of pioneer this model? >> Well, it's a good question. Uh and I come from the operating uh background. and I'm a geological engineer and I uh spent what 20 years working in operations before we uh spent over 25 years probably working in operations and uh to be honest we had royalties on a lot of the assets that I was running and I never wanted to be that royalty guy that guy the royalty is a registration on land it's send me a check every 3 months and uh send in the auditor once a year to make sure you're not it's it's just not a positive relationship and so when we created the streaming model back in 2004 we've purposely always tried to differenti share our cells. We don't want to be that royalty guy. We want to be a streaming company. Stream is based on partnership with the operators and all of our stakeholders, our shareholders. We deliver what I think is the best way to invest into precious metals uh through streaming. And it's through a a a contractual partnership, a relationship with an operator where we're constantly trying to find ways to help our partner be stronger because the stronger our operating partners are, the stronger we are. And I think that's the success that's differentiated and made streaming uh such a success. And now even the traditional royalty companies generate most of their revenue from streams. But streams are are they have so much inherent flexibility and they create more value on a per ounce basis than a royalty does to the operators. And so there's just so many advantages to the streaming model. And that shows by uh by the continued uptake in streaming in in most parts of the world, not so much here in Australia, but most parts of the world. So that that alignment and flexibility um as like a you know a minor might endure ramp up is is something to like I think really hone in on and you make your last point there is not as popular in Australia. Now we we reflect on the gold bull market that we're having here. There's most gold miners have really participated. Some haven't. The one that truly hasn't participated in the in the bull market gold because they've gone through ramp up with a a hedgebook that's um exposed and production hasn't been what they forecast. had they have you know financed their project with a stream instead of you know your conventional project finance with with debt and h and hedging they'd have alignment through this process. >> How do you how do you like how do you convince um you know the broader public who who who maybe doesn't see things like that that you know there is there is alignment at times where it it's necessary to have flexibility in the life of a of a of a single asset developer. Look, I've got enough silver hair on my head to to remember the heavy hedging days back in the 1990s, last last century. And uh and you know, we were fortunate in the sense that when I was building the first mine that I built and operated, we had to hedge there, too. But we were in a down market, and so we were able to collapse those hedges for a profit every year, reset them, repric them, and continue going forward. So, it worked well for us. But, you know, the negative with hedging is that it's a true lock in and it has to be delivered into, right? the stream is much more of a partnership. Uh I differentiate to being a we're an equity partner. We're a co-investor into the asset versus a hedge is more like a banking relationship. And uh and you've just got these demands that that have to be met irrespective and and and really such a lack of flexibility. Uh again reiterating the fact that that streaming is based on a partnership where we're here to try and make you uh the strongest you can be cuz we have an overlying mantra in our company that the stronger our partners are the stronger we are. So we're always looking for ways. So even when we enter into a streaming contract as minds mature there may have to be changes to those streams. I would say more than half of our contracts have been slightly modified or altered to unlock additional value to make sure that that the stream is actually working in a true win-win situation delivering value to both parties. That being said, you know, a stream does give us access to uh you know, very wellpriced gold, but the benefit of course for the operators that they haven't had to latch in to uh to uh demand notes like hedgebooks and like debt. Uh a stream is an equity partner. If the mind slows down, we slow down. If the mind expands, that comes down to us and our own selectivity about what we invest into. And and it's that inherent flexibility, but it that that allows it makes it such an attractive source of capital for uh for an operator as they're building a mine. It's just that that that uh we ride the wave, whatever the wave is. If it's good, strong wave, then we all benefit from it. But if it if the wave hurts, you're not held to the t to the to the debt terms or the hedge terms that that uh that that usually come with, you know, traditional financing methods. >> What do you make of the view that streamers trade at a premium to to the mining companies? >> Well, I I disagree with it because our risk profile is substantially below a mining company. So So it only calculates as a medium if you're using the same discount rates, the same risk ratings that you use for mining companies. The advantages that a streaming company has is our operating costs are fixed and defined and they're not subject to inflationary pressures. Right? One of the challenges that we always see in this industry is as commodity prices climb so do operating costs. Mainly because higher grade waste becomes low-grade ore and lower grade ore is more expensive on a per ounce or per pound basis to process. You don't see that with a streaming company. Uh our cost per ounce is the same whether it comes from high-grade or low grade ore. our cost per ounce is fixed and it's the same all the way through that. So the the risk profile on the cost side and that's usually the biggest miss in any mining investment is cost delivery. Not so much actually delivering the ounces but how much does it cost? What what is the profit when that gets delivered? And so my argument is that the that that we supply a much lower risk way of investing into precious metals. And therefore we only look overvalued if you're treating if if you're valuing us with the same uh risk parameters that you use in a mining company. We're not a mining company. And and I think that's best exemplified by the terms of our revolver. We've got a $2.5 billion revolver unused right now because we're generating so much cash, but our debt ratings, our our interest rates on that revolver are less than half of what most mining companies pay. So the banks understand that we're a much lower risk profile. Um the only reason we come up as being overvalued is because people start using the same discount rates that they use to to value mining companies. It's a much lower risk way of investing into the space. the the the tax advantages of a of a stream versus a royalty. Like can you tease this out for me? Is it as simple as um like if you write a primary royalty, you have to pay substantial amount of tax the day it is it is written and the the the burden of that actually >> is paid by the writer being the mining company themselves which doesn't have the revenue yet. >> Yeah. Yeah. No, it's a royalty and I'm going to talk in general terms because it's a global environment. So most of our experience of course is out of Canada. We're a Canadian company, but I'm going to take in glo talk in global terms. A royalty is considered a passive financial instrument. And I say passive, it's it's you you receive a check and you cash the check and every once in a while you send in an order, but there's not a lot of brains required. It's not actively managed. It's simply a matter of transferring that check and depositing it in a royalty. A stream, however, we get metal delivered to us. We get a share of the metal delivered to us. So when a copper mine produces uh 10,000 ounces of gold and we get 25% that company will ultimately deliver us 2,500 ounces of gold. Now we have a choice. We can take it in physical. Doesn't make sense. Why would you risk all the cost of security and management and materials handling or you can take it in credit form and and uh for gold and for silver we we generally take it in credit form mainly because we just don't want the extra costs and security challenges. But nevertheless we own gold. We