Plateau Energy Metals (TSX-V: PLU) – A Light At The End Of The Tunnel For This Uranium-Lithium Player?

The Plateau Energy Metals company logo
Plateau Energy Metals Inc.
  • TSX-V: PLU
  • Shares Outstanding: 99M
  • Share price: C$0.29 (28.05.2020)
  • Market Cap: C$26M

Interview with Alex Holmes, CEO of uranium explorer and lithium developer, Plateau Energy Metals (TSX-V: PLU).

Uranium and lithium have been struggling in recent years. Spot prices have fallen to uneconomic lows and uranium and lithium companies have been struggling to stay afloat.

Plateau Energy Metals has a couple of great uranium and lithium projects, but will they ever see the light of day?

We Discuss:

  1. Company Overview
  2. Uranium: Overview of the Macro and Plans for the Asset
  3. Cash Position and Money Needed for Uranium Asset’s Development
  4. Lithium: A Breakdown of the Project
  5. Lithium Market Overview: Survival Mode vs Building Value
  6. Recent Raise: Are People Believing in a Positive Future for Lithium?
  7. MOU for SOP: Structure and Reasoning
  8. Reassurance for Shareholders Stuck in 2 Difficult Markets

If you are a uranium market spectator, feel free to check out some of the recent uranium articles on our platform as well as one of our most recent interviews with a uranium mining company. While you’re at it, why not check out another lithium interview or another EV-revolution-related article?

Company Page: https://www.bannermanresources.com.au/

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 Plateau Energy Metals company logo

AEX Gold (TSX-V: AEX) – 18g/t Gold & Ready to Rock Within 24 Months?

Aex Gold Inc.
  • TSX-V: AEX
  • Shares Outstanding: 79M
  • Share price C$0.62 (27.05.2020)
  • Market Cap: C$49M

Interview with Eldur Olafsson, CEO of AEX Gold (TSX-V: AEX).

AEX Gold is a Greenland-focussed mining company that is engaged in the identification, acquisition, exploration & development of gold properties in Greenland. The company targets high-grade gold: 18g/t!

The key asset is the past-producing Nalunaq Gold Mine, with total inferred resources of 446,900t at 18.7g/t. The company also has a land package of similar properties (20-30). Olafsson claims that this is THE high-grade gold Greenlandic company.

Olafsson himself is an experienced Icelandic business entrepreneur. He has previously built up a successful geothermal business in oil & gas, but he is now “solely” focussed on the gold opportunity at hand. He claims that AEX Gold has slowly and gradually assembled a full-scale team with relevant experience, not only as an exploration team, but also as a development/production team.

What was the aim from day one? What sort of company did Olafsson want to build? Greenland started opening up for exploration around 2005, and Olafsson identified it as a highly-prospective region in terms of mineralogy despite being high-cost. Olafsson claims several international majors have exhibited an interest in the region lately.


He came to the table when the gold cycle had started to turn down. He found the “best geology” he had “ever seen.” All of the deposit is “out-cropping” on surface, and there is minimal need to conduct geophysics and other costly, time-consuming ground studies; “you can just see it.” However, the lack of infrastructure and climate-related difficulties have resulted in the operation being significantly more expensive.

How will Olafsson monetise Nalunaq? This appears to be a small resource, so what is the plan. He claims the key to the plan is making sure that the operation is economic as possible. He states that the abnormally high grade gives AEX Gold a distinct financial advantage.

However, investors and strategic partners care about scale. If AEX gold can’t offer this, what else sets it apart? It appears a big positive is the fact that Nalunaq is a past-producing mine, which accelerates AEX Gold’s pathway towards production. The timeframe appears to be 14 to 24-months (once AEX Gold is a “fully-funded company”); does this include shortcuts? The short-cut appears to be the existing infrastructure. There is already a full history of processing and mining methods. Olfasson claims that in all of his team’s calculations, they do not plan on doing anything differently.

Right now, AEX Gold has a 43-101 resource, but no PEA. However, AEX Gold will be submitting a PEA post-development by leveraging “actual (previous) data.” Once the development is done, AEX Gold would already be in production. Interesting. He argues that this risk profile is significantly reduced because the company isn’t “doing anything new.” He claims the company already has 1-year of production covered via at-surface ore and existing inventory.

So how will AEX Gold get funded? Most investors will not fund off the back of a PEA, because it is an early stage document with a large margin of error: ±20-30%. However, Olafsson suggests the company may not bother with a PEA and may go straight to a feasibility study. Even so, this appears to be something of a moot point. If funders have already given AEX Gold their backing, they are clearly happy to take the risk.

Olafsson owns 10% of AEX Gold’s total share, and has invested in public financing rounds. He claims this core insider ownership has reassured many institutional investors who like the story, but would perhaps have worried about the risk profile.

AEX Gold had been quite stagnant for a while but the share price doubled at the start of this year. What did the market react to? Olafsson explains he can’t totally explain the reaction. However, he states that AEX Gold always delivers on promises, particularly exploration commitments, delivering for 7 years in Greenland on-time and within budget. He also claims the capital structure is extremely clean: the company has hardly any warrants outstanding and the shareholding group is held tightly: c. 80M shares. He claims the company chose the TSX-V because at the time it was the largest junior mining market in the world. However, AEX Gold is looking at the possibility of doing a dual-listing on the AIM.

What is the plan for the rest of this year? AEX Gold is currently sat on a respectable C$4-5M, but the company will need to raise capital at some point. COVID-19 is currently wholly disruptive; however, Olafsson is confident the company can finalise all of its studies and conduct an exploration program. He also wants to close the financing for the build of the mine at the end of this year or the start of next. Thankfully, Greenland is starting to get going again.

What is the exit strategy? Olafsson claims he “doesn’t like to think about exits.” He is building a full-cycle gold company that he will build up like a major company in case of JV/take-put opportunities. However, the focus is on making the company strong enough to stand on its own two feet.

What did you make of Eldur Olafsson? Comment below and we will respond.

Company Website: https://www.aexgold.com/

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.

Ross Beaty – Mining And Investment Expert Shares His Secrets

A photo of Ross Beaty

Crux Investor recently had an incredibly informative conversation with Ross Beaty, Mining Investor and Entrepreneur.

Ross Beaty is a renowned mining mind. Investors in the mining space will likely already be aware of his highly-successful career. Investors need to learn from the best, and that’s exactly who they will hear from on CruxInvestor.com.

Beaty shares some of his business strategies and secrets. He also gives our uranium viewers plenty of inside knowledge about the uranium sector and what to expect from the rest of 2020.

This is a great interview that we’re very happy with. We think you will be too.

We Discuss:

  1. Nuclear Fuel Report Announcement: Opinion and Expectations
  2. Time of Benefit to Uranium Miners: Anything to Look Forward to?
  3. Building the Reserve: What it Means for Producers
  4. Supply and Demand Fundamentals: A Singular Source of Clarity
  5. Price hits $30: Will it Hold, Rise or Drop Away?
  6. Cameco: Contracts, Terms and Delivering Results
  7. Identifying Winners and Losers: Knowledge of Putting Together Deals
  8. Mood in the Market: Optimism for the Future
  9. What Will Make Generalists Come Back to the Uranium Space?

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 Ross Beaty

Serabi Gold (LSE: SRB, TSX: SBI) – Superb Q1/20 Figures As This Gold Producer Goes From Strength To Strength

The Serabi Gold PLC company logo.
Serabi Gold PLC
  • LSE: SRB, TSX: SBI
  • Shares Outstanding: 59M
  • Share price GB£0.92 (14.05.2020)
  • Market Cap: GB£54M

Crux Investor recently decided to check in on one of our favourite gold stories in an interview with Michael Hodgson, CEO of gold producer, Serabi Gold (LSE:SRB, TSX:SBI).

Serabi Gold has a smart business model that we are big fans of. Hodgson walks us through the Q1/20 figures, and while they are slightly below guidance, they are mighty impressive considering the sweeping impact of COVID-19.

Going forward, Hodgson is now talking the language of bulk gold processing and this is starting to get very exciting for gold investors. Could Serabi Gold be on course for serious share price growth?

We Discuss:

  1. Update on Progress: Q1 Numbers
  2. Ore Sorter Preliminary Test Results: Performing as Expected?
  3. Press Release on Exploration: An In-Depth Look into Findings
  4. Distractions from the Coringa Gold Project or Value Building Exercise
  5. Bulk vs High Grade: Preparation for New Opportunity
  6. Country Dynamics to Affect Q2 Results?

Company Website: https://www.serabigold.com/

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 Serabi Gold PLC company logo.

Serabi Gold (LSE: SRB, TSX: SBI) – It’s bigger than everything we see (Transcript)

The Serabi Gold PLC company logo.
Serabi Gold PLC
  • LSE: SRB, TSX: SBI
  • Shares Outstanding: 59M
  • Share price GB£0.92 (14.05.2020)
  • Market Cap: GB£54M

Interview with Michael Hodgson, CEO of gold producer, Serabi Gold (LSE:SRB, TSX:SBI).

Serabi Gold has been one of our favourite gold stories. Share price has trebled since we started following them. The team has managed to create a strong, stable operation at the Palito and Sao Chico gold mines in Brazil, but with the debt financing agreement (convertible loan notes) for second acquisition, Coringa, looking to be settled, Serabi Gold can push the cross-mine AISC down towards the US$1,000/oz figure, and double production to c. 80,000oz+ per annum of gold.

The Q1/20 production figures were released recently.

– Cash position
– US$14.23M at year-end
– Net cash – USD$5M
– AISC slightly up on 2018: US$1,081/oz
– EBITDA – US$17.2M
– Average gold price received
– US$1,376 – Total mined ore up 8% (at an average grade of 7%)

COVID-19 has negatively impacted most gold producers, but Serabi Gold has managed to successfully mitigate any potential ramifications. It has achieved this through sensible workplace safety practices, and the health & safety stats are also pleasing. Rotating the workforce has been very effective. Any junior gold miner would be chuffed with those numbers. Serabi Gold has now started allocating some money towards exploration for the first time in a while. With its strong cash flow, and with most of its debt finally being repaid, Serabi Gold has now freed up its capital for growth. This could get the market even more excited. The focus is currently on step-out drilling at the west of Sao Chico. Hodgson thinks the company is working its way towards a geophysical anomaly that the company has already been drilling at. There is a possibility the 2 could connect, resulting in some serious upside for Serabi Gold.

What about the much-discussed ore sorter, which could have a further transformative impact on Serabi Gold’s economics? Serabi Gold recently conducted a preliminary test on it. What is the feedback? Hodgson claims the thing is “absolutely singing,” which will be music to gold investors’ ears. He doesn’t have the stats for April just yet, but in March it was upgraded to pass 2,500t at a grade of c. 3g/t, and it screened out a little over 300t at a grade of 21g/t, the rest was 2,200t at a grade of 0.7g/t. Through April, the grades at Palito (50% of feed ore) went up from the usual grade of 6.5g/t to 9g/t. Overall, combined with the non-ore-sorted Sao Chico ore, it is giving the average grade a 1g/t uplift. This might not sound like a lot, but it’s a big change. He expects another healthy increase in the Palito feed grade through April, which will free up space at the production plant to use for better quality material. Smart.

Will the exploration plans distract Serabi Gold from Coringa? It’s certainly a nice problem to have, with organic growth in the company’s “backyard.” Hodgson states Coringa is still just as important. Adding ounces at a low cost gives Serabi the cash flow it needs to grow, and he is not going to forget that anytime soon. Coringa is a very advanced project that Hodgson will continue to focus on. Another focus will be on the areas surrounding Serabi Gold’s producing assets because the company will eventually need to expand its processing plant somewhere. The company has been successful at chasing high-grade veins, but now Hodgson is talking the language of bulk production. However, one of the biggest problems in Brazil is power. He claims the mining infrastructure is improving in the region every day. The company is constantly assessing its cost profile, and its eventual wish is to add in some open-pit production.

