Aldebaran Resources – Copper Gold bought cheap with Regional Scale (Transcript)

A wide photo of the Altar copper-gold project in San Juan Province, Argentina.

Interview with John Black, CEO of Aldebaran Resources (TSX-V: ALDE).

The third company from Regulus Resources’ management team, Aldebaran Resources is an “exciting” copper-gold play based in San Juan Province, Argentina.

Their flagship project, Altar, is a large copper-cold site obtained for a discounted value from a different mining company. Aldebaran, in conjunction with precious metals mining company, Sibanye Stilwater, are currently in the process of re-evaluating the project. Drilling began in January 2019, but time must be taken for exploration and the conduction of a logging program.

While the well-established track records of the Regulus Management team will instill confidence in many a prospective investor, the financials are slightly concerning. Share price has been as high as 90, but this year it’s plummeted down to 35. The company is also sitting on significantly less cash than it was in February, which begs the question: if the value of shares has gone down, how has Regulus used its cash reserves to add value?

Another concern will be the priorities of the management team. With so much already on their plates with Regulus, is Aldebaran a fledgling project that will find itself neglected? John Black offers some reassurance; a drill program on another Aldebaran project has begun in Aguas Calientes, and the primary asset, Altar, demonstrates immense potential, with over 2.5 billion tonnes of low-grade copper-gold mineralisation, and the promise of significant zones with a much higher grade.

The Route 1 group are significant shareholders with nearly 50% ownership of Aldebaran. This can provide long-term stability but for retail investors, there will be concerns regarding such high ownership levels from a single group. Will Route 1’s priorities align with the remainder of Aldebaran’s shareholders?

What did you make of John Black? Is Aldebaran Resources a promising prospect, or is it more of a pipe dream? Comment below.

Interview highlights:

  • Company Overview
  • Company Financials and the Share Price Drop of 2/3: What Happened?
  • Getting the Share Price Up: Will it be Possible?
  • Challenges and Opportunities for Raising Money
  • History of Aldebaran and its Potential

Click here to watch the full interview.

Matthew Gordon: We recently spoke about Regulus. Want to talk about the spin out which is Aldebaran. Could you give a one-minute summary for people new to this story, please?

John Black: Aldebaran is the third company from our same management team. Our first company, Antares Minerals, was sold to First Quantum in 2010 for about $650MIL. From that, we formed Regulus, which has the exciting Anta Kori Copper Gold project in northern Peru. And then we recently identified the opportunity for another exciting copper gold project called Altar, which is in San Juan Province in Argentina. And that forms the flagship project for Aldebaran. And it’s a large copper gold project. It’s one that was drilled out and previously purchased by a mining company. It was not a good fit with that company. And we identified an opportunity to pick it up for pennies on the dollar. We’ve captured that. We’re in the process right now of re-evaluating the project ourselves. And in the very near term, you’ll begin to see us demonstrating the full potential of this project.

Matthew Gordon: Beautiful. Thanks, John. Let’s start with the money side of things. So, you’re sitting on quite a bit of cash at the moment to develop the Aldebaran project, somewhere in the region of 11-12MIL bucks, is that right?

John Black: Oh, no. We’re actually at about $5MIL on the project right now.

Matthew Gordon: OK sorry. You’re right, that’s from February 2019. Good. Just sticking with the financials, share price, it’s been as high as 90, this year’s down at around 35 at the moment. What do you put that down to?

John Black: Well, when we captured this project, what we did is we had projects in Argentina as part of Regulus Resources that we had parked while we focused on the Anta Kori project. But we realized we had value in those. But we needed a little bit more to form a solid package of projects: a solid portfolio projects in Argentina. So, when we saw the opportunity to acquire Altar, we saw the opportunity to spin out and form a new company in Aldebaran. And we spun that out at a set price that was based on what our principal investors were willing to put in to get that setup at. And then the market settled that price down into where the market saw that, at that time. It’s a new project or a project that hasn’t been seen for some time on this. It’s in Argentina, which is a little bit less of a mining country. And so, we’ve seen a natural drift off on this as many of the investors that received Antares shares as spin offs, decided that they wanted to cash those shares out and put the money to work on projects that maybe had a more immediate opportunity to. And so, we’re now in the in the phase where we’re quietly putting together the Altar project and we’ll begin to reveal that value on the project over the course of the next year or two. And we’ve also just set up to begin to drill on our Aguas Caliente phase. So, a lot of the drift off has just been it’s a new company. There are projects that have not really seen much news on, as we’ve set it up in the years, it’s kind of in that initial stage where we’re consolidating and putting everything together, but we’re now in a position to begin to put out new drill results with the Aguas Caliente drilling. Aguas Caliente is a high-grade cup or high-grade gold silver opportunity that we see in Argentina, that drilling will start on in the next few weeks and we’ll soon be able to reveal how we see the Altar project and what the potential value is. And so, it’s a great time to get into a quiet story that’s just not really noticed by the market.

Matthew Gordon: Okay. I think as denoted by me getting the cash position wrong, your PowerPoint is from March 2019. You talked about starting to tell the story and I know you’ve got a PR presence, foreign personnel on board to start doing this. And you spent clearly 6-7MIL bucks since we last spoke. So, what are you going to be able to tell people about what’s happened to date?

John Black: We’ve recently just come out with the drill results from the field campaign earlier this year at the Altar project. And so, we drilled four long holes into the system, discovered a brand-new zone on the system, and have announced some very long consistently mineralized intervals. We’re talking about intervals of 800-1000-meter intervals of a +.5% copper equivalent with higher grade zones within those. So, that drilling was done to help us understand better the geometry of the mineralization in the system. We’re currently relogging the existing 115,000 meters of drilling that had been completed previously on the project, and with the new drilling and our re-evaluation of the old drilling on this, we’ll be able to present to the market over the next several months how we see this project really looking. It’s known as a very large but low-grade deposit and we view that that is what it is. But within that, there are distinctly higher-grade zones. And we want to reveal the importance, the economic importance of those higher-grade zones within the deposit. So, there’s a lot of geologic work we have to do in the background on this. We have put some of those results out quite recently. And they’re there for those that want to look for a good opportunity like this. But we’ll be able to show that in better ways in terms of how those higher-grade zones look in the in the course of the next few months.

Matthew Gordon: Right. So, it is interesting bit for me as a shareholder, I make money by share price going up. The share price has been hit, there’s been some resetting, I think you’ve called it, also maybe some market conditions, market nervousness around trade wars. And as we spoke with Regulus, you spent 6-7MILbucks within the last six months. You’ve no sense of whether you’ve got a dollar for dollar return there or not because the share price is down. What do you think you’re going to be able to do with the next 5MILbucks, which is going to drive to share price back up, or is that just not going to be possible for you?

John Black: We wouldn’t be spending this money if we didn’t think it was a good investment. We think of this money as our own money. We’re heavy investors. And keep in mind that as management we own nearly 18% of Aldebaran. And so, we think very carefully when we put this money in. Our business model is predicated on us identifying opportunities that we can capture at a bottom in the market, either due to lower prices in the market or in the case of Altar it was a project that was held by a company where it didn’t fit, and they were willing to part with that project. So, we captured this project for much less than it would cost to drill out, what’s known on it right now. And then it takes us many times a number of years for us to either drill the project out or in this case, to partially drill it out, but partially re-evaluate and identify clearly more economically viable portions of the project. So, this project is one of the larger copper resources that’s out there in the hands of a junior, potentially available for a major mining company to acquire. Major mining companies are not finding these projects themselves. And many of them are very optimistic that there will be a necessity for a lot more copper in the future as we see further electrification of vehicles and other things that drive copper price on this. And so there will be, I believe, in the next few years be an increased demand for these large copper projects. And we’ve put our hands on a great one right now. And a lot of times when we do that, when we initially acquire, this is not the first time we’ve done this. With the Hickory project we suffered through a couple of years when our market valuations were really low, even though geologically we knew we were on a great project. The same thing happened with Anta Kori and Regulus. And now we’re beginning to reveal the value on this one. I just view with Aldebaran right now, we’re in that early stage where we’ve put our hands on something at a great acquisition opportunity on this. We’re beginning to invest the money into it to reveal, but sometimes the full reveal of that value doesn’t come until just a little bit later on in the project. But there’s not an instant X number of dollars increase in price of our business. A lot of times you’re putting that money in. You’re working on showing the full potential of a project and then that potential gets revealed when we can show the project in its full potential on that. And that just takes us a little while to set up.

Matthew Gordon: Sure. So, you’ve got 5MIL bucks on the current run rate. That suggests another five months burn, right? Is that about right?

John Black: No, it’s very lumpy in this company right now because that’s very dependent on when we’re drilling on this. And so, what our plans are right now is, is that we will be drilling the Aguas Calientes and Aldebaran, we have the Altar project, which is our flagship project, the large copper gold play opportunity. But we also have a series of other projects at earlier stages and one in particular has caught our eye called Aguas Calientes. We have very encouraging high-grade copper or high-grade gold silver material on the surface and we’ll be drilling this for a high-grade gold silver epithermal vain opportunity in the course of the next few weeks. So that’s a relatively small drill program. We’ll spend about a $1MIL Canadian on that, which will result in the potential for a new discovery on this and results to come out soon on that. And then in the background, we’re putting everything together to be able to define what the next stage at Altar project is. Probably the first stage of that is to reveal the full potential of it. So, people can begin to see what that opportunity is. And that will determine how much drilling we’d need to do. We have a lot of drilling in Altar already. We have a lot of data there. So, it may be simply having us reveal what’s there by being able to better present in a different light the information that we already have.

Matthew Gordon: So, here’s the question. You’ve got 5MIL bucks left. You outlined some of the ways you can spend the money and I guess you’ll prioritize that in the way that your experience tells you to prioritize that. You expect some of those things to have an effect on share price. If they don’t, your market cap stays the way it is. You’re going to need to raise some capital. It’s going to cost you what it’s going to cost you. How are you going to approach that? I know you’re going to tell us story in the market. Really, really well. You’ve said you’re going to start telling the market really well. How do you approach the fund raise when you’ve done these things deliverables on your three projects and the market doesn’t appreciate it yet? They’re not listening to you. Just go ahead and raise small amounts or do you try and say I need to raise 12 months’ worth. What’s your thinking?

John Black: Well, our thinking really on this we’re just as I mentioned, we’re just kicking off a drill program in Aguas Calientes, so we’d like to see what those results are. They have the potential to dramatically change the situation on the project. We will be able to better reveal the full potential of the Altar project as we complete our relogging program and can present that in a little different light. I think what you’ll see us showing is the higher-grade portions of the deposit, which are still extremely large. The current resource is over 2.5BIL tonnes of low-grade copper gold mineralization. On this we view that within that 2.5BIL tonnes there are significant zones of much higher grade that form a deposit by themselves, if you will. And so, we’re in the process of being able to put that together to reveal that. When we show the results from the program at Aguas Calientes we will show our full thoughts on where we’re going with the Altar project. We believe that will warrant an adjustment in the share price on this, which would allow us to raise capital with less dilution. But the important thing is that we move projects forward on that. So, we do have the capability of raising capital somewhat independent of the share price on this. It’s just always best for ourselves as current shareholders and all of our other shareholders to do it at increasingly higher prices.

Matthew Gordon: What does that mean? What do you mean we can raise this independent of share price?

John Black: Well, we have some very supportive shareholders. This is a bit of a different structure to a company on this in that we have a group called Route 1 that’s been a strong backer for our team all the way back to the Antares days and they’re strong supporters for Regulus and they own nearly 50% of Aldebaran. Sibanye, the company that we acquired the project from has 20% of the project and his management, and we have 18. So, it’s fairly concentrated shareholders on this. And there’s alignment amongst the shareholders on this that the important thing is to move the project forward. Ideally, we’d love to do this. Our goal is to increase the value in the company, certainly by the end game, which we view as monetization and selling the projects to a mining company at the end of this. But we’re focused more on that end game than we are on day to day on this. But we do believe that the results from Aguas Calientes have the opportunity to bring us back on the map, if you will, on this. And we believe that when we’re in a position to reveal our full vision on what Altar is and what the full potential is, that that’s likely to result in an increase share price. But there are other factors that are beyond our control, like copper price or other things that could affect us as well. So, we have some time on this. And when we’re in a position where we don’t like our share price on this, the important thing is to roll out additional information, so people can understand better what we have and to be cautious. You don’t spend as much, you don’t raise as much on this when your lower share prices. But it’s important that you keep the company moving forward.

Matthew Gordon: But isn’t that kind of your problem. Based on that maths you’ve got 12% of free-floating shares, haven’t you? You’ve got 50, 20 plus 18. Liquidity’s the issue here, right?

John Black:  You’ll notice that many of the companies that do well, this is not terribly different than some structures of, say, some of the Lundeen companies and others where you have large concentrated holdings from groups that are very comfortable in the long term on this. It almost becomes a little bit more like a private company structure on this. And sometimes when you’re in a market bottom, that’s a little easier structure to have than when you have a lot of liquidity in a tough market. Liquidity is your friend when the market’s robust and going up, but your enemy when it’s going down on this. And so right now what we focus on is setting the project up, acquiring the project which we’ve done, and then setting it up and getting ready to begin to reveal that. And as we reveal that, and we raise additional capital, that’s where we anticipate we’d be bringing in new investors and increasing that liquidity. But the nice thing is it doesn’t take too much interest in us to move us pretty quickly right now, too, because it’s there not very many shares available. So, if we deliver the results that we believe these projects will deliver, a little bit of demand will have a sharp increase in our share price.

Matthew Gordon: Potentially. I think that’s a kind of fine balance. We’ve seen a few companies over this side of the pond who’ve had too much in the hands of one or two shareholders and it’s killed their share price, it had the opposite effect. It’s a balancing act. I appreciate that. But also, it gives me an insight into how you guys are thinking in terms of taking this forward. You know, you believe you’ve got the ability through your current shareholders to get you to a point where you’re comfortable to go out to market and it put some more shares in the market. Understood.

John Black: Keep in mind one thing on this, if we had a project that required a lot more drilling to reveal the full potential on it and a lot more investment on it, that would be one challenge. But here we acquired this project under very good terms, but it’s a project that actually has quite a lot of drilling to it. The Altar project was drilled out by a junior company like ourselves called Peregrine Metals and sold to the Stillwater Mining in 2011 for almost $500MIL U.S. cash at the time. It then stalled. The company that purchased it was not a good fit for the project and it disappeared off the map. So, we acquired it for much less than that. So, you know, right now, when you take a look at our market cap and the size company we have, we have the option to turn 80% of a project that at one point was valued in cash at over nearly $500MIL U.S. and when the copper market was robust. If we returned to that type of a copper market on this, we believe we can show that there’s more to this project than was even known then. And much of that we can do from simply relatively low-cost work to re-examine this and recast the information that’s there so people can better understand that this is not simply an enormous low-grade deposit, but there are distinctly economically more attractive higher-grade zones within it. That’s what we want to reveal to the market. That won’t cost us too much money to do that. That’s a lot of geologic work. We did spend some money this year for the drilling to gather information to better evaluate what we have. But we’re now in a position where we can reveal quite a bit of information about this project without a particularly large spend on it to go forward. And we believe with that information on the table, we’re likely to see a different valuation.

