Latest / SILVER / GOLD / $UFD Meme Coin Investing & Global Economics / 🔴 ALERT! 🔴 KEY Information for GOLD & Silver Investors... (Michael Gentile)

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🔴 ALERT! 🔴 KEY Information for GOLD & Silver Investors... (Michael Gentile) · SILVER / GOLD / $UFD Meme Coin Investing & Global Economics

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Today's guest is one of the most respected and closely followed
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names in the precious metals sector.
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Michael Gentilly. Welcome to Ron's basement.
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Great to be here, Ron. So Michael, I thought that we
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could start out by talking about your your overall thoughts on
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the gold and silver market. But maybe it'll be beneficial to
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our viewer as well for you to share a few words about you,
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your background and kind of how you got to where you are today
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as a major investor in a number of junior mining sector
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companies. Sure.
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Yeah, I've been investing in the commodity sector on since 1996
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or 1997. So I've been my my first, first
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sector ever start investing. It was the commodities my first
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and most passionate love in in all the markets I've covered,
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all the sectors I've covered over my career.
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I worked 18 years as an institutional money manager for
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investment firm in Montreal. I was from about 2002 thousand
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2001 to 2018 and then 2018. I know you have twins as well,
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Ron. I was blessed with the twin
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daughters, but I already had three daughters before that.
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So I had five beautiful young girls looking in the eyes, 7 1/2
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years old and younger. So I need to rethink my my
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career at that point in time and the time I was spending at the
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office. I was travelling a lot for work
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back then. So I took a little time out from
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work. I've been a job that I
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absolutely loved, institutional money management.
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I was investing in, you know, the typical 200 million to 10
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billion market cap companies. So mainly producers, either
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emerging producers or producing assets.
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I covered all sectors, but I was the in house commodity
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specialist at my Old Firm in 2018.
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You may recall gold was like $1300.00 an ounce.
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It was just coming off the lows of $1100.00 an ounce in 2015.
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I've always been a contrarian. I think it's how you make money
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in commodities when you you buy others blood in the streets when
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you have a different view of the market.
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So I was sitting at home and never gone to the Wild West of
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micro cap resource investing, mainly because my professional
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sphere, the minimum market cap we could invest in was 200
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million and above. But I was sitting at home, had a
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had a bunch of capital on my hands for investing my whole
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life and saving wealth. And I saw a huge opportunity in
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the gold space and I started to get into these, you know, 5,
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ten, $15 million market cap juniors that I never looked at
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professionally before. And I saw a huge opportunity
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because the market had been so depressed for so many years, I
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was able to buy companies that have already made significant
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discoveries. So take an exploration risk out
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of the story and run out of cash basically because the bear
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market had gone on from 2012 to 2018 almost nonstop for five $10
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million market caps. So I did a couple of significant
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placements in juniors and as got more involved, I realized that
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these juniors were often run by good geologists that had good
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projects, but they had very little idea of how to raise
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money, who to raise money from, how to tell their story properly
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in the markets, how to raise capital at the right times
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versus the wrong times, from the right investor versus the wrong
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type of investors you want in your capital structure.
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So I went from more of a past investor just making a few
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investments that I thought would make me a lot of money to
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actually rolling up my sleeves and getting very involved behind
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these companies. Owning, you know, 5-10, fifteen,
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20% of the company, in some cases joining the boards, in
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some casing cases being a strategic advisor, in other case
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just being the largest shareholder and having, you
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know, regular phone calls with management to make sure we are
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aligned on strategy. Had a lot of fun doing that
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wrong. You know, I've been really
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leaning into my strengths and really enjoying what I do.
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And as of today, to kind of buckle the story up here, I got
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about 25 positions in the junior mining sector where I'm probably
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the top 12345 number shareholder on the register.
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I'm on five or six boards. I was teaching advisor to a
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couple other companies and I'm heavily involved in the ones
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where I don't have a formal formally titled goal with the
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companies. And I just continue to see Ron a
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huge opportunity in the sector. I mean, I got involved in goals
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between 1100 and 1300. Today, gold is what, 2600
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dollars? I hit $2000 announced earlier
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this month. And these stocks are still
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trading at or below the valuations when I got involved
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in the space. You know, he told me, Ron, five
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years ago that when I started making my investments like gold
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will be $2600.00 an ounce. I will tell you My Portfolio
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will be multiples of the value where it is today.
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So that's been frustrating for you and sure for for me as well.
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But it's also incredibly exciting because it's very rare
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you get an opportunity in the commodity space around where the
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commodities making new all time highs and yet the juniors are
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still trading like it's 2018. And so that that to me is an
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incredible dichotomy. It's an incredible opportunity.
