Read on for the transcript from a fun conversation on opportunity for a new junior mining exploration company. 

Peter Bell: Hello. This is April 2nd, 2019. We've had our dropped call as part of the usual routine and we are now ready to go. Thanks Branden for bearing with me!

Branden Haynes: Hello Peter. Thanks for playing that pop music from the '80s as hold music. "Rick Rolled" is not what I expected. Rick Astley, right?

Peter Bell: Right! I actually chose that particular song. Terrible, I know. I'm sorry.

Branden Haynes: Makes me think, "10 bagger in two days". What's the business plan there? I was working on a plan and it highlights how much there is to do telling the story well.

Peter Bell: Yes. It's a massive piece of information to digest. How to distill it down to a simple 30 seconds and then followed by another 30 seconds on to 30 minutes...

Branden Haynes: That's it.

Peter Bell: And I always say, "30 seconds or 30 minutes". People's attention spans are one or the other.

Branden Haynes: If they know that they're going to sit down and listen for 30 minutes, if they have their student hat on then that's different from only giving you 30 seconds of attention, in passing. That would be the case on a phone call. How do I specify the route for an investment dollar? I need an elevator pitch, 30 seconds to show this company is different from the other two or three calls they've got today...

Peter Bell: I don't know how well calls or investment conferences or anything really works. Really. It's so hard to think, "what sells stock?" To get people to invest is a huge unknown.

Branden Haynes: Many people don't seem to care about the company. They're just looking for something that's gonna that's gonna double, triple, or go more times over on their money. Usually, they're looking for the same questions -- how much? How long? What can I make?

Peter Bell: You have to know what business you're in.

Peter Bell: I think the business of your company should be the investment business -- investment in mineral properties. Exploration and development stuff.

Branden Haynes: Exactly.

Peter Bell: And your role, a lot of times, is to sell stock. Seems to be what the CEO does for a junior, to a large degree. You need somebody who can manage budgets.

Branden Haynes: And that would be our CFO.

Peter Bell: He needs to interface with a subject area expert. You need to have somebody who can talk finance to him about the mining activities. You need a variety of work plans and possible budgets. There is some specialized knowledge required to planning this work. You don't want to have a geologist with a chequebook, but you don't want to have an accountant who doesn't know the exploration business either. 

Branden Haynes: Yes. The two of us would work together closely with the geologist, too. 

Peter Bell: If you really want to be dramatic about it, then you should record Board-level conversations between your CFO, CEO, and geologists.

Branden Haynes: Well, if I have their permission, sure -- why not.

Peter Bell: If it's hosted by the CEO or the Chairman, then you can get their permission. Playing the host is important. You don't have to share the recordings publicly, necessarily. But if you do show some of those conversations with senior-level people publicly then that could be special. Imagine hearing from your independent directors? They should have some public-facing role. I think independent directors should do interviews, publicly.

Branden Haynes: Yes. We have one such director in mind with those experiences in the past.

Peter Bell: And he can be the interviewer. He can even interview you, Branden! He doesn't have to answer questions himself, so much. Even to just have him talking to you... Again, it's not that we care so much about what he what he has to say at first. Just the publicity is important. Have as much engagement, right? We talked about hiring students and having students be like public ambassadors for the company. Student geos and researchers, right? Well, you set the example for that at the top. 

Branden Haynes: Exactly.

Peter Bell: A conversation with you would be good because we could figure out a roadmap. What would it look like? You can establish a set of questions beforehand and it could have some structure.

Branden Haynes: Yes, that's an excellent suggestion.

Branden Haynes: I had a good conversation with someone who has exploration properties available close to another property we are looking at. He wanted to talk about a property in another area that has dual ownership with an influential person in junior markets. 

Peter Bell: Great, I love it. Let's go for deals on both projects! The dual ownership thing may be messy, but there's opportunity for you to prove yourself there. Even if you can't get that ground around your first property yet, then do something to establish a relationship on the other one. We may have to prove ourselves to get that land we want. Even if takes a few years, we can include it in plans.

Peter Bell: If you're a project generator, then part of your business activities and part of your investment budget should be earning-into projects where you have options. How many generators are earning into options on properties owned by others? More than you'd think.

