How To Get Rich By Discovering A Uranium Mine With Your Dad

Father and son Ben and Garrett Ainsworth may have lead Alpha Minerals and JV partner Fission Energy to the radioactive mother lode on a new frontier in the Athabasca Region of Northern Saskatchewan.

Alpha Minerals VP and CEO

Garrett and Ben Ainsworth

Not long ago, Alpha Minerals, formerly ESO Uranium, was a dog of a stock. Trading at just $.02 last October, chances of being able to finance for the Southwest-Athabasca-Region focused uranium explorer looked slim. Backed against a wall, management had no choice but to roll back shares 10:1 and change its name in hopes of triggering a fresh start.

Then something spectacular happened. Just days after the rollback, Alpha announced Discovery Hole 22 hit anomalous radioactivity over 21 meters. Further exploration holes intersected more mineralization. Today, shares in Alpha are trading over $3.80 — providing an almost 20-fold return to investors in under five months. Good dog.

How exactly the discovery happened is one of those crazy stories that’ll take its place in mining legend.

Five years ago, current Alpha Minerals CEO Ben Ainsworth was working as VP of Exploration for Hathor Exploration — the last Athabasca-Basin-focused uranium junior to be taken out by a major. Meanwhile, his son Garrett, then 28, was toiling away for ESO.

Without money for field work, Garrett turned to searching through the Saskatchewan Mineral Assessment Database for potential finds. And in May 2008, when he was leafing through a 1977 CanOxy (now Nexen) report, something jumped off the page. A CanOxy geologist had identified radioactive anomalies near Patterson Lake, but wrote them off as likely caused by “exotic soils in the till.”

It was just a notation, but it was enough for the younger Ainsworth to head to the Southwestern Athabasca Region to stake the claims that would eventually yield a discovery.

At the PDAC conference in Toronto last week, I had the opportunity to have dinner with the elder Ainsworth, Ben, who told me I had to meet his son Garrett to hear how his discovery came to be.

I connected with Garrett in Vancouver this past Monday. He told me the amazing tale behind the find.

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Where is the value in Canadian iron ore?

No-rail advantage puts Oceanic’s Hopes Advance project before Asian steelmakers for potential partnership.

Iron ore is the key ingredient used to make steel. The majority of the seaborne trade, that is, iron to be shipped to other countries, goes to China.

An oligopoly exists today whereby China is forced to rely on Big 3 producers Vale, Rio Tinto and BHP Billiton for over 60% of its imports at arguably inflated costs.

This is primarily because domestic Chinese production is very high cost and very low grade. Given 7 of the world’s top 11 steel producers are Chinese, it is rational to assume China’s appetite for foreign sources of iron ore will remain strong for the foreseeable future. We published an article on February 1, 2013, titled “Wuhan Iron to buy more overseas mining assets” because we felt that this was a strong signal that Canadian iron ore resources will be on investors’ and steelmakers’ radar over the next few years.

In the article, Government owned Wuhan Iron and Steel (Group) Corp, China’s fourth-largest steelmaker by output, said it plans to achieve 100% self-sufficiency in three to five years and abandon its heavy reliance on the Big 3 by investing directly in iron ore resources in Canada and Brazil.

Chinese steelmakers have been looking to Canada, and in particular the Labrador Trough, as a source for high quality long term supply of iron ore in a safe jurisdiction. Steel companies typically invest in smaller owners of iron ore resources, and enter into an offtake agreement to purchase a portion of their mine production. Wuhan and China’s largest steelmaker, Hebei Steel, have already made investments in projects in the Labrador Trough.

We decided to take a closer look at some of the iron companies in Canada. Most are large and well established and therefore out of our junior filter. Of the juniors, one stood out because of its large valuation gap, which caused us to take a closer look. Continue reading

Friday Edition

Taking the long view. The pursuit of shareholder value is attracting criticism—not all of it foolish. Economist

Photo: Brett Ryder - Economist

Baghdad Broker Dodges Bombs to Rack Up Stock Trades. A profile of Shwan Taha, chairman and sole owner of Rabee Securities, a brokerage that handles 80 percent of stock trades by foreign investors on the Iraq Stock Exchange. Bloomberg

Jim Sinclair on George Soros: [He] is an old fox who will do whatever he deems necessary for the success of his ventures. A man that rich is smart and dangerous. It is not good to get in his way. He is near the top of the list of the financial feeding chain. He would consider this a compliment. Jim Sinclair’s Mineset