Hodgson acknowledges that Brazil is struggling, especially with its lack of medical infrastructure, but states he is confident Serabi will do what it can to keep producing. He states Serabi Gold might not make the guidance numbers it predicated at the pre-COVID-19 start of the year, but if the company reaches 90% of it, nobody will complain, especially at the current gold price. The exchange rate is also on the company’s side.

We Discuss:

  1. 2:17 – Update on Progress: Q1 Numbers
  2. 3:50 – Ore Sorter Preliminary Test Results: Performing as Expected?
  3. 5:41 – Press Release on Exploration: An In-Depth Look into Findings
  4. 14:46 – Distractions from the Coringa Gold Project or Value Building Exercise
  5. 16:49 – Bulk vs High Grade: Preparation for New Opportunity
  6. 18:18 – Country Dynamics to Affect Q2 Results?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Mike, how are you doing, Sir?

Mike Hodgson: Very well, thank you. Good to see you, Matt.

Matthew Gordon: Yes, good to see you. Are you bearing up still?

Mike Hodgson: Yes. Yes. We’re sort of running our operations remotely. We have daily calls, probably two or three calls a day, you know, thank god for Zoom and Skype and WhatsApp and anything else.

Matthew Gordon: It is a game changer. It is a game changer. We have seen your press release and I was interested because it is very different from what you normally talk about and I wanted to kind of get into it. Normally we have this conversation about production and productivity and what’s happening on site, but this is more around exploration at site almost. So, but let’s kick off first. I do need that usual update. So what is happening? Last month you had a bumper month. Have you been able to recreate that in April?

Mike Hodgson: Absolutely. We have. We’ve had another great month. It has really been superb. It is probably, we haven’t quite finalised the numbers yet, but they’re going to be close to 3,500oz, so great way to start a Q2/20, and we still hope that we’re going to be north of 9,000oz for the quarter, which in the circumstances is absolutely fabulous. The guys at site are working really well. We’ve managed to begin to, we’ve got some testing of some tests and we are managing to work out a system of actually rotating about 10 people a week at the moment. So we test people, we bring those 10 people to site. They’re in a separate part of the camp, which is quarantined. They spend sort of eight days there being quarantined and as long as the doctor’s happy with them and they’re all temperature tested, et cetera, they’re all fine they get integrated into the workforce.

That said, the guys at site have been brilliant. I mean, they normally work like 30-15 rostas and some of those guys have been there for 60-days now and they don’t want to leave. They keep going and we’re paying them a little bit of a bonus to keep the enthusiasm going and the motivation, and it is really showing you the numbers. I mean, the health and safety stats, before anyone gets alarmed, are fine: absolutely good. And the production stats are absolutely wonderful. So, you know, yes, I’m just delighted, delighted with the way the operation is going at the moment.

Matthew Gordon: Okay. And what about this ore-sorter? You have kind of done some preliminary tasks and you gave us some initial feedback as to what it has been able to do. Again, is that still performing as expected?

Mike Hodgson: The thing is absolutely singing, I haven’t got the stats for April yet, but in in March, it was upgrading, I think, just loosely in March has given me a bit of an idea; we passed about 2,500t at a grade of around 3g/t, and it screened out a little over 300t at a grade of 21g/t and the rest was 2,200t, the balance, at a grade of 0.7g/t. So it absolutely scavenged all this high-grade Gold.

Now, through April, our Palito grades, eventually go on, the normal Palito grades, because we’re only putting on the Palito part of the deposit at moment, the Palito grades, which generates about 50% of our ore feed, let’s say, the grades would normally have balanced sort of 6.5g/t, 7g/t, and we are basically passing about 9g/t.

So you know, overall, it is meaning, if you combine that with the Sao Chico ore as well, which doesn’t get ore-sorted, it is giving our feed grade at the plant about a 1g/t uplift. Now, 1g/t might not sound like a lot but if your feed grade is 7g/t and it is going to 8g/t, 8.5g/ – big difference. So, it is brilliant. It is working really well.

So yes, I’m looking forward, I mean I haven’t got them yet, but I think they’ll be a very significant contribution and another healthy increase in the Palito feed grade through April. That’s why we’re getting these extra ounces. That’s where it is coming from. It is taking waste out of the feed before it goes to the plant and using that plant capacity with better quality material. That’s the key.

Matthew Gordon: Okay. So that’s great. I mean I guess we’ll get a proper update from you maybe later this month if you can. I want to talk about this press release though. There’s some really nice numbers in here, but I think the bigger story in here is that you’re putting money towards exploration, which you haven’t done for some time. So, because obviously you’re producing, you’re throwing off cash now. So, tell me what you’re aiming to do here, what’s the plan here?

Mike Hodgson: Well, just to touch on your point there about that; I mean, we ever since we put Palito back in production in 2014 and we acquired Sao Chico a year or so later and then put that into production as well, we raised just enough money to do that and not, well, in fact, not quite enough, and we went to Sprott –  a great lender and we borrowed money off Sprott twice. USD$8M, which we paid off, and USD$8M again, which we’ve only got USD$2M left to pay on that and it will be gone by the end of June. So, we’ve basically paid USD$16 million, we borrowed USD$16M of debt and paid it off on a cashflow. So, we’ve never had money for exploration really, we have just been servicing and paying off debt. So, the opportunity for excavation was pretty much parked bar, you know, immediate mine site, head frame explorations, I like to call it, in around Palito and Sau Chico.

But obviously what we did in 2018, we did do a financing. We raised over USD$20M and we did set aside a chunk of money for exploration for the first time in about five years. So, it was great. But perhaps first I’ll talk about the Sao Chico exploration results, which is part of that headframe exploration I just talked about. And that is ongoing program. We have done a couple of releases already this year. It is the continued step out drilling of the Sao Chico extension, westerly, which we’re doing. And I think if one looks at the images in the press release, it is getting very interesting that as we actually stepped out West at Sao Chico, which is all we’re doing beyond the mine limits with surface drilling, we are working our way towards a geophysical anomaly, which is called Cicada, which we’ve also been drilling. And what the compelling thing here is, it is beginning to look like we’ve got the various sort of interesting possibility that this is all going to join up.

So essentially, what we’re drilling is the gap; the gap between Sao Chico and this geophysical anomaly called Cicada.

Matthew Gordon: So, let’s look at that. There’s a couple of diagrams in the press release. Do you mind sort of talking me through those?

Mike Hodgson:  Well, if we look here, we can see the Sao Chico deposit. You can see the mine limits down there in the sort of the South East corner. And that’s what we’ve been mining over the last few years. It is open to the South East, which is the area called Highway. We’ve got no holes in this release on that area at the moment. We are going to go back there, but we’ve been focusing on the area to the West. You can see there, I know it is not exactly showing the scale, but you can see we’ve got sort of 6 or 7 holes now in that area beyond the Western limit of the mine area, going towards that Lake area.

Now, we’ve got some really nice intersections in there, minable grades. Of course, what’s beginning to interest us is, at the same time with this release, we’ve got our first results from the Cicada anomaly. Now, those sort of coloured areas you see to the West there, they’re all to terrestrial or geophysical anomalies, which we obtained from the site last year. And we actually started drilling at the beginning of this year.

We’ve got our first our first sort of start results. So, we’re drilling, not with core drilling here, we’re drilling with what’s RC drilling. So, it is much courser drilling where you just collect rock chips. You don’t get such an accurate sample, but it is kind of discovery drilling. But there’s enough there for us to get pretty excited about. We’ve got three metres at 2g/t, including one at over 5g/t, which is very, very Gold bearing. And the interesting point is it is bang on projection of the Sao Chico ore zone and as we’re moving West it is becoming to become quite possible for us that these things might all join together, which is really very interesting.

So now, if we look at that in terms of the long section, so now we can see long section-wise, the mine on the right hand side, you can see all the levels in blue, you can see the areas we’ve been mining and are mining in yellow. And you can see where we’re drilling all around the edges, obviously to the West, sorry, to the East, at depth. We still have some intersections right down there at the bottom and the mine is going down and down and down. But we’re drawn in a drill, that area to the West of the mind, the information gap as I call it, between Sau Chico and Cicada, that is a terrestrial geophysics anomaly, which we’ve just actually started drilling and got those hits up at the top. So, we’ve got a nice area, about 6,000 to 7,800m there to fill in, and we’re just stepping along, going West, time, time and time. The last intersections we actually got were not so wide, but the structure was still going strong and it was still over 1g/t.

But you can see in there, we’re picking up some really nice numbers; we’ve got over 5n at 12g/t, another sort of 12g/t in there. So right at the top there we’ve got nearly 2 metres to 28g/t. So it is some really nice numbers and a big area to obviously justify extending that mine West as we go. And we’ll just continue drilling that gap all the way to Cicada. And if this thing joins up, we’re sitting on some pretty, some pretty nice resource growth at Sao Chico.

Okay. So here we have the results of that airborne geophysics survey with the geochemistry superimposed. When we first received this, we were pretty, well pretty excited about this because there we have the Palito mine at the top where our plant deposit is, and Sao Chico down there in the Southwest corner.

And never in a moment did we think we’d have this huge geophysical magnetic, anomalous high with all those little black areas. They are the little, they’re the electromagnetic anomaly, which is another type of geophysics, and they are usually an indicator of massive sulphide. So, you can see, there’s a chain of them that sit on the flank – so that big magnetic highlight.

It is a huge feature and it obviously makes us think that there’s a different rock type, a favourable rock type of sulphide mineralization. And we obviously have those black dots that give the electromagnetic highs going along with it. So, what we’ve done, we’ve actually superimposed soil geochemistry over the top and hey ho, we’ve got a nice coincidental Copper anomaly as well.

So, the plan now is to hone in on those anomalies and actually see if we get a coincidental Gold anomaly. And you can see down there on the Cinderella shear, we do. And that’s got a really nice series of contiguous Golden anomolies there. So that’s really excellent. And what we’re going to do there is do even tighter lines like closest space sampling and see if we can join all those, if they become, they join up and actually become a really nice continuity anomaly there, make those drill-ready.

But probably the two that really excite us now is this one area called Calico and Jura, which are over at the West end. Really looking at the closeup apps, Calico and Jura. We, this is an area where we’ve actually already taken the Copper soil samples that were anomalous and re-assayed them for Gold and got some really terrific results. And you can see there at Calico, we’ve got a series of really high grade, 30 parts per billion Golden soil anomalies. And they, interestingly enough, I look at that, I see the orientation of those anomalies and they are exactly the same orientation strike, as we call it as the Palito deposit. So, I think that’s going to be a big stack of veins, just like at Palito. And I’m sure that’s what that’s going to end up being. The geology is very similar, so it really does look like a Palito copy so far, at this stage, from a geochemical anomaly viewpoint. There are only 5km to Palito, so it is pretty easy to actually start something there and truck it up to the Palito plants. That’s not going to be an issue.

And to the South, we’ve got this one called Jura, now, this one probably is even more exciting because it has all the components that you would want to see for some type of scalable deposit. It is over a kilometre in diameter. It has got coincidental Copper, Gold and other elements like molybdenum, tellurium bismuth. Multi elements that you would actually find in a porphyry type deposit. And we already know the rocks that we have are right for that. So, these are the two that we actually want to sort of move forward with and get close to space sampling on, see if we can tighten these up and all being well, drill them in Q4/20 and see what we can find there.

It is looking very much like a Palito: the rocks are the same. It is only 5km from Palito, so it is pretty exciting.

Matthew Gordon: Okay. So what I’m hearing is that you’re very excited. I can hear that and you know how you’re going to tackle it. I guess, people, you know, shareholders and people are looking at you afresh are going to be like, well, is this going to distract you from the work that you’re going to do at Coringa?

Mike Hodgson: I’ve been asked that a few times from investors in the past, and obviously, I suppose it is a nice problem to have. We’ve got such good organic growth upside in our backyard. Look, Coringa is very advanced, established, as you, as you quite rightly say; it is a Palito lookalike and it is going to do very nicely. Thank you.

