This is the real CEO-CA origin story. A conversation with long-time friend and most followed CEO-CA user, Robert Sinn. We talked about my failed attempt to bring Stocktwits to Canada, believing it was too late to start a new major stock market site, and how through showing up, CEO-CA came to be. The story begins with Robert and I meeting on a Manhattan rooftop in 2011.

It was through exposure to Howard Lindzon (StockTwits), Joe Wiesenthal (then Business Insider), Josh Brown (Reformed Broker) and others I drew early inspiration. We talked about meeting those guys and trying to merge what they did with the Vancouver stock market scene.

Also mentioned were Joe, Jeremy & Jay Martin, Travis McPherson, James Kwantes, Murat the GOAT, Denis Laviolette, & the Goldspot team, all of whom contributed to our success. Enjoy the conversation with Robert Sinn.

Aris Mining CEO Neil Woodyer announced a pleasant surprise this morning.

He’s negotiated for Aris (TSX:ARIS, NYSE:ARMN) (C$ 865M market cap) to increase its stake in one of the giant South American gold deposits at 70% off the expected price.

The seller is Mubadala, an Abu Dhabi sovereign wealth fund.

Aris is acquiring an additional 31% of Colombia’s Soto Norte deposit for C $89 million in Aris Mining shares (9.9% of Aris), plus 6M shares (C$ 34M current market value) on receipt of an environmental license. Aris was expected to pay over 3X more - US $300 million, according to a 2022 option deal.

Aris now owns 51% of Soto Norte. Mubadala holds the remaining 49%.

Explaining the better terms, CEO Neil Woodyer said, "We've got very close to Mubadala, they've got a high-degree of confidence in us, we really wrapped [our] arms around the project, and they could see the best way forward was with us, and we have a limited financial capacity, so this is the best way forward."

The purchase price is roughly $24 per attributable gold ounce, and removes overhang from the existing $300M option, said Aris SVP Capital Markets Oliver Dachsel on the conference call.

Soto Norte contains 8.5 million ounces of gold Indicated at 5.5 grams per ton and 3.6Moz Inferred. That makes it a rare deposit of size and grade.

A 2022 Feasibility Study projected 450,000 ounces of annual production over 14 years at costs of $471 per ounce.

Aris is evaluating a smaller initial project to reduce environmental impact and extend mine-life. They intend to publish a new Pre-Feasibility Study in early 2025. The critical environmental assessment process is anticipated to take another 18 months, with construction potentially starting in 2027.

In 2011, Eike Batista’s AUX acquired Soto Norte for $1.5 billion from Ventana Gold. Mubadala acquired Soto Norte in a 2015 debt settlement with AUX.

Mubadala partnered with Aris on Soto Norte in 2022 for their expertise in country. That deal saw Aris acquire 20% for US $100 million and an option to buy 30% more for $300M. The enhanced deal terms announced today (30% to 31% and ~1/4 price) are significant for Aris.

Aris country manager Alejandro Jimenez said surveys showed disapproval drop from 60% to 10% since Aris joined the project, with 24% advocacy among 1300 of 4000 local residents surveyed. Jimenez expects to gain further support from reducing the mine’s scope.

Importantly, CEO Woodyer suggested permitting of the smaller mine will likely fall at the regional level, rather than federally. Aris is the most recent company to receive a large-scale mining permit in Colombia, with the Marmato Lower Mine now in construction.

"Once [Soto Norte] is operating and socially acceptable, that may be a time to look at expansion," said Woodyer on this morning’s call.

Aris Mining’s flagship Segovia mine is helping fund construction of the new Marmato lower mine and Segovia’s expansion. The company is targeting 500,000 ounces of annual production beginning in the second half of 2026, more than double current production levels.

Enthusiasm was obvious in the tone of management and analysts on the call earlier.

"On the other hand, Abu Dhabi just picked up 10% of Marmato, Segovia, & Toropuro for 30% of an un permitted mine; time will tell who got the better deal. Hopefully, the market will view as a win-win," said investor Garic Moran on X.com.

The market is so far up about 1% on the news, but +60% from our Nov 2023 profile. Soto Norte could help catapult Aris into the big leagues.

As a concentrated shareholder my coverage of Aris should be considered very biased. Please see their SEDAR+ filings for important risk disclosures, including country risk, execution risk, financing, commodity price, etc etc. This may contain errors (hopefully not). I reserve the right to buy or sell any security without notice.

This was a meaningful conversation for me.

THE INSIDER'S GUIDE TO FINANCE EPISODE 162

Becoming an Insider in the Capital Markets w. Tommy Humphreys

Listen on Apple Podcasts, Spotify, or Transistor.fm

I came across Cory Cleveland’s podcast through his great interview with the late Lukas Lundin. A mutual friend suggested we connect for an interview. I’m happy we did.

Cory’s highlights from our episode:

• Tommy’s background in web design and how he entered the investment and trading sector.

• How he successfully built and (to his surprise) exited CEO.CA.

• Tommy’s experience of growing tired as an entrepreneur.

• An overview of the media landscape and research coverage in the 2010s.

• How he addressed the vacuum in quality content during the economic downturn in the 2010s.

• Standout lessons from Tommy’s interviews with key industry figures.

• Reckoning with feelings of envy and caring for your mental health.

• Unpacking what motivates high earners.

• How wealth can reveal who people really are, and the challenges that come with it.

• The contents of Tommy’s new newsletter, The Big Score.

• Insights on key figures in Howe Street trading culture.

• How the Canadian venture capital market has changed over the past few decades.

• Tommy’s insights into the Toronto Stock Exchange (TSX) and how it functions.

• A rundown of the books and figures that have inspired Tommy.

Podcast link

Insider’s Guide to Finance

Insider’s Guide to Finance on LinkedIn

Transcript

Cory Cleveland (00:00:02):

Welcome to the Insider's Guide to Finance, where we dive into stories from the front lines of financing public and private companies. I host seasoned CEOs, fund managers, bankers, brokers, and business experts who answer your questions about how to properly engage in investors, finance opportunities, and build outstanding success stories.

(00:00:24):

We dig into the educational how-tos and mechanics of structuring good deals. You'll also hear about strokes of luck tense negotiations and the pressures of closing, as well as insights and how to navigate the capital markets. What you'll hear in these interviews may very well change the course of your career, your company, and your life. And before we get started, I'm happy to host this episode with the support of Olympia Trust Company. Olympia is an outstanding provider of transfer agent and corporate trust services and has been supporting the Canadian capital markets for well over 20 years. I can speak from experience that the team strive to deliver on their promise of making it personal. So thanks again to the team at Olympia Trust Company and I encourage you to reach out to them at any time. You can find their contact information in the show notes now on with the show.

Cory Cleveland (00:01:19):

Welcome back to the Insider's Guide to Finance. In today's episode, we're speaking with Tommy Humphreys. Tommy was an outsider in our capital markets who became an insider. He founded ceo.ca, which he built up over about 10 years to a $17 million exit. But along the way, he's also been an early investor in a number of very successful public ventures including Lithium x, fre Gold Hive, blockchain, and a number of others. He's a remarkable interviewer. He's got a great experience in the media space as well as an understanding of our capital markets and the personalities that are in them. So I'm really looking forward to our show and I think we'll also speak to his newest venture, the big score. So Tommy, welcome to the Insiders Guide to Finance.

Tommy Humphreys (00:02:03):

Thank you, Corey. Good to connect with you. Happy to be here.

Cory Cleveland (00:02:06):

Yes, absolutely. I feel like it's been a long time coming considering how closely we are with shared relationships, but I'm really happy that we're actually going to do this and get to know each other in an interview. The best place for us to start though is with an introduction from yourself. So can I hand it over to you?

Tommy Humphreys (00:02:23):

Well, thank you so much. Our connection begins from growing up in the same community in North Shore, and you went to high school with my brother, which is such a small world. You grew up in this wealthy community. My parents were successful, but I always noticed others had more and was very curious about bettering my life as a kid and watched with interest the business stories when I was a young person and was really interested in who was doing what and figuring out how I could become an entrepreneur. After high school, I did web design. Initially I was obsessed with the internet and had this thesis like Baby boomers have all the money and they all need a website. And so that was my sort of breakout, was just putting an ad on Craigslist saying, we'll do your website and taking whatever came my way.

(00:03:18):

And I tried to grow that business over three or four years, but struggled with ankle biters with people like me who would always be willing to do it cheaper, and we grew and our product quality got better, but it was just a tough business to make money. So I went on this journey about trying to find a mentor and find a business model that was more scalable and I had a strong drive to succeed and had been watching this Canadian venture capital market, public market from a far kind of skeptically for my youth and early business career, and it was just booming so much in 2010 when my web design business was really struggling that it sucked me in from the get go. I had a vision about trying to build a website for that community. It just makes sense. I'm a web guy and I remember reading TechCrunch Silicon Valley blog and thinking this came out in 2004, but it's 2010 and there's nothing even remotely interesting in the Canadian small cap media space.

(00:04:27):

There were a few platforms out there, but I had a vision to create a website in the venture stock market as a way to build a business and learn about this sector and hopefully participate because I'd seen so many success stories in our communities and newspapers and I believe that there was something there and something to it. And I used media and building this website as a vehicle to learn and meet people and share, and it was an awesome tool. Media is a wonderful tool to learn and meet people, and I had a vision of different services that we could offer over time. When I started, it was just me with a simple blog aggregating links, and then we bought this, I say it was me bought the ceo.ca domain for a few thousand dollars and then it was like over time, we're going to launch message boards, we're going to do market data.

(00:05:22):

I had all this list of all these things that I wanted to do over time, and sure enough, over six or seven years they all kind of happened and message boards was really the gift for our website. I started it with just making content and publishing interviews with CEOs and stories about the market. And when we opened up and let users post, we created the first Canadian mobile message board and it took off like wildfire in 20 14, 20 15. My new partner at that time, Murat Eer, who is truly a genius web products person. He came on and I always say he took pity on me. He was so talented and he really exploded our community with his technology and our messaging app became sort of viral and we went from getting 30,000 views a month to 30,000 a day to, I don't know if it gets that far every hour, but it was an exponential change that we made a market data and chat product for Canadian stocks and particularly in Canadian venture stocks.

(00:06:30):

So 2000 kind of penny stock listings and it's a great tool and we tried to aggregate data and community and we were approached a few times about selling it. Never really thought we would sell it because it's just a niche product, but a few people reached out and asked. And then in 2021, a guy knew in Toronto had a business that was complimentary and was interested to buy it, and I didn't count my chickens that it would actually happen, and I was sort of detached from the sale process and they're closed and I got to gratefully hand the ownership off to a group that's better capitalized than me. And if you can relate after several years of community management, I mean we were tired, so it was lucky for us to change it. And we were not investing in Marette and myself. We were kind of strategic but lazy in, we didn't have big team, big infrastructure.

(00:07:33):

We weren't picking up every dollar that was available to us. And I think it was a good time for us to sell because we were just gassed. But having sold it a couple of years ago, I'm still a power user and on it all the time. And I love the people that are managing it now. There are many, they did the things that I wanted to do, take more ads, do more media, more publishing. So I like watching it, I like using it, but then there are aspects I miss as well. That's a long answer to your question, but I'm here all day, so

Cory Cleveland (00:08:07):

Amazing. It's interesting you mentioned there's about 10 years that you're building that up and two directions I want to go with this one is the relationships you started to build because the way I see it, I think that ceo.ca perhaps was a catalyst for you to go from being an outsider to being an insider and to starting to work with some of the titans in our industry or in our public venture markets. But along the way, you said you got tired. And how was that? Because you're an entrepreneur, you go through that, what does tired mean to you?

Tommy Humphreys (00:08:41):

Well, I would say that I, I don't want to say manic, but compulsive desire to, I remember as the site was coming together, it was just like it's all in and you're completely committed and can't take your eyes off it. You can't be present with anything you're doing. And I had fortunately a relationship now my wife who is very tolerant of it, but I was completely consumed with getting that vision built out when that vision was exceeded. And to some respects, I don't want to say I ran out of vision, but I was like what I wanted to do we had done and it was very busy and rather than a startup, it needed more process and particularly around the community, community management and moderation and those things, we were inexperienced and I didn't have the best understanding of how to, I was tired of a lot of community management is toxic content and upset people and you ban me, you took this wrong side in this dispute or I've been defamed on the site and you'd get demand letters come into the house saying some piece of content has defamed some person.

(00:10:01):

And so there was just like it went from, I'm so excited about this. Watching this grow to it was was really popular and the things that I had hoped to do with it had realized, but that siege mentality that I was in to build it there was also sort of painful. And I think whenever I say somebody who sold their business versus somebody who doesn't, I feel like until we sold the business, I never expected it would sell. And business is really hard and it's like chewing glass all the time. And after 10 years, I would just say that I wasn't fully tired, I just wasn't as passionate and enjoying it as much as I did at the beginning, but I didn't know any other way of doing it just completely all in. And there were new blood, new energy, somebody who's got more optimism and it was a good thing for us. I had this business experience with the web design business where we ran out of money and was quite shocking. I had a few staff and having to say, look, I'm going to run out of money in four weeks.

Cory Cleveland (00:11:12):

That's a painful experience

Tommy Humphreys (00:11:15):

You can have this month, but I don't have any more money and we don't have any more sales. And I got a cut out of this office lease and stuff. So I was very averse to hiring and managing because I just had that trauma from letting people go and stuff. So I was never very good at delegation. And it was an accident that we got so lucky with growing it and I'm glad that it's useful to a lot of people chaos, but it's a good product,

Cory Cleveland (00:11:44):

Isn't it? All right. Behind the scenes, I'm curious to ask, I watched you did a presentation or a speech at RIC in 2024, and it was surprise Tommy to see how vulnerable you were there and emotional, and it was very compelling. One thing you said there, and I thought was really interesting is if, I think it was Gary Kasparov or something, pardon me if I mispronounce it, but if he's Bobby Fisher, yeah, Bobby Fishers, pardon me. You want to beat Bobby Fisher at a, you want

Tommy Humphreys (00:12:12):

To beat Bobby Fisher playing at anything but chess. Yes.

Cory Cleveland (00:12:15):

Thank you. And when you said that, and then I saw your interest and your desire to make money to make it rich in the capital markets, am I reading that correct, that connecting there and seeing the opportunity for CEO ca was playing a different game within the game that these guys are playing?

Tommy Humphreys (00:12:34):

I think there's a lot of truth to, it was a different game, but just to be really clear at the outset, I wasn't sure that it was going to work.

Cory Cleveland (00:12:42):

Right, okay. But it got you into it got you into the circles. It got you into conversations, which I think from an outsider,

Tommy Humphreys (00:12:52):

There was a big vacuum, and it's structural. It's like analysts and investment bank coverage has declined so much, and those who know the industry well are regulated and have difficulty speaking without tripping up disclosure issues. So there's a vacuum in quality content, and then you have the message boards, which are a lot of noise to little signal. So there was just this vacuum in information, especially in early 2000 tens. It's more popular today with social media and there's more voices than ever in ceo.ca and Twitter, et cetera. But it was a downturn in the market. I was recognizing it was going down, and so I tried to be a positive voice and help people get their story out and just say, Hey, I want to understand what you're doing, write a story about it. And I found an issuer community. The public companies who are building were very willing to have their stories communicated.

(00:13:49):

And so there wasn't a lot like it. And I tried to reach out to the strongest groups I could and learn from and interview people. Obviously I was trying to associate with high credibility people because that was obviously where you'd build the community around, was not around the bottom barrel but the best. And so I had this early dream of getting to the best wealth creators in the market and sharing, interviewing them, learning about them. And that was really my initial vision. It was just like, how do I get to these giants and make a cool story about them? And maybe in the process I'll get a relationship with them and grow my audience and just take it from there,

Cory Cleveland (00:14:34):

Of which I believe you did and you did very well. Yeah,

Tommy Humphreys (00:14:37):

I mean, this is a small industry and I was working very hard in a downturn and I was at all the conferences and I was an active voice with a publication posting, working hard, and I got noticed, and I think anybody that throws themselves into that with commitment would do the same. I think anybody could still meet the giants of the mining space within an 18 month timeframe if they were absolutely determined to show their talent and just bust their butt for it. There's always a room for a new entrant. I believe that it was then probably more. But these issuers have a huge mandate to tell their story, so that helps. But it's all finding the balance between doing something unique and the right bit of critical but positive and adding value to readers and audience. It's the content game and it, it's hard work sweaty, but it's good for branding. Right.

Cory Cleveland (00:15:47):

Yeah. Let's talk about the interviews you've done and one, I really enjoy your writing. I like how you write I, how you structure even down your paragraphs and your sentences. I think it's really interesting. I'd love to hear more about how you've kind of honed that craft, but can we talk about some of the relationships you've developed over the years and through the work you've done, the interviews you've done, because I think we share that in common. Having interviewed a number of people and there's things that really stick out that are fascinating, that are influential on you, what do you recall from or the relationships you developed, what stands out to you of these individuals?

Tommy Humphreys (00:16:22):

I would say the biggest thing that stands out about the giant resource giants and things that I met was that I am not them. I think when I was younger, I was attracted to them thinking, look what they have and their success and gravitas and all that stuff, but getting to know them, they're really extreme personalities and combination of optimism. And one thing that was incredible is so many of them were very healthy physically, which is hard thing for me when I'm in that siege mentality and working all the time, it's very hard to maintain the fitness and serenity and stuff, but they were, I don't want to say machines or something, but they were credible. They had a technical thinking about somebody like Ross Beaty or Lucas Lundy or Robert Friedland. Robert wasn't a geologist, but he knew more about geology than most of the geologists, I think, and he could tell you everything about what was going on.

(00:17:30):

So they're very technically savvy and very optimistic, and they'd taken enormous risks in their early life and survived them. And then there's part of this, they call it survivor's bias, where we focus on the people that took big risks and paid off. And sometimes there are just as credible people that didn't the success that we could learn just as much from, I think there's a lot of that in the mining sector, especially with the randomness of discovery and stuff. It's like we go, I love the line in Fiddlers on the roof. If I were a rich man, do you know that song?

Cory Cleveland (00:18:03):

No, I don't. I

Tommy Humphreys (00:18:04):

Was the rich man. Yeah, but it's very, very cute. But there's a line where the lead character says, if you're rich, they think you really know and they come to ask you questions about things, nothing about, and they think you're really smart. But

Cory Cleveland (00:18:21):

Sometimes I've been perplexed by people that have made a lot of money who I look and I'm like, my God, you don't have your eyes open to the world. I don't know if it was luck or if it was a bulldog mentality, but I'm like, you're not even likable

Tommy Humphreys (00:18:39):

Different people than me. I feel like likability is the one common trait of most of the successful people. I know that's sort of the baseline. If you're a salesman like Ross Beaty or one of these people, in addition to being a company builder, selling your story, your track record is selling for you in so many ways, but they were likable. Obviously there's some people with success that got lucky or cut corners or maybe were just highly technical and didn't have that personality piece. But I think in the capital market, the salesmanship thing is really key.

Cory Cleveland (00:19:14):

Oh, it's huge.

Tommy Humphreys (00:19:14):

Maybe the more successful you came, like Robert Friedland, for example, I bet that he could charm the socks out of anybody he wanted to,

Cory Cleveland (00:19:22):

Right? Really?

Tommy Humphreys (00:19:23):

Oh, yeah, yeah. But now that he is Robert Friedland, I don't think he works as hard at it anymore. I think that I've seen people Robert's incredible track record, but I've seen people achieve success and become less likable. But then I realized that they were kind of working it when they were less successful. They were trying harder. You've probably heard the line of wealth doesn't change you, it reveals you. But I can remember one person who was just so charming and great listener and wonderful people person and made a bunch of money, and that disappeared. But he obviously had the power to do it when he wanted to.

Cory Cleveland (00:20:07):

I honestly think that's a bit of a shame when that happens, when money changes people,

Tommy Humphreys (00:20:12):

Well, it revealed them and it didn't change.

Cory Cleveland (00:20:14):

Well, it reveals 'em. Yes. Yeah, good point.

Tommy Humphreys (00:20:16):

Oftentimes people who want a lot of money are a little bit broken inside, and that's driving them is just wanting to prove themselves or yeah, that's why either it's not no correlation between people who have lots of money and who are super contented and happy. You're just as likely to be continually on that treadmill of this more thing and finding it's easier to make more money than to want what you have probably. And so when you're in the capital market all the time, you are surrounded by people that are trying to get more all the time and being present and savoring the moment kind of gets forgotten sometimes.

Cory Cleveland (00:21:00):

That's been a tough one for me in being in the capital markets in the capacity that I have been in. And it's felt at times like a treadmill trying to keep up. And on occasion you're grinding it out whether you're helping build companies, whether we're creating content, whatever you're doing. And occasionally you see people hit a rocket ship. And for me personally at times, I mean, I don't know if I love wealth, I don't need it. I think I'm very content, but it's hard at times for me to reconcile that I haven't hit that rocket ship as big as I wanted to. Have you had those experiences,

Tommy Humphreys (00:21:45):

Especially if the guy who hit the rocket ship, you think you're smarter than

Cory Cleveland (00:21:50):

Yes, of course. But then that's just my ego,

Tommy Humphreys (00:21:53):

What you hit on. I share, and I think that when you mentioned ego, ego and envy are two character defects that are alive in all of us, and it's dangerous. Ego is not your amigo. I try to say that to myself, but these defects of character, simple, basic envy can drive you so damned if you do or don't. I don't know what the answer is. I feel like sometimes I want a physical solution to the spiritual problem of envy and money obsession, I think particularly in Vancouver, just feels like such a rich town. And there's this Jones' thing and all the range rovers at the mall and stuff. Sometimes I feel like, oh, if I just didn't live here, would we not be so obsessed with this? And I think the reality is with the internet, no, that's between my ears.

Cory Cleveland (00:22:53):

Yeah. I can tell you as a matter of fact that no, if you wouldn't live there, you would still be obsessed with it because I who now live in a small town, British Columbia, I love it for what it is, but I still have the FOMO of what am I missing? Have I made

Tommy Humphreys (00:23:09):

Direct? What small town are you?

Cory Cleveland (00:23:11):

I'm in Vernon, British Columbia.

Tommy Humphreys (00:23:14):

That's a big town. Vernon's fantastic.

Cory Cleveland (00:23:16):

Well, it's funny, I am going off the rail here. My wife's from Mexico City, and so we had down on our list, I was trying to convince her to move to Mexico City, and we were spending time down there months in a row kind of thing, and I loved it. It's a wonderful place, but it's 36 million people in a single city. And so instead of Mexico City, we ended up in Vernon, a town of 40,000.

Tommy Humphreys (00:23:41):

You have beautiful nature and skiing and golf, and

Cory Cleveland (00:23:46):

Yeah, it's a sense of joke that I kind of quasi retired and just by being here, but I still have that twinge of the ego looking and saying, I'm missing out. You're not in the room.

Tommy Humphreys (00:23:59):

Your life would be a lot better if you didn't have it. How do you quiet that voice? I don't know.

Cory Cleveland (00:24:03):

Yeah. Can we go into that? Yeah. Plays into mental health. So what would you say motivates you?

Tommy Humphreys (00:24:11):

Originally it was just to better your life's circumstances. So you want to have a good life, you want to be able to provide for your family. But I think my insecurity always wanted a bit of status too, and it was the status that I didn't think that I had, which is part of the sickness or whatever. But I think that I thought that I was really chubby as a teenager and I didn't get attention to girls, and I probably convinced myself that I needed to be successful to be wanted or whatever. And so I think that the very root of this is like there's some sickness, right? I want to be the man and I want people to like me. And then you realize that that's so flawed because you don't want to actually influence relationships by manipulation like that. You don't want to have fake friendships or something. So it's flawed. But I wanted to be successful because I wanted the things that better material lifestyle and status and so forth. And today I try to balance this scared little kid inside you who still wants those things, want to be useful.

Cory Cleveland (00:25:23):

Thank you. Rick. Rule side note, I got a little story there.

Tommy Humphreys (00:25:27):

Tell the story.

Cory Cleveland (00:25:29):

I really want to come back to that. I'm sorry for interjecting, but I interviewed Rick over a hundred episodes perhaps ago, and right before we started, Rick said to me, and for those who don't know Rick rule, he's just hyper intelligent. And I think perhaps some would think he can come across as being arrogant, but there's just such, in my opinion, such a deep knowledge and a precision in his, how he articulates himself that you could be mistaken for that. But right before we started the interview, he said, I look forward to being useful. And I felt like he was dismissing me. But then an hour later after listening to him and talking, I was like, my God, your whole meaning for life is to be useful. I saw that it's the foundation of him and his growth and wealth has been all about being useful to those around him. I just thought it's such a fascinating word.

Tommy Humphreys (00:26:23):

He's early seventies and has lots of money and he has incredible gifts and communication. When I interviewed him, I noticed I would compare the transcripts with other CEOs and Rick would have five times the words per minute of everybody else. And it was so quotable, a

Cory Cleveland (00:26:41):

Vocabulary,

Tommy Humphreys (00:26:42):

It so quotable. It was like small cap co. And it's boring. And Rick's just dropping the punches and so many words for a minute. And he has the capacity to do a couple podcasts a day and have all of them be kind of unique. It's just amazing. He's obviously in his element. I don't find Rick to be arrogant personally.

Cory Cleveland (00:27:05):

Yeah, frankly, that was mistake. Amazing. Yeah, it was my mistake. And I mean, I

Tommy Humphreys (00:27:10):

Think he could be tough. I don't think he'd probably be the easiest guy to get money from. Nope. Yeah. So you can learn a lot from older successful people about you want to be useful. I feel like I have a faith that you'll get satisfaction from being useful to others. And I know you want to have a good day, do something helpful for somebody else, and you'll feel good and build self-esteem by doing esteemable things. And so today I balanced this insecurity that wants the adrenaline and the excitement of the high risk venture business. And then at the same time, I want to keep the peace of mind. I didn't necessarily have the first run with ceo.ca and be kind and gentler and more useful. So it's like the good wolf and the bad wolf on this insecure ego thing just wants more. And then you're trying to ground yourself on just walk slowly and be humble and be grateful. And I wish at the moment, I want to listen to that.

Cory Cleveland (00:28:15):

It sounds like it's a constant battle for you,

Tommy Humphreys (00:28:17):

Isn't it for you too?

Cory Cleveland (00:28:20):

Yeah. It's interesting how it rears its head more and more at times. And then at times it's a non-issue. But it is a constant battle. And I think especially being in the world you are in more so being around these giants, being around these titans, I think that it can perhaps be triggering to use just an all too common word now.

Tommy Humphreys (00:28:44):

Well, it's great to have wealthy friends, especially the generous ones, but at the same time, you lose perspective of what's enough when it's dangerous, it's wonderful, it's dangerous. And the hierarchy of community, it's not the monetary measure, I don't really believe. But I think at one point in my life I was pretty certain that he who has the most toys wins. And I don't feel like that. Now,

Cory Cleveland (00:29:20):

Has that changed? I mean ceo.ca $17 million, however that was structured is no sum to shake your head at. But as I understand that you've been, you've participated in a lot of other deals and made more than that and been very successful and alongside others. How has that wealth helped you? And not by putting another car in the garage or say anything, but by mentally

Tommy Humphreys (00:29:51):

Well, the CEO deal shared with Murat, and he deserved every penny that he got out of it. And part of the transaction was stock, which has gone down in value. It was 2021 and everything was so rosy at the time. So I have some of the stock now that's 80% down from or 75. I've been blessed with participating in things that were successful and at early stages. And stress and anxiety is just because you have your mortgage covered or your money issues are different. I feel like if you're in anxiety kind of is replaced, it's a vacuum that's filled with something else, so it's good and you don't have context with people who are really struggling. It's good to know that we're not have to worry about where the food on the table is going to come from and people are really struggling. But I think after years of, there's an adjustment that happens pretty quickly actually, where you take for granted what you have and it's like, are you going to get lost in wanting more?

(00:31:08):

Are you going to try to find out what makes a good life? And so I feel very privileged, and I'm very lucky I'm going to go with my dad and brother on a golf trip next week. There's nothing I would rather do than go out play golf with my family or friends once a year or something. So there's some perks that are great, but my mind is always wants a project and it's like you want some new way to see something come together or it's building a house or just that satisfaction of getting something done and useful. And that's why I came back. I mean, ceo.ca was an amazing community and I was good at writing and publishing and creating media and stuff. So I love doing that. And then not having it, I missed it. And I always thought on co.ca, I was like, I should just write about all the history's best deals to remind people what's possible.