own silver and that's a difference. It's considered an actively managed financial instrument and most tax authorities around the world always treat passively managed instruments more aggressively than actively managed. So we have a metals trading team that takes our gold, takes our silver, takes our L get a little bit of palladium, a little bit of platinum coming, a little bit of cobalt. We have a active metals trading team that that optimizes and tries to beat LME averages in terms of uh uh pricing that we get for our materials going out. So it's a it's a much more actively managed financial instrument. And for that tax authorities treat it less uh less aggressively. Uh and and that's the huge advantage. Now there's no tax leakage. Uh an operation will still pay the same amount of taxes that it normally would. Your operators are paying taxes based on the spot price of the metal when they produce the metal. That's the huge difference. Royalties are a crystalliz taxable crystallization of value upfront. A stream the tax is payable when the metal is actually delivered to us. And that's the big difference because operating companies have a lot more capacity to manage taxes appropriately. They've just got more expenses. They got capital expenses. They've got operating cover GNA and stuff like this. Our small streaming company not very efficient with taxes. And so so there's no tax leakage but tax is left in the hands of the operator and that's where it is most effectively uh applied. And so that's that's the big difference and that's the extra value that you unlock. A stream is always valued on a pre-tax basis and and that difference makes a that's why streaming is taken over for royalties. How do you think about, you know, in this environment an increasingly louder conversation around maintaining gold, silver, PGMs on the balance sheet as opposed to just cash? >> Well, it all comes down to needing capital and sourcing what the most competitive is. And there's certain times, we're we live in a cyclical industry and I'm not silly enough to think that we're always going to be the most attractive source of capital. Uh we typically are considered I mean we're an equity investor, right? We ride the wave with the operator. as as the asset does well, we do well. If the asset does poorly, we do poorly along with the operator, right? And so we're we're not always going to be the most competitive in a frothy bull market where equity prices are trading at at high prices. We're happy to sit back and harvest from our existing portfolio. And we've got a great portfolio with very strong growth. The next six, seven years, we'll see 60 to 70% growth. We're climbing over a million gold equivalent ounces, something that no streaming or royalty company has ever been anywhere near. uh and that's our current portfolio that's now counting new acquisitions. That's just growth in there. So, so we don't need to chase growth and and we're not going to be inefficient. And there's going to be times there's I call it the seasons of streaming. Uh times we fund development, times we fund balance sheet uh repair, and then harvest times. harvest times means we sit back and let those frothy periods uh and build up a war chest and and get prepared for the next round because typically right after the harvest season comes a balance sheet repair season and that's where some of the true worldass opportunities come into play. So, so where are we at right now if you if you gauge it on frothiness? >> Still a still a strong, especially in the gold and silver space, still a strong development uh uh uh phase. Um we're not seeing the equity space is starting to catch up. Uh but we're not seeing companies trade at at at frothy premiums or or or even close to NAV. We're still seeing the development companies trade at pretty healthy discounts to NAV, which of course will always make it attractive to do a stream. A stream is valued at one times NAV. Why would you issue shares at 6 times NAV if you can do a stream at one times NAV? We're a fellow equity investor. Ours is just based on the commodity, not on the share price. So you don't have to worry about your undervalued shares being issued. And so it's it's still a very good market for us. >> The the great opportunities for for streamers, balance sheet repair, project project development, like you say, also play an important role in acquisition finance at times. Really, >> what has been the best stream that Ween has ever written and why? >> Well, I I mean the Valet Salobo mine uh is an incredible asset. It's our flagship asset. Uh it's it's a truly a worldclass um copper gold and I think it's a great example of of of the power of streaming where we supplied over 80% of the capital to get that mine built for the first two phases and we only take away about 15 to 20% of the uh of the revenue and in terms of that. So for Valet shareholders, they they get capital payback every year from that mine and it's got 30 to 40 years of life in front of it. It's an incredible asset. Uh produces well over close to 300,000 ounces a year to our credit and you can imagine if that's only 15 to 20%. You can imagine how much value that delivers to valet shareholders. An incredible asset, definitely our flagship asset. But I really do like the the Montage Gold Cone project that we've just signed. It's in construction right now and it's a unique one because it was a one-stop shop. It's the first major project where we supplied all of the capital and it's a unique one because it it it not only does it have a normal stream in it, but we've also got an adjustable threshold structure over and above and really because what happened was when this single asset company Montage Gold went out to price debt to help fund with the equity that we were putting in the debt was so expensive and they came back to us and said is there a way we can grow this stream to supply all the capital and the structure has got inherent flexibility. There's no demand loans. There's no risk of cash sweeps. They're building this mine. It's on track. In fact, it looks like it's going to be ahead of schedule. It's moving forward in in Cordovo. Uh and and what we've got is inherent flexibility um in terms of we get 20% of the gold dropping down to 10% of the gold, dropping down to 5% of the gold as they meet certain production objectives all the way through. So, um, you know, if if they're late, we add on ounces at the end, but we don't ever put them at risk in terms of that. And that's the difference between how you can work with a streaming company to come up with a a good, supportive, strong financing package that is truly win-win for them and win-win for us. All you have to do is look at Montage share price once we announced this transaction. when when all the shareholders out there realized there wasn't going to be dilutive shares going to market to help finance this construction, it's been truly a very prosperous uh solution for both them and us. >> Forecasting the gold price forward on on future deals you might do or silver, whatever the metal might be, is it's been a point of contention. So, we've spoken about what the broker consensus is lately and that is far far below where where we are right now. Now, how do you kind of think about it when you're looking at prospective deals going forward? >> Well, we we only look at broker consensus when we're trying to measure what kind of a public response we're going to get when we announce a transaction. We don't use broker consensus to to guide our valuations and to guide our investment decisions because they're no smarter than than we are. And I've been in this business for close to 40 years. I still can't tell you what gold's going to do tomorrow. It's a it's a it's a frustrating business from that perspective. So, we don't put a lot of effort in. I I will tell you that when it comes to our investment decisions though, we we don't uh as bullish as I am on gold and silver, we don't invest our shareholders capital on that belief. We invest such that if the commodity price stays where it is right now, we will deliver a reasonable rate of return to our investors. A reasonable rate of return even if there's no price appreciation. Now, we get to share that price appreciation if we if if it if it comes, but I'm not going to I'm not going to spend that money before we see that. That's that's irresponsible. And uh I know some of our peers have been overpaying for assets, trying to get their foot in the