I think what these results show us is how important organic growth is as well. You know, we can actually add ounces in our own backyard very cheaply. We can actually find satellite deposits which are all sort of built, dovetailed into our sort of plant expansion plans, whether they be at Palito or Sao Chico. So it is important to realise that potential in and around our 2 producing areas to see where are we going to do a plant expansion, which obviously we need to do at some point in time. And  this is what it is about.

I suppose I would like to add though that, you know, when you see something so big on the geochemical anomalies and the geophysical anomalies like this, we are mining high-grade veins at Palito, at Sao Chico and we will be at Coringa. But the scale of these anomalies, the size of them is, and the rock types they’re in, do look very similar to what the Anglo Americans of the world were looking at in Matagroso state in the South. And you know, not that we’re going to jump into bed with Anglo American or RTZ or any major, we’ve had several visits at site about these guys, wanting to come and look at what we’ve got. They’re very excited about it also; about the potential.

You know, these big magnetic anomalies are indicative of magnetic altered granites, which are usually hosts for bulk, porphyry type mineralisation. And so, we’re pretty excited about that we might have something, some real scale in our own backyard. So, you know, all we can do now is work our way through the process, prove the mineability.

Matthew Gordon: That’s kind of interesting to me. So, obviously, you have been used to chasing high-grade veins and you’re good at it, you know, you have been able to do it economically and you are obviously throwing off cash at the moment, but you are now talking the language of a different type of opportunity. You’re talking about bulk. I presume therefore, more homogenous low-grade type activity. Are you equipped or set up to deal with that as well?

Mike Hodgson: Well, a fair bit of water is going to flow into the bridge first. I mean, obviously I think, you know, one of the biggest challenges in the region is power, and that’s why probably high-grade veins work in this part of the world at the moment. But it is I think, I think as every day passes in this part of Brazil, you know, the road improvement and infrastructure improvements happening. You know, I think there’s a lot of will to actually improve the power situation in the region. And certainly, we can look at that. It just depends on the scale. But certainly, one thing that we want to do is, is address our cost profile and you know, adding in some open pit production one day with our sort of high-grade vein in mining is our wish. That’s our wish. And if we can do it organically, all the better, all the better.

Matthew Gordon: Fantastic. Okay. Well look, Mike, it sounds like things are going well. You’re coping with COVID-19, keeping the numbers flowing, which, I guess, should excite the market because I think others are struggling somewhat there. Should we expect more of the same for Q2? Or is it just see how it goes? Because what’s happening in-country, I guess is where I’m getting to?

Mike Hodgson: Well it is, Brazil is struggling and there’s no doubt and there’s no denying that. We are remaining very isolated from what’s actually happening outside. You know, people only need to read the news and see; there’s a lot of, particularly in the north of Brazil, they haven’t got the infrastructure, the medical infrastructure that we enjoy in in Europe or the US. So it certainly is challenging. What we’re doing, we think we have found a formula for rotating the workforce. The workforce has become very, very flexible and they’re working much longer periods of time than they normally would work. And as long as that will stays, we think we can find a way through of having a good Q2/20 and now we think we can have a very reasonable Q3/20. We might not make the guidance numbers that we said at the beginning of the year, but I think if we got 90% of it, no one’s going to complain. And to be perfectly honest, with the Gold price that we’ve got, 9,400, 9,500/Real an oz, and certainly making 3,000 pounds plus months, our cash flow is going to be in pretty good shape.

Matthew Gordon: And is the exchange working in your favour?

Mike Hodgson: Very much so. Very much so. That’s huge. I mean, the exchange rate today is BRLR$5.3/USD$1. BRLR$5.42 you know, our budgets were done at 3.70, so it is a, yes, let’s say that costs 85% in reals, and you know, exchange rate, 9,500 Reals/oz. You know, two months ago it was 6,000 Real/oz, it is a great time to be a producer in Brazil. Well from an economic perspective.

Matthew Gordon: Certainly. Certainly, yes. Mike, thanks very much for that update. You know, your story we quite like and we follow you avidly because I think that the potential is there and I think with, maybe, exploring; the possibility of adding bulk to this high-grade story could be very interesting for you. So, keep us up to date about things going on. I guess it is very fluid at the moment, so I appreciate the phone call.

Mike Hodgson: Many thanks.

Company Website: https://www.serabigold.com/

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Ross Beaty – So You Want to be an Entrepreneur? (Transcript)

A photo of Ross Beaty

A conversation with Ross Beaty, Mining Investor and Entrepreneur.

Which entrepreneur wouldn’t want to replicate Ross Beaty’s business success? It wasn’t always so easy for the young Beaty, who tells us about the mistakes and lessons learnt. Beaty makes time to talk us and shares some of his thoughts on a variety of topics outside of mining too. We start with his childhood and early years. What three things are important to him? What shaped his thinking and drove him into mining? We talk about his management style today and what he looks for in manager of his projects.

And let’s be honest, if he puts his name to a project it has more chance of success than most as he can bring money to the table. He appreciates that but there is still a lot to do to be able to build a globally significant mines. But you have to like risk.

So when is he going to retire and what’s is he going to do? And what is his take on Naked Shorting?

We discuss:

  1. Nuclear Fuel Report Announcement: Opinion and Expectations
  2. Time of Benefit to Uranium Miners: Anything to Look Forward to?
  3. Building the Reserve: What it Means for Producers
  4. Supply and Demand Fundamentals: A Singular Source of Clarity
  5. Price hits $30: Will it Hold, Rise or Drop Away?
  6. Cameco: Contracts, Terms and Delivering Results
  7. Identifying Winners and Losers: Knowledge of Putting Together Deals
  8. Mood in the Market: Optimism for the Future
  9. What Will Make Generalists Come Back to the Uranium Space?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Ross, how you doing, Sir?

Ross Beaty: I am well, thank you. How are you?

Matthew Gordon: Yes, not bad. Not bad. Surviving. Holed up. What about you?

Ross Beaty: It is a very strange world: I haven’t travelled in 2-months now and it’s a little bit, you know, you go a little bit stir crazy, but it’s kind of nice where I live. I live on an Island. I’m kind of self-sufficient here. You know, we are suffering through it as best as best we can and it’s not a bad lifestyle, to be honest. It is good for the planet.

Matthew Gordon: Yes, it is good for the planet. It is strange to be getting withdrawal symptoms about not being in an airplane. I never thought I’d feel that. Well, thank you very much for joining us today. A slightly unusual one too. We’re not here to promote one single company. We are usually grilling CEOs about their performance. So, we are going to talk about you today. People are interested in you and where it all began. So, we have got some nice gentle questions. Are you ready?

Ross Beaty: Okay. I am ready. I’m intrigued.

Matthew Gordon: We are interested in how people get to where they are, what sort of made them the man they are today? And so, I want to sort of start off from sort of understanding where you grew up, what was life like as a kid?

Ross Beaty: I had a pretty good life as a kid. I grew up in a kind of traditional Canadian middle-class family. My dad was an entrepreneur in the lumber business and I was just, I was always interested in the outdoors: I just loved hiking and camping. And so, I gravitated to that from an early age and I wanted a job working in the outdoors all the time, so I became a geologist. And then, after a few sessions at different universities, I started my first company right out of, pretty much out of university. It was called BD Geological, and I ran a little contract geology company and built that up. And then I started my first public company in 1985, which was called Equinox Resources, and then I’ve just had a whole stream of companies ever since then. My first company lasted nine years and I sold it to a big US mining company and started a new one the next day. There has just been a whole succession. I think I’m on number 15 now, so it’s been a lot of fun and a lot of travel, which I love. And working with great people who’ve helped me build these companies.

I was a good geologist, but I also found I was a good salesman; so, I could sell shares and I could tell stories and part people from their money. And by a lot of good luck as opposed to good management, we found Gold mines and Silver mines and we built companies and so they made more money than they gave me and they returned the favour; every time I started a new company, they backed me again and again. So, it has been a happy and successful career, which I’m pretty much at the end of now, Equinox Gold will be my last company. And it has been a great run, a great journey and a tremendous amount of fun.

Matthew Gordon: Right. Okay. Good summary. This could be either the shortest interview I’ve ever done, or we can go back, I want to get back to your childhood. Okay. So, I’m fascinated because I’ve got 4-kids, and they have each have different personalities, and I know who’s probably going to do what. They’ve got very different desires and needs and personalities. So, when you were growing up, your dad was an entrepreneur, you have had an entrepreneurial life, and the question I’m asking you is, what influence did your parents have on you, or did your father have on you when you were growing up? Or did you feel it is innate in you? You were always going to be a ‘salesman’, as you put it?

Ross Beaty: Yes. It’s hard to say really; I have 2 brothers and I had a sister, she died when she was young, and my dad actually died when he was young. He died in 1973, I think. He died when he was 55 of a car accident. So,, I didn’t have anybody to bounce ideas off when I was in the business world. I would say I just got his genes, and we had a pretty lucky early life because I was given a tremendous amount of freedom. I was always a hyperactive little shit. I was always busy running around and constantly arguing with people and just…you know. So, my mother’s solution was to just kick me outside and call me back when it was time for meals.

I’ve always been pretty active. I’m going to say I’m pretty impatient and selfish and greedy and all those things that make great entrepreneurs. But I would say no; my 2 brothers, I have 2 brothers say none of them became entrepreneurs. One is a great engineer and he worked for a company through his life and the other one was a printing salesman, so the apple didn’t fall far from the tree in my case, but in their cases, they were just sort of living ordinary middle-class lives. So that was, my personality, I guess, was sufficiently different and that is where I went. And I would say I made a lot of my own mistakes. I never had a mentor or a particular guiding light when I was building these companies. I just, it was a school of hard knocks and like I said, I made a lot of crazy mistakes, and in hindsight, crazy, but at the time they all seemed very clever and luckily, there were more good decisions than bad decisions and the outcome was positive.

Matthew Gordon: Okay. That’s interesting. Do you think your father would be proud of what you’ve done?

Ross Beaty Yes. Oh yes. Well, of course, he would be very proud and of course, my mother. My mother always was; of course, mothers are proud of chainsaw massacres. So ,mothers are always proud of the children, whether they are thieves, rapists and murderers, but fathers are a little tougher, and I know he would have been proud of me, for sure. It has been a great career and I think I’m very proud of having done it without having to lie and cheat and steal. And some of the short-term thinking that certain people in this industry have followed over the decades, I’ve been involved with it, and it never usually works out very well. It’s not hard to do things right. You do need luck. And I got luck. And with that luck plus working very hard and being very driven and motivated, it worked out; without any of those ingredients it would have been harder.

Matthew Gordon: Well, I’m intrigued in terms of what are the sum of the parts of the man, right? Because a lot of people are watching this, they will be looking for clues. They may be starting out like you now, we all once did, looking to sort of see, do they have the right characteristics and so forth? But you say you’re a workaholic. I think I just heard that was one of the criteria there. Does that leave time for your family?

Ross Beaty: I didn’t say that.

Matthew Gordon: You are not a workaholic? You work hard?

Ross Beaty: No, no, I’m not. No, I’m not. Especially when we had kids, I spent a huge amount of time, and for me, it was always about juggling; it was always about having three balls in the air at any one point in time. One ball was my business, for sure; I wanted to make sure that was healthy and thriving. One ball was my family. I have 5 kids, I have 1 wife, we celebrate our 40th wedding anniversary in 10 days. And I have me, and as long as I’m happy, my family is doing well and my company is doing well, it works. If any one of those balls drops, it’s a disaster. So, I spend a certain amount of time looking after the me, and me; I really am driven to be an outdoor person. I love skiing and hiking and camping and canoeing and traveling and I just love moving around, so I made sure there was that part of my life that I was getting a lot of personal fulfilment from.

The businesses were all doing well; that required a lot of work, for sure. But it tended not to include work on the weekends or in the evenings like a lot of true workaholics do. And it was very important that we had a strong family, and we have got a strong family. We always have had, I’ve got a wonderful wife and it has worked out quite well for everybody I’d say, in terms of that mix. I think if you lose one of those ingredients, everything else becomes more difficult. And so, I wanted to try to make sure all those three pieces of the personal puzzle were healthy, and it’s been a successful life because of that.

