John Kaiser, Eric Coffin, Brent Cook.

Three icons of Canada's venture markets joined CEO.CA for an impromptu debate Saturday morning. The topic of conversation was how to best speculate in high-risk exploration stocks.

The back and forth began with an inaugural chat by John Kaiser, of Kaiser Research, that soon drew in Brent Cook, of Exploration Insights, and then Eric Coffin, of Hard Rock Advisors. (Starts about here.)

Kaiser said the sector needs a tool (which he's creating) for investors to share their vision of how an early stage project might be valued based on potential exploration outcomes.

"What has been missing from the resource junior market is a way to quantify what an exploration project would be worth if what seems to be shaping up became reality," Kaiser said.

To frame his thoughts, Kaiser brought up Sirios Resources (SOI-V) for example -- a company with recent high grade drilling in Quebec on its Cheecho property. It was a reference that would catch Cook's attention.

"Take $SOI's Cheechoo play," Kaiser said. "Stock has gone from $0.07 bottom-fish to $0.40. Why? What is the market expecting? Where can it go from here and why? So I've invented a plausible scenario of what could emerge at Cheechoo."

Kaiser -- in his own analysis -- views it as reasonably valued, but with potential to go higher with resources in the PEA stage. Or in a frenzy of speculation, the kind of market we are now seeing again, he said.

"But it's not good enough that one person like myself offers an outcome visualization," Kaiser said. "We need everybody to be able to do this and share it. Then we can see what the crowd is thinking, and place our market bets with the crowd or its outliers...Once a site like CEO.CA has something like my OVS [Outcome Visualization System] to refer to, it will explode with highly focused commentary."

The commentary pulled Cook in, who remains sceptical of Sirios' potential. It also kicked off a debate over different approaches to speculating with some mild rib jabbing between veterans of junior speculation.

First Cook noted that Sirios historic drillholes suggest, to him, that a recent high grade hit may not be so interesting -- or indicative of an important discovery -- as some believe or hope.

He then reflected on how he analyses projects.

"I am not convinced there is not a way to quantify an exploration play," Cook said. "You review the conceptual target with the geology/alteration/size etc. Add in the results and build a model realistically considering the data. The home run upside is what we want but that rarely happens.

"So one has to evaluate the data as it comes in and when you see the fatal flaw, it's time to back away while the dreamers continue to rant away. Occasionally you miss something but from my experience, it is first more important to not lose money, second to make it. I could be wrong, but that works for me."

Kaiser came back, poking the bear a bit.

"Glad to see @Brent_cook weigh in," Kaiser said. "Exploration is all about connecting the dots, often very widely spaced ones. Brent consistently positions himself at the pessimistic end of the potential outcome spectrum. That is prudent because Brent will only rarely be wrong, though being usually right doesn't make anybody much money."

Debate!

Kaiser continued. "Where his Exploration Insights become helpful is when more aggressive risk takers who positioned themselves at the optimistic end of the outcome spectrum get lucky because the drill has started to connect the dots in a way that allows Brent to use his skills to confirm that we have a winner on our hands."

Then, Kaiser defended Sirios, noting Osisko is backing it and that this is probably on the advice of Osisko's Andre Gaumond, who also happened to lead Virginia Mines, before it combined with Osisko, to discover the Eleonore gold project. Goldcorp snapped that project up for about US$420 million.

In this Kaiser drudged up a bit of history, noting that Paul van Eeden -- who ran Exploration Insights' predecessor publication before Brent Cook took over the mantle and who also relied on Cook for analysis -- "slapped" a sell target on Virginia "in 2004 just weeks before the Eleonore discovery broke out because Andre insisted on keeping Eleonore 100% for Virginia Gold instead of farming it out."

Kaiser then opined that he paid more attention to Cook's advice on advanced stage projects -- not the earlier stage ones.

Cook, no surprise, disagreed with Kaiser's opinion, pulling up some history to show his chops in choosing quality early-stage plays and fleshing out his reasoning on Sirios.

"@jkaiser, you are right, Paul sold Virginia early," Cook noted. "But we bought back in after I toured the property. So a big win."

He continued. "I love early stage plays. We bought KAM (Kaminak Gold) based on soil samples, we own MRZ based on some alteration and geology (Mirasol Resources). There is a long list of early stage plays I have owned. Some win, some don't. But I need more than some hoped for outcome because the property is next to X, or some successful dude bought in."

He turned to Sirios again, outlining what he doesn't like about it and pulling no punches.

"I took a hard look at the SOI data and found it lacking, at least so far," Cook said. "Some 50 holes into a relatively small area going multiple directions testing an intrusive. Scattered hits that don't connect. All that tells me we are dealing with widely spaced fracture controlled veinlets that probably don't bulk up, don't connect and offer poor grade continuity. So far I see more moose pasture than buried treasure. That may change of course and there are some interesting anomalies off to the NW (northwest) and, who knows what else. But that is what I see so far."

The debate didn't end there as HRA's Coffin weighed in. He "comes down in the middle somewhere," he said.

Coffin thought it key to keep in the market in mind how hype works as strategy and to profit from a frenzy even where the fundamentals or potential might be somewhat questionable.

"We have entered a new bull market and that shifts the valuation curve upwards, sometimes a lot, for projects with a following like Cheechoo - EVEN IF NOTHING ELSE CHANGES," Coffin sad. "That's great and it's your primary profit opportunity, at least in the short run."

He added, "The key to doing that is taking some money off the table along the way. And I mean before the next drill results if the move is big enough."

Cook responded, saying he doesn't play the market that way.

"The problem I have with just buying because the market sentiment has changed and the stock is likely to get pumped is that ultimately that game plan relies on selling to a greater fool," he said. "Given Trump's apparent popularity I don't question your thesis that there is no shortage of fools. Still, some poor fool gets screwed. I guess I don't have the disposition to time the proper exit point based on market sentiment. I know you do and I am envious."

But it wasn't quite so dramatic as that, Coffin responded.

"I hear you Brent - though I'm trying to buy stuff that will be revalued because it has some inherent value, not that interested in stuff that will just get pumped."

That said, he keeps the hype in mind, Coffin said.

"Admittedly, I appreciate the fact that a bull market makes up for (covers up for?) early stage mistakes sometimes," Coffin said. "I wouldn't want people to think that is the "plan" -- it's not -- but I don't mind using the market backdrop to my advantage at times."

Coffin added, bringing the debate to a close: "Good job working in that Trump reference too ;)."

So ended an insightful debate. 

No doubt the CEO.CA community -- which is free to join -- appreciated the three veteran analysts sharing their successful investing strategies.

Serious speculators should subscribe to John Kaiser's Kaiser Research, Eric Coffin's Hard Rock Advisors, and Brent Cook's Exploration Insights.