Michael Gentile - Strategic Investing in Mineral Exploration Companies with Market Outlook

Good day everyone. Thank you for joining our interview with Michael Jantille, strategic mining investor and co-founder of Bastion Asset Management. The information, this interview is informational only. It's not investment advice or a recommendation. Please talk with an investment advisor before making any decisions. Do your own due diligence and manage a well diversified portfolio. It's your money, so take responsibility for it. As well, investing in resource companies, especially early stage ones, is highly risky.

I'm Martin Gaggel with Market Radius Research. I'm breaking up the interview into three segments. We're going to look at the overall macro perspective, and then general investment strategies and portfolio management, which I'm most interested in, how to manage risk and in entry points and exits and so forth. And then we're going to talk about individual stocks and perspectives on that. And uh so with that uh I welcome Michael. Thank you for joining us. Looks like you've had a very busy time in the markets this summer.

>> Yeah, great to be here Martin. Absolutely.

>> All right. Uh firstly, can you give us a bit of a background on yourself, Bastion Asset Management, and the investing? We had a little pre- discussion on this. Uh who invests where and what and how does all that work.

>> Sure. So quick 25 years and two-minute summary. I've been investing in institutional equities markets since I was 16 years old. Got my first job in institutional equities business when I was in my early 20s. Uh worked for 18 years at an institutional money management firm in Montreal. Uh so I was running a hedge fund, market neutral hedge fund, one of the largest market neutral hedge funds in Canada with my partner Charles Hager from 2012 to 2018. Uh doing really well, loving my job. And then in 2018 I had twin daughters and I had three girls before that. So I had five girls under eight years old looking me in the eyes, was traveling like crazy, needed to take a time out back then. Telecommuting, working from home, Zoom didn't exist. And so it was very much a physical intensive business to be in the office, you know, 60, 70 hours a week. So made a hard decision to walk away from the career I'd built up for 18 years.

Uh I had covered commodities my whole life since since university, literally covering commodities, investing in commodity stocks, covered the commodities at my my previous firm. And so in 2018 I was at home with five beautiful girls had some capital to allocate and I was very very bullish on gold at the time. Gold was 1350 had risen from 1100 um was still very depressed. Sector was on its knees after a brutal kind of seven-year bare market from the last last bull market. And so I started investing in micro cap companies. I said if gold price is going to go up a lot which is my view at the time and it's been proven correct. uh I said where is the sector has the most torque or most leverage to that call which would be junior precious metal equities and so I had not done that professionally I was investing at formula growth my old institutional firm stocks between 200 million and sort of 10 billion market cap so mainly producing assets or very close to producing assets but because it's my own capital I had a bit of time on my hands I'm going to get maximum torque by buying a junior explore co so I invested in a couple of companies 2018 2019 time frame was going to be passive in that approach um because I thought I was going to return back to institutional business at some point in time.

And as I invested in these companies, Martin, I realized one, they were incredibly undervalued and the opportunity set was just much larger than I thought because it had been a six sevenyear bare market. So I was able to buy companies that had made a discovery in the last cycle, had no money for five or six years, were sitting with a proven discovery that looked like it had real legs and real potential and had a 5,10 million, $15 million market cap. So I did one, I did two, got really fascinated by the opportunity. But what I also saw Martin was these companies in general were quite poorly managed and you know there was the real issue that I saw was most of these companies were being managed by people that were either geologists or you know scientifically minded individuals who didn't really know how to raise money how to get the right kind of shareholders when to raise money who to raise money from how to do acquisitions how to market the company how to communicate your message to investors. they would just drill, raise money, drill, raise money, and the outcome for shareholders in most cases was was pretty poor.

So, I realized by going from passive to kind of rolling up my sleeves and adding some sweat equity to thea the equation that I could add even more value. So I became kind of a cornerstone investor kind of five to 20% shareholding some of these companies and then lent my 18 years of experience of hearing 10,000 investment pitches over my life kind of turning the tables and and helping these companies communicate their stories better and knowing which pools of capital were really quality cornerstone shareholders and which ones were more renting the stocks for the warrants or for a tax break in the case of flow through investing. So I felt that when as soon as I started doing that there was not only a value ad from my investment which is well timed at a good point in the cycle but also the the value ad resulted in really strong value creation.

So I instead of going two fast forward seven years I'm now the largest shareholder personally in about 25 junior mining companies where I'm a top one two or three shareholder. I'm on six boards and all the other ones I'm not on the boards. I'm heavily involved in the in the strategy and the stewardship of those investments because I typically take a a 5 to 20% stake when I'm involved. And I want to be a very active and very involved and very supportive shareholder. And just to finish the loop three years ago, um I told my wife four years ago that I'm like when I first quit my job, I'm going to be so miserable that I'm, you know, I'm going to be pretty miserable guy cuz I love what I do. I have to walk I have to do the right thing, get away from the business and spend time with the family, but I'm going to be pretty miserable guy. Just bear with me. I was having so much fun doing junior mining investing. I told my wife four years ago, I'm like, you know, I'm never going back to institutional business because I'm having so much fun doing these junior mining investing. And it really fit my my personality and my my skill profile. And then my two former partners who I loved working with in my old shop called me up, said, "Hey, we're we're quitting. We're starting a new firm. Would you like to get the band back together?" And it was literally an offer I couldn't say no to. It was the only two guys in the world I could have called me and said, "Do you want to get back in the business?" And I would have not have said no to. So, we started bashing Asset Management about 3 and a half years ago. And that is institutional equities like 200 million to 10 million 10 billion market cap companies all sectors uh long short we have obviously a significant weight to commodities because we're both my partner and I Charles who runs the fund is are quite bullish on commodities but it's a general generalist fund so I get a lot of calls saying can I put money in your metals and marketing metals and mining fund I don't have a metals and mining fund I have my own personal capital invested in the juniors and then I have an institutional quality firm that invests in you know the midcap companies like a K92 mining or Equinox gold that that kind of approach along with healthcare companies and tech and industrials across the across the spectrum. So I have two hats that I wear but allows me to cover from a 10 million mark cap junior all the way up to potentially newmont in terms of investment opportunities. So it gives me a really good view of the whole industry from biggest to smallest and I have a pool of capital whether it be my own capital or institutional clients capital depending on the the risk appropriateness of the investment to allocate in all those areas of the market. So it gives me a really nice perspective and allows me to be in touch with with the entire market opportunity.

