Ross Beaty: 'Do Not Sell' This Rally, It's a 'Secular Breakout'
Summary
Market Outlook: The podcast discusses a significant shift in the market narrative, highlighting a potential long-term rerating in the mining sector, particularly with gold prices exceeding $3,500.
Investment Strategy: Ross Beaty emphasizes the importance of not selling during this rally, suggesting that it is a secular breakout and advising investors to ride the wave for potential long-term gains.
Company Insights: Equinox Gold, led by Ross Beaty, is highlighted as a major player in the gold mining sector, focusing on large-scale operations to leverage the current gold price surge.
Inflation and Costs: While acknowledging rising costs in the mining industry, Beaty notes that the increase in metal prices is outpacing inflation, leading to expanding profit margins for companies in the sector.
Sector Dynamics: The discussion covers the disconnect between major and junior mining companies, with majors initially outperforming but juniors now presenting significant opportunities as investors seek higher returns.
Mergers and Acquisitions: Beaty expresses skepticism about a surge in M&A activity, noting that major companies are more focused on returning cash to shareholders and deleveraging rather than acquiring junior companies.
Leadership and Risk: Beaty shares insights on leadership in the mining industry, emphasizing the importance of diversification and resilience in managing operational risks and jurisdictional challenges.
Philanthropy and Legacy: Beyond business, Beaty discusses his commitment to environmental conservation and philanthropy, advocating for responsible wealth distribution and environmental stewardship.
Transcript
[Music] Hey everyone, welcome back. I'm Jeremy Saffron. All right, now there are moments when the market narrative shifts so fast that you can almost feel it. And we're in one of those moments right now. For the past year, the story has been simple. Gold at all-time highs. But another real story, the one that's just beginning to unfold, is happening in the equities. After years of being ignored, the miners are waking up and finally catching a bid. And at gold over $3,500. These companies are set to become cash printing machines. Their stocks are coming to life. And the question on every investor's mind is no longer if the sector will run, but how far. Is this a short-term rally? Is it a start of a generational rerating? How do you separate the winners from the pretenders? Now, to answer those questions, we're launching a new series today here at Kitco News called Legends. And that's where we're cutting through the daily noise to get timeless wisdom from the icons who have navigated these markets and and built empires through the chaos. Now, our guest today is a legend in the truest sense. He's a geologist by training who has founded and built five separate public companies into billiondoll plus enterprises, a feat few in any industry have ever really matched. And he's also the man behind Pan-American Silver, one of the world's largest silver producers and the chairman of Equinox Gold, a company now worth billions of dollars. And in a league of his own, he has given millions to causes like environmental conservation, something very close to his heart. Now, he's here today not just to talk about the markets, but to deconstruct the principles of leadership and investment and what made him a legend, even though I know you're a humble man joining me right now, Ross Bey, thanks for making the time, Ross. I hope you've had a great summer. >> What a preamble. What a preamble. the the equinox tens of billions of dollars by the way that those are Zimbabwe dollars not not big US dollar not even the Canadian dollar but any it's it's wouldn't it be nice >> well well we're getting there we're getting there especially with some of these some of these deals and you know the market is back I mean the GDX is up something like 90% year to date the market seems euphoric but from your perspective I mean is this the start of a durable long-term rerating for the sector or does it kind of the euphoria feel a little fragile >> it's pretty euphoric Uh but you know I have seen these markets before >> um and and it it really is a secular breakout. I think, you know, we saw this uh oh my goodness, we saw it like in 1992. We saw it in in in 90 in 2002. We saw it in 2009, you know, where he had these fabulous moves. And I I've talked about this before with you. Um and I've advised investors, you know, especially the last few years have been so brutal for equity investors because you've had a wonderful move in the gold price and other metals like copper and and and most metals on the periodic table. But the equities haven't moved. Money's come out of the uh system. It's gone into other flavors of the month, Bitcoin, um meme stocks, and and and lots of the, you know, the the the nifty50 in in uh the big stocks in New York, the the fabulous five, as they say, the you know, all these other things that have done really well at the expense of the of the mining stock. So, there's been no money coming into the equities. And I just said, look, there's there's two things are going to happen. either gold prices are going to crater in which case fine equities valuation which which you know has has has basically reflected a terrible metals price environment um that's either going to happen I find that extremely unlikely uh or you're going to have the equities pop up to where they should be based on the metal prices and in fact the latter has occurred and then the other thing I said is to investors when this happens uh which which sort of happens overnight and we've we literally have just seen it happen in the last couple of months Yeah, >> when it happens, do not sell. Resist the uh the temptation to sell. Obviously, take money off the table if you can, get your capital back, but go in for the ride. This is likely to be a relatively long-term uh market move because the the it's been pent up for so long, for so many years where the the equities and I I follow the golds more than anything else because that's my sort of main gig right now, >> Equinox gold. So, I follow that and and I've just seen this this really incredible explosive rally as you said in the in the large caps, the midcaps, and particularly the juniors who have been so unloved for so long. It's lovely to see. Uh but my advice is this is likely to last for a while. Uh don't sell everything. Don't treat it as a trade-in opportunity. >> Yeah. Not just profit taking. I mean, you see some of that. I mean, it almost feels like the narrative has changed for the miners, too, right? I mean, now everyone's looking at these costs and the bull case is kind of simple. I mean these companies should be gushing with cash but the reality is that their costs have also exploded. I mean for anyone running any kind of business right now that is a core challenge. From your perspective what's the key to protecting you know profit margins in this intensely inflationary environment. >> Yeah I mean it's it's first of all it's not in intensely inflationary it's somewhat inflationary. It was a lot more inflationary back in 2022 21 uh which was a COVID reaction to just outpouring of vast amounts of money hitting the system and and people buying stuff and inflation going crazy. It's not crazy. It's modest. Costs are rising for sure, but they're not rising nearly as quickly as the metal price is rising. So margins are actually expanding. Companies are gushing money. Anybody in the gold space right now is uh is doing really really well. And if they're not, they shouldn't be in the business. >> Yeah. Yeah. Well, I was going to say, let's talk about the disconnect between the majors and the juniors. It feels like two very different worlds. Do do the majors with their massive operations have an advantage in this environment or or does the real opportunity for wealth creation now lie with these smaller, more agile companies? >> Well, I've always believed that scale matters. That's one of the reasons with Equinox, for example, we went big really quickly uh in the last seven years building a company from nothing to now almost just nudging a million ounces of gold production a year. And I did that because I wanted to take advantage of what I thought was going to be a really good move in gold where the larger you are, the more profit you can make from this big move in gold. But also, the market today reflects uh a desire for scale. Uh investors want large companies that are highly liquid, that have good balance sheets, diversified assets, th that kind of thing. And so that's why the majors, the the large cap stocks have typically outperformed the juniors. That's that's been the narrative for the last number of years. And it's a normal narrative in a in a kind of evolving bull market in in gold equities. But of course, as the market uh cycles, the the large cap valuations which outperform in the start of the cycle, they tend to be they tend to underperform as markets go down. People tend to take profits. They they roll those profits back in the market and they go to the midcaps and then they go finally to the juniors. And that's what's happening right now. Majors have done well. you know, barracks had a really nice move. Some investors are taking some money out of those safe, diversified, uh, lower risk companies that have great multiples and they're putting it into the smaller companies that don't have the multiples but have the upside. So, I think that's really what's going on finally after years and years of those stocks underperforming. >> Okay. So, the M&A side, I mean, is this finally, you know, the junior cycle or will the majors just buy them out and capture that upside for themselves? >> Yeah, I mean, not really. I I don't really see a lot of M&A happening. There will be some, Jeremy. It's a it's a business which needs M&A because of course every day large companies uh can only replace reserves that they mine by either new discoveries or buying companies that have gold assets. So, it's just a natural part of the mining and quite frankly any resource business where you're dealing with a non-renewable resource. >> Um is it going to change right now? I don't think so. uh you know a lot of the major companies that are gushing cash are actually returning that to their shareholders through share buybacks and dividends and that kind of thing or companies like Equinox that to build its business as a big company had to borrow a lot of money. We've got a billion and change in debt and we're using our our cash flow right now to repay debt to delever and and that's the main use of capital that that that we have right now. Um are they going to buy a lot of the juniors? I don't think so. Some will be sold. Of course, the higher quality juniors will always command a value. Uh I don't necessarily think that the pace of acquisitions is going to increase all that much. We'll see. I I just think valuations are going to where they are kind of more natural uh should have been for the last few years and are now getting to be reasonably priced relative to the gold the gold price. We see the actual fundamental net asset value of those junior companies. >> Yeah. I mean, you know, we hear about it. We've we've seen some of the majors been terrible capital allocators in the past cycles and you know people have asked us I mean what makes you think that they've learned their lesson and won't squander this opportunity of an overpriced ill times acquisitions at the top of the market. >> Yep. Well, it's, you know, it's very tempting when you've got a whole bucket of cash you don't have a particular use for it to to not to resist the the sort of the shareholder wish to return it to them and to actually use it to build the egos of the managers to