Matthew Gordon: So how much money has gone into this company in total then?

John Black: The way we structured this is as I mentioned at Aldebaran was a project that was acquired by Stillwater Mining for $487MIL in 2011. We acquired the option to pick up 80%. So, we had the option to earn 80% of the project for $15MIL U.S, which has been paid and for Sibanye, which was the new owner of the project after they acquired Stillwater, has 20% of Aldebaran as part of the process. And we need to spend $30MIL over the course of 5 years to acquire 60% and $25MIL additionally to go to 80% on the project. So, over the course of the next 8 years, we need to spend $55MIL total to acquire 80% of the project. We’re well ahead on this, we’ve just completed our first year on this and we’ve spent approximately 7 or $8MIL into that work commitment. So, we don’t have to work at that pace right now. We can a little slower as markets a little bit slower on this. But we anticipate we’ll spend that money to acquire the 60% interest within the next four years. So, we have we have time to do that. What we need to do now is to better demonstrate to the market what the potential of this is first. And then we anticipate over the course of the next few years, we’ll see, most likely, an increased interest in these type projects from major companies. And that will likely come as a predicted supply gap in copper emerges and we start to see copper prices move up. And so that will provide us a better environment to raise money at less dilutive costs.

Matthew Gordon: So, you don’t feel you’re under any pressure with regards to money as it stands because you can control the pace at which you move forward.

John Black: We can control the pace of it and we have good supporters on it and we’re on a great project with much more value than is currently revealed in our share price on this. But we don’t want to spend all of our effort just trying to get that up in the short term. We really want to set the fundamental situation so that the end game is there. We focus on that maximum value at the point that we would monetize this project by selling it to a major mining company.

Matthew Gordon: Okay. Look John, I think that’s a great reintroduction to what’s going on with Aldebaran. Fascinating. I think if people can pick shares up, might be worth having a look. Well, stay in touch. Let us know what’s going on. Sounds like a bit more drilling to happen as those results come out. Give us a call. Let us know how you’re getting on.

John Black: Yeah. Keep an eye on these Aguas Calientes. That’s a second project in there that has potential to emerge as something pretty exciting on this. And then the real fundamental part of the company to watch is how we reveal that value in Altar. And we’ve discussed a little bit on where the share price is right now. But in our previous two companies, we suffered through these same points where even though we knew we were on a great project, a lot of times takes a while for the market to see that. And the important thing is, is that we will be able to move the project forward. We will have access to the capital we need. We’re no risk of concerns that way.

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A wide photo of the Altar copper-gold project in San Juan Province, Argentina.

Hummingbird Resources – No Problem. It’s Mining. +110,000 ounces (Transcript)

A close up photo of a Hummingbird taking flight with green foliage in the background.

Interview with Dan Betts, Managing Director of gold producer, Hummingbird Resources (AIM:HUM).

An honest and candid conversation with Dan Betts about the highs and lows of mining gold in Africa.

They had a tricky 18 months but they overcame and found workarounds to be able to deliver +110,000oz. Challenges with water and a legal case a distraction. All resolved and they move on, aggressively. Hummingbird is producing more cash with improved margins and paying down debt. We like their prudent approach to mining and cash retention and their ability to solve problems when they arise. Allowing them to grow and deal with unforeseen issues. Gold grades are consistent. Q3/19 results are on schedule having played catch up for most of the year.

Is it trading at a discount to free cash flow multiples? What do you make of the way the dealt with investor concerns? Leave a comment below. We like the management team and is one we will follow with pleasure.

Interview highlights:

  • Overview of the Company
  • Dealing with Issues over the Last 18 Months
  • Production Numbers: What Have They Managed to Produce in Q3?
  • Growth of the Business: Any M&A in Sight? What is Their Strategy and Vision?
  • Share Price and Shareholders: What are the Expectations?
  • Divergent Strategies: What are Their Competitors Doing Differently to Hummingbird?
  • Dividends on the Horizon? What is the Company Worth?

Click here to watch the full interview.

Matthew Gordon: So, why don’t you kick off and give us a one-minute summary.

Dan Betts: So, Hummingbird is a gold producing company. We have a gold mine in Mali called Yanfolila that produces in the region of a 120,000oz of gold a year. We started as an explorer. We still have an expiration project in Liberia. We took that through development and we did M&A. We acquired the Yanfolila project. We financed it, built it. So, we’re slightly unusual in that regard in that we’ve been through the entire mining process, I suppose from grassroots exploration all the way through to today where we’re a producer.

We were just talking again before the cameras came on. You’re sort of 9th generation now, is that right?

Dan Betts: Yes. So not in Hummingbird’s. So, to be clear, if you go back. Yeah. Hummingbird’s been around a while, but not 9 generations.

Matthew Gordon: You were saying about some interesting ways people used to find gold in the streets.

Dan Betts: Yeah. Yeah. Under the Hatton Garden, in the sewers and gold washed down the tanks and all the rest of it. But, our family business is a gold refining business based in Birmingham. And yeah, my brother and I we are the ninth generation and it’s through that business that we had a network in the gold world and that hummingbird’s origin started, I suppose.

Matthew Gordon: So now you’re in Africa with Hummingbird. I’ve worked in Africa for quite a few years. It’s a great place to do business that can occasionally be tough.

Dan Betts: I think always tough but it’s exciting.

Matthew Gordon: You’ve had a sort of interesting last 18 months and we’ve knocked some of those things on the head and talked about those because you are producing plus 100,000oz so something’s going right but let’s deal with some of those small fires and how to deal with them on the way.

Dan Betts: You’re probably only as good as the challenges you overcome. And I remember my first chairman was a guy called Ian Cockerill who was the CFO of Goldfields. And when we were discovering gold in Liberia and then we listed the company and everything was seamless and going smoothly. He said, you have no idea how lucky you are. He said mining is a difficult business. And he was right. I have those words ringing in my ears now, so the last 18 months have been challenging. I mean, we built Yanfolila on time, on budget. We wrapped it up and everything was going great guns. And then we had a few issues, few operational issues. Difficult to summarize, really. I mean, a number of different issues hit the performance and it’s been really 12 months of working through those, whether they are geotechnical issues with the pits and the wall stability, which is well documented. Recovery, dilution, mining issues, performance, plant, just building a business, building the team. And you know, we’re here today and we are producing on budget on our nameplate capacity to the costs we originally thought. And we’ve overcome a number of challenges, which I suppose are inevitable as a new producer with our experience, you know. Looking back, I suppose we could have anticipated a few of those challenges better. But, you know, I think, touchwood, we’ve come through them.

Matthew Gordon: I only ask because it’s important for people to understand investors, to understand the complexities of mining. I repeatedly say mining is tough and you need to find workarounds and get to the end point because people only care about the end point. So, you’ve had flooding to deal with, so you’ve had to reinforce the pit walls, rules etc. and that’s impacted on production slightly?

Dan Betts: Well, so if you go back to Q4 last year, it impacted production significantly. Q4 last year, in Q1 this year, we were way down on production. And obviously that impacts your costs and the AISC was way up. We have to do a considerable amount of extra waste moving on the pushbacks of the walls to accommodate this wall stability issues. And as you also say, de-watering extra pumps, extra resources into the de-watering of the pit so that it wouldn’t happen again. But you know, today it’s middle of October and we’re at the end of the subsequent rainy season. And, you know, Q3’s results, which are just out, are good through the wettest quarter. So, I think we’ve learned a lot from the trials of last year.

Matthew Gordon: Yeah and then of course the Taurus situation – now resolved – what happened there?

Dan Betts: We’ve settled with Taurus. We’ve taken a very practical approach to the claim they brought against us. I think it shows that we’re able to be practical, non-emotional, and I think that’s in the past. I think best we move on from that one.

Matthew Gordon: Ok that’s fine. I’m just trying to show people that, you know, the business of mining is a complex business. And things come along, you know, curveballs come along and you have to deal with them and move on so I appreciate you dealing with that.

Dan Betts: That’s absolutely right. They do.

Matthew Gordon: Let’s talk about the business. You’re forecast this year to produce what? How much?

Dan Betts: So, our guidance is 110-125,000oz for the year. It is meaningful. And we were well behind the curve ball after Q1. So, we are maintaining that guidance. So, yeah, I mean, I can talk to Q3’s numbers which are just out where we’ve just over 30,000oz for the quarter and the AISC for the quarter’s 850 an ounce so a great result.

Matthew Gordon. That’s a great result. Significantly down from where you’ve been, obviously.

Dan Betts: That’s right. So, if you look at the last four quarters, we’ve had reducing costs and increasing production quarter on quarter as we’ve come to terms with and overcome the challenges that we’ve already talked about. And that means we’re deleveraging fast. You know, we’re paying down the Coris debt quickly.

Matthew Gordon: Where are you with that?

Dan Betts: So, I think total gross debt at the moment in the company is about 49MIL at the end of Q3. So, by the end of the year, it’ll be more like 32 when we’ve paid down all the other loans and things in the business say 32MIL gross debt at the end of this year, we’ll be in good shape.

Matthew Gordon: Well, for sure. And obviously with the gold price, all the producers have a nice little bump going into August which is good news for you guys. So, you’re producing cash. You’ve got to get that balance between paying back at a rate which you are obliged to and also keeping enough money in the business to grow.

Dan Betts: Grow and to accommodate unforeseen issues. I mean, to be prudent, but yeah, that’s right.

Matthew Gordon: Okay that’s exactly what I’m talking about, it’s having that capacity to deal with these thing’s as they come along. So, let’s talk about, if you don’t mind, talk a bit about technical about Q3. Have you seen grades continue as you expected? Or are you having to get more out of the ground to get those ounces?

Dan Betts: The grades in Q3 have held up as per the plan. And so, to be honest, Q3 has performed as per our DFS and our studies. I mean, it’s performed how we expected it to perform. So I’d say we’ve got back to where we expect to be.

Matthew Gordon: Right. Okay. So again, I’m just trying to understand where the companies going to. So, you’re producing cash. The margins are increasing because your AISC is down. Obviously gold price is up. You are continuing to hit targets. What are you going to be doing with all of this cash that’s in debt to pay down? But what are you going to do in terms of the growth component to this? Is there a growth component to this?

Dan Betts: Well, initially, the priority is to, you know, one quarter is not enough to do Q4 and Q1 and to build the reputation of a proper mining company that can deliver. So that’s our first priority. And I think, you know, a lot of people say, oh, hummingbird, it’s trading at a very a discount to free cash flow multiples and all the rest of it. But I think it’s fair enough for people to be a bit cynical, having travelled the last 12 months with us, so the onus is on us to deliver and that means being reliable and showing performance for the next couple of quarters, which is the key. I don’t think, you know, people get carried away with all the when are you paying a dividend, all the rest of it. Let’s just get the job done. What’s the saying one sparrow doesn’t make one summer and all the rest of it. That said, you know, Yanfolila has a relatively short mine life. It has resources outside of the mine plan. And extending that mine life and investing in exploration and underground studies and other deposits that we bring into the plant are a focus and an increasing focus. So, I would say in my mind that, you know, if I’m looking at risk, number one risk is you’ve got to deliver to plan because we failed to do that over the last 12 months. We’re now doing it. We’ve got to show that we’re reliable and trustworthy, but, you know, pretty close second is to extend the mine life and show the future of the project. And, you know, ultimately further than that show, that Hummingbird has more to offer than just Yanfolila, you know? So much of my time and effort has been about building a business and a team and skills and people and a board and relationships all around the world. And how do we leverage off that to take it forward and build real value? And ultimately, Yanfolila is a relatively small, relatively complex mine. That’s what it is. You can’t change what nature put there. So, if that’s our school and we turn out to account, we proved to be a reliable, efficient mining company, for me that’s tremendously exciting. I mean, think what we can do with that and what we can build and go forward. That slightly more nebulous, right. So intangible and in the future. And let’s just stick to our knitting and get Q4 on the money. Q1 on the money and build out the tangible future.

Matthew Gordon: I think that’s right. You know, like I say you’ve hit a few bumps along the road in the last 12-18 months. But you dealt with them and you’re hitting numbers and the market’s gone with you in terms of price of gold etc. And you are doing all the right things in terms of driving to AISC down, so you’ve got a bunch of skill sets in house. But you do have this short life of mine relatively, and you do need to do things you just talked about in terms of showing growth potential alongside delivering over the next 2-3 quarters for the marketplace because your share price has been relatively erratic, I suspect because of the reasons you’ve always said. What are the existing shareholders saying to you in terms of… are they saying let’s just the steady the ship and we’re still here? Or are they making demands?

Dan Betts: I don’t think there’s a consistent answer to that. I mean, every shareholder has a different view and a different conversation. But I mean, generally speaking, the view is, you know, be sensible. Pay down your debt, manage your cash flows, deliver to your performance and the value will come through. And I mean, I agree with that. And, you know, for me, it’s always been a game of you got to keep your options open. Things change. The game changes, the markets change, gold price will change. And if you’re absolutely dogmatic about this is what our 10-year plan is going to be and we can execute it. It’s not gonna work. I mean, we’d have gone bust carrying a huge project in Liberia and not being able to fund it.

Matthew Gordon: Let’s skip onto Liberia momentarily. The last time I saw you, many years ago, Liberia was something we were discussing actually back then. So, what’s happened? What are you doing with that? Is there any value there?

Dan Betts: There’s tremendous value there but not in our share price. I mean, you know, we own a 4.2MILoz gold deposit in Liberia, which we hardly touched the sides of. I mean, if you actually, you know, knowing what we know now, if you go back to how little we knew, then we found 4.2MILoz of gold on a discovery cost of $7 an ounce, never hitting a blank drill hole. I mean, it is actually an extraordinary success. And then the story kind of took over, the market took over and the market tanked. We couldn’t fund it. It needed to be big, the CapEx number, all these issues.

Matthew Gordon: Wasn’t Ebola somewhere in there?

Dan Betts: Ebola, everything. And then we compounded all of that by doing an M&A deal, funding a project in Mali and building it. And actually, for the last four years, Liberia’s really been on care and maintenance. But we still own it. Gold’s now 1500. There’s a lot more interest in deposits like this. I mean, if you look at Cardinal Resources or someone like that, there’s a lot of similarities, right? Except the only thing that’s a big difference is ours is worth zero. So, in terms of optionality and ways to create value, I’d say it’s a massive optionality for Hummingbird.

Matthew Gordon: Well, okay. Let’s talk strategy. So, you gave an example. You’ve got Cardinal building up the ounces next door in Ghana, reasonably close by. You’ve got Rocks Gold, who’ve taken a different strategy, they’ve said no we’re got a short-life mine we’re going straight into production, generate some cash and buy another asset which they’ve kind of done, right? So, two different strategies going on there. So, what are you guys thinking of doing? I mean, you’ve hotfooted from a management meeting so you’ve discussed various things. Is this something that’s on the table at the moment or is it still in care and maintenance mentally?

