Aspirations, Philosophy & Strategy of Emerging Gold Producers

0:13 Hello and welcome everyone joining us for today's session which has been marketed as aspirations Philosophy and Strategy of Emerging Gold Producers. But we're hopefully going to do a little bit more than that, gentlemen, aren't we? So welcome, gentlemen. Thank you for joining us. Thanks, Matt. You're welcome. What a lineup. I haven't seen a lineup this good since the return of the Spice Girls Tour of 2007. Fantastic quality. Although I notice sporty spice hasn't quite made it. Yeah. Looking at the shape of you. We better let everyone know who's here actually. So first of all, Doug Ramshaw, thank you very much for setting this up. You've arranged this. You got the girls back together for a session today.

1:05 So appreciate that. So Doug is the CEO of Minera Alamos and he's building a mine, heap leach mine stand in Mexico. We've also got George Salamis of Integra Resources, who has made shareholders a fair bit of money with Integra Gold prior to this. So another builder of value. Alex Black joins us from Rio too, hunting gold down in Chile, and of course, a track record there of, again, making shareholders money with the Rio Alto project. So, what, 12 million to 1.2 billion? Is that right? Yeah, that's right. Not too shabby.

1:48 And not least of all, Patrick Downey, Orzone, again, a track record of creating shareholder value, a mine builder, and a good solid Irishman as well to boot. So thank you very much, gentlemen, for joining us today. And welcome to everyone listening in. And as I said, we did market this as aspirations, philosophy and strategy of

2:13 emerging gold producers. But we're going to do a little bit more than that. I think we got together a couple of days ago and said that perhaps sharing some of your knowledge, lessons from history might be a good way to go to help retail investors understand a little bit more about how to interpret the market currently in terms of the macro, the economics,

2:34 to maybe look at what good looks like and how to spot what not so good looks like. So if we're still in agreement, gentlemen, I think we'll crack on, shall we? That's great. Good, good, good. Okay, so I think the question we kind of posed or we discussed the other night was

2:53 2020 was a great year for mining. It was a great year for mining companies, great year for mining investors. 2021 has pretty much followed suit for a lot of the commodities and Gold's come up a little bit but we're going to discuss what's going on there in a second. But a lot of that was done with momentum, with promotion and perhaps it was a case of it was very hard not to make money last year. We want to just sort of do a little sense check with you guys and say, well, is that always going to be the case?

3:25 What, what, what lessons have we learned from history? So Doug, I'm going to start with you. Let's, Let's talk about that. Do you think all minds will get into production? It's easy, isn't it? Well, I mean, it's never easy. It's probably made harder during a pandemic, but I think, yeah, track record of management teams doing it before is important. It's one of the reasons I thought this panel of my peers was a good one. So yeah, it's never easy. And I think

3:58 we've seen with some producers that have just started out recently that, you know, the startup is often fraught with issues as well. And I think you're always, Darren always tells me every project he's built, I've been minding his bill has been successful, but they've all had teething problems. And I think the key thing is to accept the fact there'll be teething problems and make sure that there isn't an Achilles heel. So from my perspective, often net can be a big problem. That just, you know, understand that mining, building a mine and starting up a mine is tough, but good teams get through the teething problems. And so I think every group here kind of falls into that category. So that's why I asked everyone to join today.

4:49 So Alex, let me ask you, you took a company from 12 million to 1.2, but selling for 1.2 billion. It takes a long time for these things to come together. There's a lot of bumps along the road. How patient do retail investors need to be?

5:10 Very patient. When you look back at our track record, as Doug has said, lots of bumps along the way. As long as, all I say is, as long as there's no walls, right, nobody puts a wall in front of you, as long as it's a bump, speed bump, that's fine.

5:29 But in the case of Rio Alto and our previous history, I mean, we were in the right place at the right time doing the right thing. And so that's, you put yourself in that position. There's a bit of luck there as well. Obviously a very good management team around you is important. But being in the right place at the right time. I think that's where we are at the moment. The business as a whole is in the right place at the right time.

6:03 The other third point is doing the right thing. And the right thing is generating value for shareholders, reinvesting money to the benefit of shareholders,

6:15 etc. So we're probably in a long-term positive market for Gold. I'm not a predictor of where the Gold price is going to go, but I think we're in a positive market because of all the fiscal stimulus that's been going on around the world. So we just got to put our heads down and execute. But I think also going back to the point you brought up before about what investors should be looking for. I think internally investor needs to look at themselves and say, am I a trader or am I an investor? Because they're 2 different things, right? If you're gonna be in and out of stocks, then a developer like most of us is not for you, right? But if you're an investor, yes, a stock like our stocks are for you because you will see gradual delivery and as a result of that delivery, you'll see value creation, but it takes time.

7:20 I don't know what the current, maybe one of you guys knows, but the current statistic of going from a discovery hole to development is something like 7 to 10 years, I understand.

7:34 It's a long game. We're marathon runners and we need people who want to follow us to have the equal stamina that we have. But companies fall along the way, there are there are wreckages on the side of the road on that long journey. So Paddy, what causes that? What's the reason that does happen? Because you know, and I ask that in the context of I had an interview with someone yesterday who got very excitable and very distraught about the fact that most CEO of money companies don't know what they're doing they're stealing our money. It's all your fault. Well look yeah I totally echo what Alex had just said there It is a long and patient game. You have to have the right guys around you. Why do things fail? Well, generally, fundamentally, the basis is you have to have a good project. You have to have something that you believe you can build and it will become a mine.