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So I continue to invest happily. I probably have 80% of my net
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worth invested in the juniors right now so I'm making a big
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bet the money where my mouth is. And thus far my thesis on the
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macro side has been completely accurate in terms of where I
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thought the quantity would go. The stocks have lagged, but I
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think the stocks are the last piece of the puzzle to come
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together here and catch up to the to commodity prices.
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Yeah, Yeah, I'm in the almost the exact same position,
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probably, definitely not with as much money as you have, but I
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have about 25 positions and junior, mostly gold and silver
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development stage companies. Because I, I think it's critical
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to circle back to what you said. You can still buy these
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companies that already have defined ounces in the ground and
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prospects for some future exploration success.
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And it, it does it still feel like that you can buy them for
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almost pennies on the dollar That, that, that that's the
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case. It's incredible.
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I was at a major mining conference in Q2 weeks ago
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around the annual Quebec Mining Association conference that we
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have. It was in Montreal and I've met
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with a couple of major mining companies and you know, they
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know I'm heavily involved in the juniors.
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They always have dialogue constantly with the large
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corporates. They're always keeping tires and
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looking. And I had a pretty frank
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conversation with one of the the top, you know, corporate geos
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that one of the mining companies that remain nameless.
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But we had this really interesting discussion about,
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you know, I asked them if you take a major mining company,
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take Kinross, Newmont, like Nico Barrick, whatever it is, and you
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take their expiration budget, the amount of money they spend
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on expiration, the overhead, the G and A, the employees they have
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to hire to manage the programs around the world.
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And you add up all the money they spend and you have all the
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money they spend on programs that don't need to discovery.
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Because as you know, Ron, you know, 99 times out of 100, when
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you drill, you don't find an economic deposit.
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So you Add all those holes they drilled that did not add to
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anything. And then you summarize all the,
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the oz they find that end up being economic deposits or
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potentially economic deposits. You know, they're all in
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discovery costs. It's probably depending on how
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good the company is, anywhere from 100 to $300.00 an ounce.
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This company said between 150 and $200.00 an ounce discovery
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costs. You take your portfolio of
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juniors, Ron, I take My Portfolio of juniors.
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I have very few juniors that are trading above $2030.00 an ounce
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in the grand right. The occasional one, 30-40
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dollars an ounce is a really high quality 1.
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So if you're a major mining company, you produce 234 million
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oz a year of production. That means every year you've got
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to find 4 million ounces to replace what you produce.
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But if you don't do that on a regular basis, you'll be out of
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business in 10/15/20 years because you'll be out of
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reserves, out of resources to produce.
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These companies have to find it or they got to buy it.
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And you know, we're both pretty rational economic beings here on
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this call. Ron, we'd say now you can go
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find it for $152.00 an ounce or today you can go buy it for 5:00
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to 5:00 to $20.00 an ounce. And I think it's a pretty don't
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take the risk of expiration, don't take the risk of not
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finding anything, Don't take the time risk of having to spend 345
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years defining those resources. So you Fast forward your
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development. I think it's an obvious
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proposition for the majors to come in and start buying
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resources and we're starting to see it.
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I think that Nico Ego in the last month has been an
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investment in ATAC resources, I think foreign mining and it came
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out yesterday, they bought Sears and Collective.
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So the bigger companies start to generate lots and lots of free
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cash at these higher gold prices.
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And they're starting to say, I'm going to buy 920% of these
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juniors because if they the market isn't priced them
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properly, they know what it costs to find it themselves.
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If they can buy it, like you said around pennies on the
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dollar, it's a no brainer. So first stage would be
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significant investments in these juniors and the next steps is
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going to be starting to be M&A of these junior exploration
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companies and resource companies.
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And once that gun goes off, it's going to be a race because then
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all the majors are going to go, OK, we got it.
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We got to move before someone else grabs these products that
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we've been following for several years.
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I think we're going to start to see that.
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We're seeing in the producers, MNA, we're seeing in the major
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developers, you know, Filo getting taken out, you know,
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Sabina got taken out by B2 Gold. We've seen a rash of active
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positions in the development space.
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So Cisco mining got taken out. So that's going to start to move
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down cap because the inventory of quality projects that are
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close to permitted or close to production are virtually all
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acquired. So now you've got to move down
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to the PA stage and resource stage projects that are trading
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at the widest discount to anybody in the market today.
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So that that's why I see so much value.
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So I continue to be so aggressively buying these
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stocks. And like I said, with the
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producers being in such good financial house, you know,
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buying these companies often one or two months of free cash flow
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or less for these producers to to do an acquisition and the
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balance sheets are clean. They're paying dividends their
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money back stock. So the big, the big mining
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companies in a better position to do MNA than they are today,
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nor they seem better value than they probably ever have to do
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MNA today as well. Wow, you summed it up.