Dan Betts: No. So, I think the environment is right to take Liberia forward in terms of strategically and this might sound like a bit of a non-specific answer, but what I want is create value, create value for Hummingbird shareholders. For the market to go, oh, my God, we’ve forgotten about this. There’s value there. Now, does that mean I need to build it? I’m not sure that will create that much value because people will see it as a challenge for Hummingbird, another small company, dilution, where’s the CapEx going to come from? If I could attract partners, investors in a way that suddenly Liberia was being re-engineered or the 4.2 was becoming 5 or 6MILoz with a redo in a feasibility study because power costs could have changed and different ways of looking at that. I think there’s tremendous potential with a fresh pair of eyes. Four years later to come back and go, wow, this is like the most exciting exploration province in West Africa, which I believe. Let’s take another look at this. And if I could do it in a way that was non-dilutive to Hummingbird shareholders with a partner who had the credibility, skills to do that.

Matthew Gordon: I mean, 4.2MILoz here, Cardinal next door coming up with between 5 or 7oz, I can’t quite remember. You know, whatever their market cap is, 130 million bucks, something like that. The Berimium Green Stone, it’s prolific. There’s alot of companies there. What type of company or strategic partner, someone who is going to come with money and skills are you looking at? Have you spoken to anyone? Or is it just a consideration at the moment?

Dan Betts: Yeah, it’s a consideration. I mean, you know, I don’t have any scoop to disclose for the purpose of the interview. But I mean, I’m talking to lots of people. And that’s the answer. And they’re varied and diverse. And they’re not all just, you know, capital markets listed in Toronto or London or Australia. It’s a more diverse world than the investment community realizes I think.

Matthew Gordon: For sure. I always ask the management team about the thinking, what’s going on ahead? What’s the strategy? What’s the business plan? How are they going to deliver it? Who’s going to deliver it? So, you talk about it may be zero value attributed to the Liberian asset at the moment and you I’m going to try and create value there, we’re thinking about how we go about doing that. So, I’m just interested in that process and timeline. And how much money do you throw at it? How much internal resource do you throw at that before you can bring strategic on board?

Dan Betts: You know, you need to play the cards as they’re dealt. And it depends on the conversation you have with a potential partner and how they want to structure the deal and whether it looks attractive. But in terms of strategy for taking Hummingbird forward, I think our focus is more on free cash margin, trying to focus on a lower-cost producer of a more manageable size. In places where we think we have a competitive advantage. Now we have a competitive advantage in Liberia. I mean, yes, we’ve been there for over a decade and we know everyone. But the rest of it doesn’t really fit with that strategy. It’s gonna be a big mine. It might fit better with somebody else’s strategy, but we can help them in a way that nobody else can. So, in terms of being involved in the journey, taking up the value curve, fully involved in that. In terms of actually building the project, I’m miles away from that if you see what I mean.

Matthew Gordon: Yeah, there’s a lot on the table, it’s whether the stars align, and everything comes together, you’ve got the optionality because it’s costing you time or money at the moment and quite a lot of cash elsewhere. So, let’s come back to Mali. What else are you sitting on except for the mine itself? You’ve got a lot of greenfield, brownfield exploration going on elsewhere and so on. What else is happening?

Dan Betts: Well in the country, that’s a big question. But I mean, if you go to our mining permit, there’s a number of deposits ranging from resources that we are doing studies on for underground or extending open pits or bringing in other open pits into the mine plan. But also, there are targets to find new resources. We’ve also got the largest shareholding in an expiration company called Core Gold, which was created by us with it as a joint venture with some colleagues of ours. And, you know, we’ll keep a watching brief on that and see how that develops, because that could also provide potential feed or to the Yanfolila project and also provide extending the mine life. So that’s our thinking behind that.

Matthew Gordon: So, how much of that do you hold?

Dan Betts: Give or take 20%.

Matthew Gordon: So that’s exploration optionality for you. Have you got any agreements with them or is it just equity position?

Dan Betts: It’s just an equity position.

Matthew Gordon: Okay, so back on your own assets, things that are in your control. I get that we’re focused on generating cash and free cash flow. But on the growth component of the story, if you can just tell us a bit of what’s happening.

Dan Betts: Sorry to be specific. Do you mean on our license or do you mean general M&A heads up what’s going on in the country?

Matthew Gordon: On your license, if there is any, it’d be great to talk about that.

Dan Betts: Yeah, well, there isn’t.

Matthew Gordon: What does the board charge the management team with doing on that front?

Dan Betts: Right. So really if you go back to, we have to go back 12 months. We have to go to when we had issue at the pit and we basically closed ranks. Did this pushback, focused on cashflow and survival and performance. We cut our expirations spend last year to accommodate that. And really for the first half of this year, it was all about working through the challenges. So, it’s really only now this quarter that we can lift our head up again and focus on the wider picture and building the business. But I mean, a lot of work has been going on in terms of conceptual studies for potential underground extensions to the pits, to the Resource, Commander East Resource and Commander West Resource and also other identified resources such as East and West that we could look to bring ore into the plant. And what would be good about that is that oxide resources. So, they’d complement the fresh rock as we get deeper in the pits. So that’s what we’re focusing on.

Matthew Gordon: Ok so, you generated some cash. And I know you’re paying off a bit of debt, you’ll have a lot less in a year which is great. How do you use that? Do you fall into the kind of producer trap of basically any money you generate has to go to trying to generate more ounces in the ground? Or would you leverage yourself?  I know you’ve got a bit of debt, but can you get more in there, debt that is, so that it’s non dilutionary?

Dan Betts: It’s a catch 22 because people will only lend you more debt if you’ve got a longer mine life to borrow against.

Matthew Gordon: You talk about dividends. You’re not paying dividends now, it’d be crazy to, but at some point shareholders are looking at that.

Dan Betts: I’d love to be a dividend paying gold miner, but you don’t want to do it at the expense of the future of the company. So, it’s a balance. I mean, what I always said at the start and I’d like to get back to that is, you know, be disciplined, don’t spend more than 15% of your free cash flow on exploration. And with that 50% of free cash flow, replace and increase your reserve base. That’s okay. And it just kind of feels right based on experience, I guess. But, that’s kind of where we’re at.

Matthew Gordon: Understood. That’s an interesting number. No ones ever put a number on…

Dan Betts: I think trying to build a discipline into that sort of thing is important. And, you know, we haven’t been able to because we’ve been fighting different issues. But, you know, we need to now apply that discipline from here going forward I think and in terms of dividends, I mean, it’s a question that goes round, round, round and again, it’s a catch 22 because mining is extremely dynamic. The markets are extremely volatile and you commit to something and you’re small single asset project like ours, something goes wrong, then you’re not going to be able to repeat it and then you’re gonna be exponentially punished because you didn’t maintain your dividend or improve it. That said, it would be great to return excess cash to shareholders. I mean, what else are you going to do with it unless you find an outstanding project?

Matthew Gordon: It’s always nice when the management team say it’s nice to do it, we want to do it. How do you plan to put yourself in a position where you’re able to do that? Clearly, the current market, as in the last quarter and hopefully going forward with the price of gold, you can.

Dan Betts: Well it might not last. But I think we want to build a gold business and I don’t have a roadmap for exactly what that will look like going forward 10 years. So, you want to maintain some optionality, but you want to build a reputation for being disciplined and prudent. So, for me, conceptually, if you get to a position where your net debt free, your cash and your gross debt meet zero, it would be nice to signal something to the market. Now, whether that’s a dividend or a special or a buyback or something, I’m unclear. And this isn’t happening right now, you know, but we need to start thinking about it as a board now. And next quarter and early next year, because hopefully it will happen quite soon.

Matthew Gordon: Well, the other bits are steady appreciation of the share price. Steady, not meteoric, not hockey stick. We all love that but that’s not realistic. So, you know, steady growth, there is liquidity in stocks. People can get in and out, and feel they’re made some money with you. Getting guidance from the company as to the things they’re putting in place to help accommodate that as best one can.

Dan Betts: I know that everybody that invests in Hummingbird, myself included heavily, is you see the share price, it’s there, it’s on a screen. This is what you’re worth. It’s not what you’re worth. It’s the price. You know, we’re back to that age old argument of price versus value. And the value of Hummingbird is massive. You know, the relationships, the people on the management team experience, the problems we’ve overcome, the experience, those are all intangible values. They’re not in the price. So, we have to leverage that value. And over time, it will come through in the price.

Matthew Gordon: Yeah. I mean, cold harsh view of this from a shareholder who’s bought in at one price and they’re sitting on 20, 30% lower than you are. Not saying yours are, but if they were you can sort of see why all of that doesn’t really matter. I think it’s a great story, I think you’ve dealt with some pretty tricky things and still continued to produce. I’m not down on the company, I’m just saying from your perspective, thinking of the shareholders, current and new to come in it’s given that guidance as to what the future looks like and you’ve done some of that today, but a bit more of the growth components to when and you’re at a point where you can do that, I don’t think you’re there yet.

Dan Betts: Yeah, but I mean, I take you back to when we listed Hummingbird and we raised some money specifically to explore, to take a small resource as large we could take it. We didn’t even have a target. And over the next three years, we found, formally announced, we were the most successful explore in West Africa and what happened to our share price? It went down 60%. So, even if you deliver on what you say, if you know the market, if you’re the wrong side of the market, you’re going to lose. So, the market wants one thing, whether it’s value or growth or discipline. And then lots of people chase that and they say, okay, this is what we’re going to be. And then the market changes. So, for me, I want to build financial discipline. I want to focus on free cash margins so we’re protected. I want to build a reputation as someone that can operate and deliver. And then let’s see where it takes us.

Matthew Gordon: I think it’s a great place to finish. That’s been a great summary. Thanks very much. Great to catch up again. I think that’s fascinating for people who are new to this story. I’m not sure who it’s new to because it’s around the world. It’s also quite a good explanation of what the next couple of quarters are going to look like if you continue to deliver those.

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A close up photo of a Hummingbird taking flight with green foliage in the background.

Magna Mining – How Do Private Nickel Companies Compete? (Transcript)

A wide arial photo of a large nickel mine.

Interview with Jason Jessup, CEO of Magna Mining Corp.

Magna Mining Corporation is a private nickel company incorporated in Ontario, Canada in 2016. Their primary purpose is on the acquisition, exploration and development of nickel-copper deposits in the Sudbury Basin of Ontario, Canada. Magna made its first acquisition, Ursa Major Minerals in 2017; Magna became owners of the “rather advanced” and “world-class” Shakespeare Mine, Ontario, an open-pit nickel project that was in commercial production as recently as 2010/11 via toll milling, with approximately 490,000t of nickel ore tolled. The mine also possesses all the major permits, and Magna Mining sees it as central to their play. The mine was acquired by a contrarian strategy when nickel was around $4/lb and nickel projects were about as appealing as diving into the mine itself head first.

Jason is originally from Sudbury, and has vast experience as an operations manager at mines for large corporate and junior companies; this latest project is familiar territory. The president of Magna Mining is Vern Baker, an MBA holder from Stanford University with decades of mining experience, though shareholders might be concerned his priorities lie elsewhere as full-time CEO of Jaguar Mining. The remainder of Magna’s team is comprised of experienced, highly-knowledgeable individuals. The team looks exciting, but there will be question marks around whether Magna is the priority, given many of them have heavy involvement with other corporate entities.

Magna has big aspirations of becoming a 50-year, +$100M company, but they have a long way to go before they can get off the ground. Magna Mining needs to raise money, locate acquisitions, make acquisitions and then go public. These are big steps that have to be implemented before they can proceed forward to even the earliest mining of nickel. For some Magna might be an intriguing long-term proposition, especially if they buy into the almost unanimously supported EV narrative, but for many investors, it might seem Magna has bitten off a little more than they can chew. Perhaps Magna might be ready to go by the time the EV revolution finally kicks off.

Magna Mining implements a roll-up strategy via opportunistic growth, where key assets are identified based on promise and past performance and then acquired. Magna is in ongoing discussions regarding non-core assets in Sudbury, but is the stage of this project all a little early for investors to consider getting involved?

Some might argue it’s a great opportunity for investors to get involved at an extremely early stage while stock is cheap and potential is yet to be extracted. The team at Magna has an excellent track record in nickel, and are certified experts in the field of mining metals. Nickel itself is a commodity with great potential, so perhaps Magna is a company to explore. The Shakespeare Mine’s Capex of $150M is particularly unique and the surrounding area of Sudbury is as good as it gets for facilitating mining.

What did you make of Jason Jessup? Does Magna have the potential you require as a potential shareholder, or is it more of a pipe dream? Comment below.

Interview highlights:

  • Company Overview
  • Team Experience and Track Record
  • Genesis of the Project: What is Their Main Focus?
  • Challenges Going Forwards: Is their Goal Realistic, Bi-Products, Costs and Strategies to be Applied
  • How does Magna Mining Stand Out?
  • Assets: Can Shakespeare Become a Profitable Asset? What are They Planning for the Mill?
  • What is the Future for Magna Mining, if the Market Changes or Stays Stagnant?
  • Finding Funding and Remuneration
  • Why Should You Invest in Magna Mining?

Click here to watch the interview.

Matthew Gordon: Now this is an early stage project, but it’s a nickel project. I think people are excited about nickel at the moment so why don’t you give us a one-minute summary and we’ll get into it.

Jason Jessop: So, Magna Mining is a private company. We incorporated in Ontario in 2016. And really, the purpose of our company was to consolidate nickel copper projects in the Sudbury base. So, we’re very focused on one particular region. This is a region that we have a lot of experience in. I personally live in Sudbury. I’ve worked here for different companies over the past 20 years. So, this is really where we’re comfortable. In 2017, we made our first acquisition of Ursa Major Minerals. Ursa Major owns the Shakespeare mines. Shakespeare is a nickel, copper, cobalt, platinum, palladium, gold open pit project that has tons of resource. It is you know, it’s rather advanced in that it wasn’t commercial production in 2010-11 through toll milling, approximately 490,000 tons of ore was toll milled through a mill here in Sudbury. It does have permits, all the major permits to build a 4500-ton open pit mine with a concentrator and tailings storage facilities. So, this really attracted us to the project. And, you know, we were I would say very strategic. And when we purchased it because nickel was in that $4 range, people were not really looking at nickel projects, but we understand the fundamentals behind nickel. And when people are not talking about nickel is a time to make acquisitions. So, we’ve been able to advance the project over the last couple of years, de-risk it further. And we’re pretty excited to move into up to the feasibility study and in a position to make a construction decision in 2020.

Matthew Gordon: Perfect. Okay. Thanks. That’s something. Appreciate it. I’m interested in this story because it’s early stage. You’re private, we talked about that, but with all things Canadian it eventually gets listed. So, I would love it if you could share with us the process that you’re going to go through to kind of get it to that point. So, for our subscribers and followers and investors I’d love to maybe start with who’s on the team. So, tell us about you and then tell us about the team.

Jason Jessop: Sure. So, as I mentioned, you know, I’m from Sudbury. I’ve worked for a number of different companies here. You know, I really started my career in Sudbury. I was management at one of the mines here in Sudbury. Spent about five years working there. You know, great company, great experience. But after five years, I recognized that I probably don’t fit within a large bureaucratic company like that. So, I went to work for another up and coming junior that was in the basin. Those who don’t know FNX mining in 2002, they were a junior company, share price about 25 cents acquired five pass producing mines through good exploration and creativity and entrepreneurial spirit. They were able to bring three of those mines back into production, made some significant discoveries at them. And you know, before the financial crisis of 2008, had a share price of approximately $40. So huge success. And I was really fortunate to be part of that team and see that growth.

Matthew Gordon: What did you do there?

