Which Gold Miners are Primed for a Re-Rating?

Which Gold Miners are Primed for a Re-Rating?

[Music] hi and thanks for hosting me today uh Matt and good to talk to you Oliver um for the listeners my name is Sean rusen I’m the founder of the asisco group also the founder of Eurasia Holdings the private Equity Group uh that was the largest holder of asisco mining one which is a project that that we bought the Canadian marar Assets in Northern Quebec uh for $888,888 and built it into the largest gold mine in Canada the ninth largest gold mine in the world um and that mine was sold after hostile uh Pro production with gold Corp to Yana Neo uh subsequently uh AG Niko bought that we sold that mine for $4.1 billion Canadian in the end uh I also went on to create the Cisco gold royalties platform we ipoed that two days after we sold that at about a $500 million uh market cap on the NYC it now trades about 4.1 billion on the NYC so that was our second uh $4 billion company uh and today I’m dedicated to the evolution of the Cisco development which uh are two primary assets is a large gold deposit in central British Columbia called Caribou gold uh as well as a property in the Utah called tinck uh which was previously operative of Ken kenicott and then reio uh and what we’re doing there is we’re hunting a Bingham Style porfy uh that uh we think could be one of the next big copper gold underground projects uh We’ve also formed several other companies like a Cisco mining which has uh about a billion two market cap uh things like Falco resources and uh we have 17 public companies that have been spawned out of the Cisco deal um our big belief system right now is copper and gold um I think it would reverse the order depending on what’s going on I think the thing that’s got me the most exciting and I’m i’ you know I’ve stepped off my my royalty duties after been the co and chairman there for 10 years um and I’ve uh taken on odv because we have both the copper projects uh as well as the gold projects on the go uh in safe jurisdictions so that’s our our belief system and then you know I’m interested to to hear uh all of story he and Paul have done a fantastic job and uh on Cor and you know this this these are big success stories and um and you know the experience in this industry is re repeat success is more the the way things go uh people that figure out how to do this business and have the tenacity to stick to it are often successful in multiple assets and you know certainly I think that’s one of our big themes is keep our group together and focus on like-minded individuals and work alongside groups uh like Paul and Oliver uh you know that that have done that as well because it’s there is a formula to it and to make shareholders money I think the big opportunity to today for shareholders is we’re not waiting for the gold price uh the gold price is here uh we’re waiting for the equity markets to catch up with it so you know my excitement on this is that I don’t have to worry about the gold price to go up it’s already gone up the question is when are we going to see the equities respond to it which I think is a far easier problem to solve than waiting for gold price to fix the market um you know and as we see geopolitical risk around the world uh with what happened in Panama uh with shareholders getting zero out of Ros mon Ana uh with all the political on risk you Wagner threatening to take mines away from barer and Mali the uh the safe jurisdiction assets have gone up in value significantly uh certainly we’ve seen an increase in traffic across our our portfolio uh with all the projects that we’re involved in uh in the past um and you know so that’s one of our themes that we think the shareholders will be rewarded uh for the jurisdictional uh premium that we we have and and as as does oler with his portfolio you know so that’s really our theme and the Cisco group is uh you know we’re Brownfield Specialists we’d like to go into these old mining camps on when the science and the drive value for shareholders so pass it over you P or Oliver yeah thanks Sean and and a great introduction and and certainly some phenomenal work having been done there by the Cisco group over years and and we you know we’re trying to emulate that kind of success over here with with cor and the ball and and uh various projects we put together over the last 10 15 years uh same same kind of model uh you know great people great jurisdictions really good projects often uh basically unlocking value that the groups don’t see in these projects sometimes troubled struggling assets we all know the cor story we’ll be walking through that today a little bit for sure uh but unlocking that value uh making shareholders money uh you know moving on to the next project and repeating that kind of success so a little bit about myself uh you know long career in in the mining industry with respect to technical background 7 years as a as an equity research analyst so I Echo your sentiments there Sean in terms of you we’ve arrived at this wonderful year we’ve probably been talking about for the last 15 plus years when it comes to the gold price uh and and we you know the equities haven’t respond to the way they should yet but of course they will once some of these financials start to throw through flow through to the broader markets uh Optics and then uh you know after that obviously jumping on board with Paul then RNC minerals a a single asset producer with no Mill uh burdened by royalties a nickel asset in Canada and we’ scaled that into a multi- mill multi mine locked royalty story uh and expanded its well over a billion dollar market cap company that’s going to be producing about 200,000 o a year and then of course as all the vi is here no just a couple weeks ago uh we announced a trans you know transformational merger with West gold resources in Australia to create the third largest gold producer and I will say this a couple times on this call especially in gold price environment that we live in the largest 100% unhedged Australian gold producer in existence uh and that’s going to be a fantastic company starting at the gate a 2.5 bli billion dollar producing over 450,000 ounces a year and will occupy a very much vacant space on the ASX it’ll be dual listed uh but you know no matter which way you slice it on a valuation basis we expect that thing to rate meaningfully both from scale from index demand from the free cash flow that this thing is going to be checking off at you know 2,300 $2,400 us gold extremely excited about it uh and of course you know as you mentioned Sean you know creating new businesses is what we like to do we’ve also created a spinco out of this business uh which will be you know our next sort of project here and looking at what we might might want to be tucking into that uh little spinco that’s going to be well cached up with some great lithium interest we also earlier this year launched a uh a brand new lithium vehicle in Australia which is a bit anomalous when it comes to the global lithium Market uh the West rock hard West in Australia Hard Rock Market is certainly a little bit more powerful than the rest that was the hottest lithium IPO on the ASX in quite some times that that’s going quite well it’s course called Cali Metals but lots of projects going on uh but when you put good people good teams together you want to keep them together repeat that success and something that we aim to do as well right brilliant okay so great introduction from from from uh T guys um I I guess