Peter Bell: Options and royalties. You can do exploration work for royalty money if you find the right one. Imagine that. A prospect generator who is spending money on early-stage exploration activity in exchange for a royalty on a project owned by someone else? That would be a pretty strange deal, but it could build equity. If you can do good work others wouldn't do, then maybe there's something there?

Peter Bell: If you do the right kind of exploration work, then you can just do ongoing, low-level, initial field testing of all kinds. On an ongoing basis. For any project that you can work year-round, this company should spend money on it. Hiring students to do science on it, obviously?

Branden Haynes: What you're describing, Peter, is more like offering a service.

Peter Bell: Yes. You've got to offer some value to someone. Services can be valuable. The whole minerals exploration business seems to be about information-gathering, in one way or another.

Peter Bell: Imagine if you were intensely focused on first-round work. Get good at one thing, right? Do good, basic exploration work before the heavy drills come in.

Peter Bell: Goldspot has a good business model. I think that's a high-water mark for the junior markets today. If you can do better than them in terms of putting something together that makes sense for the street, then I will be impressed. They went public this year at like $50 million valuation, right?

Peter Bell: Imagine if you came out with something at a five million dollar valuation. Just say, we are going for a few million in spending over 18 months doing early-stage field work. No one will understand what the company is about. And if you spend eighty percent of your money going in the ground, doing work... Run it lean and just do field work?

Peter Bell: If you called it a generator? Call it a hybrid generator. You see what Pacific Empire is doing. They bought a drill and are making ongoing investment in RC drilling on a specific type of exploration target: shallow porphyry Cu on logging roads in BC.

Peter Bell: If you just spend on cheap science, it's a niche. Information.

Branden Haynes: I thought Pacific Empire Minerals was using their drill for hire?

Peter Bell: No. They're using drill their drill-test their projects. They killed their listing project! They had a property they used for their public listing in 2018. They abandoned the option a year later.

Branden Haynes: They did.

Peter Bell: They killed three or four targets at their projects last year. They had some success, too.

Peter Bell: 2018 was their first season with the RC drill. There were challenges. Now they're talking about 100 days of drilling in 2019! And they're not a drilling company.

Peter Bell: 2018 was tough. Meters drilled were low. They struck out on several targets. Their partner ML Gold had a discovery, but they still had trouble in the markets. It's a crazy business. Say what you want, but PEMC did it -- they are the first people to really do that kind of hybrid prospect generator work in BC in a pubco today.

Peter Bell: And now they've got land in the Babine? They could probably do work up there for 50 years, I'd say. It's an old copper belt with a few mines. They've got to hunt around under cover as there can be quite a bit of cover there. They're doing seismic surveys to find out how deep the cover is before they pick their drill spots. They said there's some trick to getting the seismometer calibrated, but it's just more information. I think this new company, Branden, should do seismic too.

Peter Bell: Who knows what the future holds for them! In their first year, they didn't have the seismic tools. Maybe that extra bit of information proves critical? I've told them to spend more budget on that! If you look in the region across the lake to the 2 copper mines -- one is literally called the Bell Mine -- then you'll see someone else did a bunch of seismic lines right around the old mine. They crossed the tailings dumps and a bunch of other areas near the old mines with seismic lines for under $100,000. That kind of information is valuable. PEMC uses that same kind of info when they use their passive seismometer for point seismic surveys. That local seismic is critical for PEMC to make sure their shallow drill holes will reach bedrock. Their max hole length is like 200m, so they want to be careful about drilling into deep cover. 

Peter Bell: The seismic may be useful with other stuff, too. Apparently seismic was important for Great Bear Resources in Red Lake? Wild!

Peter Bell: I think all this info-gathering is what Goldspot is all about. Their business is the basics of exploration: gather information, analyze it, make predictions, and test them. They can do all kinds of deals with staking, options, and swaps. 

Peter Bell: I say, you need to a JV with a data mining. There are data mining companies who can fund work on minerals exploration projects. If they advance them privately and then see them vended into a pubco, then they can get business from themselves? Huge action there. I think they're really worth looking into. Think about it in relation to the 80/20 you mentioned in an email before. How you want to have most of the money go into exploration work?