>> So when we see a news release or that uh you have invested in a company, this is your personal account. This isn't the the hedge fund doing it. This is you.

>> This is me. When you see Michael Gentile making an investment in Junior XYZ, it's my own personal capital. I mean, Marv, we've talked about this before, like the riskreward is is very interesting in the junior mining space, but the volatility of returns is so high. They're illquid stocks. So, they're not really suitable for a pension plan or a high net worth uh individual who wants to, you know, make 10 15% a year and be able to sell his investment on Monday and buy it on Tuesday and vice versa, right? So, the institutional equities are the more liquid, you know, mainstream owned producers and other sectors. Whenever you see my name around a junior, it's my own personal capital. We designed it that way in purpose because I don't want to have any competition with my institutional clients, right? So the bastion asset management has a certain market cap and up and that's why I focus in on the really small end of the market cap because there's no ability or desire for bastion to buy those stocks. We're not we're not conflicting with each other. There's no conflict of interest in that in that way. And as well like I don't know if a lot of people appreciate how running personal money is actually quite different than running public other people's money. A lot of different incentives. you can take a much longer pro uh perspective on it as well. If people are pulling money out of your fund, you may be forced to sell and liquidate some things. Hopefully, you're not in a position where you're forced to sell stuff, but you you you can be a little more nimble and and take a different kind of perspective than a traditional portfolio manager.

What >> a great question, Martin, and a great point. People don't appreciate the the pressure u that portfolio managers are under to deliver, you know, monthly, quarterly, and annual returns. So, since I built a pretty good name for myself in the junior mining space, you can imagine I get a lot of phone calls saying, "Can you run my money? Would you start a fund?" And I know what that's like. I know I could do it. And I'm in all humility, I know I could do a pretty good job at it. But the ability that the the advantage of running my own money gives me is that I have no one to answer to except myself and my wife if she looks over my shoulder and sees how we're doing on our portfolio. So, in that sense, I can take on a longer time horizon of investments. Like give you an example, you know, from 2018 to 2020 was a pretty robust market. We did really well and then, you know, my portfolio is probably down from the peak of COVID till the lows a year and a half ago, probably by 45 50%. Now, if you're running a after being up two 300% on the way up, right? But if you're running a a broadly distributed fund, what ends up happening is investors often sell at the absolute wrong times. So, they're throwing money at you when your fund's up 300%. And when the fund's down 50% and there's maximum opportunity to be allocating more capital, they're pulling money out. So not only do you have not money to invest in new names, you're have forced to sell names that you know you're selling for 5 cents on the dollar in terms of real fair value to fund those redemptions. And so my time horizon when I invest, we're going to get to it a bit later, but my time horizon is sort of 3 to 10 years, more likely 5 to 10 years in terms of when I make my first investment to when I expect to realize liquidity. So that that gives me an amazing advantage as fun as it is to see my portfolio up like it is the last 6 months or as painful as it is to see it be down 40 50% postco they're just marks they're just they're just pieces of paper and a screenshot right so for me the real value is created over that 5 10 years where's my portfolio gone how much value have I created and I don't have to worry about reporting returns to investors explaining why we're down or up it gives me a lot of >> angry phone calls from big uh institutions and so forth you look at Warren Buffett why he was so successful obviously he's a brilliant investor, but his fund is basically a closed end fund. Like he doesn't ever had a redemption his whole life, right? You buy Birkshshire Hathway on the stock market. You sell his shares. It doesn't change the amount of capital Warren Buffett has to allocate. So he's able to buy with three hands when the market's down and sell when the market's up. And he has no outside pressure from investors who can dictate when he has to buy and when he has to sell. So there's a different mindset that comes with running someone else's money. And with the volatility in the junior space, you really, if I ever did do that in the future, you really have to have investors that understand this is a 5 to 10 year allocation and the month-to-month marks. Just close your eyes and don't look really and don't get too excited things are good because it'll cause you to make the wrong decisions time and time again.

>> All right. I was going to rearrange talk this in a different way but since we're talking about you some strategies and issues as you manage your own money um can you talk about uh when you're investing in new companies what are the key attributes on generally that you're looking for like there's good ground but always talk about management is everything management can uh find a new project or they can destroy a good an existing good project uh what what are you looking for in balancing management with uh existing assets.