door. Not the right approach, right? Uh that's what we like to deliver to our shareholders is is that upside potential. So So we typically use a backwards curve that has a long-term price that's um well, it ranges on the market sentiment of anywhere between 95% of spot price down to as low as 60% of spot price. I can tell you we're still very bullish on gold and silver. So, our long-term price is still pretty close to the spot price in the 90 to to 85 to 90% range right now. And and that's been that's been effective enough to keep us competitive in in this market and keep us still making acquisitions. So, >> you talked about the peer landscape there. Um, and it it there's no denying that scale makes a hell of a lot of difference to your your ability to to out compete your peers. In fact, you know, financing the montage deal. Would it have been something possible for for Wheaten in a much earlier iteration of its life cycle? Probably not. So, do you think the peers may be paying paying overs to get sufficient scale or a quality asset consolidation in order to have you know the right size balance sheet? >> There's a misbelief in the industry that scale is the driving factor in terms of uh you know access to capital and cheap cost of capital. Uh I would argue that quality is the most important driving factor. And so I I've never aimed to be the biggest company. What we have always aimed at at Weaten is to be the best. The size is a result. It's not a target. It wasn't an objective. The the objective has always been to be the best partner possible. And I think our track record in terms of uh repeating deals with past partners. Over 50% of our current uh you know the transactions we've done the last five six years have been with people or companies that we've done transactions with in the past. We are a service industry. That's what Weaten does. We supply a service to the mining industry. Supply capital. The holy grail of the service industry is the repeat customer. What we want is happy customers that come back every time they need capital. We are blessed with an industry that always needs capital. And so so as long as as as they call us up and and want to talk to us first and they're confident that we will give them a fair transaction, that gives us an inside track in the space. And so as long as we keep on building on that, we're going to continue to have success. So when we think about other when we talk about other sources of capital and disruptions in the royalty and streaming space, Tether is a name that's come up quite a bit recently. How do how do you kind of think about their approach and and them getting the foot in the door in in in your arena? >> Uh well the um first off uh quite happy to have uh someone in the crypto space I'm discover that gold is just like a natural Bitcoin. Uh I'm quoting uh uh quoting someone long been a believer that Bitcoin wasn't required. We already had gold. Uh but but there's lessons to be learned from the crypto space. Now Tether isn't really a crypto company. They're more of a stable coin company, right? Um their their their gold backstable coin has not done well. Hasn't been a success. it's it's challenged and and I and I would say that that it's identified it's it's really highlights one of the challenges that we have in the gold industry when it comes to investors coming into the space and that is trust is trying to build up higher levels of trust and confidence about the fungeability gold and the uh the the providence of gold behind it and so so in my eyes the whole that that whole crypto and stable coin experience has opened up opportunities for us and I can tell you that my work at the World Gold Council and our work at the World Gold Council in terms of delivering a digital token is not far off. And and we're hoping to elevate the level of trust and digitalize the way you can actually own gold to make it easy and free to move it around quickly at low costs and uh and uh and dramatically improve trust levels. I'm honored that Tether has chosen gold as a way to invest their profits and and and as I understand it, the bulk of of that investment is coming from the operating profits of their main US dollar treasury uh USDT. And and so the fact that they're pushing that into the gold space is is a recognition that I think is supportive of why we all need gold. I think that they're going through what so much of the rest of the world is going through right now, which is a lack of faith in the US dollar. And that's what has me so excited. I personally see gold easily climbing to $5,000 here in the next while. Uh definitely by the end of next year, possibly even by the end of this year, the way the trends have been going. And it wouldn't surprise me to see gold at $10,000 an ounce by the end of this decade by 2030. Um there's just a real concern about long-term strength of the US dollar and is it really the measuring stick that that we should be using, the reserve currency that we should be using? uh gold forever. Up until 1970, gold really stood as the reserve currency of the world. And so this is a pretty short-term experiment here on on a relative thing. I can say that as a geological engineer, 50 years is nothing. But uh um you know, I I I think that this experiment is rapidly failing and that lack of confidence is what's driving groups like Tether and just about every sovereign bank and central bank in the world to shift out of US dollar and into gold. the irony that the profits come from a US dollar product. Yeah. They they can't be wait to be deployed to hard money. >> Yeah. >> The um yeah, your your purview from the World Gold Council to lens is interesting as well. Do you think there are any any important narratives or or stories about the composition of of gold buying at the moment that maybe aren't mainstream yet that the mainstream should be focused on? >> Well, one of the aspects that I'm excited about is digitalizing gold trade, the gold trade itself. And and you would argue that to a certain extent it is there. You can go and buy a gold ETF, but it trades like a share on a on a on a stock exchange and access to it. It's not readily fluid. It's not easy to move around. Can't be fractionalized. To a certain extent, you can, but uh but you know what we're looking at is the next level of digitalization. And that is a gold token, a goldbacked token that has through the miracle of blockchain, which people always take blockchain and sort of correlate it to crypto world. Blockchain is a unique separate you know shared ledger database that allows that. So the miracle of blockchain, you can get to the point where you have a gold token system that allows you to use gold as a currency uh goldbacked uh the providence uh in that you get through through blockchain will allow you to have confidence in terms of not only where that gold came from, where it's stored, what what what bar and which vault around the world is backing the token that the tokens that you have on your digital wallet that you're using for your payment scheme and having that level of trust. And so so you know we've we've got a group of uh uh the approach that the world go council is taking is to focus more on institutional and regulatory support first. And so we've got a a quite a large working group of most of the major in fact all of the major bullion banks uh traders uh regulators um all working towards this uh this goldbacked token uh that that we hope will be releasing before the end of next year. Uh we've got a trial program running amongst our member companies. Some of the biggest banks in the world uh the HSBC's, ICBC, JP Morgan, UBS, uh they're all involved in this in terms of building this forward. And once we have a good working system amongst that group, then we expect to release that to the retail world. And I just think the appetite I think the world is really trying to find uh a better reserve currency than the US dollar. And uh and I think gold has has supplied that in the past. There's no reason it can't supply it in the future. It's very it's a whole different aspect in terms of increasing the appetite for gold that uh that I think even increases my excitement about where gold prices can go. >> Are there other currencies sort of thinking about Chinese currency that might come to mind that comes up in conversation with the world world gold council and others? >> There's there's no doubt China wants its currency to be as respected as the US dollar. The one challenge that I