Matt Geiger: Hard Assets at Turning Point, How I'm Investing Now
Summary
Fund Performance: MJG Capital Fund reported a strong performance, up nearly 36% by June, outperforming the S&P 500 over five and ten-year periods, with a 10-year return of approximately 420% compared to the S&P's 260%.
Market Outlook: Matt Geiger suggests that the best returns for commodities and hard assets are yet to come, highlighting the extreme overvaluation of US stocks and the potential for international equities, emerging markets, and commodities to outperform.
Investment Strategy: The fund is heavily weighted towards junior mining companies, with a focus on the TSXV index, and anticipates continued positive momentum in this sector.
Significant Transactions: Tether's acquisition of a controlling stake in Elemental Altus is seen as a sign of non-traditional investors entering the mining space, potentially indicating a shift in market dynamics.
Royalty and Streaming Sector: Recent M&A activity, including Triple Flag's acquisition of Origin and Royal Gold's purchase of Sandstorm, suggests a trend towards consolidation in the royalty and streaming space, with further deals anticipated.
Prospect Generators: Despite being out of favor, prospect generator companies are a significant part of MJG's portfolio, with potential for increased interest as larger producers seek to expand their development pipelines.
Copper Market: With 40% of the portfolio in copper, Geiger is optimistic about long-term prospects, citing the need for higher copper prices to incentivize new projects and the lengthy development timelines for large-scale copper projects.
Investment Philosophy: Geiger emphasizes a people-first investment approach, prioritizing management teams with strong track records and significant personal investment in their companies.
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Matt Kiger, managing partner at MJG Capital Fund. Great to have you here. >> Good to be joining you, Charlotte. It's been a little little while since we caught up. Um, so it's good to be here and I hope you're enjoying your summer. >> Really good to have you here and it has been a little while since we last spoke, but I think it's the perfect time to be speaking with you. We've made it past the halfway mark for the year and you just released your investor letter talking about performance. I believe H1205 was your best performance since H220. So I'm hoping we can begin by talking about the factors driving that performance. >> That's right. It was a strong a strong period of of performance for the the fund. Um we were up just under 30 36% um through the through the end of June. Um, and I was also pleased to report to partners that we're beating the the S&P um over a five and a 10-year basis. Um, I don't have the 5-year numbers top of mind, but on a 10-year basis, we're up roughly 420 20% um relative to 260% give or take for the S&P. So, that's a roughly 18% annualized return for the MJG fund versus closer to 13.5% for the for the S&P. Um, and yeah, I was I was happy to report those results. Like I don't think anybody would argue that it's been nothing short of a phenomenal period for those that are invested in US equities. Whereas if you look at commodities over the past 10 years, sure there's been bright spots. 2016 was a great year. Uh 2020 was a great year. You know, we've had runs in the the lithium price over the past few years. Uranium's had its time in the sun. really over the past 10 years decade it's been really hit or miss um on on the hard asset front. So I actually made the argument that while returns have been good I think the best is is yet to come in in in the coming years and you know I focused on a couple points. Uh the first is just the extreme overvaluation in the in the US stock market relative to pretty much any other asset class globally. And I I cited the data point that as it stands if you look at the global market capitalization US companies comprise 70% give or take of the total global market capitalization despite the US economy the US GDP only being around 26 to 27% of global GDP. We haven't seen this waiting towards US stocks relative to the rest of the world ever. And the only time in recent memory that it's been close or not even recent memory would be the the late60s during the the heyday of the of the Nifty50 uh bubble. And I made the argument that we don't need to see a huge crash in the US stock market or anything of of the sort. Though I do maintain that that's a that's a significant possibility. But I would argue that really on liberation day um that marked the turning point where we're going to see outperformance from the asset classes that have been left behind um largely over the past 10 years. And that includes international equities, that includes emerging equities, that includes emerging debt. And yes, that includes commodities and and hard assets. And I would just note over the past 15 years we've seen over $20 trillion come into US financial markets uh foreign investors were net long around $3 trillion going back to 2010 or so. They're now closer to net long $25 trillion. So again, we don't need to see a full-fledged, you know, outflow entirely, but even a few trillion would go a long way, especially for the for the commodity market. So I I think I think we're we're in for for a number of good years ahead. Um, of course it will be um it will be a rocky road. Um, so you know, we're we're we're braced for for turbulence and volatility as one should always expect in the commodity space, but looking at three or five years from now, I think we're very well placed with how we're positioned. >> Right. I think that that point about the best is yet to come really stood out to me as well when I was reading your your writing. So, are we finally going to start seeing that return of those those elusive generalist investors back into the resource space? How do you see that playing out? >> Well, I do think we've seen a a change in character even amongst the smaller juniors and the MJG fund is very heavily weighted towards the junior space. We have 19 different position positions as it stands. Um, and our median market cap, uh, is around 50 million Canadian. Um, so we are certainly on the smaller end of of the spectrum. And I think going back to late April, early May, all one has to do is look at the chart of the TSXV. Um, but the juniors are finally playing some catchup. Uh, how long that that continues remains to be seen. You know, I would argue that the TSXV is at around uh 800 or so as it stands. I think there's a pretty clear path to 900 and a,000. So that's another, you know, 12 or 25% move assuming that the broader markets remain neutral or risk on as they as they have been. So I'm quite optimistic, you know, absent another liquidity panic like we saw in April um when when Liberation Day occurred, I'm quite optimistic that we're going to continue this run um that we've seen really since late April. So it's been it's been a fun period. I've only seen the returns accelerate um you know over the course of July and and and into August. Um so I think we're seeing some of that rotation and one you know uh harbinger one you could say and I I I talked about this at length um in the MJG investor letter was Tether um one of the world's largest cryptocurrency players uh coming into elemental altus. This was announced in early June and taking a controlling stake in the company. They now own over 50% of elemental altus. Um, you know, this is a company or a group that really should have no business investing in hard assets or natural resources. So, you know, I don't want to draw too broad of a conclusion from a single transaction, but I think looking back a few years uh to, you know, this this spring and this summer, one could say that that was a sign that non-traditional mining investors were starting to wade back into the space after what's really been an over decadel longed absence um of of those sort of investors cuz why would you be anywhere else than than the broader US stock market or cryptocurrencies which have also behaved well? that's been what's working. Um, but I I think I think in hindsight, Tether's move may may prove to be quite significant. >> Yeah, I really enjoyed your your breakdown of that transaction there and what the implications could be, you know, should we be excited about this? Should be we we be wary, how should we be feeling? Anything further you would add because I think it is it is worth digging into a little bit more. >> Yeah, I mean it's it's a really interesting deal. I mean, I I broke it down from from multiple different angles. Um, and I guess one of the the considerations is what is Tether's aim for Elemental specifically? Um, are they looking to just be a passive um investor? I mean, a controlling shareholder with influence, but stick with their their their 50% stake and support the company. Are they looking to take over Elemental entirely? And this is the first step to doing that. Um, are we going to see Tether take controlling interests in other junior royalty players, other peers of of of Elemental? Um, is this a play for Elemental and Tether to consolidate the the junior royalty space? I think the jury is still out. Um, but if I had to hazard a guess, um, I think Elemental will prove to be Tether's vehicle, at least in the in the royalty space, and that Tether will support Elemental both for oneoff uh, royalty and stream acquisitions on a deal-by-deal basis, but also if the opportunity presents itself as a group that can help knock some heads together and generate some consolidation um, within the the junior royalty space, which