you built big companies okay building big companies is one thing and building uh wealth uh for investors I guess doesn’t necessarily always correlate so I’m looking at this Market high high gold price environment um you think producers should be taking advantage advantage of it some of them are but as Sean points out maybe the equities haven’t quite reacted so I’m looking to you guys to talk to us investors today about some of the variables that you guys look at to engineer that success because sitting back and hoping the market does a heavy lifting for you probably isn’t isn’t good science so in terms of financing options for you guys what’s worked what hasn’t m&a recruitment drisking generally and what signals do you look for so Sean I can start with you not all money built and designed the same way so when you’re developing a company like like you have done many many times how do you look at the financing oper options available to you in a high price gold environment yeah thanks for the question Matt I guess I would start off with the fact that uh nobody ever won the Kentucky Derby with a donkey um so it starts with the quality of your project uh if you don’t have a good asset the cost of capital is not going to be there for you um so I think mostly in what the generation uh of of investors have to earn on their side for their shareholders you know what are the returns going to be you know if you look at private Equity it’s it’s mid teens so you know sort of 14 to 18% is kind of their hurdle rate um if you look at the bank rates right now it’s they’re extremely sensitive when it comes to downside risk um you know so you’ve got to take into account what you’re going to give up and it comes down to security and Covenants when it come anything to do with converts or or debt um the royalty business business is one I know well I built the fourth largest royalty company in the world uh um the royalty business is you know provides a lower cost of capital in a lot of ways because Roy companies tend to trade their premium and their cost of capital pass through you know they trade anywhere from a low of 1.1 to you know up to two and a half times nav so their real cost of capital is quite a bit lower than the rest of the market uh money from corporates is usually at the asset level um that it comes in so they want to joint venture or want to earn into the project or they want to just buy the project so those are you know sort of the main silos that we have to work with uh and you know I try to be a little bit you know sort of omnivore in terms of trying to come up with a project package or I can get as much optionality on putting that debt out or taking it back and keeping the asset level dilution as minimal as possible um and then you know in terms of you know Equity the advantage of equity is it it doesn’t hang over the project with the debt um so if you can be opportunistic in an uptick Market uh and get the right ratio sort of I would say you know the proper ratio to strive for is maybe a 50/50 but what’s going on out there right now is probably more like a 2080 20 20 Equity 80% convert or debt and they wealthy or off take U Know the other leg of the stool is the offtake agreements um if you have a a a very high quality concentrate right now um with what’s happened in Panama uh and what’s happening around the world and with Saudi Arabia entering in in a big way uh to the concentrate and smelting business the competition to get off take agreements is really stepped up uh stuff that you might have sold for 10 bucks you know five years ago is probably worth a hundred bucks now in terms of people getting off takes and you know the at the end of the day mining is an energy equation so you’ve got energy-rich countries like Saudi Arabia are taking advantage that they could produce electricity with solar and and gas at like 1 cent a kilowatt Canada should take advantage of that we have very lowcost hydroelectric power very clean power um and that’s one when one of the reasons that we get low cost of capital uh for example carable gold in our BC project is where you’re getting 6.6 cents Canadian a kilowatt hour and it’s all clean power from from BC Hydro we don’t have any diesel generated power in that project uh so those are things that can lower your cost of capital ESG is a big part of the scoring now uh so being on top of your ESG and being able to uh to make sure that your carbon footprint is relatively low will affect the cost of capital on an overall basis and also affects the audience that you have for Equity um a lot of the big Pension funds right now are pretty ESG sensitive uh and if you’re not scoring in the sort of the the top core trial um on the ESG front your cost of capital is quite different uh so those are kind of the ways that I think about it and you know I think the the 5050 kind of approach um is where I would come down in terms of trying to achieve it uh we built canadi Mal Arctic we had a town to move I had to move 205 hous and the six institutional buildings uh we were not able to achieve much traditional debt there so that was a you know significantly higher ratio we were almost 80% equity on that one okay and if I just ask you one more thing Sean the the end of the the question I asked which is it’s when you when do you sort you know suck suck air in your teeth when you sort of look at the way that some companies do this where does it go wrong you know I I come from a sort of you know structural Finance background in banking and some of the companies we saw taking things like convertibles you know such so far away from any kind of Revenue structure only because it was the like the last option available to them that makes me run a mile I mean when you when you look out there in the market I mean do you see you know slightly desperate times right finance and money has been hard to come by for the last three years what are the things that you look at and go well that’s that’s a red like for me yeah I think it’s the it’s really what the use of proceeds come down to if you have a major Milestone that you’re achieving with that convertible and you have a way out of it um it can be a bridge uh we certainly used it you know in the case of like Victoria gold and some of the other things um we knew we were like you know 19 months from from gold pour and we had a layoff process to buy a that convert it also depends very much on the covenants of the convert and your buyback ability um so you know I think that there there you know there’s a there’s a 10% of the converts are are manageable and then there’s the 90% that talk that you talk about that are they’re quite difficult to get around on the balance sheet um you know the equity markets haven’t been performing that well um you know we’ve got a lot of entrance into the the finance space with the royalty and streaming companies providing you know a lower cost of of permanent Capital um that you know doesn’t have to be paid back uh so a lot of that has gone on and I’ve certainly been you know part of that story and then you know you look at the private Equity groups um you know they’ve they’ve been pretty dominant in Project financing for the last five to 10 years especially on bigger development stories as the sort of Bridge to that before the banks are are willing to actually take on the traditional debt uh and then you know these Equity markets you know they’re they’re always operate on a window basis you get small Windows where the equity Market is is open and we use we always use the