8:39 And so, again, that takes experience. You have to look at the metallurgy. There are so many other things like infrastructure that you have to look at, you know, you can discover something somewhere but are you actually going to be able to build it at a budget that you believe you can. Other guys don't understand that, I mean, you know, Finding the finance to build a project is not an easy

9:06 path. Generally, you have to do a lot of due diligence with banks, with lenders, with people like that to convince them. Banks don't take risk. They are looking for a 8% to 10% return and they're looking at it without risk. So they tie you up in all sorts of paperwork to ensure that they manage that risk. So it takes a lot of time to do that. And why do things fall apart? Well, sometimes guys over-promote it. They think it's something that it's not, or they say it's something that it's not. I think that,

9:40 you know, what Alex said here is totally correct. You have to be patient when you're building a mine. It's not something that happens overnight. Sometimes it does happen quicker than other times. I mean, you can get at the right spot at the right time and get going and really get moving. You pick up a project that somebody didn't like, you see something that they didn't see and away you go. But it's not always like that.

10:04 And guys fall apart because they've never been through it before. They've never gone to the other side of it. Doug mentioned about, you know, startups and things, you know, having an operational readiness plan before you actually push the button to start a project, you know, getting your team on board early so that they understand what the project is. And so when they start it up, they know they've been in the in the woods with you and they know what's coming out the other end, not just hiring guys a month beforehand. All of those various things. I've been on boards where guys are going, I go, what's happening here guys? Oh, we'll get to that in a few months. No, you need to get to it now. You need to have those people on board now. You need to have those plans in place. You need to have this type of supply chain management in place. You need to have, and those are things that you need to get going early so that you will have a success. It's one thing building a project, it's another thing starting it up and running it well, if you do to make it a success. So there's 2 sides to it.

10:57 So George, you're standing that close to the window and it's really hard to do. You've done it once. Can you do it again? What have you learned?

11:06 Well, I've learned, you know, obviously we learn through, you know, making mistakes. I've had a few. God knows I've had a few over the years, but just taking kind of a prescriptive look back at the recipe book, the things that do work, and there's a repetition to this, which is not standing still at any point, always maintaining sort of forward momentum, whatever that looks like on a project. And that process, contrary to what many CEOs think doesn't necessarily require a lot of money, but just demonstrating to your investors that there's forward momentum

11:44 on your project, rather than simply standing still and waving that sort of take me over flag, I don't think that works. And then there's the concept of having a plan A and a plan B. Plan A is sometimes, in fact, often don't work out. So having a backup plan to starting this mine, getting it into production, hitting that wall that Alex said, those walls are always gonna be there, or the big speed bumps. So having an alternative plan, and that plan could look like, well, this might not be the largest startup mind scenario that can be built here. We're going to start modestly and ramp it up. I think that that's a recipe for success ultimately.

12:30 I think a big flaw in some of the thinking amongst CEOs in the resource business is having a resource asset that doesn't have a plausible financing means. And that goes back to what Patrick said. You know, had $25, $30 million market cap company with 1 billion dollar CapEx spend. That's a no-go, that's a recipe for failure. And then I think the last piece is maintaining that the optionality on, okay, we put out this study but

13:01 there's more to come, giving the investors something to get excited about beyond that last study that you tabled. I think that's another sort of hallmark of success, I think, amongst all of us here. So Doug, what's happening in the markets at the moment? We're seeing gold's having an interesting time, still a bit of movement today as well.

13:22 Do you think it's gonna be easier for gold companies to get funded, to get the support that it needs, to get the liquidity than other commodities?

13:32 Or is it still uncertain the way forward?

13:38 I'm sorry, was that a question to me?

13:40 Yeah, Doug, yeah. Oh, yeah, I just froze just for a second. Yeah, no, I mean, I think it's, no, I just froze just before I saw the question. I think one of the big problems our sector has faced is the legacy of shareholder destruction that's happened from the top down.

14:02 And You're seeing majors now with all this free cash because they rationalize operations to operate in a $12, $1300 gold environment, they're now printing money. I think they've been doing a lot of things to appeal to generalist investors but I don't necessarily, you know, I've seen companies that have returned 60 percent of their margin to shareholders in the forms of share buybacks and dividends and the like And yet the stocks are falling. I think,

14:34 to some extent, our biggest trouble is the legacy of this sector. And so even when we're doing all the things right and cleaning up the balance sheet, returning funds, we actually need to get back into the business of building stuff, which is, you know, the majors as well, I mean, not just companies of our size.

14:55 You know, but I do think that the sector has done a much better job, whether it was COVID that forced them to take a look and clean up the sins of the past and not do crazy M&A. I think we've got a landscape now that is rife for more consolidation in the sector right now. And companies like ours that are building new operations, building new production bases, you know, we'll probably fall into that territory in due course as well, whether it's mergers of equals of similar kind of smaller size companies or just being targets as we're now starting to see the majors. So I don't know if the, you know, I do know one thing

15:41 as someone running a company, I'm glad that a business vision of actually building something, which I think our sector is not good at doing. There aren't enough teams that want to build things. I'm very much looking forward to getting off the treadmill of thinking like so many people do in this sector of you've closed the financing. And I know that there are presidents and CEOs of companies that immediately have to start thinking about the next financing. And not only should that be disturbing for that president or the CEO, but for shareholders as well. Because if there's nothing accretive there, it's just further dilution. So having, when you have companies such as ours that are looking to build things, you know, hopefully that resonates from a funding perspective that it can be self-funding and that shareholders aren't in that hamster wheel of constant dilution.