(00:32:18):

And I kind of never got around to it. And so in quasi retirement, not that I'm retired, but I had this idea, okay, well now I can go through that, do some of the history stories. And that's what I'm doing@thebigscore.com, is just trying to bring up some of the history and teach a little bit and learn as I go. And it brings me back into the market and the capital market and in touch with people, I can be working on a story about somebody who's long since passed. And then you talk to five incredible people about them. And it's amazing. It brings you closer to everybody, and it's

Cory Cleveland (00:32:59):

Inspiring. I want to take a moment to actually just celebrate that work you're doing. I think it's really, really nice. It's really well done. It's well written and it's so fascinating. I mean, we have such a unique ecosystem within what is how street, if you will.

Tommy Humphreys (00:33:17):

Bay Street is, and Calgary's got its own stories too. Oh,

Cory Cleveland (00:33:21):

Calgary as well. And so I've enjoyed that as well, speaking with people. I think I shared with you with Rick Rule, I don't want to hear about his stock picks in the market. I wanted to hear how he got into the business and talked about how he met Peter Brown, I think serving him Dirty Martinis at a bar. That's the stories that I love hearing that history. So I really like the work you're doing.

Tommy Humphreys (00:33:44):

Peter's really, really a good storyteller. And I don't think he would ever go on a podcast, but man, he would be great on your show.

Cory Cleveland (00:33:53):

Oh boy. Yeah, I've tried to angle in and thought of ways, but yeah, man, he fell

Tommy Humphreys (00:34:00):

Out of love with the media in the eighties. I think Canaccord had some down years and they were chewing him out and he started getting in this combative relationship. So he doesn't have trust.

Cory Cleveland (00:34:12):

Have you tried to interview?

Tommy Humphreys (00:34:13):

I've talked to him about it and I haven't done it yet.

Cory Cleveland (00:34:18):

Okay.

Tommy Humphreys (00:34:18):

So I've talked to him about it since six, seven years ago, and there's nothing to go to show for it. James Qantas, he's a mining newsletter writer, researcher. He wrote a story with Peter. It was a really funny little spiel where Peter's first words to him is like, you got 20 minutes, or What do you want? And one of the lines that Peter said was like 20 years ago, they wanted put me in jail. Now they're giving me awards. Something like that. He He's got this edge.

Cory Cleveland (00:34:50):

Yeah. Yeah. Wow. I want to ask you, I can't believe we're 40 minutes in, man, and I feel like we're just getting started. How street,

Tommy Humphreys (00:34:59):

This is my problem. I can't shut up. I'm sorry.

Cory Cleveland (00:35:01):

Well, I am enjoying it. I Street has a culture and a game of its own and a lot of history as we've just discussed. How would you describe this culture? And I want to maybe weave the question in. Are we nearing the end of an era where we had some greats, we had the Peter Browns, we had the Ned Goodmans, we had the, I mean, even back to Murray Pesos, and we can drop tons of names. Rick Rule would be one of them, on and on. Are we nearing an end of an era or is there new blood coming into it? And what is the culture of how

Tommy Humphreys (00:35:39):

It's going to be? Hard to answer that question briefly, how street. There was a Vancouver stock exchange from 1907 or something like that, but it really grew with Peter Brown and Murray psm in 1972. Windfall was a stock in the sixties that ran on rumored discovery that wasn't there and created this crackdown on the mining industry. And the Toronto Stock Exchange really at one point was trading over half of its volume was penny mining stocks. And they said basically, we don't want this business anymore. So how street is the metaphor for what birthed in its place in Vancouver, which was the Vancouver Stock Exchange was there, it had a process for dealing with venture capital finance and wanted the business. And Peter was a broker with Can Gordon. He wanted, and Ned Goodman supported him. And Murray Psim was a promoter from Toronto. He was a broker as well.

(00:36:41):

His first success was he was a butcher and as a broker stockbroker in Toronto, he placed the 40 cent financing for Steven Romans, Dennis and Mines, which was a uranium discovery I wrote about, the stock went from 8 cents to $87. And so PSM had a piece of this success, and he was just this personality that became a millionaire in the fifties, which was a lot more money than it is now, and then blew it all on some real estate project in Jamaica. And he was just this guy who went broke and got rich and went broke, and he was a deal junkie. And in the seventies and eighties, my understanding, and I don't know this firsthand, but he was really the engine of House Street. He had 60 deals on the go at a time. He would fund all kinds of hair-brained ideas. And let me show you, I've got this, a friend of mine, Brian Kaufman, he gave me this. This was like a Pez Resources watch that his IR used to give out. So he was this kind of, I think he was a complicated character who had conflicts of interest. Imagine having one guy behind 60 deals, I feel like, how could you do two deals well, right. And I read online that old newspaper archives that some of these deals are paying like 25% broker commissions. These were the

Cory Cleveland (00:38:06):

Days where you'd reach into a file cabinet and just throw out some share certs. It was just, you could sign a share cer on the spot.

Tommy Humphreys (00:38:14):

I don't think that there's something about his mental health that I think is really interesting about the story. And I didn't know him and I don't want to say it, but he, I guess, admitted to having a bipolar condition. And so he would lose money on a deal or something. He would go into these despairs and he wouldn't be active in the market, and then he would kind of come out into this high mania and was able to whip up a frenzy into these deals. And a big group of people were sort of latching onto him as the engine and profiting from that mania. And the good things that he did was he got risk capital to Helo and Eske Creek and two incredible goldmine discoveries were the result of his deals. But I think that the other 58 a year were not working out.

(00:39:08):

And it was a joke to the Toronto establishment into the Forbes magazine came and called it the Scam Capital of the world, but Peso was the engine of the business, and I think a 25 or 30% of the daily volume was his deals. And he would come and get everybody going, and if you were close to him and the action you could win. But I think a lot of these were messes. And Ned Goodman, who was a Toronto institutional money manager, has him got into trouble with other investments and had to sell his control position in the helo discovery to Ned. And then Ned sort of set him up with a expiration company called Prime Resources, which would fund other little juniors and that had the Esk Creek find. And so then Ned controlled that and got that as well. And he, PSIM was not somebody I knew or anything, but very interesting character who certainly nobody like him now, but if the eighties, it's a gambling mecca.

(00:40:14):

It's venture, it's venture stocks, it's high risk. High risk is putting it lightly. If somebody's doing 60 deals, it's beyond and paying 25% cost of capital. It's beyond high risk, right? It's a gamble, but it's like at that time, maybe I wasn't here, but at that time, maybe it was the equivalent of these alt coins that people are speculating on now. These at least were asset backed to an extent. There was a project or something, but now people gamble with billions of dollars on alternative cryptocurrencies that are just Ponzi by design, but people love 'em, bid them up. And so I guess before there were Ponzi coins that people to gamble on, more of that money went into the Canadian venture market. The Canadian venture market has moved. I think it's a little bit more institutional than it used to be, but still it's a dumpster fire with occasional exceptional outcomes. Probably not the best place for investment capital, but a gambling, again, in a place, if you're going to have an edge, if you want to get deep and sophisticated, you can win. Well,

Cory Cleveland (00:41:29):

There's certainly some who have and with very reputable means, it seems. When it comes to the culture and the characters of some of the groups who put these deals together, how would you characterize, how would you explain that? And for example, I asked this as it seems that there's only a handful of groups who come together to do some of the biggest deals on our exchange, on the venture on the TSX. How would you describe these groups that put these deals together?

Tommy Humphreys (00:42:03):

I don't know if it's just a handful. I think there are hundreds that try. And I remember a quote from

Cory Cleveland (00:42:10):

Lucas, I'll certainly try. Yeah,

Tommy Humphreys (00:42:12):

Lucas said, it's a very big gate, but you have to let them try. Right at the top of the industry, food chain is the Lundine group who are looking for advanced stage assets with huge scale that they talked about it, Luke talked about it with your podcast. And Lund's, their projects are bigger and they are ambitious and they use the public company method, but they're also qua, they're controlled by the family, backstops them. And so they have huge skin in the game and they make their money when shareholders do long-term to builders and developers. And I think that's where the model is best, that where it best shines. That's the best example of it. And their group today, which the Sun's run, I think is still the best example of what it can be.

(00:43:16):

Other leaders in the market, Ross and Russ Beaty, I'm thinking about, and Richard Wark and Frank Ster, they are not millennials, they're not young, those people. It's a combination of discoveries and developing projects and hopefully getting the timing right. There are so many people who try and bring projects together and state ground or acquire an old project, try to get a company going, and when the commodity's going, there can be perverse incentives, just incentives that the L, they own so much of the company, they're only selling when the company is sold. But in a public venture company, you have this secondary market. So if it means the incentives can be to sell out early, and so a lot of people see it as a means to get something floated and get it funded, and it doesn't have to be sold at the end of the day for the early investors or promoters, whoever, to make money, which is the negative of the business.

(00:44:35):

I don't know how the exchange tries to address that with escrows and disclosure stuff, but it's imperfect. I think the reason why Penny Stock Finance grew is because these resource projects were so capital intensive and they needed a large pool to gather money from. As an investor, I'm Advisory Committee of Meridian Mining, and I thought, this is a real project, and I liked the people and they seemed to be going to the end on the story. And so I overruled my instinct, which was, Hey, the stock just ran from 10 cents to a dollar 25, you could take your profit. And I didn't sell, and it's 40 cents today, but the project keeps getting better, but the market sentiment changes. So because you're dealing with this manic market and you need to stimulate a market as the CEO to get access to new money at reasonable terms, it's kind of crazy.

(00:45:42):

And so the CEOs that do the best are the ones with the most of their own money or the best access to capital. You find people that are just like Robert Friedland for example. He's a multi-billionaire, but he's always in boardrooms pitching investors around the world every day. And it's very tough for everybody else to make one of these venture sustainable. It needs so much money, and it's such a long-term proposition. It's broken, it's backwards in so many ways, but until a better way presents itself, it seems like it's been the model for a hundred plus years. And I don't see a better way to do it. I mean, if projects were just privately funded, certainly the investor class would be smaller. But then you see something like cobol, the AI exploration company backed by Bill Gates and Jeff Bezos, and it's supposedly got a billion market cap doing exploration around the world, and should all the exploration finance be private? I don't know. This is the way it's done, and I didn't invent it, but I see that when you connect the lending kind of values and access to capital and focus on scale and stuff, the rest of the participants would do well to try to be like that. But there is only one lundine, right? They have the technical people and the balance sheet. And so it's just very hard.

Cory Cleveland (00:47:13):

Yeah, it is messy. It's exciting. I think it's world renowned. We do, our markets bring very, I think, reputable companies from all over the world to access the capital in a form public venture capital. And I also, I like to see the comparison between Silicon Valley as an example, like Andreesen Horowitz or Sequoia Capital as the biggest VC in the world. Some of arguably that's the lundins when it comes to exploration and development. Not so much exploration, but development of these

Tommy Humphreys (00:47:48):

Huge, that's the Freedland and the

Cory Cleveland (00:47:50):

Yeah, yeah, the Freedland, the, I dunno, OGs terrible term.

Tommy Humphreys (00:47:56):

I dunno how old he's, he's 72 or 74. He seems kind of ageless,

Cory Cleveland (00:48:01):

Really,

Tommy Humphreys (00:48:02):

But somebody that drills that many holes. There's only one person that I know of that is young and drilling a lot of holes, and it's Zach Flood and he's the CEO of Kenner Land Minerals. And his father actually worked with Robert Freeland and was around with the Oyo Togo discovery. And I met Zach in high school and he was a very different, very intelligent, soft-spoken kid and became a geologist, worked in the Congo, and he is an explorationist and he wants to make discoveries. He made a discovery, and Quebec looks really good with Sumitomo. His company's kept a royalty. He's drilling everywhere on all these partner funded, these prospect generators. And he's been really good operator with his company, and I am a shareholder of it. But the next Robert Freeland is the guy that drilled the holes for 10 years or 20 years or 30 years everywhere. Ivan Hole mines $25 stock or something like that from 50 cents eight years ago. But in 2016 when it was 50 cents, he'd already been in Africa for 20 years with it. And that Plat Reef, those things started in the nineties. And the endurance is just incredible.

Cory Cleveland (00:49:24):

That dedication, the perseverance and the fact that I think a lot of us look at this and say their overnight successes when in this case, it's not even five years for an overnight success, it's 10 20.

Tommy Humphreys (00:49:37):

No, it's like 30. Yeah, it's like 30.

Cory Cleveland (00:49:40):

What an industry.

Tommy Humphreys (00:49:42):

Yeah. Well, who has the patience for average investors is going to stick around that long. But then again, I went to the Robert's presentations when he had a 60 cent stock and he said, this is my cost base. And he was basically saying, pounding the table. There was a time when you could recently when you could have made life-changing investment on it. And I bought at that time a lot of stock in Ivanhoe under a buck 50 and a buck. And I wish to say I had the patience to hold on because I didn't. Four bucks seemed like a huge win from a dollar. And then it's 25 now, but eight years is an eternity for a young person when so many of the things you're don't work when something does. You have this bias to sell it. And training to let the winner ride is so hard knowing which one to let ride. In Robert's case, he's like, he's the founder of the private company, he's going with the deal. And I am not that I am not strong enough to do what he's done for 50 years. Just raise money, take risks, keep going, never stop moving.

Cory Cleveland (00:50:54):

That's what I keep coming back to. It is these individuals who can do this are, they're like otherworldly in their ability. You make a really good point too about their physical strength and fitness. There's something about their energy, which it's remarkable. Tell we've gone through an hour and I could keep going and I want to ask a few other questions. I

Tommy Humphreys (00:51:19):

Told you there there'll be no way you get me under an hour. Just talk too much then.

Cory Cleveland (00:51:25):

It's very cool. It's a really neat way to get to meet people, as you know. But I want to ask you about the books behind you. What do you have there? What stands out? What have you most enjoyed been most influential on you?

Tommy Humphreys (00:51:37):

There's so many books. This is just a random three books on my pile. Okay, thou Shall Prosper. This book is about why. It's a rabbi describing why members of the Jewish community are good business people. Fascinating. And that was fascinating. This was called Family Fortunes. It's about the guy who founded Agora and writing about how if you want to have a family fortune, you cannot spend the money just like a random interesting read. But I just like reading everything. And then this one obviously is like, it's the famous Lundine book. Oh, wow. Yeah. So I've always read about personal finance and business biographies, the story that inspires me the most. Here's a bunch of just mining books like the tech founder's book, Helo Free Gold, the story of Canadian Mining Gold and Giant Other Helo. And this was the Stephen Roman book, which very politically charged. It's a negative book about Roman, but I still found it super interesting.

Cory Cleveland (00:52:40):

I love that piece. He wrote on the big score about Roman walking into, I forgot the prime Minister office. And he's like, you

Tommy Humphreys (00:52:46):

Son of a bitch, his slow back accent, you son of bitch, what a character. What a character. Yes. But my favorite story of all time is hands down, this man named Jimmy Goldsmith. And I wrote about him once. The story was called How One Man came to own 49% of the world's largest gold miner in 1990. He owned 49% of Newmont. And the Goldsmith story, I originally saw it, he had died in 1997. And when I was a web designer, I was writing about web design and I found Goldsmith's website somehow. And he had a mausoleum website and it was ahead of its time. You'd go to the website. It was like there was a trust that was administering his brand online after his death. So I said, this is a mausoleum website, this is the rich status thing. And it was cool. And so it had his quotes and his success, and they've subsequently updated it.

(00:53:49):

So that was where I first learned about this guy. And then I continued to read or hear about it and finally read one of the books about him. But he, for 15 or so years, maybe even 20 years, has been the most inspiring to me. And it's hard to sum it up, but he was a tall, charming man with blue eyes. And he was a guy that before he had success, he spent like he did, which is kind of a classic kind of promoter trait, but he had the best of everything. He had the belief that he would succeed from a young age. And when he was a child, he was at boarding school and he would trap first for extra money and he caught a pelt and escaped the school. And his parents found him at, I dunno, eight years old at the Waldorf Astoria in New York City.

(00:54:40):

And he was just an irascible gambler and business person. And then something happened and he fell in love with a girl who happened to be the richest tin miner's daughter. And he was famous around the world as one of the world's richest men. And then the father forbade the marriage. They ran away. And when he was 19, he became a media sensation. It was like the runaway love story, and the media were following them, and they got married, they had a child, and the wife died while pregnant and the child survived. And so he was like 20 years old, and he's hated by this wealthy family that he's had the baby with the wealthy family tried to, he says kidnap the kid. There was all these disputes. And so he had to start business to prove himself. And it's such a long story, but there are a hundred things that happened to him after the age of 20 where he ended up one of the tycoons that was part of the private equity movement at the 1980s of buying companies and stripping the assets.

(00:55:46):

And he was an incredible speaker about capitalism. And he had this moment where he went to Congress and spoke about how corporate raiders are good for the system, they're eliminating disease in these companies. And he was just so well-spoken and powerful and forceful, charming. And he did this couple incredible deals in the eighties where he borrowed a billion dollars at 18% interest. It was completely all in to buy a forestry stock that made matches and things. And then so he buys this company and he spins off the assets and pays down the debt, and he's left with the largest timber holding in the us. He did that twice and then he swapped the timber for the 49% block of Newmont. But it was just like this man was so at risk for so long and to care. So a billion dollars in 1982. I don't know. Was this 10 or 15 or 20 at 18% interest when the books, it says it was double or quits,

Cory Cleveland (00:56:50):

Throw around billions back in the eighties would be a millionaire. But that is a ton of money.

Tommy Humphreys (00:56:57):

He became $2 billion guy in the eighties, but he just spoke about capitalism so well, and he lived this crazy story. There were things about him that he said, when you marry your mistress, you create a job vacancy. So he had this life that was Playboy life where he had one family living in Paris and another family in England, and he was a womanizer and carried them all openly. So like I said, I come back, I am not Jimmy Goldsmith. I am not trying to have three families and take this kind of risks, but he was so smart and irascible, and I find myself after 20 years of following him, got another book about him and even more details and learning and just like, I just have this endless well of inspiration from Goldsmith, even though I'm nothing like him. But that's why I like history is just if he was alive today, I'd be trying to interview him because he's just he. So he had what I wanted, which was the ability to speak and status and stuff. And anyway, he was very funny and had a fun life story.

Cory Cleveland (00:58:05):

There's an irony in your statement there that you do have that.

Tommy Humphreys (00:58:08):

I don't have this, I don't have

Cory Cleveland (00:58:12):

This. That's part of the game we're in, but it's, wow. I just wanted to share if they're of interest to you. I read Benjamin Franklin's autobiography, Henry Ford, and then Elon Musk is interesting that over pretty much a 300 year basis from Franklin to Musk, they all shared very, very similar attributes and views on the world. Some of them notably being a disdain for lawyers and bankers. Really a very articulate view of capitalism, of what it is and what it's not. I love Henry Ford's view on capitalism and how it can create so much purpose. And then the other was a warning against the military industrial complex to use a new age term, but a warning against those who profiteer off war. And I saw that in these three biographies, 300 years apart. I just thought it was really interesting.

Tommy Humphreys (00:59:07):

All right. It's interesting that you brought 'em together. I've never read about Ford. The Franklin one I found really impressive. His story was amazing. Going to England and building the printing presses and writing, and his thing is his routine and his drink, not to dullness, eat, not to fullness and all that stuff. I feel like he was character,

Cory Cleveland (00:59:28):

Special,

Tommy Humphreys (00:59:29):

Special guy, but that you link them all together. Yeah, I mean, Elon Musk is a pretty special guy. Some media person who's writing about these people. I feel like Musk gets so much attention. It's like, how do I add to that story?

Cory Cleveland (00:59:42):

I would agree with that. Yeah.

Tommy Humphreys (00:59:44):

Yeah. I was in the room with Musk once. Oh, wow. I didn't talk to him, but the day that he closed the Twitter purchase we were visiting, we got a tour of the star base thing,

(01:00:00):

And afterwards we went to a small restaurant that was playing live music and he was clearly fried. The Twitter deal had happened and he was working all night on building rockets for Christ sake. And he came into this restaurant and sat with his brother, and we were sort of at the next table and I went, it was such a modest restaurant. You ordered your sandwich at the cash till. And I was in line with, he was right in front of me and I saw him in this crazy moment, but he seemed like somebody who had the world on his shoulders and wanted to be left alone a little bit was just sitting and listening, trying to decompress. That's as close as I'll forget.

Cory Cleveland (01:00:43):

And another individual all risk. It's very fascinating. I want to be respectfully your time. Any final thoughts? We've really weaved all over the place. I didn't expect some of the areas, I found others very insightful. Any final thoughts for our audience?

Tommy Humphreys (01:00:59):

Yeah, I would just say what you think about is very powerful, and if your thoughts become obsessions, you can make things come to reality that are both positive and negative for you. And I just leave you with be very careful what you think about.

Cory Cleveland (01:01:21):

So true. Tommy, I'm really happy we finally connected. Thank you so much.

Tommy Humphreys (01:01:25):

Me too, Corey. Thanks for having me, man.

Cory Cleveland (01:01:28):

Thanks for listening to this episode of The Insiders Guide to Finance. If you enjoyed what you heard, please share this with your friends and colleagues so they can benefit as well. You can also subscribe and leave a review on iTunes or the Play Store. Your support there is really appreciated for future episodes. If there's a question, topic or specific person you'd like me to interview, feel free to reach out. You can connect with me on LinkedIn or through my website@creativereturn.ca.

Insider’s Guide to Finance

Insider’s Guide to Finance on LinkedIn

J.C. PARETS INTERVIEW WITH TOMMY H: LINK HERE

Social media exploded in the late 2000s.

Twitter posts per day grew from 60 thousand in 2007 to 50 million in early 2010 (They're over 500 million now).

At a Whistler, BC nightclub, an acquaintance, in his early 20s, fabricated a story to one woman that he was the Facebook founder.

People didn't know who Mark Zuckerberg was yet, but they were hooked on Facebook. Moments later, everyone in the bar came up to shake his hand.

The Finance sector was slower to adopt social media. Regulatory and corporate policies forbade rogue publishing.

A Canadian born investor and VC living in the U.S. had ideas for Twitter to serve stock investors, but Twitter wouldn't listen to him. So Howard Lindzon started Stocktwits in 2009, birthing the $cashtag, market data and chat streams for every US stock.

It became a meritocracy for finance writers outside of the system to showcase their wit and get attention. Stocktwits nurtured its community and its early stars, like Josh Brown and J.C. Parets, were upwardly mobile. Brown is now CNBC's most popular commentator and CEO of a wealth management firm. Parets, a market technician then in his late 20s, built AllStarCharts into a leading research platform.

After Howard spoke at a Vancouver conference in June 2011, I pleaded with him to expand Stocktwits into Canada. Howard was receptive, but his partners didn't see the point.

A few years later, I followed their roadmap for CEO.CA, which had a similar growth trajectory to Stocktwits at Canadian scale, a transformative success for me. It’s a testament to the power of borrowing ideas in new markets and networking to gain ideas.

At Stocktoberfest in Coronado, Howard congregated his fintech friends for an annual gathering. I was there 2011-2013. I also joined Howard in New York for other Stocktwits related events. He opened many doors for me.

J.C. Parets was one of those contacts. We hit it off in New York and San Diego. He had a big personality and curiosity about everything. I hung on to J.C.'s coattails at Stocktoberfest, where he was already a known entity (not quite Zuckerberg bar level).

As CEO.CA grew, I saw less of the Stocktwits group. They were getting big in the US, as I was digging deep into Canada’s venture markets. But J.C. came up to a couple of our conferences and we stayed friends.

I watched him build financial publisher AllStarCharts to a great exit to Tiffin a few years ago. Incredibly, he bought the company back last year and is full steam again.

He’s become one of the top finance voices in media. J.C.’s calls, informed by price action or technical analysis, often contradict mainstream views and headlines. He was ahead of the Covid crash and bullish US stocks early last year, for example.

A lot of investors follow what he says, so I’ve been encouraged to see J.C.’s constructive Tweets and stories about gold recently. I take them as positive signs for Canada’s miners. So when J.C. reached out last week to do an interview together, I told him I’d been waiting 13 years for his call.

It was a happy interview about our history, why Canadians are obsessed with gold (hint, it's the banking fees), why J.C. MUST buy a gold coin, mining finance folklore, and my favorite emerging stock.

Many new subscribers have joined TheBigScore since J.C. published the video yesterday. I’m grateful to J.C. for the opportunity, and happy to have you here.

Watch the video

Follow JC on Twitter

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TheBigScore is provided for education & entertainment purposes. We are not financial advisors.

The richest gold mine in US history has yielded 45+ million ounces since 1987, transforming its owner from a small player to #1 in the world.

Yet a 50% stake in the same asset was valued at just a dollar a year earlier.

He’d already lived an amazing life, but Peter Munk was new to the mining sector.

At 16, Munk escaped Nazi occupied Hungary in 1944 on the Kastner train of 35 cattle wagons. After WW2, he moved to Canada and studied electrical engineering.

Claritone, Munk’s first company, went viral in 1964 building beautiful home stereos endorsed by Frank Sinatra and later TVs. As quickly as Claritone took off it went broke over a troubled factory in Nova Scotia.

Munk and partner David Gilmour dusted off and founded the largest resort in Fiji from a raw plot of oceanfront land. The venture exploded to 54 resorts in Australia and the South Pacific at its peak before fetching a $128 million sale price.

Flush from Fiji, Munk returned to Canada in 1979 with designs on the oil business. His Barrick Resources quickly burned through $100 million looking for oil, then pivoted to gold, beginning with a small Ontario mine in 1983.

“Whether you’re young or old, failure should not be an impediment to trying again,” said Munk, who was 59 before Barrick took off.

Toronto businessman Joe Rotman (1935-2015) joined Barrick’s board in its oil focused early days.

In an unrelated deal in 1979, Rotman bought an oil firm from Royal Bank which also held a 50% stake in a small gold mine in Nevada’s Carlin Trend. The mine, called Goldstrike, was valued at $1 on Rotman’s books.

Goldstrike was losing money on about 30,000 ounces of annual production with a 625,000 ounce reserve base.

Rotman tried to sell the mine but found no takers. “It was a dog,” wrote Munk biographer Don Rumball.

By 1986, Rotman’s cash strapped partner either needed to unload the mine or a Kentucky horse farm.

They chose the mine.

The best place to find a new mine is in the shadow of an old one. Yet major producer Newmont, which operated adjacent to Goldstrike, passed on the 6,900 acre project, having their own 250,000 acres nearby.

Enter engineer Bob Smith, Munk’s technical partner at Barrick, remembered as “the soul” of the company. Smith thought he could fix up Goldstrike and recommended they buy it for $62 million. Munk made the offer and Rotman and his partner agreed to the sale.

“He never, never questions my decisions concerning operations,” Smith said of his partnership with Munk. “I would never second-guess his financial decisions.”

Analysts hated the price. Soon they would eat their words.

“The real wealth in mining is generated by finding something,” Robert Friedland says.

Barrick's first deep drill hole at Goldstrike in 1987, dubbed “the Screamer” delivered a huge discovery and more followed. A major expansion began and production soared 50X in the coming years.

$1000 worth of Barrick shares purchased in late 1984 was worth $158,000 in late 1993 not including dividends.

Barrick became the world’s largest gold producer on the back of Goldstrike, and a generation later it is still a tier one mine.

It wasn’t only Barrick that benefited. Little known Franco Nevada Corporation bought a $3 million royalty on Goldstrike in 1985, netting roughly $1 billion in dividends since.

Munk bought a 45.3 metre yacht called Golden Eagle while Barrick ramped up. He would find other successes in real estate and port building before passing away in 2018 at the age of 90.

Biographer Don Rumball wrote that Munk would work “impossibly hard to turn [visions] into reality before reality dissolved the vision… Most people do not themselves have the will or the courage to dream visions that defy gravity.”

A find like Goldstrike is as rare as Peter Munk’s determination. He never gave up and was rewarded for it.

You might also be interested in Peter Munk’s 36 Golden rules (Link)

or this:

Bill Powers invited me on his podcast in 2018. I dodged him for 2 years, insecure that I had enough value to share.

But Bill persisted. The feedback I got from that 2020 appearance inspired me to keep going.

Mining Stock Education has grown into one of the best networks in mining. Before dawn, work, kids up, Bill's built MSE into a 40,000-strong community. Bill would rather interview ordinary people with real experience than celebrity guests who garner attention. I love that about him.

When he asked me to join his show again, I was a “yes” in two seconds. We spoke yesterday about how I approached networking as a new resource stock investor. I shared some stories about my early mentors. Bill helped me sum up my message for those who may not have the advantages I do.

I'm grateful for Bill's example of service and prosperity and to join his program again. I hope you will find this conversation valuable.

Enjoy and Subscribe to MiningStockEducation on X.com and Youtube.