analogy of the cookie jar um you know for those of us in the business we’re pretty good at hearing the cookie jar open uh and even if you think you did you you go and find out if the C if there any cookies in a cookie jar and you know as I like to say the the successful entrepreneur will not take a cookie from the cookie jar he may take a take a cookie out hand it to the guy that’s holding and while the guy that’s holding is confused grabs the cookie dry and runs so yeah uh I mean to to to layer a couple of points on onto what Sean just said there I like the quicking chart analogy as I do like the donkey analogy I’ll Circle back on that one but the the cookie jar analogy there I mean one of the perfect examples of that and we’ll talk about the current financing environment a second near map but when we finan the acquisition of the Lakewood Mill obviously the use of proceeds for that um you know a couple years ago was exactly what every you know every investor was worried about we were seeing you know capex blowing out through the roof with every project uh you know huge issues with cost overruns and Dr risking was the name of the game a couple years ago and so we managed to hit a window and trust me we did not Sy you we didn’t time the market uh the market came to us where that quickie jar did open up for a few days we did a you know aining a $50 million bot deal that got upsized to over 69 million with the green shoes so we hit that hit that window properly and we’ve only done two financings in the entire history of cor we did1 18 million right when we came in to shore up the balance sheet the company had $600,000 in cash couldn’t make payroll $8 million in working capital right when you walk through the door it was certainly is a different story today on obviously and then the and the second financing that we did do uh was the uh the acquisition of Lakewood Mill but to to bring it forward through to today you know when we talk about the environment some of the financings that you’re seeing going off we’re not seeing that much new issue and for your investor or your viewers new issue is issuance of view stock you know in large amounts coming out we’re seeing some happen but not as much as you’d expect given the gold price environment and and to Sean’s Point that’s because a lot of the equities haven’t responded to the levels that they should yet and there’s this kind of once bit and twice shy mentality here in the resource sector amongst generalists that left the sector and haven’t come back but one of the things I would say for some of these projects you know fortunately neither of us are involved with those and obviously we’re in a different bracket being a producer that’s generating cash but uh to use the donkey analogy there’s still a lot of projects out there that are technically struggling or they’re they’re struggling with labor cost inputs they the the projects have not been repaired by the metal price and the metal price will help as margins start to expand or let’s just say as some of them even just start to turn into making money rather than just continuously losing money and some of these small financings you see go off with you with a full you know fiveyear warrant uh on it those are financings of Last Resort they’re being hit by um you know let’s just say investors that are short-term in nature uh typically hedge funds are are the groups that are behind that none of the groups that Sean talked about before the ones that are doing those kind of financings so you’re seeing them go off yes they’re pinch your nose and and hope for the best but these companies really don’t have any alternatives either this uh these kind of financing goes off or the projects basically go into receivership so that’s one end of the spectrum the other end of the spectrum uh we are starting to see uh some you know bigger groups uh circle around some of these projects particularly in the base metal space um the new pools of capital Sean touched on Saudi I personally am extremely encouraged about what’s happening over there uh in terms of their project level interest look if you can if you can give them a good concentrate as as Sean mentioned uh that allows them to justify onshore uh concentration capacity that’ll build jobs in Saudi Arabia they’re starting to become very interested in in foreign projects and becoming more uh comfortable with project level risk which of course isn’t in their their expertise wheelhouse so we’re seeing those pools of capital open up as the traditional pools of capital here in North America have have dried up there’s there’s an incredible chart that that circulated a couple of months ago um on Twitter but a whole bunch of different mediums that was basically talking about the shrink in active uh capital and or active assets under management here in the mining sector right we we’ve gone from well north of 40 down to 11 uh in terms of AC in terms of billions of dollars of active managed capital in the North American and European sector so it is a a vastly shrp pool guys are recycling and by that I mean fund managers are recycling capital in order for me to finance Sean’s project I need to sell mat’s project that’s the way that guys are having to think while facing Redemption so I think as we get start to get a few quarters under our belt here and with these metal prices we can talk about where we think gold prices and subal prices are going because I think it’s an extremely interesting conversation to have as you start to not some quarters of true free cash generation look there some of these producers ourselves included are generating fantastic margins at at these prices and I think as that starts to you know that that cast is harvested put on the balance sheet and of course some of it returned to shareholders which is crucially important you will start to see the bigger guys start to pay attention uh and those more friendly lower cost of capital all cognizant the fact the interest rate environment we currently live in lower cost uh of Capital Pools will come back to the sector and we you know we should be Off to the Races but in the meantime it’s kind of um you know the cookie jar analogy is great you know being an entrepreneur finding the best source of capital for your project that’s going to allow you to move it forward because if you don’t have Capital you can’t move a lot of these projects forward and investors aren’t going to see those returns and they’ll move on elsewhere yeah I mean was there from 2019 when you know you were going through those diff difficult days um a Cora but when you went to raise the 18 million you were getting all sorts of advice about diluting uh you know retail shareholders predominantly um and it was it was a case of I think you back then saying look it’s it’s a case of um you’ve got to take the money when it’s there because it may not always be there and and I think that proved that to be right in your case um but just sticking with the donkey thing um so youve gotta you’ve gotta you got to have a you got to have a kind of thorough bread horse uh with which to allocate your capital or else it’s uh probably not going to work out no matter how much money you’ve got so m& that’s a kind of another another kind of Cornerstone in this environment we’ve seen U BHP and Ango uh there which obviously you guys recently um Kora and West gold as well we’re seeing a lot of m&a of a different type you know in the past couple of months compared to last year where was a merger of equal equally desperate