get bigger and bigger and buy other companies. It's it's very addictive to be doing this. I mean, I've done tons and tons of deals in my career. I mean, it's there's a sort of a, you know, I don't know if it's if it's like long distance running, it gives you that kind of high, but doing these deals is really fun and it's it's exciting and it's what naturally drives managers. And of course, the bankers and the investment dealers are all over this stuff because they make fees from from M&A. They make fees from recommending deals to managers of companies and they make it all look so great. um you know when they when they show you the the the powerpoints of of of combining one and one is three and you know you know using your high multiple to buy a low multiple company and so on. Well, they don't always work out and as you correctly pointed out uh there's been a lot of shareholder wealth destruction through through bad deals and I'm must admit I'm guilty of of one or two of those myself. So, it's a pot, you know, it's definitely a tempting thing to do, uh, compared to a rather more pedestrian thing of simply paying a big special dividend if you're making unusual amounts of cash or or or buying back shares, >> right? Yeah. I mean, you know, that's some of the hard math of mining, of course, and but investors also need to understand the human factor, the the leaders who drive these companies. I mean, you've been doing this for over 40 years. I mean, when you look back, what's the one thing that has become more important in your decision-m process over time? And what's something you've learned is actually less important than you once thought? >> Well, you know, lessons. >> Welcome to 60 Minutes. Yeah, >> I know. I I I don't know, Jeremy. It's it's such a risky business. Um >> I've just learned the power of diversification, I think, as much as anything. you know, the the the reason to go big is to is to build an asset bait that's resilient against some of the risks that come into the mining business. And I'll just name a couple. The last last couple last year, for example, um you know, we had a we had a pit wall failure in in one of our seven mines. It was a mine in Brazil. And you know it if we were we if we were a one asset company only holding that asset we our stock price would have been crushed potentially to an unreoverable uh point as it was we had one of seven and and we took a bit of a hit. Uh the the you know the it took about 4 months to recover from that. The mine's back running and it it recovered relatively quickly but it's it it you know that was a that was a surprising thing but it happens in industry. We've had a very slow startup at our big new mine in Canada called Greenstone. Again, that would have hurt an awful lot of companies, but we've got all this other gold production that buffers that um that slow startup. It's doing fine now, but it did it did take quite a while to start up. And then in Mexico, we've had a a community problem that's been intractable. We've had to shut a mine down there, big mine, um with, you know, giant resources that that I just think is a is a world-class deposit. But we've had these social problems. So, we had to shut the mine down. And again, if we were only holding that one that one asset, we'd have, you know, our valuation would have gone to zero. So that's that's been a big thing for me is the power of diversification. But you can only play that game if you're really in the mining business with with uh with a desire to, you know, to build something of a real scale as opposed to something that someone else is just going to be able to buy out. Yeah. >> Or make a discovery that, you know, as an exploration stock that a bigger company's going to like and want to just buy out. They're very different strategies, but the one that's worked for me is is uh in this current uh uh company at least in Equinox has been to go big, be diversified, resilient, and today we're getting a tremendous amount of value for that strategy finally after years of underperformance. >> Yeah, well said. And you know, speaking of of legends, we had Tom Kaplan, somebody that I know you know quite well, um, come on the show and he was talking about how jurisdictional risk has really taken over what he looks at in terms of importance for some of these plays. In a world where the strategic medals are now, you know, a thing in the White House, everyone's kind of this rush. How important is the jurisdiction? >> Yeah, I know. Well, first of all, Tom Tom is just a an incredible guy. He's a brilliant, brilliant man. One of my best friends. I I just think the world of him. Um he's he's in a slightly different part of the business than I am. He's more in the exploration side. Um and and I'm more in the mining side, I'd say, right now. I mean, I've got some exploration stuff, but mostly mining. And um and and I've also, you know, I've also had great success in some places that were kind of handsoff jurisdiction wise for a long time. Peru for example was a pariah an investment pariah for years until until 1992 when a new president took over clean house made it one of the more world's best mining jurisdiction which it still is today that was in 1992 and it turned around 9394 we got in there in '95 and it's just been a wonderful place uh Bolivia looked horrible for 160 years it had 180 government changes in the first 160 years of its existence since we started a mine in Bolivia in 1998 eight I think it was uh it's been actually the most stable jurisdiction for the company the this the best uh I guess place to be able to uh extract dividends from our mind value the the mining has been has been really hassle-free it's been a a huge surprise to anybody who would have said it was a basket case so you can't be too clever you can't you can't be too careful about picking jurisdiction >> I tend to again to take a diversified approach. You know, Pan-Americans in six countries, I think, Equinox is in five countries. If one goes south one day, another one might go north. These countries change quite quickly. And by the way, Canada and the US who which are countries traditionally thought of as very safe or Australia, they've had, you know, they've had disastrous uh governments in the past who have proposed absolutely uh you know, absolutely absolutely dreadful tax and royalty changes that that would have wiped out the industry >> in the last 20 years. So, so you know, you you kind of have to be careful. Um, you know, Trump is doing great things, I think, for uh for for for mining, permitting, and so forth in the US. Biden, not so. And and the EPA under Biden was a was a very strict organization, which made it very very hard to get permits in the US. That's turned on it on its, you know, on its on its side. So, so, you know, you can't be I don't think you can be too clever. You have to kind of hold your nose sometimes, go in, cross your fingers. But I've also been burned. I was burned in Russia. I've been burned in Argentina. I've been burned in Guatemala. You know, there's places that have really been uh been hard and you know that's that's the cost of uh of taking that approach. >> Yeah, makes sense. Before I I was going to move on to one of these announcements, but before we do that, I mean, you brought up US and obviously they're fasttracking. You and I talked about this briefly, but we got a new government in Canada. I mean, have you seen is it all just talk? Is Canada open for business? Has that been moving along quicker? >> Yeah, no, it is open for business. Canada's open for business. uh Ontario is, Quebec is, BC is, like Canada is a good place to be in right now. Right today, uh the provinces are supporting mining and they actually have the main jurisdiction by the way in in all the provinces over over regulating mining. The feds have jurisdiction up in the territories. But yeah, it's it's a good mood right now. You know, there's there's a lot of interesting critical minerals. Uh most of them are very critical by the way but there's a lot of interest in developing these and uh and so it's the binding industry right now has its day in the sun and and long long live it but you know typically it it doesn't last forever it'll change. >> What do you think about these these critical I mean you've been doing this a long time these new critical minerals these new critical metals I mean they're they're talking about copper silver silicon even pot ash being added. Yeah, I mean it, you know, I've got, you know, this is rant number 32 because I I've got lots of lots of opinions on this stuff. I I I kind of laugh at it. You know, most most of these things are are propagated by economists and politicians who have no clue. They they know all about the demand side. That's fine. They understand demand's going up. You know, renewable energy and and electrification of the world is going to support critical minerals. And of course, China dominates in this area, has dominated for for a long time, and they worry about that. So they all want to support this business but they don't have a clue about the supply side. The bottom line in the rest of the world there's lots and lots of supply of minerals. What there is not is a supply of metals. In other words, refined product. That's where China dominates in aluminum, in manganesees, magnesium, cobalt, lithium, you name it. You name it. Even copper, zinc, like everything. They've built this giant gigantic smelting and refining business using uh their cheap electricity which largely comes from coal mining or has traditionally now much more renewable energy based. But they've built this big business. They've taken advantage of the low cost of labor and low cost of energy and have have gone crazy on on develop developing the smelting and refining business. So that's what the west needs to have if they really want to compete. But they can't compete with China on costs. It's going to cost more. We're going to see inflation if we if we put tariff barriers up to Chinese metals. Uh you're just going to have higher prices for all metals. That's that's if that's what politicians want, that's what they're going to get. Um all we have to do is build, you know, build more smelters. It's it's a very, by the way, hard thing to do and it takes many many years. So you're not going to see anything change overnight. These these are these are big polluting uh factories typically that take a lot of electricity. Uh they aren't things that most people want in their own backyard. So they're going to be social problems. You're going to have environmental issues to overcome it. It's it's very easy to snap your finger and say we need more critical minerals, but it's a very difficult thing to actually make it happen. >> Yeah. Yeah. Good. Well said, Ross. It'll be interesting to kind of see if this is all just talk. And I mean, if if we make this tangible for our audience, I mean, news broke just, I think this week that that you and Eric Sprat made a significant multi-million dollar investment in a little junior explorer called Scorpio Gold operating down in Nevada. But let's use it as a real-time kind of teaching moment. I mean, was was there a specific human element, a conversation, a character trait? I mean, what told you that's a team worth back? How do you kind of assess that? >> Right. Well, first of all, Jeremy, I'm really not an investor per se. I've always my whole career I've been a developer. I've been developing companies. I'm an entrepreneur, startup guy. I've made most of my money building companies and and and it's been my own companies that have that I've always focused on. I don't sell them typically. I just I at least I don't sell shares in them. I I I create them, build them up, sell the whole company, one exit to a buyer or I build operating businesses that I can just retire from and and you