TIMESTAMPS

5:35 The Rich Man's Aphrodisiac

8:23 Catching Bees

11:12 Relationship Quid Pro Quo

14:12 Vision of a Sad Miner

16:02 6 Years to Win

17:33 What I learned from Andrew Pollard

21:18 How Nolan Watson Inspired Me

25:53 Find Your Centre of Influence

30:20 Earning a Mentor

32:57 Interview with a Hedge Fund Vampire

39:44 Kicking Robert Friedland's Door Open

42:13 Reality Distortion Field / My Katanga Cross

44:54 How Not to Be Too Weird

46:20 A Vision to Better Your Life

49:09 Gianni Kovacevic's Genoristy

52:43 Remaining Yourself in Pursuit of Relationships

53:33 Richard Nixon's Reciprocity Strategy

55:13 Mining's Good Ole' Boys Club

57:28 Sharpen Your Elbows

59:10 Defining 'In the Room, In the Deal'

1:07:00 What I'm trying to do with TheBigScore

1:09:39 Sifting through the Mundane for Profit

At 15 years old, Jon Goodman bet the farm on a mining exploration stock.

He risked his entire $2000 net worth on Consolidated Morrison, tipped off by a broker during a summer job working at Merit Investment.

Over dinner at a Toronto steakhouse, Jon’s father Ned, an influential money manager, teased him about the bet. He said Morrison was a dog.

Breaking even, Jon cashed out the next day. Then Morrison tripled in a few weeks.

“You steered me the wrong way,” Jon complained to his father.

“I'm not at fault here,” Ned responded. “Had you done your own work, you wouldn’t have cared what I said.”

The lesson became a core principle of Jonathan Goodman.

Today, Goodman leads mining-focused merchant bank Dundee Corporation (TSX:DC-A). In a series of interviews with TheBigScore, Goodman shared wisdom about his dual career in investment management and mining, and described how Dundee Corp is positioning itself for success.

During the time I spent with Goodman, I noticed that he's thoughtful, he listens, and he’s modest despite his achievements. Goodman’s insights on mining are some of the best I’ve heard. Read on to learn about them.

Born into the Resource Business

Jon Goodman was born in Montreal in 1961, the eldest of Ned and Anita Goodman’s four sons. A math whiz in childhood, Goodman dominated chess games, driving his uncle to retire from the game entirely. The family moved to Toronto in the mid 70s, where Ned’s career took off.

Goodman remembers, "Everyone thinks that we grew up with a silver spoon, but when I was born, we lived in a one-bedroom apartment and dad drove a Ford Pinto. We have two lives that we've lived. Before and after Hemlo."

Through a series of daring and complex bets, Ned Goodman gained control of International Corona, developer of the ‘81 Hemlo discovery in Northern Ontario which later yielded 3 mines and over 21 million ounces. It's still operated by Barrick today. Ned outsmarted rivals again in ‘90, taking control of the rich Eskay Creek mine as well.

Ned played a crucial role in establishing major resource companies such as Barrick, with a market cap of $40 billion, Franco Nevada ($30 billion), and Kinross ($10 billion). In the asset management sector, he co-founded Beutel Goodman, managing $40 billion, Dynamic Funds with $88.3 billion under management—acquired by Scotiabank for $3.2 billion in ‘11—and several more. A forthcoming Big Score story describes Ned’s rise.

Expectations were high of Ned’s sons, and Jonathan pursued education seriously in his early years. He graduated from the Colorado School of Mines in ‘84 as a Geological Engineer, in part to please Ned and also for skiing. Goodman then became a mining analyst in Toronto, first with a HSBC division, later Goepel Shields. While starting a family (Jon has two adult children and three stepchildren), Goodman earned an MBA at night school and CFA designation.

He recalled an invitation from Ned to attend a meeting of investors of the mutual fund business of Buetel Goodman (Dynamic Funds), which Ned acquired in ‘90. Jon agreed in exchange for a ride home.

At the meeting, Ned announced he'd recruited a world-class investment team. He'd reveal their names once they'd cut ties with their current jobs, assuring the audience of their calibre.

On the drive home later, Ned turned to Jon with a proposition. "Do you want to come join me? You'll run the mining funds and we'll have a lot of fun." 

"Who are the other people you've hired?" Jon asked.

Smiling, Ned said, "Nobody. It's just you and me at this stage." 

Fast forward three weeks, they recruited a stellar team at the birth of Dynamic Funds. Assets under management surged from $600 million to $7 billion in a decade. Two decades in, this figure approached $90 billion. Jon credits his brother, David, as the pivotal force in Dynamic's exponential growth during its later stages.

Opportunity Knocks in Peru

In the sun-bleached expanse of Northern Peru's desert in ‘93, 31-year-old Jon Goodman couldn’t believe his eyes.

A huge gold discovery was unfolding at a price too tempting to ignore. However, time was running short.

The Yanacocha project, some 4,500 metres above sea level, was a joint venture between Newmont, Minas Buenaventura and IFC bank. 

The project’s scale (eventually over 30 million ounces) was itself extraordinary. But what really caught Goodman was how profitably it could grow.

Buenaventura, a relatively obscure Peruvian mining company, traded quietly on the Lima Stock Exchange.

Through the mining grapevine, Goodman learned Southern Peru Copper (SPP) needed to sell its 15% Buenaventura stake. But Newmont, Yanacocha’s operator, would surely outbid him for it, if given the opportunity.

Racing against time, Goodman's Dundee Precious Metals (DPM) fund secured approximately 7% of Buenaventura from SPP, narrowly beating Newmont to the punch.

Quickly, Yanacocha became the world’s best gold mine, producing over 3 million ounces yearly at its peak. Investors began taking notice of Buenaventura (which still trades on the NYSE). Just two years after his Peru trip, DPM earned 15X on their investment. It helped DPM deliver 22.8% annual returns from ‘92-’03 (Source: Towers Perrin). 

“Growth funded by itself. That’s one of my key themes,” says Goodman.

In addition to running the DPM mutual fund, Goodman was CEO of Dynamic in the ‘90s, and played key roles in several other ventures.

In ‘89, the Goodmans took control of a Vancouver Stock Exchange-listed shell company, Repadre Capital, at $1 per share.

With much on his plate, Ned turned to Jon, then 27, to help oversee Repadre as co-founder of a new diamond exploration company. Repadre appointed Chris Jennings as CEO, with Jon as CFO and later Chairman. Initially, it burned through $4 million exploring Botswana. Jennings was a staunch believer in Northern Canada’s diamond prospectivity, and quietly funnelled Repadre’s money in this pursuit.

After failure in Botswana and Chuck Fipke’s Ekati diamond discovery in Canada’s Northwest Territories, Jennings left Repadre, teaming up with Gren Thomas (Aber Resources), trading his expertise for a 1% gross royalty on any find. Jennings and Thomas were cloak-and-dagger staking partners who got in early on one of the world’s biggest staking rushes. They flew up to Yellowknife, separated at the airport and stayed at different cheap motels to avoid detection before staking vast swathes of ground in the dead of winter.

Fighting for shareholders, Jon challenged Jennings on the basis that Repadre’s money had helped develop his thesis. This led to Repadre getting its own 1% royalty on the nearly 2-million-acre land parcel. Today that royalty is owned by Sandstorm Gold (TSX:SSL).

Diavik, Canada’s largest diamond mine, was found there in ‘94 when a 2-carat rock was spotted in drill core. It transformed Repadre from a 30-cent stock in ‘92 to over $8 per share by ‘96, helping the company buy other royalties. 

In '99, Repadre acquired an 18.9% stake in Gold Field's Tarkwa gold mine in Ghana, West Africa for roughly $35 million. But delays and the late 90s gold bear market sank Repadre to $1.50 in 2000.

But the now profitable miner was poised for a rebound. Tarkwa gushed cash and kept growing, reminiscent of Yanacocha.

In 2002, IAMGOLD pursued a takeover, but Goodman turned them down. He believed Repadre’s team, led by CEO Joe Conway, was stronger. A $470-million takeover finally closed in ‘03. IAMGOLD bought Repadre at $12.60 per share, with Goodman’s man Conway in charge of the combined company.

To Bulgaria

Just weeks after the Repadre sale, Goodman began a new venture in Bulgaria that led to a greater success.

Leveraging his expertise in both finance and engineering, he left parent Dundee Corp, transforming Dundee Precious Metals from a closed-end gold fund to a mining company. It paid US$26.5m in stages for a Bulgarian asset portfolio with an operating gold-copper mine, Chelopech, that was losing $500K per month, and a gold development project, Ada Tepe. But Goodman saw opportunity.

Chelopech was modernized and expanded. Permitting Ada Tepe was a 9-year process, with wary locals fearing environmental risk. “And we managed to do it by floating a concentrate,” Goodman recalls. “We took cyanide out of the equation and we dry stacked the tailings. By doing those two things, the community felt that they had the ear of the company and it really worked well. So those listening skills are kind of important.”

Comparing his time as a mining CEO to his leadership at investment bank Dundee Capital Markets, Goodman shared a striking anecdote: a banker, upon receiving a $1M bonus, told Goodman he felt cheated. "And then you go to this mine and you find an engineer that works 12 hour days, seven days a week. And when you give them a $100K bonus off their $200K salary, they burst into tears and say, “I don't think I deserve this.” The dichotomy was mind blowing."

Goodman thought investing was tough until he became a miner. Then he realized how little he actually knew, despite his schooling and fund management track record. Finance teams can work around a bad apple, he says. If a miner has a perfect CEO, geologist and engineer, but a bad metallurgist, or vice versa, the whole thing fails. “It's like this chain link fence where every link has to be right, and there's no two industries worse suited for each other.”

DPM evolved into a powerhouse. Free cash flow in ‘23 was $310M with mining costs below US $850 per ounce. DPM’s market cap is $1.87 billion today with roughly $805M in cash and no debt. Goodman retired from the company in ‘22 after a long tenure as CEO, later Chairman.

Lila Murphy recalls researching DPM in 2004 as a hedge fund research analyst. “Seeing Jon transform a bankrupt Soviet-era disaster of a mine into a world-class company compelled me to join him today,” said Murphy. In May 2021, she was appointed EVP and Chief Financial Officer of Dundee Corp.

"No fund manager, myself included, has ever shovelled that kind of dirt and the experience is invaluable to understanding the risks and opportunities in any given mining project,” Murphy added.

Goodman worked on other successful mining ventures. As a director of Canada’s Sabina Gold & Silver in ‘15, Goodman helped recruit Bruce McLeod to lead the company, then valued at $83 million. In ‘23, B2Gold acquired Sabina for $1.1 billion. Late last year, McLeod joined Dundee Corp’s board of directors.

“Jon is one of my favourite people in the world. I feel lucky to be working with him,” McLeod told TheBigScore.

–

Dundee Corp’s stock chart reveals a challenging decade. Shares traded over $15 when Scotia acquired Dynamic in ‘11, yet are $1.02 today. The downturn is mitigated by the $9.34 per share equity holders received from the ‘13 spinout of DREAM Unlimited, a real estate investment firm overseeing $24 billion, which has consistently paid dividends. DREAM was established in ‘96 by Michael Cooper, a close friend of Jonathan’s, alongside the Goodman family. Including DREAM, the equity value is closer to $10.34 today, plus dividends.

However, aggressive bets by the company failed or have yet to materialize. These included a Vancouver casino project, Chad oil and gas exploration, cattle ranching, fish farming and others.

Goodman says Dundee Corp was successful in three business segments: Mining, his area of focus, investment management, driven by brother David, and real estate with Cooper. “When we stepped outside of those was where we got in trouble.”

Since '17, the company has undergone restructuring (with Goodman as CEO since '18), slashing G&A overheads by 75%. Assets, like the $240M DPM stake, were divested. Dundee Corp also axed about $300 million in Preferred shares and debt, improving its balance sheet. Now, having endured this painful process and returned to mining roots, Dundee Corp may be finally poised to rise.

A Better Way to Play Junior Mining

With the stock at $1.02 today ($90.84 million market cap), Dundee Corp (TSX:DC-A) is undervalued compared to the $2.82 per share value of its asset portfolio ($287.6 million total assets, less $36.5 million market value of preferreds, divided by 88.95 million shares). 

At '23 year end, the book value of mining investments was $161.3 million. This may be understated. Non mining investments, including an automotive parts manufacturer and an Alzheimer drug developer, were $126.3 million (this includes cash of $26.3 million and net debt of $15.125M).

McLeod notes that the Alzheimer's drug, TauRx, under clinical trial, could outperform Dundee's other investments if successful, despite risks. Other forgotten assets in Dundee Corp could also surprise investors.

Goodman recruited several stars from DPM into Dundee Corp. They’re looking under the hood at future mining projects. “As you go through due diligence, you find things in the data that the company is overlooking, and that's where it becomes a lot of fun.”

Dundee Corp’s largest mining investment is Reunion Gold (TSXV:RGD); it holds a 14.9% stake worth $84.34 million at Apr 1 ‘23 (93% of Dundee Corp’s current market cap).

Dundee backed Reunion confident that drilling would yield a half-million-ounce saprolite gold find in Guyana. "And lo and behold, it became a 6 million ounce beautiful asset… That's kind of the way this business works.”

Reunion’s Oko deposit is growing and still underestimated by investors, according to Goodman. Each DC-A share owns more than 2 RGD shares, and the investment is already a double for Dundee shareholders.

Rick Howes, CEO at Reunion, is DPM’s former CEO, giving Goodman confidence in its oversight. “Oftentimes companies don’t know what the right thing to do is.”

Magna Mining (TSXV:NICU) is another cornerstone investment. “Magna is awesome," says Goodman. He’s a director of the Sudbury, Ontario focused nickel copper developer worth $85 million (Dundee Corp holds a 21.5% stake).

A 1.5% royalty on Aura Minerals’ (TSX:ORA) Borborema gold project in Brazil is entering the construction phase. It’s among Dundee Corp’s other mining assets.

Cash-strapped miners present Dundee Corp with big opportunities. “I can't predict where the market's going to take things, but if we have a good ore body and we can hang onto it, great ore bodies make great cash flow.”

Industry Fatal Flaws?

To attract capital, Goodman wants the industry to become more predictable. “Unless we give them better data, the generalist investor isn't going to show up.” He’s critical of engineering reports. “Have you ever seen a feasibility study or a pre-feasibility study that had a lower capital cost than the PEA?”

“I believe we've created a false sense of stability with these documents. They've hurt our market… at some point someone's going to have to sue an engineering firm because it's not acceptable.”

Australian studies are better, says Goodman, because they’re more likely to build their own mines, whereas Canadian juniors develop projects to sell.

He still believes Canadians are the best miners for their emphasis on social and environmental aspects. Goodman is proud that DPM employs more Bulgarians in Canada, than Canadians at its Bulgarian operations. “As a foreign investor, you really want to make it such that these mines and businesses are run by locals. That’s what we do.”

Block-size is one pet peeve of Goodman, referring to the dimensions of ore blocks that plan to be mined. “So many of the companies we look at where they tout good feasibility studies, when you actually regularize the deposit for the right block-size, they lose the economics.”

Then there’s Net Present Value (NPV). Goodman says it’s a weak metric since commodity price assumptions are less reliable as time goes on. To him, the most important thing is how fast new mines repay their capital cost.

“Most mines start off with a 10-year mine life and you wake up 10 years later, they still have a mine life for 10 years.”

He’s speaking from experience. DPM’s Chelopech had 6.5 million tons of remaining ore when Goodman acquired it in ‘03. It has since mined over 25 million tons with 20 million more in reserves.

Long-life mines are “NPV irrelevant,” says Goodman. “If you can buy them for a quarter of NPV, you're really buying it for five or 10 cents on the dollar of what they're worth. You don't need a lot of those to be very successful in this business.”

Dundee Corp avoids high capex projects. “When I look at a porphyry deposit, if you don't have a high-grade starter pit, you don't have a mine.”

Passive investing in ETFs and index funds are also crushing small miners. “Companies that aren’t in the ETFs, they’re orphans.” He emphasizes, “How do you find active investors? It's very hard.”

“I think there's more investment bankers in the mining industry than there are investors today.”

“Generational Opportunity”

The turnaround has taken long at Dundee Corp, but Goodman feels the corner approaching.

“My goals are to make this a very valuable stock, and I want to bring some cash flow into the company. I believe that we are at the precipice of a generational opportunity in mining as the confluence of the energy transition and the continued unsustainable strategy of deficit spending by virtually every country in the world are happening at the same time.”

“We're going to wake up one day in five or six years and find out that the values are significantly higher. And that [Dundee Corp] is dramatically undervalued and that as we continue to pull this together, we're going to create something special.”

"John is doing a great job at Dundee," wrote mining leader Pierre Lassonde in an email. 

Investor Rick Rule was mentored by Ned and made one of his best wins with Dundee Corp in the ‘90s. The company is on his to-do list to research again, after a trusted friend recently told Rule to do “his personal balance sheet a favour and get long.”

Goodman owns over 6% or 5.5 million of Dundee’s Class A shares. He has rights to about 2 million more through share awards, options and DSUs. Insiders and the Goodman family own close to 20% of the company. Through ownership of Dundee Corp’s super-voting shares, the four Goodman brothers control the company.

"The dynamic with my brothers is really good. I came back here with their support. We are supporting each other."

Ned Goodman died in 2022, survived by his wife of 62 years, Anita. Now it’s Jon’s turn to mentor a new generation. Matthew Goodman, Jon’s son, is a portfolio manager at Dundee Corp. Like father and grandfather, Matthew is also a CFA charter holder. Jon also serves as Executive in Residence at Laurentian University (Sudbury), home of the Goodman School of Mines.

“We spend a lot of time trying to take luck out of it,” says Goodman. “We're trying to find real ore bodies. If you can find that quick payback pit or something that's going to really be able to make you some cash flow. That’s how we turn these ventures into businesses.”

In an ‘02 shareholder letter, Ned told Dundee shareholders, “The supreme paradox of business life is that when the time arrives that you begin to believe everything is finished – that will be the beginning.”

Dundee Corp is stepping out from the shadows. Back to its mining roots, aiming for redemption in a new bull market. And the RGD win is early validation of this strategy.

"Investing is a passion of mine,” says Jon Goodman. “There is a certain family pride thing, but also I want my own legacy."

Author's family holds Dundee Corp stock at time of publication. They and the author may buy or sell securities without notice. Story may contain errors.

TIMESTAMPS

Mining Giant, Ned Goodman 00:01:02
Cheap Paper in Franco Nevada 00:06:26
Ned Lessons 00:11:47
Hemlo Gold Saga 00:18:20
Mining’s Finance Crisis 00:22:25
ARIS Mining 00:29:5
LatAm Gold Consolidation 00:34:06
Rick’s 100X on Dundee Bancorp 00:41:24
Dundee Corp Stock Today 00:42:40
Meeting Stephen Roman Sr. 00:45:42
Pitching Rick Rule 00:52:16
Robert Friedland’s Evolution 00:54:45
Earthlabs (TSXV:SPOT) 00:58:06
Rick Rule’s Personal Consumption 01:02:12
Rick’s Philanthropy 01:05:06
Battlebank 01:08:02

I love Rick Rule.

Like Warren Buffett is to value investing, Rick is to mining speculation, a great teacher.

Rick generously agreed to help me with a story I’m working on about Ned Goodman (1937-2022).

Goodman co-founded Beutel Goodman, a $40B asset manager, Dynamic Funds, an $88.3B manager sold to Scotiabank in ’10, CMP Group, which raised $5 billion in flow through funds, Dundee Securities, Dundee Capital Markets and others.

In mining, Ned built gold producer Corona Gold (sold to Homestake in ’92 for $430M US), co-founded Kinross Gold ($10B market cap), was arguably a co-founder of Franco Nevada ($30B market cap), co-founded Repadre Capital ($470M exit to Iamgold in ’03), co-founded Dundee Precious Metals ($1.85B market cap) and countless others. I’ve never seen a career like his.

And Goodman’s dealings were complex. Cascading voting structures. Related companies invested in each other and vice versa. It’s a maze. So I needed someone like Rick, who was mentored by Ned, to help me.

“There was never a deal that Ned couldn’t make more complex,” Rick laughed.

In this Mar 26 conversation with Rick, we discussed lessons from Goodman and some of his dealings, like Hemlo. We also talked about mining stocks, potential consolidation in Latin America's gold developers, and good traits of promoters.

Given Rick’s generousness in sharing his wisdom, I’ve decided to publish the Zoom call we did yesterday.

It’s 75 minutes of nerding on out Canadian mining finance history.

Thanks, Rick!

Enjoy!

TRANSCRIPT LINK

AUDIO ONLY

FOLLOW RICK ON LINKEDIN

RULE INVESTMENT MEDIA

Link to my Zoom call with Rick

TRANSCRIPT:

Rick (00:00:02):

There was never a deal that Ned couldn't make more complex and Ned would say, it's important if you're going to do a lot of business with this guy, you love him. It's important that you can resolve commercial disputes over dinner, not go to court. Early in my career after he spent time teaching me anything I did, if I'd call him, he'd say, will I get out at the same time and at the same price as you? And if I would say yes, he'd say, okay, save me the rest of the story. What would you like me to do? If you're going to have an enduring relationship with an intelligent counterparty that you ought to strike fundamental as opposed to emotional agreement. If you want to open with me, I would say I have an opportunity that I think is selling for half. Its intrinsic value and the reason for it is that it's a commodity that everybody else loves to hate. Now, immediately you hit all of my hot buttons.

Tommy (00:00:52):

Thank you for talking to me, Rick. I wanted to ask you three things. Could you describe your history with Ned Goodman?

Rick (00:01:02):

I met Ned sometime around 1977 or 1978. I was also being mentored by one of the best geologists I ever met named Hugh Mogenson, who at that point in time worked for Butell Goodman as an analyst. And I was doing an oil and gas workout that Hugh had been involved in. And so Hugh introduced me to Ned Goodman sometime in the late 1970s. And I was, well, first of all, I'd obviously heard of Ned in and around a lot of things being involved in the natural resource business, I was struck immediately by a wonderful sense of a guy who, although he didn't do technical work himself was a great consumer of expertise around both geology and engineering. And a guy that had an absolutely instinctive sense for finance around extractive industries, or as I used to put it years ago, turning rocks into money. I was also struck by a guy who was extraordinarily generous with his time with a young guy like me.

(00:02:20):

He spent tens of hours with me, I suspect attracted to my energy if nothing else, he was to the point where his mind was better than his legs. I guess I still had legs. And I was struck too by his abiding interest in the ascent of humankind, which is to say he wasn't just kind to me. He really truly wished well for the world. I'm not saying he always wished well for his competitors. Tommy, by the way, he was a highly competitive guy and understood the nature of his business. But I would say that he was smart, that he was curious, that he was generous, and at his heart at least, if you weren't in his way at that particular moment, he was extraordinarily kind.

Tommy (00:03:10):

Yesterday I was talking to Peter Brown, Canaccord founder, and Peter was describing how in the aftermath of the windfall affair and the Royal Commission that Toronto's mining stock business was moved out of, driven out of town. And Peter tried to pick up that business with the Vancouver Stock Exchange and the BCSC in Vancouver. And I think Peter was saying that a large portion majority of trading in Toronto at that time was these penny mining stocks. And when the business was shut down there, it totally died. And he said that as a young broker, he could barely afford to keep the lights on. He got a call from Ned who said, Hey, I hear what you're trying to do and I want to support you.

(00:04:02):

Peter said, which he's a colorful person, but he said, I'm not sure if it wasn't for Ned if I would've made it. He said, and then he said, probably I would've. But they had this incredible story with Helo in the 1980s, and Brown was telling me how Murray peso's margin calls had forced him to sell his control block in Corona. Brown said that he bought it and he called Ned because Ned had done him so many favors and sold it to Ned in 1977 or eight when you met, I don't think Ned was yet a household named in Canada. Definitely Helo made him that. But did you have exposure and a view of the business he was doing at the time when you met him?

Rick (00:04:54):

Yeah, he was certainly a household word in oil and gas and laterally in mining finance, household word is perhaps the wrong phrase because most Canadian households, like most American households, can't spell either oil or gas. But certainly in the industry, Ned was one of those rare providers of capital that listened and took into account the presentation. He wasn't one, he understood that he wasn't one necessarily that made his money by not writing checks. He was willing to take considered risks. He was willing to take considered risks on people like Murray Pezim, a wonderful but lethal salesman if ever there was one. And also Hughes and Lang Ned played both sides of the Corona game, or pardon me, the Helo game. And in fact won twice. But before Corona, while he probably wasn't too well known to the readers of the financial Post, for those people who were in extractive industries, particularly in the exploration part of extractive industries, Ned was a very important and very influential player.

Tommy (00:06:16):

Were you privy to, or do you know the genesis of the Franco Nevada story in 1983? Were you around? Did you know much about that name?

Rick (00:06:26):

I had the extraordinary good fortune of being allocated 10,000 shares of Franco Nevada at 35 cents in the initial public offering.

Tommy (00:06:34):

Did you take it?

Rick (00:06:35):

I did. I did. And at that point in time, it was an idea. It was nothing more Seymour, it's true, had had a fondness for the royalty business going back to his oil and gas experience. So he had a fondness for royalties that was at that point in time, 10 or 15 years old. He understood them to be probably the best part of the capital stack in oil and gas and then the mining business. But my understanding of the Franco Nevada Genesis was that they actually saw an advertisement for royalty in a Reno newspaper. And having been in the process of blowing their brains out of Alligator Ridge, probably thought we could do worse. I mean, I don't know if that's the true genesis, but I certainly recall discussions during that period of time between Seymour who came to favor the royalty approach and Ned who had a much more aggressive company building approach, hence the difference between say Corona and Franco Nevada.

Tommy (00:07:44):

Do you remember who offered you that chair position?

Rick (00:07:50):

I would suspect, I mean, the answer to that is no. I would suspect it was Hugh Mogenson who said, I've got an allocation for you and you're out of your mind if you don't take it. These are all wonderful people. As I recall, there was no cheap stock in that deal. Everybody got on the same price. There was no penny stock issued to anybody. There was no warrants issued to anybody. There were no options issued to anybody. I could be mistaken on that, but as I recall, everybody came at the same price and the same time, there were some people who were allowed to come in much bigger than peons like me, but that was probably the fairest offering in the history of the TSX.

Tommy (00:08:30):

I think from what I read, it looks like Seymour Schulich was maybe the junior partner at Buutel Goodman and lassonde was the gold analyst there, and that's correct. And through new venture equities, Goodman controlled vehicle, he helped them start the company and fund it. And obviously they bought the royalty out of the newspaper. That's what I've read too. And that's where the Gold Strike discovery happened. Subsequently, later, I think they paid 3 million and had received over 1 billion in dividends. 2 million, 2 million,

Rick (00:09:09):

I remember that. Yeah. 2 million

Tommy (00:09:11):

And received over 1 billion in dividends from it.

Rick (00:09:15):

And I recall, by the way, Tommy, nothing to do with Ned, but I recall clearly seeing the news release from Barrick on the gold strike discovery. There was a drill hole that was aptly named the screamer, because as I understand that a hawk flew by when they were trying to name it. And if my memory serves me correctly, that was almost 300 meters of 30 gram rock. It was an astonishing hold.

Tommy (00:09:46):

The crazy part reading about that is I'm a amateur Peter Munk historian and Adnan Khashoggi the arms dealer and Monk had this success in hotels in Australia and a Asia, and they wanted to get into the gold business after some failures in oil and gas. And apparently their first call was to net who helped them get into the Canadian mining business, and subsequently into that later opportunity, which I think they found on their own. But Ned told, or Peter Munk told John Goodman that Munk blamed Barrick on Ned, and I found this, it's crazy that he had the royalty through Franco Nevada. And when I've learned about his history, like you tell Goodman manages 40 billion. He started dynamic funds which had 90 billion under management. They sold it in 2010 for $3.2 billion. It's like the perfect exit of a mutual fund manager because who would've wanted the business today at that price?

(00:10:52):

And in 1983, Ned lobbied the finance minister to extend tax breaks to regular investors, expiration tax breaks leading to the boom flow through business. He raised 5 billion in flow through with CMP funds. And then Dream Unlimited was a real estate manager with 25 billion under management. It's like his success in financial services is unparalleled, and his success in mining seems to be unparalleled beyond the advisor to Barrick, the co-founder of Franco, he was the founder of Kinross, the founder, Dundee precious co-founder of Rip Padre, which I didn't even know about until I went down this rabbit hole and the key backer to all these deals. And it's just like a unfathomable that one person could have such a role in our market.

Rick (00:11:47):

Well, certainly early in my career, after he spent time teaching me, basically anything I did, if I'd call him, he'd say, will I get out at the same time and at the same price as you? And if I would say yes, he'd say, okay, save me the rest of the story. What would you like me to do? Many, many, many times, Murray Sinclair Jr. A Vancouver resident who I believe,

Tommy (00:12:16):

I don't know him, but I know of him for

Rick (00:12:17):

Sure, and I would make bridge your mezzanine loans to companies that exceeded our ability to fund. And our first call was always to Ned for two reasons. He loved the senior part of the credit stack. He loved to be a high yield debt owner rather than to be an equity owner. But Murray and I also knew that none of the junior mining companies would dare screw Ned. They might not pay Murray and I, but they wouldn't dare not pay Ned. So he was, in addition to being an invaluable part of my intellectual genesis, he was an important funder and syndicate partner in my early career.