Become an entrepreneur, not a VC. ”The ten-year returns for venture funds ending June 30, 2012 averaged 5.3 percent, compared to 6.0 percent for the Dow Jones Industrial Average and 7.2 percent for the Nasdaq Composite… For an asset class in which managers get a 2 percent management fee and 20 percent of the profits and the capital is locked up for as much as ten years, the returns are unacceptable.” Venture Capital Needs to Downsize or It Will Continue to Stagnate. Institutional Investor

Photo: Steve Marcus/Reuters

Will hedge fund magnate Stevie Cohen dodge the bullet? “Mr. Bharara said in the charges that Mr. Martoma obtained secret data from a doctor about clinical trials for an Alzheimer’s drug being developed by the companies Elan and Wyeth. The information enabled SAC to avoid losses of almost $194 million on the stocks, which it sold and then bet against, reaping $83 million in profit — a total benefit to the firm of more than $276 million. SAC executed the trades shortly after Mr. Martoma e-mailed Mr. Cohen and said he needed to discuss something important.” New Trading Case Casts a Deeper Shadow on a Hedge Fund Mogul. Dealbook

Rogue trader awaits verdict. “Adoboli testified that in UBS “Ascent” — an internal program he took part in for employees the bank deemed to be future leaders — they were told that if they saw a “stage laid bare,” they should “step into the limelight.”” Diamond, Dimon’s Early Risks Made Them Better: Adoboli. Bloomberg

The Top 75 ‘Pictures of the Day’ for 2012. Twisted Sifter

Prophecy Platinum $NKL – Greg Johnson Interview

Three Mining Pros Take The Reins At Prophecy Platinum
Gregory Johnson, Geologist

Prophecy Platinum Corp. (NKL), has scored a major talent coup by attracting a trio of credible and experienced mining executives to advance its flagship Wellgreen platinum, nickel and copper project in the Yukon Territory.

We had the opportunity to sit down with new CEO Greg Johnson late last week to better understand Prophecy Platinum’s evolving story (Jump to video).

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Web Legacies Of The Super Rich

I know some very rich people who squirm at the thought of any online attention, some who pay top dollar to consultants who promise to keep their names offline.

But I’m also starting to see a rise in rich people growing more comfortable with the Web. Wealthy people have been asking me more questions lately about publishing tools such as Twitter, Youtube and WordPress.

Like everyone else today, the wealthy are thinking about managing their personal brand online. The difference is that, while most people go online to connect with friends or promote their businesses, the rich want to shape their legacy.

It’s a modern version of the old question: What do you want your tombstone to read?

For example, billionaire takeover titan Sir Jimmy Goldsmith died in 1997, but his estate has done a marvelous job of designing his website (pictured).

Jimmy Goldsmith
Photo: SirJamesGoldsmith.com

Harrods Chairman Mohamed Al-Fayed is still alive, but he already has a well produced – and likely expensive – personal website, as does Microsoft founder Bill Gates.

I predict that, as today’s aristocrats age, many of them will undertake their own web legacy projects, and a niche production market will grow at the intersection of art, technology, history and public relations.

But, as I learned when I had a web design business, website projects have a habit of never ending. There’s always a tweak or two that needs to be added. Usually, people put a stop to it, but the super wealthy have the money to indulge their desires for an electronic monument that is living, even if they aren’t.

In this new industry of web design for the super rich, the best service providers will surely be on the speed dials of the wealthy.

People like Victoria, BC-based super designer Andrew Wilkinson can command $50,000 just to talk to you about a design (Note you can buy his templates for $50 apiece here). Ace storyteller Tony Wanless has a service for $35,000 to relax you and talk the content out of you, (but you can probably talk him down to $25,000).

In Walter Isaacson’s biography of Steve Jobs, which is a version of a legacy project, (Apple is a pretty good legacy in itself), Jobs let it all hang out.

But, let’s face it, most people want to cast themselves in a shining light, or at least have some control over their message.

In an age when we’ll all have our own mausoleum websites, what will yours say about you?

Would you take the Steve Jobs route, or would you shine up your image?

Life in Perspective: Murray Pezim

by James Kwantes, World of Mining

“Murray Pezim lives somewhere beyond Outrageous. To get there, drive to Crazed, keep going toward Bonkers via Berserk, then slow at Around the Bend and look for signs.” Sports Illustrated’s Douglas S. Looney

Murray Pezim

The Pez and three fans (Alex Waterhouse-Hayward photo)

“Pezim had taken them on a ride to nowhere, but what fun they had had.” The Vancouver Sun’s David Baines

He was like a character out of a Tim Burton movie or a Bob Dylan song. And had The Pez caught wind of such a character, he likely would have upped the ante.