>> Yeah, I'd say so when I when I came into investing in the junior explorer co sector in 2018, I had the advantage of investing in senior more senior companies for 20 plus years in the commodity space. So what what I did say how am I going to do this properly and I had to bring because I'm an institutional mind investor kind of a systematic approach. I didn't want this to be speculation or throwing darts against the dog board. I wanted to have a systematic approach to allocate capital. I started with okay so what is a success look like for a junior explore code and a junior explore code the maximum success you can have is finding a mind that finding a discovery that goes into production that is your sort of if you're in that business unless you're just a promoter trying to sell stocks you want to see a company make a discovery and go all the way into production that's how you make 50 100 200 times your money on a on initial investment if you get in early enough so having invested in producers for 20 years I tried to reverse engineer what are the attributes of a producing mine and layer that over a junior exploration company or resource company as early on in the process as possible. So what are things that make a mine? What are things that end up killing a mine from becoming a mine? So I kind of got a bit of a checklist that I go through. It's it's simplistic look, but there's obviously more to it, but it kind of very simply grade. So the higher the grade you have, that's that's your margin. So that means you're going to be more profitable in lower commodity price environments. You got to have the scale. So you can have grade, but if you don't have enough material to justify the capital they have to put into the mine, it's not going to work. So the combination of grade and scale give you the payback or the cash flow over a certain number of years to justify the the infrastructure that has to go in to build a mine. My third one sequencing logically here infrastructure. If there is no infrastructure in an area then tack on a billion or more for roads, power, hydro, airport, all things that are not there. If you have existing infrastructure in an area, then logically speaking, you need less grade and less scale to justify the investment. sort of thing how many ounces or how many pounds of copper do I need to justify the infrastructure the infrastructure is already there it's by default a lower number you know fourth point would be jurisdiction right so is it and I don't want to say Canada good Africa bad I want to talk about in this area of Canada in this area of Africa is it possible to build a mine is there government support is the local community support there where is the taxation or the stability of law in that country so in in terms of jurisdiction is it a place where we could potentially build a mine one day without too much opposition. Another one I look at is uh you know economic efficiency or return on drilling dollars. I don't know how to kind of say it in a more elegant way, but I look at drill costs per meter. And so if I want to grow a deposit, a lot of investors don't look at this, right? But if your drill costs are $1,000 a meter versus some of my projects in Quebec and Ontario that have $200 per meter drill costs, right? That means for every dollar you put in the ground, you're getting five meters in a lowc cost area versus one meter in the other area. Doesn't mean it's not a good project, but it means if you're spending $1,000 a meter, you better be looking for something that is extremely large and extremely valuable because that's going to add up over time, especially as a juniors that face dilution, you got to find some heck of a holes or heck of a deposit to keep justifying putting $1,000 a meter in to to give you a payback on those exploration dollars versus projects that have lower lower costs. And then finally, you mentioned management. Every manage team that's ever come on your platform, Martin, or I've ever met always tell you they're good. This is the best management team. We got the best management team. So, the way to cut through the crap in that would be one, a network. So, I have a have a network of people that I really learned to trust in the last 25 years that I know the industry very well, that have a lot of contacts. I always check people out through my network. And if I know someone that I trust, who knows the management team, that's also a a good safeguard against bad behavior. But the biggest governor of good behavior Martin I think is is insider ownership at the management and the board level. Because if your management team and your board owns 25 30% of the shares, they're not they're owners now. They're not renters. So things go wrong, the market goes south, you're going to cut GNA like crazy. You're going to try to preserve shareholder dollars. You're going to work really hard to get that permit because you own a lot of equity. If you don't own equity and things get a bit tough, maybe you raise money on terrible terms just to pay your salary. worse maybe you throw in the towel and just walk away and try to start something new or go into the Bitcoin or you know marijuana space like some guys did before. So ownership at the board level means incentivized sweat equity. So I'm involved in a bunch of boards. I take very little to no salary. Any situation I'm involved in doesn't matter to me. It's not material. But I put a lot of hours into the project because I own equity. And my return is going to be if the company does well, my shares are going to increase in value. In these junior mining companies, you have two, three, maybe full-time employees and you have six or seven board members. If your board all owns a bunch of stock and are heavily engaged, it's like having six or seven extra employees basically for free that are driving the value of the company, bringing their experience to the table because they want to see the value investment increase. So, that's something that's extremely important to me. And if I don't see that, I get nervous. And I also like seeing manager that writes checks. It's okay to get you know found a company and have some equity from the founding but I also want to see them if they can financially participate in subsequent rounds put their money where their mouth is so they are in the same level and the same you know tolerance of of risk for investors that are asking to invest alongside their company.

Where do you when you see drill results or that do you have enough technical expertise and where you assess that yourself or do you hire a consulting geologist or just some of your geologist buddies you you send information to? Uh how do you manage that real technical risk?

>> Yeah, it's a great question. So my my first mentor in my early 20s who who founded the investment company that I worked at gave me a great lesson I'll never forget. He said, "You know, Michael, you want to surround yourself with people that are way smarter than you and and a lot of people in this business don't do that, Martin, because it's a pretty competitive business and they like to be AAA type personalities and they want to be the smartest guy or girl in the room." But that lesson has served me very well, especially in a g geology kind of resource sector where I'm not a geologist. So, I would say I know enough to be dangerous. I have, you know, spent 25 years looking at these things. is I can kind of sniff out what looks like an economic hole or an economic deposit or economic geology versus non-economic geology. But at the same time, I still make a lot of mistakes. So, what I've done is follow that advice, built a network of, you know, geologists, metallurgologists, mindbuilders, people that I trust that like to co-invest on my deals. They they know that I look at a high volume of potential investment opportunities. I looked at two or three of them today, even before this call, Martin. So, I'm doing a lot of calls with junior mining companies, potential investments. When I find one that says, "hm, this one could really looks interesting. I like the valuation, like the setup. It goes through my checklist of things I look for." That's when I will make a call. I don't use those calls now. So, I don't want to call my network every single project look at, but out of 20 projects I look at, maybe one really gets me excited. Then I'll check it through my network. If it's an expiration story, I'll ask my geologist that I trust to look at it. If it's a production restart or a mine build situation, I'll ask mindbuilders that I know say, "Okay, look at their assumptions for mining cost, for throughput, for processing costs, for the capex going to project. Is this is this uh wildly optimistic or realistic?" And so if it comes back and often times they get a failing grade, they go like like Michael, good instincts, but here are the three or four reasons geologically this thing is never going to scale or this PA is not worth the paper it's written on. It's way too aggressive in terms of cost and it's going to be twice the cost to build this thing and it kills the project. But that keeps me out of trouble. That just increases my my odds or my hit rate of making a good investment. So that's that's very very important to me. It's it's the network effect. I like investing with similar-minded investors also as well. So when I invest in deals, I love having a partnership with people that are going to put in, let's say, 5 million on a deal and they're doing their own due diligence and they're doing their own channel checks. So it allows you to come to a a better decision with that that group intelligence that you have versus saying I know I can do everything on my own and I'm going to make right decisions every single time. It's it's not realistic especially if you're looking at the volume of deals that I'm looking at.