Tommy (00:13:02):

Do you remember any specifics of what you learned from him?

Rick (00:13:07):

I would say that what Ned was best at was picking talent that he believed to be simultaneously competent and honest. And then listening. I remember Ned telling me, don't pay too much attention to established geological models. Let the rocks tell you what they are. If you try to fit them into a box associated with your exploration thesis, often you will miss data because it doesn't conform to your paradigm. That's useful in determining what becomes. Ned also taught me, I suspect, well, maybe life taught me, but Ned was both persistent and tenacious. Ned simply outlasted many of his competitors. Many competitors today have trauma holding stock over a long weekend. They think the fact that they want to go up, that they want stocks to go up in a period of time that will enable them to meet their auto lease payment or something like that is germane.

(00:14:27):

And Ned knew that building companies took five years or six years or seven years. Ned was also a believer that you had to look after your investors first because they were your constituency. The issuer wasn't your constituency, but that part of the package of looking after your investors was making sure that at least on success, the managers did. Well. Ned was not a believer in high cash compensation for company executives, but he was a believer in fairly fulsome options packages, and he was also a believer in bonuses provided that the bonuses were issued in return for realizable goals. I guess what I'm trying to say is that Ned had a very rational sense that everyone should win, of course, in their own order.

Tommy (00:15:28):

Do you think that there's anybody like him or has there been anyone like him who would you compare him to?

Rick (00:15:37):

I'm not sure in the resource business in Canada that there is, the people who are Ned's equivalent have most often gone to the issuer side rather than being on the agent side. I mean, when I think about somebody who has tenaciousness access to good commercial skills and access to good technical skills, I think of Murray Edwards, but Murray of course went to the issuer side from being an attorney really quite early. Probably the best conjunction of the skills in the mining business is Zo Bartner, Seymour, wiley old Fox, who again has wonderful listening ability, doesn't try to tell a deposit what it is, although they went separate ways. They were an amazing combination. Ned, I remember Ned, don't take this wrong, but we would be talking about somebody that we were thinking about investment with, and Ned would say, it's important if you're going to do a lot of business with this guy, you love him.

(00:16:48):

It's important that you can resolve commercial disputes over dinner, not go to court. I think that was useful. There was occasion, I know, well, and I won't mention the names, but there was an occasion where I had invested with somebody who I knew, knew Ned. In fact, Ned introduced me to this person, and it turned out that this person was viciously, viciously, antisemitic, and had said some things to Ned probably while under the influence of alcohol. And I remember Ned called me up and said, I'm going to ask you to do me a favor, which is to say never do business with this guy again for the rest of his life or your life. I realize you do substantial business with him, and I will see to it that you suffer no loss, no financial loss as a consequence of this, but I would consider it a personal favor, which was interesting to me.

Tommy (00:17:42):

Did you oblige Jim? I'm assuming you did.

Rick (00:17:45):

Yeah. Yeah. I mean, given what Ned had done for in the first instance, and then in a very calculated sense, the amount of money I had to make from this other person relative to the amount of money I had to make from Ned. In fact, I liked Ned and I didn't like the other person anyway, I did business with him because it was easy business to do. But when Ned asked me and told me the reason I said, yeah, I'm in.

Tommy (00:18:10):

Ned had obviously the litigation experience with him. I didn't know

Rick (00:18:17):

Ned had lots of litigation experience.

Tommy (00:18:20):

I didn't know the story, but so Ned got control of peso's Corona, and right after the discovery, Lac Minerals came to site to see the core and consider an investment, and they learned proprietary information about it. They then staked around it and outbid Corona for the neighboring ground where they found a larger mine and built it. And with Ned as the controller backer of Corona in a David Goliath situation, sued Lac, which was a major, and after I think a seven year suit was awarded the new mine for costs that Black had put into it, and Corona doubled on the day and Lac split 50%. But what I read is that nobody saw that wind coming, right? Nobody thought that this little junior could out Fox the major when the major had breached a fiduciary duty to it. On that site visit in 1981,

Rick (00:19:20):

I talked to net a reasonable amount of time during that time, and Ned absolutely always believed he believed in the efficacy of the rule of law. He believed that the facts were on his side. He had absolute faith. I didn't, I had no faith in American or Canadian justice when it came to fairly complex commercial matters. But Ned had absolute faith, and I don't think that Ned, at least publicly ever expressed any doubt whatsoever that the Canadian courts would find in his favor because from his point of view, he knew he was right. I thought that faith was charming myself, but I didn't share it.

Tommy (00:20:04):

You mentioned complexity, and one thing that when I've been doing research about Ned is that his dealings were far more complex than anything I've ever seen. And I heard that in the 1980s there was a illustration done in a newspaper about Ned in front of a whiteboard with all these related companies and completely filled with words, and at the bottom it said something like Easy, right?

Rick (00:20:32):

I have a copy of that somewhere, Tommy, if

Tommy (00:20:34):

You could. I've looked everywhere for it. If you could share it with me, I would be very grateful. Apparently it was on T-shirts at some point, but yeah,

Rick (00:20:41):

I'll try and dig that out. And it is true that there was never a deal that it couldn't make more complex. He had a fondness for that. Partly that was because Ned believed that Ned would serve Ned's interests the best, and so he was always interested in things like dual share structures where there was a super voting share.

Tommy (00:21:07):

Dundee corp today has a hundred to one votes with the 3 million shares that the suns have, and

Rick (00:21:12):

That's correct. And Ned was famous for wanting cascading structures where a share class controls the company and that company controls three other companies,

Tommy (00:21:26):

And those companies invest in each other, and it's like, so for me, trying to make this linear, I wouldn't say struggling, but this is more difficult than other stories I've looked into.

Rick (00:21:40):

I think we're the author of these schemes, a person of lesser integrity. I would've been more angry about them. But the truth was that when Ned said to me, I'll come in if you and I go out at the same time, that's the way I was always treated. Ned always treated me fairly and I came to the point of view that if Ned was structuring something in complex fashion so that he could maintain control, and I wanted him to maintain control to the extent that there was no financial disincentive to me, it came not to bother me. I will say that it made due diligence

Tommy (00:22:23):

From

Rick (00:22:23):

My point of view, needlessly complex.

Tommy (00:22:25):

Yeah, so today there is a crisis in mining capital markets. I mean, I don't know if you feel that way, but there's no net who's taking shots on projects at scale and has the capital that he has. I mean maybe Eric Sprott who's done an immense amount for the business, but the capital is not there, the institutions are not there. The flows are in index funds, and I'm wondering, what do you tell issuer if you're not in an index fund and you need capital and your story is struggling, how do you tell an issuer to build a market today?

Rick (00:23:13):

Well, that's a very non NED related question. I would argue with you by the way, that Eric's skillsets are what the market needs. Now, one thing Ned was not was a promoter. His fondness for complexity when he would tell a story would leave most investors cold. While Eric's message is much simpler, much more promotional. So I would argue that in the early stage company, Eric May be more useful to the industry than Ned, although Eric uses just his own capital and Ned was able to commend a much broader amount of capital. Going back to your question though, I think that the malaise that confronts mining equities is the fault of the industry itself.

(00:24:00):

I suspect that investors, going back to the decade of the seventies, have looked at mining stocks as being leveraged warrants on commodities more than anything else, they've looked for leverage to the commodity price. Ironically, the most leveraged companies are of course the most marginal. If you're a high cost producer, when the price of your commodity goes up, you enjoy more margin expansion than a low cost producer. So for 60 or 70 years, the investor has asked the mining business to exhibit leverage, which is to say, be marginal, and boy has the mining industry complied. I mean, there's almost no more marginal business on earth if you dial our market back to the period 2000 to 2010, the gold price is up. What sevenfold and the free cashflow per share of the XAU declined, and now the mining industry says, why are we having trouble raising money?

(00:24:57):

It's because for the last five decades it was always send us new money, old money, all gone. Investors are sick of that, and with the juniors it's worse. What was nice about Ned is that he was reasonably good at in movie parlance, segregating the good from the bad. From the ugly, he would back high quality people. He was a lead order, but he would say to the brokerage industry, these terms and conditions are stupid. I'm happy to take 19.9% of the print, but it's going to be on these terms. These terms that you've proposed are merely a way for you to garner commission from stupid investors, and I'm no stupid investor. I would argue with you, Tommy, that the mining industry isn't short of capital today when good placements, or at least placements that I think are good come up, including over the last year and a half, I invariably get cut back. A company goes out to raise $20 million, they come back for 32, I put in for X, and I end up bidding two thirds of X. And heaven forbid from the issuer's viewpoint, they have to give me a warrant. They seem to be very generous with themselves with options,

Tommy (00:26:11):

But you see the dichotomy between a growing story that's made a discovery and it's being developed or maybe even a smaller miner that if they don't qualify for an index, they're orphan. Right?

Rick (00:26:27):

Certainly the industry has come to understand the benefits of amalgamation and larger trading volumes, but I don't think that that is the primary reason for the demise of the mining sector. I think junior mining sector's own failures are the cause of its own demise. If you see a deposit reunion would be an example. Snow line would be an example. There's plenty of money around for high quality people doing good work and not spending too much money on GNA. Ned was a great lead order. He probably, in terms of Canadian exploration as a consequence of his pioneering in the flow through shares deserves more credit than any other single human on the planet with the possible exception of Peter Brown. In terms of the genesis of Canadian exploration, I think we have to give him that. I don't think that the lack of Ned or Peter for that matter, functionally retired now, although still writing checks himself, I don't think that the passing of those two gentlemen has had as much to do with the current funding difficulty that the Canadian mining industry has simply because I think it's the fault of the industry and you also have some other, if you will, Titans coming up.

(00:27:55):

I think it's fair to say that Frank Giustra's come of age, his model is different than Peter Brown's and his model is different than Ned's. He isn't a guy necessarily who writes checks to other people's deals. He shepherds his own deals and he is certainly no longer a broker. But I think we've come to the point where there is a substructure of people and there are certainly quasi family offices, the Friedlands, the Lundins, people like that. I think that the industry has adapted. I think that the halt and the blind, which is to say most of the issuers haven't adapted and hopefully they'll go extinct.

Tommy (00:28:38):

You mentioned Frank, and I guess if I can ask you about Aris Mining, and this is a story that I know really well and I'm a shareholder of it, and it comes to my question about these orphaned companies, right? It's like Aris Mining has the best metrics of any small gold producer and it's cheaper than all of its peers on all of its metrics, but it lacks the trading volume to qualify for GDXJ at scale or GDX and I think it's in a special place. That 450 US market cap that will be self-funded with 500,000 ounces of production at 1200 costs in two years with 170 million on its balance sheet. I don't see how that stays a 450 million market cap company, but in the meantime, it's half the price it should be in my opinion. And so a company like Aris have to be subsumed to get the value that it deserves, or do they just wait and do what they're going to do and the market will weigh it eventually, but what do you do in that situation when you're not the GDXJ star?

Rick (00:29:58):

I need to disclose conflicts of interest. I'm a shareholder of Aris and I was a shareholder of Endeavor before it. I'm a woodier fan.

Tommy (00:30:07):

Me too.

Rick (00:30:07):

Before we go on, let's disclose conflicts. I think the description that you gave of the company is not quite accurate. I would suggest that there are still some unanswered questions with regards to continuity of grade, and I think that there's still some unanswered questions with regards to the politics and the sociology of Marmato. This is my second time investing in Marmato and I've been there. I don't know if you have no go there. I think that the sociological problems can be solved and I think that Woodyer is the right guy to do it having done it in frontier markets before, but I think that the market is uncertain about the political direction of Columbia, and I think Columbia's on again off again, fascination with mining means that the concern that the market is expressed is valid. I think the market should be concerned about mining in bc. People tend to be more concerned about political risks that they don't know about, but I think there is some concern. I think the market's concerned about the sociology around Marmato and Antioquia generally, and I think that's valid too. I think there are concerns around the drilling density at Marmato and the ability that the company has to live up to the projections that you've discussed. I own it because I believe that they will, but I can understand the criticism that they haven't yet. I get that.

Tommy (00:31:39):

I haven't heard that. I knew that the marma lower mine project that's now started, they're taking it from 20,000 or 30,000 ounces a year to 200 I think for 20 years is the plan. But I just assume because of who I'm dealing with that whether it's Neil and Wheaton who's funding it, that they have sufficient information to move forward with a bill, right?

Rick (00:32:08):

I think they're going to get it done. Understand that Silver Wheaton's funding it sequentially. You have to overcome, there has to be sequential progress to answer unanswered questions. Wheaton invests the same way that retail investors auto invests. They trust, but they verify. Retail investors have a very different paradigm, got a hunch, been a bunch, and that often doesn't work, particularly when the hunch is politically incorrect, which is to say Colombia, I happen to believe that fears over political risk in Colombia while well founded are unduly discounted compared to political risks in other jurisdictions, places like the United States and Canada, which I believe are riskier than the market gives them credit for being.

Tommy (00:33:00):

So Endeavor was a dog stock for five years was flat and growing, and then in one year it appreciated five x and that was 2015 or 2016, so it was like the market woke up to it

Rick (00:33:16):

Right after the check started cashing. You will remember that Endeavor answered a series of unanswered questions. Endeavor did two things. They answered a series of unanswered questions and they grew by amalgamation. Frank to his credit, understood that what you needed to do was get sufficient scope and scale and sufficient trading liquidity that the index funds had to buy you. The acquisition of Semafo was both about combining the Semafo and the endeavor assets to create a very solid West African to competitor and to maximize the joint pipeline. It was also about getting enough heft and enough trading liquidity that the various index funds had to buy it.

Tommy (00:34:06):

Do you think that there is a story like Aris or one that is would be suited to an amalgamation with it? It's tough for Aris to merge with somebody that has a premium price and if you are trying to get to the GDX,

Rick (00:34:26):

I don't think that they are or should be interested in an amalgamation. Now, I would love to see some form of northern South American amalgamation amongst say reunion, say G2, say GMining, say Aris, and if I'm really allowed to fantasize lundine gold, I'd love to see something like that happen.

Tommy (00:34:58):

It's crazy, but for me, looking at those stories like I love Oko and that's got a six 500 Canadian market cap. Gold's 3,000,000,001 great mine, and Dave Fennell was joking with me that he thought the Oko would be as good as it. They're different, different grade, but the simplicity at Oko and the scale is very impressive. Yep. G min G mining, that's close to a billion market cap, but I guess I see a reunion on a path to something like a mini lundine in potential, and that's what Jin is too, a smaller project, but there's Aris Orphan that's cashflowing today. That's the same value nearly. I mean it's bigger, but then just the deposit in the ground and Aris has four huge projects and cashflow.

Rick (00:35:58):

Yeah, I think the deposit, the market cares about one deposit in Aris, which I suspect in the near term Neil cares about too.

Tommy (00:36:06):

Is that Soto Norte? Pardon me? Is that Soto Norte? Yeah.

Rick (00:36:11):

I think too that with regards to the challenge in front of Reunion that the challenge is less formidable as you suggest it is socially one deposit. I mean they have a neighbor and that amalgamation, it would be nice if that amalgamation would take place, although I guess the management teams are less than past friends, but the job ahead of them is relatively simple, relatively non-complex, and the ore body shows every sign of wanting to get bigger, which is pretty nice. Fennell has also evidenced, unlike most of these other guys, a real willingness to transact even if he doesn't come out in the control shoes,

Tommy (00:37:06):

This is reunion.

Rick (00:37:07):

Yeah, I think that helps. With regards to G Mining, they were an orphans stock for a while. They have, I think done a very good job finding a constituency for their story

Tommy (00:37:21):

Background plus the Egyptian billionaire, right, who helped? Well, they both,

Rick (00:37:26):

I think they've done a better job than most Canadian miners finding a constituency themselves that wasn't delivered to them by the Canadian investment banks looking outside the ranks of traditional North American gold mining investors to find very large family offices around the world who came to believe in their track record came to believe in the lundine in premature. The Lundins were very generous in terms of crediting the Gignac family with successful on time, on budget completion Del Norte, which was by no means a simple task. Early in its incarnation, there was widespread condemnation about G mining in Canadian capital markets because they called them lousy promoters. In fact, the Gignac family didn't want to go the route of traditional investment bank led Canadian promotion and instead charted their own course. By the way, the same course that Endeavor had partially charted 10 years earlier.

(00:38:35):

My suspicion is that Neil Woodier will be able to do precisely that with Aris. I think like the Gignac family, it'll take him 12 to 18 months to do it, but I think going a different route than the route that is so common, Bay street Canada, yeah, will pay dividends. And my belief is that Neil, given his past successes and the tenacity of Frank behind him, will be able to fashion his own constituency. That constituency is out there, Tommy. It is just that most issuers are too lazy to access it. Most issuers seem to believe that you ought to be able to call up Haywood, and then you ought to be able to call up BMO. You ought to be able to consign market building and financing to those two outfits, and the game ought to be over, but that's not the way the game is currently constituted, and I think the success in G two in building their market cap in a nontraditional sense is really excellent testimony to that. But

Tommy (00:39:47):

That's G min, I think. G two, G two,

Rick (00:39:50):

I'm sorry, yes, G mining

Tommy (00:39:53):

G, but G two you mentioned that's G two gold fields, right? Yeah,

Rick (00:39:58):

It's right across the property line from Reunion, and I believe part of the same mineralized event, very different rock response G two thus far is more higher grade discrete veins, whereas Reunion is a very different ore body, but my suspicion is that they're part of the same mineralized event and I would love to see them at some point in time combined.

Tommy (00:40:22):

Does G2 have, is that the old Aurora mine?

Rick (00:40:26):

I don't know the answer to that.

Tommy (00:40:28):

Does did they have a mine startup that didn't go well there? Was there a mill and everything built or No,

Rick (00:40:35):

There may have been a very small scale mill.

Tommy (00:40:37):

I think there were a couple Guyanese stories that, I forget the name of the predecessor, but I watched Reunion and talking to John Goodman about it. They have 16% of it. I mean, according to him, he was backing them looking for 500,000 ounces insite thinking that it could be a simple million profitable mine, and then they've got 6 million ounces that could be much more, and it's a super success and it's now an $80 million position for Dundee Corp, and their market cap is 85 million and they've got 300 million of other assets. Do you follow Dundee Corp, the stock at all? Do you know much about

Rick (00:41:24):

I do. I need to say as predecessor, Dundee Bankcorp was one of the great wins of my career when it was spun out of Corona, when Corona was taken over by Homestake, it was a total orphan if my memory serves me well, and it was spun out, it traded for 41 cents. I wasn't astute enough to buy any at 41 cents. It took me till it was 55 or 60 cents before I understood what Ned was trying to do and the fact that it was a total orphan, but I'm delighted to say, by the way, partly without me, it went from 41 or 42 cents at the bottom to $42 at the top.

Tommy (00:42:03):

I think it had a three for one split, maybe even.

Rick (00:42:06):

It was astonishing. Now, it would be disingenuous to say I held every share 50 or so cents to 40 or so dollars, but the truth is it happened so quickly that I was able to hold a large number of shares and I benefited mightily from Ned's effort in that name, both in terms of my own personal net worth, but importantly my own reputation. My book was littered with Dundee Bancorp.

Tommy (00:42:40):

Well, they had a huge success in asset management and in other investments, but in 2014, they really hit the wall. The stock dropped 90% in four years. And so it seems like John, he's been leading this restructuring, selling assets, buying preferred shares back, and now they have this, I wouldn't say pristine stock, but you got a 90 million market cap with 300 plus million of assets, and that team and the Goodman's have about 12 or 13% of the stock, but John seems really focused on the family legacy and making it good again, so I'm a believer in it, and it's a little illiquid to buy it. That's part of the challenge, but I like it now.

Rick (00:43:33):

I do too. I need to spend more time with John. I've known him a little bit for a very long time. Again, Maurice Sinclair Jr. Who was his

Tommy (00:43:42):

Partner at Dundee. Precious the fund, I think, right?

Rick (00:43:45):

Yeah. Murray is a shareholder and former director and has told me that I should do my personal balance sheet a favor and get along when Murray Jr. Says something like that. It's usually pretty good advice.

Tommy (00:43:59):

Yeah, I've heard so much about him, but he remains an enigma to me. John described the two of them with Dundee Precious Metals as a fund. They had a 23% annual return from 92 to oh three. That's pretty good. And on one site, John in 1993 was at Yanacocha, and he said that BU Ventura, BU Ventura had a 40% interest in Yanacocha, and John was able to sort of beat Newmont to buy 7% of it for their fund, and they made 15 x in three years as a 3 million ounce a year. Mine was built out of profit, not equity,

Rick (00:44:48):

I'll tell you a similar story, but the best stock market would've my career was Paladin.

Tommy (00:44:54):

I've heard you describe it in past Australian

Rick (00:44:56):

Uranium Junior and I had bought a bunch of stock at a dime, financed them to see it all the way to a penny, which shakes your faith mercifully. I had the courage of my convictions. I bought some more stock, although not at a penny, and then the stock started on the way up and at a dollar, I decided that I would sell enough stock that I had my bait back. So I was selling some stock and I got a call from Murray John who used to work for Ned, and he said, Rick, you can do it. You want, but the buyer of that stock you're selling is Ned. You might want to think through the sell side. And of course, it went from that dollar to $10 in, I don't know, four years, four and a half years. A very shrewd guy.

Tommy (00:45:42):

No kidding. We spoke briefly, or maybe it was email. I was wondering if you could tell me your story about meeting Steven Roman, Sr. You're a great storyteller, and I don't know anybody who's known him directly.

Rick (00:46:00):

I'm embarrassed to say that. I don't know when I first met him,

Tommy (00:46:08):

It was 50 years ago.

Rick (00:46:10):

It was a long time ago. I do remember having lunch with him, and if my memory serves me correctly, it was in the bar of the old highs in Toronto, the original highs in Toronto, and I remember him as a very good storyteller and oblique promoter, which is to say he didn't begin his presentation with the close. He didn't try and say, this is a 25 cent stock that's going to go to $3, which is the normal Canadian open. He was much more of a Robert Friedland style promoter in the sense that he would begin his pitch with the state of the world. I think at Xerox, they used to call it foundational selling. He would get you to agree with two or three big picture statements before he would get more and more and more focused on where he wanted the discussion to go. I found him a fascinating human being. He was mission-driven, which is a very good thing, but his mission at the time that I met him wasn't of any particular interest to me, so he never did business.

Tommy (00:47:27):

What was his mission at the time? Do you remember? Pardon me? Was it the Slovak cause or,

Rick (00:47:32):

Well, Roman Corp, basically. He saw himself as an emerging merchant banker, and with probably the sole exception of Dundee Bank Corp, I have never invested in a merchant banker that worked for me. So that model, while he was of interest, wasn't of interest to me. Another really little known thing that I have found very consistent among very good natural resource investors is that they're collectors and buyers of redundant databases, and Roman was always bragging about the fact that bragging is the wrong phrase. He was always discussing with interest the fact that he had bought, as an example, the Pathfinder database or some other database, and he would say, I can't believe that these companies are selling me data that they compiled for $150 million and they're selling it to me for a hundred thousand dollars. And I would say, whatcha going to do with it? And he would say, I don't know, but it's going to come in handy. And I've heard that from other good investors. Very, very, very commonly. I've never been lucky enough myself to get one of these discarded major mining company databases, but I do remember with fascination that Roman was extremely interested in buying intellectual capital for a penny on the dollar with no immediate sense of what he was going to do with it, just that there was some knowledge in there that if he was smart enough to plummet would come in handy.

Tommy (00:49:22):

Could you describe a definition of merchant banking?

Rick (00:49:27):

Well, my definition is a sort of a holding company that invests both its capital and its talent in developing affiliates. Dundee Bank Corp was of course the classic successful.

Tommy (00:49:44):

It sounds like a nice way of describing a House Street promoter too, right?

Rick (00:49:48):

Well, except for that, the House Street promoter tries to use your money in the case of legitimate, and I would suggest that the Lundin family are merchant banks. They're just not public merchant banks. I would that Ross Beaty, I would argue that in the oil and gas business, and in some senses in the mining business, that some of these serially successful families are private merchant banks. They don't allow you to participate in the parent company because the parent company's closely held and they don't feel that they need you, and they don't feel like they'd like to talk to you in terms of how they allocate their own assets. But I would argue as an example that the collection of trusts that form the basis of the Linde family and the management company, Namdo, have the effect of being a private non-public merchant bank. And I would suggest that Kestrel Holdings, the Ross Beaty family has functioned in much the same fashion, answerable to themselves using their own money, but using their own money to grow a stable of affiliates

Tommy (00:50:55):

In Romans. In some of the readings I did about Roman, a journalist said that described that his faith floods a room, and you mentioned that he set a theme and got you to agree before he made the pitch. As a writer and a communicator, I always got to think about how do you grab people's attention right away, and so by saying a 25 cents stocks going to three bucks, at least I've set the tone and you know what I'm talking about. Yeah. Do you think it's better to do the Friedland or Roman approach, or do you have to earn it by being the equivalent of a billionaire to have that sort of gravitas?

Rick (00:51:35):

I don't know, Tommy. I certainly understand that if you're going to have an enduring relationship with an intelligent counterparty, that you ought to strike fundamental as opposed to emotional agreement. If you're a guy like me and you start off by saying, I have a 25 cents stock that's going to go to $3, my usual first response is tell somebody who cares. I don't want to know if you need a headline like that.

Tommy (00:52:12):

So how do I open with Rick Rule with a pitch?

Rick (00:52:16):

It raises, oh, well, if you want to open with Rick Rule, I mean, you know me well enough, you've listened to my BS for years. If you want to open with me, I would say I have an opportunity that I think is selling for half. Its intrinsic value, and the reason for it is that it's a commodity that everybody else loves to hate. Now, immediately, you hit all of my hot buttons.

Tommy (00:52:39):

You forgot warrant. Yeah, well,

Rick (00:52:41):

I mean, when it comes to the deal terms, then we have that discussion, but I have to care about the investment before I care about the warrant. If I don't think the investment's worthwhile, I don't care particularly about getting the right to buy it at a higher price, so I don't think it's going to get there.

Tommy (00:52:57):

You said something, and I'll wrap up soon, but you mentioned databases and you mentioned Roman, and there was the Fennell story where he relentlessly pursued the Anaconda database to get, I think it was the deposit in surname that Oh my. But I wanted to bring this together by describing this man that I know. His name is Denis Laviolette. I dunno if you know him. I know him. Yeah, I think he's the VP X at Newfound Gold, and he used to work for Sheldon Inwentash. He's my age, so he kind of grew up knowing how the sausage was made, but he put together with Colin Kettell, this portfolio, including Newfound Gold, and he's made a big fortune on newfound, so I don't want to say he's puffed his chest out, but he has no fear of what you're going to think of him, but he's also very charming, and he's from Ottawa originally, but he's got this down home geologist charm, I'd say. I think that his wealth from the discovery has made him more confident, and so he's letting his hair down in the way that when he's promoting his companies, he's describing, oh, this thing's like a Frankenstein, and it's kind of like what I'm getting at is Roman and Friedland, they had huge success, which changed how they can market themselves because they bring to the room their track record, and I'm wondering, was there a difference with Robert in 1980 versus, or 85 versus today, and the way he would pitch Rick? Cool.

Rick (00:54:45):

Robert is now obviously he can pitch based on his reputation. What is consistent is that Robert is so smart. What happened in the early eighties is that you would have a couple of conversations with Robert, where Robert would just ask you questions and you would think, where is this going? Where it was going was that he was debriefing you. He was finding out what your hot buttons were. He was finding out how to persuade you Later. He was absolutely lethal because he was smart enough and he could segregate data in his mind well enough that he could tailor his pitch to fit your parameters. He knows too many people now, and he doesn't have time to do that. I think probably that process was, from his point of view, fairly degrading to him. He becomes a much less lethal promoter now because he doesn't pitch me on the basis of a 100% ability to understand what's going to be important to me. Ironically, to me, he's a less effective promoter. Now I know that his cost of capital will be low. He doesn't have to tell me that he's a great promoter. I know that he attracts great people and he pulls unbelievable stuff out of them. He motivates people like nobody else in this business.

Tommy (00:56:25):

Sorry, go ahead.