that is and perhaps that was a bit obvious for people to see so do you what’s what’s your view Sean on m&a as as a tool for uh growth meaningful growth uh for you uh in an environment like this well I think size matters when it comes to uh to the market access um you know the kind of the magic number number out there is a billion dollars US if you want to you know have enough liquidity and enough volume where a pension fund can be below 5% uh and and achieve the liquidity they need to do so if you’re not a billion- dollar market cap you got to think about how you get there um you know it’s one of the challenges I took out with obv is to you know set that g destination GPS I mean we’ve we’ve we’ve done it uh five times uh take companies from almost a you know negligible market cap over the billion dollar line um most recently we did windfall Lake we that was a rollup so that was built off the back of m&a we Consolidated seven public companies um windfall was the winner uh we drilled 2.2 million meters into that and subsequent we did a deal with goldfields and now the company’s $ 1.2 billion market cap with 450 million in cash and had another $300 million due on the permit from goldfields um so you know that’s that’s an interesting deal to look at in terms of structure because there was an ARB there on flow through um John used mostly flow through to dry that off that he raised at about a 80% premium to market for those of you not familiar with flow through it’s a tax tax advantage in Canada which is essentially an R&D credit that we use in exploration in Canada and then he was able to get hard dollars back uh from the Australians for those so-called flow through dollars so his real cost of capital was about half of of that so it was about 60 cents on the dollar uh by the time he did that deal um so we play in this this game in this market but it’s a sophisticated Finance platform to do and it’s only specific to Canada where you have access to flow through and there is some of that stuff in Australia but a much smaller scale um so there are those sort of hybrid structures that we’re familiar with and we ended up being you know 50% of the drill count in Canada for five years in a row um so we’ve we’ve done about 17 m&as from the asisco platform um and rollup plays to get their critical mass in a property is is often how we get to where we are caribou is a classic example we have 2,000 square Kil land package there um which is one of the biggest it’s the same size as the entire Bor Camp um it’s 83 kilometers long which is the same strike length as as uh as as some of the biggest M mining camps in the world so I always believe that you have to get in you have to achieve a dominant land package um you have to make sure that you control you know your access to surface rights and all those things and then you know now you’ve sort of set the stage to be that billion dollar club uh and you have to have a property of scale that eventually is going to interest a major or has the stage to get you into the The 500 Club as I called the 500,000 oun a year uh Club because you know if you look at the Mark cap mineral I mean Al is a good example of The 500 Club um I think they’re predicting 490,000 ounces this year they got an $8.2 billion market cap um so that you know you cross over into the into the Zone where you’re where you’re investable versus not investable uh with the big tier like Black Rock and vanck and all the rest and they can’t own the smaller names due to the liquidity constraints and concentration issues so those are the Dynamics that drive it and back to the Kentucky Derby analysis um you need a good jockey uh on that a fast horse is not enough uh and no good jockey is ever going to show up with a with a bad horse the reason that they’re good jockey is because they’re pretty good at horse selection you know so that combination of the Jockey and the horse uh and being able to manage all the things that are going to happen during the race um is also the key thing if you’re looking to invest right now I think you have to look at track record um and if you don’t if it’s a you know first-time CEO first-time Management Group um you know you better do the the homework and find out who they are and and and what their what their achievements in life are um you know one of the things we always get accused of in this space is that there’s too much Capital destruction well when we look around at it you know money tends to end up in a lot of a lot of companies that perhaps that they shouldn’t be in so I don’t want to talk down my my brothers in the business uh because you know I I came from Humble backgrounds and this business was very good to me and I didn’t have a track record when I started so you know so that’s that’s the other challenge that you have here is making sure that the jockey is right uh and you know in terms of being able to tough it out that jocky has to be capable of of raising capital and then holding hands with the shareholders in the Rainy Days uh and getting you through this and in terms of m&a if you’re going to be serious in this business that’s how you’re going to build critical mass you know there’s the 90% of the discoveries right now 99% of the discoveries right now are on Brownfield and if you’re going to go into a Brownfield Camp there’s other people there already so you better figure out your m&a strategy and sharpen your toolbox but you know all the companies like you know you look what what corar did what we’ve done and a lot of the other successful companies it’s all built off of m&a the beginning I got Canadian malartic for 8,800 bucks out of out of bankruptcy and baric had sold it in 2003 for a dollar um but I ended up doing 22 more deals to consolidate that land package which is now hosting 33 million ounces right and alliv for you obviously you’ve gone through that merger recently with westold you chose to do that and I think some were questioning the need to do that you had you know you kind of um build kind of critical mass of your own you’re moving into you know a seminal a year in 2025 in terms of um some of the assets that you’re going to I guess liberate answers from um why did it make sense for you to do that now in a high price gold environment yeah yeah um it’s a good question and and something that you know we’re extremely excited about look there there there are certainly weight classes in this industry that matter and and to Sean’s point there you talk about The 500 Club that’s exactly where we’re heading with this proor entity um not only that and I said it once before but I’ll say it again we will be the third largest and and the only 100% unhedged Australian gold producer the Australian uh entities you know Australian mining companies enjoy a multiple premium compared to where we’re trading in Canada so you’re capturing a multiple premium you’re C uh in terms of the ASX you’re capturing a multiple premium by the way that’s a um a valuation based on your nav so we traded at price to nav multiples for those of you listening uh we would expect to be well north of one once this ND gets Consolidated we’re trading around 6 to 7 right now um so you’ll be into a a larger entity you’ll be on the ASX you have incredible index demand uh so we expect about $30 million 30 million shares of demand to be into the asx200 which is their second largest index there about 20 million of shares of demand to be uh graduate onto the GDX uh which is all the passive fund flows a lot of the the money managers that that Sean