think China has and anyone has that's trying to to support a reserve currency, a reference currency, is that for it to be a reserve/reference currency, it needs to be abject of political influence. It can't be subject to political influence. And I would argue that one of the reasons we're seeing such weakness in the US dollar, you know, the one unique aspect about the United States is the Constitution and how it how it separates or tries to separate the Fed from the government. and the Fed is the one that controls the US dollar. It's a unique aspect of the United States that has clearly been an important aspect that's brought the United States dollar to be the reserve currency of the world. Now, what we're seeing in the current administration, United States is is uh you know a real effort to try and extend political influence into the Fed and that independence that lack of independence is concerning. And that's one of the reasons we're seeing such a shift away from the US dollar. My concern is I'm not sure if China will ever be able to to get to that kind of a level of trust. And so you'll trade with the Mimi, you'll trade with Chinese currencies, but are you ever going to put it away somewhere and be confident that it's not not going to be subject to political influence? That's that's something that I'm China needs to do a lot of work before they can ever get to that level of trust on a worldwide basis. They're they're big enough that they can force trade to occur in the remi and but but it'll always be a forced avenue. won't be something where people hold value and uh and and they'll they won't want to carry their value in that in a long-term basis. And so I I just think as long as you have political influence, you have political risk. And as long as you have political risk, there's a concern. And that's the beauty about gold is that gold is accepted universally by everyone, respected universally by everyone, and never not controlled by anyone. If we put your bet on gold being $10,000 by the end of the decade aside for a moment, do do you have other sort of high conviction perspectives or views that you think are underappreciated across the the market at the moment? >> Uh I love silver. >> Precious metals is cheap. Yeah. >> I I love silver. I spent three years as the chair of the world gold council and I constantly get asked what's your favorite metal and I said you know I love gold but I really love silver. >> Is that still contrarian at this point in time though? H you know it's it's definitely what I what I think we're seeing now is the start of a recognition that that we've been operating in a deficit. Uh you know the demand for silver has exceeded supply for many years now and we're running out of the reserves. The vaults are empty and uh I can tell you that I just spent last week in London at the LME conference and the number of media interviews I had on silver which is very unusual for Europe. Silver is usually an America focused uh uh commodity. That's where we get all the questions on that and just you know the the and so yeah it's uh it's not so contrarian I guess because that wave has started but I still think it's got a long ways to go and when you sit and think about traditional silver gold ratio that's typically in the 30 to 40 range it's usually operates in those kind of levels and we're still just below 80 and so there's a potential for silver to see $100 an ounce and that would put it in the right range relative to gold and how gold is has reacted and so that's uh you know that Silver silver always lags and then outperforms and it's only recently started that outperformance but I don't think it's finished by any means. Um yeah and then wheaten I mean uh our business model our growth uh you know our official forecast has us reaching a million ounces by by 2031 but you know with these high prices every one of our partners is trying to wait trying to find a way to accelerate their expansions invest into expiration move forward and bring forward and I'm confident that we'll see a million gold coal ounces a year by 2029 not our official forecast but we've just got so many uh partners coming forward with accelerated plans for expansion Uh it's incredible exciting times and uh we've got such a good strong portfolio, the strongest growth portfolio in the industry. Um and good good quality assets. Again, one of the huge advantages of of of Wheaten is the fact that most of our gold, most of our silver comes from copper, from big base metal assets and and these assets have very long reserve and resource lives. And so we're we're in an incredible position. I think we are delivering the best way to invest into precious metals. the the advent of sort of streaming over the past 20 years was a quite a big change in how mines got financed. Do you think a lot about potential new innovations in the financing of of mines going forward and have any hunches hunches on on where that could come from over the next 20 years? >> Yeah, we mentioned earlier on the Montage uh transaction and and in there we used what we call an adjustable threshold structure to add so so you know a bit of background on montage. They originally started out like every company does. Okay, how are we going to finance this mine build? A little bit of debt, a little bit of equity, right? The equity, well, we can do we can use a stream to satisfy the equity need. So, they came to us, we gave them a sort of a basic equity, you know, basic streaming proposal, 7% drop into 5% long-term, $250 million bucks. They need about $700 million, $650 million to build it. They went out and priced the debt, couldn't find it, came back to us. And so what we did was incorporate it's a new it's a new mechanism. Uh they didn't want the long-term tail to climb any. So the long-term tail is 5% of the gold. They didn't want that to claim but they wanted a bunch of money. So what we had to do is come up with a mechanism that kind of replicates debt from the financial impact on the asset in terms of forward loaded got to pay it off but doesn't have the same uh requirements the same limitations that debt has. And so that's where this adjustable threshold mechanism comes in. So now instead of taking, you know, we've still got that base stream in there of 7% drop to 5%. But now we get 20% dropping to 10% then dropping to 5% and that extra uh block of material of ounces getting delivered to us early on in the project replaces their need for debt. They have no debt. So, can you imagine being a single asset company building a mine that's going to produce 300,000 ounces a year at below $1,000 an ounce cash cost and you have no debt the first year of production? Uh they're they're going to be profiting uh at at 75% operating margins in this mine. Now, they have to deliver us 20%. And so, that modification, that adjustable threshold, and and if now what what they had to do is commit to a production profile. And if they're late, we get to modify that production profile, but at least the cost of those delays is pushed out to the end of the of the threshold point, right? So, it's incredibly flexible for them. They have a choice. They can overd deliver and keep us whole or uh they can they can uh push out the cost of that as they're working their way through the startup. Now, all things being said, Montage is doing a great job building this mine. It doesn't look like this is going to be an issue. It's not normal in the industry, but Montage is doing a great job. It actually looks like they're ahead of schedule. Very rare in this industry. Not too many mines I've seen finished ahead of schedule and under budget. Montage is doing a great job on that front. And so, but that mechanism has just created such um uh to me it's streaming 2.0. It's it's the next level of streaming where where we can have that flexibility and and can incorporate that. We're protecting our shareholders. you know, our risk profile is much lower than the than the uh than the Montage shareholders because it's a mining company, but but at the same time, they haven't gone through dilution and they get the benefit of a good profitable operation that that the shareholders, the existing the original shareholders still own their piece of. They didn't go through excessive dilution to finance it going forward. It's a real win-win situation. One implication of that that model I can think of for for Wheaten is it even front ends the uh the the cash flow attributable to wheaten or the you know the additional