Rick (00:56:26):

In a sense, he doesn't have to be as lethal as a promoter as he was, and I don't mean lethal in a bad sense. I mean that when he was determined to sell somebody something before he started selling, he got to know them well enough that he could customize his own pitch. The pitch that he would give to say Peter Brown at that point in time, or Ned Goodman at that point in time or me, were very, very different pitches, each pitch geared to his understanding of the value of the person he was pitching. He was unique. I've never met a salesperson with his skills

Tommy (00:56:59):

When I was in the Congo with him 10 years ago, and I didn't know him, but I knew of the famous salesmanship of him, and he got quite frustrated with me. He looked at me, he is like, why do you keep telling me to promote the stock come back in 10 years? This mine will be built? And so I felt that he no longer wanted to do that. He was like,

Rick (00:57:23):

I think that's absolutely correct. He doesn't

Tommy (00:57:25):

Have

Rick (00:57:26):

To. I think he probably found the process demeaning, and I understand that completely, and the truth is he doesn't need to.

Tommy (00:57:34):

Robert, I've got a 17 billion market cap or something. Now,

Rick (00:57:38):

We've talked about a lot of people now, but Robert remembers very well that I was there for him in Ivanhoe mining at 65 cents, 66 cents, 67 cents. He appears at my conference in Boca Raton every year, not because he needs to, but rather because he believes maybe someday he'll need to, and at any rate, because I was loyal to him, he's loyal to me, which is a wonderful thing for a guy that's accomplished what he's accomplished.

Tommy (00:58:06):

Part of why I mentioned Denny was that we were describing the data sets, and so Denny bought ceo.ca, which was a great favor to me, but he also bought the Northern Miner for 3 million bucks, and he got mining.com with that acquisition. So that's a pretty valuable domain. But on one hand, it's kind of crazy because media businesses is insane, but there's 125 years of mining stories in there that I think could be interesting. Anyway, I've been noticing recently, success lets people sometimes be more of themselves. Sometimes that's bad, sometimes that's good, but anyway, watching the characters evolve is really fun and Well,

Rick (00:58:56):

I'd like to learn more about that stock. You may know I'm a reasonable shareholder at as Vermont, having watched Agora Grow, I'm attracted to the media and information business.

Tommy (00:59:10):

Well, that actually, it's a great stock for you, and I know somebody who has a block. We should talk. That business is like, it's 55 million of securities, Northern miner ceo.ca, a 0.2% royalty on newfound gold and a bunch of cash, and the valuation's 27 million.

Rick (00:59:34):

Yeah. If I know the securities, I'm probably unlikely to pay full price for that part, but I sure like the rest of it,

Tommy (00:59:42):

But I'm saying is that the, I get it. It's a basket case of inequity. It's trading at a huge discount too.

Rick (00:59:50):

No, I'd be very interested in knowing that. I think I might be able to help them in two senses. I think I might be able to help them on the content side. Oh

Tommy (01:00:01):

Yeah,

Rick (01:00:03):

I'm pretty good. If I believe a stock is selling for less than it's worth causing other people to know that it's selling for less than it's worth,

Tommy (01:00:11):

No, that would be a game changer for them.

Rick (01:00:15):

They should talk to me if they were prepared to do the right thing. I might in the right set of circumstances, sign some form of binding letter. I am attracted to dollar bills for 50 cents, particularly if I'm comfortable about the fact that there's a dollar there.

Tommy (01:00:37):

One of the challenges, obviously the mining securities are super speculative. They own a bunch of juniors, which are going to get written down this quarter, be for the last quarter, but yeah. One of the things that I think affects the stock negatively is Eric Sprott, actually, he's the largest shareholder with 15%, and I think obviously he's passive so wealthy and has all these investments, but Denis has been, he's got this huge position in newfound, and I think he wants to own more of it, but insider alignment is a piece that I think they're going to try to fix, and maybe that's the Rick opportunity.

Rick (01:01:19):

I have some history with Eric, and from my point of view, it's pretty good.

Tommy (01:01:22):

Yeah. Eric gave you the giant liquidity event, right? Well,

Rick (01:01:27):

It wasn't really a liquidity event. I haven't sold a share,

Tommy (01:01:30):

Really

Rick (01:01:31):

Not a share. What Eric did is my business made a lot of money, but there was no ongoing concern. Value. If I'd gotten hit by a truck, my heirs successors and the signs wouldn't have gotten anything for the business, and so that's what they did for me. Liquidity event assumes that you sell stock.

Tommy (01:01:55):

No, I meant diversification opportunity,

Rick (01:01:59):

Right? What it did was crystallize in a permanent sense, the intangible value that I had created around the global brands.

Tommy (01:02:12):

What do you do with the success you've enjoyed? You were in a video recently wearing a Hawaiian shirt, and it doesn't seem like you consume your money, but yet you're motivated by it, right? So what does money do for you?

Rick (01:02:32):

I'm wearing a shirt now that's emblazoned Battle Bank. I'm celebrating retirement by starting a new bank. My seventh, by the way. I like to create wealth. Well, when the second of my wife and I shed our mortal coil, which is to say when we're both gone effectively, our entire estate is going to go to philanthropy. Any other areas successors and the signs have been looked after already. And as you suggest, I'm not particularly a consumer. My new car is 14 years old. I live in a very nice house. I didn't succeed in downsizing with regards to my house, I hope you come visit me sometime.

Tommy (01:03:21):

Thank you. I would love to,

Rick (01:03:22):

But I'm down from three houses, so I have downsized. In one sense, I love helping people build businesses. I love entrepreneurs who find a need in the market and find a way to serve it. At the last bank, which we built EverBank, we recognized a need in the market. We recognized that the branch banking system in the US wasn't serving the mass affluent consumer, but was adding cost, and we understood that Americans wanted to save in currencies other than just the US dollar. It took us 14 years, but we built up a 275,000 saver constituency around that before selling the bank. Similarly, after I sold my business to Eric Sprott, we recognized that there was a whole class of Americans who wanted to own publicly traded oil and gas in a vehicle that wasn't, pardon me, publicly traded precious metals in a vehicle that was tax efficient.

(01:04:22):

That wasn't an ETF. That's now this brought physical trust business, a 26 billion business. There was a huge market segment to serve, and the market wasn't serving that segment. Being part of building those very large franchises, serving underserved portions of the market that I know well is something I just absolutely find fascinating. I don't need to do it myself anymore. At age 71, I'm past prime time in terms of being a CEO, but I love assisting young entrepreneurs who have identified a market need and a way to fulfill it. The other thing I do now is I spent 50 years Tommy, learning how to make money, and thus far my track record, giving it away is fairly spotty. The old dictum do no harm. I'm not sure. I've always done no harm, giving away money, so I'm going to spend the next 10 years learning how, because I'm going to give away a fairly large amount of money and I'd to do good. It's

Tommy (01:05:29):

Not an easy thing to do because as a libertarian man that you are, we know that it's better to teach a man a fish than to give him a fish.

Rick (01:05:39):

Well, in particular, I have a philosophical aversion to giving money to a philanthropy that takes government money. That means from my point of view, if I give money to an outfit that takes money from government, I feel like I'm benefiting from the proceeds of crime, and that limits the outlets I have.

(01:06:06):

Most of my estate will go to organizations that are at worst, or pardon me at best, antithetical and more likely hostile to government.

Tommy (01:06:20):

So is there a theology behind your philanthropy? Will the libertarian stuff that you do, will you support that sort of an issue?

Rick (01:06:32):

Certainly the Atlas Foundation, certainly students for Libertarian group like Ross Beatty and Tom Kaplan, I'm interested in environmental causes, but free market environmentalism. I'm interested in the work that, as an example, the Nature Conservancy does buying habitat and setting it aside, I'm interested in the work that Tom Kaplan does, saving big cats. If you save the top of the food chain almost naturally you've saved the rest. So I do that and I'm also very interested in invested in economic empowerment. So I've been investing reasonably successfully in microcredit for 30 years, establishing banks in places like India, Somalia, the West Bank, that loan money to very, very, very poor women, generally women that have no collateral. Interesting way to bank and providing economic opportunity through credit to people that otherwise wouldn't have it. I mean, these banks have enjoyed really tremendous financial success, although they're nonprofits and the human success that I've been able to enjoy vicariously, women that were absolutely destitute who now employ 20 other women and are part of feeding 20 families has been very gratifying to me.

Tommy (01:08:02):

For the last question, Rick, what are you most looking forward to personally right now?

Rick (01:08:08):

Probably the growth of Battle Bank.

Tommy (01:08:12):

What is the launch product of Battle Bank?

Rick (01:08:15):

We will be a nationwide branchless bank operating through the internet. Rather than having 15 deposit products designed to hoodwink customers, we'll have one deposit product, a high yield money market account so that you can earn interest on your checking account. As an example, we'll have certificates of deposit in 22 currencies, not just the US dollar. We'll have IRA products that aren't just repositories for mutual funds from financial institutions, but rather IRAs like your RSPs that can own a duplex or a triplex can own an owner or operated franchise, could invest in private equity. We believe that our customers, IRAs are just that. They're IRAs and we've developed legal structures to allow people to invest outside the norm in their IRAs. Amusingly on the lending side, one huge opportunity. We believe that there's in excess of $30 billion in precious metals, bullion held in segregated accounts in the US and nobody banks it. So establishing credit facilities for the gold community, a community that I know how to talk to and understand because I'm one of them, is I think a huge opportunity. When we started EverBank in 2000, the backlog of people who wanted to do business with us, that is to say our waiting list was zero. With Battle Bank today, pre-open, that list is above 12,000 on the way to 13,000.

(01:09:58):

EverBank grew in substantial measure through the assistance of the editors of Agora who liked our unique products and liked our approach to market. Battle Bank is owned as to about 20% of the bank by Agora and their editors and their publishers. So I would suggest that between my list and between the 275,000 former customers of EverBank and the efforts of Agora, that our customer acquisition cost will be very close to zero. If you combine a customer acquisition cost close to zero, a business plan narrowly focused on a few sectors that we know well and non-interest bearing expenses that are in the best decal in the industry as a consequence of having no branches, I think you have a recipe for a really, really, really successful bank. Just like the last one.

Tommy (01:11:03):

Will you put it in a penny stock so we can all buy it?

Rick (01:11:06):

It is unlikely. I hope it doesn't go public. It may. That'll be up to the shareholders. The last bank grew so fast that we had to take it public because we couldn't keep pace in the equity side with the deposit growth and the founders ran out of the ability to fund that growth. If you take, you need seven or 8% of deposits by way of equity to be a well-capitalized bank. When you take the bank from zero to 28 billion, obviously as private check writers, even with fairly substantial return earnings, which we had, you can't keep pace. I believe that because this bank won't enjoy the mortgage refinancing boom, that EverBank enjoyed that our pace of growth will be slower. I view this in the first five years as more of a dividend machine. Should the shareholders decide that they want to grow it faster or that they want liquidity, then we'll take it public.

Tommy (01:12:13):

When does it launch?

Rick (01:12:16):

That's up to the FDIC. The FDIC has had more significant challenges in the last two years than my bank. I'm afraid. Things like First Republic Bank, Silicon Valley Bank, it seems that my file wasn't the top of their desk. We believe that we've answered substantially all of their substantial questions now that they've asked them, and our hope is that we'll be open this summer.

Tommy (01:12:39):

How many co-founders do you have?

Rick (01:12:42):

Well, the real co-founder is Frank Trotter, who co-founded with David Goland,

Tommy (01:12:48):

EverBank

Rick (01:12:49):

EverBank on my living room floor, by the way, many, many, many years ago. So he's the real co-founder. There's a private family office in St. Louis that is the other leading shareholder. And then there's a variety of shareholders, including, I wouldn't call them a coalition, but a group around Agora, Agora Inc. Bill Bonner as a person, and then officers, directors, and employees of Agora. They own about 20% of the bank. At this stage.

Tommy (01:13:26):

I want to ask you about Bill Bonner, but maybe next time, because I've taken so much of your time,

Rick (01:13:31):

You're one of my favorite topics. One of my favorite people in the world. Okay,

Tommy (01:13:33):

Well let me book it in a quarter so with you. Thank you so much for your time today, Rick. Great.

Rick (01:13:38):

Pleasure. We should have a discussion to Peter Brown sometime.

Tommy (01:13:41):

Oh, he would kill me. He's such a unique character and

Rick (01:13:49):

You may know that I began my career in Vancouver in the bar business, and the consequence of that is that I have two trails on Peter Brown, one, the House Street Trail,

Tommy (01:13:59):

Daytime and nighttime,

Rick (01:14:00):

Other. The other one is the Hornby Trail, or maybe the daytime trail and the nighttime trail, but they're both amusing.

Tommy (01:14:06):

Well, I had a lunch with him once and it was 12 hours, and I'm still recovering from it, and it was six years ago.

Rick (01:14:16):

Having lunch with Peter requires a formidable liver.

Tommy (01:14:20):

He's such a trove of material like you that you could mine it for a long time, and I hope to do that and I'd love to come back to you and do this again.

Rick (01:14:30):

Great. I look forward to it. I love talking about these old guys. They're great.

Tommy (01:14:34):

Thanks for being so generous, Rick.

Rick (01:14:36):

Pleasure. Pleasure. They were all generous with me, Tommy.

Dave Lotan spoke at Red Cloud’s Pre-PDAC Mining Showcase in Toronto last week. It’s one of the best talks I’ve seen for small cap mining investors.

Highlights:

“…the equities of the companies that develop and look for the stuff to replace the stuff we need are hyper cyclical and super volatile. And I guess the opportunity for investors is you can't sell high profitably if you don't buy low. And you sure do get that opportunity in this sector. “

“And if you look closely at [the winners], what you'll notice is that most of the ones that did well, were attached to a network. We have many prominent networks or constellations of investors, as I like to call them, in this business.”

“…when networks come together, you can get really special, really special performance in stock prices.”

“There's really nothing that's quite as good as a high grade discovery in an existing mine… So you can see that the multiplier effect of the Swan Zone discovery was truly, truly impactful for this industry.”

“I'm very, very grateful that [Eric Sprott] was here, and I think we all should be. We won't see the likes of a daring entrepreneur like Eric who makes the money at the top and brings it down to the bottom.”

“Bridging off of the network concept. You can often see promotions coming.”

“…my thesis was that the losses that mining companies take when things go wrong are linked to the value that they need to pay to buy junior companies to ensure that those things don't happen.”

Dave Lotan

I often call on mining investor Dave Lotan for feedback on a story or project. His passion, knowledge and generosity is palpable. After a successful career in private credit, Dave brought his capital and talents to venture-stage natural resource companies. He’s found success against odds as a shareholder and company builder. In this presentation you will better understand why and how.

Luc ten Have, the brilliant GoldDiscovery.com founder, helped Dave with his slides. A big takeaway from Dave’s talk is the power of mining networks converging. This collaboration between Dave and Luc is an example of this power.

After a family trip in the UK which is going super, I’ll be back in the saddle shipping more Big Score stories ASAP.

A transcript of Dave’s talk is below. Don’t miss it.

Here’s a link to the keynote on Youtube.

Best,

Tommy H

Keynote Speaker: David Lotan | Red Cloud's Pre-PDAC 2024

David Lotan (00:07):

Thanks so much everyone for coming this morning. This presentation is born out of a conversation that I had with Chad Williams a couple of months ago in the boardroom of our office, which is right next door to Red Cloud. And we are talking about trading junior stocks, which I do a lot of and what it's like to have to look after the needs of an issuer, which I also do. So I'm kind of on both sides of the market. And I guess the question is often asked, can you make money in this market without buying private placements with warrants or getting in on seed rounds and almost all the stock I own in the market I bought in the open market. So that seemed to make this an interesting and apropos conversation as well. So why are we here? Actually, I don't think I need the lectern ammonia is why we're here. Thanks to a couple of crafty German scientists. We can synthesize about 150 million megatons of that per year. And according to some estimates, that allows the earth to carry about 4 billion more people than it would otherwise be able to using agricultural techniques of the organic variety.

(01:23):

But really, why are we here?

(01:26):

Well, the needs of that 8 billion have resulted in a large and deep market for commodities that is cyclical and volatile. And as a second order effect of that, the equities of the companies that produce these things are cyclical and volatile. And as a third order of that, the equities of the companies that develop and look for the stuff to replace the stuff we need are hyper cyclical and super volatile. And I guess the opportunity for investors is you can't sell high profitably if you don't buy low. And you sure do get that opportunity in this sector. But we're going to drill down and we're going to look at the period from 2015 to today and think about what happened in markets during that period, what the opportunities and the risks were. And I like to start all of my discussions of investing with what I think is the most important thing, and that's capital flows.

(02:36):

This made it out to Twitter about a month ago now, and it's a sale of woe for our industry. Probably starting in 2000 investors started to notice that China was buying more and more of all the major bulks. I think by 2010, China was consuming 50% of cement, iron ore copper just go right across the periodic. And if you had linearly extended their demand, you might've seen an exponential move in commodity prices. And this started to emerge from the haze in the middle two thousands. And so you had a lot of money flowing into commodity related plays and the associated equities. And of course that money at the time went into specialist funds, which were the principal financial product that you could expose yourself to commodities through. And there's been a change in the market since then as we've moved to passive investing. But more importantly, as some of the pundits said in 2011, the China story was over and it wasn't that China wasn't going to grow and it wasn't that China wasn't going to be a great world power, it's just that growth leveled off starting in 2011, their demand for copper iron ore and all the bulks actually started to go down.

(03:57):

And for 15 years now, we've seen outflows from those funds that were focused on commodities. As a result, 40 billion out of the specialist UK funds, that's mostly at a BlackRock and JP Morgan and 16 billion out of Canadian funds. For some reason, this BMO slide didn't have US funds or endowments or pension funds, but I think the numbers would be similarly ugly. So how else do we get capital into this industry? Get it from the existing producers from their cash flows. And I'm going to focus on gold today only because if we look at the commodity complex as it is in the last year, everyone really has been wondering about the gold equities. The copper is doing pretty well. Lithium's had an incredible run. Again, no major eruptions in anything, but the gold equities have been strangely dislocated from the gold price. So let's just talk a little bit about what's going on there, or at least my suspicions thereof.

(04:57):

So this was Barrick since 2020, and I like to think that I understand generalists pretty well. I've worked in the asset management business for better than 20 years now, and most of the generalists I know who don't care in particular about gold or oil or stocks or bonds, they just want to buy what's relatively cheap and sell what's relatively expensive. Most of 'em think of gold as being, or gold equities as being a spread trade. So they're short energy and they're long gold when they buy a gold equity. And certainly when you think about covid oil briefly went negative at the beginning of covid. And lockdowns were going to be for an undetermined period of time, which meant that the government would be printing money and sending checks to people to sit at home and produce nothing. And that was actually the recipe for weymar hyperinflation.

(05:51):

All the coal workers and timber workers in the Ruhr Valley refused to work. When France came in and occupied the rule looking for an acceleration of their war reparations. The German government printed money and sent it to their patriotic workers. The velocity of money increases. People got it. They spent it faster and faster. And we all know that that was the greatest destruction of wealth and savings in a developed economy in history. So you could see a generalist looking at history through this nonspecific lens and thinking, COVID, everyone's at home. No one's producing anything, money being printed, the cost of energy is going to be suppressed for a long time by gold equities. And then we got a vaccine in November of 2011, or sorry, 2020 just after Biden got into office. That was years sooner than anyone would've ever thought it possible, given that it generally takes years just for safety testing new medicines, let alone the years required to test for their efficacy. The hedge funds got out of the Gold Trade first and the generalists followed shortly thereafter. And there has been no replacement for that money as I think you can plainly see.

(07:05):

Let's just rub some salt in the wound and show the chart of Pfizer versus Barrick. And then of course, tech Nvidia here, 2 trillion of market cap. The last time I checked four times the market cap of the hundred largest miners on Earth. So we're still not living in a material world, I guess, or hey, maybe it's just costs because as it turns out, the gold price went up $350 since then and all in sustaining costs have done the same. So I guess it could also be stock picking. If you drill down and you look at Lundin Gold or Alamos, they've tripled since 2020. So maybe that was the problem as well. But the smart money continues to allocate to gold. The Lundin family just recapitalize a West African gold story called Montage. West Africa has been a graveyard of gold. So I think that's some interesting news. And

(08:06):

I guess we didn't get the new presentation. I had a corker here, the gold price versus the flows out of the ETFs. And I was going to say, Hey, only 85 million ounces left to go. And of course it hasn't put a dent in the gold price despite the fact that these ETFs are losing tons by the week. And I guess when they're finally empty, maybe Vladimir Putin will call the Federal Reserve in New York and bid them for the last 8,000 that they have. But that would be something Stalin would do. Okay, so another, and I think a really misunderstood way that capital gets into the sector is organically. And so I want to talk about one of the greatest discoveries we saw in gold in the last 20 years, and that's the swan zone at Fosterville in Australia. And Rick Rule likes to say that great gold discoveries finance themselves, and in certain instances they actually finance the entire market.

(09:02):

I have very mixed memories of these days. 2015 was the last year of declines in my portfolio juniors, and it was a pretty awful humiliating year. But new market gold came into existence that year, and it was Doug Forster, Blaine Johnson, the Lundin family, and they took over crocodile mining, which was a ratty old refractory gold mine in Australia that Northgate had mined at one point in time, really well-known asset and just a disaster frankly throughout its modern history. But funny things started to happen. Some really interesting gold intercepts started coming out of Fosterville and high grade and totally clean free gold. Somewhere in that mine, there was this beautiful zone of free milling quartz and it turned into cashflow for Tony Makuch very quickly. And Kirkland, which at the time had become the merger of New Market and Kirkland Lake Gold went from being a small cap to a big cap in the course of a couple of years.

(10:12):

Really, really very unusual in this business. There's really nothing that's quite as good as a high grade discovery in an existing mine. The high grade zone of Red Lake, of course, is a famous version of that. And Wesdome had its own wonderful high grade discovery in an existing mine. Of course, Richmont for Alamos, they're really, really valuable. And more importantly for the room, the gains ended up in the best sort of hands they could be in. Eric Sprott we think made a about a billion dollars out of this. And what we saw in the aftermath of that was capital recycling at an unbelievable, at just a breathtaking rate. Eric took 1,200,000,000 out of the swan zone we'll say, and put 1,400,000,004 back into the market over the next few years, 134 companies. Some of them did really well, some of them haven't done so well, but he went right down to the bottom of the market, the most levered and most dangerous sector.

(11:12):

He's a daring entrepreneur. I don't know that we'll see his likes again. And this was an incredible gift to the market, wasn't just Eric Kirkland Lake bought Detour Gold, they got bought by Agnico Palisades and Cresco I think became prominent as a result of their participation in this discovery. They raised money and put money out to lots of companies and Kirkland Lake itself put money into Novo Resources. Novo put money into newfound gold. They put money into a Osisko Mining, Osikso Mining put money into many companies. So you can see that the multiplier effect of the Swan Zone discovery was truly, truly impactful for this industry.

(11:57):

Now, I guess the melancholy part of this is I think that it's over. Eric is focusing on family now. I think his filings have been dwindling over the years, and they've largely been concentrated on newfound gold, which is where he's laying perhaps his last big gold that who knows, maybe he'll have another return to markets. But I'm very, very grateful that he was here, and I think we all should be. We won't see the likes of a daring entrepreneur like Eric who makes the money at the top and brings it down to the bottom. Again, maybe not, however, don't despair. It wasn't just Eric. There are many valuable networks, many great entrepreneurs, many high net individuals who continue to see opportunities in this sector cycle after cycle with the assistance of Luke ten Have, who's not here today at GoldDiscovery.com. We took a full look at the mining issuers on the TSX and the TSXV starting in 2015, and a third of them went up, two thirds of them went down, 3% of them went up by more than 10 times, 6% of them went up by more than five times.

(13:10):

And if you drill down, the numbers get a little bit more interesting. So this excludes takeovers. This is just all the stocks that went from pennies to dollars from the end of 2015 until today, two years into this terrible market. And if you look closely at these, what you'll notice is that most of the ones that did well, were attached to a network. We have many prominent networks or constellations of investors, as I like to call them in this business. Pierre Lassonde and the Trinity Group would be one of the more famous ones. They've had some stunning successes in this last market. Orla probably is the most impressive. And there are some other companies that maybe aren't part of the Trinity Network like Foran, but certainly Pierre and his fellows have been big investors in and prime mining, a whole bunch of stocks, and probably a bunch that we don't know about because they don't file on everything.

(14:14):

And there are, as I said, many networks that you would know off the top of your head. The Lundine family, Ross Beaty, of course, Frank Giustra, Craig Perry. I didn't see him coming. I thought that money would find its way into Canada from Australia. The gold stocks had already run in Australia, and at some point that capital had to come across the lower valued opportunities. I didn't know Craig, I didn't really appreciate his involvement in NextGen and ISO Energy and chena, but the Inventa group, I think is the story of Australian Capital coming in Canadian Markets Discovery Group. Of course, we all know John and Jim and Great Bear was not in those numbers because it was taken out during that cycle. And that was 1,800,000,000 takeout and then another couple hundred million for Great Bear Royalty. Great story. And these are good guys. Richard Warke, of course started the cycle off selling Ventana and then Augusta and then Arizona mining for a couple billion dollars to set three, two, and I think he took 600 million out of that personally.

(15:16):

I mean really quite amazing. The Pathway Group, Marcel De Groot and Dave De Witt in the nineties, they did Arequipa and Peru Copper, and they seeded Sandstorm and a bunch of other great companies. Lamancha out of Egypt that gives Sui, sold the Rocom cell phone network and then created Endeavor Mining and Evolution. Rob McEwen, of course, one of my favorites, Harry Dobson, he's the big man in Switzerland or in Finland these days, and lots and lots of value created. Some of them started before this cycle, but most of these companies are creatures of the last cycle, next gen 30 cents stock, maybe 50 cents in December of 2015. 4 billion of market cap today. So the cycle was actually pretty good to us. 73 billion of increase in market cap. And all the stocks that we had on that list all multiplied in value. So they weren't just serial diluted, they didn't print a billion shares to gain a billion dollars of market cap.

(16:21):

A couple of case studies here, this is really noisy. Orla is one of my favorite examples of all this. It was a moribund shell called Red Mile Resources. I had a coffee with my good friend Mark pre Fontain in July of 2015. He said, oh, we had dinner with Pierre last night. And he said, what are you guys doing? And since they sold grade, mark had created grade and sold it to Agnico, and Pierre said, oh, we're looking for, we think this is the time to get back into gold. And Mark said, I think it's the same for us. And Pierre said, well, let's get together and not compete with each other. So they took Red Mile, rolled it back. I think five for one created 11 or 20 cents for the remainder of the year, even after they press release, they joined the board, then they took over Perim Co for Sara Cuomo and Panama got to $167 million of market cap.

(17:12):

And then they took over Camino Roho from Gold Corp for stock and a royalty. And you can see they become a billion and a half dollar gold company since then. And all of that was Sarah Cuomo going to zero absolute zero. Nothing in Panama is worth anything anymore. And these guys created market cap off of that, and they took that market cap and they turned it into the acquisition of Camino. And that's what the good guys do. They get something rolling with a property that they like. Maybe they find out they don't like it, but they squeeze value out of it and they pivot, and this is the power of these networks. Nothing stops when they put their mind to it because they have the capital and the expertise and the connections among other things. Another interesting example that I like to cite is G Mining.

(18:01):

And why is this little stock so interesting to me? Well, this is the Gignac family, and they put this together as a cash shell in the middle of the last cycle, and it's a gold development story. And if any of you own gold development stocks right now, you'll know that this is just a horrid, horrid time to own them. There is no capital for development stories now, and the capital that's available for development stories is credit card money. This is why Matt Manson had to sell Marathon to Caliber, supposedly almost all the way through his build. G Mining has a little asset called TZ that they got out of El Dorado. I don't think anyone thought it was great. And yet, look at this incredible ad performance versus the GDXJ. What's going on here? Well, there it is, Lamancha, the Gignac family, the Lundin family, Franco Nevada.

(18:57):

That means Pierre's in there too. So this is the effect that multiple networks can verging on a stock can have. I don't think anything's more impressive to me. Nothing would be more impressive than an anti-gravity machine than a development stock performing like this in the market that we've had really, really quite impressive. So when networks come together, you can get really special, really special performance in stock prices. And so they're all still there. You don't just have to be a macro economist and try to predict the movement of money supplies or try to figure out the supply of zinc or copper and warehouses around Europe. There's all kinds of other ways to make money trading small caps. I have owned almost all of these stocks since 2015, and they all were just value plays frankly. Champion Iron Mines was a stock taken over by Michael O'Keefe, who is a concentrate trader at Glenco.

(20:02):

When you see a Glencore guy show up, you should probably buy the stock. I don't have the Foran mining chart here, but Dan Myerson came to Farran when it was a 20 cent stock. He'd been trading zinc concentrates at Glencore, and Glencore had done a feasibility study on Albena Bay. Dan showed up at 20 cents just by the stock. These Glencore guys are pretty clever. So Michael proceeded Dan, he got the consolidated Thompson assets that Cleveland Cliffs had bought put into bankruptcy. He got them for pennies on the dollar, and he's turned this into a beautiful play on super clean iron ore. And of course, when you're a concentrate trader, like any of these Glencore guys, you know what the smelters will pay for higher quality stuff. And that's been part of the story here. If you just want it to be lazy as it currently exists, I think it's called Probe Metals, actually.