was talking about you know the black rocks of the world the vanx of the world these guys need scale in order to be able to invest a lot of the Pension funds do so we get bigger and more investable so you have passive uh basically Tailwinds let’s call it so all the right Financial metrics are working in your favor but let’s talk about the assets right because ultimately in this business when you’re doing of this scale what you need to unlock are true synergies and we’re not talking about just corporate synergies where you know you’re eliminating one management team and and that’s you know a way you go but true synergies from at the operational level how do you make these operations Better Together rather than on their own and then the second thing I’ll talk about is how do you accelerate projects and with West gold we get all of this in one package so when it comes to synergies look there is an incredible amount and if for those of you that understand the West history um you know it was it was a that’s a larger entity than it is today producing over 300,000 aners a year Wayne came in a couple of years ago that’s the CEO West has done a phenomenal job in rationalizing the business the assets that actually make money focusing on free cash FL generation rather than mining for for oun sake as part of that they rolled up their uh contracting business which had you well over a hundred pieces of equipment that those pieces of equipment are being used at their assets but a lot of them are sitting idle on their sites right now this is excellent equipment that can be used across the portfolio enter beta hunt and Higginsville and the assets that we have look everybody knows how well the ad Hunt’s been going and a lot of investors are very excited for 2025 as are we but we also have other assets whether it’s Mount Henry to the South whether it’s Spargo underground and I’ll talk about that m&a just was a little tuck which turned into to be a lot more than a tuck in several years ago um those are projects that we now have the capability of accelerating things that would take 12 18 24 months to get underway additional Capital that we need to wait for until we finished expanding beta hunt we get to accelerate those projects now acceleration is always a good thing but accelerating a project into $2,400 us a gold environment is a very good thing in terms of bringing those cash flows forward we could not do that on our own so that’s a true Synergy with our project that is is unavailable with any other merger that we would do so that’s that’s that’s a true syg that we have we also have obviously the ability to share consumables across five Mills that are in the Western Australian region and consolidate the entire team in Western Australia then this the second aspect that you know it’s definitely worthwhile talking about is is um sorry the the second sort of equipment Synergy that’s worthwhile talking about is drilling they have a lot of drills that they can bring down to accelerate um Higginsville so Sean mentioned one of the biggest things that matters for building scale of this kind of relevance is having a dominant land position Cora owns the single largest land package in Western Australia and the Cal Gorly belt it’s almost 2,000 square kilometers we worked via m&a in the early days uh in order to consolidate that land package and bring it under one ownership we now have the capability with gold resources the combined cash of the company to accelerate accelerate expiration across that entire property that is truly a game Cher for the entire entity so that is that is really really important to consider um so at the operational level we’re doing a lot of great things at the financial level we expect the stock to rate none of this is available if cor kind of goes it alone and we also don’t have access to those Australian Capital markets if we just remain TSX listed so a lot of reasons why now make sense and one of the things I will say here this is you know very important to reiterate this is not a sale of the business this is a merger and we now own 49.9% as cor shareholders of the third largest 100% on hedge Australian gold producer that is going to be a fun ride to be part of and then also going to become shareholders of this spin code the cash component of this deal which is required for that that that you see that split on ownership is a very small component of this deal um the majority of it’s going to be in paper and we’re going to be very very happy shareholders once this deal closes right okay so you’re talking you’re talking about reras because you’re going to get obviously access to indices rate uh in terms of efficiencies in terms of access access to additional equipment Etc and you be able to get after some projects which you haven’t been able to uh or would be able to on your on your own steam so hopefully that comes that’s what you got to kind of prove because I think the we make money when the share price increases not when you get bigger so that’s what we look forward to you for for you um just one one thing one thing there Matt which is which is worth talking about so you know to talk about the the horse and jockey kind of analogy there as well you take a step back and ter where cor started you know up up to the the numbers that we just printed when we did this deal you know that’s a 74% return uh Paul and the team prior at kondex you know printed a plus 800% return for shareholders so to to Sean’s point about teams have done this multiple times and the asisco group’s done it innumerable times um you know is horse and jockey and when we first entered uh you know at Cora and you’ll remember this mat because you were there in the early days people took you know a big groan a big sigh oh beta hunt that’s a legacy asset with a lot of issues oh Higginsville that’s you know that’s something that the prior company couldn’t make work what are you guys doing as management teams and as jockeys of these horses that we select you know we think in terms of three five seven year long strategies we look at the asset base we realize there’s a whole bunch of hair on it in the current environment that we live in today there’s lots of projects out there but none of them are without hair on it but once you have the technical capabilities and let’s just call it the the capital markets capabilities and the financial capabilities to unlock value from these things it doesn’t happen overnight but it does take years and that’s happened with Fire Creek clond index and the assets that were ruled in there same thing at core resources so pay attention to that see where Shawn and his team go next what they do next they see where we go next what we do next and back those teams and trust that the assets that they’re looking at that upon initial review you might go that’s a bit of a head of scratcher why are they looking at that thing we have long-term strategies and we see the capability of unlocking value that perhaps other jockeys and teams could not right okay but I I hear what you’re saying um and I I agree with a lot of what you’re saying um Sean I’ll put it over to you the same statement that you know we investors make money when the share price goes up um it’s been a tough three years for precious medals across the board um and the equities have not responded people have not been you know it’s risk offer environment what tools have you got available um to you and your various projects and companies to be able to kind of look forward to the next three years and say