I think is long overdue. There's a good six or seven companies kind of in that 200 million Canadian to $600 million snack bracket. Um, and I think investors in the space and in those companies would be well served to see that number uh, you know, reduced to to three or four different names. Um, so so that's one angle as it pertains to the junior royalty space. And then as a broader ang you know uh uh perspective as we've touched on this could be a signpost that generalist capital non-traditional mining capital is coming into the space. Um if one wanted to be pessimistic or a little bit cautious maybe it's also a sign that at least in terms of the gold price or precious metal pricings you know maybe it speaks to where we are in the cycle. um like I don't think I don't think we're in the the very end end stages of the move, but when you start to see non-traditional companies come in to the space to this degree, it could at least signify that we're in the mid innings um and at least at least provide a little bit of caution. Um, so I think again it's it's risky to draw too broad of conclusions from a single deal, but I was just fascinated by the amount of headlines and attention that the transaction drew even from those that aren't invested in Elemental and even from those that don't have exposure to the junior royalty space. And I I think that the attention that was paid to it, it was was worthy. >> Yeah, it's it's really interesting to look at all those angles and certainly it'll be one to keep an eye on. I'm sure we'll come back and talk about it with you in the future. looking a little bit more at the royalty and streaming space. I think that's a good one to get into on the M&A front. So, you mentioned we're we're due to see more of that. We have seen some interesting deals this year. So, I'm wondering if I could get your take on what we've seen so far. Do these deals make sense to you and what we might see moving forward in that sector? >> That's right. Right. I mean, the past 120 days have been extremely exciting, uh, quite candidly for anybody following the royalty and streaming space. Um, there have been a lot a lot of talk about consolidation for really a 2 or threeyear period and had not really borne out. Um, but I I think what started off the frenzy we've seen um was Triple Flag uh making a move for Origin. Um, and this was this was late April. Um it was a transaction of around 420 million Canadian. Um but really what Triple Flag was after was Origin's 1% NSR uh covering Anglo Gold Shanti's uh expanded silicon project. It's it's now being referred to it's been rebranded to the Arthur project. So I'll try to stick with Arthur going forward. Um that is a truly world-class development asset. um you know, Origin generated that royalty um going back 10 years ago and it had become such a large percentage of their NAV that I think it made sense for for Origin um to to sell at this juncture. And I think the the day that that deal was announced, the gold price had hit at least to what at that point had been an all-time high. Um so I think that the the deal made sense. Um the rest of Origin's business has since been spun out into Origin 2.0. Um, but so Triple Flag was was in it for that specific royalty. That was late April. You know, 5 6 weeks later, we had the Elemental Tether transaction, um, which we which we've already touched on. Um then in early July uh right as Rick Rules conference was was kicking off in Boca Raton um we had uh Royal Gold uh make its move for in one in one fell swoop taking out both Sandstorm and associated royalty company Horizon Copper. So that that was a big deal. I I think I think was close to $4 billion in value uh between those two different companies and it took one of the few mid-tier royalty companies um which I would define as you know companies between roughly 1 to10 billion in market cap off the table and help beef Sandstorm's market cap up closer to $15 billion. So that was a very significant deal. Um, and in the aftermath of that, I did a couple different interviews, uh, speaking about the royalty space, and my best guess was the next shoe to drop was going to be one of two different things. Um, the first was the potential for a merger of equals um, between O and Triple Flag. Um, and that has not come to pass, but I I still think that is within the realm of possibilities. That's something to keep an eye out um, in the months ahead. The second one I mentioned did come to pass and that is Ultius Minerals um which is a company near and dear to my heart. It's been a a holding of ours going back to early 2020. Um, and it's one of the really the only true buy and hold uh in the portfolio. Um, where I sleep very very easily with their altus position. And they announced a couple weeks back, this would have been late July that they were selling 2/3 of their royalty um covering the Arthur project. So Origin owned a royalty covering Arthur. Allies itself owned a 1 and a.5 a.5% royalty covering Arthur. They sold 1% of that to Franco Nevada um for around 275 million uh US. That's 375 million uh Canadian. And that deal was relatively well telegraphed. Like CEO Brian Dalton from Altius had been on the record saying that Altius was going to make a decision on how to proceed there in Q2. And they had quite a few options. They could have sat on the royalty themselves. They could have done a full or partial sale. They could have in theory traded that uh royalty to a larger royalty company in exchange for a nonprecious metal royalty because Altius' bread bread and butter um has been nonprecious metals. Um you know, there's even the possibility that that Altius as a whole was going to be taken out by a larger a larger company. they settled on a on a partial sale. Um, which as a shareholder I was quite pleased with. I I was actually concerned that Altius as a whole was going to be taken out and we were going to, you know, lose one of the cornerstone investments of our portfolio. Um, so that that the pricing for that Franco paid was about a 9% premium to where Origin sold their royalty to Triple Flag. Um, I think the premium made sense cuz the the gold price itself had increased by 12 or 13% between when Origin agreed to the triple fan uh triple flag transaction and when Altius transacted. So, I think that's I think that's reasonable. Um, but I also don't think it was an easy decision um for the Altius management team really at all. Um, like this this Arthur project has the potential to be a generational gold asset. It just keeps getting bigger and bigger in really quick order short order here. Um so in broad strokes I think Franco paid for roughly 30 million ounces of gold there. Um you know the the the resource as it stands is at 16 million ounces. So Franco paid a premium assuming that there's going to be significant growth. Um, you know, I think, you know, five, six, seven years from now, if you know, the project's at 35 million ounces of gold and there's been no significant snags on the permitting front, then perhaps, you know, Franco would have gotten the best of that that deal. But I I think this made a lot of sense from from an altus perspective. they still maintain a half percent royalty on the asset so they can hope that it gets as big and as beautiful as possible but they've also locked in and really taken taken the burden hand in a respect you know for an asset that was noncore to them just a few years ago and yet in recent months had swelled to close to 50% of their of their NAV um so I I thought that was that was really exciting to see and you know the alti the share price reaction from Altius has been strong in the aftermath of the deal in fact just just yesterday they hit an alltime all time high um exceeding their previous all-time high that was reached all the way back in 2007. So I think the market has you know voted with its feet and and given the thumbs up to the to the transaction >> really clear that there is so much activity going on in this space and yeah if if you are an investor who is looking at all these things happening and maybe trying to position here how how might someone want to approach that in this this royalty and streaming space right now? >> Yeah, it's a good question. I mean, different investors are going to have different answers. Like, I'm always very much a people first investor. That even applies to the royalty and streaming companies. Like, I'm happy to pay extra. Um, for a team that I trust, for a team that has a track record of disciplined decision-m that's in the interest of shareholders, you know, Altius certainly falls into that category. Um, also from a people perspective, I like teams that can that keep it lean and and minimize overhead to the utmost extent because for these royalty and streaming companies, the more money you can save on GNA, that goes straight straight to the bottom line. So, I I start first and first and foremost there. Um, and then I think investors have to decide the their risk tolerance. Like especially at this point in the cycle, there's nothing wrong with with buying a Franco. Um, but you know, we we're focused much more on the junior royalty space. Kind of our two big bats. As I've mentioned, our Altius Minerals um and and Elemental Altus as it stands and I feel comfortable growing with with both of those with both of those companies. Um, Altius, as I mentioned, is a true buy and hold, so I don't worry quite about the valuation there. Um, Elemental, you know, I'll keep an eye on things. If the share price gets too out of hands, then we would consider taking taking profits. But I'm comfortable giving Tether and the Elemental team a chance