(20:56):

But Probe Mines, Borden Lake was taken over by Gold Corp for $500 million and they spun out Shell with some cash and a few properties. It was about $19 million of assets in the vehicle, and it traded for $12 million for most of its first two years of existence. And so in 2015, you could buy the sink for 35 cents a share quite regularly, and it got as high as two and a half dollars when Dave Palmer and Jamie Sikowski, Dave who'd made the board in Discovery, Jamie, who used to be the CEO of Barrick when they started rolling out properties around Valdo, I mean, why were those guys worth negative $6 million? This seemed like an obvious trade to me,

(21:43):

Bridging off of the network concept. You can often see promotions coming. I thought Northern Dynasty was a dead story. I didn't think the mine would ever get built. I'm still not sure, apologies to anyone who's holding the stock, but in late 2015, Northern Dynasty, which had gone from 20 plus dollars down to 40 cents, merged with Mission Gold, a company that was controlled by Pathway and the Lundine family, and with Canon Point, a company controlled by Frank Giustra. And so there you were multiple networks coming together. Marusa jumped on board and ran a big promotion for it. Donald Trump got into office, it seemed briefly possible. It's an incredible suite of medals, by the way, and from 40 cents to $4. So you can do that too if that's your flavor. Sometimes I just buy listings on the stock exchange. Guerrero Ventures was a great example of that.

(22:40):

I was playing golf with my friend Brandon. Ty mentioned that they thought they might get control of the shell. They had no purpose for it. But over the next years, I bought up about 8% of the company in the stock market, and then Vince Metcalf and Joe De La Plant came over from Cisco and created Nomad Royalty. The stock went up 10 times. And when I buy listings, I think about what it costs to list a company these days. If you want to get a shell to bring something public, the good guys will charge you a million to a million and a half dollars. The legals are about 300,000. So when I see listings trading on the exchange for sub a million and a half dollars, I might buy those. I think I own five or six of them now, maybe five to 9% of those companies.

(23:20):

And who knows, maybe this market will be different, but words not to live by. So cycles are eternal. I think the Nova, Dan guys, Rome on NIO like to say that, or maybe they say cycles are forever. I can't, Mike, you might know. I haven't seen Romeo and Anyo for quite some time. Why is that? Well, sadly, mining is a tough business. Every quarter in the mining business, there's an awful announcement and hundreds of millions, if not billions of dollars of market cap are lost in a single trading session. We've got some really unfortunate examples of that recently with First Quantum having the mine shut down through really populism in Panama. And of course this terrible accident for SSR and my heart goes out to the families there. SS R is not even on here. We didn't get that entry in here, but that's down more than 50% in a couple of days.

(24:18):

Mining's a tough business, and I started keeping track of these unfortunate numbers many years ago because my thesis was that the losses that mining companies take when things go wrong are linked to the value that they need to pay to buy junior companies to ensure that those things don't happen. So 605 million median, there's 37 events here, 1,000,000,002 average skewed by some of the really big bad ones like First Quantum. And then if we look at acquisitions over the same period, 69 billion worth of deals, $744 million, average median value, 229 million, and those numbers aren't too far off from the 600 million to billion dollar range when you think about the value proposition there. So this is it. This is your cyclical nature of business right here. Mining companies don't replace reserves when prices are terrible. They often sell off assets to pay debt, and then when investors demand growth, they demand acquisitions.

[Thumbnail photo credit: Brian Leni]

Rage filled Stephen Roman’s stout frame as he stormed Canadian prime minister Lester Pearson’s office in 1965. Exploding over a ruined $700 million uranium contract, Roman hurled "son of a bitch" at Pearson, who would later quip that Roman was a relic, lagging "fifty years behind the apes."

It wouldn’t be Roman’s last battle with a prime minister. His improbable rise from tomato picker to mining king is a tale of grit and the dramatic turns in 20th century uranium mining. Pope John Paul II even blessed Roman’s sprawling Toronto estate. Merging business, politics, and the biggest uranium mine, this is how Stephen Roman built an empire.

$30 Billion Uranium Strike

In the cold wilderness of 1953 Northern Ontario, a 90 mile uranium trend was discovered near Elliot Lake. In secrecy, over 100 men staked claims to the area in what became known as the “Back Door Staking Bee”. They worked on behalf of mining legends Joe Hirshhorn and Frank Joubin. The area became America’s major Cold War uranium source. The first of 12 mines opened just 2 years later. By the 1980s, an estimated $30 billion was contributed to Canada’s economy as a result of these finds.

Sensing something was happening, three prospectors led by Art Stollery interrupted the six week Staking Bee. They plied a pilot with whiskey, heard whispers of Quirke Lake action. By dawn, they hit the bush, bumping into Hirshhorn’s squad. Stollery bluffed: "We've staked this already." Confused, Hirshhorn’s crew retreated. Stollery snagged 83 claims in 48 hours. Just a sliver of a 90-mile, 1500 claim expanse. But fate smiled. Little did they know, they stood atop the world's richest uranium deposit.

But Nobody believed Stollery’s claims had value. Hirshhorn himself refused to buy them, feeling cheated. In early 1954, Stephen Boleslav Roman, a forceful young Slovak immigrant to Toronto seized the opportunity. 

Roman bought Stollery’s claims personally on a promise of $30,000 cash and 500,000 shares of his penny stock shell, Denison Mines. Roman had recently bought 900,000 shares of Denison for 8.5 cents a piece and become its president.

With Denison stock swinging between 30 and 60 cents ahead of drilling, a $30,000 drill program found a rich uranium deposit by October 1954. It eventually contained 367 million pounds grading 0.14% uranium. Annual production would equal all of America’s mines combined.

Joe Hirshhorn was the man every young mining entrepreneur aspired to be in Canada (Read all about Joe in last week’s profile). He lived large, enjoyed immense success, and had the greatest access to capital. The upstart Roman once pleaded for a meeting with him in 1946, when Hirshhorn dismissed him, saying, “Don’t waste my time.” In the great Elliot Lake uranium strike, they would become bitter rivals.

“You’re a horse’s ass,” Hirshhorn told Roman in one showdown. “I’m a farmer, and that’s a compliment,” Roman responded.

Hirshhorn would cash out of the Back Door Staking Bee early and build America’s largest private art collection. Roman controlled his mine til his dying day.

In a rush to secure uranium for bombs and power plants, the US Atomic Energy Commission pledged to buy Denison’s output at cost plus profit margins “in the order of 200%... A sweeter deal couldn’t be imagined,” author Paul McKay wrote in The Roman Empire (1990). A $202 million 5 year contract was signed, construction loans were facilitated, and the race to build a mine was on.

Just three years after discovery, a $37 million mine came on stream in the remote wilderness of Northern Ontario. First uranium shipped in June 1957.

By 1962, Denison had retired its debt, earned profits of $61 million, and paid dividends of $18 million (37% to Roman). Only a fraction of its deposit was mined, and Denison sold at $10 per pound with production costs of only $4. Uranium had surpassed gold and copper as Canada’s largest mining export.

$1,000 invested in Denison in 1954 grew to $37,000 by 1962, when Denison traded at $12 per share. Those same investors earned dividends of $15,000 along the way, according to McKay. Denison diversified into oil, cement, phosphate, baking, banking and other industries.

But 10,000-plus nuclear warheads later, the US was awash in uranium and stopped buying. Panic spread in Elliot Lake. All but a few of the 12 mines kept operating, including Denisons. Of 9,000 mining jobs in 1959, just 1060 remained in 1964.

Needy for new buyers, Denison sold 5.6 million pounds to Britain in ‘62 at $4.38 per pound, less than half of USAEC prices. Roman also convinced the Canadian government to stockpile $25 million worth at $4.32 per pound between ‘63-’65.

The Fast Talking Frenchman

In the early ‘60s, a suave, fast-talking Frenchman, Jean Bodson, arrived on Denison’s doorstep. He promised access to lucrative French contracts and Roman took a chance on him. But there was a catch. Denison needed to grease some wheels. It bought a random gravel pit near Paris, a finance company for Bodson, and opened a lavish office for him. Bodson was also promised a 3% success fee.

Finally, in ‘65, Denison landed a 100 million pound, $700 million French purchase order. Pressured by US president Lyndon Johnson to deter France’s entry to the nuclear club, the Canadian government blocked the deal. This led to Roman’s fiery showdown with Pearson. Making matters worse, Bodson sued Denison and won an additional $5 million fee because the contract had been signed.

After making a multi-million dollar cash withdrawal from Denison’s account, Roman flew the company jet to the Bahamas for a face-to-face meeting with Bodson. “How much money he gave the Frenchman is still a secret... [Roman] brought back no receipts,” McKay wrote.

To placate Denison and support Elliot Lakes miners, Canada agreed to stockpile another 15 million pounds at $4.90 from ‘64-’70. Denison was still earning a profit with costs of $3.10. New orders started trickling in from Japan, including a $300 million commitment starting in ‘74.

Then in 1970, Continental Oil bid $104 million for Roman’s 36% Denison stake, a massive sum in those days. New prime minister Pierre Trudeau opposed control of Denison leaving, and Canada blocked that deal as well. A furious Roman went back to the Prime Minister’s office in a “verbally bloody encounter” that was unable to persuade Trudeau. Roman then sued Canada and lost. He appealed and lost again. But Canada agreed to stockpile another 6.4 million pounds at $6 per until ‘75.

Canada-Led Cartel Leads to 700% Price Hike

Barred from US exports, the Canadian uranium business was fighting for survival in the early 70s. The federal government, awash in stockpiles, hatched a top secret plan: form a cartel with the major producers. A new floor price was set ($6.25 for Europe, $6.55 for Asia, because, Asia…). Cartel members would take turns winning contract bids.

The cartel had a major impact on the uranium market. Customers began outbidding each other, generating windfall profits for miners. This was a lifeline for Denison, threatened by new richer discoveries in Saskatchewan and abroad.

In 1975, reactor builder Westinghouse fell into the cartel’s trap. They’d promised customers uranium at $8 per pound, but the new world price had moved to $26. Facing $2 billion losses, Westinghouse defaulted on its contracts. Panic ensued and uranium prices ripped to $42. It was a 700% price climb in just 5 years.

Then news of the cartel leaked. Trudeau barred any Canadian from speaking of it under threat of 5 years in prison. Roman denied the cartel’s existence. 

In ‘81, Denison and others were charged criminally. Two years later, Canada’s Supreme Court ruled that companies acting under the direction of the government could not be charged with crimes, dropping the case. However, Denison still settled with Westinghouse for an undisclosed sum.

Mega-Deal Costs Ontario Taxpayers Billions

Utility provider Ontario Hydro had an ambitious plan to build nuclear reactors in the ‘70s. They needed uranium, and as cartel-rigged prices rose, they became concerned enough to consider buying Denison.

Roman played hardball. After years of fierce negotiations, Ontario Hydro agreed to buy 126 million pounds from Denison over 30 years at escalating prices. The deal was worth $4.7 billion to Denison, with a minimum profit of $630 million.

The Ontario Legislature voted down the deal, but the premier signed the contracts into law in Feb ‘78 as uranium prices peaked. It was an incredible deal for Denison and cost Ontario taxpayers billions. In 1990, Ontario Hydro was buying uranium from Denison at $70 per pound, while the world price was under $10. Ontario Hydro had not pursued its aggressive nuclear plans after all.

The Roman Empire

With Denison stock trading above $70 for the first time since the ‘60s (it reached $87 per share in ‘67, a ~1025X leap from 8.5 cents in ‘54), Roman and Denison were on top of the world again.

"In a neat blue suit, his face always somewhere between a glare and a grin, Roman lives up to expectations," Macleans magazine’s Angele Ferrante wrote in a 1978 profile. "His faith floods the room."

Roman was chauffeured to his opulent, oak-panelled offices in downtown Toronto in a Fleetwood Cadillac. Behind his massive desk, he peered down at visitors from a chair on a hidden, raised platform atop plush, red carpets. Richard Nixon joined him for lunches prepared by Denison’s private chef. At his 1200 acre “Romandale Farm” 30 minutes from Downtown Toronto, Roman lived in a 17 room mansion with wall to wall marble and gold-plated fixtures. He owned a crystal chandelier that once belonged to an Indian Maharaja. Roman said it took a dozen maids three weeks to clean the chandelier each year. He bred the finest Holstein cattle in 8 barns at Romandale (he once paid a record $1.45 million for a pure-bred). In 1984, Pope John Paul II personally visited and blessed the $25 million cathedral Roman was building there.

“I don’t like your word opulent,” Roman once told a reporter. “Christ is the complete ideal. Don’t forget that he wined with people, and was called a glutton by the Pharisees. I think Christ liked nice things. The Bible doesn’t say that a man can’t be wealthy.”

"His bottom line is faith,” continued Ferrante. “He just believes-in himself, Denison Mines, Roman Catholicism, capitalism and the emancipation of Slovakia, the country of his birth. "Everybody is put on this earth to perfect a divine plan,” he says. "Mine is to save my soul."

Genesis of Steven Roman

Roman left Slovakia in 1937 when he was 16. He studied agriculture and picked tomatoes initially, then joined a World War II munitions plant as a factory worker. Ambitious for greater things, Roman played the penny stock market.

According to Paul McKay, Roman and a colleague tracked down Viola MacMillan, Canada’s mining queen, in a remote cabin near Timmins, Ontario. They “slept on her floor, and primed her for every detail on how to find, stake, and promote mining claims.” 

Roman founded Concord Mining Syndicate in 1946 with ten partners pooling $2,000 each. When a mining company bid $500,000 for one of their staked projects (a $50,000 payday per partner) after a nearby gold strike, Roman agonized. He’d sold the claims days earlier for $150,000.

The young Roman scoured Canada, staking prospects near exciting discoveries. This included oil production in Saskatchewan as Alberta’s great Leduc oil strike was underway. “Roman, shrewdly, was into the right thing – not quite in the right province but clearly at the right time. This is close to the perfect formula for success in financing speculative ventures,” Frank Joubin wrote in his autobiography. The Northern Miner estimated Roman earned $2 million from these oil ventures by 1953, the year before his uranium strike.

The brash Roman was never quite accepted into the WASP-dominated Canadian business establishment, where a big bank directorship was typically offered to a man of his stature. "If Roman was a Scot, his stock would be selling for much more,” a Toronto portfolio manager told Ferrante in ‘78. “It's as simple as that. Hunkies are not supposed to make that much money."

In the ‘80s, Denison made a huge ill-fated bet on a BC coal project that hurt the company. When Roman died in his sleep in 1988 at 66, his daughter Helen took over Denison, soon facing numerous challenges. Ontario Hydro finally got out of their uranium contract. The Elliot Lake mine was decommissioned in ‘94. When Helen resigned from Denison in ‘99, Roman’s shareholding had been diluted from 36% to 3.5% amid restructurings to avoid bankruptcy. The stock had fallen all the way down to 11 cents.

Stephen B. Roman’s legacy is tangled. An avowed free-market capitalist, he cozied up to government when it suited him, such as in the cartel saga. Critiques, especially from McKay, paint him as negligent, particularly for skimping on early vital mine ventilation, putting miners at risk.

Roman was survived by his wife of 43 years, Betty Gardon, who died in 2017. The Romans had 7 children. Stephen Roman Jr. today leads Niger uranium developer, Global Atomic (TSX:GLO - $654M market cap). 35 years after Roman’s death, a restructured Denison (TSX:DML - $2.1B market cap) is still active in the uranium business today.

“Stephen Roman was a brilliant competitor whom I greatly respect,” Joubin told the Northern Miner. “His qualities of global imagination, self-confidence, financial courage and sound judgement were extraordinary. He had few equals and no superiors in the intensely competitive world of mine finders.”

“[Elliot Lake] was the cork in a bottle for Steve,” said Joubin. “He opened the bottle and the genie emerged.”

Sources

The Roman Empire by Paul McKay (1990) https://a.co/d/76BvCKA 

Not For Gold Alone: Memoirs of a Prospector by Frank Joubin (1986) https://www.amazon.ca/Not-Gold-Alone-Memoirs-Prospector/dp/0969379307 

Macleans magazine archives (Sep 26, 1959, Jun 26, 1978) https://archive.macleans.ca/library

Stephen Roman dead at age 66: The Northern Miner (1988) https://www.northernminer.com/news/stephen-roman-dead-at-age-66/1000121179/ 

As dawn breaks over the National Mall, the Hirshhorn Museum emerges as a standout example of modernist design among Washington DC's historic landmarks. Its unique circular shape sets it apart from the traditional architectural styles of nearby monuments, marking a significant shift towards the avant-garde. The museum is a gateway to the world of contemporary art. Few visitors would imagine the incredible backstory of the museum’s founder, a rough stock operator turned mine promoter who became the undisputed king of uranium at the height of the Cold War.

Joe Hirshhorn ate garbage to survive his Brooklyn childhood. His early struggles didn't deter him; instead they fueled his ambition. By his teens, Joe had conquered Wall Street. His triumph was no fluke; he relentlessly pursued knowledge and devoured business biographies. “Men Who Are Making America” by BC Forbes was his bible.

Joe's path was full of ethical dilemmas. Long-after he mastered Wall Street, he’d play a game with people who sought advice from him. Joe would tip them about a penny stock, saying it would reach $100 per share within a few months. The suckers piled in as Joe sold, offloading worthless positions. It was a tough lesson about greed and doing your own due diligence.

This cruel practice humiliated at least one of Hirshhorn’s four wives, after people close to her lost money. One Hirshhorn friend still loved him after experiencing it. “I cannot dislike Joe. He’s so extraordinary. He sold me a bill of goods. I lost a bundle.”

As a young curb-broker, buying and selling securities in the open air, Joe solicited friends to yell fake buy orders, attracting other traders. This practice, known as “spoofing” is outlawed today.

In 11 months at age 17, Joe grew $255 into $167,000 trading - the beginning of his financial rollercoaster. After buying his mom a house, he proceeded to lose everything on a supposed inside tip.

“I learned never to buy stock on a scaledown unless you’re an insider… otherwise you’re guessing,” Joe reflected 50 years later. He wanted “to deal the cards, not to draw them.”

Recovering, Joe earned $4 million by age 30. He cashed out weeks before the 1929 crash, sensing there was no one left to buy. Missing the action, Joe set his sights on gold mining and opened an office in Toronto. He announced his 1933 arrival with a full page ad in the Northern Miner that read, “My Name Is OPPORTUNITY and I Am Paging CANADA.”

A Gambler’s Origins

Born in 1899 in Djustk, Latvia, Joe Hirshhorn was the twelfth of thirteen children. His father died when Joe was 1, leaving his mother, Amelia, to raise the family and run their store alone.

Soon after Joe’s father’s death, Amelia sent Herman, her eldest son, on a buying trip with all of her savings. Herman never returned to Latvia. Fearing poverty and rising antisemitism, Amelia moved to Brooklyn in search of a better life. She arrived at Ellis Island in 1906 with two working age daughters.

The three Hirshhorn women worked 12 hour days, 6 days a week, for $3, as sweatshop seamstresses. 8 year old Joe and his remaining siblings set sail for America in September 1907. A couple in first-class noticed the handsome, tiny boy in steerage, and invited Joe to join them. He spent the remainder of the voyage on the upper deck. “Joey always wanted to be in first class,” sister Annie remembered.

The 9 Brooklyn Hirshhorns moved into a railroad-flat in Williamsburg. Herman appeared soon after, and moved in. When a fire engulfed the building, the Hirshhorns’ leapt into a fireman’s net to safety. It was Herman who noticed the fire and rounded up everyone, helping restore his standing. The fire killed an entire neighbouring family.

According to daughter Gene, Joe won a neighbourhood craps game after emigrating. The other boys roughed him up and stole his money. This ingrained in Joe a sense of toughness and suspicion that remained in later life.

Joe said he experienced “the bitter taste of poverty” in Brooklyn, telling biographer Barry Hyams that he “stayed alive on garbage.” Joe sold newspapers and gave his wages to Amelia, determined to improve her circumstances.

One day, young Joe travelled through Manhattan on his way to a track meet. As he walked down Broad Street, he noticed the action on Wall Street and froze. Joe spent the next 5 hours staring at the commotion of outdoor trading, skipping lunch and missing the track meet entirely. "I made up my mind that some day I was going to come back and be a stockbroker. It was that simple,” Joe remembered.

The four foot eight inch Hirshhorn (Joe reached five feet, four inches after age 20) dropped out of grade 9 at age 14. He began door knocking on Wall Street, looking for work. Feigning experience as a telephone switchboard operator, he landed his first Wall Street day job, also delivering Western Union messages by night. “He marked one truth that jumped out from those messages he carried and studied,” daughter Gene wrote, “that buyer or seller, profit or loss, the gain was always the broker’s and, therefore, the more transactions a man could stimulate, the better.”

In his Wall Street beginnings, Joe only ever ran, never walked. Older brokers took notice. Joe joined a financial publishing firm, charting stocks and learning technical analysis. One mentor staked him in trading. Others sent him business. In the Roaring 20s, Joe thrived as a broker and trader.

“When doctors, lawyers, dentists left their professions to play the market full time, I knew it was time to quit,” Joe said of his timely August 1929 exit from stocks.

In the 1930s, Joe began commuting weekly from New York to Toronto. He established Technical Mine Consultants, and built a dedicated team to sift through potential investments.

“He was what was known as a broker’s broker, someone who completes transactions for other brokers rather than for individual investors. Of course, all the while Joe traded stocks for his own account,” daughter Gene wrote.

Joe had a habit of calling people, especially competitors, while they were still in bed in the mornings. He thought they would be more likely to blurt out of the truth inadvertently in the early hours.

“It was difficult to talk to Joe, because he did most of the talking,” remembered Dit Holt, a geologist who worked with Hirshhorn on later uranium ventures. “He'd go, “How's your mother? How's your father? How's your girlfriend? How's your sister?” You wouldn't get a word in edgewise.”

For the next two decades, Joe had many false starts in mining. But through risk-taking and capital-access he eventually earned credibility.

A $2000 bet on two prospectors exploring near Geraldton, Ontario, paid Joe $500,000 after a gold mine discovery. In Free Gold: The Story of Canadian Mining (1947), Hirshhorn explained why he made the investment: “Why? Don’t ask me. For one reason, I liked their looks. And I had a hunch.” He helped fund the Macassa gold mine in Kirkland Lake, today operated by Agnico Eagle. Joe cornered the market in Preston East Dome, leading to a reckoning for short-sellers when it became a significant gold producer.

“Since those days, “Little Joe” has blossomed like a rose. A bundle of nerves and energy, ever bursting with grand plans and unfailing generous impulse, he has opened a flood of money from the United States to Canada,” Free Gold’s Arnold Hoffman wrote.

Enter Frank Joubin

Joe Hirshhorn’s greatest triumph was still to come. It came through collaboration with Frank Joubin, an accomplished prospector from British Columbia. “They acted as catalysts for each other,” geologist George Werniuk said.

Drawn to Joe’s work ethic and intuition, Joubin was 41 when he teamed up with Hirshhorn, then 53. Recognizing Joubin’s soft-spoken drive and brilliance, Joe reluctantly agreed to share 10% of his mining profits with him.

When Joubin was a child, his mother brought him to see a clairvoyant. She predicted he would triumph in his 40s. "Each time [mother] spoke of this I smiled inwardly,” Joubin wrote in his memoir. “I knew that in the vast majority of cases good fortune comes because the person to whom it comes recognizes opportunity when it arrives."

Hirshhorn’s Routine

Not For Gold Alone, Joubin’s 1986 autobiography, paints a vivid picture of Joe in the early 1950s:

“Hirshhorn had installed on his desk an exceptionally extensive telephone network. It consisted of two hand-held telephones (sometimes in simultaneous use) and about twenty or more push-buttons to connect him directly to his banker, traders, and brokerage officers in a score of cities. He called this his "piano." It was his pride and joy, as well as his most effective professional tool.”

“Joe Hirshhorn was primarily an intuitive, vocal person. Eighty to ninety per cent of his business was transacted over the telephone. When not in a meeting, Joe was almost continually at work on his telephone "piano." He was the centre of a widespread and highly efficient financial and mining communications network."

"He seemed to enjoy criticism… He never tried to outsmart his trusted staff. He constantly asked us searching questions and was satisfied only by reasonable and understandable answers."

"Joe would shout, gesticulate, prance about, and wave the cigar, lit or unlit which was always near at hand. I was the contemplative realist, concentrating on Joe's "machine gun" delivery."

"His pleasure, his joy, and his skill were raising [money]." 

Jewel in the Wilderness

In 1949, Joubin first visited the north shore of Lake Huron, Ontario, near Elliot Lake, curious about a prospector’s discovery of radioactivity. It hinted at the presence of uranium, the critical metal needed for the new Atomic era.

However, they couldn’t find any uranium in rock samples. Joubin never forgot it. A few years later, he learned claims to the area were set to lapse. Joubin ordered them staked for Joe’s account.

Joe was superstitious about names, and favoured the letter P. Peach Uranium and Metal Mining was incorporated with Joubin as president. Peach was later renamed Pronto, Spanish for “hurry.”

In March 1953, Joubin visited the British Museum in London, meeting Dr. Charles Davidson, a leading uranium expert. Davidson described how surface uranium at South African mines had dissolved deeper into the ground.

A lightbulb went on for Frank Joubin. After a month of pleading, Joubin convinced Joe to invest $35,000 to drill the radioactive target in Ontario.

Drilling began April 5, 1953. On May 2, results showed a big, low-grade ore body. Its size and proximity to rail was promising.

Joubin’s team needed a geological map of the region. A copy was found in a Toronto used book store. It showed a 90 mile formation in the shape of a big Z. Joubin’s team, armed with geiger counters, found radioactivity across the entire area.

Joubin ordered Peach’s drill removed, to look like a failure. He and Joe set about planning the largest staking campaign in Canadian history, to tie up as much of the 90 miles as possible.

In those days, each prospector could only stake 9 claims. They hired over 100 men to stake the 1500 needed in secrecy. To cover their tracks from local competitors, the staking campaign that became known as the “Back Door Staking Bee” was coordinated from Timmins, a mining town about 200 kilometres to the north.

Huge bugs and rough terrain greeted the stakers, who lived in the bush for the whole six week process.

"Joe Hirshhorn served as the dynamic "field marshall," constantly shouting to me through the open door of our adjoining offices in Toronto. "What’s the news? What’s the news?” Joubin remembered.

More than 56,000 acres were claimed in late Spring 1953. When the work was finished, Hirshhorn sent a team of lawyers to the mining recorder offices to help process the paperwork. Meanwhile, Joe told Peach shareholders to hang on. "Don't sell! Don't sell! Hold for a big roll!"

When news of the rush spread, prospectors staked an additional 8000 claims. But Joe Hirshhorn and Frank Joubin beat them to it, and got most of the 90 mile structure for themselves.

In just a few months, shares of Peach climbed from $1 to $135 per share. Twenty drills ran day and night, pioneering deep drilling techniques. 50 of the first 56 drill holes hit paydirt. The first mine opened just over 2 years later. Within 5 years, 12 mines were brought into production near Elliot Lake, which became the dominant uranium supplier for the US Cold War effort.

In 1956, Rothschild controlled British mining conglomerate Rio Tinto acquired Hirshhorn’s companies. Joe yielded a $35 million profit on $35,000 in startup capital according to Joubin. "Blue chips are alright for Momma," Joe told a reporter. "I like a thousand-for-one payday!" In the 1980s, an estimated $30 billion had flown into Canada’s economy as a result of these finds.

Flush with more cash than ever, Hirshhorn accelerated his art collecting. He befriended the likes of Pablo Picasso and Willem de Kooning. Imagine buying a piece of art a day for 33 years. That’s essentially what Joe did. His collection grew so important that US president Lyndon Johnson fought off Queen Elizabeth to build a museum to house them. Joe eventually donated over 12,000 works to the Hirshhorn Museum in Washington DC.

In an interview with the Smithsonian in 1976, Joe said the first 6500 pieces had cost him $32 million, and were worth approximately $125 million at the time. When Hirshorn died in 1981, at age 82, he was said to leave behind over $100 million.

Joe's personal life, however, was less successful. His relationships suffered as his focus remained on accumulating wealth and art. Joe’s early children sued him in the 1940s for access to money. One daughter called him “a monster.” An ex wife referred to Joe, who was Jewish, as “Hitler.” His daughter Gene said the family was hurt that Joe did not share more of his extraordinary life with them. To Joe Hirshhorn, artists could do no wrong, but his family could do little right.

“If Uncle Joe had been a better father, he wouldn’t have had time to accomplish what he did,” said nephew Lawrence.