16:34 So all CEOs say that. Can I say that? Sorry, Alex, let me just say this. All CEOs say that, we are going to build this thing. They have to, it's part of the negotiation tactic. They can't seem to be an easy takeout or a cheap target. So how do we investors, how do we family officers interpret that? How can we interpret it? What should we be looking for? Because every time I speak to you guys, you know who's good, you know who's never going to make it, you can't say anything in public, it's not the done thing, but what are the things that you guys look for? I mean, Doug, back at you. Well, I mean, you know, George made the point earlier. I mean, there's, you know, the exploration side of the business is playing the odds against Mother Nature and the odds are not good.

17:28 And for every one of our projects, there's 1000 that don't make it. But there are also a lot of fantasy developers as well. You know, George made the point about market cap to CapEx chasms there on companies that create PEAs and everything else, or projects that only work in higher gold price environments, or ultimately looking at operating teams that have done it before. I mean, you don't want, if you're in the business of building a mine or looking to develop 1 with a realistic path. You want to see a board that's technically strong, you know, not just a management team, but a board as well, that are overseeing that, that, you know, operating team. You don't want to see a bunch of lawyers or accountants or whatever running, no offense to any lawyers or accountants who are on the call today, but I don't think, you know, you want technical strong teams, because as we said at the beginning of the broadcast, building minds is difficult.

18:28 You know, You want skill sets for that. So, you know, there's a host of things to look at. But I mean, from a rule of thumb, I definitely look at CapEx to market cap. Like if you want to start paring back all these gold developers, look at their PAs or their feasibility studies and look at the chasm of market cap. It's a very quick first step. If a company has got a sub $50 million market cap and the CapEx build is $400 million, and they don't have an answer as to how to bridge that gap, you can probably move on to another one that has a more realistic chance of being able to get there. And so whether that ratio is 2 to 1 or 3 to 1, it's probably in that kind of order.

19:18 And that helps you screen out a lot of things. Alex, let me come to you. You're not shy on Twitter and social media pointing out some of the things that companies say, some of the things that CEOs say, well, and a lot of retailers too, what frustrates you the most in terms of the way that companies communicate? No, because, you know, look, I'm 63 years old, I've been in this business for 40 years. So I feel that even though I've heard the words, it's not the done thing, I don't give a shit. I will get on and I will say things. Unfortunately, I've got this badge here that says that I'm from Rio too. But you know what's happened to this industry over the last 20 years in particular is a brain drain.

20:10 People have left the business, they've not been replaced by good quality technical people. Who of any kids, of any parents wants to be a geologist or a mining engineer or a metallurgist? I mean, it's not a glamour business. So there's been a big brain drain and then that passes all the way through because here we are talking about shareholders, right? We're talking about investors. Okay, we've all got great projects, you ask us and we'll tell you. But at the end of the day, what is their reference to make an investment in somebody like us. It's the sell side analysts, right? The sell side analysts that put out research, et cetera. Well, I can tell you most of the quality of those sell side analysts is very poor, right?

21:00 And that's because of this brain drain that's happened over time. So most of those guys have come from being good at running up spreadsheets to then becoming a mining analyst. I mean, it's quite incredible. So if people like me, when I get asked, don't opine in a medium like Twitter, then everybody's flapping in the breeze from an investment perspective, because how did, you know, every sell side analyst will say, what a fantastic project. And We can name many projects that haven't worked very well over the last 10-years. You will have seen the sell-side talk highly of those projects up until the cataclysmic event.

21:46 The shareholders or the investors, or whatever you want to call them, particularly people that don't know a lot about mining, get dragged along with it. So that's what I see and that's why I am vocal. And you know, at my age, I don't really care. You know, I really care. So it sounds like this. Sorry, George. No, I just wanted to make a comment to something that Alex said in just on the theme of communication and this sort of hyper intense mode of communication that we've all been in in our business due largely to the internet and sort of this need to constantly communicate. I think one of the drawbacks for us as emerging project developers, It used to be there was a time back when I started my career when you would start mine construction and whoever owns you would give you a period of 2 years to get it right.

22:45 That you weren't judged on a monthly basis or on a weekly basis of do I have enough money? Do I have enough ore on the low grade ore pile? Do I have enough, whatever it takes to get the mine build right? And then after that 2 year period, if you got it right, you were rewarded. If you didn't, you were penalized. Now it seems like we're being judged on our new mine constructions on a monthly or quarterly basis. And that really hurts us because that's not the way mining works, as Alex mentioned earlier, and Doug as well, and Patty. I mean, it takes time to get a mine right, ultimately. I tell you, that's highly frustrated me. Just to follow up on George, sorry, Matthew, just to follow up on George. I remember, you know, at the beginning of each year as a producer, you put out yearly guidance, right? Whatever it might be, 100,000 to 120,000 ounces.

23:44 It was, I mean, because even though there are bumps along the way to building a project, there's also bumps along the road to producing, right? But you as a management team believe that 100,000 ounces is achievable, that's your guidance. But then people come back to you every quarter and say, how's it going? And you have a quarter where it's not on average 25,000oz because that's what everybody's expecting. They go, okay, 100 divided by 4 is 25, so you should be doing 25,000oz 0.25. But it doesn't work that way. But when, you know, and Paddy's smiling, and he's probably had this issue before too. You know, people want to finesse so much. And it's, this is a, from an investor perspective, and from an analyst perspective, and from a, you know, big perspective in this business, it's almost a business. And by that I mean, you say something, you say, yeah, but, yeah, but, yeah, but, yeah, but this, yeah, but that, no, yeah, but, you know, everybody's trying to pick a hole in everything you're doing in a business that's so bloody difficult to get right and to get humming in the right direction. So I totally agree with you, George.