know maintain themselves like like I did with with Pan-Amean and for example my renewable energy company Altera Power. Um so I'm not really a classic investor the way you know the average retail or institutional investor is. Uh I do invest now and then and I'm generally not investing these days. I've said no again and again and again because I'm actually kind of on the exit plan right now. I'm not really doing any new startups. I'm not doing any new companies. I've got a couple in my fold that I'm trying to have a happy ending from. Um but that Scorpio was a really exceptional story. Not even having to do with the asset. It it the fact is that Leo Hathaway a geologist has worked with me in my Lumina my Lumina group since 2003. I think he's been with me for 22 23 years. He joined the board. He really likes it. He recommended it to me. Uh and I just took his recommendation. The other members of the limited group have invested as well. It really doesn't speak to anything particularly clever about an analysis of the gold deposit at their property. I've never been to the property. Um it it I love Nevada. Nevada's been great for me. It's it's a wonderful it's probably the best. I mean, it really has been the most successful gold mining jurisdiction and gold discovery jurisdiction in the world for the last 40 years. More gold there. It's just swimming in gold. It's just incredible. So, it's it's a great place to look. Maybe they'll have great success. Uh it's a very small company. Um and maybe they won't. There's a lot of risk in all these things. Again, I take a diversified approach as if I am an investor. I buy a whole pile of things, a basket of companies because any one of these companies can have a have a failed uh you know, a failed uh set of drill holes and and that's life. You you as long as the management do what they say they're going to do and drill holes in the in the right in the places they say they're going to and and execute the the business plan, I'll be happy to give the money again. It's when they take money and do it something else with that uh that I would never support again. And that has happened a number of times. So anyway, we'll see. But that's that's the Scorpio story. Not very exciting. >> Well said. I mean, you know, because I I was going to ask you, I mean, everybody knows that some of the juniors before, you know, what's happened in those cyclical times, but what's a subtle red flag you see in a leader that makes you walk away even if the asset looks world class? >> Yeah. Yeah, for sure. I mean, you need to have when I look at something, I do start with the asset. The asset is fundamental. Even a a genius can't make a crappy asset and do a good investment. even a fool uh can drill a great hole and make a make a good asset, you know, valuable. So, it's it's the asset first and foremost. But behind that, you also have to look at the people. People are really important. Uh you have people who have a history of uh malfeasants for example uh um diverting money or or or not spending money on what they what they promised they would. uh people who are serially um operating these these sort of pump and dump schemes where you know you can see the value of the stock go up then they sell and the the stock gets crushed. It's it's it's common in Vancouver to have that experience. It's not hard to sort of identify people like that. Uh you know you have to do some work. go to investment conferences, listen to KGO, for example, and and try to separate the wheat from the chaff. And and you know, you can't be a good investor overnight. You've got to do you've got to work at it and use good brokers and good adviserss and read the newsletters and read read investor reports from from the the brokerage firms. It's it's there's good analysts and there's crappy analysts. It's like everything. There's some people I really admire and and some people I don't. That's that's the way of the world. But people are really important. Has your appetite for for that kind of risk changed as you've gotten older? I mean, how has your personal risk tolerance evolved? >> I would say uh much I I would say what I look for now is um is a well ststructured company >> and and I won't say Scorpio is one of those by the way. It's got way too much stock out and they've issued too much stock. So that's a criticism of that particular management team. But I I hold my nose cuz the geologist that that I know and love is is is supporting it. Um yeah, so you look at the you look at the structure of the company, indebtedness, uh um the the record of financings, um the integrity of of of the management structure in terms of how they're spending money, where it's going. Um has that changed over time? It probably has. I I'm I must admit I can I can see through a company pretty quickly now whereas it took me a while to kind of understand the game when I was starting out. Um at the end of the day though as I said it's a very risky business and you really have to um understand that you can lose all your money uh and not get into it unless you're prepared to handle that. And the other thing I guess just thinking about this Jeremy is the reality that we live in a cyclical world, right? This this mining game, equity investing in the mining game is highly cyclical. You have these wonderful runs like we're experiencing right now. And by the same token, you have these horrible long bare markets that just feed on themselves and these the whole market gets lower and lower and lower. The tide goes out. All companies are left high and dry. And it can be out for years. you can be out for, you know, four or five years sometimes. So, you just and in a market where everything's, you know, the tide's going out, the bare market, it doesn't matter what kind of clever management exists, um, you're probably going to lose money if you're invested in the in the game. On the contrary, if the market's good, like right now, everything's going up. You're seeing that today. Every single thing is green on the on the screen, and it's just a a market that even an idiot can make money at. >> Yeah, silver. Silver's catching a big bid here. 42 bucks. I think we got 3570 at the time of taping this on the gold front. I mean, are you looking at just kind of everything? I talked to a broker yesterday. He said, "Now's the time to just go and pick it all up." >> Well, you know, as much >> reflect on reflect on that kind of comment. I mean, exactly. >> Look, brokers brokers have the attention span of a gnat. You know, they're they're they're very short-term focused. I've always tried to build companies that are longer term focused and really try to take advantage of these big cyclical swings in in metal prices. I did that with with with silver, for example, starting Pan-American when silver was at the bottom. I did it with the copper companies, the aluminum copper group and and Equinox gold. We began Equinox gold at the end of 2017 when gold was 1350. I was pretty sure gold was going to go up. Uh and um and in in the process, you know, the bigger the company you can build, the more leverage you're going to have to that higher price. Well, I was pretty sure it was going to blow through $2,000. And I said that year after year after year, but it never actually did that until last year. And boy, what a run it's had. I mean, I never expected this kind of a run. But I'm really happy that in the meantime, you know, we built this company that's that's really hitting its stride right now and is really going to take advantage of this great gold price by turning out massive amounts of cash and just being a super solid company. Um, so you know, I take a much longer term view than than most people, but but at the end of the day, you know, Jeremy, things could turn tomorrow. I mean, gold is a wild animal, for example. It's very hard to predict. You could you could take 50 analysts uh in the world of mining analytical companies uh and they're all going to be bullish on gold right now. It's very hard to create a bearish sentiment. But of course to the to the contrarian, that's the best sell signal you can possibly have that everybody's bullish on on on an upward gold price. Uh I must admit it's it I I tend to side with the analysts. I I do think it's it's very very hard to create a bearish scenario for gold right now. So I do see gold maintaining its price, bouncing around where it is today. Uh potentially going higher um really uh it's it's it stay in the sun is happening right now. Silver's a different story. Silver, of course, you know, as well as as anyone, it's it's a schizophrenic model. It it it's it's both precious and it's industrial. And if we have a, you know, an economic turndown due to higher inflation, higher rates, whatever causes the the the major market equities to have a downturn or even the economy generally to be in a down, which could happen tomorrow. It could happen. >> Yeah, >> you're going to see silver hurt. Uh maybe not as much as say copper or nickel or zinc, but it's going to be hurt. On the other hand, if you have a synchronized economic growth with a good market for gold, you're going to see silver outperform gold. And that's just the way silver works. Has worked for, you know, the 40 years I've looked at it closely. >> Yeah. And it continues too. I mean, here today just watching it. You were talking about the contrarian side and the cyclical approach on this industry. I mean, our viewers are constantly bombarded with financial advice as you can imagine. What's a common piece of advice, investment wisdom, not even advice that you believe is actually dangerous? You know, what's a smarter way for them to think about it? >> Uh, I it's really hard. It's really hard to give any kind of wisdom on that, Jeremy. I think people, one thing I do is I try to read what other smart people are doing. You know, John Paul is bullish on gold. He's a smart guy. Um um Ray Dalio, you know, super smart. Uh very bullish on gold and very bearish on things like the US economy and bonds. >> Um those are smart smart people. Way smarter than me. I'm not an economist. I don't know beans about, you know, investment theory at all. I'm a geologist. >> I'm a rock basher. I mean, that's where I've that's that's been my career. But but I read these smart guys and, you know, they're they're all they all put pretty compelling cases. So, I would say that's a good place to start is to look at smart people, what they're saying, and kind of follow their advice. They they build businesses uh without or by being smart, not stupid. >> Yeah. Well said. And so, taking it back to mining, what you do best in those rocks. I mean, looking out 10 maybe 20 years, what do you think will be the single biggest disruption in the mining industry? I mean, will it be AI, automation, maybe a revolution in industry, something else entirely? >> I don't know. I don't know. I mean, uh, I do know a couple things that as the gold or as the metal prices go up, uh, there's a lot of resources in the world. There's a lot of copper. There's a lot of nickel. There's not a shortage of metal. There's lots and lots of metal. Uh, it's going to need higher prices to be economic, but but there's I mean, take copper for example. Every country in the world right now is trying to promote its own country's uh potential for copper mining because copper creates a lot of jobs and it's a very big long-term wealth creator for any any country. Canada's doing it, United States is doing it, Mexico, everybody's doing it and and there's copper everywhere. So, you know, as the copper price rises to make mines more profitable, you're going to see new mines opening up all over the place in in say five years, seven years, and that is a natural break on higher prices. So, uh, higher prices, the the cure for higher prices is higher prices. And and it's the