gold equivalent ounces in the early years and so so I know you know like streamers royalty companies they tend to benefit over the long run rising commodity prices mean that um you know cash flow grows year on year in general but when you've got like a a very substantially front-ended um proportion of the you know life of mine revenue to Wheaten in those early years, then does the market maybe get ahead of itself on on actually projecting a company like Wheaten's um operational cash flow and the multiples you trade on are actually not set to grow. They might diminish over time. If you thought about the implications of of that, >> it just means that we have to take that cash flow and keep on reinvesting it back into new opportunities. So, you're right. Uh when we drop from 20% to 10% and then 10% 5% that's going to be a drop in our production. So, we better make sure we've got other projects coming in and we are blessed with an industry that always has other projects. The one thing about record high gold and silver prices, there's sure a lot of, you know, generally most of our business traditionally has been non-core byproducts from copper mines, but in the last four or five years, most of the deals we've done are core gold streams on gold mines and the demand with these prices, uh there's lots of opportunities out there. So, as long as we keep on reinvesting that capital, we'll be able to fill those holes. >> Randy, appreciate your time and looking forward to seeing more deals here in Australia. >> Um, thanks for that. I uh I am looking forward to love Australia. So love the love to spend more time down here. >> JD, we we are uh we bumped into Jay Martin famously of the uh the Jay Martin show and the Vancouver Resource Investment Conference. Jay, you've been talking about, you know, the merit of of real assets much longer than we have. Um big fan of the work you you put out there and I suppose having been in and around this investment for so long, now that it's finally becoming popular and more mainstream, are you feeling a bit different about it? >> Um yeah, first of all, thank you Travis. uh super generous of you to say and I'm stoked to be here chatting with you guys. Yeah, there's there's a core behavioral uh behavior that I've noticed since the market got a bit hot, right? Because gold is suddenly cool. Like we haven't been cool for a very long time, right? The last 15 years, nobody cared about our our industry and now people do. And what I've noticed is that gold bugs and gold investors and silver investors, it's almost like they have so much PTSD from the last 12, 15 years that they forgot what a bull market feels like. Because as soon as any generalist investor or mainstream financial media pundit starts talking about gold, gold investors start saying, "This must be the top. It's getting too frothy." Right? But that's what a bull market is. It's when the generalists start showing up, the mainstream investors start showing up. And by the way, even though that's begun to happen to a slight degree, I would say it's a slight degree. You know, I was I I have this little uh group of entrepreneurs that I travel with every year and we were in Japan a month ago. Uh successful guys. They all, you know, founders of seven or eight figure companies, critical thinkers, uh got a bit of cash. They're in the market. Not one of them would even think about putting a dollar into the gold market. They're just chucking cash at the QQQ or the broad equities market. Like it is the most obvious thing that any investor should do. And I just use that example because inside the industry like we are, we feel the froth because the froth wasn't here 2 years ago. So it's very noticeable to us, but on the outside like we're not even a blip on the radar yet. And so, you know, early innings in this precious metals bull market. That's my take so far. >> Well, that that PTSD you talk about is really interesting because it's not just the investors, it's the it's the companies as well. The the companies are so scared of of misbehaving, of doing expensive acquisitions and all these sorts of things. And we're starting to see the early signs of good cash flow coming through and I think they all think eyes are on us. We need to we need to behave here and and show investors that we can reward them and those sorts of things. Would you agree? Same in same in Canada. >> Yeah, 100%. And and that's a really good observation because the PTSD is a very positive thing, right? Especially for the company executives that are very concerned about how they're spending their treasury. Are they being good stewards of shareholder capital because it was extraordinarily bad behavior in 2010, 2011, 2012 that uh put the market into this 10, 12 year hangover, right? It was egregious GNA. I mean the I remember the market in those days. It was loud. It was noisy. It was pink socks and flamboyant promoters and and um I don't miss it at all to be honest. Like I love that I cut my teeth in this industry from 2013 to to now, you know, because the easy money wasn't here. So the easy money investors, brokers, promoters, they left. And anybody who stayed was down to work really hard to make money. You know, it should be hard to make money. It shouldn't be easy, you know, and so I hope I hope that company executives keep those memories front and center. And I hope investors do too because, you know, as the market heats up, people are making money. Like we're seeing returns in the speculative market that we haven't seen in a long time. And I'm in a handful of sort of WhatsApp and Signal investor groups and gold and silver investors are celebrating big wins, 300%, 400%, 600% wins, but they're not taking any principle off the table yet. They've got some price target in their imagination and they're like, I'm holding out for that. Um, but you know, it's very important when the market hands you a gift like this that you do derisk a little bit from those speculative positions. Now, I think we're in a secular bull market. I'm very convicted about that. And you can park your cash in certain companies to ride out a secular bull market, but those are high quality cash flowing companies with good jurisdictional diversification companies like Agniko, Newmont, Weat, and Precious Metals. Park your cash there and and ride out the near-term volatility that exists in a long-term market because both things can be true. We're in a sec secular uptrend, but inside of that, traders will trade up and trade down and trade up and trade down and we'll see a lot of volatility in that uptrend. But in the speculative market, that's not a place where you park cash for the long term because you're not relying on quarterly earnings. You're relying on a catalyst that may or may not come that would appreciate that share price. Maybe that catalyst is a discovery. Maybe it's market sentiment and momentum. Well, that's here now, right? So, if you're up 100%, 300%, 400%, I'm not saying take it all off the table, but take some, right? Because rule number one is stay alive, right? Don't lose money. And all the best investors in our industry and every industry became that because they stayed at the table longer than anybody else, right? It was duration that won the game. And and the only way you participate in duration is by staying alive. So take some principle off, derisk, still capture the upside, but take care of yourself first. One thing I've noticed here though is that in Australia there is far stronger government support than I see back home. I mean, every region of Australia, we have Canadian governments, government of Ontario is present here. I've seen India, many countries, we don't have that kind of representation or participation yet in the Canadian market. And uh that's curious to me. I think it's whatever they're doing, they're doing a great job. You know, I'm I'm impressed. >> Uh yeah, I don't think it's remarkably different to Canada in the sense like most of the support is uh there's lowhanging fruit, right, to to really move the dial in in like, you know, the minerals extraction industry. And a lot of that is just getting out of the way of private industry. And our government doesn't do a great job at that. In fact, a lot of the support comes in forms that are, you know, much more, you know, ownorous or inconvenient or it's financing projects that shouldn't be financed in the first place. And that's not good for capital formation in any sense of it. So, like I think in