In the end, Joe Hirshhorn returned to the earth, like the uranium that made him rich. The man who once ate garbage to survive left a museum filled with treasures, a testament not just to wealth but to the enduring allure of beauty and the relentless pursuit of a vision. Joe’s story shows the cunning of a stock operator who mastered mining and failed in the nurturing of a family. Success at Joe Hirshhorn’s scale does not come without a price.

In 1958, Hirshhorn was travelling from New York to his home in the south of France, when one of the aeroplane’s engines cracked and broke. The plane dropped to 6000 feet, and hobbled to Newfoundland for an emergency landing. Hirshhorn kept spirits high on the flight by breaking out in song and dance, easing tensions. "When praised for his poise under fire, [Joe said] that as a mining entrepreneur he was accustomed to brushing off the stress of risks," Gene wrote.

Of the 56,000 acres claimed in the Backdoor Staking Bee, Joubin and his team managed to miss one 83 claim parcel near Quirke Lake. It became the richest mine in the region. The man behind it was an arch rival who had many similarities to Hirshhorn. I’ll tell you all about him in the next issue.

Special thanks to Dave Lotan, chairman of Finland gold explorer Aurion Resources (TSXV:AU - $63 million market cap), for inspiration for this story. Thanks also to Kerry Knoll and Phil O'Neill for discussing it with me. O'Neill is CEO of Radio Fuels Energy (CSE:CAKE), a $28 million market cap uranium explorer with $20.6 million in cash and securities at Nov 30, 2023, and a 107 million pound historical uranium equivalent resource (indicated plus inferred) in the Elliot Lake region.

Sources: 

Video: Carved from Rock: The Story of Elliot Lake (Smithsonian, National Dream Productions Inc 2005 (Producer Antony Anderson, editor Eric Abboud) https://www.si.edu/object/siris_sil_1068065

Canadian Mining Hall of Fame https://www.mininghalloffame.ca/joseph-h-hirshhorn

Little Man in a Big Hurry (2009) by Gene Hirshhorn Lepere https://www.amazon.ca/Little-Man-Big-Hurry-Hirshhorn/dp/0533160790

Not For Gold Alone: Memoirs of a Prospector (1986) by Frank Joubin https://www.amazon.ca/Not-Gold-Alone-Memoirs-Prospector/dp/0969379307

Oral history interview with Joseph H. Hirshhorn, 1976 Dec. 16 https://www.aaa.si.edu/collections/interviews/oral-history-interview-joseph-h-hirshhorn-12741 

Free Gold: The Story of Canadian Mining (1947) https://www.amazon.ca/Free-Gold-Story-Canadian-Mining/dp/B0006AR5NE

He sent three quarterbacks to the hospital. In one game.

That’s how Dave Fennell became ‘Dr. Death’ and a household name in Canada.

"If you're going to survive as a defensive lineman. The people who are opposite you, have to be afraid of you,” Fennell remembers.

"I was capable of playing very violently.”

He played 10 seasons for the Edmonton Eskimos (renamed Elks in ‘21), appearing in 8 Grey Cups (Canada’s Super Bowl). The Eskimos won 6, including 5 in a row 1978-1982.

Fennell, who turned 71 Feb 4, is chain smoking Marlboros on a Zoom call with me Feb 5. He’s reflecting on a career that spans beyond the gridiron to golden ventures. His resume includes co-founding Golden Star (US $467M sale in ‘22) and Miramar ($1.5B sale in ‘08). Fennell was a tenured director of Sabina ($1.1B sale in ‘23) and Torex ($1.2B market cap). His Reunion Gold ($485M market cap) has rapidly discovered a major gold deposit after setbacks.

Weary of the spotlight from his football career, Fennell has kept quiet about his journey – until now.

Fennell's sons picked up his drive too. David Jr. played Michigan State football then turned engineer. John raced luge at the Sochi Winter Olympics, now he's a corporate analyst.

–

Raised in a middle-class Edmonton, Alberta family, Fennell was the second of four children. “I was taught very early on, you're not allowed to quit when you start something. It was not acceptable.”

He completed a 4 year undergrad degree at U of North Dakota in 3 years. Fennell could have gone to the NFL, but chose to stay in Edmonton, joining the Eskimos on the condition he’d also go to law school.

It's hard to imagine a pro athlete smoking, studying law, and winning six championships today. But Dave Fennell did it all. He planned to play pro for 10 seasons, and wondered, “What do you do when the cheering stops?”

Joining a law firm next, the bosses leveraged his "Dr. Death" fame for networking. Fennell recalls, “They loved taking me to the Petroleum Club on Mondays.”

His law practice worked with many small miners. After three years and a Guyana field trip, Fennell decided to get into gold mining himself.

At 32, Fennell founded Golden Star Resources (GSR). He partnered with Roger Morton, a U of Alberta geology professor, to explore Guyana. GSR spent $20K staking the forgotten Omai gold deposit. “It was open ground.”

Anaconda Copper explored Omai extensively in the late 1940s but stopped when the Korean War began.

Secrets of the Anaconda Library

A private detective helped Fennell find Anaconda’s geological data. They learned of a cavernous library in Montana, holding 100 years of records. A librarian, just laid off, liked Fennell and sold him the Guyana files for $30K.

GSR hired SNC Lavalin, with their top supercomputer, to process this historical information. It showed a big potential mine.

Placer Dome partnered on Omai in ‘87, before walking away. Fennell didn't give up. He invited Louis Gignac’s Cambior to visit Omai during a 3 day rainstorm. Cambior ended up funding construction for a 70% stake. It produced 3.7 million gold ounces from 92-05.

Renowned mining investor Rick Rule says Fennell is easy to underestimate. "The physicality obscures a great intellect and a guy that's actually very kind. He's the classic entrepreneur. When he sees an opportunity, he can't not grasp it.”

Next, GSR pursued Cambior to partner in Suriname. “If I had a mine each time someone told me a story about a property, I'd be a very rich man,” Gignac says. GSR’s Rosebel discovery was in region reeling after Suriname’s civil war. “David, why don’t you settle down, get married, do something easier than this,” Gignac advised him.

Fennell persisted, inviting Gignac to tour Rosebel. It poured rain again on that trip, which Gignac saw as a good omen after Omai’s success. Cambior eventually built the mine. Rosebel became one of South America’s largest, yielding over 6 million ounces. Today, it’s operated by Zijin. GSR stock jumped 600% in the early '90s thanks to these wins.

Gignac and Fennell discuss Omai and Rosebel in this Canadian Mining Hall of Fame video (begins at 2:24):

Investor Mike Halvorson says GSR’s work in the Guianas and Suriname put the area on the map for mining.

“Back in those days, from a political point of view, it was considered high-risk to go into the Guianas,” Gignac remembers. “It took a lot of guts for [Fennell] to get involved, and a lot of guts to follow him there. We eventually mined about twice the [initial] reserves at Omai. By doing Omai, it was that much easier to do Rosebel. We were comfortable with the region and its people. There's a lot of advantages in these countries. It's simpler. Decision makers are easier to know and be in contact with.”

Halvorson remembers Fennell throwing a 'chirping' analyst into a pool on one Suriname stay. The guy skipped on the water like a stone. Fennell and Halvorson connected in Edmonton in the 1980s through their love of migratory bird hunting.

“Anything that walks, flies or swims, Dave has killed,” says mining engineer Bruce McLeod, who hunts and fishes with Fennell. A massive Anaconda snake skin once adorned the crown mouldings in Fennell’s Montreal offices.

At 41, Fennell lucked out as the sole bidder for Sigrist House, once King Edward VIII's Bahamian villa. Fennell lived there 28 years before downsizing. 

In the late 90’s, Fennell clashed with GSR's board and was pushed out. Later, GSR refocused on Africa and was sold to a Chinese company.

To avoid GSR conflicts, Fennell eyed new gold regions. BHP's Hugo Dummett offered him all their gold assets for $80 million. But with few flush bidders, BHP sold the portfolio in pieces.

Ivanhoe got Mongolia and discovered Oyu Tolgoi. Randgold took West Africa, and Harmony got East Africa. 

"If you'd have kept that package together, it'd be the second largest copper company [today]. And you'd be arguing with Newmont about who was the biggest gold company," Fennell says.

He bought the Canadian assets for US $20.4 million. It had Hope Bay, a 4 million ounce gold discovery in the high arctic.

Fennell dealt through Cambiex Exploration (CBX), where he’d been appointed Chair and CEO in January ‘99, when CBX was a 15 cent stock with a $3.5 million market cap.

CBX split the tab with Miramar, a modest gold miner sitting on cash. Miramar swallowed CBX in 2002, appointing Fennell Executive Vice Chairman. Miramar invested about $100 million in Hope Bay and led it through permitting. In 2008, Newmont bought Miramar for $1.5 billion.

Every $1 invested in CBX’s equity funding when Fennell took over in early ‘99 was worth $19.50 when Newmont acquired Miramar 9 years later. CBX shareholders made even more money through a spinout company, Ariane Gold, acquired by Cambior in ‘03.

Rob McLeod, a geologist at Hope Bay, admired Fennell's strong presence, humour, and optimism. Fennell built bonds with Inuit partners through fishing and Crib games, easing the permitting process.

Fennell would need that optimism for his next venture.

–

In 2004, Fennell listed Nevada explorer New Sleeper. A name change to Reunion Gold (RGD) came in 2006, after recruiting former GSR colleagues and returning to the Giuanas.

The stock ran from 30 cents to over $2 in early ‘07 on the back of a Suriname gold find. It didn’t pan out. RGD crashed to 3.5 cents during the ‘08 financial crisis.

“When you take your shareholder's money and you say you're going to do this, and if it's not successful, my job is to fix that and I'm not going to roll all the stock back. I'm not going to wipe shareholders out,” Fennell says, explaining RGD’s current 1.23 billion shares.

Reunion roared back above $2 again after a Guyana manganese discovery. Then, metal prices crashed, cutting RGD to one penny by 2016.

“You're going to fail a hundred percent guaranteed in both exploration and football,” Fennell says. “The real question is, what are you going to do after you fail?”

A US $10 million sale of the manganese project provided a lifeline.

In 2019, Barrick partnered with Reunion on exploration, committing $4.2 million.

Reunion was a 7 cent stock in 2020 when they found gold at Guyana’s Oko project.

But, Barrick quickly abandoned the alliance and skipped a $3 million commitment. They even sued Reunion after Oko's success. In 2023, Barrick and RGD settled, owing nothing to each other.

Oko moved from a prospect to a major gold deposit rapidly. An initial 2023 resource estimate showed 4.3 million ounces (indicated plus inferred).

Fennell believes Oko could be the best gold mine in South America. He sees a 300--400,000 ounce per year, low-cost mine, with a 12 year initial mine life.

"It’s going to be much bigger and longer,” Fennell says, optimistically. “Whether we're going to live longer is a whole different question."

Reunion aims to publish a PEA study on Oko before Summer. Fennell also looks forward to a feasibility study and final permits in Q1 2025, with construction to start soon after.

"From a discovery to a tier one mine in [potentially] six years, it doesn't get any better," Fennell says.

He’s in Georgetown this week, talking with the Guyanese government about Oko's future. Reunion’s looking at options: build, sell, merge, or partner up. Fennell wants RGD to avoid execution risk and debt.

G Mining Services, led by Fennell's old friend Gignac, is advising on Oko. They've successfully built many mines, like Fruta del Norte in Ecuador (Lundin Gold - $3.7B market cap). Gignac's G Mining Ventures, doing well and on track in Brazil, could be a key player in Oko's future.

“There will be a mine [at Oko]. There's absolutely no question,” says Gignac. “The size, grade, and gold content. That's going to be the next one to put on his record.”

There’s a slight problem with Venezuela’s claim over Guyana’s Essequibo region, where Oko is. Fennell isn't worried. He says the US will protect it because of Exxon and Chevron’s huge oil investments there.

Gignac says Fennell hasn't changed since they first met in the late 80s. "Always glass half-full, always enthusiastic. A track record as good as anybody at finding deals, doing exploration, and developing orebodies."

Fennell is honest and a consummate salesman according to Rule. “I don't think in 35 years he ever lied to me, but he would polish the living shit out of the rear view mirror.”

Some colourful highlights of my 2 hour Zoom with Mr. Fennell were published on Youtube. It’s raw and full of wisdom about gold exploration and football.

“David is one of the most low key and commercially successful entrepreneurs in [mining],” Bruce McLeod wrote on X. “He has played a huge part in mentoring others too. Without David I wouldn't be where I am today.”

Fennell says, "We always overcome challenges. I never give up."

Reunion Gold (RGD-TSXV) is worth $485 million at press time, last at 39.5 cents.

Fennell owns 61 million RGD shares. He has warrants and options to purchase 12.6 million more.

B. McLeod, Rule & Halvorson all own the stock.

All figures CAD unless otherwise indicated.

Timestamps:

Personal Crisis 0:03
Mining Comes Calling 1:38
Million Dollar Question 2:29
Genesis of CEO-CA 3:16
REKT in the Klondike 4:06
Dilution Fatality 5:21 Lessons from an Icon 5:59
3 Keys of Mining Wealth Creation 7:40
Lessons from Willow Ufgood 9:22
10X Net Worth in 6 Months 10:29
Holding a 100 Bagger 11:23
Crypto Epiphany 12:20
Emptiness of Wealth 13:12
Why TheBigScore Now 14:36
Favourite Junior Miners Now 15:12
Final Thoughts, Choking up 16:30

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Transcript:

Tommy Humphreys 00:03):

Six 10 Jervis Street in downtown Vancouver. This building was constructed in 1910. That's three years after the Vancouver Stock Exchange opened. The VSE traded about $650,000 of volume that year, but our story actually starts a hundred years later in the summer of 2010, and I live in the top left unit in the top left corner of that building. The last year and a half had been pretty hard for me. I had my business partner and I, we were doing web design and we made the common mistake of young people and took three years to file our first tax return. So we were behind with the CRA and my partner left and the business just hit a wall and ran out of money. But there was one thing that was keeping me going through that period, which was this beautiful, incredible woman that I was living with, and she was my north star at the time.

(01:03):

And I came home from one of my troubling days. And on the computer, which we shared on the desk, there was a Craigslist posting. And on that Craigslist posting was an apartment. And that's how I learned that she was moving out. I was devastated. I spent the next few months trying to get her back, and one day she told me that she found somebody new. And I was obviously crushed, but there was more. He lived in my building and beyond that, he lived on my floor in the unit next to me. And in that modest place, there were mice scurrying on the ground and I was broke and broken and I was so pissed. And I sat on my bed and I remember I said to myself, you're going to get rich in junior mining. I knew about the junior market growing up mostly because of all the fancy houses that came up in Vancouver. And it seemed like the only ways to get rich were in real estate development or junior mining stocks. My grandparents lived on this quiet street. This is in West Vancouver, and in my high school years, three of these six houses were constructed and they all all belonged to mining people. I said, that's interesting. But my parents were very negative about the junior market. They said, it's a dangerous place. It's full of scammers. You can be anything you want growing up except a mining promoter.

(02:29):

So I found myself at the January, 2011 VRIC. This is a year later, but I knew nothing. I was very insecure and had a lot to learn. One of the challenges was I never went to university. I never had geology or engineering background. I wasn't a CFA or a money manager or a broker or connected in this space. And I was trying to find out what's my edge. One of the many people I was seeking out advice from was a broker. And he said about the same thing, cynically to me. He said, how are you going to make it? And then he said, A line I'll never forget. He said, how do you beat chess Master Bobby Fisher? You play him in anything but chess.

(03:16):

So ceo.ca was born because my edge was making websites and I could do that. I wasn't brilliant at it, but I was good enough and I could talk to people. The top right version was the first site we launched in 2012, and the bottom right is the second, and the version on the left is what you see today. But I spent 2011 to 2016 just obsessively trying to learn about this market. And I interviewed people frantically. You'll never find a nicer lot of people than mining CEOs because they always need money and they're always looking for a new audience. So I made all these interviews and transcribe them. And between those years, I believe that I consumed tens of thousands of news releases. And I was slowly but surely getting the hang of how this thing worked. But there was some challenges. In 2013, I met this man, Eric r, he's no longer with us.

(04:13):

And I took a picture of this meeting because it was just so funny to me that I was like, I think I got to remember this. But Eric had the key ground in the Klondike gold rush area, and he said he had some very famous backers who were exciting. His market cap was like $8 million and he had a fresh $3 million treasury, and he threw these gold nuggets on the table. And in his adorable German accent, he said, I've solved the riddle, I've solved the riddle. And he pointed on the map and said that he's found the source of the Klondike Gold Rush. And I thought it was ridiculous, but at the same time I was like, this is a bad market. This is a cheap stock. There are big players. I put about 50% of my capital in the stock. It was 8 cents, and within three months it was a penny and a half.

(05:00):

Eric pivoted to a project in Portugal, which is a very nice time, a very nice place to explore if you're in your sixties and living on the shareholders and his family worked for the business, the money was gone. But Peter Tallman has cleaned up that company and continues to develop it today. But that was one of the lessons. This was another story where there was no chicanery involved, but there the top left of the screen, there was a 10 million market cap company with a very good project. And on the bottom right of the screen, there's a 10 million market cap company with a very good project. And what happened in the middle was those three years, the company had difficulty raising capital because commodity price didn't move and it had to raise money at successively lower prices. So the valuation stayed the same, but the shares increased by 10 x and that picture, that gravity is what deals in this space are facing unless they experience one of three things.

(05:59):

I met Mr. Telfer along the way. He was an amazing inspiration to me. He was a very slow starter, the last man to get into university, and he became a chartered accountant when he was in his mid forties. He went to work for Robert Friedland, but he was nervous about the job because Robert wanted him to run Vengold. It was a 300 million market cap gold exploration company in Venezuela that had never drilled a hole. The equivalent of that today would be like a billion market cap exploration company with no drilling. And Ian was nervous, but he wanted an opportunity. But he had the wherewithal to say to Robert, Robert, if I do this for you, I don't know if it's going to work. Can I get a little bit of exposure to the other things you're working on? And as luck would have it, VenGold never found any gold.

(06:43):

It pivoted to a.com startup and 10 years later went bankrupt. And Ian tried the whole 10 years to make it work. But one of those other projects that Friedland was working on, lucked into a nickel find called Voises Bay in Newfoundland. And his early shares saved his neck. And this shows to me that there's a randomness with discovery, and discovery is one of the holy grails of wealth creation in the space, but there's a randomness to it. And it only came from a portfolio, and he didn't know where it was going to come. Ian also at 55 years old, launched Wheaton River Minerals. We took it over and he had a view of higher gold prices. He and partner Frank Giustra. And through mergers and acquisitions, they increased the value of this $17 million shell to 22 billion US and five years they did it through acquisitions.

(07:30):

And this wasn't a discovery story. This was a story about getting bullish on the gold price at 300 bucks and having it run to a thousand and overpaying for acquisitions and moving aggressively. But if it's not a discovery, you need a sentiment change in the market and you need the commodity price to go up. Those are the two things. There's a third thing. This man is Daniel Ameduri, he's in the audience. And that third thing about this space, if there isn't a discovery, if the commodity price isn't going up, the only other thing that's affecting the share price is the supply and demand on the shares. There are 3000 pre-revenue issuers in Canada, and they're consuming capital to create wealth. And so they always need more money. And unfortunately, this space is not extremely strong at reaching the 6 billion people out there who might be interested in investing in this space.

(08:23):

We all focus on the 5,000 who are in here who've already heard 50 mining stories. So Daniel, he grew up with me in this space, came from California, and he's just been absolutely gifted at connecting Vancouver deals with bigger audiences. But promotion is just such a vital factor. The stock has to be a discovery, a commodity price, sentiment change or promotion. Otherwise, your chart is going to be like one of the ones that you experienced earlier. So marketing is vitally important, but it's also an opportunity because most of these issuers are very poor communicators. And if a better communicator can come and take over a story and that story can spread, it can make a major difference in the valuation of an early company, early stage company. Long-term market's a weighing machine, but short-term, it's a voting machine and your access to capital, it's all about how you promote.

(09:17):

And Daniel's the best at it. He charges accordingly. In 1988, this is one of my favorite movies, Willow Ofgood. So I'm struggling through this sector and trying to figure out my way. Willow was a farmer and he was like the village clown, basically. Nobody liked him. He had no respect, but he always wanted to be a sorcerer. And he got an opportunity to interview with the sorcerer and apply for a job. And in the movie, he was amongst the final three. And the sorcerer said, okay, the final test, he held his hand and he said, the power of the world is in which finger. And the first aspiring sorcerer touched this hand and the sorcerer said no. And then the next one touched this finger and the sorcerer said No. And Willow looked and he hesitated, and then he touched this finger and the sorcerer said, no apprentice this year.

(10:13):

And later, the apprentice put his arm around Willow and he said, why did you hesitate? What was your first thought? And Willow said, well, my first thought was it was my finger. And the sorcerer said, that's right. You've got to believe in yourself. In 2016, I found myself in the middle of a hurricane because in 2015 I was writing and participating, investing in the space. And that's the gold chart, the big chart. It moved from a 10 80 to 1400 in a few months. And the same time I was able to invest in a friend's startup, lithium exploration company right at the head of the green energy move. And within six months, I had 10 times my net worth. And it was just incredible to experience this miracle Telfer, who I talked about earlier. He describes money coming into this space as like a pouring a whiskey bottle into a shot glass. And this is what happened. And it's just a little blip on the TSXV chart in early 2016, but it was completely life-changing for me.

(11:15):

I was able to be around some incredible discoveries. This was nexgen. We were in the stock at 33 cents and 40 cents, and it's now $10.50. I sold at $2.60. This was great bear biggest discovery win. I think of the last five or six years. I had the stock at 15 cents. I sold it at 15 cents. But it taught me that I could be there. And even without having a lot of reason to be around by focusing on the space I was at the table in these early deals, there wasn't the information about the discovery when I sold, I needed the money. And I don't look at this chart with any animosity because even if I was there when the discovery, I would've sold it at $2.80 anyway. And who has the wherewithal to hold a stock from 15 cents to 30 bucks? Do you think you can do it?

(12:02):

I think the only way you really hold onto a discovery like that is if you are management or insider and you can't sell optically or if you're locked up or if you're rich enough that you can just let it ride. But fact is these things happen sometimes. And if you're in the space, you get to see them. In 2016, I just had this instinct, which was that I think these little mining stocks, they're just people projects in capital in a little Canadian public company. Why can't we do this for crypto? And this idea germinated into a company, and it was an absolute miracle for us because we tied up a Bitcoin and Ethereum mining operation and team in 2017 in the middle of a crypto euphoria. And the stock was an absolute juggernaut. It went from 2 cents a share to $6 down to 10 cents, up to $9.

(12:54):

It was an absolute roller coaster ride. But this little hunch was life-changing for me, and it gave me the financial success that I dreamed about that day in the apartment. But the reality was when I reached the financial goals that I had, I still had an emptiness feeling. And you get to the top of the mountain, you think you're climbing and you realize there's not much there. And I was very mixed up. Excuse me. So I met this guy. He reminded me of Lebowski. He was just super chill. He didn't drink white Russians. He actually didn't drink at all. And he was the first guy I met that had a cool, he had a good life and he didn't drink, and he was a good businessman. He said, I just want to be the kind of partner that I seek. I was really drawn to him. We spent a lot of time together. And then I asked him, I said, I think I might need some help getting sober. And fuck, excuse me, that was five years ago. And that was completely transformative for me.

(14:08):

So anyway, I found that financial success alone was not enough. And what I really needed was just sort of rework where my value system and that sort of brokenness inside that money alone can't satisfy. But anyway, now I'm a father of soon to be three girls and married happily. And I have this new websites called the big score.com, where I'm writing about stories that inspire me. I want to share what I learned. I want to entertain people. I really like the emotional side of stories and the transition that people make and wealth creation stories. So I have a YouTube channel and a Twitter page and the big score.com. And I really enjoy doing it. I do it for fun, and it gives me a reason to keep looking at all these press releases and to be in the space. So I encourage everybody to subscribe, and you might learn something there.

(15:12):

I'd be remiss not to talk about a couple of companies that I'm excited about. Aris Mining is chaired by Ian Telfer. I've made a large investment in Aris. This company has no dilution risk like a typical junior. It's a 500 million market cap. Canadian closer to 900 million with debt, has five incredible projects. It has close to his market cap and cash. It's cash flowing dramatically right now, I believe it's trading close to one times 2026 cashflow. And Aris is either going to be a consolidator of other mining companies and become a story like Mr. Telfer Wheaton River, or it will be consumed, I believe, because gold mining has to consolidate. And a company like Aris is an incredible place and no one cares. So it's cheap and it's come off in the last couple of weeks. And I like it. I'm on the board of advisors of Meridian Mining, an 80 million market cap company in Brazil that has a very compelling project and good people and have a large investment there.

(16:09):

This company has 8 million at the last quarter, but the biggest risk in this space is dilution. It's going to need a bit more capital, but very compelling project with a 10.6 month payback real people. So I volunteered to help them with some marketing work and haven't been super successful, as you can see in the share prices, 30 cents. So driving in this morning, I passed the six 10 Jervis, and I always look up at that building and think about that time. And I think my message is, if I can do it, anybody can do it. Excuse me. And the last thing at the end of Willow, he comes back to his town and he's the sorcerer. He always want to be, excuse me, it's a beautiful message about a little person realizing his dreams. In some ways I feel like that, but if I can leave with anything, it's the power of the world is in your finger. Thank you.

Nothing in this communication is intended to be individual financial advice. These are my personal views and may contain errors. I'm not a licensed investment advisor and reserves the right to buy or sell any security without notice.

Timestamps:

Zero to Hero 0:10 
My Biggest Loss: What Happened? 1:26 
Biggest Wins 2:26 
Wisdom for Speculators 3:51 
What Mentor Joe Martin Taught Me 5:01 
Why a Junior Mining Stock Rips 6:13 
What I’m Working On 7:14

Grateful to catch up with James Pettem at the Vancouver Resource Investment Conference (VRIC) on Monday. James is a bright young guy helping make CEO.CA the best place for information in Canada’s venture small-cap market.

This was a fun interview and featured a touching moment when VRIC founder Joe Martin joined me in front of the camera… It followed another brief chat with Stockhouse’s lovely Coreena Robertson on my start in the junior mining industry with Joe.

"I always think nostalgically about knowing no-one and nothing and being very insecure 15 years ago and being a slightly older version of the same today... Originally it was an obsession for bettering my life..."

Coreena and I discussed creating wealth... Passion for the stories and people in this market... CEO.CA's origin ('From this rock I will build my church'), how I feel about the site after selling it… naming The Big Score, and sharing what I've learned through storytelling...

Link: Tommy Humphreys jumps back in the game with The Big Score

These brief interviews were taped after wrapping my VRIC speech where I got choked up in front of a live audience… I still can’t believe that happened, and hope to share it with you soon…

The Highs and Lows of Junior Mining: Interview Transcript:

Tommy Humphreys (00:10):

In 2010, I was doing web development and my business ran out of money. And I had this girl I was in love with living with me, and I came home from a very challenging day with business in trouble. And she announced she was moving out and I was desperate to get her back. And she ended up finding somebody new and with a catch that he lived in my building on the same floor. And so I'm sitting in this apartment with no money and no hope and heartbroken, and I'm like, I've got to make something out of myself. And I had this dream of this junior market that I knew that a lot of people were successful in it and that I could too. And the thing that I did better than other people was making websites. I wasn't great at it, but I was good enough. And the junior resource market is kind of forgotten by technology and forgotten by the promise of the internet. So I was able to do some things that maybe now we couldn't do. But at that time, there was an opening for better information platform on the site, and I was very lucky to be able to do it with great people. And I'm thrilled with where it is now as the best place for information in the junior market in Canada.

(01:26):

All these wounds are self-inflicted, but a couple of big mistakes. One time I was on a trip with a really famous mining icon, copper icon, and one guy showed him drill results of a deal and the icon. He said, oh, that's impressive. And so we were on a plane together and after the flight was done, I called my broker right away and I put in like 75% of the money I had into the buying this random stock that these guys were gossiping about because I thought I was on the inside. Well, it was a four or $5 stock at the time, it quickly went to 80 cents. And I went way too concentrated on it, and it was like a dumb impulse purchase. Just because somebody says something doesn't make it great. Stocks at that time, it was the end of the commodities boom and didn't matter what you own is going down. So it just taught me to bet small and be able to fight another day and to listen to what important people had to say, but also just put it together with other information. Lots of stories like that. You cannot be in this game and not lose money, but when you win, it's bigger than you lose.