25:02 It's quite interesting how we get nailed to the cross of you said, and there's a little bump, and that's really bad. Yeah, I totally agree with that. Just to get onto the production side of things, I mean, really, I think where mining companies fall down, and generally particularly junior mining companies, is the guys don't truly understand their deposit or they've overestimated what the grade is, or they're overestimated what the development they can get from it. I mean, there's a number of simple rules, I mean, in terms of tons per vertical meter and ounces per vertical meter that you can get from, say, an underground mine. And If you look at somebody and go, hold on a minute, you've got this many ounces per vertical metre yet you say you're going to produce this, I don't get it. How are you going to do that? You're either going to have to develop the whole way down the mine, so you're opening the whole way down, which costs too much capital, to open up enough stopes to get that tons per vertical meter at a greater rate.

26:00 So Some guys overestimate it right from the get-go, but if you understand your ore body, you understand the grade, you understand your production, unless something happens that stops it, an event, you'll generally be pretty good to what you're seeing. If it's 120,000oz over those 4 0.25, if you understand it and you're not overestimating the grade or you're not smearing stuff into waste or you're not overestimating your mining rate, you'll get your production. It might not be exactly what you say, Alex, what it is every quarter. So some guys don't understand that. And then analysts I see going, oh, they missed their target this quarter. They go, no, they're not. They're still on target to meet what they, just because it was, you know, 8,000 ounces less than last quarter, it's still, you know, everything's what they said they were gonna do. There are difference in grades across development, you know, as you might. In terms of us, as we go to produce it, don't over promise. I mean if you believe, you know, getting financing, getting things happening, it takes time.

27:11 As soon as you put a feasibility study out, it doesn't mean next month you're building, you know, you have to get the final and the feasibility is only part of the number. Remember, that's X, that number is X. Then there's all of the other things that goes with it, such as your corporate GNA, your local GNA, your working capital, your first fills, all of those other things, you're getting hiring people at the start to start running the mine. So yes, it might be 120 million, but it's probably 160 that you truly have to put in the bank before the bank will let you build it because they know all of those things. So unless you understand that, then you come back to the market, oh, well, I actually need another $40 million. Well, why? Well, because you didn't know what you were doing, that's why. And we know we've built it.

27:57 Everybody here, one thing I wanna tell the investors, everybody here has built mines and they've been involved with mines and they've been successful, they've not been failures. The things that we've been involved with, some of them have gone on to other companies, absolutely, but they've gone on to other companies and been successful mines. Cudi, are you frustrated, or were any of you frustrated with seeing, there's some fantastic companies which are still drilling, never put out a resource, some big companies that are way bigger than any of you guys, way bigger. They've not built mines, They've not presented the information as you're laying out. They can report the information within very broad parameters to look as shiny and bright and new as they possibly can. And that For us, again, retail investors trying to interpret that, it's really hard, it's really difficult, because it looks good.

28:51 It looks good. And you've got billion dollar market cap companies out there without a resource published. I mean, somebody's asking on the questions here about a 43-101 how good it is. Well, it's reasonable, I guess. I mean, if you do it well, and you've got good people doing it, it gives you a reasonable, you know, numbers to where things are going. But there's guys out there with 1 billion dollar market cap and you're going well, you know, I look at us and I go, well, you know, we've got a, you know, we're gonna be producing 130 to 140,000 ounces a year, 13 year mine life, we've got the money in the kitty, we're not raising any more money, we're going to be cash flowing in 14-months time, so great margins. But you're saying, well, if somebody with 1 billion dollar market cap gonna double to $2 billion in the next 12 months, I don't think so unless they're the greatest thing since free x I guess but I don't think they are but if you look at us and you go well will will our value double absolutely it'll double as we build the project and if you're patient for a year year and 0.5 you'll see that double even in a flat gold market you will see it But you have to have the team that shows they can do it. You have to have the, and one other thing is, if you're a shareholder, is the CEO and the board, are they invested in the company? Have they bought a share?

30:15 Do they believe in the project? Or are they just taking a wage home and a bunch of options? But have they actually got the conviction to say, I believe that this is going to happen and I'm putting some of my net worth into it because we've made money by putting our net worth into our own projects. We didn't make money by taking home a couple of hundred grand a year. We did it by actually putting the money where we believed we were going to what was going to happen. Yes, it took a bit longer, but we're patient investors and we did well out of it. Like 12 million, you know, to 100, or sorry, 1.2 billion. It wasn't over a month, I don't think, Alex, was it? 6 years. 6 years, there you go. But that's a hell of a return on your investment over 6 years.

31:02 It's got all the same boat in that you've invested into your companies, you believe in your companies, you've put big chunks of money into your companies, for sure. But Doug, let me ask you this. Isn't it just a case that the rules of the game have changed and you need to adapt. It's not about building minds anymore, it seems. RAOUL PAL, PhD, MBA I don't know if it's – no, I don't think the rules have changed. We're talking Lassonde curve here. Those billion-dollar companies are on the front end. Companies like ours on the back end of it. When you get to that second peak, and this goes back to that kind of the market expectations. 1 problem I have with Mr. Lassonde's curve is it's quite often portrayed as the production peak that you want to get to, because you can sleep well at night at that point. You've got to a value, and then it's, as Patty says, it's just a question of time for that valuation to be realized.