Not well I do you invest in let's say pre-discovery uh exploration plays where it's just you like management and it's generally in a good territory and that or or what like do they have to have a discovery hole for you to get in involved in

>> really interesting question so I like to operate along a song curve and so yeah you know what I what I my perfect setup Martin is what I had in 2018 and what I've had basically the last six seven years why I've been so aggressively deploying capital in this space which is I have a situation where people are very pessimistic on a commodity in particular in this case it was gold in this case where I have a a very bullish view so the market's negative I'm positive if the market's negative that's typically reflected in the valuations of the companies along the lan curve and so what happened in 2018 I'm like I was going in after a seven-year bare market and so typically in a in a more optimistic market the valuations of most companies from pre-discovery to discovery to pa to prefeasibility are are at a certain level. But in 2018, everything was trading at like 10% of its normal value. So the companies I was buying in 2018, I can go take green field expiration risk and put money into the ground, put $5 million in the ground, try to make a new discovery, or for a $5 million market cap on the public market. I can walk in and buy a company that's already discovered half a million to a million ounces open in all directions. No money to do a single follow-up poll because the market's been shut for financing the last 5 years. So in that case for the last majority of the last 6 years I have not done a lot of green field expiration because my next step on the Lan curve is post discovery and normally in a normally functioning market you make a discovery your mark cap goes from 10 million to let's say 100 million but these companies are still trading at 10 12 7 8 9 million mark cap. So why take the exploration risk where you have a one in maybe 50 chance of making a commercial discovery when you can pick off what I felt were many of them potentially commercial deposits that were just start of capital. So I've been very much focused on that. The markets just started to turn the last you know 3 to 5 months. We're starting to see some life in the junior market. So I've started to plant a few seeds with a couple of geos that I really respect. We're thinking about starting a private company looking at picking up some expiration lands uh early stage kind of grassroots targets well vetted in the anticipation that the opportunity to pick off projects that have existing resources and quality projects at low valuations will be gone by this time next year. Like the market will will start to lift and at that point in time if you're trying to buy an existing discovery with a million ounces in the ground for a 500 million market cap then maybe it makes sense to put in money in a earlier stage. all a relative for me riskreward discussion about how much money am I putting in? What does the next company up on the Lan curve look like? Right? So part of the reason why the developers are trading better now is because the producers finally got a bit of a multiple now. You know, if you can buy a producing asset that has 200,000 a year production, it's only got a 500 million market cap. Well, how can a developer that has a 200,000 ounce one day producing company have a big market cap when its big brother producing asset doesn't have a doesn't trade well in the market? Well, that asset now has a 3 billion mark cap. So there's now valuation room for that less developed company to to grow into and and have investors say okay when I grow up or when I achieve production I'll trade like Equinox or you know B2 gold they have a better valuation so they can now see a pathway to good return. So, it's all this relative valuation and what's available in the market visa v the the cost of capital today.

And and I just want to make a point when you're investing, you're strategic. You're not just buying shares in the market. You're investing putting capital onto their balance sheet. So, if you you're just a Joe investor buying 10,000 shares of something, but they're under capitalized, maybe it's cheap, but if they need to raise capital, then it could get worse. you're actually affecting change in the companies you're investing in, which is very different than just buying a few thousand shares in the market. Correct. One thing investors need to be aware of you're allocating individual capital is major overhangs on these stocks is they all consume capital. They they all burn through cash as a as a regular course of business. They don't generate cash flow. So if their company's underfunded or the market knows there's a need of funds, typically the stock will start to drift lower until that problem is resolved. And so yes, at the size that I'm buying, if I'm trying to buy 5 to 20% of a company, very hard to do that in the the market, nor would it be advisable to do that in a business where people consume capital for a living. So I typically come in under a private placement. So what what what my investment signals hopefully the market is I've done my work. I've done my due diligence. doesn't guarantee success. Um, bringing in typically a high quality cornerstone group of shareholders and solving that capital overhang for the moment in terms of the market now can say, "Okay, the company is well financed. They can move forward on their projects and they have an investor here who's going to think like an owner and and you know defend against dilution or or bad financing decisions. Not they're not done badly on purpose, but just sometimes desperate times cause desperate measures. If you there's no capital available and you don't have creative solution, sometimes companies uh choose the path of least resistance and raise money from, you know, less desirable traders that end up causing trouble. So, yes, I'm 95% of the time coming in on on private placements. Um, I will add in the open market if I make an investment and the fundamentals are getting better and the stock is below my price and the company doesn't need money, I can add to my position in the in the open market, but in general for my chunky investments, it's on on private placements.

I I just want to circle back to uh your your your marketing activities. You are going on a European road show uh in October and I believe you're bringing some of your investy companies with you sort of marketing them and I guess that's another value you add to uh the companies you invest in, why you're probably a very attractive shareholder to have on the books is you help bring awareness and so forth. Can you talk about your European road show? Maybe what companies you're bringing with you and and what you're hoping to accomplish there.

>> Yeah, the idea came out of a few of my companies were in Europe and you know since I had my twin daughters uh six and a half years ago um have not traveled that much. I've really restricted my travel. So many of my companies have been to Europe and and people know I'm a cornerstone investor in some of those companies and I often get asked you know when's Michael going to come to Europe when he's going to talk about his investment approach. So we created a a road show around that idea of where I'll be explaining my investment process. You know how I we're doing today but more detail how I allocate capital you know what I look for in investments how I've attacked investing in junior resource mining you know as a profession let's say the last seven years. So there'll be a a teachin on you know what I look for how I allocate capital the attributes of of a winning junior mining investment in my view. And I I'm a former university teacher. I taught at night for 10 years at university. Nothing better when you're teaching students on how to invest money to bring some real life examples with you. And so instead of just talking about the hallmarks of good investments in your mining space, I brought six of my largest current dollar investments with me on the road. Doesn't mean I don't love the other 25. I mean, I love some more, some less in the 25 stock portfolio, but the idea was bring my six largest dollar value investments where I'm an insider or have a heavy shareholder in those companies and allow them to present to the European audience their story so people can hear from me as to what I look for. and then hear in real life flesh and bone what these companies are, what the attributes are, the opportunity they have going forward, and the quality of the team behind it. So, it's, you know, lunch session from 12 to 2:00. So, 2 hours, they'll hear me and six companies, you know, very efficient use of their time. And there'll be one-on- ones in the morning with me and some of the other companies, and then a cocktail at night just to have more time for networking and socializing. So, it'll be a nice condensed one uh one-day trip. five cities uh London, Paris, Geneva, Zurich, and Frankfurt October 6th to 10th. And uh yeah, for your European audience would be would be great to see some of those investors there and and get to know them face to face.

>> Okay, great. And uh if they do want to get additional information, uh you can send me an email and I'll forward uh things off to Michael as well with Peter Grandwich, you're doing a live event in New Jersey in November. Uh why don't you tell us a bit about that?