same with gold. You're see you're going to see a gush of new gold mines opening up in the next few years because of high gold prices right now. And that'll eventually put a lid on the gold price. It always has and always will. Um, so we always have to keep that in mind as an investor. That kind of a a timeline is is important because there will be a market correction to the price eventually. Um, and and you know, you look at something like lithium. Lithium had this run. Well, there's so much lithium in the world. There's lithium everywhere. Uh there's no shortage of lithium. We're never going to run out of lithium. And that, of course, has served as a big break on the on the price. That's why lithium prices haven't continued to go up, even though demand's gone up and up and up every year. So, each metal is a little different in its demand and supply. You have to understand that. You have to think about what's not what's happening today, but what's happening what's going to happen like in 5 years and try to be ahead of that if you're an investor. >> Have you ever I mean, I was going to ask you about self-reflection. I know that you're good at it. I mean, have you ever looked back in your career and wanted to do something differently? Was there a specific deal you passed on that maybe became a huge success? Any lessons about your own bias? >> Lots of them. >> Lots of them. No, I think it's it's inevitable. You know, you can't win them all. I've had a lot more wins than losses. I haven't lost very many times. I've had many, many wins. I've had I think I've started 16 companies now and sold, you know, 12 of them. and three three of them have >> have become really big companies that I've just retired from. Uh and so I've had a lot of success, a lot of luck. I I always blame luck as the as the big reason I've been so successful because I've just been a very lucky guy. Uh with with all manner of things, by the way. And um and so you know I don't know how much uh it's it's very hard for me to be a kind of a pundit Jeremy on on how someone else should behave. Uh I just put my head down and I try not to listen to too many people. I I do read a lot and I travel a lot. I try to understand history, geography. All of this informs my own thesis of what to build, when to build it, who to build it with, uh how to how to strategize the growth. It's it's very hard to be to be to be it's actually, you know, because I've never really written a book about it or anything else. I I've never really thought about it much. I just put my head down and have done it. >> It's that it's that humbleness. It's that humbleness I was talking about, Russ. Uh okay. Well, listen. I mean, outside of your family in the world of business, what are you most curious about right now? Is there that book or an idea or a subject that recently kind of captured? >> Books are a lot of work. You know, I I uh co it was it's weird. I mean, this is kind of personal, but it but go really, you know, because I was forced to be on my little island near Vancouver, Bowen Island. It it got me into gardening in a big way. It's it's shocking to, you know, here I've been a guy who's been traveling all my life, just an obsessive, compulsive traveler. It doesn't matter for holiday or, you know, skiing. I just love to move. bicycle, train, boat, plane, you name it. Um, hiking, canoeing, kaying. Uh, I just love to move and co, you know, forced me to stay close. So, I got into my garden in a big way. And I love gardening. I keep bees. I've kept bees all my life. I love keeping bees. We have a bunch of hens. You know, it's like a survival camp. >> I fish. It's, you know, my my nephew, she was she was, you know, deers on the property because there's too many of them. And so, we have venison now and then, even though my wife's a vegetarian, I've got a bunch of kids, a bunch of grandkids now. So, it's got my whole life's been evolving as I age. Uh, I really am cycling out of this mining game. Uh, personally, I I it's been a great run, but you can't do it forever. And, uh, I've got to do a lot I've got a lot of quests that I want to do. I'm kayaking around Vancouver Island right now. I'm trying to, you know, cycle a ton. And, uh, pretty soon I won't be able to do any of that. So, that's that's my world. It's kind of kind of >> I mean, it sounds like a heck of a world. I'd love to go out to go hunting with you out there anytime. I mean, uh, you know, you've also given millions to conservation through Sika Foundation, other initiatives. Why is that important to you to channel your mining success into protecting the environment? >> Um, well, it's it's not just mining success. I mean, mining success has has resulted in tremendous amount of financial success. Yeah. Uh, I don't know which came first. Um, but I do not want to die with all this money. And um, I've always been philanthropic. I've always felt that I've had incredible luck and I should return that luck to some things that are important to me and my children and their children and future generations. I've always also been interested ever forever in the environment, in protecting the environment, in doing what I can. It sounds very in Congress as a minor to have that interest, but that's the way it is. Uh, it's not in Congress if if you were to get down to it, but I'm not gonna bore your listeners. >> I was gonna say it's >> all my reasons for why that is. >> Yeah, you guys are in the rocks all the time. They're, you know, you do like nature. >> We we we are and we do. And most mining leaders are also strict good environmentalists. They really want to protect the earth as much as they can. Mining is a very very disruptive business, of course, but money is short-term use of the land. It gets reclaimed by and large. Some places you can you can go to a mine, you wouldn't even know it was there. So, you've just got to do it right. And and there's places that are done right and there's places that are done wrong, but I can go down that road for a long time. Environmentally, I think uh we need to come back to uh trying to protect our environment. We require healthy soil, clean air, clean water. Um and we're just uh hammering the earth just too much. And so, uh I feel, you know, you can do shot if you're philanthropic, you can be a shotgun. You can give money to every cause on the planet. Small amounts. I don't really know that that's terribly useful and it certainly doesn't focus anything. My focus is the environment and we have a foundation. We we donate to over 100 groups now in Canada looking after protect the environment, protecting biodiversity. I'm the chair of the BC Parks Foundation trying to support this idea about 30% of our land protected by 2030 to make uh to make some uh inroads on the on the loss of biodiversity that we're seeing. climate change you know all about there's a ton of things we do to support climate change one of them was building a renewable energy company for for for 10 years I did that in Altera Power uh so I'm I'm doing a lot of that stuff because it's important to me and uh if you realize also that of all philanthropy only about 1 and a half% goes to the environment 98.4 4 or 98.5% goes to people things like schools and hospitals and you know refugees and and all sorts of things that help people. >> Mhm. >> That one and a half% the environment that's important to me because of course without a healthy environment none of the other stuff is going to work long term >> uh for us and and and so we need to do them both together. Have a good economy, have a healthy healthy environment. Um so that's that's that's why I focus on that area. Well said. I mean, do you think the next generation of mining leaders has a responsibility to follow your example, building companies, giving back? >> I I do think philanthropy is really really important. If you're lucky enough to make money, you know, what's the point of dying with it all? It's it's crazy. And I I have a very healthy a great family. They're healthy. They're they're on their own. Uh I don't particularly think that, you know, giving them, you know, tens of millions of dollars is a very healthy thing. So, uh, it's something that I'm trying to, you know, shovel out to different groups that that support, uh, their children and their children long term. Um, but generally speaking, I don't tell people what to give money to ever. I mean, if if people are generous, God bless them, you know, they're going to go to hell, guaranteed, because it doesn't matter what they give to. The idea of giving is a good thing. It builds a healthy society. It's very good for communities, and it makes us a richer country and a richer a richer uh environment to live in. So it doesn't matter what they give to. I just think they should give. If people are lucky enough to make to make more money than they can sensibly spend, they should they should pass it to others who are less fortunate. >> Well said, man. Okay. Well, before I let you go, I mean, you've been you've been great at getting on here with me today, but let's talk about the future of mining itself. There's that real concern that mining isn't attracting the next generation of top tier talent. You know, the engineers, the geologists, the financeers. Do you share that concern? I mean, what needs to change to attract the best and the brightest back into the resource sector? >> Yeah, you know, I hear that a lot, Jeremy, and I don't agree with it. Okay. Uh, you know, I don't I mean, we operate I mean, look at Pan-American Radio. Pan-American has I don't know, 11 mines, I think, in in like six countries or seven countries, 26,000 employees. You know, I started that with, you know, no employees. It's 26,000. Equinox in seven years we now have 16,000 employees in uh in five countries at our at our nine operations. I think we have eight or nine mines. I mean it's extraordinary. And so our head office here, you you'll find 100 people in our head office with 18 different languages. Uh and there's a lot of young people. They're smart. They're they maybe aren't educated in in in at UBC or Queens in Canada. Maybe they're educated in at the at the University of Catholica in in in Lima or in Mexico or in or in New Delhi. But these are smart young people. They're interested in getting into mining, working with companies that are trying to do the right thing, trying to have healthy workers, healthy communities, good environmental practices, doing the right thing and contributing to society by building communities and building uh building wealth that comes from the mining industry that is spread all over the place. >> So, I don't really see that. I I uh I uh I think it's true. There's a lot of older, you know, uh, I will say older white engineers and geologists that are tending to be retiring now, but there's a lot of other people, younger people from other countries coming in to fill the spaces and there's there's good talent available. >> Yeah, good find it. Good to hear that, Russ. All right. Uh, hey, listen, when when people look back on your career a hundred years from now, what do you want the headline to say? >> Ashes to ashes, dust to dust. I I I really I won't be remembered at all and I don't care about that. It's just not important to me. The important thing is to have healthy kids and you know I've got all this posy grandkids and I look after them and try to make them have a happy life and and try to create a an environment quite frankly that uh is going to be healthy for future generations of humans. Uh and the only way to do that is to look at the myriad of other species that we share this planet with and try to share it rather than dominate it. And and that's that's why I I do what I do. But no, I don't expect any great any great memory of of of me when I'm when I'm dead and gone. It's just going to be a passing over to new generations. >> What a hell of a last question. Hey, Ross. All right, Ross Batty. Of course, very humble humble man. That's a powerful place to leave it. Thank you for your incredible uh candid insight today. It's been a true master class. We appreciate your time. >> I'm very humble with my arrogance. >> Not always. Not always. We'll see if you get a tinagger off of some of these. I we, you know, we're all just watching around. >> All right. Very nice. Appreciate it. Thanks so much. >> All right. The lesson's clear. Success isn't just about wins. It's about what you learn from the setbacks. That's the kind of wisdom we're here after on the legends. I hope you'll still join us next time. Be sure to subscribe for all of us here at Kicko News. Thanks for watching. [Music] Heat. Heat. [Music]