Matthew Gordon: Fantastic. Nice balance. Well, let’s get on and we will stick with the work bit now, okay? What type of manager are you?

Ross Beaty: I am a very decentralized manager. I like to work with smart people and I really give them a lot of runway to do their own thing, and I just try to help manage them and we make mutual decisions. I also try to be quite hands on though; I try to visit all the projects and try to have a complete understanding, technical understanding of what’s going on. And so, I can help really inform the decisions with personal experience. I’ve got to see things with my own eyes. I’ve got to touch the ground, go underground, for example, look at opportunities personally before I can really get a good sense of them. I can’t do it from reading a book, or a report or online.

Matthew Gordon: Okay. And you talked about mistakes that you’ve made along the way, and we say to people, you probably learn more from your mistakes than you do from the successes. So, what are the big moments you think, boy, I’m not going to do that again? Or maybe I’ve now worked out what I should be doing.

Ross Beaty: Yes, well, like I said, I am a quick study. I do learn quickly. And I, when I realise I’ve made a terrible mistake, I try not to repeat it. Instead of that I make other new mistakes, and that’s kind of what life’s all about, right? It’s just a one-way street; every time you come around a corner there is this sort of new situation that may or may not be something that you’ve experienced already. And the world changes so you can’t always apply experience that you’ve learned 30 years ago to what’s going on today. It’s a different world. We have different markets, different investors, different ways of looking at things, different social issues, all kinds of things that are different. So, you know, there are a few ingredients though that I have learned and number one is working with nice people, good people and if you can’t get along with somebody, change. You have goy to cut quickly. The quicker you cut, the happier you’re going to be and the happier they’re going to be.

Another is to focus on scale: look for big projects, big opportunities, big ideas. I spent 3 years of my life trying to permit a 50,000oz a total Resource Gold deposit in California back in the late eighties and it was 3 wasted years. It was ridiculous what we tried to do. So those kinds of things are just a waste of time, a waste of energy.

And try to be opportunistic. In other words, set yourself up for things that are going to happen as to things that are happening today. I’ve done that quite frequently in my career and it has always been very successful, particularly trying to look at long-term commodity price trends that will eventually drive markets.

I got into the Gold business in the eighties. It worked out well. I got into Silver business in the nineties, the Copper business in the 2000s. I went into renewable energy in late 2000, in 2008, I started a renewable energy company. Then I got back into Gold in around 2015, 2016, and that has been a pretty good run. So, I try to look at what’s going to happen in future trends as opposed to what’s happening today. The best opportunities are those where you’re taking advantage of weakness elsewhere, or markets that just seem to have it wrong. When I started a Copper company in early 2000, a group of Copper companies, nobody wanted to know the word Copper, and that was when I was buying like a drunken fool. I was buying everything with Copper that I could find. And sure enough, Copper went from an all time low to an all-time high in just 4 or 5-years. And every one of those workflows, Copper deposits I bought became incredibly valuable. We sold them all for nearly USD$2Bn. So, it is stepping back, it is reading a lot. It’s traveling a lot. It’s looking at what’s going on in the world and what’s going to go on in the world, and making a prediction and then trying to set up a business that takes advantage of that trend and takes advantage of that.

We live in very cyclical markets: bull markets beget bull markets. Bear markets beget bear markets. That’s why we have these cycles. And so, if you’re in a bottom of a cycle, you want to be preparing for when the cycle turns and goes up. Those to prepare, who are lucky enough to have the capital to prepare themselves and get the assets that will do well in an up cycle are going to benefit disproportionally, and vice versa. If you are at the top of the cycle, that’s when you want to be selling. That’s when you want to be turning to cash up, to try to take advantage of when the cycle changes and it goes down again. These are multi-year events, but they always happen, they always will. We are in a down cycle today in many respects because of this COVID crisis. This is the time to be loaded up on equities and buying things that other people have destressed and have to sell. That’s just how these markets work. So that’s worked very well for me, and it’s a kind of a basic thing. It sounds very easy to say, it’s rather more difficult to do.

Matthew Gordon: Yes. It does sound easy to say, but people talk the story of being, about the contrarian philosophy for investing, but when you’ve got money, it feels like it’s slightly easier to actually deliver on that. Because we saw this with Uranium and Gold previously, and obviously with the debt which happened with the market reset, people who had been talking very aggressive, contrarian type language were terrified to actually place a bet. I’m talking retail here, okay. They were terrified. They were asking each other, where they had been bullish before, they were now asking other people’s advice, should I, should I? I just find that kind of interesting. It was the definition of a contrarian environment, but the human psyche comes into it when actually being, you know, the last pitch of the innings; you have got to place your bet and a lot of people didn’t. I thought that was interesting.

Ross Beaty: Right? It is very easy to say and very hard to do. And of course,  I mean, there’s different ways to do it of course. And it is a very different world between being an investor where you can buy and sell someone else’s company anytime you want; you are by definition a short-term investor because you can sell anytime, and nothing will happen to you or the company. If you are on the other side, like I’ve been, which is basically a developer most of my life, I mean, I’ve been an investor at different times, but mostly I’ve been a developer of my own businesses, and I only sell once or I don’t sell at all. When I sell once, it means I sell the whole company, and I’ve done that, I don’t know, 10 or 11 times with different companies I’ve started, but you have to hold for the long-term.

So you’re building, you’re investing in projects or you’re investing in people, you’re investing in ideas when you start these companies from scratch, and you try to get your timing right; and so you want to start them at the bottom and sell them at the top. And that’s actually something I have done. And you have to have a lot of courage of your convictions because there’s always people who say you’re an idiot; you are doing the wrong thing, you are selling out at the wrong time. There’s always people who second guess you. And sometimes they’re right. Sometimes you’re right. But you just have to have the courage of your convictions and you have to have enough control of your business to actually make those decisions and you’ve just got to do it. And so whether you’re a nurse or you’re a company builder, you have to think long-term and you have to play these cycles in our business, I’m not saying it’s the same for selling a brand or some other service to somebody, but in the commodity game it is a cyclical business and you can actually do very, very well if you pick the cycles right.

But you don’t have to necessarily have a lot of money when you’re in the development world. Like when you’re starting these companies, I mean, I have lots of money now and I had money starting probably, well, after I sold my first company, Equinox, I had a bit of money but when we got our Silver company going we didn’t have a lot. We had very, I would say, very supportive shareholders and they financed us again and again at, at good prices and with that money, we were able to build up an asset base that was very successful, I guess, when Silver prices took off after 10-years or 8-years, it took a long time. But finally, they went and boy, everybody was happy when they went.

I mean, I was completely wrong. I thought Silver, when I started my Silver company in 1994, I had the confidence of ignorance and I was able to sell the idea that Silver is going to the moon. It started at USD$5.20 I think when I started Pan-American in 1994. And I was saying to everybody, by the end of the decade is going to be up to USD$10 and everything we buy now is going to be ridiculously valuable. And of course, the predictable happened: by 2000, at the end of the decade Silver was USD$4 p/oz. It was at an all-time low in real terms, and yes, we had scrubbed together a company that actually had a whole bunch of assets and after a near death experience, a very near-death experience starting in 2001 where we almost went bankrupt. Luckily right after that, the Silver base took off, we had this wonderful run of the super-cycle in early 2000: Silver went from that USD$4 price in 2000, in the fall or the winter of 2007 it went all the way to USD$48 an ounce, 6-years, 7-years later.

So it was a glorious run. We were well positioned for the run. We had the asset base for it. Yes, we had almost died, but we were lucky enough to just come out of that all-time low with that tremendous asset base, a lot of goodwill from shareholders, a good name as being a primary Silver company, one of the very few in the world, and our share price went from USD$3 a share to a nearly USD$50 a share during that glorious run. So, it was a happy time. Maybe if it had taken another year or 2, we might’ve gone bankrupt and that would have been the end of the story, but we didn’t.

Matthew Gordon: Yes, it’s amazing; those moments and the paths just split right or left and there’s a lot of very successful people who can remember that moment where it could have gone either way, a very, very different story, very different outcomes.

Ross Beaty:  Forks in the road.

Matthew Gordon: Forks in the road, right? So you must appreciate the power and the value of your name being associated with a project. I know you told me Equinox is the last hurrah, but for last few years if you’ve been involved in a project, you put your money in it in some capacity or other, people follow you. There’s a value to that because the view is, there is a successful guy. If I can just get a bit of what he’s got, it’ll be okay. Right? So, do you mind if we sort of delve in and sort of see how true that is, what have you done?

Ross Beaty: Well, it is true. I mean there is no question that success generates followers and people who like to get onto your bandwagon. And in this business, because I’m a very public person because all my company investments, almost all of them are public investments and whatever I now buy something, it’s not very meaningful to me unless I have a fairly big stake in it. I’ve a multimillion dollar stake, 10% plus. I don’t care if I’m showing up as an insider or not. In many times I am. And if I am, it is very public. And so, you got a lot of people who will buy based on my name or Lukas Lundin’s name or Richard Warke’s name, or any of these guys who have been serially successful, and they’ve made a lot of money. Not always, not every company, there’s been some dogs in the portfolio, but there’s been more winners than losers. So, there are people who do pile on. And that’s true.

That’s particularly true for when I have been more traditionally an investor in companies; where I will look at a hundred companies and pick two or three to actually do a private placement and then trust the management to build value, add it again, that has been more successful than unsuccessful, but I’m not doing that right now. I’m not hardly doing that. I’m doing that a tiny bit. Mostly right now, 90% of my world, my business world is actually Pan-American Silver, Equinox Gold, one or two little private companies that we have that aren’t public, but we’re working on quite hard and the Lumina group, which comprises today two companies, or two and a half companies within a group that has been close with me for 15 to 20 -ears, a very, very good management team and I’m really backing them financially versus being too active in the companies. But I do try to help out where I can. I would say that’s still in my orbit as a developer versus an investor where I have absolutely nothing to do with management.

Matthew Gordon: Can I just ask? Who are the guys in the market, apart from your own team, who you admire at the moment, when you look at either CEOs or management teams or companies, who do you admire and go, actually, they’re doing a good job?

Ross Beaty: One of the realities in this business that I’m in, because I’m so much in the trenches with my own companies, I actually don’t, I don’t really listen to other presentations. I mean, I know all the guys very well, but I don’t really know the fundamentals of their business. I have an enormous regard for Randy Smallwood of Silver Wheaton or Wheaton resources. He’s a very smart, very lovely guy, wonderful guy. I have a tremendous amount of time for Lukas Lundin. He’s a dear friend of mine, smart, driven, a huge amount of fun, generous competent, just great. And he has very good business sense and works with really good people. And so, his companies are strong and they’re strong for a reason; they are very well led. Beyond that, Donald Lindsay at Tech, I have enormous admiration for Don. He’s a smart guy. He’s a great leader. People love working with him. Core investment for me. I have a lot of time for Tech. Those are a few names.

Amongst the juniors, I just don’t know them well enough to really comment, to be honest. I don’t have a, I mean, I know certain people in certain companies, but I don’t know enough about the companies themselves to really give you a sense of who I would back.

Matthew Gordon: I guess the bit I wanted to understand from you, obviously, was, maybe not now because I appreciate you’ve just explained where you are now, but let’s say in the last 10, 15-years, has that track record, has that money, allowed you to be a little less right or a little bit less choosy about the project because you know that you following your cash would make it work?

Ross Beaty: How has it been? How’s it made me less choosy? I think when you are an investor, you won’t have a big win on every single investment. The more money you have really doesn’t matter; a lot of money, a little money. What you, what you luxuriate in, when you have a lot of money is, you can afford to be wrong again and again, and you’re not going to really change your lifestyle a lot. And small investors simply can’t do that, which is a big difference to me. But having said that, I don’t like losing money. I don’t like looking stupid. I think there’s a lot of ego in all of this, don’t forget; a massive amount of ego in everything that I do. I always want to be seen as being smart and right. It’s just an unavoidable intimate, personal characteristic, Carl Icahn is the same and anybody who’s a public figure who goes after companies and has as a brand or a cachet, they always want to be right. And that’s a very natural human, human instinct.