Yeah. So, for your viewers that don't live in Europe and don't want to save the cost of a flight going over the pond to to see my companies and be there, I'm doing a one-off event November 8th. It's a charity event with Peter Grantage. We're raising money for disadvantaged community service organization. And it's going to be uh November 8th, Saturday in New Jersey. I'll be giving a two-hour talk and answering questions over the two hours of investors have on on the markets, commodities, and my investment approach. So, if you're interested in that, we'll put a link in the show uh notes as well. The European tour is is free. It's sign up only. Uh we have to get approved to come, but we can just register and you can get an invite from the organizers. The New Jersey show, it's uh $250. I'm not making any money from this. All the money is going to charity. Only 40 spots available. So be very intimate uh gathering. Both myself and Peter will be available for about 5 six hours there to answer any investor questions on investing in the junior resource uh sector.

>> You you switching back to the markets uh themselves. You said when you first started investing, what 7, 8 years ago, things were really cheap and things are starting to heat up. How do you view the junior markets now? Are they hot, overvalued? Is it a little dispersed? Some are a little too much. So, there's still a lot of miss stories. Generally speaking, uh is as concrete as you can be. How are the junior markets fairing right now?

>> So, it's it's been amazing. As I mentioned, I'm doing this for 25 years more and I've never seen a setup like this before. And so what I mean by that is I'm very comfortable and done it many times. You know, I invested in oil and gas in 199899 when oil was $10 a barrel. People said it's going to go to five. It was super negative and oil went to 145, $145 a barrel. So I'm very comfortable investing in that blood in the streets pessimism rains type point of the cycle especially when I have a contrary positive view for the commodities. As I mentioned earlier, what's happened in gold is it was very pessimistic 2015 to 2018. you know, not a lot of interest. So, started making investments there. What's happened is the gold price, as you know, has close to tripled in value since then. But the junior resource stocks for the greater part of the last 6 years, as gold has been rising pretty much every single year, have not at all risen, which is very unusual. Usually, when a a commodity makes a new high and breaks out to new all-time low levels, the the stocks follow. So, there's been this major kind of pentup energy, I would say, these gold stocks have been suppressed for four or five years. Most of the junior mining stocks that I own in my portfolio today, many of them are still trading below their COVID highs, despite gold being up, you know, $1,600 or more above its old previous high. So, while the recent rally feels good, right, it's been nice to see these stocks made them double the last kind of 3 to four months and a contextual basis, there's still a lot of room to run. And give you two guideposts. GDXJ, which is the midcap producer index, was $160 $170 a share, the last high between 2008 and 2012. Today, it's around 80 something. So, it's still 50% off its old all-time high. And the very good friend of mine in Montreal, I did some good work in in Quebec, macro kind of minded guy. He he sent me an email the other day saying that, you know, when in average gold cycles, the junior resource sector trades at about 10% of the value of the gold price in the ground for an ounce. So you go back to the 1990s when gold was $300 an ounce, the average resource in the ground traded at 30 bucks. If you go to 2008 to 2012, when gold price hit 2,000, the average resource is trading about $200 in the ground for value. Well, today we're $3,600 an ounce and the average resource is trading anywhere from 20 to $120 per ounce in the ground on average for most junior resource companies I follow. So, we're still 3 to 10 times below the average institute value. So, the gold price going up has dramatically increased the value of the gold in the ground. And so far, the only companies benefiting from that are the producers who are seeing massive increases to cash flow. And just for the last six months, the large cap, you know, the barracks, the Numonts, the Agos of the world, and some of the bigger midcap names, IM Golds are starting to make new 52- week high, some cases, new all-time highs. So, they're starting to see their valuations increase because the value of their gold production is going up. But the junior resource market still very, very depressed in my view. It's still extremely undervalued in my view. Still seeing incredible opportunities to allocate more capital. But it's the first three, four months where I've finally felt the wind a little bit at our back. And it's been such a long winter, so to speak, it feels good. And you might say, "Oh boy, it's getting a bit overdone." But when you put that into context, we're just getting started in my view of a multi-year rally in especially a smaller precious metals companies. Not saying we can't have a 10, 15, 20% pullback. It's perfectly normal on a on a rally, but we still feel very early to use the baseball analogy maybe second or third inning, right? But the crowd's starting to get into the stadium and it's starting to get going a bit. But it's still very early. I don't see Uber drivers or CNBC or mainline portfolio managers saying, you know, I'm I'm loading up on on junior resource stocks. But it's starting to warm up a little bit. And that's that's very positive because when these rallies go, they can they can last for for quite a few years once the the wind gets going at their backs.

What I've noticed as the difference is when a company does get some good results is they actually get a bit of a bid on the stock it runs. like a bunch of years ago just nothing would happen. No one would care if anything the stocks would go down cuz oh great I can sell on some liquidity now. But now we're getting a bid and it's running up. But I don't see anything that's really getting too crazy out there. It it's uh the markets still seem like they they they can get really wound up still. Uh there's a lot of room for that on the macro side. And boy, we're chewing through our time, but this is a great interview. um the the big macro S&P 500 are like do you have a lot of concern of a big macro crash debt crisis black swan stuff or or chest hey we could hit a little bit of a correction which would be normal and healthy because when the big corrections do happen liquidity gets sucked out of the the junior markets doesn't matter how good it is uh kind of everyone gets crushed on on that side it goes to the liquid stuff uh big perspectives uh risk of a big crash or just a pullback or or what do you think?