Ross Beaty: 'Do Not Sell' This Rally, It's a 'Secular Breakout'
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[Music] Hey everyone, welcome back. I'm Jeremy Saffron. All right, now there are moments when the market narrative shifts so fast that you can almost feel it. And we're in one of those moments right now. For the past year, the story has been simple. Gold at all-time highs. But another real story, the one that's just beginning to unfold, is happening in the equities. After years of being ignored, the miners are waking up and finally catching a bid. And at gold over $3,500. These companies are set to become cash printing machines. Their stocks are coming to life. And the question on every investor's mind is no longer if the sector will run, but how far. Is this a short-term rally? Is it a start of a generational rerating? How do you separate the winners from the pretenders? Now, to answer those questions, we're launching a new series today here at Kitco News called Legends. And that's where we're cutting through the daily noise to get timeless wisdom from the icons who have navigated these markets and and built empires through the chaos. Now, our guest today is a legend in the truest sense. He's a geologist by training who has founded and built five separate public companies into billiondoll plus enterprises, a feat few in any industry have ever really matched. And he's also the man behind Pan-American Silver, one of the world's largest silver producers and the chairman of Equinox Gold, a company now worth billions of dollars. And in a league of his own, he has given millions to causes like environmental conservation, something very close to his heart. Now, he's here today not just to talk about the markets, but to deconstruct the principles of leadership and investment and what made him a legend, even though I know you're a humble man joining me right now, Ross Bey, thanks for making the time, Ross. I hope you've had a great summer. >> What a preamble. What a preamble. the the equinox tens of billions of dollars by the way that those are Zimbabwe dollars not not big US dollar not even the Canadian dollar but any it's it's wouldn't it be nice >> well well we're getting there we're getting there especially with some of these some of these deals and you know the market is back I mean the GDX is up something like 90% year to date the market seems euphoric but from your perspective I mean is this the start of a durable long-term rerating for the sector or does it kind of the euphoria feel a little fragile >> it's pretty euphoric Uh but you know I have seen these markets before >> um and and it it really is a secular breakout. I think, you know, we saw this uh oh my goodness, we saw it like in 1992. We saw it in in in 90 in 2002. We saw it in 2009, you know, where he had these fabulous moves. And I I've talked about this before with you. Um and I've advised investors, you know, especially the last few years have been so brutal for equity investors because you've had a wonderful move in the gold price and other metals like copper and and and most metals on the periodic table. But the equities haven't moved. Money's come out of the uh system. It's gone into other flavors of the month, Bitcoin, um meme stocks, and and and lots of the, you know, the the the nifty50 in in uh the big stocks in New York, the the fabulous five, as they say, the you know, all these other things that have done really well at the expense of the of the mining stock. So, there's been no money coming into the equities. And I just said, look, there's there's two things are going to happen. either gold prices are going to crater in which case fine equities valuation which which you know has has has basically reflected a terrible metals price environment um that's either going to happen I find that extremely unlikely uh or you're going to have the equities pop up to where they should be based on the metal prices and in fact the latter has occurred and then the other thing I said is to investors when this happens uh which which sort of happens overnight and we've we literally have just seen it happen in the last couple of months Yeah, >> when it happens, do not sell. Resist the uh the temptation to sell. Obviously, take money off the table if you can, get your capital back, but go in for the ride. This is likely to be a relatively long-term uh market move because the the it's been pent up for so long, for so many years where the the equities and I I follow the golds more than anything else because that's my sort of main gig right now, >> Equinox gold. So, I follow that and and I've just seen this this really incredible explosive rally as you said in the in the large caps, the midcaps, and particularly the juniors who have been so unloved for so long. It's lovely to see. Uh but my advice is this is likely to last for a while. Uh don't sell everything. Don't treat it as a trade-in opportunity. >> Yeah. Not just profit taking. I mean, you see some of that. I mean, it almost feels like the narrative has changed for the miners, too, right? I mean, now everyone's looking at these costs and the bull case is kind of simple. I mean these companies should be gushing with cash but the reality is that their costs have also exploded. I mean for anyone running any kind of business right now that is a core challenge. From your perspective what's the key to protecting you know profit margins in this intensely inflationary environment. >> Yeah I mean it's it's first of all it's not in intensely inflationary it's somewhat inflationary. It was a lot more inflationary back in 2022 21 uh which was a COVID reaction to just outpouring of vast amounts of money hitting the system and and people buying stuff and inflation going crazy. It's not crazy. It's modest. Costs are rising for sure, but they're not rising nearly as quickly as the metal price is rising. So margins are actually expanding. Companies are gushing money. Anybody in the gold space right now is uh is doing really really well. And if they're not, they shouldn't be in the business. >> Yeah. Yeah. Well, I was going to say, let's talk about the disconnect between the majors and the juniors. It feels like two very different worlds. Do do the majors with their massive operations have an advantage in this environment or or does the real opportunity for wealth creation now lie with these smaller, more agile companies? >> Well, I've always believed that scale matters. That's one of the reasons with Equinox, for example, we went big really quickly uh in the last seven years building a company from nothing to now almost just nudging a million ounces of gold production a year. And I did that because I wanted to take advantage of what I thought was going to be a really good move in gold where the larger you are, the more profit you can make from this big move in gold. But also, the market today reflects uh a desire for scale. Uh investors want large companies that are highly liquid, that have good balance sheets, diversified assets, th that kind of thing. And so that's why the majors, the the large cap stocks have typically outperformed the juniors. That's that's been the narrative for the last number of years. And it's a normal narrative in a in a kind of evolving bull market in in gold equities. But of course, as the market uh cycles, the the large cap valuations which outperform in the start of the cycle, they tend to be they tend to underperform as markets go down. People tend to take profits. They they roll those profits back in the market and they go to the midcaps and then they go finally to the juniors. And that's what's happening right now. Majors have done well. you know, barracks had a really nice move. Some investors are taking some money out of those safe, diversified, uh, lower risk companies that have great multiples and they're putting it into the smaller companies that don't have the multiples but have the upside. So, I think that's really what's going on finally after years and years of those stocks underperforming. >> Okay. So, the M&A side, I mean, is this finally, you know, the junior cycle or will the majors just buy them out and capture that upside for themselves? >> Yeah, I mean, not really. I I don't really see a lot of M&A happening. There will be some, Jeremy. It's a it's a business which needs M&A because of course every day large companies uh can only replace reserves that they mine by either new discoveries or buying companies that have gold assets. So, it's just a natural part of the mining and quite frankly any resource business where you're dealing with a non-renewable resource. >> Um is it going to change right now? I don't think so. uh you know a lot of the major companies that are gushing cash are actually returning that to their shareholders through share buybacks and dividends and that kind of thing or companies like Equinox that to build its business as a big company had to borrow a lot of money. We've got a billion and change in debt and we're using our our cash flow right now to repay debt to delever and and that's the main use of capital that that that we have right now. Um are they going to buy a lot of the juniors? I don't think so. Some will be sold. Of course, the higher quality juniors will always command a value. Uh I don't necessarily think that the pace of acquisitions is going to increase all that much. We'll see. I I just think valuations are going to where they are kind of more natural uh should have been for the last few years and are now getting to be reasonably priced relative to the gold the gold price. We see the actual fundamental net asset value of those junior companies. >> Yeah. I mean, you know, we hear about it. We've we've seen some of the majors been terrible capital allocators in the past cycles and you know people have asked us I mean what makes you think that they've learned their lesson and won't squander this opportunity of an overpriced ill times acquisitions at the top of the market. >> Yep. Well, it's, you know, it's very tempting when you've got a whole bucket of cash you don't have a particular use for it to to not to resist the the sort of the shareholder wish to return it to them and to actually use it to build the egos of the managers to get bigger and bigger and buy other companies. It's it's very addictive to be doing this. I mean, I've done tons and tons of deals in my career. I mean, it's there's a sort of a, you know, I don't know if it's if it's like long distance running, it gives you that kind of high, but doing these deals is really fun and it's it's exciting and it's what naturally drives managers. And of course, the bankers and the investment dealers are all over this stuff because they make fees from from M&A. They make fees from recommending deals to managers of companies and they make it all look so great. um you know when they when they show you the the the powerpoints of of of combining one and one is three and you know you know using your high multiple to buy a low multiple company and so on. Well, they don't