Murray Pezim promoted Vita Pez rejuvenation pills and helped put Hemlo and Eskay Creek, premier Canadian gold deposits, on the map. He flogged cassette greeting cards and backed Stampede Oil and Gas, which owned a piece of a huge Canadian gas field.

He made, then lost, fortunes – several times.

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Calgary Oil Baron Jeff Boyce’s Petroamerica (PTA) Turnaround In Progress

Calgary Oil Man Jeff Boyce

Boyce

Since we first wrote about Petroamerica Oil Corp. ($PTA.v) on August 16, shares of the Calgary/Bogata-based oil and gas junior have risen over 50% to 52-week highs (chart). Obviously something is up so we decided to take a closer look to see why shares in PTA have more buyers than sellers.

What first attracted us to Petroamerica was the management team, which we detailed in our August article. Jeff Boyce, former CEO and co-founder of the $4.5B+ Vermillion Energy Inc., is a ‘hands-on’ Executive Chairman with a strong track record. CEO Nelson Navarette was formerly second in command at Ecopetrol, the state oil company in Colombia, and he has the connections and expertise to navigate the oil business in that country. Influential resource mogul and billionaire Frank Giustra is also one of the largest shareholders of the company.

We were also impressed by the turnaround strategy being executed by management. When we first spoke with Boyce by phone in August, he told us, “We’ve come out of two years of hell, changing management, cleaning up the company’s asset base. But I like this kind of stuff, I think I have half an idea of what I’m doing, so I stepped up, as did Nelson Navarette and Ralph Gillcrist [EVP Exploration and Business Development], and now we’ve made a major discovery.”

Another press release was issued by PTA last week which the market responded favourably to, announcing current net production of 2714 barrels per day. See: “Petroamerica Announces the Drilling Start-up of the Las Maracas-5 Well…”

Following this release we wanted to know what to expect from PTA over the coming months, so we ventured to Calgary last week to catch up with Mr. Boyce and learn more.

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How To Sell An Idea To Smart Money

One of the most common ways to become wealthy is to come up with an idea that requires capital (such as buying a building or a company) and pitch it to a sophisticated investor.

If the investor wants to back the idea, the pitcher may get a piece of the action for coming up with the idea and seeing it through. This is the same as a ‘carried interest’ in the private equity world.

Fred Wright

Fred Wright

I learned this lesson from Fred Wright, a legendary Canadian investment banker, a few years ago when I asked him for advice on creating personal wealth.

Fred is a Fellow Chartered Accountant and Chairman of Capital West Partners, Western Canada’s leading independent investment bank. In his past life he was President of Pemberton Securities when it sold to RBC. Fred is a wonderful guy with a sterling reputation.

When I sought Fred out for advice few years ago, he told me his secret to institutional sales. His advice was this: “Never presume to know what smart money thinks is a good deal. Just be humble, say why you like it, and present your facts. They will always make their own decision.”

I took this advice to mean if you’re genuine enough, your buyer may appreciate your approach, and eventually become anchored to your success. At the least, he or she will have enough patience to hear you out and give you valuable feedback.

Fred’s advice applies to selling almost anything to a sophisticated buyer, not just private equity investments. Just be straight, and don’t pretend to know everything, especially not the appetite of somebody who manages money professionally.

If Fred Wright, one of Canada’s most respected financiers, doesn’t presume to know someone else’s deal criteria, Tommy Humphreys won’t either.

Neither should you.

Life In Perspective: J. Paul Getty

“The Meek Shall Inherit The Earth—But Not Its Mineral Rights.” -J. Paul Getty

Lived From 1892-1976
Billionaire Industrialist, Oil Magnate
Founder of Getty Oil

Memorable Quotes:

“If you can count your money, you don’t have a billion dollars.”

“Formula for success: rise early, work hard, strike oil.”

“There are one hundred men seeking security to one able man who is willing to risk his fortune.”

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Conscience of a Gold Miner – Nolan Watson Interview

Nolan Watson, CEO of Sandstorm Gold and Sandstorm Metals and Energy

We had the opportunity to sit down with one of the youngest and most successful CEO’s in the mining business today, Nolan Watson, of the Sandstorm companies. Chosen as a Canadian “Top 40 Under 40”, Nolan has created billions in shareholder wealth beginning as a 26 year old CFO at Silver Wheaton. He currently appears to be repeating the same process at Sandstorm.