>> It's it's a good point for your investors to remember. So when the market pulls back, say NASDAQ or S&P 500 has a has a major sell-off, um it would actually be quite positive for the junior resource and the mining gold sector in general. We have not seen yet Martin in this rally which typically kicks off or accelerates any major rally in the metals markets in the mining market. equities is a major market pullback and what that does is capital rotation. The gold sector is extremely small. I don't know what the latest stats are but the entire mining sector in the world is like a quarter of Nvidia's market cap or less. Right? So you could sell 1/4 of Nvidia and buy almost every single mining company in the world just to give you an idea of how small this sector is relative to the overall market pool of capital which is actually extremely bullish when you think about the strategic importance of gold reasserting itself. it's always been but as a monetary metal. You know, gold crossed over treasuries in terms of foreign central bank ownership for the first time in 60 years recently. So the central banks are clearly saying gold is the new reserve asset of choice versus the US dollar. That's a mega trend. And so think about the the importance of gold and the importance of all these critical metals like copper and silver and zinc and and tan all these metals for the EV transition and for fueling AI and electrification of the grid. These are two crucial sectors that have a very microscopic percentage of overall capital invested. So what would happen in a crash would be you stop making easy money in tech. You stop making easy money in SP500. All portfolio managers like myself run a generalist fund for for most of my career will go where where am I going to make money sustainably for the next 3 to 5 years. And so when when capital comes out of one sector, it'll flow into the next best looking sector. And I think gold and metal mining, copper and those are the best next place to go. So we've had this rally despite people not selling their their tech shares this fe. So if we have a pullback that'll be a major pause where capital get reallocated to the sector but in the short term they're still stocks. So when you have a soft in the market people are need liquidity they're getting margin calls they'll sell anything. So you'll have a a draw down in these names like we saw during co but my view would be they would be the first to rally and the most explosive to rally and actually that would be very positive for the long term in terms of market crashes. you know, my partner Charles Hager who who runs the fund every day at Bash is probably better to answer that. But I would say one thing I'll point out to investors that we're thinking about a lot of is is the market rallying because fundamentals are good or is the market rallying

Because paper money is worth less and less and less. So if you look at the performance of the S&P in gold over the last 12 months, it is actually down quite a bit. So, we're trying to differentiate how much of this rally is fundamentally positive and how much of it is people saying, you know, the US dollar is getting less and less valuable. Fiat currencies are less and less valuable. So, I've got to park my my paper bills in something that can protect me from inflation. And so, stocks are a decent inflation hedge for that. Gold's a really good one. And so, I think we got to look through that in a period of massive money printing and devaluation of paper currencies. Like Argentina's stock market made new all-time highs every single year for the last 15 years because their currency was devaluing at 80% a year. So, nominal highs versus real is an important thing we need to start looking at more and more and be aware that maybe you're not as rich as you think because a one unit of the S&P 500 buys you a lot less than it did 2 years ago, even though it's up. So, you got to think about it more in inflation-adjusted dollars or purchasing power dollars. And I don't believe the CPI numbers. If you look at what's costing you to live your life and things you actually need, it's not 2-3% a year. Stuff you actually need to survive is up 10%, 20%, 30% a year in in dollars that actually cost you money. And so, we need to become more and more aware of that. I think that's also fueling into the narrative of hard assets are going to gain more and more prominence, like they have in all countries that have had currency devaluations, that all the res—those countries really understand the value of purchasing power preservation. It sure sounds like you think that gold commodity itself has legs to it and it has still, it's still room to run.

I think there's a a mega trend of central banks, the BRIC nations, uh, allocating away from the US dollar into hard dollar assets like gold. So, I think that is a mega trend. Most of the rally we've seen in the gold market has really been driven by central bank buying. It's not been the typical buyers, which has been the investing public and the large macro funds and the hedge funds that that buy gold, which is also very bullish as well. Like the the GDX and GDXJ have had negative inflows for all of last year, only only turned positive this year despite gold going up $1,000 now. So, it tells you it hasn't gone mainstream. And so, the central banks are not, I'm buying gold in 2024 and I'm selling it in 2026. They have a target for a percent of their balance sheet to be allocated to gold, and they're persistent buyers over time until they reach that target. So, that to me is a is a mega trend. What I have been saying, Martin, over the last 6 months is that the equities are a lot more attractive than the gold price. We don't need the gold price to go any higher to have a phenomenal kind of 3 to 5 year run in these stocks. I think the trend is your friend. It's going to go higher, but we don't need gold to go to $5,000 to $6,000 to have these stocks go up 200%, 300%, 400%, some of them, right? If gold can just go sideways for for a few years, I think the backdrop is there that it should go higher, you're still going to have an incredible uh runway of investment in this sector, but the central bank demand is huge because it's less uh whimsical, less trading oriented, and more just structural. And that we haven't had in the gold market since the 70s.

All right. I've got a theory that one of the reasons that the speculative mining companies haven't done h—haven't had that big pop is is that there are other speculative uh ways for investors to play now, be it Bitcoin or digital stuff or even sports betting. Like so many of my kids' friends are like addicted to betting and like any extra speculative capital is going to betting on the the bulls or the whatever. uh Any any thoughts on that as to dilution in the speculative market to other uh assets or other uh uses of capital?

This environment reminds me a lot of the late 1990s, Martin, you know, the dot-com boom that we had, right? Remember back then people were saying old economy stocks, you know, railroads were worthless, banks were worthless, uh, you know, money names were worthless because it was all old economy. The only that really had value was do. And guess what? All those people are right. The internet ended up being 20 times bigger than they dreamed of back then, but the NA went down 80%. And all those old economy stocks that were ignored for years ended up being the best performing stocks for a decade after that. So, AI is a mega trend right now. AI is going to be huge. But the valuation of AI, the the amount of money flowing into AI, you're right that if you can make 500% by getting a couple of software engineers together and doing an AI start, putting a PowerPoint deck together and getting funding from Silicon Valley and get a $100 million valuation a year later with a business plan and a couple of really smart programmers behind you. Why would you do that? Same thing happened in the dot-com boom. Bunch of guys got together. I'm starting a com and I'm an overnight worth a billion dollars or $100 million. So, that is a lot of speculative money is going there. It's it's easy to make money in AI right now. It's easy to make money in the Magnificent 7. It's easy to make money in in crypto and some of these other speculative things, but they are highly speculative. And from my experience, when a lot of money is is pouring into a sector like AI is right now, the overall long-term return on all the investment going into AI is likely to be very, very low because you're overcapitalizing it. You're overinvesting in it. And there's going to be very few winners. There'll be an Amazon, there'll be a Facebook, there'll be a Google, and there'll be 99 companies that earn their investors zero for that investment, right? And so, so what once that the the air comes out of that balloon, and it will, right?

That speculative money will have to find a new home, right? And you'll some of those investors back into the gold space that has great long-term fundamentals.