Branden Haynes: Yes.

Peter Bell: We talked about this before. It's a great tag line. I saw it in a headline for a video on Mining Stock Edu. Some quote like, "A Junior mining company has to have at least 80% of the budget directly into exploration." May be strong, but he's not wrong!

Peter Bell: The funny thing is that eighty percent can be all kinds of things that people never heard of. If you market a company based on that, then you've got something special. What is the budget with that business plan? It's probably the kind of thing that Goldspot would fund itself, upfront. I think they will probably spend millions of dollars on early stage exploration for the right project. A million dollars on soil sampling?

Peter Bell: It's a good business. It can be symbiotic with other mining companies if it is doing something unique. Just spending 80%, a large proportion, of your overall spending on all types of relevant initial field work?

Peter Bell: Everything but drilling.

Peter Bell: "80/20, everything but drilling."

Peter Bell: Thinking about 80/20 with everything but drilling -- that's neat. That's a great way to tag a whole business plan with two sentences. It tells you the budget and the work program.

Branden Haynes: Well, we have a recording of it now. I can see the poster now, "80/20, everything but drilling". Have a partnership with Goldspot Discoveries? University of British Columbia? And connections to local universities. It might be more make more sense if the property is in Quebec to link-up with universities there.

Peter Bell: Yes, it is. I raised money at universities before. It's possible. Not only that, but colleges. If you go to a college with a budget, then it can work well. It doesn't have to be a university, it can be a college. Or a CEGEP. Any kind of government educational place in Canada, if you put money into it then you usually get a multiplier on it.

Peter Bell: And if 80 percent of your spending is going to "everything but drilling", then the question is how much goes to university partnerships?

Peter Bell: I don't know. 30%? If you're getting a two-for-one multiplier on that spending, then maybe less? Or maybe more? It depends on the partners, I guess.

Branden Haynes: That'll be adjusted depending on the success of the initial program.

Peter Bell: No way. That is the initial program.

Peter Bell: Not just early-stage work, but collaborative with an educational institution. That is the initial program -- eighty percent of money into the ground doing research and science and data work.

Peter Bell: How much is that? How much of that is included in funding for the school? I don't know, that's why I'm asking. There are all these things that most people wouldn't think of spending that much on. University engagement? If you come to Goldspot with a different model again, they may like it. They may respect you for it.

Branden Haynes: Are you suggesting that I go to Goldspot as a potential strategic partner?

Peter Bell: Yes. I'd expect that they have high standards, but you should try. Imagine if you went to them with a two million dollar valuation on the company.

Branden Haynes: Well, I'll have to ask the property owner what kind of evaluations he would put on some of those projects.

Peter Bell: If it's a new, crowd-funded, non-brokered company then $2M may be a realistic valuation. Any project vendor probably wants five million at the low end -- more like ten! Yes, shoot for the moon, but consider this -- it may be possible to approach Goldspot first at a two million dollar valuation, privately. Find properties and start working them up privately. I don't know how much you can raise, but I would say you should not raise more than ten million dollars.

Peter Bell: I realize this may sound like a totally silly thing to hear, but I will say it again. You should not raise more than ten million dollars cash.

Branden Haynes: Well, that ten million dollar raise could take years.

Peter Bell: If ever, right? I couldn't do it.

Peter Bell: You may be concerned that you take an idea to somebody else and then, all of a sudden, it happens. You may want to protect your ideas and you should. Nurture them. But if it's copied then that's good too. It should be copied if you have a good idea. It should be up to you to talk about it better than everybody else. Literally.

Branden Haynes: A lot of companies aren't going to follow an 80-20 rule. Not when they have fat cat paychecks to cut for themselves.

Peter Bell: If you're talking to me about 80-20 with a $500,000 financing, then it almost seems silly. And then you say, "Well, we're going to do field programs at a cost of $50,000 each round." And there's a multiplier on them from university partnerships. What?

Peter Bell: And you're doing marketing with students as social media ambassadors?

Peter Bell: You may be able to afford six round of work on a $500,000 financing with this "80-20, everything but drilling" approach.

Peter Bell: Spread those 6 work programs over three projects and get it done in 18 months?