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I don't, I don't know what else to ask you at this point,
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Michael, because right, I mean, these big the big, it's true,
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the big mining companies over the last 10 years were more
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focused on fixing their balance sheets.
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But it's so critical for our viewer to remember that every
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time the big mining companies mine an ounce of gold or silver
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out of the ground, it's gone and they need to replenish that.
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And they have not made the investment to replenish it.
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And you have this group of junior development stage and
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like you said, exploration stage.
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Even companies sitting there with with ounces in the ground
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valued literally at like 5 to $20.
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And if the big companies decide that they want to try to find it
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on their own, they're likely on average going to spend 150 to
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$200 just attempting to find more gold and silver.
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At what point our, our mutual friend Peter Grandich once told
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me that the, the number of people that are trading the
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junior mining sector stocks right now could likely fit
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inside of a like a high school basketball gym.
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At what point do you think the market wakes up and, and, and,
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and we see some money flowing back into the junior sector?
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And I have another question for you on that, on that same point,
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which is, do you, do you agree with the idea that since the
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sector has has become so out of favor, which makes it attractive
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to people like us who are contrarian investors, but that
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it won't take a lot of money coming into the sector that to
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make a big change? Like it's been beaten down so
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low that the path of least resistance, a small amount of
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money could make a major impact within within the sector.
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With that that you and I hold so so dear to our heart.
10:07
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10:32
you're from Ron's basement. Yeah, 22 great questions, Ron,
10:35
and two questions that I spend many nights in my falling away
10:37
from my bed thinking about always.
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I said before earlier that I've never been so right in 25 years
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on a commodity call. Typically when you get the
10:44
commodity right in this business, you know, I was
10:46
fortunate enough to invest in oil in 1997 or 98 when it was
10:50
$10 a barrel. And the consensus at the time
10:52
was oil was was dead. It was going to $5 a barrel.
10:55
Nobody needed it anymore. And oil went from 10 to 140.
10:59
And and that move, all the oil stocks followed like rocket
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ships were over in a eight to 10 year period.
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So I've never seen a sector where they said before the
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commodities making new all time highs and the stocks don't
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rally. So I spent a lot of time going,
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what am I missing? What's what's causing the lag?
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Is there some fatal flaw or some issue that would prevent these
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stocks from trading like commodity stocks have traded for
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the last 150 years pretty consistently following the
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commodity higher? There's a few things, Ron, that
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I would, I would say that I've been waiting to see that we
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didn't see in the last rally that that have caused it and a
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few things that are still yet to come.
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So the first thing I would say would be in COVID times, you
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know, gold had a massive rally from $1600 an ounce to $2000.00
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an ounce. And all these junior stocks
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traded like you and I over a whole career would expect they
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would. They all had epic runs of you
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know 50 to 400% in a very short period of time as the gold price
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rally from 1600 to $2000.00 an ounce.
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So what happened is the gold stocks rallied because the
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market said OK commodity goes up, cash flow is going to
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increase, the helpless sector is going to increase.
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Therefore all all names in the in the sector should rally off
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of higher valuations. What ended up happening as we
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recall around we had a massive inflationary period where the
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producers, the new monster barracks, the Nico's of the
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world saw massive all sustaining cost inflation.
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So the gold price went from 1600, two $1000 an ounce, but
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their costs on an all sustaining basis went up $400 to $500.00 an
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ounce or more. So at the end of that one to two
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year period, the generalist investors like myself will run
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institutional money as well. I have an institutional
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management firm called the Bastion Asset Management.
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They were expecting to see large free cash flow, large increases
12:26
in EBITDA and buybacks and clean up their balance sheets.
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But they ended up happening as the companies were making less
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money per oz profit margin in 2022 or 23 than they were in
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2020. So the market said, oh, you guys
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are a bunch of terribly run companies.
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Gold price goes up, you can't make any money.
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Gold price goes down, you almost go bankrupt.
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I give up on the sector. And you saw that, that mass hand
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towel floating and exercise. I remember I was at the BMO
12:50
mining conference, which is the major mining mega conference of
12:53
the industry. All the big mining companies are
12:54
there. I think Newmont was making a new
12:56
all time low as gold was making a new high at that conference.
13:00
And investors are just so fed up saying you're never going to
13:02
make any money. If you can't make money with
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gold at all time highs, you're just useless to me and investors
13:05
just throwing the whole sector out.
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So that create a big overhang on the sector.
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What you've had recently, Ron, is gold's gone from 1800 to to a
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high of 2000 and now we're back to around 26.
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You look at the Q2 reports, the Q3 reports, the free cash flow
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of these companies is exploding. Their profit margins per oz is
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exploding because ASIC reflation has kind of slowed down a bit.