And provides probably a little the entry points and the valuations of these companies are a lot more attractive than buying an AI startup at a $7 billion valuation or $30 billion like you're seeing in the market today. So, that'll be the next wave of investment. What's nice is that we're rallying even without that. We're getting the tailwinds, but it'll be future pools of capital. Portfolio manager capital. We talked about speculative capital.

That has to come into the sector. That'll what fuels the next rally. When all that capital is in and everybody's allocated to gold, it's probably a sign that we're getting close to a top. But to me, we're still several years away and multiple billions and tens of billions of dollars away from from that allocation wise.

We're quickly running out of time here. What are your favorite commodities? Sounds like gold's in there. Copper and pick. What are some of your favorite commodities?

Yeah, I'd say gold and copper um in that order. Uh, we didn't get to too much about how I pick investors. I'm really focused on finding companies that have potential to be a mine. So, I'd rather buy a commodity where I'm neutral to slightly positive on that has an asset that could be all the attributes of a potential mine one day than buying a gold stock that I where I I quickly ascertain that's ever going to become a mine. So, I'm not someone who's going to just buy a gold stock because I'm positive on gold, but my commodity backdrop does form what percent of my capital and how many opportunities I'll invest in in each sector, but I say gold and copper are are quite constructive over the long term for for different reasons that I'm quite quite pleased to invest in. And then there's other commodities that I'm, you know, positive neutral on. Some commodities like like oil, I think, is a nice long-term picture, but not now, but it could be something if it gets negative enough I could allocate to that. And some of the more, you know, exotic metals like like zinc and some of these uh, you know, bulk uh, commodity metals that are in the base metal space are also interesting over time because we're going to need a big build out of all these materials to to fund the revolutions we're trying to do in these countries. And and I don't feel like we're anywhere close to the capital and the permitting to to make that happen. So, there should be a a pre-high pressure effect on pricing on all these commodities going forward due to the lack of supply that's going to be able to brought online quickly.

I we're not going to get through a po—major amount of the companies that were listed. Why don't you just highlight uh the five companies I believe it is that you're taking with you to Europe on your roadshow? Those are the biggest positions uh I believe are some of the biggest positions you have just to to see presumably you're the most bullish on on these stories and exemplify your uh investing strategy.

Yeah. Just to save time and get to a few of the questions we had from viewers that we'll just do them really quick, like 30 seconds. So, um, I'd say, you know, North Copper and Gold is a, you know, premier development project in BC. All-star management team with two mining hall of famers on the board. Probably one of the the best looking PAS development projects I've seen in a while. It's got about a $400 million market cap, but the net present value at spot pricing is close to $5 billion. Just getting on the radar screen of a premier gold, copper development project, great infrastructure, power, roads, airport, everything's in place, port, um, with really exciting exploration upside. So, that's that's one. Uh, Northern Superior uh controls 4 million ounces in the Shape Shabbugu camp. 12 million ounces in the camp was a highly fragmented camp, you know, 5 years ago. Nord Superior, my partner, I, Simon Mkov, who runs the company CEO, has done the heavy lifting to consolidate, you know, five or six junior mining companies into one. So, now these 12 million ounces are owned by two companies, IM Gold and ourselves. We think the camp has potential to be 15 to 20 million ounces or more in Canada. That's an extremely valuable proposition. You know, still trading at sub $50 Canadian an ounce in the ground, that that's a very attractive package and likely to be a developed project over time where we have a commanding position there. Uh, Rison Mining, high-grade gold, a BTB Hang Cadillac lard fault, million 50 today at very good grade between 5 and 10 grams. 6 mills, Martin, within 75 km of the project, so great infrastructure, power, you know, a lot of hungry mills in the area, and the recent exploration success that we've had there is pointing to 3 to 5 million ounces of potential. Company's got $16 million cash in the bank, 60,000 meter drill program ongoing right now. So, lots of news flow, a really robust PA we put out with a sub 2-year payback recently. So, showing the value of infrastructure in the area, and uh, it's not well owned by institutions yet. So, that's one of the advances of going on the road, starting introduce these stories to the larger pools of capital that can see the potential for these projects to become mines. Um, Group 11 Resources. I think they've been on your your platform before, Martin. Um, 50 million tons of zinc owned by Glencore and Group 11 in the camp. Uh, 8 to 10% zinc, which is just on the on the margins of economic development. My thesis there was always if we could find 5 to 10 million tons of high-grade 10 to 20% zinc, that would make this whole camp light up and be extremely valuable. Good news for shareholders is we think we found that. The Valley Wire deposit, 1.5 km of strike, 10 to 50 meter wide zones of massive sulfide, 10 to 20% zinc, lead, silver deposit, great continuity. And the real exciting sizzle is below that. We think we've tapped into very juicy copper, silver system of like as high as 6% copper, 1,000 grams per ton silver, some of the highest grades ever seen in Ireland. So, you'd have a layer of zinc, lead, and silver, and then a layer below that of copper, silver, very high grade. This play keeps playing out, the whole camp becomes extremely available for a major to want to develop. Still has a poultry kind of $80 to $90 million market cap. Great management team, low drill costs, all things I look for. Uh, last two, Capitan Silver. Um, silver stocks in general are a little more expensive, Martin. They're hard to find quality pure play silver stories that that have good management teams. Capitan Silver, Mexican-based management team, top seven shareholders own 70%. During the downturn, they kept the share count tight. They consolidated the entire district. They increased their land by two, 300% during the downturn, and and now they're putting out results, you know, 2,500 grams per ton silver over 3, 4 meters. Uh, 400 grams silver over 20 meters. Really nice hits. Uh, it's an intermediate epithermal system. And what that means is they're very rare. They have depth potential of you know, 400 to 800 meters deep. A lot of these silver systems are are high grade but very limited in vertical continuity. This is like a Mag Silver, a Fekete Silver, a Fresnillo, very rare geological systems. They have a conster plan. They have Jupiter Finan management and myself as top shareholders. The company's just starting to drill again after consolidating the camp. Did a great acquisition. And unlike other silver stories, Martin, this is like 95% silver they're drilling in these holes. They're not silver equivalent holes that have 80% zinc and other stuff and a little bit of silver and they're coating it silver. This is this is pure silver they're drilling, which is extremely valuable and extremely rare. The last one is I think Astra has also been on your platform. Astra Exploration. Uh, very high-grade gold and silver in Argentina. Um, management owns 15% of the company. Never seen this before, Martin, during the downturn. Just reserve cash. The company didn't pay themselves any salary for 11 months. VP Exploration, CEO, they went to zero salary. This is not IOU or deferred. It was just, we're not taking salary. We're we're preserving dollars. They took that money, went out and did a fantastic acquisition in Argentina where they saw super high grades. The previous operator didn't see the geological model to have real scale. They came in, Diego, their head geologist, did an amazing job working at the targets, realizing, "Wow, this thing has real size potential." The last drill program they did, all the holes we hit were stepouts. Everything hit 8,000 grams per ton silver, 70 grams gold in true stepout holes. Just press released this week that they're going back out to drill two, three weeks there, fully funded for phase 2 program. Still only has a $40 million market cap and it's one of the most prolific um districts in Argentina. 50% of the gold and silver Argentina has been produced in this corridor. So, great infrastructure again, great location, and an asset looks has real real legs and again, you know, 60-70% owned by a few cornerstone investors, really supportive shareholder base there.