to execute on this business model um over the coming, you know, 6 to 12 months and seeing how things go. Um so, you know, that's that's kind of how how we're approaching it. But there, you know, there there are many different there are many different fish in the sea. There are companies that are much cheaper on a Pav basis relative to either Elemental or Altius. there could be opportunity there, you know, particularly if you expect more M&A to occur. Um, but I would argue that there are reasons for that valuation disconnect, um, including lack of trust in the management team or, you know, assets that have risk on on a on a permitting or or social front. Um, so, you know, it's not oneizefits-all, but those are these are the two horses that we've chosen to back. >> Well, good good insight on how you're approaching that. And so royalty and streaming, this is a chunk of your portfolio, but another big piece of it is the prospect generator companies and I believe we spoke about this last time we talked. It's a model that I feel like I used to hear quite a bit about. People would talk about it a lot and the potential there and it seems to have lost popularity in recent years, but it's something that you you really like. So, can you tell me why that's that's so compelling for you? >> That's right. I mean, it is very much out of favor, but that that's attractive to me cuz it doesn't have to even return to full favor. There just has to be a slight change in sentiment. Um and and there could be a move, you know, in this space more more generally. Um you're right. I mean, as of the end of June, um we sat at roughly 36% waiting um towards prospect uh generation between I think what were six six different holdings. So that's, you know, roughly a third of our of our portfolio. Um, we just added another one. We're we're participating in the Concora copper um financing that was announced uh last month. That will be closing uh later in August, early early September. Um so we've only increased our our prospect generation exposure since that letter was was sent out. Um you know, I'm excited about Concora in in particular. We were able to to get in at a at a good price there. you know, they have four different partners spending money across the Concora project portfolio over the next 12 months. Um, Anglo Gold Ashanti is kind of the uh the the flagship partner there. Um, but they have others that are that are doing drilling and then also the potential for one to two new parties to come in if if all goes to plan. And there's a potential for uh six different projects to be drilled over the the next 12 months here. That could even increase if they bring in additional partners in the in the in the months ahead. Um so a lot of a lot of shots on on goal which is all you can really really ask for um as an investor in this in this business model. But look I mean the reason I I think this business model is going to return more into favor. Um the first is just the general trickle down that we're just starting to see from the metal prices to the large producers to the smaller producers. we're finally seeing some interest return to expiration stage juniors and prospect generators fall into that that broader bucket. Um so I think from a general sense that will be positive. Um I also know that the larger producers are looking to beef up their development pipelines. Um and I do think that there is going to be new deals hatched whether it's with Concor in the months ahead. Uh Headwater Gold which is a prospect generator that I'm following closely. They very recently announced an earning deal with Oceanana Gold. Um, Centa Gold um has been very aggressive taking strategic stakes uh and and prospect generators such as Kenderland Minerals, Headwater, Azimoot, uh, Midland up in up in Quebec. Um, so I I think we only see the deal flow increase. And then the final point I'd add is not all but quite a few of these prospect generators actually have hidden early stage uh royalty portfolios kind of in the background being assigned no value. And we've seen a few different transactions in recent years. We're kind of out of the blue. A prospect generator has monetized um one or more of its royalties. You know one example is Almodex Minerals uh sold their Elk Gold royalty uh to star to star royalties. That was a few years back. You know, more recently, I think this was was mid to late 2024, Commander Resources sold their royalty portfolio to an Australian private equity group at a price that exceeded Commander's entire valuation. So, that was a good example of of value being created, just seemingly seemingly out of the blue. Um, and so we've seen an Eagle Roy um Eagle Plains is another example. That's that's that is a holding within the MJG portfolio as well. they did a spin out of their royalty portfolio into into a company called uh Eagle Royalties. So, kind of creating value from where from where there was none. So, I think there's the opportunity in the months ahead for for more of this this activity to take place. Um, and I think investors when they're evaluating prospect generator should also ask management, hey, do you have any royalties that that are sitting in the portfolio uh gathering dust but that potentially have value? If so, you have to factor that into your your valuation analysis. Very interesting points there as well. And I want to also take a look at your portfolio from a commodity perspective because if we if we go from that area, copper is really at the top of the list. And I know that you are looking for companies that will do well regardless of what the commodity itself is doing. But I do want to spend a little bit of time looking at the copper market because we had all of this tariff excitement where there was interest prices were moving and then the tariffs were actually announced and it wasn't quite as extensive as we thought it would be. So I wanted to ask you about tariff impact on the copper market. How are you seeing that? >> Yes. Well, you touched on my caveat and I always try to emphasize this. There there are many different ways to invest in this this space. Um, you know, the MJG approach is to assume flat or even subspot metal prices and invest in opportunities where there's at least the potential um for a significant share price rating based on company specific catalysts. So, we really try to avoid, you know, I do factor in the commodity of focus into the analysis, but it's one of the very last things that I that I consider. And we don't like the optionality plays um where you're, you know, banking on $4,000 gold or on $8 copper or, you know, $10 a pound nickel in order for the the investment to work. You know, on the copper front, all of our copper focused investments have the opportunity for a material rerate and share price either through the drill bit, either through permitting um or through M&A. So, I I always like to lead with that. Um with that said, you are right. you know, 40% of our weighted portfolio as it stands right now is weighted towards copper. So, I'm I'm clearly very comfortable with with exposure with exposure to the metal. You know, I couldn't tell you where the copper price is going to go over the next 6 or 12 months. That's really a Mug's game, but I feel quite conf uh confident that it's going to be a good place to be thinking out 3, 5, 7 years down the line. And a couple aspects that I that I like about the market. The first is that, you know, at 450 or so copper, we're well below the true incentive price. Um, you know, I I think astute market observers would say that roughly $6 per pound copper is what's needed to really incentivize the world's largest mining miners to get going on their latest stage development projects and really go pedal to the metal. And this is actually pointed out by by Brian Dalton. If you look to to previous metal cycles, sometimes you need to see double the incentive price for the big boys to really get a move on. So I I think there's at least a 33% move in copper that has to occur just for the incentive price to be achieved and, you know, room to run beyond that before there's really that sense of urgency for the big guys to get going on the next generation of development projects. Now, once that occurs, the copper market is so big that you really need a mega project to even move the needle at all. And these mega projects, we're talking 3, four, 5 years from when ground is broken to where name plate production is achieved. And that's if everything happens exactly to plan, which is very rarely the case with these mega projects. So, there's a huge lag, especially compared to gold. like you know a smaller midsize gold project if the if the management team executes perfectly on the build like that can be up and running in 18 months in 24 months for these large scale copper projects you're talking about a multi-year lag before that supply actually comes online so I think that adds to kind of the appeal of the broader copper narrative um and then I just conclude by saying you know there's a huge amount of interest for copper assets so if you're a development stage company or an explorer that's made an exciting copper discovery. There's no there's no shortage of of potential suitors, you know, from the very largest diversified miners um to, you know, copper focused uh producers like the Hudbays or London Minings of the world to gold companies pneumontic have all been very clear that they're trying to up the in uh the percentage of copper within their their broader portfolios to ch to Chinese parties to private equity groups. So there's no shortage of potential buyers if you find your your hands on an asset