always work out and as you correctly pointed out uh there's been a lot of shareholder wealth destruction through through bad deals and I'm must admit I'm guilty of of one or two of those myself. So, it's a pot, you know, it's definitely a tempting thing to do, uh, compared to a rather more pedestrian thing of simply paying a big special dividend if you're making unusual amounts of cash or or or buying back shares, >> right? Yeah. I mean, you know, that's some of the hard math of mining, of course, and but investors also need to understand the human factor, the the leaders who drive these companies. I mean, you've been doing this for over 40 years. I mean, when you look back, what's the one thing that has become more important in your decision-m process over time? And what's something you've learned is actually less important than you once thought? >> Well, you know, lessons. >> Welcome to 60 Minutes. Yeah, >> I know. I I I don't know, Jeremy. It's it's such a risky business. Um >> I've just learned the power of diversification, I think, as much as anything. you know, the the the reason to go big is to is to build an asset bait that's resilient against some of the risks that come into the mining business. And I'll just name a couple. The last last couple last year, for example, um you know, we had a we had a pit wall failure in in one of our seven mines. It was a mine in Brazil. And you know it if we were we if we were a one asset company only holding that asset we our stock price would have been crushed potentially to an unreoverable uh point as it was we had one of seven and and we took a bit of a hit. Uh the the you know the it took about 4 months to recover from that. The mine's back running and it it recovered relatively quickly but it's it it you know that was a that was a surprising thing but it happens in industry. We've had a very slow startup at our big new mine in Canada called Greenstone. Again, that would have hurt an awful lot of companies, but we've got all this other gold production that buffers that um that slow startup. It's doing fine now, but it did it did take quite a while to start up. And then in Mexico, we've had a a community problem that's been intractable. We've had to shut a mine down there, big mine, um with, you know, giant resources that that I just think is a is a world-class deposit. But we've had these social problems. So, we had to shut the mine down. And again, if we were only holding that one that one asset, we'd have, you know, our valuation would have gone to zero. So that's that's been a big thing for me is the power of diversification. But you can only play that game if you're really in the mining business with with uh with a desire to, you know, to build something of a real scale as opposed to something that someone else is just going to be able to buy out. Yeah. >> Or make a discovery that, you know, as an exploration stock that a bigger company's going to like and want to just buy out. They're very different strategies, but the one that's worked for me is is uh in this current uh uh company at least in Equinox has been to go big, be diversified, resilient, and today we're getting a tremendous amount of value for that strategy finally after years of underperformance. >> Yeah, well said. And you know, speaking of of legends, we had Tom Kaplan, somebody that I know you know quite well, um, come on the show and he was talking about how jurisdictional risk has really taken over what he looks at in terms of importance for some of these plays. In a world where the strategic medals are now, you know, a thing in the White House, everyone's kind of this rush. How important is the jurisdiction? >> Yeah, I know. Well, first of all, Tom Tom is just a an incredible guy. He's a brilliant, brilliant man. One of my best friends. I I just think the world of him. Um he's he's in a slightly different part of the business than I am. He's more in the exploration side. Um and and I'm more in the mining side, I'd say, right now. I mean, I've got some exploration stuff, but mostly mining. And um and and I've also, you know, I've also had great success in some places that were kind of handsoff jurisdiction wise for a long time. Peru for example was a pariah an investment pariah for years until until 1992 when a new president took over clean house made it one of the more world's best mining jurisdiction which it still is today that was in 1992 and it turned around 9394 we got in there in '95 and it's just been a wonderful place uh Bolivia looked horrible for 160 years it had 180 government changes in the first 160 years of its existence since we started a mine in Bolivia in 1998 eight I think it was uh it's been actually the most stable jurisdiction for the company the this the best uh I guess place to be able to uh extract dividends from our mind value the the mining has been has been really hassle-free it's been a a huge surprise to anybody who would have said it was a basket case so you can't be too clever you can't you can't be too careful about picking jurisdiction >> I tend to again to take a diversified approach. You know, Pan-Americans in six countries, I think, Equinox is in five countries. If one goes south one day, another one might go north. These countries change quite quickly. And by the way, Canada and the US who which are countries traditionally thought of as very safe or Australia, they've had, you know, they've had disastrous uh governments in the past who have proposed absolutely uh you know, absolutely absolutely dreadful tax and royalty changes that that would have wiped out the industry >> in the last 20 years. So, so you know, you you kind of have to be careful. Um, you know, Trump is doing great things, I think, for uh for for for mining, permitting, and so forth in the US. Biden, not so. And and the EPA under Biden was a was a very strict organization, which made it very very hard to get permits in the US. That's turned on it on its, you know, on its on its side. So, so, you know, you can't be I don't think you can be too clever. You have to kind of hold your nose sometimes, go in, cross your fingers. But I've also been burned. I was burned in Russia. I've been burned in Argentina. I've been burned in Guatemala. You know, there's places that have really been uh been hard and you know that's that's the cost of uh of taking that approach. >> Yeah, makes sense. Before I I was going to move on to one of these announcements, but before we do that, I mean, you brought up US and obviously they're fasttracking. You and I talked about this briefly, but we got a new government in Canada. I mean, have you seen is it all just talk? Is Canada open for business? Has that been moving along quicker? >> Yeah, no, it is open for business. Canada's open for business. uh Ontario is, Quebec is, BC is, like Canada is a good place to be in right now. Right today, uh the provinces are supporting mining and they actually have the main jurisdiction by the way in in all the provinces over over regulating mining. The feds have jurisdiction up in the territories. But yeah, it's it's a good mood right now. You know, there's there's a lot of interesting critical minerals. Uh most of them are very critical by the way but there's a lot of interest in developing these and uh and so it's the binding industry right now has its day in the sun and and long long live it but you know typically it it doesn't last forever it'll change. >> What do you think about these these critical I mean you've been doing this a long time these new critical minerals these new critical metals I mean they're they're talking about copper silver silicon even pot ash being added. Yeah, I mean it, you know, I've got, you know, this is rant number 32 because I I've got lots of lots of opinions on this stuff. I I I kind of laugh at it. You know, most most of these things are are propagated by economists and politicians who have no clue. They they know all about the demand side. That's fine. They understand demand's going up. You know, renewable energy and and electrification of the world is going to support critical minerals. And of course, China dominates in this area, has dominated for for a long time, and they worry about that. So they all want to support this business but they don't have a clue about the supply side. The bottom line in the rest of the world there's lots and lots of supply of minerals. What there is not is a supply of metals. In other words, refined product. That's where China dominates in aluminum, in manganesees, magnesium, cobalt, lithium, you name it. You name it. Even copper, zinc, like everything. They've built this giant gigantic smelting and refining business using uh their cheap electricity which largely comes from coal mining or has traditionally now much more renewable energy based. But they've built this big business. They've taken advantage of the low cost of labor and low cost of energy and have have gone crazy on on develop developing the smelting and refining business. So that's what the west needs to have if they really want to compete. But they can't compete with China on costs. It's going to cost more. We're going to see inflation if we if we put tariff barriers up to Chinese metals. Uh you're just going to have higher prices for all metals. That's that's if that's what politicians want, that's what they're going to get. Um all we have to do is build, you know, build more smelters. It's it's a very, by the way, hard thing to do and it takes many many years. So you're not going to see anything change overnight. These these are these are big polluting uh factories typically that take a lot of electricity. Uh they aren't things that most people want in their own backyard. So they're going to be social problems. You're going to have environmental issues to overcome it. It's it's very easy to snap your finger and say we need more critical minerals, but it's a very difficult thing to actually make it happen. >> Yeah. Yeah. Good. Well said, Ross. It'll be interesting to kind of see if this is all just talk. And I mean, if if we make this tangible for our audience, I mean, news broke just, I think this week that that you and Eric Sprat made a significant multi-million dollar investment in a little junior explorer called Scorpio Gold operating down in Nevada. But let's use it as a real-time kind of teaching moment. I mean, was was there a specific human element, a conversation, a character trait? I mean, what told you that's a team worth back? How do you kind of assess that? >> Right. Well, first of all, Jeremy, I'm really not an investor per se. I've always my whole career I've been a developer. I've been developing companies. I'm an entrepreneur, startup guy. I've made most of my money building companies and and and it's been my own companies that have that I've always focused on. I don't sell them typically. I just I at least I don't sell shares in them. I I I create them, build them up, sell the whole company, one exit to a buyer or I build operating businesses that I can just retire from and and you know maintain themselves like like I did with with Pan-Amean and for example my renewable energy company Altera Power. Um so I'm not really a classic investor the way you know the average retail or institutional investor is. Uh I do invest now and then and I'm generally not investing these days. I've said no again and again and again because I'm actually kind of on the exit plan right now. I'm not really doing any new startups. I'm not doing any new companies. I've got a couple in my fold that I'm trying to have a happy ending from. Um but that Scorpio was a really exceptional story. Not even having to do with the asset. It it the fact is that Leo Hathaway a geologist has worked with me in my Lumina my Lumina group since 2003. I think he's been with me for 22 23 years. He joined the board. He