So, whether I’m a developer or an investor, you could say the same thing; I’m always trying to hit for the fence, trying to make a home run of every single thing I do. And most of the time you swing for the fence and you might get a bunch, or you might run halfway to first and get thrown out, but often you do get that home run. I’ve had a lot of home runs in my career, a heck of a lot of home runs. They feel fabulous.

Matthew Gordon: Yes, they always do, right? That’s why you get out of bed in the morning. But do you think if someone took all your money away today and you were, you know, the young Ross Beaty in today’s environment, could you do it again? Is it a different world now compared to back then?

Ross Beaty: Yes, yes.

Matthew Gordon: You could do it again?

Ross Beaty: Yes, yes, it’s definitely a different world. It’s definitely a different world, but yes, you can do it again. I mean, all the ingredients to success are more than anything: hard work, a lot of drive where you make the phone calls, you don’t wait for the phone to ring, and that’s true in any business, I think, in any sector; it is the people who have that extra bit of drive, not necessarily any smarter than anyone else, but just that drive. If I’m looking to hire somebody, that’s what I’m looking for. Somebody who’s got drive, somebody who’s got an interest in what they do, a motivation to work hard. And then you put in place the ingredients for success. In our business, you put in place the opportunity to have lots and lots of drill holes, and because when you drill, usually you get bad results, but every so often you get good results and it’s a statistical thing. Obviously, you want to drill good projects, but not all of them are good. That’s the nature of the business. But boy, if you get a success, it goes straight to the bottom line. It’s real immediate capital value. And so, you want to position yourself for that kind of success if you’re in the exploration business. And if you’re in the mining business, you want to watch two things: you want to watch, obviously, the size of the project you remember because the bigger the project, the more valuable it’s going to be for you, and you want to try to get your timing rate on the commodities.

So, if you start a business at the top of the cycle and the cycle goes against you for four years, you are going to have more and more difficulty funding your dreams and trying to build any kind of value at all. It’s just going to be a, it’s almost a losing proposition. It’s very difficult. Whereas if you started at the bottom and you get your direction right, it’s going to be a pretty happy time because even if you buy something that is a marginal project, or acquire or discover something that is quite marginal at one point in time, the price rises, it has real tangible value and you can sell it, you can develop it, you can do all kinds of ways to realise on that. You don’t see that kind of thing in other businesses. That’s what makes the mining business so beautiful when things go well and so terrible when they don’t.

Matthew Gordon: I think that’s right. I think that’s right. But a few things you said there, I think one of the phrases you probably touched on earlier was also courage; you’re not frightened to make a few mistakes along the way. And the wisdom comes with time. For sure. But the other thing you said there which was interesting to me is that having the money allows you to do things that some companies, some management teams don’t make time to put in place or are unable to put in place because money can paper over cracks, but it can also, as you say, through the drill bit, release potential, assuming you bought at the right price. So, I mean, do you look at the market and go, boy, there’s some nice assets there. They’re struggling, I could do something with that?

Ross Beaty: Yes, I mean that is a difference for sure between now and when I started out, I can certainly say that my last two large companies, Equinox Gold and my renewable energy company that was called Alterra power, which we ultimately sold to a big Montreal-based company a couple of years ago, both of those companies would not have done nearly what they did without my ability to back them financially. I was able to backstop Equinox Gold, not once, not twice, but three, three times now with a significant pot of cash that they needed to get kind of over that hurdle to acquire some means, to finance a program. And with that support and my own, as you might put it, my own brand, other shareholders came in at the same time to provide additional capital and we were able to get over that hurdle and built scale, not just when we started, but several times since. I mean the company is only two and a half years old, but we have done this now three or four times, where I was able to put a significant amount of cash in and it really helped the story. I couldn’t have done that if I was starting out with no money.

Like I said, with my first company, I had no money. I mean, my total investment in that company was USD$3,000. And then I bought more shares every time I made some money in something else, I would put into buying more shares. And then I, so eventually I built up a decent position in the company before we sold the company.

But today it is very different in that respect. If I was starting over today, you’d have to go through that struggle. But that’s kind of what business is about. You start at one scale and then if you develop things and are lucky enough to capitalise on it, you start again and you try to scale up like that, and that is very much my story.

I guess the one thread that has been consistent is I have been lucky. I have been very lucky in getting markets right and in making discoveries in where I live and how I finance it. I have had a lot of luck. I’m not saying you can’t get that luck or you couldn’t get that luck if you started again today, but because the business does reward luck; I mean, it does have a lot of luck in it and a lot of people do get that luck. So yes, you can start today. I’m sure you could. This is a long, very long answer to your simple question. Could you do something? Could I do something today? Starting out as a young geologist the way I was starting out in the early eighties, and I’m absolutely confident you can. In fact, I know people who are doing it. There are some young geologists out there. They’re very smart, very dedicated and hardworking people and they’re making big successes out of it. However, the one thing is, I do think this is not for everyone. So not every person is just made to be an entrepreneur. Thank God, because otherwise the world would spin out of control. So if you’re going to try to get into this business, look at yourself in the mirror; ask yourself who you are, what you’re good at, and if you feel you’re actually not a risk taker, this is not a business for you; you shouldn’t be an entrepreneur. You should be an employee because you can be a great part of someone else’s team and still be incredibly rewarded and fulfilled and make lots of money. But if you’re not born to be a risk taker, which is fundamentally what entrepreneurs are, I mean, I love risk. I thrive on risk. I embrace every, every time I see a risk, I just want to wrap my hands around. But it is a weird kind of a thing, but a lot of people aren’t like that. My wife isn’t like that. She’s exactly the opposite. I mean, she’s a doctor; every time I sneeze, there’s some horrible calamity that’s happening to me. And so, it’s not for everyone, that is what I’m saying. And if you’re not an entrepreneur and you try to be, you’re not going to succeed. So, know who you are.

Matthew Gordon: I think that is good advice. It is calculated, measured risk, but you’re assessing multiple variables very quickly to make decisions. I like that.

Ross Beaty: I use a coin. I flip a coin.

Matthew Gordon: Nice. Nice. Keep it simple. Okay. I think someone wrote a book about that. They went through a year making decisions based on a flip of a coin. I’m not sure it ended too well, but it could have. Can I just ask you about Equinox please? Because we have interviewed Christian Milau a couple of times. Really nice guy. I like the story that he painted. And it would probably give us a good chance to understand your thinking when you’re putting these teams together because like I said, you financed them, not once, not twice but three times. And you’d put together a bunch of companies for low-grade bulk Gold recovery. So how did you get that team together? How did that story come to you? It is your last hurrah – how is it going to finish?

Ross Beaty: So, I like Gold first of all, the commodity. We’re in a good secular bull market, and regardless of COVID, by the way, things that are going on in the world financial field and just generally with the amount of money that’s floating around the world and being stimulated every place today, it’s just the macro market, the macro environment for Gold is fabulous. And it started being fabulous since about 2015, 2016. So, I had a couple of Gold investments, of course I have a Silver company, Pan-American, which is exposed to Gold, and Silver markets pretty well. But I really like Gold, and I kind of, I had just sold in 2017 my renewable energy business that I spent much of the last eight years working on. And I kind of wanted to have a last hurrah in Gold, I mean at scale.

I mean the market today, and that is size. The market is very different than it was 20 years ago. It really rewards scale. We have all this, this robot money, the ETF money, the computer-based buying and selling, and so much of the investment today is dumb money. So, what that is rewarded by is getting scale, getting somebody with a lot of liquidity and size and leverage.

So, I had a little company that was a cash shell. I am good friends with Richard Warke. He had a Gold business that was kind of just sitting there, it was a one asset company called Newcastle. And then Christian Milau and his team had a Gold company with an asset in Brazil that was kind of not really going anywhere, so we thought if we put them all together, we could we could build something at scale. And that was something that made sense to me. I agreed to chair it and to make it my last company. And so, we named it after my first company, Equinox Gold, was named after my first company, as a kind of a way to bookend my careers with Equinoxes and Gold companies.

 And we went out hard. We started the company, it went public just right at the very beginning of 2018 as a 3 way merger. And we really haven’t looked back. We bought a Gold mine in California and an operative Gold mine at the end of 2018, which gave us one producer, a little bit of Gold production that year, 25,000oz in 2019, because we then opened up our mine in Brazil we had a little more Gold production. We produced 200,000oz last year. And then at the end of the year we acquired Leagold, which has now built a significant six-mine portfolio: two development projects, one in California and one in Brazil, plus the expansion of a mine in Mexico. And we’re going to produce over 600,000oz this year and we’ll be on the road to about 1Moz sometime next year.

So it has been just an absolutely exponential growth, and that’s precisely what I felt was the right strategy today to get leverage to Gold in both operating business; on an income statement and also on your balance sheet with respect to very large Gold reserves and resources. I think we have something like 24Moz now in our reserves and resources. So, it is a very, very leveraged vehicle now that the market has absolutely embraced the business plan. The guys are good strong managers. Mostly the management team is Christian’s team supplemented by Nelson, some strong people from the Leagold teams.

So Equinox Gold now is a mid-tier producer going on the way to the journey towards becoming a senior producer. And there’s no magic to a million ounces a year, but it does separate you. If you hit a million ounces a year, there’s only 15 companies in the whole world that produce a million ounces or more. So, you’re in a very small club and it’s a club that investors want today. They want that size, they want that liquidity, the ability to go in and out with big volumes of money. And we now deliver that. So, we have grown very satisfactorily in the last couple of years from that idea that we created back in the end of 2017.

Matthew Gordon: Okay. So, lovely idea. You brought it together with your, well the people who surround you and your own capital and you built that into it. Was it a $1Bn? $2Bn? What is it at today?

Ross Beaty: Canadian dollars – it’s about CAD$2.5Bn, USD$1.8Bn.

Matthew Gordon: $1.8Bn. Right. Okay. So ,when we last interviewed Christian, it was USD$1.2Bn. I’m intrigued by the team that you’ve put in there and how you incentivise them. When I spoke to Christian, he said to me that the entrepreneurial spirit is in the company, and by that, you can demonstrate that by saying, they don’t take big salaries, but they do take positions themselves. They use their own cash and are incentivise with, whether it be options or warrants or whatever is on the table to make them hit targets, to incentivise them to hit targets. As you say, not everyone is entrepreneurial and self-driven. Some people need incentives, but I liked the fact that they weren’t sort of taking big wages off the table. Because we have interviewed some pretty big companies along the way and it just seems to be they’ve reached that point where they’re not quite sure, they’ve run out of ideas as to how this thing moves to the next stage, and therefore what does it do for the shares? Because ultimately, we buy shares, we’re not all sitting at your side of the table. We’re sitting here investing in your companies. And we are looking to make money on shares. So I liked that, and it continues to grow but where does it stop? What’s the end game here? Are you going to be taken out or is this thing just throwing off cash and you’re throwing out, throwing back dividends?

Ross Beaty: Right. So, in my case the outcome for Equinox is really the same as that for Pan-American Silver, which I started 25-years ago, or 26-years ago now. Really the plan is to build a world-class Gold mining company that will become simply a world name, a brand in its own right, in the world that will last a long, long time and not be something that someone else buys or is offered for sale. A company that will outlive me, that I will probably pass my shares onto my kids or simply put them into the foundation that I have, the nature foundation or environmental foundation that I have, where most of my money goes when I kick the bucket, if not sooner.

I mean, I have no particular need for money. I have a great lifestyle. I don’t do any of this to earn money to spend. I just do it for the fun of making money and creating wealth for me and for other people. But once you’ve made it, I also have a lot of fun giving it away; so I’ve given a huge amount of money away and I’ll continue to do that. It is great. It’s great fun doing that as well. So, for Equinox there’s no plan to sell. For some of the other companies like Lumina Gold for example, it’s 100% of the business plan to sell that company. It’s an exploration company. It’s not a producing company. And the idea there is to sell it to a big developer, a big Gold producer, the same way as I’ve sold so many other companies in my career.