that has enough scale uh to matter. So I like all of those those aspects. And just to touch briefly on on the the tariff situation, I mean I will say that I was shocked that we didn't see any tariff at all on refined copper imports. Like just a few weeks before the formal announcement was made, uh Trump was making noises that a 50% tariff was going to imply. I think it caught the whole market off guard, uh including myself. um that there did not end up being a refined uh copper uh import tariff. Um with that said, at least as it stands, almost all of our copper exposure um comes from projects outside of the United States. Um we do have a couple names that are exploring um for copper kind of earlier stage ventures within the US, but those are less impacted than kind of the latest stage development projects um or the producers. So, it didn't have a huge uh impact um within the within the MJG portfolio, but I mean it was certainly I think a surprise to all market watchers. With that said, uh and sorry to to to uh draw on here, but um Mitsubishi just today with um with Hudbay announced a big $600 million investment into Hudbay's uh copper world project in Arizona um in exchange for a 30% project level stake. So I I think you know if there was a hangover kind of in the with the disappointment of of the tariffs not going into place on on refined copper projects this shows that that hangover was was uh you know perhaps shortlived and you know the HUDbased share price has responded very well to this latest announcement and I think it's broadly a positive for other later stage copper developers that are focused on the US specifically. really really nice overview of your thoughts on copper and I think it's good to spend some time there since it is such a big part of the portfolio. I did want to make sure we at least touch on precious metals since it's a strong interest for our audience and I found it interesting. So, of course, you've got your exposure to gold, but then ahead of silver, you've got platinum group metals. And I thought that would be interesting to touch on and maybe talk a little bit about special considerations for investors who are looking at platinum group metals because there's been more interest in those metals lately and I think people might be less familiar with how to evaluate them. >> That's right. Well, I will say, and again going back to that caveat earlier, like we didn't make a big bet on PGMs. We made a big bet on a company that happens to be focused on PGMs. And I think that's an important distinction. Um, the company in question is Bravo Mining. Um, they have their Langa uh project down in in Brazil. Um, and this is a company that I've, you know, written about probably for the past four or five investor letters. I've talked about it quite quite frequently publicly. um you know it sits as our as our single single largest uh position as it stands. So there's another company that's that's just approaching it in terms of in terms of waiting within the portfolio. But it's been a very significant investment for us for a number of years. We were fortunate enough to get in um when Bravo was a private company preipo and it's been a very strong uh uh performer for the for the MJG uh portfolio. So again, that's a company where I look at it from a bottom-up perspective. Excellent team. Um, CEO Luis Asavdo there is one of the pre-minent m mining lawyers in in Brazil with two different exits over the past uh 10 years. Um, really large um interesting asset with with the Longa. Um, you know, it's a PGM dominant deposit. There's also a nickel and and a gold kicker there as well. And then on their broader land package, there's IOCG copper potential as well. also checks the people box, it it checks the asset box. Um, and you know, tight structure, catalyst in the calendar, like there's a lot to like there. Um, you know, with all that said, it has benefited by being a PGM focused story. There are other metals in the mix as well, but I think if you had to classify Bravo, as I do within the MJG investor letter, it is primarily a PGM focused story. And if we'd roll back the clock, you know, six 6 months ago, you know, I would argue that PGMs were one of the most contrarian out of favor metals that were out there. You know, maybe I'd throw zinc into that basket. Um, lithium into that basket, venadium. These are some of the metals that have really really uh struggled in in recent years. Nickel. Nickel as well. Um, but really going back to April, so it's been a relatively recent phenomenon. Um the PGM space has caught fire um with you know prices rising. It's it's quite volatile but we'll say you know 40% 30 40% year to date for both platinum and palladium. So while Bravo's creating value on the company level it's also had a nice tailwind um with that with that PGM move. And so that that speaks to to its its share price performance uh year to date. Um I don't think it's quite up 100% year to date but it's it's close. So that has been a a key driver within the within the MJG uh portfolio. No doubt. Um and that explains our entire PGM waiting that you mentioned. We have no other PGM exposure um beyond Bravo. >> Well, thank you for going into that and I I like the focus you're bringing it back to that company first approach. I think that's really helpful for people to understand how you're looking at everything. I also before I let you go, I want to take a little bit of a look at jurisdiction in the portfolio. So, I believe you've got Canada, US, and Brazil as the top three jurisdictions. And we can talk about all of them, but I wanted to hone in on Canada because it's one that I think typically we hear about, yes, Canada is a safe good jurisdiction for mining, but I'm starting to hear a little bit more about, well, you know, there's environmental protections, there's First Nations issues here. So, just wanted to get your thoughts on that and and we can speak about the other jurisdictions as well if you'd like. >> Sure. Well, yeah, as you note, um Canada is our largest uh waiting um by by jurisdiction. Um I think at the end of June it was in the low30s. Um and then if you add the United States and Brazil to the mix, that takes it up to 80% of the portfolio. So, we have our eggs pretty significantly in these in these three different uh baskets. You know, I would note for any jurisdiction, and this certainly applies for Canada just given the immense scale of the country. Like it's it's I don't I I really hesitate to to paint anything with too broad of a brush. Like each project should be looked at on a case-byase basis. It depends on the the juris uh you know, the province that one is located in. Uh it depends on you know the specifics of where that project is located within the within the province. Are there clear uh environmental roadblocks that may be ahead? Um are thereuh local communities whether indigenous or otherwise that may be very supportive of the project or conversely you know uh dead set on stopping its development and also what team are you backing here? Is this a team that has a track record of you know advancing projects both on the permitting and the social front to where you can actually you can actually get licensed there. So yeah, there there have been headlines. I know Canada took a little bit of a hit um with the most recent Frasier uh Institute ratings. Um and that's caused some consternation within the industry. Um am I aware of that? Yes. Am I moing monitoring closely? Yes. Am I making any drastic or dramatic adjustments to the portfolio because of that? No. Um so but but you know again it it it bears close but um close watch but I I don't want investors to have a knee-jerk reaction and to consider some of those company specific variables more so than just kind of the broader narrative about a given a given country Canada included. >> Yeah I think I think very fair points especially for Canada which as you mentioned is very big. So great to go into that with you as well. And before I let you go, I wanted to ask, are there any final points you would leave investors with? I know there's definitely a lot to be considering right now. >> Yeah, I mean, I think we've covered we've covered a lot of ground here. Um, I'll end with one of my typical talking points, but I think it's I think it's it's just very important to emphasize like from my perspective, this is a people first business. And when I'm evaluating a a given opportunity, like I tune everything else out and just look at the management team and the board, uh, how much skin in the game do they have? How do they get their shares? You know, what's their cost basis relative to the current uh, share price? Have they been buying in the open market or subscribing heavily in recent placements? Um, and of course, are they ethical? And do they have a skill set for the task at hand? And if I'm not comfortable on all of those fronts, like I just I don't look at the rest. I don't look at the project. I don't look at the upcoming catalyst. I don't look at the valuation. Like I think it's a a way to quickly screen opportunities, which I think is important because especially as this market starts to pick up steam, you know, they're already close to 3,000 juniors out there uh across North America, Australia, and beyond. And that number is probably only going to grow further. So I I think one can fish in a much better pond by sorting opportunities first by the people involved. And if it checks all those boxes, then you can move on to the asset. You know, then you can move on to the company structure. Then you can move on to the catalyst to create value. Then you can move on to the valuation both on an absolute value and a relative value perspective. You look at the jurisdiction, look at the commodity. So, I think it's important to have a holistic um analysis of any of of your potential investments, but for me, it really always starts with the with the people involved. >> Well, I think that's a a great note to end on. You really do have to have a way to whittle it down from all of those companies. And that sounds like a a really good place to start. So, thank you so much for coming on to go through all these topics. I do think we covered a lot of ground today. >> Thanks, Charlotte. That was a fun conversation. Appreciate you having me. >> Of course. and we'll be sure to have you back again soon. For now, I'm Charlotte Mloud with investingnews.com and this is Matt Ger. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]