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So our ASIC has been sort of flat up while the gold price has
13:29
been dramatically increasing. So now we're starting to see
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that increased profitability, increased free cash flow,
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cleaning up the balance sheets, buying back stock, what
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generalist investors want to see.
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And you're seeing generalists flow back into the larger gold
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producing companies. You're seeing a single asset
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producers, you know, the, the West owns the, you know,
13:47
blending gold, the Alamos of the world that are smaller producers
13:50
all having huge moves in the stocks.
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And now we're seeing because we're seeing M&A in the late
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stage developers except the Skena, the Cisco minings, the
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Sabinas, the Filos, those stocks are all taking off.
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So we're seeing better profitability, general swing
14:03
back in the sector. All stratas of the sector
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working except are beloved juniors, which is the last piece
14:09
of the puzzle. And they're always the ones that
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rally last. But this time all the boxes are
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ticking. The the one thing that is
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holding us back that we've not seen yet, I think your viewers
14:18
should pay attention to. It reminds me a lot of the late
14:21
90s and the.com boom when tech stocks were on fire.
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Nobody wanted old economy stocks.
14:26
Everybody was mesmerized bythe.com stocks.
14:28
Remember that Warren Buffett was senile.
14:31
He'd lost that, lost the plot. He no understood how to invest.
14:34
He was this crazy guy buying banks and railroads and you
14:36
know, coal stocks and all kind of stuff he was buying back
14:38
then. And, and because the investors
14:40
are mesmerizedby.com Well, the same mesmerization is happening
14:43
today on the AI trend. So investors are mesmerized by
14:46
the magnificent 7, they're mesmerized by by the AI stocks.
14:49
And that is sucking a lot of money, speculative money that
14:53
otherwise would have gone to the juniors into tech.
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And if you look what happened when the tech bubble burst in
14:58
O1, that's when oil stocks and commodity stocks took off.
15:02
So that's, you know, the last piece of the puzzle.
15:04
I'd like to see the tech sector roll over or the gold sector
15:08
start to outperform the tech sector.
15:09
It's pretty close this year. That's a pretty good horse pace
15:11
in terms of return. When when the outperformance
15:13
starts in gold stocks, I'm almost convinced it will that
15:16
you'll see money flowing out of tech into precious metals.
15:20
And to close the loop on your last point, which is a very good
15:22
one, the sector is so small. You know, NVIDIA makes market
15:26
cap is 2 just NVIDIA alone. It's two to three times the
15:29
market cap of the entire worldwide mining sector.
15:33
I'm talking about the PHPS, the free ports.
15:35
Like take every mining stock in the world listed, it's half or a
15:38
third of the value of just one stock, NVIDIA.
15:40
So think about when that stock starts to roll over on the tech
15:43
stocks in general start to roll over, just a little bit of money
15:46
coming out of tech into mining because the market caps are so
15:49
tiny on a relative basis to the market cap globally, a little
15:53
bit of money coming to sector can have massive moves in these
15:56
names. And in the junior level, it's
15:57
even more dramatic. It's such a tiny market cap that
16:00
a little bit of fun flows through our sector.
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That's why you can see 203 hundred, 400, five, 100% returns
16:06
in these stocks very, very quickly when the fund flows
16:08
start to shift. So fundamentally, all the boxes
16:10
are being ticked fund flow wise. We're starting to perform a bet
16:14
as well or better. The tech sector, once that
16:15
sector starts to soften a little bit more, I think you're going
16:18
to see some, some dramatic fund flows into the space and that'll
16:20
cause even more outside moves in the names.
16:23
Yeah. Yeah.
16:23
Thank you, Michael. So if, and please correct me if
16:26
I'm wrong, but when I think about the junior mining sector,
16:29
I kind of think of them as like the future of gold and silver
16:33
production, right. They're finding the oz ounces in
16:36
the ground. There's one company I'd like to
16:38
touch on if you have a few more minutes that I think both of us
16:40
own Kapitan Silver. A lot of my viewers are, are,
16:45
are are very interested in silver and they're a Mexican
16:49
based silver exploration company, but they already have
16:53
some silver in the ground and some gold in the ground.
16:55
I know it's a stock that that you own as well.
16:58
Any thoughts you can share with us on on copy time?
17:01
Yeah, I know your viewers enjoy silver.
17:03
I also do like investing in silver.
17:04
I'm a bit of a value contrarian investor.
17:07
So my, my hang up why I've not invested in more silver names in
17:09
the past is generally they tend to be a little bit more
17:12
expensive than the gold names on a on a pronounced basis or in a
17:14
cash flow valuation basis. So I'm always looking for silver
17:17
names. I tend to be a little bit more
17:19
selective so costly comparing it to my my gold valuations that I
17:22
can buy in the market. So Capitan is a name for me that
17:25
ticked all the boxes. Just for Full disclosure, among
17:27
the largest showers the company, they own, 16% of the company
17:31
really love this story because it's got one of the best
17:33
geological silver targets I think in the world.