Jason Jessop: So, I was an operations manager at two of the mines here in Sudbury, brought one of them into commercial production. I helped raise another one from 300,000 ton per year production to over 800,000 ton per year. So, you know, I was heavily involved in the operations side of the business. And after 2011, we had merged with another company, gone a little bit bigger. And I thought there were some opportunities, maybe work for another junior. So, I’ve spent a couple years in the corporate development field doing work in royalty space as well as junior mining structuring deals and finding acquisitions and evaluating projects. And in 2016, saw an opportunity here in Sudbury to do something again similar to the experience I had and that’s when we formed Magna.

Matthew Gordon: And who else is on the team?

Jason Jessop: So, our chairman is Vern Baker. Vern Baker is a professional engineer, he has an MBA from Stanford. Vern was the V.P. of operations at F&X Mining. We worked there together. Vern was a great leader and actually a really great mentor of mine. And we kept in touch after we both left. And, you know, we all see this opportunity in Sudbury to take some of these non-core assets and be very successful, mining them differently than some of the majors.

Matthew Gordon: But he’s says here he’s full time CEO at Jaguar Mining.

Jason Jessop: So, yeah, so he’s our chairman. He’s also a CEO of Jaguar Mining in Brazil. So, he joined that team in August and he’s helping them unlock the value in their operations in Brazil.

Matthew Gordon: So, what’s his actual day to day with you on this particular project?

Jason Jessop: You know, we communicate weekly. He’s involved is as much as needed. So, he is available. You don’t get to see him probably in person as often as I’d like to. But, you know, he’s a great leader and a great collaborator to bring teams together.

Matthew Gordon: Right. And what does that mean for you and in terms of what you’re trying to do now? So, he’s giving you advice or still mentoring you or…?

Jason Jessop: Yeah. Well, he you know, he’s the chairman of the board. So, you know, on board decisions and large decisions, he obviously gets involved. You know, he’s still very involved in the strategy of how we move forward. And we have a few other opportunities that we’re looking at. So, he gets involved in that. One of the things that we’ve done here, and I think this is really what speaks to the experience, and I can get into some of the rest of the team but, you know, our experience working in FNX and in Sudbury is really based around people, and I think that’s what differentiates us from maybe other groups that have tried to do something similar in Sudbury in the past. We are a very successful group because of the culture. So, you know, Vern, I would say from a cultural perspective, you know, he sets that tone for the group and we provide a lot of ownership to the people that work in our team. So, we’re a small team. You know, we wear many hats. But right down to, you know, the guys that go out to site and do one monitoring and, you know, the care and maintenance work. We give a lot of ownership to our people. And that’s the successful culture that we saw at FNX Minings, we recreate that. Now, as far as the rest of the team, our CFO and co-founder of Magna is Derek Wayrauch. Derek is a CA by background. He’s been an executive or board member of a number of publicly listed companies over his career. Currently, he is the interim CEO of Palladium One, which is a junior palladium company explorer, and has a property in Finland. So, all the nickel property here in Ontario. Derek, you know, at this point we do not need a full time CFO. So, he acts as our CFO and as a board member. You know, Derek and I speak almost daily and are quite involved, especially on the financial side of the business. And Peter Litefoot is our V.P. exploration. Peter is a veteran of the Sudbury base and spent a lot of his career as a chief geologist for international nickel targeting. And he really wrote the textbook on Sudbury deposits and the origin of Sudbury Igneous Contact. So, Peter, he really leads our exploration in and around Shakespeares, as well as evaluations of other non-core assets that we’re looking at.

Matthew Gordon: I notice you’ve got a bunch of other strategic advisors and let’s not get into that. We can maybe post this presentation up at some point for people to look at. You’re kind of like I’m bringing the band back together here. Some people you’ve worked with before, people who’ve experienced success together and you think… What do you think actually? We just want to do a project. We just want to work together. I mean, that was the genesis of this? What was the idea?

Jason Jessop:  Yeah. So, you know, we have big aspirations here in Sudbury. We don’t want to be just a little single asset junior who hopefully we can get to a point where we’re a $50MIL or $100MIL company. We have seen the success. It can happen. And like I mentioned in the past with our group. So, we really have big aspirations. There’s a few things that we see. So, by having Shakespeare and building the mill, it gives a real strategic presence in the basin. And there’s a number of deposits that either don’t fit well with the majors or have metallurgy that maybe isn’t conducive to the large mills they have here in Sudbury, for example, Valley’s Milford process, probably 35,000 ton a day. So, it’s a huge plant. You can’t customise for a small or small percentage of ore coming in. So, having this opens up a lot of opportunities to negotiate and find other feeds that can be higher grade than our open pit ore.

Matthew Gordon: Come back a bit for me here. You’re getting into the project. Come back a bit. Tell me like a helicopter view. We are trying to be what? A major nickel producer in the Sudbury region or globally? What’s the idea?

Jason Jessop: So, absolutely. We are looking to become, I would say, a mid-tier producer in the Sudbury region. We’re very Sudbury focused. We’re leveraging the experience of our team. And, you know, and I would say our advisory team is very important to us. Again, a lot of former F&X people who have a lot of first-hand knowledge and insight. So, that is what we are focused on. You know, I would say that we are not experts in mining exploration, in mine building. We’ve not built a mine in the Congo. We have not operated a heap leach gold operation in Chile. What we have done very successfully and what we are experts on is exploration mining in Sudbury and building mines in Sudbury. That is really where our expertise is. So, this is where our focus will be.

Matthew Gordon: So, what’s the challenge going forward then? You know what you want to be, you’ve articulated that clearly and it makes sense. And that’s the experience, you know what you know. What are the challenges? You’re talking about building this thing into a mid-tier. You’re going to need to raise money. You’re going to have to find acquisitions. You’re going to need to make those acquisitions. And go public, I suspect at some point. How do you manage all of that? Is it realistic, first of all?

Jason Jessop:  We believe it’s realistic. We believe that we have a great strategy. We have a team that’s done it before raising money, I think, you know, is always a challenge in the junior space and being a private company, especially, you know, in the past couple of years as nickel prices were quite depressed. Yeah, it was absolutely challenging. Again, we were able to keep our GNA cost quite low and be really focused, continue to de-risk. Going forward we have we believe in this better nickel environment. There is a lot more opportunity to raise capital. Having a project and a company that’s focused in a great jurisdiction, there’s a tremendous amount of metal endowment in this region. And, you know, with the combination of not just nickel, but also some really considerable by-products of copper and cobalt and platinum and palladium and gold. We have seen a lot of interest in and we think that getting the capital once we have our feasibility study done for project financing, is quite reasonable. We’re not looking at raising $500MIL to build out Shakespeare. Our CapEx is not completely finalized, but we’ll be in about $150MIL Canadian range. So, it’s manageable. We have a good by-product credits, so there’s opportunity to use a precious metal stream as a portion of that project financing without taking away from the overall economics to much of the project. So, there is some strategies we’re working on right now as far as moving that forward. As for other projects in the basin, because of our success in the past with many of our team members, finding the capital to make these acquisitions, we believe is very possible. It’s very doable. And the challenge always is, is dealing with major so as being a smaller private company, we get asked the same kind of questions a lot of people do. Where are you going to get the capital? Do you have the support? Are we wasting our time negotiating with you now? We’ve been here for a while now. Like I said, I’ve been working such for 20 years. We’ve built long standing relationships. We know, a lot of the people and the players. And now that Shakespeare has moved forward over the last year, we have developed more credibility, I would say, with some of the other companies that are in the basin where they see a strategic benefit in working with us. So, obviously a deal is never done till it’s done. But I would say in the next year, we should be able to secure some additional projects in the basin that will have synergies with our Shakespeare mine.

Matthew Gordon: This is where it starts getting interesting for me. Okay. You’ve got a long track record in the basin. That’s correct. You know, people. Right. But like you say, they’re only going to go with you if you’ve got access to capital. Right. Or this is strategic benefit. You’re saying some people are interested. There are interested in your knowledge, presumably. But it still comes back to the issue of availability of cash. Right. Availability of good projects because no one gives the good projects away for free. Right. So, you’ve got to either step up and pay a premium or pay a price for it or you’ve got to deliver them something which they don’t have. And, you know, what is it about you guys versus the bunch of other people I’ve spoken who have experience in this basin? Why are they going to go for you? Personal relationships?

Jason Jessop: Yeah, I think there’s a little bit. So, one of the things, we’re not looking to buy a World-Class deposit in the Sudbury Basin. Those aren’t for sale.

Matthew Gordon: Well, tell us about that. What is it? Do you find small assets? Roll them up and together? Is that the idea?

Jason Jessop: That’s what we’re looking at. So, we’re looking at projects that are, you know, ideally past producers that can be brought back into production relatively quickly, but just do not make sense for the cost structure and the way that larger companies operate. And, we have an in-depth understanding of that. Again, going back to our experience, taking mines that were, very very low priority and would’ve never restarted under a major company. We were able to take those, approach things differently, keep cost structure low, you know, use mining methods that probably haven’t been used in the Sudbury basin and in 30 years, very selectively mined some of these deposits and create a lot of cash flow. Now, it isn’t on the scale that really moves the needle for a major company, but for a junior company, it can create a tremendous amount of cash flow. And so, these are the opportunities we’re looking at. And we have experience in doing it before. I wouldn’t say it’s easy. It definitely it comes down to having the right team, the right culture, the right approach, and having a CEO that asks the right questions from the people, so they can stay focused on what’s important. So, I think we have a lot of credibility with people, they know what we’ve done here before, and that gives more confidence that if they do a deal with us, at the end of the day, there’s going to be some benefit to them. Most of the deals that we’d be looking at doing in one way or another have some tie to the owner’s long term, whether it’s an off take or royalty or something. So, they don’t want to sell something that the end of the day really there’s no long-term benefit. What’s the point? So, we have developed some confidence, I would say, in some of the discussions and people, you know, in the basin.

Matthew Gordon: So, first things first, you’ve got to get Shakespeare moving. You’ve got to get financed and you got to be able to… I think you’ve talked about doing various studies and sort of understanding what it is that you’ve got and try to understand the economics. That’s fair enough. And if you do that, you might be able to persuade someone to give you the money to be able to develop this thing. So, from what I read, it’s the standard sort of low grade, about .3, that sort of level? But you do have the copper credits, which is a good thing. So, the low grade means you need scale to get the economy’s going there. Do you need to do these other acquisitions to kind of give you that scale? Or do you think Shakespeare has got the potential to actually become a meaningful project in its own right?

Jason Jessop: Yeah. Good questions. So, Shakespeare is a, I would say you describe it in a lower grade category, but it’s not overly low grade the because of the by-product. So right now, it’s sort of sitting in that, .65% nickel equivalent range. And that’s why it really requires about a 4500 ton per day plant, running it at 2000 tons per day. You just don’t really get the payback you require. So, I think we have a good-sized plant that sort of permits our, currently, 4500 tons per day. You know, one of the things that has held back Shakespeare in the past is it only has, you know, in the 2006 feasibility study, about 11.5MIL tons of reserves, which at 4500 tons a day gets it about a seven-year mine life. And so, people look at that as a seven-year mine life’s way too short. You know, it doesn’t kind of meet our hurdles, but there is tremendous exploration potential. So, to get back a little bit to why there’s a seven-year mine life, in 2002, Ursa Major optioned the property from Falcon Bridge and they made a discovery in 2003, about 150 meters to the east of the West Deposit, which was the known historic deposits, about 2.5MIL tons. And, you know, had a great intersection, followed that up and basically drilled out over the next two and a half years, about 14MIL tons of resource. Now, this was at a time in 2005 where nickel was starting to take off and they saw an opportunity here. Let’s get this permit. Let’s do a feasibility study and get it into production and take advantage of these rising nickel prices. So, they continued in 2006, completed a feasibility study, 2007 received permits for construction. So, they did a great job. But after 2005, there really wasn’t a focus on exploration anymore. They had enough to get going once for cash flowing. We’ll continue to drill out, extend the mine life. And that was the strategy. 2008 came along. You know, everything stopped. And it wasn’t until 2010 that they were able to actually start up through toll milling some production. But when we acquired the property, you know, it was really an orphaned asset. The owner had become very non-core. There was no institutional knowledge left. So, it took us a lot of work to pull together all the data, the historic work that was done, re-interpreted, take this store, geophysics, reinterpret that. What we found was there’s a tremendous amount of exploration potential and we’re quite excited about it. In 2018 we did some drilling in an area between the east and West deposits. So currently the project has two separate pits. As per the 2006 feasibility study. What we were able to do, we drilled this EM plate between the two deposits in an area it was previously believed to be unmineralized and every hole hit exactly where we expected in resource grade mineralization. Now, we had a budget that didn’t allow us to continue to keep drilling. So, we’re hoping to continue that drilling and bring more of that material in between the two pits into resource. By b doing that, we should be able to deepen the West Pit and expand the resources considerably. There’s also a zone that has very little understanding. Two holed intersected it in the 50s. One of the early drill campaigns. It has 103-meter intersection just to the south in what would be the foot wall of the west deposit. And there’s no follow up drilling. So, it’s a very large resource grade type intersection zone. Currently, it’s about 750,000 tons in resource, but there’s no drilling around it. Up dip, it’s open. Incidentally, we found some mineralization on surface, I guess long and short as we really think through exploration, there’s a lot of potential at Shakespeare. It’s really been underexplored. And we think there is tremendous scale. Right now, taken the resource 21MIL tons, we believe we can add another 5MIL tons of resource with additional drilling around the West deposit.

Matthew Gordon: All right. OK. Those are the kind of exploration statements I would hope you would say and expect you to say. But if we come back to what you’ve got today, I do want to talk about this mill component because again, I want to understand your thinking. I’m fascinated by the way the management think, because you make or break companies with good decisions or bad decisions. So, around this mill, right now, today, 4500. You say you have a permit for that?

Jason Jessop: So, we have the permits, the closure plan and major permits for the mill and tailings storage facility and mine.

Matthew Gordon: Beautiful. So, how long does it like the mill of that size take to build?

Jason Jessop: So, once you start breaking ground, assuming that there isn’t delays to long lead item components. It’s about an 18 month build. But let’s say 18 to 24 months.

Matthew Gordon: And what does that mean for you in terms of your ability to kind of hit this cycle? I mean, you’ve got to have a view on how long this cycle is going to run, how quickly you can get into production and does this mill, the cost of this mill, prohibit you in a down cycle from actually operating? What are all the economic factors you’re trying to manage? The rest you’re trying to mitigate, because you’ve got to have a view of the future. You’ve got to have a view of what you can do today and what happens if there’s a down cycle, right? And, you must have then had contingencies and plans and said maybe, maybe we just can renegotiate the terms with… I think is a couple of other mills locally, aren’t there? Get better terms with those guys? So, how did you get up measuring those things up against each other, if you did do that?