31:58 It looks, often in those cartoon images of it, it looks as abrupt a peak as the exploration discovery curve, and it's not. It's a slow build-up once you've got it got up into production for all the issues that we've talked about so far in this broadcast, But once you're there, you're very much less likely to have a round trip, whereas at that first peak that can get some exorbitant valuations in far more rapid time. You can also see 60% haircuts on the back of a poor set of dual results. So no, I don't think the rules have changed. I honestly think that we don't have enough companies that want to build. And we've also had a track record in the highway of junior mind development. There's been a lot of roadkill And that doesn't help.

32:54 And good people, now good teams, I mean, I'll give you, you know, a good example is what Tim Woman's done at Fiore. You know, And hats off to him, he came in on a project that had failed. One of those road kills with Midway Gold and how it collapsed. And he's done a really good job turning it around. But there aren't many Tim Wormans and Alex Blacks and Patty Downey and George Salamis is in the business. And so I don't think the rules have changed so much as most people don't want to build. I was asked the question recently, are you finding prices of your assets are going up as a result of the rising gold price. And I said, quite honestly, I mean, there's an attempt to see some cost creep on that. But we haven't suddenly seen an 1800 dollar gold, you know, a whole bunch of new teams saying, you know what we should do. Let's build gold mines. So, you know, I what I like about it and why I put the net worth that I have into this, I'm not independently wealthy yet. Hopefully, you know, some of these smart decisions I've made as to where I put my money, you know, make me so, but I do it because I'm on the back end of that curve and what I like about the back end of that Lassonde curve is You know, you've de-risked and you can afford to do it.

34:10 My wife lets me do it Because because you know that front front part of the Lassonde curve is all excitement and everything. There are way more round trips on that curve than there are when it's companies that get to the back end of it. Okay, let me ask you a question. I might put it to George actually, because while we're on the topic of Lassonde curve, this has been sent in by Paul Karras. How does a small investor make money during the long trough in the Lassonde curve when a commodity price stays flat? What's the incentive to buy shares in the market post-PEA or pre-PFS? So let me sort of take a different angle on answering that question, and that is, I think that there are things that we as CEOs of emerging or developing mining companies in that realm of that niche of our market can do. It's not necessarily binary in other words where you know, companies getting into that Lassonde curve, they're waving the flag that they're going to develop, they're into permitting and to construction, everybody sells you off, you're into that long trough. Yes, that is a tried and true thing in our business. I think that there are some things that we as CEOs can do.

35:28 And it goes back to that point I mentioned earlier about giving your shareholders a reason to be excited even though you're into that draft, you're building a mine, but there are other things that you can do. You can keep demonstrating exploration upside where you can while you're building that mine. So there's always this promise of resource growth. Keep pushing the envelope of developmental optionality. Yes, this is what we've declared we're going to do. If it's heat bleaching, that's the course that we're going to take. But along the way, while you're in that Lausanne curve, you can demonstrate, well, I might have a millable sulfide resource over here, which could add a lot of upside. So I don't think it's necessarily binary switch on, switch off. I think the key for the investor is to look for those companies that are nimble, that can demonstrate that that Lausanne curve will get filled with some form of upside excitement, optionality, et cetera.

36:30 So are retail investors equipped to make those sorts of decisions? Do they know enough? Have they got enough experience? Well, that's a great question I was going to say something there about because I honestly, you know I've made a lot of money investing in companies in that Lausanne trough that I truly believe have got the management and the project. I look at the CapEx and I look at the location of the project and go, okay, does this seem real to me? Does this CapEx per million tons of throughput seem real? There's a number of benchmarks that I've used in the past. You know, I mean, it got a little wild during the time where mining costs were going through the roof and people weren't controlling them. But in general terms, there's a few rules of dollars per thousand ton throughput and things for CapEx. And I look at that, I look at the team, I look at the size of the CapEx and go, can this really be financed? Or is there a potential takeout with somebody else?

37:25 Is this attractive to some? And that Lassonde curve where the stock goes down and people are in, I will fill my boots at that time because I know what's going the other way. I know what's gonna come out of that trough. And I know, you know, if I pick the right horse every time and you don't get it every time but generally I'll get it most times and I'll get out the other end and go, what a great win. Cause the project's built, It's now doubled in its market, you know, cap to nav, and it's been a great win, because, you know, there is a dead period while you're doing the finance. The financing takes time. You look at the level of financing that they need. You know, you do sort of numbers around that. I always take a CapEx and I add 25% to it because I always say, well, that's the true number these guys are gonna have to put on the balance sheet to build this, to get through that timeframe for keeping their own offices and lights on and their own people plus plus plus. And then I look at a time frame and I go that I think this will get built.

38:24 I look at the number of that. But other ones where I go somebody as I think maybe it was Doug said earlier on, it's an 800 million dollar build. And sometimes they'll both pardon me, they'll they'll say something in the P.A. That it's only 400. But you look at the size and you go, well, that's wrong. And you look at the market cap and you go, well, there's no Lassonde curve. There is just a flat line, because it's not going anywhere. And they never get beyond the PEA or the feasibility study. It just sits as a document because it's not going anywhere. That's not a Lassonde curve. That's just a flat line. Lassonde curve is when you're actually gonna build something. You're actually going to get there. Yeah. That's my point. You've described some quite complicated ideas and ways of measuring and you've been in the business, man and boy, 40 odd years.