17:36
They're definitely not Mexico. It's one of the Mexico's viewers
17:39
know is a top silver mining jurisdiction and why I like this
17:41
company so much. It's got an intermediate sulfide
17:44
epithermal system and that's a lot of big words, geological
17:47
words, but basically they're very, very rare.
17:48
What that means is a system that has potential deep roots.
17:51
Some systems, they can go to a hundred 200 meters deep.
17:54
Intermediate sulfide ethermal systems can go to about 800
17:56
meters deep or more. They typically have excellent
17:58
vertical continuity and it's a bit of a fascinating story.
18:01
I made my investment in Copy 10 Silver when it was called
18:04
Capitan Mining because it was a gold oxide project, your
18:06
classic, you know, half a million to a million ounce oxide
18:09
gold project in Mexico. They drilled a hole to the
18:12
further define the gold oxide resource that they had and the
18:15
hole went a little bit deeper through the through the pitch
18:17
shell and they ended up hitting a silver zinc LED rich hole at
18:21
the bottom of a gold deposit. And that caused a lot of
18:23
surprise and a lot of interest in the story.
18:25
And they said, you know, we don't just have an oxide target
18:27
here. We have a potential intermediate
18:29
sulfide of a thermal system. Then they drilled a bunch more
18:32
holes run in in during the last little bit of the last bull
18:34
market we had post COVID and they started hitting some
18:36
massive silver holes like 7 meters of 1000g silver, 4.3
18:40
meters of 786g silver, like 1.5 meters of over 1400g silver.
18:46
So they started getting some massive silver holes.
18:48
The stock had a huge run from 10 to about $0.70 while the while
18:51
the last bull market was still still breathing on and running
18:53
hard. What I love about this company's
18:56
well run is it's run by local Mexicans.
18:58
So when you're in a foreign jurisdictions, I think outside
19:01
of Canada in the US, one thing I've learned over the years, I'm
19:03
very open investing in foreign jurisdictions, but I love it and
19:06
almost require when investing in these foreign jurisdictions that
19:09
you have local content. In this case, while Capitan is
19:13
listed on the TSX, it's got a Mexican based CEO named Alberto
19:16
Roscoe. He's head of the Sonoran Mine
19:18
Association. Some of the biggest mining
19:20
companies roller on that board and he's Sherman of that board.
19:22
They just brought in Fernando Alanis, who is a legend in
19:25
Mexican mining. He was former head of Panolas
19:28
Presidentio legendary guy. Look him up.
19:31
He was super successful, built many, many mines, kind of the
19:33
godfather of of Mexican mining. He just joined the board and
19:37
then they also brought in Costa plan on the last financing,
19:39
which is one of the largest construction enc mining
19:42
companies in Mexico for 9.9% state.
19:44
So they've got great geology, they've got a great management
19:47
team. What I've learned Ron, is this
19:49
week you follow the smart money and you follow the smart people.
19:51
So they've got great geology, the great team for the best
19:54
people in Mexico now joining the board and coming on as
19:57
shareholders. And the last piece of the puzzle
19:59
that I love too is a very tight share structure.
20:00
So a lot of companies, Ron, you may know this when they go
20:02
public in the space, a lot of bad behavior.
20:05
A lot of company management teams give themselves penny,
20:07
paper, 1 cent stock. So they go public at $0.25 a
20:09
share. And then you realize that
20:11
management got 10 million shares at a penny.
20:13
So they're coming public. They're asking you to buy shares
20:15
at $0.25, but their shares are all costing them one cent and
20:18
they're already up 25 times their money before this company
20:20
does anything. Capy 1065% of the stock is owned
20:23
by their top five or six shareholders, including myself.
20:26
They've never issued cheap paper to management team.
20:28
Management team has bought stock with their own money, an average
20:31
price around $0.20 a share. So all the shoulders are
20:33
aligned, local content, great geology.
20:36
They see the who's who Mexican mining behind this.
20:38
And during the downturn they didn't do a lot of companies
20:41
there, which is a lot of mining companies think they have to
20:43
drill because that's why they exist.
20:45
If your market cap falls to 56 million, my advice to my mining
20:48
companies was don't drill. Don't go to a $10 million drill
20:50
program. When you got a $5 million market
20:52
cap, you're going to have two 100% dilution.
20:54
They smartly stop the drilling and they acquired all the land.
20:59
Now 5 kilometer trend. They bulked up their land
21:01
position very cheaply in the downturn.
21:03
Were they able to buy stuff cheaply?
21:04
My advice was it's cheaper to buy than drill, cheaper to buy
21:06
than explore. So why don't you pour up your
21:08
land position, keep your share count tight.