Jason Jessop: Yeah, that’s a good question. We get asked that a lot. You know, once the mill is built and we’re in production, it might actually have a pretty low C1 cost. You know, again, we’re not finalized the feasibility study, but from all the internal work we’ve done we’re gonna be somewhere on a by-product basis, you know, sense of a dollar, a pound, nickel… So very good C1 cost. As far as a toll milling idea, we definitely have looked at that and a lot of people said, you know, why don’t you just continue to keep toll milling and create some cash flow? It is an option. It is an option. Now, I don’t see it as being the best option for us. Again, you talk about these larger mills in the basin and you know, they are really set up to process a massive amount of certain ores. And because our ore is, it’s done great recoveries, but it’s not the same as a standard Sudbury contact, 2% nickel ore. So, I don’t think we’re gonna get as good of terms as necessary as we would want. And, is it worth investing? I think that if nickel went to $10, there’d be an opportunity during our construction stage to be shipping ore, as we’re stripping, start some early production through some toll milling for maybe a year or two until the mills up and running. That’s definitely a possibility. And I think we could make some pretty good cash flow from that. Long term, I just don’t see it as being the best option for the company, because really at some point, you do not have final control over your destiny. If they say, you know what, we’ve decided we don’t want your ore anymore. What do you do? So, you know, there may be some opportunity to create some cash flow in the short term, depending on metal prices. But I think that, the real focus is to get this built and be a low-cost producer. As far as how we can tie in other projects, you know, Shakespeare on its own has a reasonably good payback. If we can extend the mine life, you know, the NPV goes up significantly. But if we could add in another deposit, let’s say another non-core Sudbury deposit that has higher grades, higher margins and add that in at 1000 tons a day, displace some of our open pit ore. Well, the economics of that, they’re fantastic.

Matthew Gordon: Well, yeah. Look, I don’t envy a junior mining board at all because there’s so many ifs and buts. You know, if it gets to 10 bucks and if we can find an asset, if we can’t, it’s kind of like me playing with a spreadsheet of, you know what ifs. I could make I make a lot more money if my shares went up in price every day. I’m trying to piece together the kind of the roadmap that you go through. So, what I’m hearing is you’ve got to get Shakespeare nailed down, get that where you want it to be in terms of what you know about it, to be able to go and have intelligent conversations, sensible conversations with either money, people with money. And you’re not public yet so you’ve got some options, right? Strategic partners who may be just money and offer you different types of money or an operating company which has cash, which again, once you kind of have to somehow under their wing. I mean, you’ve got to look at a multitude of different options and you must have these sorts of conversations each week. I suspect to look at how you move forward, right?

Jason Jessop: Yeah. And it’s actually interesting. You know, we have a lot of irons in the fire, especially in the base metals space. You know, there’s just a limited number of players. So, you want to get to know all of them. So, we’ve had a lot of discussions with a lot of different players. You know, at this point, we may want to partner with a producer already, look for a strategic investment. We have been talking with a lot of private equity groups who are quite interested. They like the team. They like the space. They like the opportunity and the de-risk nature of the project based on the permits. So, there is a lot of opportunity out there. There’re three majors operating in the basin. You know, we have regular discussions with all of them. And, you know, we’re quite optimistic about the opportunities we have here. So, we do need to be, you know, flexible, see opportunities, weigh them against other opportunities and risks. And, yeah, we’re doing that on a regular basis, since it’s part of the exciting and fun part of it is this way.

Matthew Gordon: Well, it’s exciting till you run out of cash and then it stops becoming exciting. And I appreciate you’re private and we don’t have to be worried too much because you’re not public yet, but you will be. So, how have you financed this thing so far? I mean, you know, you’ve been in it two years.

Jason Jessop: Yeah. So, we started off with a very small sort of friends, family, type route. Raised some money. And, we brought in some strategic sort of investor from Vancouver, David Elliot from Heywood. So, David came in and he’s been a very supportive shareholder. David Elliot and his group own about 20% of the company. And they’ve been they’ve been great. You know, we are looking for that sort of next strategic partner to put in another piece of money. Right now, we need about $2MIL to finish the feasibility study update and do some of this high priority exploration drilling adjacent to the deposit. As well as finalize some of the minor permits and engineering to get done. So, you know that that money… there’s interest out there being a private company. It gives you some opportunity to get money from maybe some places where, from private equity groups that are looking to take a bigger stake in a company, but, you know, being private also has its drawbacks where some investors just can’t invest because they don’t have that opportunity for liquidity. So, we talk to lots of people. We keep our GNA costs extremely low. So, we really want to make sure that, we’re doing what’s right for our shareholders, keeping the money that we’re raising, going into advancing Shakespeare, advancing our strategies. And so, we’ve been able to do a lot, I’d say, for a little. And it’s one of the reasons we’ve been hesitant. Up until now to go public, because just the extra costs associated with that. But, definitely I would say once we have our feasibility study done and it looks positive with hopefully some exploration success, it would be a time we’ll definitely look at…

Matthew Gordon: So, how much is the management sitting on at the moment? They have shares in this, I guess? Have you bought shares?

Jason Jessop: So, you know, management has lots of that. The two founders, I myself and Derek, we have about 47% of the company currently. Neither of us have taken any salary or compensation. I don’t even have options in the company. I am really working hard for the other shareholders that are putting their cash into the company. And I believe so strongly in that I’m willing to do that. It’s a big picture.

Matthew Gordon: That was my next question. Were you paying yourself? You’re not. That’s good. So, the money that’s been put in today is going to board in costs from outside costs at the moment, right? Okay. And then the next 2MIL. Would that continue to be the case?

Jason Jessop: Yeah. You know, at some point I wouldn’t mind paying myself a modest salary if the board agrees.

Matthew Gordon: What does more modest look like? A company of your size, what’s modest today?

Jason Jessop: Yeah. You know, probably more than 5000 a month, and less than 1500.

Matthew Gordon: So, we’ve just seeing some fantastic salaries on here. And I do ask the CEOs, you know, what they’re earning because the public company it’s easy. I can take a look. But they don’t like talking about it. Look, I think it’s been a great introduction to you, which is the important thing here for people, so when you do go public, they can sort of see what you’re like and what you’re thinking has been like and what your plans are or were from the start of this and track back and see if he delivered on those. So, I do appreciate that. Do you kind of give us the three reasons why people should be continuing to follow your story?

Jason Jessop: Sure. So, I’d say first and foremost is really like I mentioned earlier, I think that our team is unique. I think that we have a group that’s been successful before. We’re not trying to do something that we’re not experts in, that we don’t have experience in. We’re really trying to leverage the knowledge and the experience of the team in a region that we have deep roots in. So, I think that that’s sort of the biggest thing. Next, Shakespeare is a unique nickel development project. I don’t know of any other nickel development projects that are out there in a good jurisdiction that could be producing concentrates in two and a half, maybe three years and have a CapEx of 150MIL. So, it’s really unique de-risk. Great. You know, we have a great region we’re working in here, being in Sudbury, we have every service provider. You know, workers go home every night, so you don’t have the camps, which allows us to keep operating costs lower than a lot of projects. So, I think that’s great. And then the third thing is really our broader strategy, the consolidation strategy, to grow in the Sudbury basin. I think that is something that all of our investors currently have really seen as sort of a key reason that they want to get in early and take advantage of that, because the potential is great. If you believe in nickel, I think that we are one of the best stories out there.

Matthew Gordon: Well, yeah, it’s definitely the story of the moment. And I think, Cobalt and Lithium have been through a lot in recent years. And, you know, gold hopes that it is the new story, but people are interested in nickel. It’ll be interesting to see how you guys get on.

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A wide arial photo of a large nickel mine.

Link Global Technologies – Low-cost Energy Solution for New Generation Data Centres (Transcript)

A photo of a blue sparkly bitcoin against the backdrop of black with dots of blue light.

Interview with Stephen Jenkins, President and CEO of Link Global Technologies.

Link Global Technologies build and manage semi-portable, self-contained power solutions (containers) that can be rapidly deployed in virtually any environment. They are a low-cost energy supplier to the data-mining/data-hosting space.

Link Global started as a crypto-mining company, but recognised the opportunity of a bigger play in 2 additional sections: providing mobile date centre solutions and developing IP around energy efficiency. They have just carried out an IPO of 5,000,000 common shares at a price of $0.30 per share for total gross proceeds of $1,500,000.

This is Jenkins’ first foray into the realm of public companies; all his previous experience came with private companies.

There are question marks as to whether Link Global can compete with its rivals, especially big hitters like Cisco with a market cap of $190.59B! Jenkins remains adamant that despite the massive difference in available capital, Link Global can compete in the big leagues.

What did you make of Stephen Jenkins? Are you crazy about crypto? Can Link Global prosper against the technological behemoths that surround it? Comment below.

Interview highlights:

  • Company Overview
  • Going Public and IPO Raise: What Will They Do With the Money? Who’s Supporting it?
  • What Are They Focusing On?
  • Crypto Currency Mining Origin Story: Why Did They Choose This Commodity, Who’s Involved in it and Why Stay With it?
  • Energy Supplier: How Will They Compete in the Market? Who’s Got the Right Experience to Assure Success?
  • What are New Shareholders Buying Into?
  • Peers and Competition: Why Will This Junior Survive?

Click here to watch the interview.

Matthew Gordon: I’m interested in your strategy and how you’re going to move forward. I’d love you to kind of tell our folks, our followers, subscribers, a little bit about what you’re planning to do.

Stephen Jenkins: Sure. So Link Global Technology started primarily as a crypto mining company. Got in on the craze, located some machines down in low cost power, Oregon, and has been building a business based on crypto mining. But we quickly recognize the opportunities, I think in a much bigger place. So, that is providing the infrastructure for not just crypto mining, but also data centres in general. So, we’ve really launched what we think are three pretty exciting branches to our business. Those being the underlying revenue from crypto mining. Number two is providing mobile data centre solutions for all types of data centres. And number three, is developing some IP around energy efficiency.

Matthew Gordon: Kind of interesting. You’re a relatively small company. You know, the IPO, you going to raise some money on that. I think you’re issuing like 5MILshares. What sort of price you thinking?

Stephen Jenkins: 5MIL shares at 30 cents.

Matthew Gordon: 30 cents. With this IPO, you’re raising some money. What are you gonna do with it?

Stephen Jenkins: So, what we’re doing with it is we’re actually just building more. We’re basically building out more places to put in machines, but also really to build some more of the mobile units. And eventually we’ll use that. We’re partnering with a few people. We already have a partnership in Canada right now with Astra and we’re co-locating with them. We’ll build out that data centre for them. So, we’ve got things, I think, in the works. Obviously, we we’ve been in the IPO process for a long time. After the IPO happens, we can you know, really get busy with our business, put it that way.

Matthew Gordon: Get by focused on the business of doing business.

Stephen Jenkins: Yeah. It’s a long process.

Matthew Gordon: It really is.

Stephen Jenkins: And, you know, it again, goes to show you that the maturity of the crypto or immaturity of the crypto market. Anything could happen in the crypto market. We had exchanges fall apart. We had a bunch of other things happen. So, the commission came to us and said, well, how are you going to deal with it? Quite rightfully so. But what that did is it dragged on an IPO process for much longer than we were hoping. But at the second time, it made us look at our own business to see is this where we really want to be? And I still think we have a good underlying opportunity in that crypto space with all these other verticals.

Matthew Gordon: So, you’ve got a busy few days in front of you. You’re going public 14th, 15th?

Stephen Jenkins: November 15th. We should be trading the 14th or the 15th. Yeah. It’s been a fairly busy time.

Matthew Gordon: Exciting, exciting times. Is this your first public company?

Stephen Jenkins: Yeah. So, I’ve always been focused on private companies and this is my first foray into the public side. It’s definitely respecting that there is the market side, but respecting that, you know, everybody that buys into this company buys into any company, whether it’s private or public, we have to be able show people that we’re working for them.

Matthew Gordon: For sure. For sure. Okay. Well, you mentioned Lee Gable in there, well known. Who else? Who are the other names involved in supporting this IPO?

Stephen Jenkins: So really, they’re the main body underwriting this. And we’ve really stuck with them and we haven’t had to go out to find. We’ve had a lot of interest and much credit to them as well for raising awareness about what we’re doing. And really right now where we’re staying very tight. We like that it’s tight. We could have raised more money, but we want to stay focused.

Matthew Gordon: Yeah. Well, I agree with that. I think that’s smart and unusual for the Canadian market. You’re not raising a whole stock of money. But you’ve got already three branches to it. And again, when we sort of analyse companies and look at companies, we want to understand what they’re trying to be when they grow up, as it were. So, you started this crypto, you’ve kind of got the energy component to this, which I think is quite exciting. And then you’ve also, of course, obviously got the container technology as well. What’s the focus?

Stephen Jenkins: Yeah. Great question. So, what we’re using the crypto mining for is really that’s our what I would call our endemic cash flow at this time. So, we’ve managed to cover our overheads and get through a long IPO process with the exchange by having a Bitcoin mining ongoing. But I would say that in in the larger play is that it’s providing infrastructure for data centres in general. That means, you know, IP around energy efficiency is number one for sure. And using data, integrating it into mobile data centres.

Matthew Gordon: Right. And so why have you morphed like that, because obviously crypto has been fairly erratic, I think is be fair to say in terms of the price of Bitcoin etc. as people get excited and then it falls off again and it comes back up. So, what was your origin story with regards to crypto? Why did you kick off in that space?

Stephen Jenkins: So, we looked at crypto as a very interesting part and potentially some substantial blue sky on the revenue side. But watching and being involved in it day to day realized it’s a highly volatile, highly unpredictable market. We’ve got things coming up next May. So, we want to provide for people. One is this blue-sky opportunity with what could have happened with crypto. But two, is some revenue knowledge and some consistency in the business in terms of growth. So, providing infrastructure is always a good way to do that.

Matthew Gordon: Right. I’d agree with that. I wonder why keep the crypto bid at all if it’s that erratic. Why not focus on what seems to be quite a big demand area, which is energy and technology run energy supply.

Stephen Jenkins: That’s a great question, Matthew. We’re actually quite good and quite efficient at crypto mining. We have a very knowledgeable team behind that. We don’t do anything too complicated. We mined Bitcoin. That’s it, bitcoin core, so that’s all we do. We can turn that to Fiat. So, we use that as really as we say, as our cash flow. But we also we’re also using that to learn about the infrastructure that we’re building. So, we use that to demonstrate to people that we actually know what we’re doing ourselves as well, so we can lower our base costs by our own energy efficiency innovation.

Matthew Gordon: Okay. I can understand that. You’ve kind of got a working model which I guess you can test yourselves. And I guess it’s something you’d hope that you’ve come less dependent on that revenue stream. So how many machines have you got actually deployed at the moment?

Stephen Jenkins: Yeah. So, we have 1400 machines working now. What we’ll be doing and as profiled in our in our use of proceeds, we’ll be upgrading some of those machines in the short term. But again, I think, you know, watching how fast innovation is occurring in this space, it’s absolutely incredible. So, these machines are really only good at the outside for two years. So, unless you’re paying them back and making them, you know, cash positive within 18 months, you’re really fallen behind the curve. So, we’ll watch that closely and we want to be very conscious of our capital expenditures in that area. We’ll get to mine a little bit. And I think that really helps on a lot of cases. It’s still good cash flow today.

Matthew Gordon: Steve, if you don’t mind, tell me a little bit about some of the names that… You were kind enough to send the document over and some names on there. Michael Vogel, who’s well-known in the crypto space. I mean, how did you come across him? Why is he working with you?