Peter Bell: While you're still private?

Peter Bell: That's unheard of! It's possible. The key is to do field work. You're not punching deep holes. It's the indirect route. Science.

Peter Bell: I was tweeting with Warwick Anderson and he said with field crews taking 300 geochemical samples in a day, he can analyze the new data overnight and have targets for the crew in the morning. That's Orefox, a data mining company in Australia.

Branden Haynes: Good information, Peter. Something I can delve into and wrap my head around. How to proceed? Following the Warren Buffett model 90%, of this week is spent researching, thinking, studying, and planning. Then 10% is action. Same with this.

Peter Bell: Do it right the first time. Have a great lead property and work within the 80/20 budget rule. The first few years should see some marginal successes. It's not just how great the property is, but it's about whether you can do great work on an ongoing basis.

Branden Haynes: Exactly.

Peter Bell: That's always a big question. Execution? Everything is tough, but "think different" too. There's a lot of room for that in the exploration business. There is so much opportunity. There's an arms race going on around intellectual property and analytics. The information that's pulled from these surface programs you is substantial.

Branden Haynes: How would we monetize that and make it useful? What would the data data company do with it?

Peter Bell: You use it to generate additional layers of information, generate predictions, and then you go test those predictions.

Branden Haynes: Very good.

Peter Bell: Then you come up with more predictions and move along repeatedly, on an ongoing basis at whatever pace is sustainable. Just do it in a way that reflects the raison d'etre for the company is the 80% going to minerals exploration.

Branden Haynes: Right. And the angle that I can take with investors is mining data first, cheaper than mining land. Reading data much more in-depth than other companies is how we make sure that when we do more work it's targeted. As a result, we will be more successful with exploration.

Peter Bell: Maybe. There's a lot of luck in exploration.

Peter Bell: You heard me say before about multipliers from spending at universities. There's also multipliers on working with Goldspot. They may match parts of your 80% budget. If you bring them data, then they may take equity in your company in exchange for the value of their analyses. Imagine that. They are earning into your company or your project by providing you with a service! That service is analyzing specialized data sets and giving you exploration targets. If you focus on the early-stage work to generate data they can analyze, then they may do a deal with you. And if you can test their targets in some meaningful way, then you may be able to do business with them on an ongoing basis.

Peter Bell: Go to them with data and get new targets. Give them shares. Raise cash, and test their targets. Bring the results back to them. That's a pressure cooker scenario for advancing projects.

Peter Bell: Think of it as an incubator. And "Everything but drilling"? If you do this on an ongoing basis, then it's interesting. Would they take equity on an ongoing basis for their analysis? They would probably love the fact that you're bringing them tests of their targets. They might even fund drilling for testing of their targets. Especially if you spend money testing their targets beforehand with "everything but drilling".

Peter Bell: The best way to test their targets may be with MMI soil sampling stuff. Special stuff. SGS labs does it. Even they may be willing to do some interesting deals if you do it with them often enough. It's probably unheard of for a junior to focus on MMI work. Of your the 80% budget devoted to field work, how much would go to MMI? 50%? I don't know how much MMI you could do for $200K?

Peter Bell: There's only one company in the world that does this MMI soil sampling. It works well sometimes. Mobile metal ion, a proprietary method.

Peter Bell: There's one public company talking about using MMI in conjunction with data mining. That's Playfair mining, PLY. Playfair have made a template model. It's brilliant. First guys talking about MMI who are working with Albert Mining, a Canadian data mining company. AIIM is a hot stock.

Branden Haynes: Perfect. Is it possible to get a quick synopsis or overview of our conference call here?

Peter Bell: Yes! I'll prepare a transcript to share publicly. 

Peter Bell: When anyone shows you projects, remember that Pacific Empire turned-over their listing property in their first year. Just one year as a public company and they killed their listing project. The option on that is probably available! There are probably still good targets on that ground PEMC dropped. Imagine if you went to their listing project, which they've dropped, and did more of this early-stage field work? They had copper showings in logging roads and went right to drilling. It's almost like they did "nothing but drilling". Imagine if you went there and did everything but drilling?


Watch for more from my conversations with Branden going forward. This is not sponsored content.