Matt Geiger: Hard Assets at Turning Point, How I'm Investing Now
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[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Matt Kiger, managing partner at MJG Capital Fund. Great to have you here. >> Good to be joining you, Charlotte. It's been a little little while since we caught up. Um, so it's good to be here and I hope you're enjoying your summer. >> Really good to have you here and it has been a little while since we last spoke, but I think it's the perfect time to be speaking with you. We've made it past the halfway mark for the year and you just released your investor letter talking about performance. I believe H1205 was your best performance since H220. So I'm hoping we can begin by talking about the factors driving that performance. >> That's right. It was a strong a strong period of of performance for the the fund. Um we were up just under 30 36% um through the through the end of June. Um, and I was also pleased to report to partners that we're beating the the S&P um over a five and a 10-year basis. Um, I don't have the 5-year numbers top of mind, but on a 10-year basis, we're up roughly 420 20% um relative to 260% give or take for the S&P. So, that's a roughly 18% annualized return for the MJG fund versus closer to 13.5% for the for the S&P. Um, and yeah, I was I was happy to report those results. Like I don't think anybody would argue that it's been nothing short of a phenomenal period for those that are invested in US equities. Whereas if you look at commodities over the past 10 years, sure there's been bright spots. 2016 was a great year. Uh 2020 was a great year. You know, we've had runs in the the lithium price over the past few years. Uranium's had its time in the sun. really over the past 10 years decade it's been really hit or miss um on on the hard asset front. So I actually made the argument that while returns have been good I think the best is is yet to come in in in the coming years and you know I focused on a couple points. Uh the first is just the extreme overvaluation in the in the US stock market relative to pretty much any other asset class globally. And I I cited the data point that as it stands if you look at the global market capitalization US companies comprise 70% give or take of the total global market capitalization despite the US economy the US GDP only being around 26 to 27% of global GDP. We haven't seen this waiting towards US stocks relative to the rest of the world ever. And the only time in recent memory that it's been close or not even recent memory would be the the late60s during the the heyday of the of the Nifty50 uh bubble. And I made the argument that we don't need to see a huge crash in the US stock market or anything of of the sort. Though I do maintain that that's a that's a significant possibility. But I would argue that really on liberation day um that marked the turning point where we're going to see outperformance from the asset classes that have been left behind um largely over the past 10 years. And that includes international equities, that includes emerging equities, that includes emerging debt. And yes, that includes commodities and and hard assets. And I would just note over the past 15 years we've seen over $20 trillion come into US financial markets uh foreign investors were net long around $3 trillion going back to 2010 or so. They're now closer to net long $25 trillion. So again, we don't need to see a full-fledged, you know, outflow entirely, but even a few trillion would go a long way, especially for the for the commodity market. So I I think I think we're we're in for for a number of good years ahead. Um, of course it will be um it will be a rocky road. Um, so you know, we're we're we're braced for for turbulence and volatility as one should always expect in the commodity space, but looking at three or five years from now, I think we're very well placed with how we're positioned. >> Right. I think that that point about the best is yet to come really stood out to me as well when I was reading your your writing. So, are we finally going to start seeing that return of those those elusive generalist investors back into the resource space? How do you see that playing out? >> Well, I do think we've seen a a change in character even amongst the smaller juniors and the MJG fund is very heavily weighted towards the junior space. We have 19 different position positions as it stands. Um, and our median market cap, uh, is around 50 million Canadian. Um, so we are certainly on the smaller end of of the spectrum. And I think going back to late April, early May, all one has to do is look at the chart of the TSXV. Um, but the juniors are finally playing some catchup. Uh, how long that that continues remains to be seen. You know, I would argue that the TSXV is at around uh 800 or so as it stands. I think there's a pretty clear path to 900 and a,000. So that's another, you know, 12 or 25% move assuming that the broader markets remain neutral or risk on as they as they have been. So I'm quite optimistic, you know, absent another liquidity panic like we saw in April um when when Liberation Day occurred, I'm quite optimistic that we're going to continue this run um that we've seen really since late April. So it's been it's been a fun period. I've only seen the returns accelerate um you know over the course of July and and and into August. Um so I think we're seeing some of that rotation and one you know uh harbinger one you could say and I I I talked about this at length um in the MJG investor letter was Tether um one of the world's largest cryptocurrency players uh coming into elemental altus. This was announced in early June and taking a controlling stake in the company. They now own over 50% of elemental altus. Um, you know, this is a company or a group that really should have no business investing in hard assets or natural resources. So, you know, I don't want to draw too broad of a conclusion from a single transaction, but I think looking back a few years uh to, you know, this this spring and this summer, one could say that that was a sign that non-traditional mining investors were starting to wade back into the space after what's really been an over decadel longed absence um of of those sort of investors cuz why would you be anywhere else than than the broader US stock market or cryptocurrencies which have also behaved well? that's been what's working. Um, but I I think I think in hindsight, Tether's move may may prove to be quite significant. >> Yeah, I really enjoyed your your breakdown of that transaction there and what the implications could be, you know, should we be excited about this? Should be we we be wary, how should we be feeling? Anything further you would add because I think it is it is worth digging into a little bit more. >> Yeah, I mean it's it's a really interesting deal. I mean, I I broke it down from from multiple different angles. Um, and I guess one of the the considerations is what is Tether's aim for Elemental specifically? Um, are they looking to just be a passive um investor? I mean, a controlling shareholder with influence, but stick with their their their 50% stake and support the company. Are they looking to take over Elemental entirely? And this is the first step to doing that. Um, are we going to see Tether take controlling interests in other junior royalty players, other peers of of of Elemental? Um, is this a play for Elemental and Tether to consolidate the the junior royalty space? I think the jury is still out. Um, but if I had to hazard a guess, um, I think Elemental will prove to be Tether's vehicle, at least in the in the royalty space, and that Tether will support Elemental both for oneoff uh, royalty and stream acquisitions on a deal-by-deal basis, but also if the opportunity presents itself as a group that can help knock some heads together and generate some consolidation um, within the the junior royalty space, which I think is long overdue. There's a good six or seven companies kind of in that 200 million Canadian to $600 million snack bracket. Um, and I think investors in the space and in those companies would be well served to see that number uh, you know, reduced to to three or four different names. Um, so so that's one angle as it pertains to the junior royalty space. And then as a broader ang you know uh uh perspective as we've touched on this could be a signpost that generalist capital non-traditional mining capital is coming into the space. Um if one wanted to be pessimistic or a little bit cautious maybe it's also a sign that at least in terms of the gold price or precious metal pricings you know maybe it speaks to where we are in the cycle. um like I don't think I don't think we're in the the very end end stages of the move, but when you start