well actually this is the environment where we start to get that share price moving not just case of scale but scale and profit and dividends and all of those good things investors look F yeah I mean this is a you know it’s a tough business and uh you know requires that you you have some optimistic Tendencies and uh you know my description of of the way that we work in this world is you know you have The Optimist the pessimist with The Optimist being half full glass guy the pessimist half empty um to be a good uh a good Steward of of mining assets uh you know you have to look at the same scenario and realize that uh you know we’re only at 50% capacity and we have 100% upside um which is kind of my approach to this is that you have to have a rainy day strategy um you know my strategy in in bad markets is to focus on m&a um and try and get discounted assets uh when the sun is shining you know we we try to advance these assets and take less dilution uh in the overall basis than what we’re delivering in terms of value increase and to achieve you know the 800% returns and that is the key is when you take dilution uh and when you stand down or when do you go out and acquire an asset that’s you know somewhat troubled almost all the successes that we’ve seen recently have come out of the Brownfield stuff I mean you know if you look at something like fosterville how many people owned that before Eric got it you know I gave him I bought him out of canadi a caribou for $85 million he took my 85 million bucks and went did fosterville uh which I think was nine bankruptcies in a row and then he ends up with the highest grade mine in the world out of it and creates Kirk and Lake gold um you know so these these kind of plays um are built in the in bad weather um and that’s usually when you want to be in these things if you get you know if you get a stock that’s down 70 80% but you know the guys on the on the team have the access to Capital to carry on um the ultimate form of dilution is always bankruptcy um but anything short of bankrupt rcy is to live and fight another day and any other the way that we approach this thing is like we always have a top 10 list of things we want to own we’ve done the work and we’re laying in weight uh and if we get the opportunity to take it we will Utah is a good good example of that for us uh we did the work in 2009 and 10 with Dick siloto and we identified everything we thought that was going to be important uh in the next generation of copper mines I.E anything that was at depth that was going to be block cave or bulk mining with you know copper PF Frey systems are rather large uh and easy to find if they out crop to surface and just about every o crop on the planet has been visited by some geologist uh at this point in time so you know the the easy pickings are are are basically done so the generation of wealth creation Now comes from from blind targets U or Brownfield mining camps where you have a huge amount of data uh and the data has not been processed properly um so that’s that’s where you have to find that time and the people that sit on their hands and fret during a downtick market as opposed to look for the next asset base uh they don’t stick around um you know the guys that have been in the business a long time like you know Oliver and uh and Paul and our group and everything you know we’ve been at this our whole Liv I mean I started as an underground minor at 18 I was a diamond driller for a long year at 21 um you know so we we’re we’re a dedicated to this and if you don’t have that level of intensity and concentration um the down down markets like this are not going to help you when I look at where where the where the leverage points are in this market right now you know you got baric sitting there at 2350 right now with a $600 increase in gold you know that’s a cap on big money coming down Market um so you know Barrett can move out of the way we’ve seen ago move um the big companies start reporting good results um the equity markets will move down and go back you know take their profits and redeploy uh down market and that’s that’s the next step to come here uh as we get further into it and I think that’s the opportunity for shareholders right now is it the equity run has not started so you know it’s not too late you need to think about a lot of people are looking at the gold price say I’m too late well then now it’s it’s just starting really like you know you still got lots of opportunity to buy stuff that has our ability to double or triple okay see say what what I’m hearing there is because I’m trying to get to the point where investors still so comfortable you know you’re saying right okay the name the games to stay in the game in the downt um be contrarian investor pick up good assets from perhaps others cons um and still be sort of managing those kind of through that that downt in the hope that what’s someone else will either you will be able to find the right cost of capital to develop it yourselves or someone’s going to come along and and acquire that is that the kind of the way that you view the market I think the opportunity for shareholders right now is you can buy quality like tier one Quality Companies right now for a discount of you know 50 to 70% um you’re not going to get that opportunity once the market turns and as we all know that turn is often not very long can be a matter of weeks you know and there’s a couple of canaries in the M shaft when you look around uh you know you see the GDX starting to to gain momentum you you see deal Finance financing deals start to deploy where smart money is deploying through you know private Investments and and public Investments and and financings are getting done um m&a deals like what uh what Paul and Oliver have done start to get concentrated you know he saw a bunch of them recently ago with or sorry Alamos with h magino at Argonaut we saw Equinox Ross B one of the smartest guys in the business just pulled in the 40% of greenstone they didn’t have um you know so there’s there you’re starting to see the smart guys do deals and the senior you know the gray hair the the the silver backs of the industry are moving um so if you keep an eye on those guys uh then you know you’re going to you’re going to see a trend and a pattern and I think you know with guys like yourself Matt um you guys are doing a good job of highlighting that to to shareholders I don’t think shareholders have to do all their own work um but you know it’s it’s it’s it’s up to them to make sure that they’re following the right people uh and that you know they’re paying attention to the real markers well it kind of answers my next question which is really about what what what Market signals do you look for you talk about you C at your opening earlier and obviously then you kind of signaled when the silver BS kind of get moving that it’s it’s a sign because they they tend to move sooner than even the Brokers that’s a signal I look for when the Brokers start asking me for copper deals or lithium deals from a couple of years ago you you know something’s coming down the line but that’s then following some of the signals which you look for as well is it is that what you’re saying yeah pretty much I mean there’s that old adage that you know wall Street’s the only place where a guy drives get gets his driver to drive him into town in Rolls-Royce and sits down all day and takes advice from guys that came in on the train um you know so that’s uh you know that’s that’s a little bit what goes on here