general, pretty similar to to Canada. >> Yeah. Well, that and that's that's astute and I think that I'm on the same page as you. I'm a small business entrepreneur. I'm a free market guy. Um, but we're, I believe, about to see a lot of state creep into our industry that we haven't seen before. And if you look just at the moves of the American administration in like the last 6 months, you know, we've got 15% equity in MP materials, 10% equity in Intel, it's chips, but it's, you know, it's the same premise. Uh, 10% in Trilogy Metals, 5% in US Antimony, 10% in Lithium Americas. uh the US administration is moving into the mining market in a way that is more akin to what you would see in China, right? The public private partnership where the the the government provides a bit of steroids to the private market, right, to help boost them along and direct capital flows and adjust policy where required and even public sentiment. And we're beginning to see that now. And you know, the Trilogy Medals up in Alaska, that's a it's a key example because the government's not just a new activist investor at the table providing capital. They have the ability to move policy. And the big barrier with that project for the last 5 years was that under the Biden administration, they brought they blocked the access road. I think it's called the Amler Road. >> Yeah. And um and now this new investor is, you know, throwing their weight behind policy changes that need to occur. I'm not for it. Just like for the record, but it doesn't matter how I feel about it. This change is coming and I think it's got to come because, you know, we're in this new sort of geopolitical landscape. The globe is more competitive than it's ever been. Whatever era we're moving into, we're definitely moving out of globalization. The the era where if you had the cash or the credit, you could buy whatever you wanted from whoever you wanted. And and that's done. And I don't think we know what happens next. A lot of people have ideas. I think we're just going to have to let time tell us. But um governments are aware that they have to get a lot more aggressive at securing their supply over the key materials that they used to just take for granted, right? We can just buy rare earths. We can just buy copper. We can just buy nickel if we need it. Those days are far less certain now. And so I think we're going to see more activism from governments into the supply chain of raw materials as a consequence. And uh yeah, I think I think it's coming. State creep >> the the geopolitics. Jay, you've been like um as in the weeds talking with the most connected people in geopolitics for for a really long time as it relates to your conviction in like a a precious bull market. Has any of the rationale for the debasement trade or the um you know the the bull thesis for for gold like changed or evolved in any way, shape or form in like the last 5 months? >> For me, it has not. If you're asking like has the incentive to hedge yourself against dollar uncertainty uh decreased, I'd say it it has not whatsoever. I think that if we go back to you could, you know, pick your moment when you where you're going to say this gold bull market began, right? Some would say 2016, some would say, you know, 2020. Uh but, you know, around 2022 is when we saw the record central bank gold buying. And that was kind of the first move in what's materialized since then into what I would call like the most textbook and patient and methodical precious metals bull market I could imagine in that we saw a move in the physical three years ago two years ago we saw a move in the best-in-class equities you know cash flowing companies like royalties and and major producers newens all these guys and then now the funded developers are catching a bid and it's slowly tricking through the sector but that origin in 2022 was built off of two assumptions. One being we assume the US dollar will continue to be devalued in the future. We assume we're going to keep printing that currency. And the second is we assume American geopolitical strategy is going to be less certain than it was the last 40 40 years. So unless those two assumptions are no longer true, and I think they are, I don't see the thesis as any different. And I think central banks, I think institutions and and retail investors alike still believe in those two things. And so they're still in any way they can looking for optionality, right? And gold is like a nice adjacent bet, right? It's highly liquid. It's the most liquid asset in the world next to US dollars. And so it's a good lifeboat to park your your treasury in. >> I'm curious to hear Jay how you're thinking on state ownership of assets has has changed because clearly we have been on on a track that is unsustainable. China has bit by bit increased its refining, smelting and production of nearly every single metal. And if they can't, they they buy these assets in African. And I think we probably all come from a from a a similar kind of perspective of free markets know best. But there there does feel like a a point where we can't have it all in the hands of someone who doesn't think about the world or a country that doesn't think about politics and these sorts of things the same way as we do. >> Yeah. I think the the big trend we're going to see is uh governments waking up to the fact that they have to be involved, right? And whether or not they want to. I mean, the United States, you know, it's it's been funny watching the announcements come out of the US administration the last few months because people have been cheering on the tariff policy and this is going to raise a bunch of money and this is how America became wealthy back in the day and it's like no no like America became great because it was the biggest free market economy in the world. Like that's what made that country great, right? It didn't become prosperous through regulation. It was the opposite of that. So, you can't regulate yourself to growth, but they're going to try. And some strategies may work better than others. I think state investment in the commodity sector will have a positive effect. And it's if only because it's like you guys recall Lance Armstrong. >> He was the seven time Yeah. tour to France winner, right? And there was all this controversy for so many years. Was he doping? Was he not doping? All this stuff. And eventually he admitted he's like, "Yes, I was doping." But here's the thing. Everybody else is too, right? And the USADA report that came out about Lance and proved that he was doping also proved that the second place winner in each of those seven years that he won was also indicted on doping. Right? So that's just to say that like he didn't become a champion because of the juice, but it just gave him that extra 2 3% to keep him competitive, right? And that's kind of where the United States finds itself today, right? they they need to participate in funding strategic re strategic industries uh because their biggest competitor is already doing that right I mean um yeah and so so they don't their their backs kind of against the wall here now it's it's like doping it's a slippery slope right like you do as much as you can to stay as competitive as possible until suddenly you cross the line and you don't know when that happened but before you know it it's too late right and I I see state intervention as exactly the same you you know, a little 5% piece here. Let's move this project along here. Let's get this road built up in Alaska there. Uh, but that barn door is open now, right? And that's a that's a seductive path for any future leader, any future politician to use and abuse in the future, you know? And so I think it it does change the game in in a handful of ways. And it's unclear to me yet exactly how this materializes except that I think for commodity investors it can be very bullish if you are looking at projects that are favorable from jurisdictions you're friendly with, right? And so if you're looking at projects that are um that are uh preferable for the Australian government, for the American government, for the Canadian government, you know, it's it's probable, it's more likely today that you'll actually have the government on your side pushing that project forward as compared to the last 12 years where definitely in Canada specifically, we just vilified the extraction industry to no end, you know, and it destroyed Canada's economy for 10 years. Uh, and Canada is a very simple country. Like it's got