to see non-traditional companies come in to the space to this degree, it could at least signify that we're in the mid innings um and at least at least provide a little bit of caution. Um, so I think again it's it's risky to draw too broad of conclusions from a single deal, but I was just fascinated by the amount of headlines and attention that the transaction drew even from those that aren't invested in Elemental and even from those that don't have exposure to the junior royalty space. And I I think that the attention that was paid to it, it was was worthy. >> Yeah, it's it's really interesting to look at all those angles and certainly it'll be one to keep an eye on. I'm sure we'll come back and talk about it with you in the future. looking a little bit more at the royalty and streaming space. I think that's a good one to get into on the M&A front. So, you mentioned we're we're due to see more of that. We have seen some interesting deals this year. So, I'm wondering if I could get your take on what we've seen so far. Do these deals make sense to you and what we might see moving forward in that sector? >> That's right. Right. I mean, the past 120 days have been extremely exciting, uh, quite candidly for anybody following the royalty and streaming space. Um, there have been a lot a lot of talk about consolidation for really a 2 or threeyear period and had not really borne out. Um, but I I think what started off the frenzy we've seen um was Triple Flag uh making a move for Origin. Um, and this was this was late April. Um it was a transaction of around 420 million Canadian. Um but really what Triple Flag was after was Origin's 1% NSR uh covering Anglo Gold Shanti's uh expanded silicon project. It's it's now being referred to it's been rebranded to the Arthur project. So I'll try to stick with Arthur going forward. Um that is a truly world-class development asset. um you know, Origin generated that royalty um going back 10 years ago and it had become such a large percentage of their NAV that I think it made sense for for Origin um to to sell at this juncture. And I think the the day that that deal was announced, the gold price had hit at least to what at that point had been an all-time high. Um so I think that the the deal made sense. Um the rest of Origin's business has since been spun out into Origin 2.0. Um, but so Triple Flag was was in it for that specific royalty. That was late April. You know, 5 6 weeks later, we had the Elemental Tether transaction, um, which we which we've already touched on. Um then in early July uh right as Rick Rules conference was was kicking off in Boca Raton um we had uh Royal Gold uh make its move for in one in one fell swoop taking out both Sandstorm and associated royalty company Horizon Copper. So that that was a big deal. I I think I think was close to $4 billion in value uh between those two different companies and it took one of the few mid-tier royalty companies um which I would define as you know companies between roughly 1 to10 billion in market cap off the table and help beef Sandstorm's market cap up closer to $15 billion. So that was a very significant deal. Um, and in the aftermath of that, I did a couple different interviews, uh, speaking about the royalty space, and my best guess was the next shoe to drop was going to be one of two different things. Um, the first was the potential for a merger of equals um, between O and Triple Flag. Um, and that has not come to pass, but I I still think that is within the realm of possibilities. That's something to keep an eye out um, in the months ahead. The second one I mentioned did come to pass and that is Ultius Minerals um which is a company near and dear to my heart. It's been a a holding of ours going back to early 2020. Um, and it's one of the really the only true buy and hold uh in the portfolio. Um, where I sleep very very easily with their altus position. And they announced a couple weeks back, this would have been late July that they were selling 2/3 of their royalty um covering the Arthur project. So Origin owned a royalty covering Arthur. Allies itself owned a 1 and a.5 a.5% royalty covering Arthur. They sold 1% of that to Franco Nevada um for around 275 million uh US. That's 375 million uh Canadian. And that deal was relatively well telegraphed. Like CEO Brian Dalton from Altius had been on the record saying that Altius was going to make a decision on how to proceed there in Q2. And they had quite a few options. They could have sat on the royalty themselves. They could have done a full or partial sale. They could have in theory traded that uh royalty to a larger royalty company in exchange for a nonprecious metal royalty because Altius' bread bread and butter um has been nonprecious metals. Um you know, there's even the possibility that that Altius as a whole was going to be taken out by a larger a larger company. they settled on a on a partial sale. Um, which as a shareholder I was quite pleased with. I I was actually concerned that Altius as a whole was going to be taken out and we were going to, you know, lose one of the cornerstone investments of our portfolio. Um, so that that the pricing for that Franco paid was about a 9% premium to where Origin sold their royalty to Triple Flag. Um, I think the premium made sense cuz the the gold price itself had increased by 12 or 13% between when Origin agreed to the triple fan uh triple flag transaction and when Altius transacted. So, I think that's I think that's reasonable. Um, but I also don't think it was an easy decision um for the Altius management team really at all. Um, like this this Arthur project has the potential to be a generational gold asset. It just keeps getting bigger and bigger in really quick order short order here. Um so in broad strokes I think Franco paid for roughly 30 million ounces of gold there. Um you know the the the resource as it stands is at 16 million ounces. So Franco paid a premium assuming that there's going to be significant growth. Um, you know, I think, you know, five, six, seven years from now, if you know, the project's at 35 million ounces of gold and there's been no significant snags on the permitting front, then perhaps, you know, Franco would have gotten the best of that that deal. But I I think this made a lot of sense from from an altus perspective. they still maintain a half percent royalty on the asset so they can hope that it gets as big and as beautiful as possible but they've also locked in and really taken taken the burden hand in a respect you know for an asset that was noncore to them just a few years ago and yet in recent months had swelled to close to 50% of their of their NAV um so I I thought that was that was really exciting to see and you know the alti the share price reaction from Altius has been strong in the aftermath of the deal in fact just just yesterday they hit an alltime all time high um exceeding their previous all-time high that was reached all the way back in 2007. So I think the market has you know voted with its feet and and given the thumbs up to the to the transaction >> really clear that there is so much activity going on in this space and yeah if if you are an investor who is looking at all these things happening and maybe trying to position here how how might someone want to approach that in this this royalty and streaming space right now? >> Yeah, it's a good question. I mean, different investors are going to have different answers. Like, I'm always very much a people first investor. That even applies to the royalty and streaming companies. Like, I'm happy to pay extra. Um, for a team that I trust, for a team that has a track record of disciplined decision-m that's in the interest of shareholders, you know, Altius certainly falls into that category. Um, also from a people perspective, I like teams that can that keep it lean and and minimize overhead to the utmost extent because for these royalty and streaming companies, the more money you can save on GNA, that goes straight straight to the bottom line. So, I I start first and first and foremost there. Um, and then I think investors have to decide the their risk tolerance. Like especially at this point in the cycle, there's nothing wrong with with buying a Franco. Um, but you know, we we're focused much more on the junior royalty space. Kind of our two big bats. As I've mentioned, our Altius Minerals um and and Elemental Altus as it stands and I feel comfortable growing with with both of those with both of those companies. Um, Altius, as I mentioned, is a true buy and hold, so I don't worry quite about the valuation there. Um, Elemental, you know, I'll keep an eye on things. If the share price gets too out of hands, then we would consider taking taking profits. But I'm comfortable giving Tether and the Elemental team a chance to execute on this business model um over the coming, you know, 6 to 12 months and seeing how things go. Um so, you know, that's that's kind of how how we're approaching it. But there, you know, there there are many different there are many different fish in the sea. There are companies that are much cheaper on a Pav basis relative to either Elemental or Altius. there could be opportunity there, you know, particularly if you expect more M&A to occur. Um, but I would argue that there are reasons for that valuation disconnect, um, including lack of trust in the management team or, you know, assets that have risk on on a on a permitting or or social front. Um, so, you know, it's not oneizefits-all, but those are these are the two horses that we've chosen to back. >> Well, good good insight on how you're approaching that. And so royalty and