really likes it. He recommended it to me. Uh and I just took his recommendation. The other members of the limited group have invested as well. It really doesn't speak to anything particularly clever about an analysis of the gold deposit at their property. I've never been to the property. Um it it I love Nevada. Nevada's been great for me. It's it's a wonderful it's probably the best. I mean, it really has been the most successful gold mining jurisdiction and gold discovery jurisdiction in the world for the last 40 years. More gold there. It's just swimming in gold. It's just incredible. So, it's it's a great place to look. Maybe they'll have great success. Uh it's a very small company. Um and maybe they won't. There's a lot of risk in all these things. Again, I take a diversified approach as if I am an investor. I buy a whole pile of things, a basket of companies because any one of these companies can have a have a failed uh you know, a failed uh set of drill holes and and that's life. You you as long as the management do what they say they're going to do and drill holes in the in the right in the places they say they're going to and and execute the the business plan, I'll be happy to give the money again. It's when they take money and do it something else with that uh that I would never support again. And that has happened a number of times. So anyway, we'll see. But that's that's the Scorpio story. Not very exciting. >> Well said. I mean, you know, because I I was going to ask you, I mean, everybody knows that some of the juniors before, you know, what's happened in those cyclical times, but what's a subtle red flag you see in a leader that makes you walk away even if the asset looks world class? >> Yeah. Yeah, for sure. I mean, you need to have when I look at something, I do start with the asset. The asset is fundamental. Even a a genius can't make a crappy asset and do a good investment. even a fool uh can drill a great hole and make a make a good asset, you know, valuable. So, it's it's the asset first and foremost. But behind that, you also have to look at the people. People are really important. Uh you have people who have a history of uh malfeasants for example uh um diverting money or or or not spending money on what they what they promised they would. uh people who are serially um operating these these sort of pump and dump schemes where you know you can see the value of the stock go up then they sell and the the stock gets crushed. It's it's it's common in Vancouver to have that experience. It's not hard to sort of identify people like that. Uh you know you have to do some work. go to investment conferences, listen to KGO, for example, and and try to separate the wheat from the chaff. And and you know, you can't be a good investor overnight. You've got to do you've got to work at it and use good brokers and good adviserss and read the newsletters and read read investor reports from from the the brokerage firms. It's it's there's good analysts and there's crappy analysts. It's like everything. There's some people I really admire and and some people I don't. That's that's the way of the world. But people are really important. Has your appetite for for that kind of risk changed as you've gotten older? I mean, how has your personal risk tolerance evolved? >> I would say uh much I I would say what I look for now is um is a well ststructured company >> and and I won't say Scorpio is one of those by the way. It's got way too much stock out and they've issued too much stock. So that's a criticism of that particular management team. But I I hold my nose cuz the geologist that that I know and love is is is supporting it. Um yeah, so you look at the you look at the structure of the company, indebtedness, uh um the the record of financings, um the integrity of of of the management structure in terms of how they're spending money, where it's going. Um has that changed over time? It probably has. I I'm I must admit I can I can see through a company pretty quickly now whereas it took me a while to kind of understand the game when I was starting out. Um at the end of the day though as I said it's a very risky business and you really have to um understand that you can lose all your money uh and not get into it unless you're prepared to handle that. And the other thing I guess just thinking about this Jeremy is the reality that we live in a cyclical world, right? This this mining game, equity investing in the mining game is highly cyclical. You have these wonderful runs like we're experiencing right now. And by the same token, you have these horrible long bare markets that just feed on themselves and these the whole market gets lower and lower and lower. The tide goes out. All companies are left high and dry. And it can be out for years. you can be out for, you know, four or five years sometimes. So, you just and in a market where everything's, you know, the tide's going out, the bare market, it doesn't matter what kind of clever management exists, um, you're probably going to lose money if you're invested in the in the game. On the contrary, if the market's good, like right now, everything's going up. You're seeing that today. Every single thing is green on the on the screen, and it's just a a market that even an idiot can make money at. >> Yeah, silver. Silver's catching a big bid here. 42 bucks. I think we got 3570 at the time of taping this on the gold front. I mean, are you looking at just kind of everything? I talked to a broker yesterday. He said, "Now's the time to just go and pick it all up." >> Well, you know, as much >> reflect on reflect on that kind of comment. I mean, exactly. >> Look, brokers brokers have the attention span of a gnat. You know, they're they're they're very short-term focused. I've always tried to build companies that are longer term focused and really try to take advantage of these big cyclical swings in in metal prices. I did that with with with silver, for example, starting Pan-American when silver was at the bottom. I did it with the copper companies, the aluminum copper group and and Equinox gold. We began Equinox gold at the end of 2017 when gold was 1350. I was pretty sure gold was going to go up. Uh and um and in in the process, you know, the bigger the company you can build, the more leverage you're going to have to that higher price. Well, I was pretty sure it was going to blow through $2,000. And I said that year after year after year, but it never actually did that until last year. And boy, what a run it's had. I mean, I never expected this kind of a run. But I'm really happy that in the meantime, you know, we built this company that's that's really hitting its stride right now and is really going to take advantage of this great gold price by turning out massive amounts of cash and just being a super solid company. Um, so you know, I take a much longer term view than than most people, but but at the end of the day, you know, Jeremy, things could turn tomorrow. I mean, gold is a wild animal, for example. It's very hard to predict. You could you could take 50 analysts uh in the world of mining analytical companies uh and they're all going to be bullish on gold right now. It's very hard to create a bearish sentiment. But of course to the to the contrarian, that's the best sell signal you can possibly have that everybody's bullish on on on an upward gold price. Uh I must admit it's it I I tend to side with the analysts. I I do think it's it's very very hard to create a bearish scenario for gold right now. So I do see gold maintaining its price, bouncing around where it is today. Uh potentially going higher um really uh it's it's it stay in the sun is happening right now. Silver's a different story. Silver, of course, you know, as well as as anyone, it's it's a schizophrenic model. It it it's it's both precious and it's industrial. And if we have a, you know, an economic turndown due to higher inflation, higher rates, whatever causes the the the major market equities to have a downturn or even the economy generally to be in a down, which could happen tomorrow. It could happen. >> Yeah, >> you're going to see silver hurt. Uh maybe not as much as say copper or nickel or zinc, but it's going to be hurt. On the other hand, if you have a synchronized economic growth with a good market for gold, you're going to see silver outperform gold. And that's just the way silver works. Has worked for, you know, the 40 years I've looked at it closely. >> Yeah. And it continues too. I mean, here today just watching it. You were talking about the contrarian side and the cyclical approach on this industry. I mean, our viewers are constantly bombarded with financial advice as you can imagine. What's a common piece of advice, investment wisdom, not even advice that you believe is actually dangerous? You know, what's a smarter way for them to think about it? >> Uh, I it's really hard. It's really hard to give any kind of wisdom on that, Jeremy. I think people, one thing I do is I try to read what other smart people are doing. You know, John Paul is bullish on gold. He's a smart guy. Um um Ray Dalio, you know, super smart. Uh very bullish on gold and very bearish on things like the US economy and bonds. >> Um those are smart smart people. Way smarter than me. I'm not an economist. I don't know beans about, you know, investment theory at all. I'm a geologist. >> I'm a rock basher. I mean, that's where I've that's that's been my career. But but I read these smart guys and, you know, they're they're all they all put pretty compelling cases. So, I would say that's a good place to start is to look at smart people, what they're saying, and kind of follow their advice. They they build businesses uh without or by being smart, not stupid. >> Yeah. Well said. And so, taking it back to mining, what you do best in those rocks. I mean, looking out 10 maybe 20 years, what do you think will be the single biggest disruption in the mining industry? I mean, will it be AI, automation, maybe a revolution in industry, something else entirely? >> I don't know. I don't know. I mean, uh, I do know a couple things that as the gold or as the metal prices go up, uh, there's a lot of resources in the world. There's a lot of copper. There's a lot of nickel. There's not a shortage of metal. There's lots and lots of metal. Uh, it's going to need higher prices to be economic, but but there's I mean, take copper for example. Every country in the world right now is trying to promote its own country's uh potential for copper mining because copper creates a lot of jobs and it's a very big long-term wealth creator for any any country. Canada's doing it, United States is doing it, Mexico, everybody's doing it and and there's copper everywhere. So, you know, as the copper price rises to make mines more profitable, you're going to see new mines opening up all over the place in in say five years, seven years, and that is a natural break on higher prices. So, uh, higher prices, the the cure for higher prices is higher prices. And and it's the same with gold. You're see you're going to see a gush of new gold mines opening up in the next few years because of high gold prices right now. And that'll eventually put a lid on the gold price. It always has and always will. Um, so we always have to keep that in mind as an investor. That kind of a a timeline is is important because there will be a market correction to the price eventually. Um, and and you know, you look at something like lithium. Lithium had this run. Well, there's so much lithium in the world. There's lithium everywhere. Uh there's no shortage of lithium. We're never going to run out of lithium. And that, of course, has served as a big break on the on the price. That's why lithium prices haven't continued to go up, even though demand's gone up and up and up every year. So, each