it's got the largest coastline in the world, three oceans, and the largest land border uh on the other side of which is the world's wealthiest and hungriest customer. And we're commodity rich. Got everything the world needs from softwood, lumber to potachsh, you know, you name it. Nickel, oil, and gas. And um but we had an administration that for 10 years vilified all those industries and it just crippled the Canadian economy and all the like you know talk about Canada being annexed and becoming the 51st state. It's like a joke you know there's no actual substance to that. It galvanized the base though >> dude it did right and important to note that if Canada had become the 51st state it would be the third poorest state on a GDP per capita basis in the United States right next to Alabama. And that's an important data point because in 2008, Canada came through the GFC with a healthier balance sheet than any other G7 nation. It was it was a country that was managed properly. Canada's simple. You manage the commodities and the export. And if you get that right, then you can have all the incillary industries that are funded by that income. But you can't just have the incillary industries and vilify the pillar industry. That doesn't work right. And that's what we've been doing. So, you know, I'm seeing positive changes in Canada. I'm seeing positive changes in the in America and globally right now where governments are stepping in to support the raw material sector and that is bullish for commodity investors. >> I'm curious to hear you you mentioned base metals as being a huge focus of your time as well. Copper is obviously the the elephant in the room, but are there other pockets there that you're particularly excited about that just don't get the airtime? I I think nickel is really interesting right now and I think that um if you look at why the nickel price why that chart looks different from pretty much every other hard commodity chart over the last couple of years um you know it's uh one of you mentioned if China doesn't have the resource it finds it somewhere else well I just flew in from Indonesia last night that's where all of our nickel's coming from right now about you know they've got about 65% of the refined nickel market um under their thumb and it was financed by the Chinese to the tune of about $65 billion. Um, but if you are willing to seed all environmental considerations, which they have, the South Sawwasi Islands are an absolute disaster. Uh, but if you're willing to make those concessions and leverage your cheap labor, you can, and they are, producing cheaper nickel than anywhere else in the planet and pricing out all their competitors and eating up that market share. I don't know if that's sustainable or at least for how long. Um, I look at the way Indonesia is modernizing and I'm seeing very positive changes and the new government, although he tanked the stock market and the currency, it's because he's bringing in regulation that that country needs in the sense that this is a country that really fasttracked its recovery after the Asian financial crisis in the late 90s and and many of the islands took capital investment so quickly without really thinking it through. And so, it's far overbuilt. Um the infrastructure is lacking, it's cracking, permitting is a mess. Um and the new president is very focused on cleaning up that image and modernizing, you know, the most densely populated country in Southeast Asia, right? It's got a lot of potential and a very favorable demographics. So, if they can get it right, um I'm very bullish on Indonesia. We're, you know, we're investing there uh from a from a life standpoint. My kids go to school there now. We spend it's become our second home. Um, part of that will be meeting the global standards of environmental considerations and that is what I think will eventually come to head for Indonesia's nickel market and all the Canadian and Australian minds that have been sort of put on care and maintenance because they can't compete at these prices will become relevant again. I don't think that's a one-year thesis. I think it's more of a 5-year thesis. Uh, but I see that as a place for opportunity depending on your time horizon. No one's talking about nickel right now because people talk about things that are at all-time highs, not all-time lows, right? Uh but the opportunity in nickel, I think, is substantial. And I think that will materialize because, you know, it's the most important alloy in any steel product. You you can't build without it. You know, when um again, when the Americans talk about reshoring their steel manufacturing and making Pittsburgh the steel capital of the world again, it's like that's great, but you can't do that without nickel, right? like you need to make sure you can secure the ingredients to do so. Otherwise, it's just lib service and politics. And so, yeah, nickel's interesting to me. Copper, you know, I'm I'm uh I'm quite bullish on copper, but my time horizon is far more flexible. Um, you know, what's interesting is that copper investors tend to have one of two thesis. They either they're they're a bull because they say, "Look at the energy demand coming from AI and these data centers. Look at the demand coming from renewable energy and all of this just advanced technology in general. this is going to be a crazy bull market for the next 5 10 years. And then the bears come in and say, "Yes, but we're probably on the cusp of some kind of a globally coordinated recession and that's going to crush demand and so I'm bearish." Right? And if you look at copper supply and demand, you can go back like 50 years and if you step out to like a 10-year window, right? But what you'll see is a very steady incremental growth of about 4 to 6 million metric tonses per decade in demand from 1970 to 1980, 1990, 2000, 2010, 2020. And supply pretty much met demand on the nose every decade until about 2015. Then it started to falter. A little gap started to open up in 2020. That gap opened up a lot wider because we just stopped investing in new supply, but demand kept going. I mean, my biggest thesis as an investor is like I am long human ingenuity and progress. like we're going to keep building amazing stuff. Our lives will keep getting better over the long term. There'll be blips in the road. But that's the direction we're going. So, demand will follow suit. If you don't invest in supply, these opportunities open up. But the point of that like 50-year perspective on copper is that inside of those 50 years, you'll find massive technological innovation booms, right? The dawn of the internet, uh personal smart devices, right? The laptop computer, the home computer, like none of this stuff existed in the 70s, right? So we saw this boom in tech advancement and adoption, but the trajectory of demand was still remarkably consistent decade after decade. We also saw massive globally coordinated recessions. Yet the decade over decade demand was remarkably consistent. So everything that people are building their near-term copper thesis on top of has happened in the last 10 years, 20 years, 30 and 40. Yet demand was remarkably consistent, right? And so if you step back far enough, it gives me the conviction that I may have a near-term thesis on gold. I have a medium to long-term thesis on copper. I don't know if we're going to see I mean, look, the entire US equity market is held up right now by like four AI companies. Like that's this is a house of cards. And when it falls, we're all going to get hit a little bit, right? And everything gets sold in those environments, right? Like everything gets whacked for US dollars so that people can make their payment obligations, right? Gold will get whacked, silver will get whacked, copper will get whacked, all of it for a period of time, right? I don't know when that's going to happen, but eventually we'll recover, right? And I'm I'm bullish copper with those conditions. Does that make sense? >> Yeah. You interview a lot of people, Jay. Last time you spoke with someone and they changed your mind about something, what was it? >> So, man, that's a good question. Um, last week I had Peter Zahan on the podcast. You know who he is? >> Big geopolitical analyst. and he um you know I spend a lot of time studying the US China dynamic because I just I feel like if you have a good filter mechanism uh to understand headlines as they come up like as global developments occur if you can view them through the lens of a