streaming, this is a chunk of your portfolio, but another big piece of it is the prospect generator companies and I believe we spoke about this last time we talked. It's a model that I feel like I used to hear quite a bit about. People would talk about it a lot and the potential there and it seems to have lost popularity in recent years, but it's something that you you really like. So, can you tell me why that's that's so compelling for you? >> That's right. I mean, it is very much out of favor, but that that's attractive to me cuz it doesn't have to even return to full favor. There just has to be a slight change in sentiment. Um and and there could be a move, you know, in this space more more generally. Um you're right. I mean, as of the end of June, um we sat at roughly 36% waiting um towards prospect uh generation between I think what were six six different holdings. So that's, you know, roughly a third of our of our portfolio. Um, we just added another one. We're we're participating in the Concora copper um financing that was announced uh last month. That will be closing uh later in August, early early September. Um so we've only increased our our prospect generation exposure since that letter was was sent out. Um you know, I'm excited about Concora in in particular. We were able to to get in at a at a good price there. you know, they have four different partners spending money across the Concora project portfolio over the next 12 months. Um, Anglo Gold Ashanti is kind of the uh the the flagship partner there. Um, but they have others that are that are doing drilling and then also the potential for one to two new parties to come in if if all goes to plan. And there's a potential for uh six different projects to be drilled over the the next 12 months here. That could even increase if they bring in additional partners in the in the in the months ahead. Um so a lot of a lot of shots on on goal which is all you can really really ask for um as an investor in this in this business model. But look I mean the reason I I think this business model is going to return more into favor. Um the first is just the general trickle down that we're just starting to see from the metal prices to the large producers to the smaller producers. we're finally seeing some interest return to expiration stage juniors and prospect generators fall into that that broader bucket. Um so I think from a general sense that will be positive. Um I also know that the larger producers are looking to beef up their development pipelines. Um and I do think that there is going to be new deals hatched whether it's with Concor in the months ahead. Uh Headwater Gold which is a prospect generator that I'm following closely. They very recently announced an earning deal with Oceanana Gold. Um, Centa Gold um has been very aggressive taking strategic stakes uh and and prospect generators such as Kenderland Minerals, Headwater, Azimoot, uh, Midland up in up in Quebec. Um, so I I think we only see the deal flow increase. And then the final point I'd add is not all but quite a few of these prospect generators actually have hidden early stage uh royalty portfolios kind of in the background being assigned no value. And we've seen a few different transactions in recent years. We're kind of out of the blue. A prospect generator has monetized um one or more of its royalties. You know one example is Almodex Minerals uh sold their Elk Gold royalty uh to star to star royalties. That was a few years back. You know, more recently, I think this was was mid to late 2024, Commander Resources sold their royalty portfolio to an Australian private equity group at a price that exceeded Commander's entire valuation. So, that was a good example of of value being created, just seemingly seemingly out of the blue. Um, and so we've seen an Eagle Roy um Eagle Plains is another example. That's that's that is a holding within the MJG portfolio as well. they did a spin out of their royalty portfolio into into a company called uh Eagle Royalties. So, kind of creating value from where from where there was none. So, I think there's the opportunity in the months ahead for for more of this this activity to take place. Um, and I think investors when they're evaluating prospect generator should also ask management, hey, do you have any royalties that that are sitting in the portfolio uh gathering dust but that potentially have value? If so, you have to factor that into your your valuation analysis. Very interesting points there as well. And I want to also take a look at your portfolio from a commodity perspective because if we if we go from that area, copper is really at the top of the list. And I know that you are looking for companies that will do well regardless of what the commodity itself is doing. But I do want to spend a little bit of time looking at the copper market because we had all of this tariff excitement where there was interest prices were moving and then the tariffs were actually announced and it wasn't quite as extensive as we thought it would be. So I wanted to ask you about tariff impact on the copper market. How are you seeing that? >> Yes. Well, you touched on my caveat and I always try to emphasize this. There there are many different ways to invest in this this space. Um, you know, the MJG approach is to assume flat or even subspot metal prices and invest in opportunities where there's at least the potential um for a significant share price rating based on company specific catalysts. So, we really try to avoid, you know, I do factor in the commodity of focus into the analysis, but it's one of the very last things that I that I consider. And we don't like the optionality plays um where you're, you know, banking on $4,000 gold or on $8 copper or, you know, $10 a pound nickel in order for the the investment to work. You know, on the copper front, all of our copper focused investments have the opportunity for a material rerate and share price either through the drill bit, either through permitting um or through M&A. So, I I always like to lead with that. Um with that said, you are right. you know, 40% of our weighted portfolio as it stands right now is weighted towards copper. So, I'm I'm clearly very comfortable with with exposure with exposure to the metal. You know, I couldn't tell you where the copper price is going to go over the next 6 or 12 months. That's really a Mug's game, but I feel quite conf uh confident that it's going to be a good place to be thinking out 3, 5, 7 years down the line. And a couple aspects that I that I like about the market. The first is that, you know, at 450 or so copper, we're well below the true incentive price. Um, you know, I I think astute market observers would say that roughly $6 per pound copper is what's needed to really incentivize the world's largest mining miners to get going on their latest stage development projects and really go pedal to the metal. And this is actually pointed out by by Brian Dalton. If you look to to previous metal cycles, sometimes you need to see double the incentive price for the big boys to really get a move on. So I I think there's at least a 33% move in copper that has to occur just for the incentive price to be achieved and, you know, room to run beyond that before there's really that sense of urgency for the big guys to get going on the next generation of development projects. Now, once that occurs, the copper market is so big that you really need a mega project to even move the needle at all. And these mega projects, we're talking 3, four, 5 years from when ground is broken to where name plate production is achieved. And that's if everything happens exactly to plan, which is very rarely the case with these mega projects. So, there's a huge lag, especially compared to gold. like you know a smaller midsize gold project if the if the management team executes perfectly on the build like that can be up and running in 18 months in 24 months for these large scale copper projects you're talking about a multi-year lag before that supply actually comes online so I think that adds to kind of the appeal of the broader copper narrative um and then I just conclude by saying you know there's a huge amount of interest for copper assets so if you're a development stage company or an explorer that's made an exciting copper discovery. There's no there's no shortage of of potential suitors, you know, from the very largest diversified miners um to, you know, copper focused uh producers like the Hudbays or London Minings of the world to gold companies pneumontic have all been very clear that they're trying to up the in uh the percentage of copper within their their broader portfolios to ch to Chinese parties to private equity groups. So there's no shortage of potential buyers if you find your your hands on an asset that has enough scale uh to matter. So I like all of those those aspects. And just to touch briefly on on the the tariff situation, I mean I will say that I was shocked that we didn't see any tariff at all on refined copper imports. Like just a few weeks before the formal announcement was made, uh Trump was making noises that a 50% tariff was going to imply. I think it caught the whole market off guard, uh including myself. um that there did not end up being a refined uh copper uh import tariff. Um with that said, at least as it stands, almost all of our copper exposure um comes from projects outside of the United States. Um we do have a couple names that are exploring um for copper kind of earlier stage ventures within the US, but those are less impacted than kind of the latest stage development projects um or the producers. So, it didn't