(To skip to interview, click here)

While his accomplishments are profound and deserve the highest of honors—they are merely a by-product of something deeper. It was our discovery that faith and conscience developed at a young age, are at the root, and are the secret of, Nolan’s success.

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“The US is More Dependent on Foreign Uranium Than Foreign Oil” – Amir Adnani Interview – Video

Uranium Energy Corp CEO Amir Adnani

Recently we sat down with Amir Adnani, CEO of Uranium Energy Corp. ($UEC), an American uranium mining company, for a conversation on the nuclear industry eighteen months after the catastrophe at Fukushima which devastated both Japan and most uranium miners’ share prices.

One of the most critical issues we discussed in our interview was the severity of the US uranium supply and demand deficit. According to Adnani, “The US is consuming 55 million pounds of uranium per annum…to generate 20% of US electricity…[but] domestic production of uranium is only 4 million pounds per year…The US is more dependent on foreign uranium than it is on foreign oil.”

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A Billionaire’s Bet on Inflation – Frank Giustra Interview

Frank Giustra in conversation with Tommy Humphreys

We had the opportunity to sit down with Frank Giustra last week, the lion behind Lionsgate Films, and an early architect of countless resource companies—most notably Wheaton River Minerals (now known as the $33B Goldcorp, which spun out the $12B Silver Wheaton), Petro Rubiales (now the $7B Pacific Rubiales), and Urasia Energy.

By all accounts Giustra is brilliant, connected and wealthy. He made headlines in 2007 by pledging over $100 million and half of his future earnings to establish a charitable foundation with President Clinton. Outside of philanthropy however, Giustra has been reluctant to draw attention to himself, and rarely speaks publicly about investing.

In 2002 however, he moved heavily into gold and published, “A Tarnished Dollar Will Put the Shine on Gold”, when it was trading under $300 an ounce. Ten years later and with gold now priced over $1600/oz., it still occupies the largest percentage of his investment portfolio, and his views remain the same.

In discussing gold during the interview he said, “I believe it’s going a lot higher…it’s going to have a parabolic spike, caused by some event or some loss of confidence…a US dollar crisis would be a perfect example. That will cause gold to go through the roof, and then everybody will want to own it…I don’t think we’re even close to that yet…Gold will probably have a much greater run than some of the other hard assets–because it’s also a currency.” (19:16)

On the subject of inflation he remarked, “It’s easier to make money with inflation than with deflation. All you need to make money with inflation is money…Those that influence policy are usually the ones that have access to money, or can borrow it very cheaply… They have a conflict of interest… [Inflation is] where a lot of people are getting rich, and the public is being educated—quote “educated” to accept that type of [inflationary outcome].” (11:10)

When asked about the parallels between today’s Western societies and previous civilizations, he replied that a strong example would be, “Sixteenth century Spain. In just over 100 years, it went from an almost nothing nation, to a great empire, and back to a nothing nation. They became a consumption economy…They waged a number of wars with almost everybody on the planet…because they felt they were a superior nation…[and] that’s what’s happening in America today…There’s no way out except currency debasement.” (15:30)

With respect to the mining shares, he said, “The resource market is in the worst state I’ve ever seen it in…people usually connect irrational and stupid market behavior with peaks of markets, but it takes place at the bottom of markets too. And it’s just as bad [at bottoms]…fear is a much stronger emotion than greed…[There are] companies developing world-class assets trading at pennies on the dollar.” (21:50)

Additional topics discussed included agriculture, success, and mentorship (31:07).

Giustra’s predictions for the western world economies are sobering, but his view of the resource sector is optimistic, and his case for inflation is impossible to ignore. We feel this interview is required listening for all those who seek and desire wealth.

So without further comment, here is billionaire mining and entertainment mogul Frank Giustra in conversation at the Vancouver Club last week. Special thanks to Cambridge House and VC for putting us up, and to Frank for joining the program.

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Khan I get a new deal… please

Meet Shahid Khan, Brilliant New Owner of The Jacksonville Jaguars.

Shahid Khan Engineer

Shahid Khan, a Pakistani-born American business man, recently acquired the Jacksonville Jaguars from previous owner Wayne Weaver for a modest $780 Million. After unanimous approval by all 31 owners of rival NFL teams, the deal settled on January 4, 2012.

Khan is also the first ethic minority to own an NFL team; which in itself is very impressive. However, Continue reading