um you know you’ve got a bunch of people that are kind of part of the biosphere um but you actually have to look at the doers um as opposed you know to the uh to the audience um and then you know in terms of markers I think when we see you know the the top 10 companies moving uh and sort of coming down right now I would say like you know AG Niko has got the Cinderella status um and they’ve got the golden hell and you know that’s basically on the quality of of jurisdiction uh as well as the fact that they’re good Miners and you know we’ve seen Barrack struggle they got a lot of uh you know exotic destinations in the portfolio and um they really haven’t been able to get the share price 2019 that stock was trading $41 now it’s 2350 I think or whatever it was today um we need that one to move we need a couple of these other things that are kind of like I would say at the bottom of tier one now I mean it’s some and Niko’s got a market cap $5 billion larger than baric now I never thought I’d see that U but that’s the reality but you know you get the the argument it says well I can go and buy barck at0 65.7 times na um why do I need to take the risk and you know it’s a valid argument but as these things you know start turn a couple quarters of profit to Olivers Point um you know that that unleashes the Beast here so how to time it it’s uh it’s one of those things if you if you develop a strong belief you can put your bet down and you’ll be right um if you try to get too smart you may miss it and you know that’s happened a lot uh We’ve SE certainly seen like in the lithium and and uh and and critical minerals stage you know um you know we had a lot the the Patriot Discovery Corvette and in Quebec used to be one of our projects uh we still kept the royalty on it but we did make the mistake of selling it uh we have a bunch of other things through Brunswick which I think we have 520 lithium targets within odv we have a electri electric elements uh that owns a lot of the greenstone belt that we had we acquired through the acquisition of Virginia back in the day so I think we have 1800 square kilometers of greenstone belts and about 26 pegmatites that sort of thing um you know so those are call on lithium and you know the lithium space has been fickle uh lithium is down 82% from its peak um the nickel space is is is also down which should have been the one that should have been the rocket shot if the you know with the critical mineral PL and needing 388 new mines around the world to support the 2050 program um so these things haven’t really happened yet like the there’s been the talk and everybody you know I think everybody right now that wanted an eveve has got one and now it’s now you know people are buying an Eevee is just just a sort of a very simple binary decision this is cheaper than the other one like it’s not it’s not a pack anymore the guys that have the passion for these EVS they got their vehicle but you know you got Ford lost $132,000 a unit for every every EV they sold this quarter you got rivan down 5.4 billion so there’s going to be a cleanup trade in the EV space and we get to the next leg of lithium and critical minerals and then U you know I think the copper and gold are the clear winners right now it doesn’t matter which scenario you look at Copper as a winter um with the central banks buying gold because of the threat of sanction out of the US system right now is pretty widespread I mean the US come out and said they’re looking at sanctioning six8 more Chinese banks for their participation with Russia uh these central banks you know they’re they’re they’re hedging away from the US dollar system um and you can’t you know if you take physical delivery of gold um it’s hard for somebody to sanction you on the value of that and you know Russian oil and gas is now trading mostly and gold uh and they’re not taking you the the Russia can’t take us dollars because they all get seized so that you know this US dollar trade is bifurcated at least once and may do so again um that’s going to drive gold prices and it’s going to drive jurisdictional security as we see you know finally North America has woken up and decided that they don’t have enough minerals uh to support their energy transition um so the critical minerals business is sort of a variation on traditional on traditional metrics and themes um you know so it’s it’s a lot to try and digest uh I think but the simple rule for me is copper and gold are going to be the winners and everything else is a little more exotic right okay and sorry I did smile earlier because I think you mentioned Unleash the Beast I think Paul H’s um giving t-shirts away to his investors his quote from 2020 um so contact call directly he’ll be fine um now you will you’re probably going to uh reiterate I suspect a lot of those uh sentiments on on the uh jurisdictional risk obviously did you say you’re unhedged in Western Australia I can’t I can’t remember 100% yeah 100% unhedged you said three times again just so we’re clear yeah yeah exactly we can type it out on the screen too t it one missed it right so jur you see that that was the name of the game in terms of m&a it made a lot of sense to have someone obviously the proximity but also the jurisdiction for for you what are the other some what are some of the other geopolitical considerations when you were looking around at what you should do because obviously txx company with Australia and ask that you could have gone either way yeah yeah for sure I think I think basically you want to be in we like the way that our group works there’s basically three countries that will be involved in it’s Canada us and Australia that’s that’s where we want to play that’s where for the most part uh you can understand legislation you can understand regulatory impact you know what what ministers and what groups say they’re going to do broadly speaking ends up happening I mean Western Australia is an unbelievable place to to permit a new mine you get a Surface to service permit in 30 to 45 days it’s it’s like nothing I’ve ever seen so it’s a great place to mine um and you know we’re seeing some shift in the landscape in certain provinces and states in the US but broadly speaking uh you know you can be more certain about what’s happening there which is great when you start to step out in some of these other jurisdictions and look there’s a lot of phenomenal projects all over the world I mean I always I perpetually tip my hand to C Johnson that be2 golden and the ability for him to navigate in a lot these jurisdiction and sometimes it works sometimes it doesn’t but I think there’s few people that can do what that group does uh in in a lot of the jurisdictions that they go into so um it’s all about where you want to play and where your skill set is our skill set is is being in tier one um and and basically turning around assets that have been troubled whether it’s for a mining reason whether it’s for being under capitalized or whether it’s for something a little bit more complex especially with the royalty structure that we saw in our Assets in Australia so that’s where we see opportunities that’s what we get excited about and that’s where our skill set is and that’s what we’ve demonstrated in terms of success and and one thing I do want to Circle back on you know when it comes to choosing your medals I completely agree with Shaw when it comes to copper and gold in that ranking I mean Cofer is just a simple math problem it’s it’s the most basic math problem out there if we’re going