Stephen Jenkins: So, Michael, he developed a company called Net Coins, which was really a good on ramp off ramp for Fiat currency. We came across Michael because we’re actually using a service to provide us with the Fiat, so on ramp, off ramp from bitcoin to cash. And we started discussing, Michael saw what we’re doing, got quite excited about it. He’s built, you know, and he really understands the crypto space. So, he’s been very valuable to us in terms of, you know, looking at our business and helping us decide if we’re on the right course with respect to crypto.

Stephen Jenkins: Great question. Jeff is a electrical engineer, 35 years’ experience. He’s well versed in automation. So, he’s done a lot of work within Canada’s space power. He’s done a lot of work within automation for skids and containers. And he’s really what we look at as our expert on the electrical side. Ed Smith is a well-known engineer, Phoenix Energy. He helps us with the heating and cooling side of stuff. So, they come together and really my focus is on the energy, renewable energy, but also taking the technical garb and putting it in English for people. So, I’m a bridge between the technical side and what I think are the retail people that maybe don’t understand all the technicalities of it. It’s a good team.

Matthew Gordon: Yeah. And then there’s have a guy in her called Feng Tao, quite successful Chinese businessman. How has he become involved with you? What’s his role here?

Stephen Jenkins: Lee Gable’s is the underwriting and financier for the project. Tao is very well known in China for being successful in terms of business. And he is the largest shareholder in the company. He has offered some incredible insights into the crypto market. Chinese are obviously very, very big players in the crypto space. So, he’s provided us with really great contacts and I think he provides that high level vision of what can be in that space and understands business very well.

Matthew Gordon: So, is that it or is there a kind of link to China in terms of the production and manufacture of some of your products?

Stephen Jenkins: Yeah. So, some things maybe that are early stage, but there’s no question where when we’re bringing over hardware, anything to do with crypto, all the hardware is still coming from mainland China or from Hong Kong. So yeah, we’ve got to have those contacts and we’ve got some interesting ideas about things that can be done and certainly he does as well. But yeah, it’s a critical connection for sure.

Matthew Gordon: Just staying on him, he’s your largest shareholder. How much does he hold?

Stephen Jenkins: He’s under 10%.

Matthew Gordon: OK. And has he introduced other money from China, or was that the idea?

Stephen Jenkins: Well, there was no question that, you know, they have a discussion there about to what’s going on in North America. There’s obviously an interest to grow the business to North America. So, he’s been incredibly helpful with respect to introductions and that kind of stuff. So, we have growing relationships, for sure.

Matthew Gordon: Right. OK. Let’s come back to the energy component, because again, I see what’s going on out there in the marketplace. You got players like Amazon and Google and Facebook. They’re building these huge data centres. You’ve got a lot of second three, second tier, third tier companies out there as well with their kind of respective technologies. Where do you hope to sit in all of this? I mean, how do you compete with those second, third tier companies?

Stephen Jenkins: The bottom line is that the demand for something like Amazon Web Services is overwhelming. Where we are in Oregon right now, there’s 14 data centres just for Amazon. They’re building another 16. And they’re also learning that, you know, that the demand for products and innovation in this space is huge. So, we’ve had early discussions with a number of players in the market. And we know that this will provide us a really enormous step forward, I think, in terms of our own business. So, we’ll stay focused in that area in Oregon, because that’s really where you’re seeing lowest cost power and the biggest development of data centres right now.

Matthew Gordon: OK. So, I named a few big names there. And I appreciate you can’t say too much about names, a few big names operating in that space around there. Have you got relationships with these people? Are you in conversations with them? What is it that you’re actually talking to them about? Are you going to be a supplier to them or what’s the relationship look like?

Stephen Jenkins: Well, it depends on what we can provide for them. So, we’re fairly motivated, I think, on the energy innovation side. And providing turnkey mobile data centres that integrate our own IP in there. So, what we’ll do with them is and what we’ve been doing is just really having early stage discussions about what they want, understanding what their needs are. So, we make sure that our focus is to fulfil their needs. Right. And just to give you an example, one data centre for Amazon is using $1.6MIL a month in power. 200,000 gallons per minute in water. So, that’s all money they’re spending out. So, whatever we can do for them, let’s say we can provide 20/30% energy savings. That’s a massive amount of number or what could be 30 data centres. So, yeah, of course, they’re interested.

Matthew Gordon: Yeah, they would be. And is that the type of products and intellectual property which you are developing currently? Because you talked earlier, you’ve got a bunch of crypto guys on the team, which is great. But around energy, who on the team has got that kind of background build to bring this on board?

Stephen Jenkins: So, the team we have electrical engineers, 35 years’ experience in automation and in containerized solutions, skid solutions so that they’re semi mobile solutions. So, bringing together people with understanding of how data centres operate, how computers operate and how power operates is really what our focus is and that’s how we’ve got forward on IP and innovation in energy efficiency. So, if you look, there’s been a lot of exploration today on DC data centres. So, we know that, you know, between alternating current and direct current, we know there’s real great gains to be had on DC data centres.

Matthew Gordon: Right. I mean, it kind of fascinates me how these big companies make investment decisions, right? They’re making a lot of money. Reliability, it’s got to be more important to them than energy saving, surely, isn’t it?

Stephen Jenkins: Oh, for sure. But if you want if you look at, say, one of the Amazon data centres as a good example, they’re backing up that entire data centre with Diesel Jensen. So, they’re using generators that are diesel powered. They’re conscious of the marketplace as well. And, you know, social impacts and perspectives and perceptions on green power. So, they didn’t want to have these massive diesel generators hanging out of all their data centres. What we can provide, and one of my focuses is renewable energy. So, in somewhere like Oregon, you’ve got massive wind resources, you have massive solar resources, but you don’t necessarily have a way to put those into the data centre in a coherent fashion. What battery storage does is which is one of the other things we’re playing with right now. It provides this amazing opportunity to… Doesn’t matter what type of energy you provide or what kind of generation you’re getting. They will put them in batteries and distribute that when needed. You can also use these solutions for managing power on a grid scale. All of the major utilities want to be able to manage power at a grid scale. So, if you’re relevant enough in the marketplace, you have enough power draw, they can use you to balance an entire group. There’s a lot of opportunities that are coming that we have our fingers in, but we want to stay focused as well on creating value. Step by step for our shareholders. So, I think there’s really this to balance one of, you know, letting all the minds get crazy and think about what could be, but also how to get there is really important, step by step.

Matthew Gordon: So, you’re private at the moment but you’re doing the Canadian thing, going public at a relatively early stage. What is it that you’re selling to the public? What are they buying into at the moment? I’m hearing a lot of stories about intellectual property, around product development, product innovation. You’re talking to the right customers, but you’ve got to have something for them to buy. So, what are your shareholders or the new shareholders buying into?

Stephen Jenkins: So, they’re buying into a company that’s really already generating revenue, has survived on its own for over a year process of an IPO. So, a private company that’s been run like a private company, we may be going public, but we’ll continue to be very, very cash conscious. You have to be in this marketplace today. Investors are much more sophisticated there nowadays than they have been ever. So, I think one is, you know, providing that ongoing responsibility and fiduciary duty around our cash flow and what we’re doing, but also at the same time, they’re buying into this company that’s really operating, has proven operations already and also is stepping forward and more into the marketplace of larger data centres and energy efficiency.

Matthew Gordon: Okay. So, you’ve got a track record of producing cash through the crypto component, but you are morphing the company into allowing it to play in a much bigger space, which is an efficient energy space. What have you got today which investors can put their finger on and go I understand what these guys are going to produce, I understand what they’re going to sell, I understand where the revenue is coming from. How do they get a sense of that?

Stephen Jenkins: Well, one is I think you can always go back. Everything we’ve done to date is public record. So, that to me gives me comfort. Two is we actually have already built our own mobile data centre solutions for our own equipment and we’ve deployed those. They’ve been operating without fail since day one. So, May 2018 we deployed our first mobile solution for a data centre or for crypto mining. It’s irrelevant which one. And we’ve simply made more and more of those mobile data centres available for ourselves. So, people can come and see that they can see that we’ve delivered it. You know what I think is a very, very reasonable price. But also, it’s UL certified. So, we’re not one of the companies that jumped on the market and sort of put up crypto miners in a very sketchy way. We’ve had two huge power surges in Oregon. Both of them didn’t do any damage to us because we built our equipment properly. And I think those are things that we can say today that we’ve really proven our way.

Matthew Gordon: Right. I was doing some research and I was trying to find companies which did similar things to you and I couldn’t. Who are the other players? Who are your peers in this space at the moment?

Stephen Jenkins: I think there’s certainly lots I mean, you have lots that are focused on crypto mining. You have some people that are playing in the providing mobile data centres. You have massive players. You have Cisco, Sun Microsystems, you have massive players that are building these portable data centres now because everybody started recognizing there’s an opportunity there. So, you’re certainly seeing what I would call is fringe players trying a couple of things. And it’s just that I think it’s also the age of the market. It’s still very new. So, Sun Microsystems, they’re building mobile data centres that might be a million dollars a pop. So, there’s certainly room in there for us to operate.

Matthew Gordon: But how do you compete against people like that? I mean, they’ve got big pockets here. They can spend outspend you, surely? I mean, how do you win?

Stephen Jenkins: Yeah. So, I think what we provide is a really focused, detailed mobile data centre at a price that nobody else can compete with. We certainly have them operating already in a number of locations. So, we’re in two locations with plans to expand. So, I think we’re proving it out ourselves. We’re not just selling it and saying, there you go. We’re selling it. And we’re just simply making them better because we rely on them to operate ourselves as well. So, I think we’re going to provide a really good product that I think will be competitive in a space. And listen, nobody wants to be first, right? Everybody wants to be first to be second because you’ve got a proven product there. If there wasn’t competition in the space, it would mean there’s no business there. And having the big players in there shows you that there’s space, right? So, we’ll run the business very tight and be very, very competitive.

Matthew Gordon: Okay. That says to me you’re going to undercut the competition, right? In other markets, when you look at other verticals, the big guys will go in there. They don’t mind providing a loss because they want to own that space. I mean, are you susceptible to some kind of behaviour like that or do you think that it’s going to be easier for you to have conversations?

Stephen Jenkins: I think the market space is going to get very competitive. There’s no question. By saying that, you’ve got to find ways to build a very cost-effective product. And, you know, knowing who wants what and understanding how it works. We have those people I think already that they’re building some of those units for other people as well. So, we understand what’s going on in the marketplace. But it’ll evolve over time. And the mobile data centre market will become very mature in the next five years, I think.

Matthew Gordon: Yeah. There’s a lot of players out there in the market place, okay. So how does a small company like you hope to survive? Are you still going to be around in five years’ time? And what are you doing to ensure that you are?

Stephen Jenkins: Yeah. So, one is I think we’re creating our own revenue and we continue to keep our revenue stream alive with crypto mining. Number two is we’re building containers for ourselves. But at the same time, these data centres; Amazon, Microsoft, Facebook, they all are looking now at these mobile data centres. We can do those. We can provide reliability, quality, price. So, we know because we’re proving it out for ourselves that we can also do that for the bigger entities, regardless of who’s in that marketplace. If it’s Sun Microsystems or somebody like that building, we’re still going to be a player in there and there’s still going to be a need for the services we find.

Matthew Gordon: Stephen, thanks for running us through that story. I wish you every success for the IPO next week. I hope that goes smoothly. I think you’re in the right space. Very, very interesting space that you’ve decided to operate in. And you seem to be talking to a lot of the right names. So, I wish you well. Stay in touch and let us know how you get on.

Stephen Jenkins: Matthew, thanks. Thanks for your time and thanks for the questions. Also, I think it’ll be a good discussion after the IPO happens. We can we can start to delve into other areas, because I know that we’re really excited about moving forward and moving forward quickly.

Matthew Gordon: Thanks very much for watching. We hope you enjoyed that. And if you did, please click the button in the corner of the screen to subscribe to our YouTube channel. You can also catch us on our website and Crux Cast, our podcast series. Plus, most days you can catch us on LinkedIn or on Twitter. We love getting your feedback, so please keep that coming. And we’ll speak to you again soon.

Company page:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

A photo of a blue sparkly bitcoin against the backdrop of black with dots of blue light.

“There’s gold in them thar hills!”

A photo of a pile of 24k gold bars.

Over a century old but Mark Twain’s sentiment remains that there are riches to be found. For thousands of years, gold has been a popular choice of investment and a consumer good. The complexity of gold makes it enormously hard to understand, even for those in the gold mining industry.

As a new investor myself, I am on a steep learning curve to find out as much as I can about investing in gold, so that I can make sensible investments with my own money. So please do join me on my discovery of gold production and the journey I am now on to find out how to make the safest investments, with the biggest returns! Please do feel free to make suggestions and comments below, which will both help me and other potential investors in the gold market. Remember you once stood where I stand now! We all have different needs and goals from our investments and each of us will come at it with different knowledge and expectations.

So how should investors make informed decisions when they don’t understand what drives the price of gold? It appears that it is mainly driven by demand and alterations in reserves, rather than purely from the gold mine supply. As investors, we are looking for a strong return on our investment. Without good management, no asset can be successful. I am looking at company track records, are they flatlining or they making good decisions and producing more gold at lower cost? A profitable company is not necessarily going to make me money… this week I learned about ‘Shorting’… but more of that another time. What I did know walking into this is that I only make money if I sell my shares for more than I bought them for.

Tempting as it would be to go out on a ‘gold rush’, the inexperienced investor must understand the importance of looking at a company’s management experience, the corporate structure, their assets, their financial position and how they promote themselves to the market and investors. The saying goes that “a fool and his money are soon parted.” There is a ‘gold minefield’ of information out there but this often overlooked. Finding out as much as possible about a company, their experience and management structure, assets and financial position is crucial before investing. Lacking gold mining ‘know-how’ makes it notoriously difficult to make sensible decisions on future investments. Some people make money from investing in gold and some lose, so if you have any tips for me on making money and good investments, please do highlight these below. I am grateful for all shared knowledge.

Investing issues and the value of gold

As part of my research, I have found encouraging quotes from the financial markets:

“‘The value of gold hit a six-and-a-half-year high at $1,546/oz at the start of September 2019, driven by investor sentiment and macroeconomic factors,” in its latest ‘GFMS Gold Survey’. Over the third quarter of the year, gold recorded a “spectacular” performance, with its dollar value appreciating by 12%, compared with the prior quarter, and was valued at 22% more year-on-year, at an average of $1 472/oz. (9)

“Further, a visible shift among the world’s key central banks towards a more accommodative monetary policy this year has seen investors flee back to safety, making gold shine even brighter.” (6)

It is estimated that ‘the production globally of gold will break new record levels of between 3,380t and 3,390t this year, which would be an increase from the 3,332t reported in 2018’. (6)

I have discovered that it would be unwise to only invest in gold though, as it can be high risk. Although it should not be dismissed as an investment, as it can be a ‘store of wealth’. It is cited that investors turn to gold, when they are ‘scared’, which in turn boosts the value of gold, when stocks are falling.

Adding to my confusion is whether gold is seen as a commodity or a ‘non-printable’ currency. Experts argue over this endlessly, but many will see it as behaving as both, but nevertheless it is seen as a ‘global monetary asset’. Gold has many uses and purposes and it is in constant world-wide demand, always available for use and not typically consumed like other commodities.