39:13 You know that, but for retail guys, how can we possibly have a chance of competing against, whether it be researchers or brokers presenting information in a certain way, or the company presenting information in a certain way, and be able to decipher what the actuality of the situation is? What do you think, Alex? Well, you've got to look at track record, execution, delivery of the team that's telling you these stories, whatever it might be. The other thing I'd like to give a guy a plug, I mean, for all those on Twitter, one of the better analysts that I think people should follow and he probably is going to hate me to say this, but is Ron Stewart. We have Ron Stewart on Twitter. He's an ex-mining analyst. He's an ex-mining guy. Very, very good. Puts up a lot of stats on Twitter.

40:03 And he'd be a guy that if I didn't know what I was doing from an investment perspective, I'd probably reach out to Ron and say, hey, Ron, you know, I'm looking at company X, what do you think? And he'd probably give you some good sound advice. That's the issue that you're talking about is where do these people that want to invest in the business go to? And once again, as I said to you, the sell side analysts will always tell you rosy pictures about every story they provide. So That's not a great place to go. So you need to go somewhere independent to get good balance. Your crux investor is a great source of, no, maybe not. It's a great source of trying to judge people because part of assessing where you're gonna put your money is the person that's being interviewed by yourself, Matt, for example, and some of the tough questions that you put to them and how they respond to that.

41:03 And so it is difficult, difficult for the investor to make those decisions. It is difficult. I think we've got 4 full-time analysts who like you guys, had a lot of experience. And for them to decipher this stuff, it takes a lot of time, a lot of money to do that, but that's what they're paid to do, but they can do it in an honest way to not pay for, you know, by the companies to do these reports and that's important. Then, you know, and yeah, it's really, it's really, really tough. Can I just say what retail investors and, you know, where they fit in the mix for all of you, because at different stages of your life, they were more or less important to you because you needed that liquidity going? I mean, again, what were you are they continually important to you? Can you honestly say they're always equally important during the growth from Greenfield Explorer right the way through to a producer?

42:00 Is that true? Well, I certainly value them that way. Maybe my bandwidth is better served talking to my shareholders that have 10 million shares as opposed to 10,000. However, it's the person with 10,000 shares that can be the one that sets price discovery on any given day in the stock. I will always remember something I was told 10 plus years ago, which was a company was doing a 10 cent financing. They were saying, yeah, we were already thinking about who is going to be the people that buy their stock at 20 cents. And it was like, in my mind, it was, you're treating your shareholders as disposable or replaceable instead of actually creating a story that they wanna be part of all the way along. It's a lot easier to get traction in your stock. If you if you look after the interests of all your shareholders, you know, and then it just comes down to supply demand. If they don't want to give up their shares, someone's got to pay more for it. And you want them to come along for the ride. It's 1 of one of the reasons I actually like MOE transactions we've seen in the sector right now, because you're basically saying to 2 sets of shareholders, you know, come along for the ride at this bigger scaled up company. That's where you'll unlock value as opposed to people that want to just, so you know, an exit strategy and leave something on the table. So no, I think there are limitations obviously with everything we do on a day-to-day basis as to how much we can speak to every little shareholder. However,

43:31 those are the calls I like more than any other because they remind me who we're working for, you know, and they're people that our efforts can make a hugely meaningful impact on their lives. Alex's success with Rio Alto, I mean, would have transformed so many shareholders of his life and I'm sure that's something that he takes with him when he's doing the next iteration of Rio. So every shareholder is important And the day that you forget about that is I think the day that you're going down a slope that I don't see any other people on this channel ever going down, but I don't think you'd want to go down. We'll find out. George, it's a lot easier dealing with a handful of institutional guys than you put a lot on your plate. Time is precious.

44:25 I think that's bollocks because Just following on from Doug, I've done 3 things. I did a copper company back in the mid 2000s. I did Rio Alto, I've done Rio too. And predominantly dominated by retail investors. If you don't make yourself available to them as a CEO, then you're doing a disservice to those investors. I believe each of us have got plenty of time, we'll find time to get on the phone, to get on a Zoom call, to do whatever we have to do to placate and to a certain extent, educate some of these people that have got questions.

45:14 So, So no, there's no excuse there. Actually, Alex, you know what, the flip side to that, and I was talking to this point the other day with somebody, for me, a red flag in terms of, should I be staying in the stock, should I continue to invest in it is when the senior management stops communicating. In other words, you stop hearing from them. They don't return your calls, they're not getting back to you, they're not asking those point blank questions that are being aimed squarely at them for the right reasons. So I know that this sort of the topic has come up within this forum. What are some of those red flags that the retail investors should be looking at? I think that's a big one actually, Alex, at the end of the day.

46:02 Really big one. Yeah, we see that complaint a lot. In fact, people ask us to reach out to companies because they're not getting a response from the company. A company like that doesn't deserve that person's after-tax dollars. Just like we should be putting our money where our mouth is and eating our own cooking, which everyone on this channel does, you know, if you are not hearing back from from a company, you know, within a reasonable period of time, then maybe revisit whether you should be looking at spending any more of your time and certainly any of your money on a company that treats you that way. You know, if we're looking for very simple ways that anyone without technical background can try to screen which companies to start focusing on, that's a clear, as George said, red flag and something that helps the screening process. Yeah, and I think it gets back to another point, which is another red flag for me in the way I invest.

