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@CriticalInvestor @Excelsior My point is, take the 10 best prospect generators, and compare them with 10 solid, not even best, single asset juniors, same commodities. I'm sure the latter wins by probably a double
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@CriticalInvestor @Excelsior Altius is a royalty play using PG as part of their strategy, not the other way around
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@Excelsior @CriticalInvestor - Yes, I'd agree there but that is if we take the 10 best single asset Jrs. What about the hundred that flame out and will NEVER make it into production. The #ProspectGenerators and #Royalty companies are diversified over many assets, (like an ETF or Streaming company) as a result, one set of bad drill results, or a blocked permit isn't going to take them out of the game.
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@Excelsior @CriticalInvestor - The #royalties are the result of JVing out their properties using the #ProspectGenerator model. That's why they do it - the prize is the #NSR or #Stock. Here is Eurasian Minerals that has rebranded as not a ProspectGenerator, but as a RoyaltyGenerator, but they are doing it using JVing out their properties. That's the point. #ProspectGeneration - A need for quality exploration projects worldwide is an opportunity for successful explorers, and EMX continues to generate compelling geologic targets. EMX acquires early-stage properties with unrecognized upside, advances the project, and then seeks partners with the insight and funding to further advance to discovery and onto production. Partners benefit from a flow of high quality greenfields projects managed by seasoned geologists with in-region expertise. Long term, the Company prefers to retain royalties on its discoveries by executing agreements where partners may earn a 100% equity interest with work commitments, milestone payments and annual advance royalty payments. This "organic" royalty pipeline provides the foundation for future cash flows to sustain the Company's growth over the long term." http://www.eurasianminerals.com/s/business-model.asp
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@CriticalInvestor @Excelsior Exactly, but this diversification is also the reason share price appreciation is lower on average. Safer play but lower returns
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@CriticalInvestor I see them as (much) less leveraged plays on metal prices compared to single asset juniors, developers, producers
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@Excelsior @CriticalInvestor - Yes, we agree there, but it is safety over higher risk
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@Excelsior My strategy has been to make the profits in high-flying single asset Jrs, and then to dump the profits in #ProspectGenerators and #Royalty companies.... #ProfitDumpsters :-) They achieve different investment objectives. If you want the huge returns, then get lucky on a #drillplay, but to buy and hold a speculative drill play for the longer term is generally suicide in Jr Mining. The odds are 90% that the project will never make it.
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@CriticalInvestor Not that easy for me, I have to analyze even more projects there. Look at Sandstorm with all their high risk projects
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@Excelsior Sandstorm $SAND $SSL has completely turned around their portfolio in the last 2 years. Hit the "Expand All" + and you'll see their whole basket of Streams and Royalties. Many of them are far from high risk now. (unless you consider partners like Rio Tinto, Glencore, Newmont, Alamos Gold, First Majestic, Anglogold Ashanti, and Yamana "high risk") http://www.sandstormgold.com/gold_streams_and_royalties/
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@CriticalInvestor Buy and hold in juniors is dangerous, yes, but you have to monitor constantly anyway, if it isn't for projects it is for macro, sentiment or metal prices
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@CriticalInvestor That is true, but it took them 4 years to even realize what went wrong
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@CriticalInvestor They didn't admit anything
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@Excelsior Different strokes for different folks. I never claimed #ProspectGenerators would have the highest returns. It takes years to build up a portfolio of #Royalties like $ALS has done, so it is more of a gradual increase (but far less risk of 1 challenge blowing the company up). Don't get me wrong, my focus is in the Jr Miners, but I see the place for parking some profits in a safer climb up.
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@Excelsior $SAND $SSL made a few bad calls out of the starting gate (but what companies haven't?). Nolan Watson and the teams ability to address what went wrong and improve things is exactly why I feel they epitomize great management.
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@CriticalInvestor If you are considering safer plays I would diversify to producers and different metals
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@Excelsior #Producers are far from safe, and I'm diversified in about 10 commodities. I understand diversification.
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@CriticalInvestor Well let's say Watson took some time to address things properly
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@Excelsior Agreed, but you have to admit that they have turned that ship around. Isn't that what good management eventually does?