to achieve any of the energy reticulation goals that we have and this doesn’t have to be EV dependent whatsoever you talk about the advid of AI and just the gargantuan amount of power that’s needed for these power centers that or for these these operating centers you know you can’t build a nuclear reactor next to every single one of these things right but no matter what we need a lot more of this metal uh and in order to get more metal out of this out of the ground it takes a very long time to get these projects online you know 10 to 20 years from from initial Discovery and we haven’t had the discoveries that we need so copper is the clear winner I think that’s just a you park your money in the best assets um that you can find the best teams you you can find be patient and you will be rewarded when it comes to gold at least in my career I have never seen an environment out of this and I think the pro like this and I think one of the most interesting things that I’ve seen so far this year in the first four guess almost five months that we’ve seen this year is you know we used to be dominated by the lip service the fed and look the idea that the fed’s going to be cutting some rates uh know that has dropped from expectations of over seven Cuts earlier this year which is hard to believe now to 1.4 times now that moves all all over the place left right and center right and ultimately they will have to cut the question is just how much and when but that’s become Irrelevant in the context of the geopolitical environment and that that Sean’s highlight Chinese Central Bank buying Chinese retail buying chin you know domestically CH people in China are living in a world where you know their housing market is collapsing they they’re not allowed to access we won’t go down this this conversational thread they’re not allowed to access crypto um and and they have no trust in their own banking system right so they’re buying retail uh or retail purchases of gold are absolutely unprecedented and at the Shanghai exchange where which is the only exchange where you actually can collect physical delivery you’re starting to see a premium on physical delivery that is is truly enormous so um that kind of driver that structural driver is extremely positive for the gold price environment you have uh cons you know considerable unrest expanding across the world and and you have uh you know the backdrop of whatever’s going to happen with the Fed so gold pricewise I think it’s going to be wonderful let’s get a few quarters notched here with these kind of margins and the generalist Capital will be be unable to uh to ignore this space and one of the things that I’ve said on your on your you know your service here several times before the investable universe you know Sean’s talking about a lot of the big guys here um relative to our sector the investable universe in mining let alone gold stocks is a pimple on the back of of the US capital system or that’s just call it Global Capital Pools if and when or I’d say when not if um that Capital decides to allocate you know 50 basis points of portfolios into some of these leveraged gold plays rather than just physical gold it is a very very violent uptake and it’s a fast it’s a fast you know fast Capital flows and it’s fun to be a part of so pick your jockey pick your horse Park your Capital have some patience understand that at these margins producers are able to survive uh and you know enjoy those returns when they come do not try to be too cute don’t try to wait till you know two weeks before you think Jerome Powell’s going to say something or some piece of news is going to come out of the Middle East or China and try to get your you know your three four five 10 bagger weeks before it happens parking good assets good teams and be patient and it’s going to happen because the environment’s here we’re in it now uh it’s just a matter of time great well I think that’s fome I’ve Tak a lot of your time today but I hope there’s some clues in there for investors in terms of people assets how you go about building businesses and more importantly having a look around the the mar environment too corporate gold seems to be the the the tip of the day um gentlemen appreciate your time today and we’ll speak to you soon

Interview with Sean Roosen, Founder & CEO of Osisko Development Corp, and Oliver Turner, Executive VP of Karora Resources Inc.

Recording date: 30th April 2024
*Gold Miners: A Compelling Opportunity*
The gold mining sector presents a compelling investment opportunity currently, based on the perspectives of two highly successful mining executives – Sean Roosen of Osisko Group and Oliver Turner of Karora Resources.

The key argument for gold miners is the disconnect between the strong performance of the gold price and the lagging response of gold mining equities. With the gold price at high levels, gold miners are poised to generate significant free cash flow. However, this improvement in fundamentals has not yet been reflected in the share prices of gold mining companies.

Roosen and Turner believe this disconnect provides an attractive entry point for investors. They expect the upcoming quarters to demonstrate the cash flow growth potential of the sector as high gold prices flow through to the bottom line. As this fundamental improvement becomes more apparent, they see the potential for generalist investors to return to the sector and drive a positive re-rating of gold mining equities.

To capitalize on this opportunity, they advise investors to focus on miners with high-quality assets and proven management teams. Roosen stresses that “it starts with the quality of your project. If you don’t have a good asset, the cost of capital is not going to be there for you.” Turner similarly emphasizes the importance of acquiring assets that have true operational synergies.

Another key element is backing management teams with a track record of value creation. Roosen uses the analogy “you need a good jockey. A fast horse is not enough”, to illustrate the point that the best assets still require the right team to deliver shareholder returns. Turner points to the strong returns his team previously generated at Klondex Mines, Karora and new lithium spin-out Kali Metals as evidence of this principle.

Importantly though, both emphasize the need to take a long-term, multi-year view to allow the investment thesis to fully play out. Part of this means being willing to go against market sentiment to acquire fundamentally attractive assets during downturns when valuations are more compelling. Roosen and Turner have successfully applied this approach with Canadian Malartic, Beta Hunt, and Higginsville.

At a macro level, the outlook for gold appears constructive. Increasing central bank purchases, the prospect of a Fed pivot, and constrained global supply growth are all seen as supportive of a strong gold price going forward. When combined with the margin expansion and free cash flow growth a high gold price enables, the stage appears set for a significant re-rating of gold equities as this fundamental improvement becomes more apparent.

In summary, the combination of an attractive macro backdrop for gold, robust underlying fundamentals that have not yet been reflected in valuations, and the proven ability of companies like Osisko Group and Karora Resources to create value from these conditions makes gold miners a compelling opportunity currently for investors with a multi-year time horizon.

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