bigger thesis that you believe in things often become a lot more clear I tend to view a lot of major global developments through the lens of US China competitiveness right and as a student of that thesis this. I honestly find it very hard to see angles that the United States recovers from this trade war. I I don't really see it. You know, I uh look, my family is American. My wife's American. My kids are American. I'm Canadian. I'd love to see it. I just don't I can't see the angle. But empires fall. Like this happens, right? We've seen five empires in the last 600 years. So, we know how fast the puck gets passed. And turns out London's still a great place to visit, right? So, New York will be as well. Uh but the game will change. And um Zahan's highly convicted that I'm dead wrong on that. And the reason is is because China's demographics are far worse than we understand. He puts the fertility rate in China around 0.25%. So replacement rate being 2.1. That's disastrous. And that's, you know, that's a consequence of state creep going too far, right? A little bit is helpful, too much is disastrous. If you're going to engineer some resource sectors, that might be advantageous. if you're going to engineer like social engineer like one child policy that can really hurt you down the road. So, you know, that's the situation that he claims they're in, his forecast for the Chinese economy is that inside of 10 years they become irrelevant because of demog of a demographic crisis. Um, you know, I I I don't buy it yet, but I've spent the last week chewing on it and trying to wrap my mind around his thesis because it's, you know, it's you want to, right? somebody disagrees with you aggressively, you want to understand, right, and try to be able to make their argument just for your own sake. And I'm I'm spending the week on that. Um because they're not the worst demographics in the world. I mean, Japan is is 20 years ahead of them, right? And I was there a month ago. It's a high functioning economy, right? Um it's different for sure. Um but uh that's a pretty audacious one. It counters everything I believe and I'm trying to trying to understand it myself. curious to hear are there sort of other themes that you think are not quite spoken about enough or they aren't sort of understood widely at the moment. I mean adjacent I guess to the debasement trade would be the sort of creep of ddollarization in the global market and um you know how that will I think continue to destabilize the American economy over the sort of medium term I'd say and and actually I'm I'm sure you guys saw this but it was end of September um you know China imports more Australian iron ore than anybody else in the world like 719 million tons per year it's like $75 billion worth of iron ore. And at the end of September, they this came from from the top, we are pausing all new orders of Australian iron ore from BHP in US dollars. Now, we're not pausing iron ore imports. We're pausing iron ore imports in US dollars. And as I understand how those negotiations have landed, BHP um agreed to sell 30% of their iron ore and remini and 70% in US dollars. Right. And so >> of spot sales. Yeah. So they the the long-term contract stuff hasn't changed, but there um yeah, you're like what you're talking about is is is correct. There's been a pretty the the negotiations with CMIG are like very hard to figure out what's going on, but there's some funny games being played between BHP and and CMG. On the flip side, it's like, well, how does this how does this unfold? Where can where can the iron or exporters actually like negotiate from in return? We almost need an OPEC for the iron ore producers to um to consolidate their their selling power at the same time if if the funny game is being played. I don't know. I don't know how far you've thought that one through or consider it. >> Yeah. Well, 100%. I mean, when your biggest customer um makes a claim like that and you know, it' be easy to say, well, there's there's no possible way China stops importing iron ore. I mean, manufacturing steel is such a pillar of their economy. It's obviously a bluff, right? Uh but they have a lot of political will, you know, and and they can uh >> Yeah. And I think I think you're I think that point like you're right, but now this time right now is different for a few reasons. One um one they've built up like tremendous stockpile plus you've got Sim and Doo coming online at the same time and then when you've got the growth of CMG like I just thought I thought it was a remarkable tell that the BHB seated not not not CMG. >> Agreed. Agreed. Yeah. Yeah. And you got to think like I mean there's a handful of like ripple effects from that. Number one, the rest of the world wanted that deal to happen, right? Because the rest of the world doesn't care what's in BHP's treasury. They don't care what currency you know CMRG and BHP are trading in. They care the 75% of the world that relies on Chinese cheap steel. They steel keeps arriving, right? So whatever deal you have to get done, just get it done as long as what I need keeps arriving, right? Because every economy's first priority is themsel, right? their own prosperity and stability and so and and now BHP is in the position I suppose where they're going to start accumulating a remn treasury and have to spend that somewhere they could just convert to US dollars but like as any non US business owner knows like currency risk is a real thing it's annoying it's expensive right and when you're dealing with tens of billions of dollars that's a real headache so I I don't see that as the best option although it's probably the near-term most probable one it's more appealing if they could find a home for that rent maybe another supplier that will accept Ren Mindy per transaction, right? And so there's a a perspective here that I think BHP is now incentivized to see more major uh companies or economies ddollarized so that they have a home for that Ren Minimb Treasury. You know, I think the biggest win here is that China can now go to the rest of the world and say this is new precedent. This wasn't a deal with Indonesia or Vietnam or Brazil or India. This was BHP in Australia. They'll now transact and rent MinBY if we put our foot down. So this is how we do business now. It was good enough for BHP. So it'll be good enough for you. And I think that's, you know, when these things happen, it's always like the start of or the part of a trajectory, right? They're never one-off events. So if I put myself in the shoes of the negotiator on the Chinese side, it's a big win just from if nothing else, just publicity, right? this is now something you can take to other tables and say this is how we do business now and uh and precedent set right so yeah it's a bit of a shift in that regard >> it's been great chatting Jay love getting your your takes hearing your perspectives on a whole bunch of geopolitical issues and the conference you got coming up in uh late January >> that's great yeah thanks Jonas uh it's been great chatting with you guys too so love to see you guys there in Vancouver uh January 25th and 26 it's the Vancouver Resource Investment Conference It's an investor centric event. So, we have about 9,000 investors that attend. Um, I fly in around a 100 keynote speakers and when you walk into the conference, it's like a marketplace of junior mining investment opportunities and there'll be around 300 companies exhibiting at the show this year. Um, the the purpose of the event is to help retail investors, folks like myself, make better decisions in the metals market. And so the keynotes that we invite are anybody who's got a amazing track record of allocating capital into the metals market for the previous 5, 10, 20, in some cases 45 years, right? Um and they come to share where they're putting capital in the year ahead. Um it's uh it's a ton of fun. It's two days. It's jam-packed. Um and uh love to see you guys there. It's a good time. >> Awesome. Appreciate it, Jay. We'll share some details in the show notes. And that's all money miners. Hope you enjoyed those conversations with our three guests. We've had a blast here recording live on air at Imark and a huge thanks to our other great great partners mate Sandic Ground support focused platform by market tech and intrlinks. Check them out. >> Now remember I'm an idiot. JD is an idiot. If you thought any of this was anything other than entertainment, you're an idiot and you need to read our disclaimer.