Matthew Gordon: Yes. We have got Marshall coming on in a couple of weeks and we have interviewed him last year a couple of times as well. Yes, so I mean there’s like USD$1.2Bn worth of capex required for that. You’ve no interest in funding that I presume?

Ross Beaty: No.

Matthew Gordon: None. In and out. Okay.

Ross Beaty: Different business, different business plan.

Matthew Gordon: Okay. Tell me a little bit about Pan-American because you’ve delivered, you’ve given what? USD$450M back in dividends over its time, as throwing off cash. It’s a huge Silver producer. Is it just more of the same? Is that the idea?

Ross Beaty: Yes, it is, it’s more of the same. It’s a much bigger company now than it was a few years ago because we combined with Tahoe resources at the beginning of last year. So not only does Pan-American produce, it’s the second largest primary Silver mining company in the world, but it also produces a lot of Gold: it will produce almost 600,000oz this year. So, it’s a very leveraged company to Gold as well as Silver. And it’s got an impeccable balance sheet, great cashflow, multiple assets in multiple countries. So, just a really good diversified major company in the solar business as well as the Gold business that I hope is going to last a long time. Those companies are hard to build, but once you built them, they’re actually, they kind of run of themselves.

The thing about all these companies though, don’t forget all these operating companies, the mining business, the reason there’s a market for these junior companies, the exploration companies that have good assets, that are setting themselves up to be sold, the reason there’s always a market for those companies is because major companies eat their future every single day, right? Their reserves deplete. And unless they replace the reserves through their own discoveries or by buying other companies, they go out of business. Their whole business plan dies unless they sustain their production by acquiring other companies that have good discoveries, that will allow them to sustain their production for many years, or they discover it themselves. And major companies aren’t very good at discovering mines themselves. So therefore, they generally go out and buy them from juniors. And that’s why there’s always this great market for the junior companies that are successful; they’re going to be bought.

And so Pan-American Silver probably, like Equinox Gold, they got to a certain point where they’re not making their own discoveries quickly enough to support their depletion of reserves from mining and they have to go out and look for other companies. And that’s probably going to be what these companies are going to do for a long time.

Matthew Gordon: It’s very tough, a very competitive environment, which doesn’t make things any cheaper, but if you can find a niche, find your position in this, I guess you’re saying that you can, you can do it with the right drive and ambition.

Ross Beaty: You can do it, you can do it. And yet companies do make mistakes. They buy companies that are dogs, or they build a mine that turns out to be a dog. This is a very risky business. And even the people in the business like me, we often make terrible mistakes. We buy the wrong thing. Pan-American bought a company in Argentina that had the biggest Silver resource in the world. It was fabulous deposit in the middle of a perfectly good place to mine, in the middle of a kind of a windswept no man’s land in the middle of Argentina, Pampas in Southern Argentina. And it had every technical reason in the world to be a really great place to build a mine. There was no biodiversity loss, no environmental issues at all, no people, no nothing.

And yet, weirdly, we had terrible luck, the province was a place where another company had made a discovery of a really rich Gold deposit in a ski resort. And the people in the ski resort went bananas and they banned mining, and they threw out the baby with the bath water and they banned mining in the entire province. Well, I couldn’t figure any reason that that would persist because it was so illogical to me and obviously, no technical or environmental sense. So, I thought, well, let’s go and buy this company that’s got this great deposit there. The deposit is perfect for us, and at some point, they’re going to change the law and allow open pit mining.

Well, it has now been, I think it has now been 10-years, 10 or 11-years that we have owned that deposit. And I still have that kind of blind optimism that they’re going to change the law, but so far they haven’t, and maybe they never will. So, if they never do, that will have been a really, really dumb thing to buy. But you’ve got to take risk and you’ve got to swing that bat and try.

If it is permitted, it’s going to be a home run. If it’s not, it’s going to be a strike out. So, that’s your risk and reward ratio when you make all these decisions on these companies. And so, I can say that from personal experience.

Matthew Gordon: I mean, that nearly happened with Taho, didn’t it? There was nearly a sort of sticky moment there. I mean, it was idle for well over a year. I mean that must be tough going?

Ross Beaty: Well, it still is. It still is idle. I mean, we bought Taho in 2017, right at the bottom of the kind of there was a low in the Gold price. The Taho price had been crushed because its main asset was put out of operation by a constitutional court in in in Guatemala. And we came along and said, okay, well the value of the purchase is based on their other assets. And that’s been for us, it’s been almost a home run. I mean, the timing was just beautiful ,and the assets are good and we got the Silver asset in Guatemala for free. And if we hadn’t restored that operation, then we’re going to make a payment to the Tahoe shareholders. But if we don’t, we don’t pay for it.

And so, it was a very well structured deal. But to be honest, to this day, it’s not running yet. We need to get social licensing in Guatemala. We’re working very hard to get it. And we may get it and we may not get it. It’s just the way it is. We’re pretty sure we will, because again, it’s a resource that is very high grade, very, very low-cost mining. The mine is built, everything’s there. It’s a tiny footprint. It doesn’t cause any real issues with anybody. It generates a massive amount of wealth for the Guatemalan economy. There’s no real logical reason in the world that that mine shouldn’t be running again, creating wealth for the Guatemalan people and for Pan-America. But so far, it’s not running. That’s all I can say.

Matthew Gordon: Sometimes you win and sometimes you have just got to wait to win. Can I talk to you about, so we have got this big European, Asian audience , Canada is, obviously the North American market is huge, but can you give me your view on things like naked shorting, the uptick rule, et cetera, and any other things like the quirks of the Canadian TSX, TSXV exchange? Do you think that those things are being properly regulated? Do you think that those things are being looked at properly? Do you think they’re an inhibitor for people coming from outside of Canada to invest in Canadian companies?

Ross Beaty: You know, I really don’t have a dog in that fight. I don’t, I don’t really, I’m happy with things as they are. I don’t make a fuss about this kind of stuff. There’s way too many things going on in the business that are far more important, that require time and energy and money and focus than to worry about this kind of stuff. I really have absolutely no opinion on it. I can take it or leave it. It doesn’t matter to me,

Matthew Gordon: But I guess it doesn’t affect your type of business. It is just interesting to me. We have got some pretty big names who sit on opposite sides of the table on the topic. I wondered if you had a view.

Ross Beaty: No, and don’t forget that, again, I’m not really an investor and even if I wasn’t an investor, I’ve never been an unfriendly, hostile investor and I just don’t engage in that kind of thing. Life is too short. There’s so many easy ways to make money in this business really if you get things right: invest in good people, invest in nice looking projects that I’ve got a bit of understanding of what they look like because I’m a geologist and I can read the news releases pretty competently. And I’ve been to so many places, I kind of have a pretty good feel for countries and all the risk envelopes around those things. So, I focus on those things. I don’t worry about all the other stuff.

Matthew Gordon: Okay. One last one for you is, really the advice to retail, family office investors around the ratio between Gold and Silver. I’m not a big Silver guy. Gold I understand. Uranium, I understand, but Silver not so much. It’s always been to me a very volatile commodity. But people talk about the ratio between Silver and Gold and the relationship between Silver and Gold. What’s your view on where Silver can go?

Ross Beaty: Right. I think the Silver-Gold ratio, it’s only a statistic that has meant something because it has been relatively consistent: around 55:1, for quite a few years, for several decades, I’d say for a couple of decades. Inherently, it means nothing. Every commodity is different. The one thing that’s consistent between Silver and Gold is that they’re both precious metals. They’ve always been used as money for many, many centuries. They both have ingredients that make them a store of value for a lot of people who want a store of value. How Silver differs from Gold of course, is it’s also an industrial metal. And so, it’s increasingly industrial as it is used in more things than any other metal in the metal spectrum. Silver has more uses than any other metal. And I could go on for hours about what all these uses are.

We use it in every single thing in daily life. Every time you pick up a computer, a calculator or electronic calculator or a cell phone, you use Silver. It’s used in mirrors. It’s used in resin alloys, it is used in everything digital. Of course, it’s a beauty adornment. It is jewellery, it’s Silverware. It is money. It’s got all of these different uses. Its largest use today, you probably don’t know this, it’s largest single use is as in photovoltaic cells. It is 100Moz nearly that it’s used now in photovoltaics, out of 1Bnoz total demand.

So it has got all these uses and therefore, you have got to look to industrial markets to understand that part of the Silvery equation, and quite frankly, in the last year and a half, or 2-years, industrial metals have all gone down in price because China has changed from being an infrastructure economy to a services economy and a consumer goods economy and that uses less metals.

With this COVID crisis, of course, all metals have, have come down with decreased industrial demand. Silver is in the middle between a classic industrial metal, like say, Zinc and Gold, because it’s got elements of both. So, if Gold does well, industrial metals do poorly, you’re going to see that Gold-Silver ratio increase because Gold will do well, and Silver won’t. Silver is in the middle somewhere. By the same token, if we re-inflate this fall, if the markets come back to some kind of a strong economy based on all of this crazy amount of stimulus that’s going on everywhere in the world, that juices demand for industrial metals, all driven by pouring money into infrastructure projects and whatnot. If it juices demand for industrial metals and Gold does well, you could see a perfect storm for Silver.

You could see Silver benefiting, both as an industrial metal and as a precious metal, and actually outperform Gold. Well, if it does that, that Gold-Silver ratio is going to go down and it will recover to something less than a hundred, maybe 80, 90. Who knows what, but you’ve got to look at both of those markets to understand it. So, I think Silver has a potentially fabulous outcome this fall or this next year if, in fact, Silver demand is increased in industrial production as well as Gold doing well and Silver coming along with the coattails of Gold. And if that happens, obviously the Silver-Gold ratio will change significantly. It’s strong where it is. The Gold-Silver ratio is high right now because Gold is outperforming Silver. Gold is outperforming industrial metals. That’s why it is, in a nutshell.

Matthew Gordon: You are a precious metals guy, so I guess you don’t really have an opinion on the next thing either. But this wave of nationalism and trade Wars and national security, which is affecting a lot of other commodities, especially around the EV thematic, and even Uranium, I guess. Do you have an opinion as to, is this going to, because we talked about cycles earlier and obviously things like the ebb and flow, but what’s your take on it?

Ross Beaty: On economic nationalism? You mean on trade? Trade barriers and tariffs and so on? Yes, I would say the more the world goes to a protectionist state, and of course, we’re really just looking at one country that’s doing that. Right. Really. The more they go protectionist in the US, that will decrease, it will have a negative effect on global markets, I would say for sure. I mean it is, it’s not rocket science. I was going to say, it is basically economics that if you put up trade walls, you decrease demand and actually you make the country’s economy worse. It has been tried so many times in the last 50-years, or a 100-years, really. It has a logical outcome: costs go up, demand goes down, or prices go up, demand goes down and things are used less. It will have a negative effect and I don’t think it will persist. It’s not smart economics. It’s not smart policy. It’s maybe good politics for a while, but it’ll fall apart.

Matthew Gordon: It’s also good TV, right?

Ross Beaty: It’s good TV. Yes. It plays to that guy’s base, as ignorant as it is.

Matthew Gordon: There you go, that is a fantastic place to finish this conversation. Ross, it’s been a pleasure talking to you and I learned a few things there. So, I do appreciate you taking time out of your day for us. And I’m going to let you get back to your family and whatever else you’ve got lined up for today. Thank you very much. We’ll speak to you again soon.

Ross Beaty: Thank you. Thank you very much.

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

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A photo of Ross Beaty

Serabi Gold (LSE: SRB, TSX: SBI) – But it’s business as usual, Day after day (Transcript)

The Serabi Gold PLC company logo.
Serabi Gold PLC
  • TSX: EQX
  • Shares Outstanding: 60M
  • Share price GB£0.75 (17.04.2020)
  • Market Cap: GB£44.5M

Interview with Michael Hodgson, CEO of gold producer, Serabi Gold (LSE:SRB, TSX:SBI).