metal is a little different in its demand and supply. You have to understand that. You have to think about what's not what's happening today, but what's happening what's going to happen like in 5 years and try to be ahead of that if you're an investor. >> Have you ever I mean, I was going to ask you about self-reflection. I know that you're good at it. I mean, have you ever looked back in your career and wanted to do something differently? Was there a specific deal you passed on that maybe became a huge success? Any lessons about your own bias? >> Lots of them. >> Lots of them. No, I think it's it's inevitable. You know, you can't win them all. I've had a lot more wins than losses. I haven't lost very many times. I've had many, many wins. I've had I think I've started 16 companies now and sold, you know, 12 of them. and three three of them have >> have become really big companies that I've just retired from. Uh and so I've had a lot of success, a lot of luck. I I always blame luck as the as the big reason I've been so successful because I've just been a very lucky guy. Uh with with all manner of things, by the way. And um and so you know I don't know how much uh it's it's very hard for me to be a kind of a pundit Jeremy on on how someone else should behave. Uh I just put my head down and I try not to listen to too many people. I I do read a lot and I travel a lot. I try to understand history, geography. All of this informs my own thesis of what to build, when to build it, who to build it with, uh how to how to strategize the growth. It's it's very hard to be to be to be it's actually, you know, because I've never really written a book about it or anything else. I I've never really thought about it much. I just put my head down and have done it. >> It's that it's that humbleness. It's that humbleness I was talking about, Russ. Uh okay. Well, listen. I mean, outside of your family in the world of business, what are you most curious about right now? Is there that book or an idea or a subject that recently kind of captured? >> Books are a lot of work. You know, I I uh co it was it's weird. I mean, this is kind of personal, but it but go really, you know, because I was forced to be on my little island near Vancouver, Bowen Island. It it got me into gardening in a big way. It's it's shocking to, you know, here I've been a guy who's been traveling all my life, just an obsessive, compulsive traveler. It doesn't matter for holiday or, you know, skiing. I just love to move. bicycle, train, boat, plane, you name it. Um, hiking, canoeing, kaying. Uh, I just love to move and co, you know, forced me to stay close. So, I got into my garden in a big way. And I love gardening. I keep bees. I've kept bees all my life. I love keeping bees. We have a bunch of hens. You know, it's like a survival camp. >> I fish. It's, you know, my my nephew, she was she was, you know, deers on the property because there's too many of them. And so, we have venison now and then, even though my wife's a vegetarian, I've got a bunch of kids, a bunch of grandkids now. So, it's got my whole life's been evolving as I age. Uh, I really am cycling out of this mining game. Uh, personally, I I it's been a great run, but you can't do it forever. And, uh, I've got to do a lot I've got a lot of quests that I want to do. I'm kayaking around Vancouver Island right now. I'm trying to, you know, cycle a ton. And, uh, pretty soon I won't be able to do any of that. So, that's that's my world. It's kind of kind of >> I mean, it sounds like a heck of a world. I'd love to go out to go hunting with you out there anytime. I mean, uh, you know, you've also given millions to conservation through Sika Foundation, other initiatives. Why is that important to you to channel your mining success into protecting the environment? >> Um, well, it's it's not just mining success. I mean, mining success has has resulted in tremendous amount of financial success. Yeah. Uh, I don't know which came first. Um, but I do not want to die with all this money. And um, I've always been philanthropic. I've always felt that I've had incredible luck and I should return that luck to some things that are important to me and my children and their children and future generations. I've always also been interested ever forever in the environment, in protecting the environment, in doing what I can. It sounds very in Congress as a minor to have that interest, but that's the way it is. Uh, it's not in Congress if if you were to get down to it, but I'm not gonna bore your listeners. >> I was gonna say it's >> all my reasons for why that is. >> Yeah, you guys are in the rocks all the time. They're, you know, you do like nature. >> We we we are and we do. And most mining leaders are also strict good environmentalists. They really want to protect the earth as much as they can. Mining is a very very disruptive business, of course, but money is short-term use of the land. It gets reclaimed by and large. Some places you can you can go to a mine, you wouldn't even know it was there. So, you've just got to do it right. And and there's places that are done right and there's places that are done wrong, but I can go down that road for a long time. Environmentally, I think uh we need to come back to uh trying to protect our environment. We require healthy soil, clean air, clean water. Um and we're just uh hammering the earth just too much. And so, uh I feel, you know, you can do shot if you're philanthropic, you can be a shotgun. You can give money to every cause on the planet. Small amounts. I don't really know that that's terribly useful and it certainly doesn't focus anything. My focus is the environment and we have a foundation. We we donate to over 100 groups now in Canada looking after protect the environment, protecting biodiversity. I'm the chair of the BC Parks Foundation trying to support this idea about 30% of our land protected by 2030 to make uh to make some uh inroads on the on the loss of biodiversity that we're seeing. climate change you know all about there's a ton of things we do to support climate change one of them was building a renewable energy company for for for 10 years I did that in Altera Power uh so I'm I'm doing a lot of that stuff because it's important to me and uh if you realize also that of all philanthropy only about 1 and a half% goes to the environment 98.4 4 or 98.5% goes to people things like schools and hospitals and you know refugees and and all sorts of things that help people. >> Mhm. >> That one and a half% the environment that's important to me because of course without a healthy environment none of the other stuff is going to work long term >> uh for us and and and so we need to do them both together. Have a good economy, have a healthy healthy environment. Um so that's that's that's why I focus on that area. Well said. I mean, do you think the next generation of mining leaders has a responsibility to follow your example, building companies, giving back? >> I I do think philanthropy is really really important. If you're lucky enough to make money, you know, what's the point of dying with it all? It's it's crazy. And I I have a very healthy a great family. They're healthy. They're they're on their own. Uh I don't particularly think that, you know, giving them, you know, tens of millions of dollars is a very healthy thing. So, uh, it's something that I'm trying to, you know, shovel out to different groups that that support, uh, their children and their children long term. Um, but generally speaking, I don't tell people what to give money to ever. I mean, if if people are generous, God bless them, you know, they're going to go to hell, guaranteed, because it doesn't matter what they give to. The idea of giving is a good thing. It builds a healthy society. It's very good for communities, and it makes us a richer country and a richer a richer uh environment to live in. So it doesn't matter what they give to. I just think they should give. If people are lucky enough to make to make more money than they can sensibly spend, they should they should pass it to others who are less fortunate. >> Well said, man. Okay. Well, before I let you go, I mean, you've been you've been great at getting on here with me today, but let's talk about the future of mining itself. There's that real concern that mining isn't attracting the next generation of top tier talent. You know, the engineers, the geologists, the financeers. Do you share that concern? I mean, what needs to change to attract the best and the brightest back into the resource sector? >> Yeah, you know, I hear that a lot, Jeremy, and I don't agree with it. Okay. Uh, you know, I don't I mean, we operate I mean, look at Pan-American Radio. Pan-American has I don't know, 11 mines, I think, in in like six countries or seven countries, 26,000 employees. You know, I started that with, you know, no employees. It's 26,000. Equinox in seven years we now have 16,000 employees in uh in five countries at our at our nine operations. I think we have eight or nine mines. I mean it's extraordinary. And so our head office here, you you'll find 100 people in our head office with 18 different languages. Uh and there's a lot of young people. They're smart. They're they maybe aren't educated in in in at UBC or Queens in Canada. Maybe they're educated in at the at the University of Catholica in in in Lima or in Mexico or in or in New Delhi. But these are smart young people. They're interested in getting into mining, working with companies that are trying to do the right thing, trying to have healthy workers, healthy communities, good environmental practices, doing the right thing and contributing to society by building communities and building uh building wealth that comes from the mining industry that is spread all over the place. >> So, I don't really see that. I I uh I uh I think it's true. There's a lot of older, you know, uh, I will say older white engineers and geologists that are tending to be retiring now, but there's a lot of other people, younger people from other countries coming in to fill the spaces and there's there's good talent available. >> Yeah, good find it. Good to hear that, Russ. All right. Uh, hey, listen, when when people look back on your career a hundred years from now, what do you want the headline to say? >> Ashes to ashes, dust to dust. I I I really I won't be remembered at all and I don't care about that. It's just not important to me. The important thing is to have healthy kids and you know I've got all this posy grandkids and I look after them and try to make them have a happy life and and try to create a an environment quite frankly that uh is going to be healthy for future generations of humans. Uh and the only way to do that is to look at the myriad of other species that we share this planet with and try to share it rather than dominate it. And and that's that's why I I do what I do. But no, I don't expect any great any great memory of of of me when I'm when I'm dead and gone. It's just going to be a passing over to new generations. >> What a hell of a last question. Hey, Ross. All right, Ross Batty. Of course, very humble humble man. That's a powerful place to leave it. Thank you for your incredible uh candid insight today. It's been a true master class. We appreciate your time. >> I'm very humble with my arrogance. >> Not always. Not always. We'll see if you get a tinagger off of some of these. I we, you know, we're all just watching around. >> All right. Very nice. Appreciate it. Thanks so much. >> All right. The lesson's clear. Success isn't just about wins. It's about what you learn from the setbacks. That's the kind of wisdom we're here after on the legends. I hope you'll still join us next time. Be sure to subscribe for all of us here at Kicko News. Thanks for watching. [Music] Heat. Heat. [Music]