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@CriticalInvestor Ok great, then you know producers have the least risk
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@Excelsior Streamers have the least risk
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@CriticalInvestor When the markets and shareholders tell you that for 4 years straight you are slow
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@Excelsior #Producers can have a tailings dam rupture, their input costs can go up due to labor or fuel changes. Ask the South African miners how "Safe" their mines have been the last few years as investments.
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@CriticalInvestor Streamers and royalty plays have less leverage to metal prices
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@CriticalInvestor like prospect generators
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@Excelsior @CriticalInvestor - You seem to keep mixing up the point. Safe and Leverage don't go in the same sentence. I said streamers were the safest, not the highest leverage. Their safety comes from being diversified, so by default they are not going to have as much upside leverage. I agreed with you that exploration plays or single asset Jrs can have the most torque, but they are far from safe. 2 very different investing strategies.
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@CriticalInvestor higher premium to NAV but less leverage
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@CriticalInvestor Opex is something you monitor, and SA companies are on my avoid list at all times
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@Excelsior The point is there are no shortages of problems that even producers can have, but yes, they are far more derisked than a green field explorer. The Streamers and ProspectGenerators are a good place to stash a percentage of ones gains for a safer, and albeit slower ride up with improving metals prices. Again, my main focus is high-torque Jr Developers and small producers for the leverage, but I'm not putting all my funds into strictly high risk, and wouldn't advise other to do that either.
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@CriticalInvestor In general, they probably are but I wasn't talking the lowest risk period. I would take producers to still have leverage in a relatively safe way
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@CriticalInvestor And no single asset producers in SA but probably a Barrick, Agnico or Newmont
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@Excelsior There are a number of single asset PGM miners that got their clock cleaned on rising input costs, labor & union BS and currency exchange fluctuations...even though they were producers.
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@CriticalInvestor It depends on your risk profile and AUM
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@Excelsior Agreed. I have to run but this has been a good discussion and thought exercise. Thanks for bouncing some ideas back and forth @CriticalInvestor
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@CriticalInvestor Ok nice chatting with you, talk later
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@BS I agree with you CI, as an investor in public companies if you want leverage during a bull market, in general you'll have more upside with a successful single asset junior. But if you're founding an exploration company, which you want to be 'sustainable', during bull and bear markets (to take advantage of both sides of the cycle), my hunch is that a private prospect generator is quite a good option (if you have the right skills and find the right backers)
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@90bigpicture a topic for discussion: Pretium...convertible issuance...why? Between the debt, the stream, the convertible, does the equity still work? I don't have my own model, but interesting intersection now of geology (nugget effect), engineering (new mine to ramp and construct), finance (several capital structure tranches), and valuation (what every part of it is worth). So I leave it to the syndicate to consider $pvg
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@JamesKwantes Stornoway and its Renard has some similarities, a stream and many moving parts -- including a lack of large diamonds at least initially. Will be intereating to see how the economics take shape
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@90bigpicture For those who in the past have chastized me for not offering concrete stock ideas, from 5 months ago, up 300% since then: https://ceo.ca/index?d9a15fbcf580 https://ceo.ca/index?cb3fa35a8f58 #index
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@Brandon Not good enough, @90bigpicture. I need private messages to me ordering me to buy a stock or else I don't consider it a concrete stock idea.
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@TheGalvanizer Nice pick @90bigpicture I see I was quite chatty that evening so not like me
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@90bigpicture Clearly no one on this site has actually looked at Katanga properly
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@Brandon I don't know that Katanga is really within the wheelhouse of most of us.
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@MiningBookGuy @90bigpicture - it's hard to find anyone to look closely at ANY projects in 'africa' on this site, let alone look at them 'properly'. though i'm interested if you're planning a '90BP katanga tweetstorm'...
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@90bigpicture feedback, anyone who types Katanga on this site should have to check a box saying they've read the latest financials and know how much money the company owes Glencore at 10% interest rate + the prepayments for metal to be delivered from future production
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@TheGalvanizer Like a puppet on a string
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@90bigpicture $1.5Bn of metal prepayments, $3.4Bn of debt, a mine that isn't even producing and will not until their controlling shareholder decides to turn it back on
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@90bigpicture really shouldn't have to be me pointing these things out
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@TheGalvanizer Haha. Personally never looked at the company now I know I don't need to
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@TheGalvanizer then again Glencore was the biggest clue
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