47:07 When I see ego take over amongst a certain management group, in other words, they feel that they're beyond having to communicate to or answer to investors in a certain way because they've made a lot of overnight success and they've bought the Ferraris and all that sort of stuff. When I see that take hold, that to me becomes another red flag. In other words, we're too good to communicate with with these plebs of our retail investment. We're only talking to the 10 shareholders who are who make a difference. That that really pisses me off when I see that as an investor. It's interesting. It's interesting you say that because we again we've had CEOs come on start an interview and go, oh shit stop I've got to take my gold Rolex off. I don't want people to think I'm a flash You know the 10 shareholders that can make a difference It's we should be looking at CEOs about how we can make a difference to all those shareholders, whatever the size of them. You know, and it's like, you buy your, you eat your own cooking, you buy your own stock, and then you don't focus on the stock you own or a few shareholders, you focus on all the stock you don't own.

48:24 Selfishly, you're gonna help yourself in the process, but I think too many management teams fixate on their holdings and not the wider holding out there, which is what really we are entrusted to actually work for. Okay, I've just got to point out actually, Doug, I know you put this together and you allocated 45 minutes, but like all good concerts by the Spice Girls, there was always an encore. So we've got a few more minutes before I think people may want to go off and join, I think, George at the Prospect Generators conference too. So I've got a couple of questions from the crowd. Yeah, if I could throw it. And I think this is a great one because this is what we all came here for, which is, and Patty, I'm gonna go with you first.

49:10 So what are the 3 best ratios to use in the precious metals industry when investing? Great question. And that's from John Steinton. The 3 best ratios. I'm glad you started with Paddy. Yeah. Well, you know, the one thing I've always known about precious metals being in the business is like, I don't know what the price of gold is going to be. And I always look at what I'm going to be in terms of costs, where are my costs going to come in and how do I control those? So, you know, the, the, you know, looking at, you know, gold stocks are, it's, it's a cyclic business. And, you know, you've always got to understand the cycle as well, you know, so I think we're in a long term, I'm not a gold ball, but I do think we're in a long term bull market. And I'm not answering the guy's question on the 3 best ratios, 3 best ratios are.

50:09 But I always look at it is is what's going to drive the gold market and and it's always going to be guys spending money. It always has been. Gold is here for the long time. Everybody says it's going to disappear. It's not. And it's controlling your costs so that you can always continue to reinvest in your project. And I look at a lot of projects that have never made a penny for anybody. They've still got a market, but they've never actually generated a dollar, you know, and so you always look at will this continue to generate cash as I go out the gold cycle in the bottom end and the top end of where it is. My best ratios, I don't know what my best ratios are in gold. I don't know what that answer would be, the 3 best ratios.

50:57 Market cap to NAV, I always look at that. So in terms of looking at where the company is and looking at where they can, can you work out what the true now of the of the project or the company is, if you can't, you're probably going to go, well, why is it up there? Why is the market cap there if I don't have a nav to work off of? You know, you're generally gonna look at that. I always look at the developers and I go, are they in the right range? Are they in, before they produced, are they in the range of like 0.3 to 0.4? If they're at 0.8 and they're a developer, you're going, well, how do they get to 1.6? Have they got the greatest project in the world? Probably not. But if you start looking at it going beyond that in terms of ratios, gold price, Everybody floats up. Also look at the, you know, the market cap to Capex.

51:55 You know, what is the Capex that they're going to have to raise and what is the market cap of the company? Can they raise that debt because you're not a bank or a lender will only let you raise a certain amount. You got to do the rest with equity or you give the game away by selling a large stream and worse the upside for the investors anyway, you know. And you know So that's another one I look at is, look, the market cap to CapEx. And also when I'm looking at something, just mining, I look at, if somebody says it's 2 million tons per annum, I'll get on, what was the last 2 million ton per annum mine built in that area? I look at the CapEx and I go, well, these guys are 0.5 that CapEx, how can that be? You know, are they better than everybody else? Is there something they're doing? And it'll generally raise a flag. You know, if somebody's telling me what the CapEx is something per ton, and I will always look up the most recent one. You can find it.

52:50 Go look at where it is. Go on Cedar or whatever. Look at what the CapEx truly was. And if somebody says, well, ours is only 100 million dollars because we're buying a used mill and all that. Used mills don't save you money. In fact, they generally cost you money, you know, unless you get a complete bargain. You still gotta put the concrete up, still gotta put the steel up, still gotta refurbish the mill. You might save 5, 10%. That's a lie, It's a complete lie. So always look at the capex and go, is it reasonable, reasonable time? But on the Lausanne curve, once you're financed, once you start putting concrete in the ground, you will see your NAV go up. It will absolutely go up if you deliver. Right. George, anything to add? Yeah, I don't have any specific ratios that I use in terms of how I invest. I go back to the kind of the tried and true methodology is management group.

53:43 Have they done it before? I tend to stick to tier 1 jurisdictions in terms of what I'm investing in, simply because I've been beaten up so many times through expropriation and nationalizations that I've learned my lesson that way, both as an investor and as an executive. I tend to stick to those. And I also look for assets where there's a high degree of optionality. In other words, when the stuff hits the fan, what can this group do? How Can they see their way through the storm? Can they keep a low-grade stockpile to weather them through the bad times? Is there development and production optionality? I tend to look at those stories as well.