(02:32):

Well, I have this friend Rob McLeod. I was deliberating doing this K 92 mining deal at 35 cents with a full warrant at 50 cents. And Rob, my friend, said, no, that's a good project. And it was just the nod I needed to participate in that deal. And I think it was three bucks when I was selling out of it, and it was like a 15 x or something with the warrants, but they ended up stock going to $10. And I have had a lot of situations like that. Some deals, I helped start a mining company, lithium X Energy, which was a 250 times return. And in the mining space there's been a handful, probably a dozen of really good outcomes. The best outcomes came being at the market, low in the sentiment. And then quickly that attitude changes. I've said a hundred times, it's like pouring a whiskey bottle into a shot glass. But in early 2016 when gold moved from 10 80 to 1400, Vancouver stocks went bananas. And all the deals I was in in 2015 were five to 10 times the money and nothing had changed other than the sentiment. So I feel like right now it's not full despair, but it's an interesting time. Things are getting cheaper and I'm cautiously wading in again.

(03:51):

Well, the first thing to learn coming to a conference is a better investment than buying a stock. It's a good investment to lose money if you learn something. And the most important thing is just understanding what you own in context of other companies like it. You want to be able to learn, you want to be able to use CEO.CA to understand what people are saying about it. Oftentimes you want to do what the opposite of what the crowd is saying, but you want to be able to understand in their management discussion and analysis of their financial statements every quarter, how much money they have, what's their financial runway and what's the cost of the shares are required. Understand the cap people. You just really want to get an information edge and know what you own. And ultimately, if you're young, it's a great place to get ahead and to build a career. It's fantastic. It's more treacherous if you're trying to preserve your capital and don't want to commit your time and passion into it. So I would say you can win big in this space if you're obsessed with it. And that's what my experience has shown.

(05:01):

Okay, so this is my mentor, Joe Martin. Joe gave me my first opportunity in the market here with the Cambridge House conference. He hired me to do some marketing. It was an incredible experience. You learned who the CEOs were, who the experts were and what the trends were happening. It's all here in this show and putting that all together and that's why everybody keeps coming back every year. But the best thing I learned from you, Joe, was when you said promote the promoters. Keep them coming back. Anyway, I owe a lot to you. Thank you for having me. You were an absolutely wonderful guy to work with. You are too. Still are. We had a lot of fun together. Yes, we did. I'm very proud to see what Jay's doing with the business today.

(05:41):

But somebody had to start it and you were part of that start. Well, I think you were starting at 20 years before we showed up, but Joe's a legend former owner of BC Business Magazine and just a dear friend. And part of the beauty of coming back to these shows is the relationships you build through time with people like Joe. And there's been times when I definitely tried Joe's patience and I appreciate the benefit of time. Thank you for all your patience and forgiveness. It's been a pleasure. Love you, man. Love you. Bye friend. Okay,

(06:13):

There's only three reasons the stock goes up. Discovery, sentiment change like commodity price rising or promotion. That's it the rest of the time. Gravity, what else? Promotion's incredibly important. Management have to have alignment of interest. And some people, if their stock gets cratered, they'll bring new money in at terms that are destructive to the share price and the value of existing holders. And you can't fault them when they don't have access to money. But some teams just fight to keep the share price alive and to keep previous shareholders going. And the people I just saw Dave Lotan walking around, there's a guy's not selling warrants and he's got big incentive. He buys the shares. And finding people that treat the shares like gold, that's the hardest part in the space. But if you're around when one of those three things happens, you're going to like this business.

(07:14):

Right now, I'm working on continuing to find cool investment ideas and to be plugged into the space, and I use ceo.ca every day for that. I probably, I'm a power user. I love ceo.ca. I'm writing on the big score.com, a series of stories sharing what I've learned and stories that inspire me, the human stories behind wealth creation in the Canadian market. I love doing that. So I'm trying to write cool stories. I'm trying to find good investment ideas and support people, and hopefully make a buck. But the big score.com and ceo.ca/@Tommy, that's where to find me.

Dear Big Score readers,

This is a guest post by a friend who has been dedicated to small-cap investing for 30 years. He's successful but shuns the spotlight. So, he writes under the name 'Rainy Man' here. I trust him and value his ideas. I’ve invested in DCTH too with a ~$6 avg (DCTH last @ $4.36). You might find this interesting. Tommy

A Better Way to Treat Liver Cancers

Liver cancer is often a death sentence. Roughly 50% of cancer’s metastasize there. Treatment is extremely difficult. Tumour removal rarely works, so doctors often send chemo beads to the liver with varied effectiveness, or rely on harsher therapies.

A small-cap company I am an investor in is pioneering a better way. Delcath Systems (NASDAQ:DCTH) is based in Queensbury, New York. Their Hepzato Kit treatment gained initial FDA approval last Summer and began commercialization this quarter. It’s the obvious leading solution to treat liver cancers, and presents a compelling opportunity for investors.

Hepzato Kit treatment is also known as percutaneous hepatic perfusion (PHP), and Delcath owns the commercial rights. PHP is like isolating the liver and treating it without affecting the rest of the body. Doctors use catheters and balloons to keep the liver separate from the body's circulatory system during the treatment. This allows them to deliver a high dose of the chemotherapy drug directly to the liver. Then, the blood coming out of the liver is filtered to remove the chemotherapy drug before it goes back into the body. This method makes sure that the rest of the body is not exposed to the high dose of chemotherapy.

This treatment is important because liver metastases are a major concern in patients with uveal melanoma. Without effective treatment, these metastases can be life-threatening. Hepzato has shown positive results in clinical trials, with a significant number of patients responding to the treatment. The overall response rate observed was 36.3%, and patients could undergo this treatment multiple times. Side effects are known and can be managed with standard care.

FDA approval was granted to treat uveal melanoma, a rare form of eye cancer with a potential $600M annual market, but the opportunity is much bigger. It makes sense Hepzato will be used for other liver cancers despite no FDA approval, and could be a huge win for patient investors.

Delcath Stock Summary

Delcath Systems has a current market capitalization of US $125M (28.6M shares at $4.36/) plus ~$9M debt. Cash was $40M at Sep 30, 2023. Burn rate is high at $4-5M/month. All figures USD.

The company is targeting $330M peak sales, and at reasonable revenue 85% gross margins (excluding fixed costs of ~$55M per year). This would translate to over $200M earnings before tax. At a 15X multiple would make this stock $100 per share, 22.4X above the current share price. Seems too crazy but the main point is there is major upside.

Why So Cheap?

1/ Delcath isn't biotech; it's a bulky medical device needing training. Biotech attracts big money and PhDs. They prefer new, exciting drugs, not this. Big biotech funds bought in, then sold off. Delcath's stock will rise with sales. They need to prove their success first.

2/ ‘Show me’ stage. The commercial launch of Delcath's product is starting slowly. Sales are expected to increase each quarter, from $3-5 million now to $12-16 million by the fourth quarter. When sales hit $10 million, the company will be close to breaking even. One doctor tweeted about planning to generate $900,000 in sales in January alone. If this trend continues, reaching $3 million this quarter is likely. I think it’s possible management is low-balling the guidance.

The launch involves a process called proctoring. This means doctors must either visit a training centre or have a certified Hepzato physician come to them. The physician then guides them through the procedure. As more doctors get this training, the number of procedures will likely increase quickly. This could greatly boost the stock.

A key step for the company is getting an official reimbursement code. This is expected in the coming months and should be a big plus. Many doctors hesitate to use treatments without a specific code. It can complicate getting paid and slow down the payment process. Getting this code is seen as just a formality now.

This step-by-step increase in sales, training, and official recognition marks a significant phase in the company's growth and investor interest.

3/ Delcath might need temporary funding to reach break-even. They want to avoid issuing more shares to protect current shareholders' value. They have a $9M debt, paid monthly until August. A flexible debt solution, like a line of credit, is ideal. This can be repaid with future cash flows, despite high interest.

DCTH stock will move higher as these issues are resolved, in my opinion.

Gerard Michel, Delcath's CEO, successfully led the company through FDA approval. However, he's been criticised for the company's valuation. Michel is detail-oriented but lacks the flair of a passionate sales leader. In meetings and conference calls, he focuses on specifics and misses highlighting the larger vision.

Michel left a comfortable CFO role at Vericel, drawn by Delcath's potential. Vericel, initially a low-profile science company, struggled early on. It's now valued at $1.5 billion. This success came from mastering cell delivery in medical applications, like sports medicine. Delcath could mirror this trajectory, indicating a promising future for investors.

Will Delcath's big year be 2024 or 2025? We don't know yet. But success, more sales, and a higher stock give them big chances. They can then tackle other cancers like colorectal or breast. I love these setups.

Currently, 2000 patients have the cancer Delcath can treat. There are more with other types: ICC (3500), neuroendocrine (8000), colorectal (35000), and hepatocellular (40000).

Management can't say much. But using Hepzato Kit for other liver cancers makes sense. It's not FDA-approved for these yet. But it's effective, and doctors understand it. There are also studies on bile duct cancer. This might be the next target. Doctors could get paid for using it this way. This use might be bigger than the approved one.

Immunotherapies (IO) are really hot right now. Look at Immunocore IMCR, valued at $3.5 billion. But their treatment for ocular melanoma isn't very effective. They only help 45% of patients, with an 18% response rate. This is partly because the liver's immune system is less active. It's designed to let nutrients pass without a strong reaction.

IHP is a complex treatment for liver diseases. It connects you to machines that act like your organs, while giving chemo to the liver. Sadly, it has a high death rate. It was used because it's good at killing cancer. Delcath's Hepzato Kit uses a similar idea but is much safer and very effective.

It's really striking when IHP is combined with immunotherapy. The response rate is amazing: 50% for colorectal and neuroendocrine cancers. Compare that to Immunocore's 18% rate for ocular melanoma. Hepzato Kit alone has a 36.3% rate. It seems clear that using Hepzato with immunotherapies could become the standard of care.

The Chopin study tested Hepzato Kit with immunotherapy. In just 7 patients, the response rate was 85%. A larger study with 76 patients will share results soon. If these are like the small study, it will be a big deal. This could change the game in liver cancer treatment.

Boston Scientific has a liver cancer treatment called Y90. It sends chemo beads to the liver. They bought this for $4 billion, making $400 million in sales. Y90 costs $18,000 per treatment, cheaper than Hepzato's $185,000. But Hepzato Kit works better. Boston Scientific's sales head moved to Delcath. It’s not much of a leap that one of the major players will attempt to acquire Delcath once the revenues ramp up. Hepzato Kit is too strategic to ignore.

Delcath's Hepzato Kit offers hope for liver cancer patients and a promising opportunity for investors. With effective treatment and growing demand, it's set to revolutionise liver cancer care and deliver significant returns.

I will continue to add on any pullbacks.

DelCath is a speculative stock and might not meet my expectations. Check DelCath's SEC filings for key risks. This isn't investment advice. Verify all facts yourself. Always do your own research and talk to a licensed advisor before investing.

Imagine your hedge fund, your pride and joy, takes a nosedive. First, it falls over 20% in a year, then another 30% the next, and a staggering 50% the year after that.

The cash you're managing shrinks to $350 million from $3 billion in 5 years.

Then the firm with your name on it announces they're phasing you out of investment decisions.

That's the rough ride Eric Sprott found himself on in early 2014.

His relentless faith in gold and commodities, which made him a billionaire, turned against him. He was 69 years old, destined for the dustbin of finance history, or not…

In January 2015, Sprott became chairman of a quiet Canadian gold producer, Kirkland Lake Gold (KGI). Worth $319 million, KGI was tracking 150,000 ounces of annual gold production. Sprott held a $36 million personal stake.

A few months after joining KGI, Sprott merged it with St. Andrews Goldfields (SAS), a fellow Ontario miner. Owning $4.8 million in SAS stock, Sprott couldn’t vote for the merger, but it proceeded anyway. The new company was 71% KGI and 29% SAS owned. It aimed for 285,000 ounces in 2016. After the deal, the company's value hit $540 million.

Next Sprott recruited Tony Makuch, an experienced Canadian miner, as CEO.

Bigger gold miners attract more investors, Sprott knew. He was ‘driving the bus’ behind the Fall 2016 merger of KGI, now trading as KL, with Newmarket Gold (NMI). Sprott owned 18% of NMI, a Vancouver-based miner with operations in Australia, and stayed out of that merger vote as well. The new entity targeted 500,000 ounces in 2017, with a $2.4 billion market value, split 57% KL and 43% NMI.

Sprott announced he owned 19,178,195 shares of KL on Jan 4, 2017. My best guess is he paid about $92.12 million* for the stock, but it’s impossible to know without access to his trading records. KL closed at $7.73 on Jan 5, valuing his stake at $148.5 million.

Then things took off. A rich new find at the Fosterville mine, one of NMI’s operations, expanded KL’s potential and profitability. 2017 production soared 20% above expectations. KL ripped to over $44 per share by early 2019.

In May 2019, Sprott retired as KL’s chairman. His last insider filings showed him owning 19.783 million KL shares.

Later that year, KL acquired a massive Canadian gold mine, Detour Gold (DGC), in a $4.9 billion stock deal. The combined company, 73% KL and 37% DGC owned, produced over 1.5 million ounces in 2019 with US $700M in free cash flow.

Gold was on KL’s side as well, climbing from $1280 per ounce in early 2019 to over $2000 by August 2020 when KL eclipsed $74 per share.

In September 2021, Agnico Eagle (AEM) announced a takeover of KL, then trading at $55.70, in another stock swap. KL got 45% of AEM. AEM, now worth $35 billion, did over 3.25 million gold ounces in 2023.

Sprott’s $92.2 million* bet soared to over $1.4 billion at its peak, $1.1 billion at the time of the AEM merger.

“I’ve had lots of ten baggers and the important thing is to stay in it,” Sprott told Financial Post’s Gabriel Friedman in late 2019.

Since 2017, Sprott’s family office invested $900 million in over 175 mining companies. 'It’s like being at a table with a winning run,’ Sprott reflected.

In a three-month span of 2019, research by Oreninc showed that $1 of every $4 raised by Canadian listed junior miners was from Mr. Sprott. Yet, he admits these high-risk bets are 'the worst place for money', with more losses than wins.

‘The guy gets up at ungodly hours, he might get up at 2 a.m. studying,’ said Conor O’Brien, a Sprott colleague. ‘Neither one of us are geologists, we’re just financial people that can do mathematics, as opposed to the geology. We more kind of conceptualize, and dream and kind of multiply.’

Mr. Sprott turns 80 this year. Outside of KL, he’s best known for founding Sprott Securities, now called Cormark, a leading investment dealer. He founded Sprott Asset Management as well. The Sprott School of Business at Carlton University is named for him.

For his KL win and others, Sprott is a legend among retail investors. Unlike so many mining entrepreneurs, he buys his stock like everybody else, rather than manufacturing companies.

He confesses to reading internet message boards for stock tips, and his comments promoting CEO.CA, my mining community web site, were a huge benefit to us.

Sprott owned 17% of Goldspot Discoveries when it acquired CEO.CA in 2021. That’s how my partner and I ended up with some of Sprott’s KL winnings.

At a ceremony in Toronto last week, Sprott was inducted into the Canadian Mining Hall of Fame for his vast contributions.

'He was a public champion of the sector and then how many dozens of juniors would not have made it if it wasn't for Eric Sprott,’ said colleague Peter Grosskopf.

Ten years ago, Sprott was down on his luck after grave losses to his hedge fund. But he stuck to his knitting and it led to one of the all-time great mining scores. His comeback story is one of resilience and vision. In the world of commodities, Eric Sprott's legacy shines like the gold he believes in.

* Estimate of Eric Sprott KL cost basis:

+ $35.831 million market value for 8,143,466 KL shares reported Jan 26, 2015, + $22.5 million for 10 million NMI in Feb 2016, per SEDI, + $45.36 million for 16.2 million NMI, also in Feb 2016, per SEDI, + $11.332 million for 5,151,196 NMI shares held before becoming a reporting insider, estimate $2.20 cost basis, + $4.8 million 13,349,000 SAS * .36 in context of market at announcement, - $27.7 million for NMI sales July-Sep 2016 = $92.123 million… This estimate is definitely wrong… But directionally accurate…

So many people in North America feel like the system has failed them... like it's getting harder and harder to achieve the American dream... like they won't be as successful as their parents.

They can’t afford a house… can’t buy a nice car… can't save enough for a decent retirement…

So, they have this big drive to speculate. To swing for the fences. To hit it big. To YOLO it with crypto, options, etc.

I know it all too well. So well, in fact, I’ve made a career out of it.

For generations, investors have flocked to the city of Vancouver, Canada, to chase giant, life-changing financial wins.

That’s because Vancouver is the world epicentre of public venture capital. It all began in 1909 with the Vancouver Stock Exchange, now the TSX-Venture. This exchange started to fund oil and mining booms. Vancouver became the first place pools of investment dollars were paired with huge ambitions, geologic data, and a big risk appetite.

The Vancouver scene grew to include more than just resources. In the 90s, tech startups surged on the VSE. Then came another commodity boom. In the 2010s, lots of cannabis companies crushed it in Vancouver. Next was crypto. Back in 2017, I made a 200X return on a crypto mining stock. It changed my life. Now, critical metals are booming again.

Hundreds of massive stock market winners were incubated in Vancouver.

It’s the home of the 100X win and broken dreams.

Most lose in this game.

Some win bigger than they ever dreamed.

What I Learned at the Super Bowl of Canadian Venture Capital

Every year in late January, something wild happens in Vancouver. The Vancouver Resource Investment Conference (VRIC) rolls into town. Think of it like the Super Bowl of Canadian penny stocks. It's a hub for experts, packed with chances to make it big. Speculators from all over come to learn about Vancouver’s best deals.

Now, if I had to pick one thing that pushed me ahead, it's being a fixture at these conferences. They opened my eyes to this tricky market.

My first VRIC, 13 years back, was a bit of a shock. But a few conferences later, I was in my element. Making friends, getting the hang of things.

Here's a key lesson: these events are for watching and learning, more than stock tips. It's about connecting and picking up patterns. Like this one time, a throwaway tip from a geologist I met at VRIC led to 20X win.

In Canada’s public venture capital arena, it's all about the people. Some folks have the magic touch. And you can't ignore the hucksters either. Their dirt-cheap deals might just spell gold, if you can mix in the right crowd and ditch the dead weight.

These stocks will rocket 500%, then crash 80% in a typical year. You learn to deal with failure. You wait for the right moment and watch out for the big trap: dilution. Often, a stock's value skyrockets while its price drops because of new shares.

Don't put the gurus on any pedestal. Like this one time after a VRIC, a libertarian stock market influencer drove me the wrong way down a highway! He said road rules were a shackle on his freedom. Amid heart-stopping pleas, we screeched to a halt at a convenience store. I escaped, taking a long taxi ride back home.

A packed conference can be another red flag. In 2011, over 12,000 showed up – a sign of a market peak. This year, with about 5,000, the odds look better.

This time around, I'm not just attending VRIC. I'm speaking. My talk: "Vancouver’s Next Big Score… Hidden in Plain Sight." I'll share stories and my latest research.

You could catch it online later, but there’s so much more to gain in person.

So, join me on Monday, Jan 22, 1:40 pm, Workshop 4 at VRIC23. Tickets are free here. Check the agenda here.

The official greeting of teenage Canadian boys in ‘99, when I was in the 8th grade, was not a wave, handshake or fist bump.

It was a cross armed x chop, or more casually, a one armed x chop, combined with a hip thrust and the words,

“Suck it.”

It was our hello, our goodbye, our battle cry.

Monday nights were sacred. WWE's Raw wasn't just a show; it was our weekly sermon, with superstars like Goldberg as our saints. I remember donning my Goldberg T-shirt, a prized possession from my brother, and practising his signature moves on our rainy trampoline.

The school was our ring, where phrases like “Nugget,” a nod to Owen Hart, bounced off lockers like a wrestler hitting the ropes. We were all part of this dance, from the big kids to the little guys, each finding someone smaller to enact our wrestling fantasies.

Pay-per-view events featured the best matches, but my parents refused to indulge us. These nights, I’d obsessively log on to early wrestling websites. Updates crawled in on our 56.6k dialup modem.

Over the Edge, a pay-per-view event scheduled for May 23, 1999, promised to be incredible. It featured Undertaker vs Stone Cold for the WWE championship. The Rock was set to battle Triple H. The Intercontinental belt was up for grabs as well, with Owen Hart challenging the Godfather.

By the time Over the Edge began, my modem was running hot from frequent logins, and my sister was screaming at me to get off the phone. Then I read something ominous. Owen Hart had fallen into the ring from the rafters after a harness malfunction.

Scant details were available. I kept logging back on for updates. An hour later, announcer Jerry Lawler confirmed 34 year old Hart had been killed in the accident, having fallen 78 feet. It felt like I had lost a family member. Wrestling lost its sheen after that.

Fast forward to tonight, and I'm at a WWE Smackdown event, trying to reconnect with that wide-eyed teen. The President’s Club at Rogers Arena is a far cry from those simple Monday nights. Seats are a staggering $75K per year. It’s as posh as anything I’ve experienced in live events, and the service is amazing.

Tickets with the best parking in the stadium. Up a flight of hardwood stairs, enter a beautiful restaurant and bar with room for about 50 patrons. It’s right below the bleachers, behind the benches. On either end the players walk to and from their locker rooms. All food is included, and we ordered wagyu and ribeye steaks to our table, cooked to perfection. Curtains open to a priority seating area with ringside views. From where I park to where we sit is a mere 100 paces.

Rockford, a retired wrestler in our group, narrates the event with the wisdom of a ring veteran. His insights are golden, yet the spectacle doesn't quite capture the magic of yesteryears. 

There’s no Stone Cold fighting his boss, kicking ass and drinking beers. Vince McMahon’s retired. Steroids are gone too.

But what can I expect? I’m not following the storylines, and I’m a grown up now.

Every time I’m in a major sporting arena, I think about CEO.CA, the stock market website I created. I always envisioned CEO.CA being like a stadium of stock speculators, and the CEOs the wrestlers, vying for the adulation (and investment) of fans. 

Here's the thing – CEOs could learn a thing or two from pro wrestling. Like the larger-than-life personas of the WWE, business leaders need to engage their audience. It's not just about the message; it's about the drama, the story, the connection.

Years ago, we produced Subscriber Summit conferences alongside newsletter writers Eric Coffin and Keith Schaefer. I once pitched Eric and Keith on hiring some wrestlers to spice up our corporate presentations. My idea was to have a wrestler pose as a disgruntled investor, heckle my speech, and slam me into a conference table. Then have another one come to my defence and brawl. Drama, excitement, unforgettable - but my colleagues didn't quite catch my vision.

So, as I sit here, savouring the finest wagyu, I can't help but feel that both the wrestling world and the corporate sphere have something in common. It's not just about what you do; it's about how you make people feel while you do it. Maybe it's time for more CEOs to step into the ring and show some real personality.

PS - Andrew Nelson, CFO at Westward Gold (I’m a shareholder), gets it (Example).

TIMESTAMPS

Slow Starter 00:24
Intro to Mining 1:24
Lessons from Mining Giants 2:53
Wheaton River’s Origin 4:08
Goldcorp Merger 5:57
Royce Ambush 10:08
McEwen Fallout 11:48
Managing 25,000 14:49
$22Billion ‘Epiphany’ 16:50
What it Takes 19:11
M&A Strategy 20:06
ARIS Mining (NYSE:ARMN) 22:41
Ian’s Hero 25:28
Hit the Bid 27:07
Uranium Luck 28:11
Maintaining Optimism 29:08
Flow State 30:19

After setbacks in the ‘90s, Ian Telfer sold his house to afford his kids’ tuition.

As long as they kept up appearances, no one would know he was struggling, Ian says.

His dot com venture had failed, just as his search for gold in Venezuela did. But at 55, Telfer made a historic comeback in the mining industry. Through daring acquisitions and belief in rising gold prices, he created the world's largest gold producer. He also came up with what became the most valuable royalty & streaming company.

‘For that five or six years, someone would present an opportunity and I just knew it was the right thing for us. I just knew. I could feel it.’

The Rise of Wheaton River Minerals

In early 2001, investor Frank Giustra believed gold prices, then ~$260 per ounce, were poised to run.

To profit, Giustra wanted to build a new gold company. He’d helped finance Telfer’s earlier mining ventures, respected him, and wanted to work together.

Out of a job, Telfer seized the opportunity. The two men identified a small public company with an exhausted gold mine called Wheaton River Minerals (WRM).

WRM, then worth just $17 million, agreed to let Telfer take over as CEO with Frank’s backing. They arranged a $5 million investment into WRM.

After scouring the gold market for opportunities, WRM bought 3 Mexican mines producing 191K gold equivalent ounces at cash costs of $198 per ounce in 2002.

It was an ambitious first deal for WRM. Luckily, gold started moving, and WRM tapped equity markets to finance the purchase price ($75M cash + ~20M WRM shares).

The next year, WRM transformed into Canada’s 8th largest gold miner and pulled off a record setting financing. WRM grabbed a 25% stake in the massive Alumbrera gold-copper mine in Argentina, and 100% of the Peak gold mine in Australia, from Rio Tinto, for $214 million. The deal brought WRM’s annual production to 458.5K gold ounces at $124 per ounce cash costs.

In early 2004, WRM bought the Amapari mine in Brazil for $105 million.

Next, a merger with Iamgold moved forward, but WRM moved from hunter to hunted. Couer d’Alene bid $2.65 billion for WRM, while another company bid for Iamgold. In a fierce few months, Iamgold’s shareholders rejected the WRM merger, and WRM was able to fend off Couer d’Alene.

While all this drama was unfolding, Telfer believed WRM’s silver production wasn’t getting fair value. He came up with the entirely new concept of metals streaming. WRM sold its silver production to a new company, 80% owned by WRM, called Silver Wheaton, which took off like a lightning rod. Now Wheaton Precious Metals, it’s the most valuable royalty & streaming company, worth $22 billion.

Goldcorp Merger

In 2004, Toronto’s Goldcorp owned Canada’s largest gold mine in Red Lake, Ontario.

For years, other miners coveted Goldcorp, but CEO Rob McEwen rebuffed advances.

In October, Telfer invited McEwen to a WRM presentation in Toronto. McEwen immediately saw potential in WRM, and Telfer as a capable leader.

A friendly merger was announced in December. The combined debt-free company was set to produce 1.1 million ounces in 2005 at the world’s lowest costs.

However, Reno’s Glamis Gold interrupted the deal with their own hostile $3.28 billion bid for Goldcorp, trumping WRM’s $2.58 billion offer.

McEwen still believed the WRM combination was better for Goldcorp. “This is going to be the biggest sales pitch of our life,” he told Telfer.

The duo called on every major shareholder for support. After showing up unannounced at Royce Funds, a 11% Goldcorp holder, the Royce executive ‘tore a strip off’ Telfer and McEwen. Despite getting off to a rough start, Telfer and McEwen eventually persuaded Royce to support the deal.

Against all odds, a Feb ‘05 Goldcorp shareholder vote approved the WRM merger. The Goldcorp name stuck, and Telfer replaced McEwen as CEO. The combined company was now worth over $5 billion and poised for growth. Gold, then $415 per ounce, was on the cusp of a dramatic rise.

Goldcorp bought more mines in Canada and Mexico. By 2006, it produced over 2 million ounces. That August, Goldcorp turned around and bid $8.6 billion for Glamis.

Just 5 years after Telfer took WRM over, Goldcorp was now worth $21.3 billion. The $5 million 2001 investment Telfer and Giustra arranged had grown by ~40X. Goldcorp reached a $40 billion market cap by 2012, excluding Silver Wheaton.

Telfer retired as CEO after the Glamis deal, retaining the chairmanship until 2019. Then, Newmont acquired Goldcorp, and moved its head offices to Colorado. Telfer regrets not fighting harder to keep Goldcorp in Canada.

Now Telfer is chairman of ARIS Mining (NYSE:ARMN), an emerging gold producer that’s reminiscent of early WRM. ARIS is my largest mining investment.

Neil Woodyer, an early WRM director, leads ARIS, which owns several substantial mines & development projects in Latin America. Frank Giustra is a 8% shareholder.

Telfer has been a generous mentor and philanthropist. He’s donated $30 million to the University of Ottawa, home of the Telfer School of Business, and another $7 million to the University of Toronto. The Jay Telfer Forum, named for Ian’s brother, is a new high-tech musical performance centre under construction at U of T.

Knowing Ian Telfer is a privilege. His humility is remarkable. He faced financial troubles at 55 but later achieved success with self-awareness and gratitude. Telfer credits luck and timing, openly discusses his failures, and focuses on helping others succeed.

Telfer joined the Canadian Mining Hall of Fame in 2015, cementing his mining legacy.

Youtube link

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Transcript

Tommy Humphreys owns securities in ARIS Mining. Nothing in this communication is intended to be investment advice. Ian Telfer interview taped June 2022 in Vancouver. All facts to be verified by the reader. Always do your own due diligence.