Hodgson gives us his take on the 2019 figures, the highlight being the cash position of USD$14.23M at the end of the year. Other notable numbers are Net cash USD$5M; the AISC at USD$1,081 up from 2018; EBITDA $17.2M; average gold price received of USD$1,376; total ore mined increased by 8% at average grade of 7%. The company continues to produce free cash flow and the Brazil Real exchange rate is also helping.

We also discuss the Q1/20 Operational Announcement. Feb production was impacted by an unexpected failure of a ball-mill, which was down for 2-weeks. However the new ore-sorter, allebit in a test period, is delivering astonishing results. Hodgson gives us an indication of the sorts of numbers it is delivering and can expect to continue delivering. The quarter ended up only slightly down on production forecast as a result.

Coringa is still progressing. Progress is slow as Greenstone wanted to evaluate the market to ensure that right amount of capital is available for the company. They have agreed a payment plan with Equinox and Greenstone involving a payment plan. All parties are agreed as money is being paid in a manageable way and allows Serabi to pay down the Sprott debt in full by the end of June. It also means that Serabi has cash on hand at all points. And what it means is that Coringa will, when mining resumes to normal levels, be able to double the production numbers as expected.

Currently it is business as usual for the moment. March figures where above forecast (best aver month on record), and expectation is that April will be similar. COVID-19 precautionary measures have been taken but the company is looking at the situation on a daily basis.

Apologies for not grilling Hodgson, but the line was quite poor, so conversation was difficult to have. They seem on top of things for now and we look forward to resuming normal conversations eventually.

We Discussed:

  1. 2019 Audited Results
  2. Coringa Gold Project: Impact of Covid-19, Financing and Plan Moving Forwards
  3. Palito Gold Mine: Is it Still Operating?
  4. New Ore Sorter Saves the Day: The Potential Future Capacity

CLICK HERE to watch the full interview.

Matthew Gordon: Hello, Mike. How are you, sir?

Michael Hodgson: Very well thank you, and yourself?

Matthew Gordon: Yes. Holed up at home, I guess like you? How have you been whiling away your hours?

Michael Hodgson: Well, a lot of Skype and a lot of WhatsApping and a lot of management through the Wifi to Brazil. Yes, a lot of communication between the corporate guys here in the UK but, yes, it is good Wifi – that’s what you need.

Matthew Gordon: It is. It is. I think it’s going to change the way we work and certainly change the way we interact with our people for sure. ‘Mike, a couple of things happened last week: audited end of year came out and I think today, operational announcement as well. Can we start off with last years audited results? There’s quite a few nice numbers in there. You must be pleased?

Michael Hodgson:  Probably the biggest number, the most important number is cash and we ended the year with over USD$14M in the bank; which is great. It really probably meant that we were generating about USD$1.5M per quarter, more or less. We started the year with about USD$8M. We built that cash up to about USD$8. The plan behind that was to try to accumulate as much cash as possible to actually put towards the effort to start Coringa. That was the plan. It still is the plan but of course, I think that the world has changed ever so slightly since then. But it’s great to have that cash in the bank. All In Sustaining Costs (AISC) came in at about USD$10.80: which is a little bit of an improvement on 2018. That was a function of just optimisation; more ounces, we did over 40,000oz. More, more ounces over the same cost base. Our costs are very stable in real terms. That’s important because, obviously, we are enjoying, did enjoy for much of 2019, and certainly today we are enjoying great economic tailwinds on the Gold price as I call them. Particularly today, the Gold price in Brazilian reals because of that exchange rate. So that has been terrific and that is really helping our All in Sustaining Costs and our continued cash generation as we go into Q2 2020.

Matthew Gordon: Brilliant. I think the thing that people want to know most about is Coringa. So last year, generating positive cashflow, which is great and you ended the year with a lot of cash in the bank, but you are going through a process, and I appreciate that everyone has had things held up with regards to what they are doing because of COVID-19. Is that still progressing?

Michael Hodgson: It is. People will have seen the press release late last week of the rescheduling of the final payment to Equinox through the Greenstone loan. Greenstone have been super supportive. Equinox have been super understanding. At the end of the day, I think it is fair to say that when Corona really started biting at the beginning of March, Greenstone wanted to pause, and we put out a press release, we were somewhat pressured into having to do it but I think the press release was received, I think some of the wording was perhaps a little harsh and people possible misinterpreted. I think there was a general feeling that people felt that Greenstone were getting cold absolutely not. I was in touch with them all of the time. All that they wanted to do was a pause, and they just wanted to say, look, you know, we don’t know how this is going to pan out. We know that the company might need, if for example, our business gets completely interrupted we might need that money. I don’t think Greenstone have got endless amounts of money just to keep supporting all of their investments. They just wanted to see that we were safe and secure and the production was still going okay before we went forward.

Now, we have come to a very, I think, eloquent solution, I think, Equinox, where we are going to start the payments so we can have early drawdowns on Greenstone’s loan, but we do keep the bulk of it there just in case whatever, something might happen. At the end of the day, we are going to make a USD$0.5M payments April, May, June, and then it will go to USD$1M payments. And as soon as the whole international travel bans are lifted we make the bullet payment to Equinox and we get Coringa.

In a way, you know, it’s a very nice solution for us. Probably not quite so good for Equinox; they’re not getting it all in one chunk but they are getting something, they are getting it at least. And we are paying it down in a very manageable way. So I’m delighted about that and we will continue to keep doing that during Q2. And the great thing about doing that is that it gives us some breathing space to pay off Sprott: USD$1.2M per month, April, May, June, so we will be debt-free by the end of June as well, and cash in the bank still.

Matthew Gordon: Fantastic. So that little triumvirate of related parties, they are all happy with this elegant solution?

Michael Hodgson: Yes they are. I mean, obviously, Clive, my colleague, he has had to go around a lot of, they were, the lawyers took a bit of time to get their heads around it. But no, it has all been very much agreed and Sprott are happy. Greenstone are happy and Equinox are happy.

Matthew Gordon: That is good news, especially difficult in the current climate etc. That’s nice to see. So we can expect you to be progressing with Coringa and developing Coringa as part of your new stable, your new portfolio?

Michael Hodgson: Yes. I will just add that we have just taken the precaution of suspending any non-essential activity during Q2 because of, obviously, movement of people is difficult etc. So the idea was to start Coringa in Q2. That’s been pushed back to, well, Q3 at least. Diamond drilling and exploration at Palito and Sao Chico has actually been put on stop. To be honest, the contractors couldn’t keep their people there, they couldn’t keep their supplies coming in themselves. So it was going to stop anyway. So we are just focussing completely at the moment on mine development and Gold production, and we will do that for the next 3-months, and then hopefully in Q3 we will pick everything up.

Matthew Gordon: So you are focussing on Palito, which is making money, but you have set the times back slightly for Coringa in terms of where you spend money for future growth. That makes sense to me. How are things at Palito? Is there anyone working?

Michael Hodgson: Absolutely. Up until now we are unaffected. Completely unaffected. I suppose that the advantage of being isolated but not that remote but at least fairly isolated is that we are completely virus-free. We have a workforce which is pretty local. And we have agreed with our workforce that they all are forgoing their usual 20:10, or 30:15 rotations; they are all going to stay there for the foreseeable future and just work on – the movement of people in Parai is restricted so they are going to stay on because once they leave they won’t be able to get back. They have said that they will stay on working there as long as no new people come to site and we therefore eliminate any risk of bringing this into the site, because we are a camp and as I am sure you can appreciate, if we have someone coming in with the virus, it would go through the camp like a bushfire. As long as we can keep the camp virus-free, and therefore no new people coming in, they all stay there working.

March was terrific. Those three weeks that we put out at the beginning of March we did, as you say, we had a problem in February with the bull mill, an unforeseen failure of one of our main bull mills, that actually took 15-days to resolve and really ate into our February production. We thought that would really damage the quarter but the guys responded in March absolutely magnificently and we posted our best ever monthly Gold production since operations began. Fantastic response – 3,700oz. So we ended the quarter with a very respectable 9,020oz, which was by no means a bad result at all. And I am pleased to say that we have started April absolutely screaming. We are on for a really good April by the looks as well.

As things stand at the moment, we are going to continue with normal business and it will be, we will make the best efforts to keep on to the budget. I think we will have to be cautious and say that we are doing absolutely everything that we can to make sure that we don’t actually have an interruption. We are trying to stockpile as much consumables as we can: mill balls, cyanide, carbon, lime, explosives; these are all things, food as well for the people, we are trying to keep all of these things there to try and keep people at site. We have literally got half of the workforce, well, the normal workforce at site but we are not rotating, so we have just got to try and keep them happy and motivated. So far they are happy, and that’s what we will do.

You know, it would be foolish for me to say, look, we can do this indefinitely; at some point in time we are going to have to, those guys will ultimately get tired and we will have to replace them, but we are not going to do that until we can and when I say we can, that’s with testing. We don’t know where we are with tests. We are trying to get tests, but we all know in this country, tests are very hard to come by. They are all being allocated, quite correctly, to the health services rather than private companies. So we will endeavour, however, to get some tests eventually so we can start to rotate the workforce.

But for the foreseeable future we expect a good April and a moderately good May. We will just do the best as we possibly can, but what can I say? Business as usual at the moment. Probably one thing that I do want to add is that this is one of those things where, I wouldn’t say we knew about this but the impact of the ore sorter has been absolutely phenomenal and probably has come in at exactly the right time. Here’s a piece of equipment that can really improve the grade and it probably was instrumental in the ounces that we produced in March that we could recover and salvage to make a very respectable quarter out of what could have been a poor quarter. And that is still operating today and will be all through Q2 and is really adding some, screening out waste on the Palito ore and really getting the grade up , and the plant is singing as a result. There’s some high-grade going in and some high-level ounces being mined.

Matthew Gordon: If I can just ask, the ore sorter, sorry, I was going to ask you about your Q1 operational announcement but I think you have covered a lot of the components there, so thanks for that. With the ore sorter, I appreciate that it has contributed to you being able to recover some of the losses from the failure at the Ball mill. But can you give me some numbers. Give me a sense of what the future could look like in terms of what is the ore sorter doing for you?

Michael Hodgson: It’s kind of hard to say exactly what – January and February, we were just literally playing around with any old material, just to see what we could scavenge out of low-grade piles to see what it could do, and it was pretty impressive, but March was probably the first month where we really, seriously measured and we fed it with typical run of mine material, lower grade, admittedly, and see what it would actually pull out. These numbers are basically the March numbers. So we fed this ore sorter in March with 2,500 tons at a grade of 3.2g/t. So that 2,500 tons was then separated into 300 tons of product at 21g/t, and 2,200 tons of reject at 0.8g/t. So essentially, we have scavenged all of that high grade out of that 3g pile. All that ore into the 300t high-grade pile and the reject was 0.8g/t. That’s 21g/t and it went to the plant and it was a real sweetener on the typical ROM feed of about the typical 7g/t to 8g/t. You can imagine that 2,500t would have normally been going through the plant and instead we reduced that to 300t.

Matthew Gordon: That’s amazing. And what will the ore sorter capacity be going forward? What sort of numbers will be going through it?

Michael Hodgson: Well, I think in time we will probably pass all of the Palito ore through the ore sorter. I think we will. We will be running at about 250 tons per day. It can easily do that. It is actually capable of doing about 40 tons per hour so it can comfortably do that. In fact, it is so efficient that crushing them becomes our bottle neck; we can’t crush enough. We are now looking at ways of expanding our crushing facility so we can actually…the bottle neck just moves around, that is the problem, but certainly at the moment, all of the Palito ore, the majority of the Palito ore is going through the ore sorter, just screening. And then the plants, the capacity that we liberate, we use Sao Chico ore for because that doesn’t work so well with the ore sorter; it doesn’t need to be sorted because it is sort of 9g long-haul material and that just goes straight in. So this is just the ounces, we are generating more ounces through the processing plant but not by increasing the throughput, just by increasing the head grade.