21:10
Keeps using investors like myself supporting the company.
21:13
And now the silver market is starting to turn the corner.
21:15
Get back out there, do some drilling, remind the market of
21:18
how great your silver deposit is.
21:20
Bring in the key cornerstone players to get this thing to the
21:22
next level. And a lot, a lot of value for
21:24
shelters. They've done everything right
21:25
because you love the story. I bought more last line thing
21:27
they did and continue to be one of my top bullies in My
21:29
Portfolio. And and their location is 1,
21:33
which is surrounded by a lot of the world's biggest silver
21:37
mining companies, correct as well.
21:38
Like this is in a really good neighborhood.
21:41
So I imagine there's a lot of infrastructure in place, mining
21:44
support, all that. Yeah, it's one of the best
21:46
Drago, Mexico, one of the best jurisdictions to mine in.
21:48
And just to give you an idea, back to geology for a second,
21:51
intermediate sulfide per thermal systems, similar to, I'm not
21:54
saying these are going to be the next one, but similar geological
21:56
hallmarks of, you know, Mag silver, Juanes CP OS mine,
22:00
Lundin Golds, Fruit del Norte, Fresnio silver mine, Fresnio
22:03
silver mine, which is the largest Mexican silver producer
22:05
in Mexico. Silvercrest, which got taken out
22:07
by Fer, there's a similar infothermal sulfide system and
22:11
Visla silver. So that's kind of the, these are
22:13
very rare. They're very hard to find now.
22:15
These early days, they've only drove about 150 meters deep.
22:17
They got to go out and drill a little more aggressively.
22:19
But it's got the hallmarks of a major system and that's why it's
22:22
attracting attention. And you have great jurisdict,
22:24
great geology and the right geology, the right confirmation,
22:27
the right rocks to make a significant discovery and silver
22:30
focus, which is, which is more and more rare these days.
22:32
Yeah. And, and the right management.
22:35
I noticed I was looking through their investor presentation.
22:37
Of course we have Alberto the CEO, but it, it looked like to
22:41
me the the remainder of the management team like they had
22:43
all worked together. Was it argument gold?
22:46
I mean like, so this is like a team that has proven themselves
22:50
in the past on other projects and they kind of now moved on to
22:53
this. Yes, it's a very, very exciting
22:56
prospect. This team Alberta was the head
22:59
of it. They're the ones, I mean,
23:00
Argonaut Gold went through obviously a rough patch when
23:02
they start to build Magino, but at one point in time, I was an
23:04
investor in a company 10 years ago, professionally, my social
23:06
firm, they had a billion dollar market cap based purely on
23:09
Mexican production and producing 200,300 thousand oz a year of
23:12
Mexico and Mexican gold production.
23:14
Fernando and his team are the ones that built these open pit
23:17
oxide heat bleach deposits for Argonaut.
23:19
So what I like about two is they got good geological IQ, Ron, but
23:22
they've also got a team that's taken something from exploration
23:25
all the way to production. So they've got the local talent
23:28
and ability to get things permitted, get things built.
23:31
So we're always my time horizon when I invest, Ron, it's not for
23:34
six months. I'm looking for three to 10
23:35
years investment horizon. So I'm always looking, does it,
23:37
does it have the geology the BMII think it does?
23:41
Is that the team to de risk it? Yes, Does have the shareholders
23:44
behind it to support it. And then if they do have the
23:46
success with geology, they have a team that knows what to do to
23:48
de risk it all the way to production.
23:49
And they have all those attributes within a small, you
23:51
know, $25 million K market. It's pretty rare.
23:54
You should have to hand the baton off a few times to to get
23:56
that from start to finish. And this team has what it takes
23:58
to take it all the way in my view.
24:00
And it's and it is silver in the ground in Mexico.
24:04
You know, a lot of my viewers, a lot of investors out there, I
24:08
like to reiterate that like you can buy, whether it's you're
24:11
talking about a gold development stage company, exploration stage
24:14
company, but these companies have defined ounces in the
24:18
ground in these countries. And you can buy it for, you
24:21
know, a lot of times for silver for a dollar an ounce or $2.00
24:25
an ounce. Of course, there's a lot of
24:27
things that need to happen, right, to get that silver or
24:30
gold out of the ground, but really represents a great value
24:33
opportunity. Do you have just a few more
24:34
minutes to give us a quick update on American Pacific?
24:37
That's another stock that I own. I know they had some big news
24:40
this morning that came out. Could you share with us what,
24:44
what, what, why you're so excited about that?
24:46
Yeah, fantastic news came out earlier this morning.
24:50
Just incredible news this morning, Ron.
24:51
I mean, I've, I've done a lot work in the States for 25 years.