have a huge uh impact um within the within the MJG portfolio, but I mean it was certainly I think a surprise to all market watchers. With that said, uh and sorry to to to uh draw on here, but um Mitsubishi just today with um with Hudbay announced a big $600 million investment into Hudbay's uh copper world project in Arizona um in exchange for a 30% project level stake. So I I think you know if there was a hangover kind of in the with the disappointment of of the tariffs not going into place on on refined copper projects this shows that that hangover was was uh you know perhaps shortlived and you know the HUDbased share price has responded very well to this latest announcement and I think it's broadly a positive for other later stage copper developers that are focused on the US specifically. really really nice overview of your thoughts on copper and I think it's good to spend some time there since it is such a big part of the portfolio. I did want to make sure we at least touch on precious metals since it's a strong interest for our audience and I found it interesting. So, of course, you've got your exposure to gold, but then ahead of silver, you've got platinum group metals. And I thought that would be interesting to touch on and maybe talk a little bit about special considerations for investors who are looking at platinum group metals because there's been more interest in those metals lately and I think people might be less familiar with how to evaluate them. >> That's right. Well, I will say, and again going back to that caveat earlier, like we didn't make a big bet on PGMs. We made a big bet on a company that happens to be focused on PGMs. And I think that's an important distinction. Um, the company in question is Bravo Mining. Um, they have their Langa uh project down in in Brazil. Um, and this is a company that I've, you know, written about probably for the past four or five investor letters. I've talked about it quite quite frequently publicly. um you know it sits as our as our single single largest uh position as it stands. So there's another company that's that's just approaching it in terms of in terms of waiting within the portfolio. But it's been a very significant investment for us for a number of years. We were fortunate enough to get in um when Bravo was a private company preipo and it's been a very strong uh uh performer for the for the MJG uh portfolio. So again, that's a company where I look at it from a bottom-up perspective. Excellent team. Um, CEO Luis Asavdo there is one of the pre-minent m mining lawyers in in Brazil with two different exits over the past uh 10 years. Um, really large um interesting asset with with the Longa. Um, you know, it's a PGM dominant deposit. There's also a nickel and and a gold kicker there as well. And then on their broader land package, there's IOCG copper potential as well. also checks the people box, it it checks the asset box. Um, and you know, tight structure, catalyst in the calendar, like there's a lot to like there. Um, you know, with all that said, it has benefited by being a PGM focused story. There are other metals in the mix as well, but I think if you had to classify Bravo, as I do within the MJG investor letter, it is primarily a PGM focused story. And if we'd roll back the clock, you know, six 6 months ago, you know, I would argue that PGMs were one of the most contrarian out of favor metals that were out there. You know, maybe I'd throw zinc into that basket. Um, lithium into that basket, venadium. These are some of the metals that have really really uh struggled in in recent years. Nickel. Nickel as well. Um, but really going back to April, so it's been a relatively recent phenomenon. Um the PGM space has caught fire um with you know prices rising. It's it's quite volatile but we'll say you know 40% 30 40% year to date for both platinum and palladium. So while Bravo's creating value on the company level it's also had a nice tailwind um with that with that PGM move. And so that that speaks to to its its share price performance uh year to date. Um I don't think it's quite up 100% year to date but it's it's close. So that has been a a key driver within the within the MJG uh portfolio. No doubt. Um and that explains our entire PGM waiting that you mentioned. We have no other PGM exposure um beyond Bravo. >> Well, thank you for going into that and I I like the focus you're bringing it back to that company first approach. I think that's really helpful for people to understand how you're looking at everything. I also before I let you go, I want to take a little bit of a look at jurisdiction in the portfolio. So, I believe you've got Canada, US, and Brazil as the top three jurisdictions. And we can talk about all of them, but I wanted to hone in on Canada because it's one that I think typically we hear about, yes, Canada is a safe good jurisdiction for mining, but I'm starting to hear a little bit more about, well, you know, there's environmental protections, there's First Nations issues here. So, just wanted to get your thoughts on that and and we can speak about the other jurisdictions as well if you'd like. >> Sure. Well, yeah, as you note, um Canada is our largest uh waiting um by by jurisdiction. Um I think at the end of June it was in the low30s. Um and then if you add the United States and Brazil to the mix, that takes it up to 80% of the portfolio. So, we have our eggs pretty significantly in these in these three different uh baskets. You know, I would note for any jurisdiction, and this certainly applies for Canada just given the immense scale of the country. Like it's it's I don't I I really hesitate to to paint anything with too broad of a brush. Like each project should be looked at on a case-byase basis. It depends on the the juris uh you know, the province that one is located in. Uh it depends on you know the specifics of where that project is located within the within the province. Are there clear uh environmental roadblocks that may be ahead? Um are thereuh local communities whether indigenous or otherwise that may be very supportive of the project or conversely you know uh dead set on stopping its development and also what team are you backing here? Is this a team that has a track record of you know advancing projects both on the permitting and the social front to where you can actually you can actually get licensed there. So yeah, there there have been headlines. I know Canada took a little bit of a hit um with the most recent Frasier uh Institute ratings. Um and that's caused some consternation within the industry. Um am I aware of that? Yes. Am I moing monitoring closely? Yes. Am I making any drastic or dramatic adjustments to the portfolio because of that? No. Um so but but you know again it it it bears close but um close watch but I I don't want investors to have a knee-jerk reaction and to consider some of those company specific variables more so than just kind of the broader narrative about a given a given country Canada included. >> Yeah I think I think very fair points especially for Canada which as you mentioned is very big. So great to go into that with you as well. And before I let you go, I wanted to ask, are there any final points you would leave investors with? I know there's definitely a lot to be considering right now. >> Yeah, I mean, I think we've covered we've covered a lot of ground here. Um, I'll end with one of my typical talking points, but I think it's I think it's it's just very important to emphasize like from my perspective, this is a people first business. And when I'm evaluating a a given opportunity, like I tune everything else out and just look at the management team and the board, uh, how much skin in the game do they have? How do they get their shares? You know, what's their cost basis relative to the current uh, share price? Have they been buying in the open market or subscribing heavily in recent placements? Um, and of course, are they ethical? And do they have a skill set for the task at hand? And if I'm not comfortable on all of those fronts, like I just I don't look at the rest. I don't look at the project. I don't look at the upcoming catalyst. I don't look at the valuation. Like I think it's a a way to quickly screen opportunities, which I think is important because especially as this market starts to pick up steam, you know, they're already close to 3,000 juniors out there uh across North America, Australia, and beyond. And that number is probably only going to grow further. So I I think one can fish in a much better pond by sorting opportunities first by the people involved. And if it checks all those boxes, then you can move on to the asset. You know, then you can move on to the company structure. Then you can move on to the catalyst to create value. Then you can move on to the valuation both on an absolute value and a relative value perspective. You look at the jurisdiction, look at the commodity. So, I think it's important to have a holistic um analysis of any of of your potential investments, but for me, it really always starts with the with the people involved. >> Well, I think that's a a great note to end on. You really do have to have a way to whittle it down from all of those companies. And that sounds like a a really good place to start. So, thank you so much for coming on to go through all these topics. I do think we covered a lot of ground today. >> Thanks, Charlotte. That was a fun conversation. Appreciate you having me. >> Of course. and we'll be sure to have you back again soon. For now, I'm Charlotte Mloud with investingnews.com and this is Matt Ger. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]