Deutsche Bank’s Jorge Beristain: “Breaking Up The Major Gold Producers Could Unlock Their Hidden Value”

I had the opportunity this week to connect with Jorge Beristain, head of Americas metals and mining equity research at Deutsche Bank. It was a fascinating interview, as Jorge communicates with CEOs of the world’s largest mining companies, and helps guide high-net worth individuals and institutions with their mining investments.

Key issues discussed during the interview were the expectations of “geopolitical disintegration” of the major gold producers, as well as commentary on asset sales following a year of billions of dollars worth of industry write-downs.

In addressing how the major gold producers can rediscover their leverage to the price of gold, Jorge said that, “Companies like Barrick and Newmont have become quite large, and it’s difficult for them to move the needle in terms of growth projects that have a meaningful impact on their income statement. By breaking these companies up somewhat, you lower the bar in terms of what would be considered a meaningful mine. You might be able to go for a 250k oz. mine instead of a million ounce mine, and as well, you would be able to create a company that has more direct leverage to the gold price on an earnings per share basis.”

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Jim Rogers: “This Is The First Time In Recorded History Where All Governments & Central Banks Are Printing Money”

I was able to reconnect for an interview with legendary Quantum Fund manager and commodities bull, Jim Rogers. Jim shared thoughts on the fundamentals of agriculture and mining after ten years of being in a bull market, and further spoke to the “artificial boom” going on in the equities market.

Additionally, he commented on the biggest challenge facing gold mining companies today, one which didn’t exist during the last bull market nearly forty years ago.

When asked about the fundamental supply picture for commodities today, Jim commented that, “Agriculture for instance is much worse, inventories are now near historic lows, [and] they weren’t ten years ago. The average age of farmers in America is now 58, and ten years ago it was 48. The world is [also] running out of farmers, because farmers all over the world are aging or retiring, and in America for instance, more people study public relations than study agriculture. So the world is facing serious shortages of agriculture.”

“In mining [for example], we’ve had huge numbers of projects and capital spending cut back, cancelled, delayed & rescinded, because of the problems [occurring] since 2008. We’ve certainly had some new capacity in some areas since 2008, but not enough in my view to end the bull market.”

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Mining Legend Ross Beaty Audio: The World Is Stronger In 2013

Pan American Silver Chairman Ross Beaty. Click the image to open the MP3.

I had the opportunity yesterday to connect with legendary resource developer & financier, Ross Beaty, founder and chairman of the $2.7B Pan American Silver Corp., and executive chairman of Alterra Power Corp. Throughout his 37 year career, Ross has generated an astounding sum of over $4B worth of shareholder wealth.

His comments during this amazing interview, describe a screaming ‘pressure-cooker’ global environment for commodities, with sustainability, declining discovery rates, depletion, and resource nationalism all but choking off supply-side growth.

“We are hitting walls of sustainability,” said Ross. “Discovery rates are declining in metals and in oil & gas, much less is being found than is being consumed, and all of these patterns whether it be use of water, use of land, depletion of soil, inability to replace energy consumption as is being consumed…When you look at all those things [you see] there’s a lot of constraints to our economic system today…The world will hit those constraints, and that’s going to be a brake on things like economic growth, and things like commodity consumption growth.” 

Speaking on the supply-side Ross added that, “Nothing that affected the supply-side challenges we’ve seen in the last few years is different this year. If anything, supply challenges are greater. Social issues, environmental issues, political issues, resource nationalism by many countries, all of these things will constrain supply responses to high metal prices…There will be lots of shocks to cause prices to go up and go down this coming year I think.”

When asked about record sales seen recently in silver bullion products, Ross commented that, “Because of the world’s indebtedness…particularly the U.S., there will be continuing weakening of global currencies and increasing monetary flooding of paper currency supporting hard currencies like gold and silver. I think metal prices for those precious metals commodities will continue to trend higher…Look at the ETF & coin demand, and you’re seeing continuing demand for silver as a monetary product, just like gold…it’s a tendency of people to want to buy physical metal as an alternative to paper money…it’s been a great bet, and I see that continuing.” 

When asked about the tough resource share market for investors, Ross said, This is a really good buyer’s market today, there’s great value in exploration companies…it’s a far better time to invest than say the beginning of 2011 when prices were at the top, and so I think people should look at an out of favor market. That’s when money is made. It’s when nobody else wants to invest. It’s when the best investments are made…I think it’s a very good time to invest right now for anybody looking at this particular sector…The tide is out…[but] any improvement in the macro market which brings investors back into the space will cause improvement in the share prices pretty much across the board…We are in a super-cycle [for commodities], metal prices are proving that…[so] you’ll see lot’s of capital gains being made in 2013.”

In a concluding word to investors looking to profit in resources, Ross said, “Over the long-term cream floats to the top, and a well-run company that is financially & operationally strong, with it’s greatest asset[being] it’s people…will do better than other companies, and generally speaking will outperform the market.” 

Ross is one of the world’s most successful “bear-market operators”, and his comments and companies should be followed very closely.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to your desktop:

>>Interview with Ross Beaty (MP3)

To learn more about Ross’ companies, visit: Alterra Power Corp. and Pan American Silver.