24:53
It's probably the most accretive transaction I've ever seen in
24:57
the sector. You know, the company has done a
25:00
great job. Like, again, my advice to my
25:02
companies was guys and girls, we're in a downturn here.
25:04
Market caps and got compressed. Let's not blow our brains out
25:07
drilling. What is smart MNA we can do as
25:10
companies, let's say we the companies that I own in My
25:12
Portfolio, what's what's smart MNA transactions that we can do
25:15
to unlock value while the market's depressed.
25:17
You know how you make hundreds of millions or billions of
25:19
dollars in the sector, Iran is, is buying when there's
25:22
depression blood in the streets. So you can do M&A deals that you
25:24
can't otherwise do when the markets flying and find things
25:26
are easy to get. So if you look back to a year on
25:29
American Pacific had a 30% JV on their Madison project in
25:33
Montana, which I really love, high grade gold copper, we can
25:35
talk about that if you want. And a 30% JV interest with DOA
25:39
on their Palmer project in Alaska.
25:40
That was at the beginning of this past year.
25:43
If you look today, they now and they had about two to $3,000,000
25:45
in cash in the bank. If you look today, they own 100%
25:48
of Madison, They now own 100% of Goa and they've got $16,000,000
25:52
Canadian cash in the bank without issuing any equity to
25:55
get this transaction done. So it's an incredible deal
25:58
making team they've put together.
26:00
They now own 100% of both projects, which makes them
26:01
incredibly valuable to unlock value either through future
26:04
joint ventures or asset sales or drive them.
26:06
Ford, most major mining companies want to own 100%.
26:08
They don't own 30, so it makes them much more attractive.
26:11
They have full control of these assets.
26:13
Donald Trump winning the presidency, the House and the
26:15
Senate. They have two high grade copper,
26:17
gold assets, zinc, precious metals and base metals assets in
26:20
the United States. I think the permitting pathway,
26:22
but his assets is going to be dramatically improved.
26:24
He saw, you know, Trilogy Metals as an Alaskan competitor of of
26:27
American Pacific. Their markup went up 100% since
26:29
Trump won because the the belief is the permitting pathway in
26:32
Alaska is going to get a lot easier.
26:33
So now we own 100% of 2 assets that are extremely valuable.
26:36
They have about half the market cap today, around 16,000,000
26:39
Canadian in cash on the balance, which is an incredible asset,
26:42
14,000,000 ton resource in Alaska at 1212% plus equivalent
26:46
with copper and silver mixed in there.
26:47
And they're gonna have a resource coming out of their
26:48
Madison project, which no one's ever really done in the last 50
26:51
years, putting Madison all together, redefining the
26:53
geological model. And they're fully funded to move
26:55
these products forward aggressively without any
26:57
dilution for trailers. It's literally the best
26:59
acquisition slash BL I've seen 25 years.
27:02
So, so they have all this cash on their balance sheet.
27:05
They own 100% of both the big projects, Alaska and Montana.
27:09
And let me ask you this. Obviously, there were millions
27:12
of dollars spent over the last decades, however long it's been
27:16
on. Drilling.
27:17
And work that's gone in, I mean the value opportunity and it's
27:20
not just American Pacific, it's true with a lot of these junior,
27:23
but the value opportunity is astounding and there's been a
27:26
lot of money already invested into both these projects at
27:30
American Pacific. I would imagine possibly 10s of
27:33
millions of dollars that that has that that produced results,
27:38
right. There's, you know, it's been
27:39
proven that there's minerals there and the, the, the amount
27:43
of, you know, the, the valuations are so compelling
27:46
right now. It's a great point.
27:48
So a, a Palmer I know still got the number last night, $216
27:53
million US has been spent on that project life to date.
27:57
It's got a camp, it's got a resource, it's got all
28:00
infrastructure in place. And now we own 100% of the
28:03
American Pacific, 100% of that asset today.
28:05
So you and it has America today as a well this morning.
28:08
I'm not sure it has market, where is it at today, but it's
28:11
got a $30 million or $35 million Canadian market cap.
28:15
And then Madison, which a lot of investors did not know American
28:17
Pacific had to adventure with Rio.
28:19
They've consolidated the whole district which had never been
28:21
done before. Madison has 40,000 meters, I
28:24
believe of drilling completed historically never put into a
28:28
resource or 40,000 meters of drilling at you know, $300.00
28:32
USA meter. That's, you know, that's a huge
28:35
amount of money that's been spent by previous operators that
28:38
America Pacific as the new 100% owner of that asset, they drill
28:41
a couple 1000 meters this quarter, they'll go a few 1000
28:43
meters next year, but they can put out a new resource out
28:47
benefiting from 50,000 meters of drilling of which they funded
28:50
maybe 5000 meters themselves. So either when I said before
28:52
earlier, major mining companies can look at building versus
28:55
buying this type of investment, it takes years move these assets
28:58
where American portfolio is today.