54:28 That's kind of my top criteria right there. Doug? You know, what a good head of hair they have on them. I mean, George clearly sleeps well at night. He's got no problems. And no, I mean, the ability to raise money, honestly, the, you know, when we saw in the second half of 2019, when gold had broken out, we saw a very good market for good teams that gave way to a kind of more of a rising tide, less all boats kind of market this year. But I think you want to be able to see the companies that can do well in tough times, because they certainly have shown that they have the ability to withstand the capital markets pressures that are on all companies by being kind of almost viewed by the bankers and the street as a cream rising to the top.

55:27 You know, obviously the whole business model is designed to try to stay away from giving those bankers fees and stuff and be self-sustaining, but it takes time to get to that point. So, you know, you as an investor want to feel comfortable that the team has not just the vision and the creative, you know, ability or technical ability to build something, but actually that financing support to see that business plan through. That would probably be the one additional thing I'd add to the good points Paddy and George made. I'd like to finish with you on that one. Ratios don't matter to me. That's for people to play with. Gold, Silver, I don't have any Silver in our deposit.

56:17 Oil, Gold, Gold, Copper, all these other ratios. All I'm worried about is that I've got one of the best management teams in South America that's working with me because I'm not the one building this project, they are. And secondly, our project is bulletproof to $1,200 goal. So whatever ratios you wanna play with over and above all that, knock yourself out, because I've got no time for it. I just have to execute and deliver as we've all talked about with my team and be able to do that profitably at $1,200 gold and the rest will work its way out.

57:03 Brilliant. Okay, thanks guys. And just conscious of time, I'll ask Doug how you want to play this. I know we've obviously got the prospect generator starting in about 3 minutes, but if people wanted to stay on, would you want them to? Or do you want to wrap it up? Because there's a lot of topics we haven't covered yet. Yeah, there is. I mean, I certainly, I think all of us have the time if people, I know this one will be recorded, so we can carry on having this conversation. There's going to be a recording out, you know, in the next couple of days. Why don't we have a round 2? Yeah, well, that's the other thing we discussed on Monday. There's definitely going to be, okay, and that's a great point to bring up, Alex, because I think another thing which is, Patti mentioned a whole bunch of things earlier where unless you're a seasoned pro or a mining engineer, for the typical retail investor, there is not some fact sheet to check off all these metrics that Patti referenced. I don't know 0.5 that stuff that Paddy had mentioned. I'm a mining geologist, not an engineer, and skipped most of my mining engineering at the Royal School of Mines, I confess.

58:12 But, you know, one of the things that an investor can do is see if a company delivers on what it says. And we talk about over-promising and under-delivering. I used to say to investors, when you're first looking at this sector, don't do anything for 6 months. Instead, kind of in your mind, look at the companies you would have invested in, don't mind if you, you know, there's always another train leaving the station, watch and see if they live up to, oh, do you want to have a round 2? Yes, I will. Watch and see if they do what they say they're gonna do. There's another really simple way. It might take 6 months of analyzing a company, but you know what? Words matter, actions matter, execution matters.

58:58 So in that regard, to Alex's point, I'm looking forward to having further conversations of this ilk, whereas in industry we should, it is incumbent on us to educate, maybe we haven't educated as much in this hour as we could do, but whether it's 3 months from now, 6 months from now, I think it would be great to come back and hopefully follow up with the audience and with each other. And what the audience can have learned from watching companies like us over the next 6 months. Well, a round 2 will enable every one of the participants here to think and to come back to us with some follow-up questions that Matt can couch to us in a second round.

59:48 I have to also say to you guys are consummate promoters because coming up with this round 2 idea on the fly, if you thought round 1 was great, wait till round 2. It's brilliant. It's just brilliant. Yeah. It's good. And we should do it with wine, some of Paddy's wine. Yeah, well, that's good wine. We'll be able to also continue to talk to you about where we are with our projects and what is happening. If it was easy, everybody would be doing it. It's not easy. And Alex said it right. You gotta have great management team around you who fully understand what you're trying to do, who can see what the pitfalls and the bumps in the road are going to be and how to manage them and how to live with them. I mean, it's just it's it's mining is not easy. It is not easy. It's a lot of fun.

1:00:39 And it's great. And the other thing that we've learned over the years is, is we is with the communities and the people we deal with, how much fun that is and how great being part of helping communities around mining really develop and develop their skill sets. And going back to mines, my greatest pleasure is going back to mines that have been involved in and seeing the local communities again and how much they've benefited from what we have done. Yes, we benefit the shareholders but there's other stakeholders that also benefit hugely from what we do. And it's very important. Well said. I'm just going to probably look to wrap it up here on that basis. There's a second world tour. I just want to finish up a point sent in by Miguel Angel Ramos. Do you know of any good brief guide that is a non-engineering guy like me could use to quickly understand the quality of drill reports. And I just want to say a slight plug here. So Crux Investor, we write and produce weekly free reports for retail. We're all about retail and helping them decode, demystify what's out there. If you go and look up for, look up analyst notes on the crooksinvestor.com website. Lots of free reports and analysis. They're looking at the good stuff and the bad stuff. And, you know, all of us here, you know, are thinking about retail and how to protect retail.

1:02:02 You know, I wish more people would be like these guys. So gentlemen, thank you so much for today. Wonderful, Doug, super idea. Very, it's very generous of all of you to share your knowledge, your vast knowledge, you know, Having built so much wealth for people in the past, I hope you continue to going forward. Thank you, gentlemen. Thank you.