I also identified that investors will often look at the Environmental, Social and Corporate governance (ESG) of an and how it manages risk through environmental, social and governance issues. Sustainable investing! Yes, a company’s organisation when evaluating the financial health of a company, their long-term business performance who promote their business with strong environmental, social, ethical values in accordance with corporate governance seek to generate positive returns. Investors who are socially minded will be encouraged to invest in an organisation which endeavours to manage its carbon footprint and have a positive long-term impact on the local community of the mine, the environment and the company.

The jurisdiction, geopolitical and economic state of the country producing the gold will affect gold production. Is it stable or uncertain? Are there concerns of lower interest rates or a slowdown in economic growth? Are there issues with the government? Trade disputes, access to licences and permits, power supplies, riots and political unrest, difficult climate conditions limiting mining prospects, accessibility of water, transport issues or access to skilled labour, all provide their share of difficulty. These are very real and important issues to consider, as they will all affect the gold production, availability and cost price.

When investing, it appears that market downs can often boost investment demand for gold. Competing assets, such as bonds can also influence gold attitudes and price trends and capital flow can affect the performance of gold. Some questions we should be asking ourselves are: Is there enough investment in infrastructure? Is it a well-trodden path? Is there potential for global expansion? Are there restrictions on cash?

So much to learn and take in, it makes it even more complicated when I think about parting with my money.

The streets of London are paved with gold

Initially, I have decided to look at two gold mining producers who have many similarities but who also who have differences. One is a large producer and one is a small to medium producer.

I feel that the similarities are that they are both are UK based companies listed on the London Stock Exchange. They are both honest companies and successful in mining high-grade gold from two underground mines, with strong management teams. Both offer steady growth and dividends to shareholders and both make money when the share price goes up. Both face operational issues within the jurisdictions that they work in. I shall give some background detail about each company and invite you to ‘dig deeper’ through the links!

The two companies are Pan African Resources (large) (AIM: PAF) in South Africa and Serabi Gold (small and soon to become medium) (AIM: SRB) in South America.

Serabi Gold is listed on the London Stock Exchange

An aerial photo of Palito Gold Mine.
Palito Gold Mine

Mike Hodgson is the CEO at Serabi Gold. He had interview recently with Matthew Gordon of Ptolemy Capital and Crux Investor  

I like as they have an easy style and less technical of interviewing but get in to the important detail with the CEO. The CEO has a chance to explain the strategy and story as the interviews tend to be 30-50mins.

As a gold exploration and production company, Serabi Gold is based in North-central Brazil and is involved in the development of gold deposits in the area.

They own the Palito Mining Complex, which is currently producing approximately 40,000 ounces per annum. While this is deemed as relatively small, their gold production should double when their recently acquired Coringa Gold Project goes fully into production. This should increase their standing to a medium size producer and could make this a less risky investment.

We got the right team in and the formula for success has been the mining. My saying always is ‘grade pays, tonnes cost

Mike Hodgson

Serabi Gold has a very long and successful history of operation in this area of Brazil and takes its relationships with local communities seriously.  They are keen to ensure their long-term impact on society; the environment and that business holds strong.

During the above-mentioned interview Mike was asked about the team around him and their level of experience and this was his response:

“We got the right team in and the formula for success has been the mining. My saying always is ‘grade pays, tonnes cost’”. (3)

Some of the difficulties that are faced by Serabi Gold are maintaining the supply of power, internet communication, together with conditions such as water filling trenches. They also come up against difficult climate and terrain with a tropical high humidity climate, tropical jungle tree canopy and a wet season between October and April. These factors play their part, but the company does state that work can still be carried our year-round.

Other risk factors that play a role include political changes in Brazil, regulatory issues, changes in law together with social unrest, currency exchange fluctuation and the changes in the gold price. All these factors have made me think about how difficult gold production is.  Serabi Gold is overcoming these issues, with excellent results.

The share price has risen this year following a period of 3-4 years of being relatively static. This move in share price would appear to be because investors see the acquisition of Coringa as an indication of the company’s growth ambitions as a gold producer.

Pan African Resources is also listed on the London Stock Exchange

A photo of two maintenance workers checking mining equipment.
Pan African Maintenance Workers

Cobus Loots is the CEO and he also had a recent interview with Crux Investor

Pan African is based in South Africa. They are a mid-tier African-focussed gold producer with a production capacity in excess of 170,000oz of gold per annum. They own and operate a portfolio of high-quality, low-cost operations and projects and they like to grow business in a value-accretive manner to benefit stakeholders and that meet their stringent investment criteria.

Pan African has two large underground gold mining complexes, one at Barberton, one at Evander. Cobus Loots said “Operationally we exceeded our production guidance for the year past. That’s obviously quite a positive. Actually, from all operations we had an improved performance. Pan African has emerged at year-end as a safe, low-cost and long-life gold producer, following the successful execution of our strategy.” Asked whether he plans to raise any more money for capital expansion programmes, he responded “We are funded as far as the existing projects are concerned. So, there’s no need for us to go to market. I think the shareholders want to see us deliver on what we said we would do. 2019 was a first or second step in doing that and 2020 should be more of the same.” So, to me this says no more dilution of investors shares. That’s a good thing”. (4)

Pan African has emerged at year-end as a safe, low-cost and long-life gold producer

Cobus Loots

The South African Government has established targets for the mining industry in terms of social development and community upliftment that are laid out in the Mining Charter. President Cyril Ramaphosa outlined the “steady, but sure” progress being made to make South Africa a “more competitive investment destination”. An Investment Fund being set up to attract both public and private finance. (6)

With a large focus on seeking sustainable growth, Pan African invest in their time and efforts in ESG. They understand that this can positively affect their long-term business performance and health of their company through strong risk management. There is a chequered history in South Africa, and they are operating in an environment fraught with risk because of unionisation issues, artisanal miners, high unemployment in the country which has led to rioting.  With all these factors to deal with, Pan African strives to be a low all-in sustaining cost (AISAC) producer of gold in South Africa.

I have to say I admired the way both CEO’s talked honestly about the difficulty of mining and didn’t appear to be trying hide anything or mislead me.

So, to invest or not to invest, that is the question?

Please look at the Crux Investor website and the company profile pages I found it useful. I included the links for both Serabi Gold and Pan African Resources in my short company summaries. The company pages will give insight and provide you with more detailed information about the issues each company is facing. You will also find a profile, financials and a stock chart for each company listed. There is a magnitude of opportunity, when you know what you are doing. Read and learn!

After this initial research, I am personally still not ready to invest yet and will continue to research and do my homework. I know that there are deals to be done, but there will always be deals to be done in the future too. So, I won’t rush into anything, neither will I miss out. My money is valuable to me and before I part with my money, I also need to consider investing my money into other sectors, such as technology, manufacturing or healthcare. All these sectors are cyclical, sometimes going up and sometimes on a downward trend.

Your thoughts on this will really benefit me and other readers. Maybe you can help me understand what makes a good company to invest in and I welcome your thoughts on this. Some people make money, some people loose money. Should I keep my money in my pocket?


  1. Crux Investor
  2. London Stock Exchange
  3. Serabi Gold
  4. Pan African Resources
  5. World Gold Council and  
  6. Mining Weekly
  7. Wealth Simple
  8. Gold

Company page:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

A photo of a pile of 24k gold bars.

What on earth are we doing?

In recent weeks, my research into investing has become considerably more detailed and focussed. Whereas before I took a passive overview of market proceedings, now I consider myself to be active; I look at stocks with a genuine consideration of purchase.

I am an investor, just like you, but in the last few weeks, I’ve become genuinely perplexed by a consistent narrative saturating the investor community.

Hearts not heads?

In the last few weeks, I’ve reviewed all aspects of numerous public companies with scrutiny. I have reached a conclusion that has truly surprised me: the vast majority of companies are going to lose you money.

A phenomenon that exists amongst investors novice and seasoned alike is a peculiar prolificacy that descends any time a vague, yet promising press release comes out from a junior mining company. Logic and prudence fly out the window, and gut gambling instinct takes control. A desperation to be ahead of the curve and locate a winning lottery ticket is the downfall of many investors. It is startling just how little shareholders know about their investments; this is evident in the most basic of enquiries regarding companies finding their way onto community boards via investors whom, with their retirement fund in hand, have already taken a leap of faith. Having made this poor decision, the investor is then forced to double down; they can’t admit to their friends or partners they have made a bad call, which has strangely become more frightful than losing a huge sum of money. The subsequent lies they tell themselves as the share price falls serve only to insure by the time the penny finally drops, it’s all too late, and their shares are worth about as much as a second-hand toothpick.

Most companies have an Achilles heel that renders them doomed from the very beginning. One would think such fatal flaws are well hidden given the tendency of investors to fall for them so often, but this is simply not the case. It does not take a rocket scientist to notice a plummeting share price, a mountain of debt, a low percentage of insider ownership or a terrible management team/structure. Therefore, how do so many investors manage to navigate their financial vessels into deep waters of unparalleled danger? The answer is simple: investors do not take anywhere near enough time to educate themselves before making investment decisions.

It is obvious that investors don’t simply have a wanton disregard for money, and nor are they just lazy; the problem lies deeper than that and manifests itself throughout much of our financial culture. We are too trusting, too emotional, and not critical enough. We have a tendency to fall for snake oil salesmen the world over. As a consequence, resources like Crux Investor are vital. Crux cuts through the nonsense, and gives easy to access, trustworthy information so you can make proper investment decisions in the light of certainty, rather than the dark of ignorance.

Before making investment decisions, you must ask yourself if you are prepared to lose the money you will be investing. If this money is not something you can afford to never see again, you shouldn’t invest.

After asking this initial question, there are 10 further questions you should ask yourself. The questions will be explored in an article in the near future right here on

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Nickel Investment Bible

A man walks on water, labelled 'This Article,' and pulls a man, labelled 'Your lacklustre investment decisions,' out of the swirling water. A wooden boat with a nickel on its front and full of men watches on in the background.
A photo of a pile of shards of nickel.
Nickel, nickel, nickel.

Nickel is the fifth most common element on earth. It is ‘a naturally-occurring metallic element with a silvery-white, shiny appearance.’(1) Frankincense, gold and myrrh? No. Nickel, nickel and…

However, if you’re an investor, I doubt you’ll be reading those words with any bubbling sense of excitement; you want to know one thing and one thing only: “how is this big hunk of metal going to make me money?” To realise the full potential of investing in nickel, one must have all the facts available to them.

The following serves as the definitive nickel investment article. It is filled with inside knowledge that the average investor would struggle to access. One shouldn’t consider investing in nickel without reading it. Sit back, relax, and take in all the information you need to make money investing in nickel.

The Commodity

Nickel occurs extensively in the earth’s crust. It had been utilised for thousands of years as meteoric iron before its isolation as an element in 1751 by Swedish scientist Axel Frederik Cronstedt.

Nickle: Key Properties

  • High melting point (1453 °C)
  • Strongly resistant to corrosion and oxidation
  • Can easily form an alloy
  • Magnetic (at room temperature)
  • Malleable and ductile
  • Can be a catalyst
  • Can be deposited via electroplating
  • Harder than iron
  • Good conductor of heat/electricity
  • Average life in many applications of 25-30 years

Applications of Nickel

Nickel is used in a massive 300,000 products, with fields varying from:

  • Engineering/Investment (33%)
  • Transport (20%)
  • Metal Goods (18%)
  • Home Appliances/Electronics (13%)
  • Building/Construction (10%)
  • Others (6%)
  • 70% of nickel’s specific application is alloying with a (minimum 10.5%) chromium to form stainless and heat-resisting steels. These steels form a multitude of items, from household cutlery to medical equipment.
A photo of a stack of stainless steel poles with holes in the centre.
Stainless steel is the main use of nickel.
  • 9% is used in alternative non-ferrous alloys. These have a more specialised application in industrial, aerospace and military equipment.
  • 6% of nickel is made use of in electroplating practices.
  • 6% is used in iron and steel castings and low allow steels.
  • A modern, rapidly growing use of nickel is in batteries for hybrid and fully electric vehicles and stationary storage. However, this still only accounts for 6% of present-day use.
A photo of a Tesla Model 3 battery pack inside a workshop.
A Tesla Model 3 Powerwall.
  • 1% of nickel is consumed to produce coins and for other electronic applications.

The Current Nickel Market: An Outline

The nickel price has demonstrated more volatility than a lion in a butcher shop. Since the 80s, Nickel has been regarded as a boom/bust metal that moves in giant super-cycles. The market saw a quite staggering boom, followed by a dramatic downturn and lingering bust.

Spot Price and Production Analysis

A primary factor behind nickel’s ascension to a high of $54,000/t in May 2007 was the rapid expansion of Chinese demand in the 2000s. However, this soaring price resulted in nickel becoming a victim of its own success. As prices rose, China began seeking more affordable options, thus turning to 200-series stainless steel (1-2% nickel) rather than 300-series stainless steel (8%) nickel; with this compression of demand, spot prices fell through a trap door.

A graph demonstrating nickel price in USD/lb against the date from Jan 3 1989 to Jan 3 2019.
A spot price chart that moves as frenetically as a broken elevator.

When nickel prices were high, a new source of cheaper nickel was developed: nickel pig iron, a version of nickel created using low-grade laterite ores and blast/electric furnaces. Nickel pig iron now accounts for 35% of international nickel supply, up from ≈0 in 2006.

The decrease in Chinese demand and oversupply combined to push the spot price of nickel off a cliff edge. Brief increases in the spot price, specifically around 2009, were attributed to the Chinese government’s economic stimulus. Subsequent price increases have been created by a nickel ore export ban from Indonesia in 2014 (partially over-turned in 2017) and again last week. A planned Filipino ban in 2017 never took place.

Nickel’s recent low point came in February 2006, with a price of $8,000/t causing 80% of the industry to lose cash.

However, over the last three years a large, and mostly permanent reduction in supply of over 200,000tpa (particularly Chinese nickel pig iron), and an increase in worldwide demand has caused the nickel market to recover surprisingly quickly. While uncertainty still exists surrounding high global inventories and the government policy in Indonesia and the Philippines, this upwards trajectory has caught the attention of many investors. This is especially true given that by the end of 2020, total market inventories are projected to fall below normalised levels, which paints a very promising picture of an increased nickel spot price.

Reasons to be Excited

If you’ve read any base metals company’s press releases in the last ten years, you will have heard a seemingly indelible torrent of positivity regarding the incoming EV revolution. If the macro is to be believed, the growth of nickel will be propelled. While, at present, nickel’s preeminent use is in stainless steel, an EV revolution would skyrocket the demand of nickel.

2006-18 quantities of nickel use for specific purposes are as follows:

  • 683,000t in stainless steel.
  • 103,000t in batteries.
  • 105,000t for other uses.

However, nickel forecasts for 2018-2030 place use at:

  • 729,000t in stainless steel, a 46,000t increase.
  • 825,000 in batteries, a massive 722,000t increase.
  • 119,000t for other uses, a 14,000t increase.