29:01
It takes 10s and hundreds of millions of dollars to move them
29:04
where they are today or you can go do a Greenfield.
29:06
So that's what I'm talking about M&A tension in the space is that
29:09
you can walk in if you want American, you know, Western US
29:12
exposure to precious metals and and base metals.
29:15
You can do it yourself or you can walk into opportunities like
29:17
this where it's set up on the team for you, you know, fully de
29:20
risk and you can, you can aggressively move these projects
29:23
forward that are years ahead of other projects.
29:24
You'd be have to do grassroots exploration both in the
29:26
permitting and the development side as well.
29:28
Yeah, the money's already been spent and it's been proven that
29:31
the that the metals are there. I have a friend who says he
29:36
likes to buy dollar bills for a nickel.
29:39
And it feels like in the junior mining sector, we aren't giving
29:42
financial advice. But it sure feels like to me
29:44
even even now with the we have a little bit of a move up, you can
29:48
still buy dollar bills for a nickel.
29:50
And Michael, thank you for joining me today.
29:53
You've been a wealth of information.
29:55
I've followed you for the last couple years.
29:57
I know a lot of people follow you.
29:59
Many people have just the highest regard for you, the
30:02
highest level of respect. I want to mention to our viewer
30:05
that if you want to learn more about Michael, there is a great
30:08
video that he made with Warwick Smith, who's the CEO of American
30:12
Pacific Mining, where you talk a lot about your philosophy behind
30:16
investing, but also your philosophy behind kind of why
30:20
you do what you do. And I won't ruin it for the
30:23
viewer, but it's definitely well worth watching.
30:26
I know you're a regular guest on our mutual friend Peter Grandich
30:30
on, on his YouTube channel where you discuss a lot of the
30:32
companies that that you own and your your opinions on what's
30:37
going on in the precious metals market.
30:38
So they people can go to petergrandich.com.
30:41
Any other information you want to share with our audience
30:44
regarding how they might follow you, get in touch with you or
30:47
anything you think they benefit them?
30:49
Yeah, I try to keep a low a profile.
30:51
I give you social media to the guys like you, Ron and Peter,
30:53
who are the experts in that. But I do enjoy getting on
30:56
YouTube. I, I got a lot of questions on
30:59
what I'm thinking or what I'm investing in.
31:00
So I enjoy getting on YouTube, you know, once a quarter more
31:03
authors to my, my names that I'm involved in.
31:04
It's my way of sharing once with one click of a button, my view
31:08
on the markets and stocks. I really enjoy your content,
31:11
Ron. You do a great job and I really
31:12
enjoy being on this interview. They're happy to come back in
31:14
the future with you. It's it's for me.
31:16
It's a nice way to speak to everyone at the same time.
31:19
And I think investors, you know, can make a lot of money in the
31:22
sector. They've got to educate
31:23
themselves. The one thing I pass along too
31:25
is that maybe my approach to, to junior mining just I, I view it
31:29
as venture capital kind of portfolio.
31:31
You've got to spread your bets in the sector.
31:33
You know, you can't go on Ron's basement and said, you know, oh,
31:35
Mike Gentile or Ron said, buy this stuff and put all your
31:37
money in one name. My view is you got to own, you
31:40
know, 20 to 25 names if you can spread your bets over them.
31:43
I try to put, you know, 1% of my portfolio's initial investment
31:46
when I make an initial investment and grow it over time
31:48
to five, 1015% of My Portfolio. But invest more heavily the ones
31:51
that are working because there is a high failure rate in this
31:53
business, right? It's expiration.
31:55
Not all these stories are going to become mines, but the ones
31:57
that do work will make you 10203050 times your money.
32:01
And I know from experience, I've done it multiple times in my
32:03
career. Those winners will, will pay for
32:05
your mistakes, but you got to have the, the staying power and
32:08
and the desire to educate yourself like on shows like
32:11
yourself. Learn about the space, learn
32:13
about investing, learn about the value risks and rewards of
32:15
junior mining, spread your bets and, and, and try to really be
32:19
proactive and thoughtful about your allocation process.
32:23
I think you can do extremely well, especially with what we
32:25
talked about the valuations that we've seen today.
32:27
I think the returns are going to be even more powerful than they
32:29
have been in the past. And and the setup for the sector
32:32
has never been better in my view.
32:33
Yeah, Yeah. Great, Great advice.
32:35
Well, thank you, Michael, on behalf of myself.
32:38
It's been a big honor. And I know our viewer has gotten
32:40
a lot out of this as well. And we will look forward to
32:43
having you back here in the basement again.
32:45
You're welcome anytime. So thank you.
32:48
Thanks, Ron. My pleasure.