Given out of lot of demand for information on Arizona Metals, uh, a lot of questions. Are you still a shareholder there? What do you think the prospects are? Take it away on Arizona Metals.

Sure. I've I've publicly been a very large shareholder. Still am a shareholder of the company. Um, it's been full transparency, been disappointing, uh, because the company had some phenomenal drill results over the last 3-4 years. Talk about 100 meters at, you know, 3 grams gold or 100 meters at 3% copper. Like, really impressive intercepts. Um, love the location, great infrastructure. Arizona, made in the USA, copper, gold target, like a lot of attributes of the project. Huge exploration upside there. Uh, the previous management team um didn't do a good job of keeping expectations in check. They were, you know, talking about a 25 to 40 million ton resource potential size. Um, new management team came in, again, didn't do a great job of managing expectations there as well. They came out with a 10 million ton resource at 3% copper. So, really nice grade, uh, good continuity in that deposit, but the size obviously was quite a step down from the previous kind of 25 to 40 million tons and 15 to 25 million tons down to 10. So, there's been a series of step downs in in the size of the resource. I think current management could have done a better job articulating to management, posted resource that we're just getting started. Only about 10% of the trend has been drilled. A lot of upside potential here where you find high-grade VMS deposits, you typically find more of them, but there's been a bit of a, I think, weakness in communication of the upside. So, we had a disappointing resource, um, probably a poorly explained uh, upside potential. So, that's why the stock is down where it is. Um, company's well-financed. They had about $25 million on their last balance sheet, published balance sheet, $100 million or so market cap, Canadians, about a quarter of the market cap in cash. So, they're fully financed to drill more at K. They also have a historical gold project called Sugarloaf that has a 1.5 million ounce oxide gold resource. So, they're going to be drilling in Q4. Um, so, there's a lot of things to like here, Martin. Um, I'd like to see management buy some stock, you know, and get more aggressive with the stock having pulled back from, you know, $7 to 75. Like to see management get a lot more aggressive buying stock. I'd like to see them get a bit more proactive at telling their story in a in a more uh forceful way. But it remains an investment for me. I'm not an advisor. I'm not a board member. I don't have a a hand on the steering wheel there. So, you know, limited in the involvement I can have in the company, but definitely at these levels, uh, it feels like a really good value. Understand it's been a disappointing ride for myself and others in the story. That's why I have a portfolio of companies. They don't all work at the same time, but it's definitely one that I am remaining very actively involved with in terms of following the story and and looking for tangible signs of progress there. But but on a valuation perspective, especially with the move we've had in the market, feels like a pretty good risk-reward. But I'd like to see management be a bit more forceful in articulating that and defending that uh publicly.

Was it strictly a a poor uh setting of expectations or like you said the resource estimate was a little disappointing as well? Was it like on an absolute basis or just uh on expectations wise? And and if it didn't have the expectations history, this could be exciting. Or was there actual some of the results just not?

I think I think expectations were were probably if the expectations had been 5 million tons going in and the stock had never been $7, it probably would have rallied in the back of the resource. But part of being uh a management team and a public company is understanding where are the expectations of the market, right? What are people expecting and how do I manage those expectations and get people in line with what the reality is going to be? And and as you know, it's I'm not an arrow at anybody here, but like junior mining investing expectations get out of hand very, very quickly. As you drill big holes, people get really excited and you know, throw big numbers out there. And so, as a man, you got to constantly be temp—if you want to have a long-term success, tempering those expectations to what you think is is reality. And then if you do have a disappointing resource, I think you need to communicate to investors that how this thing can grow beyond that. 10 million tons to 3% is a really good starting point for an economic project. But laying the investors the roadmap to how that 10 million can become 20 or 30 million tons over time as you explore more the offside potential puts a little bit of uh, you know, balm on the wound, so to speak, of a disappointment. So, there's there's ways to to manage that. But the fact remains, good project. I mean, the the match team is technically competent. They they've built many mines before in their career. So, it's not not their first rodeo. Um, but I think it's a case of expectations just getting too out of whack. Emotions, like we talked about earlier, right? Like just in terms of just your just because the stock is up, it's not a good company. If the stock is down, it's not a bad company, right? You have to separate that uh emotion from from reality. Um, and I think there's a there's still a nice opportunity ahead for Arizona Metals.

Okay. Thank you. I believe we're out of time. You've got to jump on a phone call here uh shortly. So, um, unfortunately, we didn't get to around to a lot of the names. Maybe we can get you back uh maybe after your your road trip or something and we can be less macro and more hit on a few company names. Thank you very much for taking your time. I I thought it was uh fascinating, excellent uh perspective you have on the markets. I really appreciate it. Any final comments?

I just say for those that ask questions and have time, happy to come back for maybe just an exclusive Q&A session if you want to do that next time. We can answer as many questions as we like. Or if not, come and see me live in person on one of my my tours. I would love to meet your investors face to face.

Michael, thank you and the audience, thank you for uh attending and great questions you had. I'm sorry we couldn't get uh to many of them. Thank you very much.

Thanks, Mark.

Cheers.