Nickel now has two growth drivers, batteries and stainless steel, whereas before it was just stainless steel. When investors also account for nickel’s specific importance in batteries, this is even more promising; another metal that is currently crucial for the EV revolution is cobalt which I wrote an article on and you can click here to read. However, because of cobalt’s controversial ethical issues, such as using child labour in the Democratic Republic of Congo, companies have been pressured into signing up to the Responsible Cobalt Initiative. Some high-profile individuals like Elon Musk, and companies like Panasonic, have stated they are actively at work to virtually eliminate cobalt from their batteries. By reducing cobalt in batteries, the beneficiary is nickel; in a recent interview with Crux Investor, Conic Metals explained the development of batteries with as much as eight times more nickel than any other metal in the battery designs, including cobalt.

The Vanadium Redox Flow Battery (VRFB) is yet to become a serious contender in the market because of their excessive weight and the poor ratio of vanadium to electricity stored. Unlike the short high-burst energy of Lithium-ion batteries, VRFB is seen as a means of long-term energy storage to allow for management of peak-flow energy requirements (we will write about this in the next few weeks). At the end of the battery’s life, the Vanadium is reusable for either use in steel or a new battery. Nickel-lithium batteries are a future technological prospect and are predicted to hold more than three and a half times as much energy per pound as lithium-ion batteries, while also enhancing safety.

All the production signs for nickel are incredibly promising, so what about the price outlook?

Price Forecast:

Year Nominal Constant
2018 13,122 13,122
2019 (f) 13,469 13,127
2020 (f) 15,000 14,249
2021 (f) 17,000 15,740
2022 (f) 18,000 16,244
2023 (f) 19,250 16,931
2024 (f) 19,811 17,000
2025 (f) 20,306 17,000
2026 (f) 20,814 17,000
2027 (f) 21,334 17,000
2028 (f) 21,868 17,000
2029 (f) 22,414 17,000
2030 (f) 22,975 17,000

The LME forecasts steady growth in the USD$/t spot price of nickel up until 2030:

In terms of constant 2018 dollars, the nickel price will have to average around $17,000 to incentivise sufficient new capacity to meet increased demand. Moreover, analysts have speculated the capital costs for non-Chinese and non-Indonesian integrated projects may need nickel prices above $25,000 to gain a return. However, increased EV demand is likely to be satiated by these cheaper projects in addition to high-pressure acid leach projects.

Inside Investment Tips

Now you’ve had some insight into the financials of the nickel market, it’s time to hear some crucial inside knowledge that could make or break your investment.

The primary drivers behind the EV hysteria are companies themselves. When you actually dig a little, the truth is the EV revolution is not as close as CEOs would like you to believe. Researchers are also uncertain as to when electric vehicles are going to take over. There are a lot of factors at play and while the trend is towards embracing EV to reduce our carbon footprint, there are still a number of psychological and financial barriers for the consumer to overcome.

The usability of this information will vary based on two things:

A photo of a pile of dollar bills.
  • Your confidence in the EV macro.
  • Your expected speed of returns.

If you have a wholehearted belief in the EV macro, it doesn’t matter if it happens tomorrow, the next day, or in ten years’ time, it is going to happen, and when it does, prices are going to rise. Therefore, if you’re a patient investor with some time to spare and have disposable income that you can afford to wait for a return on, now could be a great time to invest in a nickel company.

However, if you don’t fully buy into the EV thematic, nickel isn’t the commodity for you. Perhaps you foresee a shift in direction when it comes to vehicular transportation, or perhaps you see nickel as a commodity that will become obsolete in batteries after further advancement. Maybe you believe there will be an even longer time scale of 20+ years before EV rises to prominence, in which case many of the companies you might invest in today could have gone under, especially given nickel’s track-record of erratic prices.

Lastly, if you’re an investor looking to make a quick buck, don’t listen to the hype. In Crux Investor’s interview with Conic Metals Corporation (, it was clearly laid out that current spot price increases are not due to electric vehicle demand, and are instead generated by asset discovery, general euphoria and the Indonesian export ban on nickel ore. The EV revolution is a few years away at best.

What Nobody is Telling You

…smelting companies will march to their own drumbeat

Some investors might view all the information already mentioned as more than sufficient for them to make an investment decision on nickel. However, there’s an incredibly important secret that big nickel mining companies aren’t letting you in on: the nickel smelters currently have a huge amount of their own raw product on site, and the smelting companies, in many ways, control the market and the ability of public nickel producing companies to forecast. This means nickel mining companies are at their mercy; smelting companies will march to their own drumbeat. 

The Ten Commandments of Nickel Investment

A photo of an open bible with a woodland background.

To conclude this article, here are the ten things to be aware of when investing in the nickel market:

  1. Nickel is a volatile asset; its price is often unpredictable; depending on what type of investor you are, this is either an opportunity or a curse.
  2. The EV revolution is by no means just around the corner. Some say it is two years away from kicking in. Others point towards a longer timescale. However, nobody is disputing its inevitability.
  3. All financial projections point towards a prosperous future for nickel in batteries as there are very few large-scale operations globally; with nickel, scale is king.
  4. China, Indonesia and the Philippines are the foremost producers of lower quality steel, which contains only 1-2% total nickel. Indonesia has just stopped all exports of nickel.
  5. Nickel is almost certain to be central to any evolution generated by electric vehicle demand. Other battery metals (such as cobalt) lack its longevity.
  6. The smelters control the market. Until they can make money, no-one makes money.
  7. Not all nickel companies have the cash or assets to attract capital investment to last until the EV demand commences. Choose your nickel investment carefully.
  8. For the next 12 years, total nickel production is projected to be almost double what it has been for the last 12 years.
  9. As the nickel price recovers a lot of scrap metal will come into the market causing a dip in short-term prices until Q3/20.
  10. Don’t make investment decisions based on sentiment. Look at a company’s management and level of experience. Investigate their assets and potential. Analyse the point in the developmental cycle the company is at (ready to mine, or still exploring). Work out if the company’s priorities are aligned with its shareholders’. Finally, educate yourself fully on nickel by reading this article again and again and again. Oh, and maybe once more for luck.

An Example of a Good Nickel Company:

Examples of nickel companies I feel have great potential are Canada Nickel, Conic Metals or RNC’s Dumont asset. I’ll be writing a full piece on them in the near future; but, for now, happy investing!


Company page:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

A man walks on water, labelled 'This Article,' and pulls a man, labelled 'Your lacklustre investment decisions,' out of the swirling water. A wooden boat with a nickel on its front and full of men watches on in the background.

Energy Fuels: I need your clothes, your boots, and your uranium mill.

A picture of the face of the Terminator, Arnold Schwarzenegger, who wears sunglasses and holds a gun up.

If, like me, you are a budding investor, you likely spend hours each night scouring the internet for the latest and best opportunities to make money. From economic revolutions instigated by futuristic technology, to trade embargos plummeting the prices of certain commodities, the world of investment is a complex minefield, which incites fear and excitement in equal measure.

In recent days, a commodity that has captured my focus is uranium; certain American economic news regarding it has intrigued me, in addition to the international surge of attention towards climate change. Following national news coverage in the last few weeks, it has been impossible not to notice seething commuters warring with Extinction Rebellion protestors. What could possibly cause smartly dressed commuters to devolve into a primitive mob? The answer is the increasingly intense climate change debate.

A colour photo of a crowd of colourfully dressed Extinction Rebellion protestors holding a large green banner stating: 'REBEL FOR LIFE.'

This event was one of many occurring in England’s capital in recent months. Additionally, Greta Thunberg’s damning climate change speeches have navigated themselves into the centre of international discourse. An individual wouldn’t be nominated for the Nobel Peace Prize unless their cause was especially relevant.   

One of the key components of the raging debate is nuclear energy. Nuclear-based electricity production avoids carbon dioxide and other greenhouse gas emissions. However, it has been suggested radioactive gas can cause health issues to workers and individuals from communities surrounding power plants. Furthermore, the disposal of nuclear waste is an even more controversial subject, and if one so much as utters the words ‘nuclear weapons’ they can expect a flurry of opinions to be launched at them more explosively than the warheads in question.

One of the primary materials involved in nuclear energy production and military use is uranium. In the wake of a tsunami striking a nuclear power station on the shores of Fukishima, Japan, the energy sector held a review on reactor designs and safety procedures. The resulting financial and psychological tidal wave had a detrimental effect on the industry, one which it is only slowly recovering from. As a consequence, despite offering vastly lower energy costs, uranium seems to have reached a political and environmental impasse and demand has plummeted. When combined with a lingering sense of distrust generated by incidents in Chernobyl, Ukraine (1986) and 3 Mile Island, U.S.A. (1979), and its association with nuclear proliferation throughout much of the 20th century, I was beginning to view uranium as a commodity too contentious to consider investing.

A colour photo of the dilapidated Ferris Wheel in Chernobyl's infamous abandoned playground.

However, after conducting my own research, I have concluded it is an area that can bring big returns to patient investors. The macro story is positive and encouraging. There are billions of USD being spent building new reactors across the world. New technologies mean small, more mobile reactors are being commissioned by countries who previously would have found themselves priced out. High profile individuals are vocal in their support, from Bill Gates to Elon Musk, and the vast scientific community adds additional endorsement to nuclear power being critical to the energy solution. Our current energy sources are not sufficient to cope with a rapidly increasing population and I feel nuclear power can be a green, affordable solution. 

…many of the world’s largest uranium mines are in care-and-maintenance mode.

The Uranium Cycle: I’ll be back.

Uranium is fundamental to the production of nuclear energy. However, current uranium spot prices remain far below what is economically viable to mine and produce ($23.90 as of 31/10/2019). Such market activity has depressed investment. Most of the (≈50) remaining uranium companies are struggling to stay afloat; many of the world’s largest uranium mines are in care-and-maintenance mode (1). These cold, hard facts lead prospective investors to one conclusion: why on earth would I want to invest in uranium? The answer remains the same as any other investment: it can make you money if you play your cards right.

I have studied numerous articles detailing different investment approaches to goods experiencing a low equity price. To me, the most attractive attitude towards uranium investment is the contrarian approach. After recognising where uranium is in its cycle, and the potential for an uptake in the future, this method seems prudent.

However, I can’t exactly go out and buy large quantities of uranium for myself; I wouldn’t want MI5 knocking on my door in the early hours of the morning. A wise investment will require choosing the right companies to invest in.

From an investor’s standpoint, there are 3 crucial elements a company requires to instil confidence in me, or any other investor. If any of these aspects are missing, I think the company is likely to falter and investment should be avoided. 

Investing in uranium: the secret recipe

The three ingredients are as follows:

  1. An experienced management team who have a proven track record for every process: mining, refinement and sale.
  2. Sufficient liquid assets to enable the company to survive until prices take an upturn.
  3. A genuine asset(s), not something purported to be an asset (such as a licence) that in reality is more restrictive to a company than beneficial.

Energy Fuels, the leading U.S. producer of uranium and potential producer of vanadium, has all three, but, perhaps most interestingly of all, it has an ace up its sleeve that is likely to be a real game-changer.

An Experienced Management Team

Uranium is an incredibly complicated commodity to work with. From permits, licences, safety, legislation, regulation, transportation to refinement there are numerous difficulties, not to mention the difficulty of mining itself. The sale of uranium is also far from straightforward, because the buyers are utility companies with long buying cycles and complex purchase criteria. If a management team has not already been through this process from start to finish, they are learning on the job with my money.

A colour photo of Energy Fuels CEO, Mark Chalmers.
Energy Fuels CEO, Mark Chalmers

Energy Fuels has a management team with an impressive résumé. Their CEO/President Mark Chalmers has been involved in the uranium industry since 1976. His vast experience would impart confidence to most investors. As a company, Energy Fuels has been operating since the 70s, and has nearly 40 years of experience mining and refining uranium. I find Energy Fuel’s established industry-related relationships and experience with uranium production/sales impressive.

Sufficient Cash

The brutal nature of the current market has created a tough environment for uranium companies. Murmurs from funds surround the need for price discovery: the spot price for uranium will need to start increasing before they will invest meaningful cash into companies again. It seems clear to me that utility companies have complete control of the timescale of any potential uranium price uptake. In the meantime, if a company lacks the cash to maintain their facilities, they will not be able to survive.

Handily, Energy Fuels has $40-45 million to see them through until uranium prices rise.  In a recent interview with Crux investor, Chalmers expressed a reason for investors to be hopeful of a price increase in the near future.  Energy Fuels and Ur-Energy are hopeful their petition to the United States Government under section 232 and the subsequent announcement of a 90-day Working Group may bear fruit.   

If the group’s report is favourable to the nuclear industry, it is possible President Trump could subsidise U.S. uranium companies via tax breaks and other federal financial boosts, thus allowing prices to rise and profit to be made for investors who climb aboard while prices are still low. However, despite Chalmers stating he would be “shocked” if the government doesn’t rule favourably towards the uranium sector, the judgement currently resides in a realm of definitive uncertainty; the group’s report may not be completed this year as other events take centre stage on the U.S. political platform.

Genuine Assets

A company’s assets are an excellent indicator of if my hard-earned cash will be worthily invested. Energy Fuels have a portfolio they regard as ‘truly unique.’ (2). They have ‘more production capacity, licensed mines and processing facilities, and in-ground uranium resources than any other U.S. producer.’ Energy Fuel’s 100% ownership of numerous promising mines across Arizona, Utah, New Mexico and Wyoming gives them an excellent list of valuable assets.

Furthermore, in an interview with Crux Investor at the WNA, Chalmers explained the versatility of Energy Fuels. The company tries to ‘diversify,’ to ‘keep a strong balance sheet’ and ‘protect shareholders.’(3) The quantity of projects being undertaken by Energy Fuels helps reduce the risk of investment, as if one goes horribly wrong, there are plenty of alternative options to steady the ship.

The diversity of Energy Fuels is further exemplified by their status as the largest U.S vanadium producer. Vanadium has a variety of uses in engineering and redox flow batteries to name but a few. They also provide ‘low-cost environmental cleanup and uranium recycling services, including potential involvement in the EPA clean-up of Cold-War-era uranium mines.’ Investors can find their risk reduced because the company is clearly not a one-trick pony. Energy Fuels is not completely reliant on uranium.

The Game-Changer

When first mined, Uranium isn’t functional for nuclear energy or military use; it needs to be enriched to ≈20% for power and ≈85% for military use. The enrichment process requires the mined uranium ore to be processed in a mill. Energy Fuels own the only ‘fully-licensed and operating conventional uranium mill in the United States.’ (4). This means in the event of a uranium price increase they are the only company ready to go into production immediately. It also means that any competitor will be restricted at their leisure; companies will have to pay Energy Fuels for use of their mill, or face expensive shipping expenses to mills in foreign countries. Energy Fuels will also have control of the timescale of other companies’ uranium production. Chalmers has positioned the company strongly with an undeniable leg-up on the competition.

A photo of three nuclear cooling towers in action against the backdrop of a clear blue sky and a woodland area.

An Option I Could Seriously Consider

Upon conclusion of my research into the world of uranium companies, I have reached the conclusion Energy Fuels would be a potentially sensible investment. I don’t think any other American uranium producer comes close when the management team, business model, cash and bonus mill of Energy Fuels places them in such a commanding position. In the near future, I am likely to invest. I feel my money would be much better served waiting to grow with the sleeping giant of uranium than comatose in a bank account with less interest generated than a taxidermist’s dating profile.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.


Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. We provide paid for consultancy services for Energy Fuels. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

A picture of the face of the Terminator, Arnold Schwarzenegger, who wears sunglasses and holds a gun up.