Matthew Gordon: Mike, that’s really fascinating with regards to the fact that the ore sorter is liking the ore that you are putting through it. Those sorts of numbers are phenomenal. It bodes well for the future for sure. Great to hear that it is business as usual for now. Numbers: and hopefully you can continue to hit those numbers. I know that it is difficult times for you guys. I think that the market is going to give you guys, well miners, a pink ticket for a while because it is exceptional times here. It is nice to see some companies, with the cooperation of their staff, their team, to be able to continue to work. I appreciate the update today. We loved the turnaround last year, with Coringa coming on board I think it will be pretty exciting times this year if we can get back to some semblance of normality soon.

Michael Hodgson: Yes, well we are certainly, definitely, definitely looking forward to that day.

Matthew Gordon: We all are. We all are. Well look, I’m going to let you get back to the sunshine down on the South coast and your WhatsApp and your Zooming. Do pick up the phone if anything does change because yours is one of our favourite stories, certainly here in the UK. We wish you well and we will speak to you soon.

Michael Hodgson: I appreciate it, Matthew. Speak to you soon.

Company Website: https://www.serabigold.com/

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 Serabi Gold PLC company logo.

Adriatic Metals (ASX: ADT) – A Fast-Moving Project With Very High Grades

The Adriatic Metals company logo
Adriatic Metals
  • ASX: ADT
  • Shares Outstanding: 178M
  • Share price A$1.15 (09.05.2020)
  • Market Cap: C$204M

Crux Investor recently sat down for an interview with the CEO of Adriatic Metals (ASX:ADT), Paul Cronin.

While you’re here, why not check out our latest mining interview or our latest mining article?

Adriatic Metals is a UK-based exploration and development company, listed on the ASX. The company is the owner of the Vareš Mining Concession in Bosnia and Herzegovina, a polymetallic project with promising historical data that has recently been proven via a drill program.

The grades of the project are extremely high, and with permitting moving quickly, Cronin hopes 2020 can be the year for a share price explosion.

We Discuss:

  1. Company Overview
  2. Business Plan and Vision
  3. Bosnia as a Mining Jurisdiction
  4. The Numbers: Raised to Date and Use of Money
  5. Permitting the Project: Timings
  6. Status of Additional Land and Claims
  7. Covid-19
  8. Drilling Update
  9. Big-Name Shareholders
  10. Polymetallic Ore Bodies

Company Website: https://www.adriaticmetals.com/

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 Adriatic Metals company logo

Search Minerals (TSXv: SMY) – 10 Years: Anything To Show For It?

The Search Minerals Logo.
Search Minerals Inc.
  • TSXv: SMY
  • Shares Outstanding: 230.7M
  • Share price CAD$0.05 (21.02.2020)
  • Market Cap: CA$10.4M

We recently sat down to interview Greg Andrews, President and CEO of rare earths company, Search Minerals (TSXV: SMY). He answered a lot of difficult questions. Investors will need to watch the video to decide if they think he answered them well…

We discussed several topics, including:

  1. Rare Earths? What Are They And What Are They Used For?
  2. Raised CAD$20M, worth CAD$10M. What Happened?
  3. Struggling To Fill A CAD$500,000 Private Placement: Has The Market Had Enough Of Search Minerals?

This is an important interview for investors to watch, especially for its educational exploration of critical rare earth elements (CREEs).

Company Website: http://www.searchminerals.ca/

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 Search Minerals Logo.

I <3 geology, I <3 Ecuador

A photo of some colourful wooly hats.

In June 1991 I was unlocking my bicycle after my last first-year exam in geology at the University of Manchester when a bubbling surge of happiness stopped me in my tracks and made me look up and smile and just take it all in. I couldn’t believe that I had gone through my life until then without knowing what I had been taught in my first year of geology. It had opened my mind to new concepts of time and space, fascinating processes of rock and mineral formation, and also of how geology had influenced human activity through millennia. It had been a revelation, hard work, and a lot of fun. For me, the study of the science of the earth had shone a light onto politics, economics, the environment, climate change and of course the role of mineral deposits in the development of man. As I stood there, bicycle lock in hand, I thought how amazing the world was, and how much I loved this subject that I had come across by chance when I had mistakenly started an engineering degree.

Twenty-nine years later I am happy to say that my love of geology is still there. While the digital age thunders on, with apps and memes, full of ideas on a high-tech future, full of concerns about sustainability and climate change, geology is as relevant as ever and it still captures my imagination. As it was in my revelatory moment back in Manchester, so it seems to me that many of the key issues of the age are met in the exploration and development of mineral deposits. Is this too gushing¸ a case of hyperbole?  I argue that it is not an exaggeration, and that a look at the extraordinary events in Ecuador will help you share my appreciation.

The Ecuador national flag

Ecuador has it all. All of the issues, all of the challenges, all of the opportunities and all of the natural resources it might need to make a transformation. And I see this on a daily basis as I am a director of Salazar Resources, a proudly Ecuadorian Gold-Copper exploration and development company.

Ecuador is a traditionally socialist country that until recently had economic policies that deterred foreign direct investment in the mining sector. In 2007 the country trumpeted its eco-tourism and promoted a green economy, which was all well and good, apart from the fact that the country soon ran out of money. And in a dollarized economy (since 2000), printing is not an option which just leaves borrowing, inward investment or foreign export earning as potential sources of US dollars. In 2008, Ecuador borrowed $6.5 billion from China, with repayments partially based in Ecuadorian oil and terms negotiated at times of historic high oil prices.  While the oil price was strong, everything seemed fine, but commodity prices are cyclical and the cycle turns as inexorably as the arrival of taxes and death. Oil prices to 2014 had covered up the multiple sins of an inefficient public sector, large macroeconomic imbalances, and limited private investment, but eventually the oil price fell. As the new oil price reality bit, and growth opportunities in Ecuador (oil, agriculture, tourism) were remarkable by their absence, the government reassessed its attitude towards mining.

Maybe the 2008 moratorium on all mining was overkill? Maybe a subsequent imposition of a 70% windfall tax and mechanisms for 50% national ownership were deterrents on investment? Maybe the rampant illegal mining sector that paid no taxes and was completely unregulated in areas of environmental monitoring safety or any degree of social governance, should be brought under control? Maybe it would be better to have foreign direct investment to build a regulated, responsible mining industry that employs thousands, grows domestic economic capacity, pays royalties and taxes and earns hard currency? Maybe the mining sector in Ecuador should be nurtured not shunned? Maybe the remarkable geological endowment should be used to help build a better nation for the people?

An ineluctable truth emerged. Ecuador needed a modern mining industry to pay for its social and infrastructure agenda.  There were no other options, no other cards to play. And so reform was embraced.  Consultants helped create a plan for the Ecuadorian mining industry that led to bidding rounds by metal and by region, and critically the development of a new mining code.  The government introduced similar conditions to other countries, including incentives such as a fiscal stability agreement, VAT reimbursements and investment recovery before taxes kicked in. The results were astonishing.

A photo of copper-gold ore.
Copper-gold ore

Geology is apolitical, and copper-gold mineralisation doesn’t necessarily stop at a political border. Ecuador straddles some of the most prolific copper-gold geology on the planet and since the dawn of modern mineral prospecting it has experienced negligible systematic exploration. Almost uniquely for a peaceful country there are still walk-up large-scale high-grade deposits sitting at surface. When the government signalled it was serious about developing a modern mining industry, the world’s resources companies responded.

Almost overnight, Ecuador became a global mining investment destination. Foreign direct investment (“FDI”) surged to more than $250 million per year in 2017, with a projected $1 billion per year for the next four years. Over 200 new mining concessions were granted in 2017, accompanied by investment commitments of nearly $500 million of exploration expenditure in the first four. Since 2018, twenty-eight internationally renowned mining companies have established entities in Ecuador to pursue investment opportunities. Not only that but in 2019 two billion-dollar investments were completed, and the country now has two well-regulated, carefully monitored mines, employing thousands of local people, and generating vital foreign exchange earnings by producing copper at Mirador, and gold at Fruta del Norte.

Unsurprisingly there has been a backlash to this level of activity. A prominent anti-mining activist Carlos Perez has changed his name to Yaku Perez (Yaku is the Quechua word for water) and is vehemently opposed to foreign investment in the Ecuadorian mining industry, even though he turns a blind eye to the devastatingly destructive illegal mining in the country. Yaku regularly calls for referenda on the future of mining projects in Ecuador and he will continue to delay and obstruct the industry where he can as he persists in his argument that Ecuador should be pro-water and anti-mining. Incidentally, most professionals in the mining industry are supporters of clean water, responsible employment, wealth creation, the sustainable supply of vital raw materials and are not supporters of water pollution, environmental degradation, dangerous working conditions, tax evasion and all of the problems associated with illegal mining.

Another factor is that the population of Ecuador is split between those wanting jobs and those experiencing a very human resistance to change. What does a large mine entail? Will dastardly miners raze mountains, and bury villages under toxic waste? Some fear the rapid introduction of a new industry; others have the luxury of working closely with some of the many in-country professionals and learning first-hand about the industry. Suddenly the Chamber of Mines in Ecuador went from a clubby outfit to needing to assist the government and a population learn about the role and importance of a well-regulated mining industry in society.

Predictably, some of the mining companies gamed the system. Companies bid to spend $250 million on a single exploration licence (a ludicrously large amount) over four years, only to load the vast majority of the spend into Year 4 and then make it conditional on material success in the under-funded years 1-3. Companies committed to investing multiples of their market capitalisation in early-stage exploration within a 4-year period. Stuff and nonsense perhaps, but given that it seems easier to find a near-surface deposit in Ecuador then other parts of the world, many companies were enable by the vagueness of the new mining code to put placeholders on title in the rush.

Stunned by the whirlwind of real and promised FDI, protest referenda, the arrival of most of the major mining companies, and by the general pace of events, the government closed the Mining Cadastre in 2018. The commitment to a modern mining industry is as strong as it has ever been, supported by public pronouncements, progressive changes to process and structure within the mining ministry, and of course, the stark reality of ongoing national budget deficits. But it was a case of too much too quickly. The cadastre is still closed as the government is redesigning the mineral title permitting process to make the exploration expenditure more accountable, transparent and digital. No new licences have been issued for eighteen months and although in that time wrinkles in environmental permitting and water use permitting have been ironed out, there has been a knock-on delay in exploration activity. It does mean, however, that those companies that already have a licence portfolio are at an advantage over new entrants looking to build a presence in-country.

Which brings me full circle, to that moment when I was standing outside the exam hall in Manchester so long ago. The study of the science of the earth continues to shine a light onto politics, economics, the environment, climate change and of course the role of mineral deposits in the development of man. I am just as excited and fascinated by the interdisciplinary nature of my subject as I was as an undergraduate, and each of those competing and complimentary aspects are manifest in the gloriously complex reality of the mining industry today in Ecuador.

Companies, such as Salazar Resources, that already have mineral title to explore have a wonderful opportunity to continue the discovery journey (discovery of an economic resource is always much more of a process than a single moment in time). Community relations and environmental stewardship are critically important, and those enterprises that can bring its local and regional population along the discovery journey with them will succeed where companies that fail to engage, encourage, and educate its neighbours will face protest and delay. The government understands the vital developmental and economic role that a responsible mining industry offers and it is working as fast as it can to create the framework for that industry to grow, and yet it is weighed down by the responsibility of having to make decisions now that will have long-lasting effects. It is no exaggeration to say that the fate of the nation depends on it. The officers and directors of companies that I know are genuinely excited about the positive transformation that a single well run mine can make to individuals, families, a community, a region, and the contribution that it makes to nation-building in a relatively small economy. And within it all there are the pure geologists among us, thrilled at the prospect of being part of a team that will make the next big discovery and bring vital commodities for our future needs to market.

Company Website: www.salazarresources.com

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

A photo of some colourful wooly hats.