Interview: Oceanic Iron Ore Corp. Courts Asian Partners To Unlock Value At Hopes Advance

In spite of falling iron ore prices, a group of well known insiders from Oceanic Iron Ore Corp have reached into their own pockets to move their Hopes Advance project in Quebec’s Labrador Trough forward.

castle mountain - hopes advance (oceanic)

Castle Mountain at Oceanic's Hopes Advance Project - Photo: Oceanic Iron Ore Corp.

We had the opportunity recently to connect with Oceanic’s chairman and former president of Teck Resources, Steven Dean, and Oceanic’s president, Alan Gorman, an experienced mining operator who was last EVP at Goldbrook Ventures before it was taken out by its Chinese partner.

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Slurry Pipelines: Exciting Technology Entering Period of Renaissance

JP Fortin

In one of the most interesting interviews I’ve had the chance to take part in all year, I spoke with JP Fortin, Vice President & General Manager of OSD Slurry Pipelines.

If you haven’t yet had the chance to sit down and learn about slurry and slurry pipelines, it’s fascinating technology. What I learned from JP, is that Slurry, a liquefied mixture of essentially any mineral(iron, coal, metals, etc.) is transported long distances through a specialized pipe. This offers resource companies an edge in reducing transportation costs for moving heavy products such as iron.

In an ideal circumstance, a mining project situated hundreds of kilometers away from a shipping port, can create a slurry pipeline from the mine to the port—and arrange the slurry to be processed and loaded directly onto shipping vessels. An example of this type of project coming together is Oceanic Iron Ore Corp.’s Hopes Advance project(video animation).

Outside of the basics of this technology, JP shared additional facts and history of the slurry pipeline business, along with his expectations of how the industry will mature in the decades ahead.

It’s a relatively young technology he explained, ”with the first slurry pipeline Continue reading

Greatest Adventures of All Time: Shackleton’s Arctic Expedition

“Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.”

-Newspaper advert created by Sir Earnest Shackleton

One of the most gripping tales of endurance, is that of Earnest Shackleton’s 1914 imperial trans-antarctic expedition. Below is an image link to a documentary of his voyage. The story is certainly reminding of how lucky we all are to be enjoying lifestyles of comfort and relative ease.

Click image below to view “Endurance, Shackleton and the Antarctic” on YouTube

Sir Earnest Shackleton

Photo source.

Three Feet From Gold

Gold prospectorThe following is an excerpt from Napoleon Hill’s timeless classic, “Think and Grow Rich”…

One of the most common causes of failure is the habit of quitting when one is overtaken by temporary defeat. Every person is guilty of this mistake at one time or another. 

R.U. Darby, who later became one of the most successful Continue reading

Sunday

China Calls For Free-Trade Deal With Canada Within A Decade. “We’re Not Coming To Control Your Resources” Chinese Ambassador says. Globe and Mail

Canada Gears Up for China Uranium Exports. Globe and Mail

Brazil Stands Ready To Devalue Currency Following QE3 Inflows. Bloomberg

Conrad Black: Canada’s front-row seat for the American disaster. National Post

Inside The Biggest Shopping Mall On The Planet. Financial Post

Southwestern Resources CEO Pleads Guilty to 9 Counts of Assay Fraud. Vancouver Sun

Friday

Guido Mantega, Brazil's Current Finance Minister.

Fed Wants Inflation Now, Will Clean Up ‘Mess’ Later: El-ErianCNBC

Gross Sees No End to QE3 Until U.S. Unemployment Drops to 6%–From The BLS Stated Rate of 8.3%. Financial Post

Brazil’s Mantega Warns of Currency War, Calls QE3 ‘Protectionist’. CNBC

Bananas, World’s Most Traded Fruit, Headed Higher In Price. Bloomberg

‘Smart’ Money Targeting Low-Priced Coal Assets. Globe and Mail

Gold Dominates The 940 (over $79 Billion in total) Mining Deals of 2012. Globe and Mail

OLG Head Paul Godfrey Touts Toronto Casino. Globe and Mail

Photo source.

Life in Perspective: Aesop

“He, by announcing a story which everyone knows not to be true, told the truth by the very fact that he did not claim to be relating real events.”
-Philostratus, Life of Apollonius of Tyana, Book V:14

Aesop, Villa Albani Collection, Rome

Lived From 620-564 BC
Fabulist, Storyteller
Credited For Writing Over 684 Fables, Known as “Aesop’s Fables”

Aesop’s fables are known for conveying life wisdom and moral strategy through entertaining stories of interactions between animals. “The Tortoise and The Hare” for example, is one of the more famous of Aesop’s fables.

(Readers should know there is great debate as to whether or not Aesop ever existed. We’ll leave that conclusion up to you.)

Memorable Quotes:

“It is one thing to conceive a good plan, and another to execute it”

“Better be wise by the misfortunes of others than by your own.” Continue reading

The Elephant and The String

I was retold a story yesterday by my father, a classic, which I refer to as “The Elephant and the String”.

Hearing it again reminded me that as we grow older, the classic wisdom’s and stories we’ve heard since childhood, and especially those from our parents, take on a more significant meaning. Indeed as the years pass, they take on different meanings, as each time we hear them, we are ready to see and hear different things.

In case you have yet to hear “The Elephant and The String” story, here it goes…

On the day a new elephant is born, the training method of East Asian “mahouts” has been to tie one end of a thick rope to the elephant’s neck or leg, and the other to a stake planted deeply in the ground.

From birth the young elephant struggles and fights to free itself, day after day, month after month, and year after year. Continue reading