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Exploration Insights, the mining newsletter published by Brent Cook and Joe Mazumdar, is the best publication of its type in the business. A prime example of its quality came today with the EI write-up and commentary on the goings on at Orezone (ORE.v) last week.
What shines in the EI analysis is the skillset range. To get this ORE.v story right you need to know about geology and mining technicals for sure, but you also need a deep knowledge and understanding of capital markets, corporate politics and the ability to glean off-record information that only a team with long-standing contacts in the right places in the industry can boast. And last but not least, the writer needs the ability to put it all into a narrative that reads logically and reaches the brain of the reader easily.If you get the chance to read the Exploration Insights analysis of Orezone, SRK, RPA and all matters arising then do so, it's a genuine tour de force.
*Potentially missing a hyphen at the end. You decide.
For "One Of The Most Influential Economists In The World Today", Doug Casey sure says some stupid things about the economy
Take for example this, published today in The Casey Report:
"If there was a completely free market in medical care, its price would have been falling, not skyrocketing. Why? Because medicine is a high-tech endeavor. As such it would be subject to some variation of Moore’s Law, that we see in the computer world, where prices go down and quality goes up every year. Moore’s Law is at work in biotech, nanotech, and genetic engineering—all of which are currently unregulated. These things are now intimately related to medical technology. But your doctor and hospital have to spend more time and money meeting regulations and dealing with insurance minutiae than actually providing care. A lot of doctors are leaving the practice, because it’s become more trouble than it’s worth. And less people want to spend the years of time and hundreds of thousands of dollars it takes to get a medical degree, for the same reason."
Read more about "One Of The Most Influential Economists In The World Today" here.
"Mexican finance minister Luis Videgaray stepped down yesterday, apparently in relation to the wildly unpopular meeting between President Enrique Peña Nieto and Republican presidential nominee Donald Trump. Vidigaray is a close ally of Peña Nieto and championed the idea of the meeting, which backfired on the already unpopular Mexican leader..."
Knowing when to do nothing is part of the armoury. It's the bit that to some may look boring, but frame it as 'making money by doing nothing' and it suddenly sounds more attractive.
It also helps to have previously made good decisions while people were telling you how stupid you were for doing something like that.
Eat dirt, vampire squid.
For secret reasons.
Here's a small section of The IKN Weekly IKN382, out last night. It's about Ivanhoe Mines (IVN.to) and the way its boss, Robert Friedland, runs rings around the average mining CEO when it comes to selling a story.
Ivanhoe Mines (IVN.to): As stated on a handful of occasions this year, the reason I included the larger-sized IVN.to in this year’s list was interest (perhaps mere curiosity) in watching more closely how Robert Friedland goes about positioning, promoting and marketing his companies to the wider world. I’ve been impressed on several occasions in 2016 with what I’ve seen and the impressive share price performance is due at least in part to his abilities. But last week saw a genius stroke move, a pièce de résistance, meisterwerk level and I really have to take my hat off to Robert Friedland’s marketing prowess because the stunt he pulled (I choose my substantives carefully) should go down as a case-study for every single junior mining company CEO. Let’s first consider what normally happens to juniors when they’re approached by a larger company:
1) They talk informally and then normally (but not always) sign a Confidentiality Agreement (CA) which offers the larger access to the smaller’s data room.
2) The larger will then rootle around, perhaps do a site visit or two. Sometimes its interest in the smaller company is aimed at a potential buyout and that process may continue, but there are plenty of other reasons for a CA to happen that don’t involve active interest in a potential buyout.
3) However, if a buyout has been mooted by the big company and they like what they see at this stage, it’s typical for the two sides to advance the process and move into new rounds of talks and negotiations. This is when management and board members will meet, potential advantages and problems of a fusion discussed, all sorts of other and then if things really move forward, dollar prices get a mention.
4) A buyout deal eventually happens or does not happen.
For sure it’s not as straightforward as that, but that’s a reasonable framework and it gives an idea of the stages any given junior exploreco has to go through in order to nail down its most coveted exit, that of the juicy premium buyout. But the basic point is that a junior being approached by a larger company is normal, it’s nothing strange, it happens all the time and it’s typical for any junior to have several CAs open at the same time. And they won’t talk about that unless asked and when a nosy guy like me says “So...got any CAs running?”, they will offer up the number they have open (“Oh, we have four/seven/three/eight”) but that’s all, as CAs by their very nature mean that they can’t talk about the details.
However, normal rules do not apply to Robert Friedland.
1) IVN is approached by a larger company or companies.
2) IVN tells the world that it has been approached in a news release that subsequently gets picked up by wires such as Reuters and Bloomberg (and half a dozen other places, check Google for more) who write their own stories on the NR.
3) IVN shares pop higher.
That’s what we saw from IVN in its NR last Monday (5) and with the ensuing media coverage (examples (6) (7)) and as Bloomie put it...
“Shares in the Vancouver-based company rose as much as 16 percent and was up 14 percent at 11:50 a.m. in Toronto, pushing up its a market value to C$1.5 billion ($1.1 billion).”
...because the whole pitch was “hey everybody, we’re getting bought out!” when the only substantives were nothing more than 1) we’ve signed CAs and 2) we’ve decided to eventually pay for third party advice on any eventual deal offer. And that last piece is the key, it sounds great and potentially too expensive for small-end junior, but notice that no money has changed hands. That’s all about having a board of directors 100% in line with the management and marketing of a company and that’s what happens when you have one man running the show with a keen nose for salesmanship.
The point: Any junior mining company can use the same strategy as Friedland did last week. However, it also needs the things that Friedland has and those are also part of his genius.
1) Assets and properties that are truly interesting to larger mining companies. The reason explorecos usually keep quiet about CAs is that they don’t want to annoy or scare away majors by running up your share price on a promo by simply using their interest as a marketing tool. If your properties are mediocre and you start shouting they’ll stay away. But if you really have something top drawer and you know the majors are serious about buying you (and yeah, I’m looking at you John Black of Regulus Resources) you can shout and scream and get the share price moving, you won’t scare them away.
2) Brass neck. Most junior CEOs don’t have the marketing chops to do what Friedland does but I’d contend that it’s already part of the skillset they need and that it’s going to be even more important as the years roll by. Having a timid geologist in love with rocks as the company top dog works in early stages, but it can become a veritable hindrance as your junior mining company grows. And listen, selling skills aren’t brain surgery, sales gurus are made not born.
3) A board of directors that works with the company officers, not against them. And by my own experience of watching juniors from the outside I can tell you hand on heart, ladies and gentlemen readers of The IKN Weekly, that situation is far less common than you’d imagine.
Friedland may be world class at this but it’s not some magical gift exclusive to him, either. This is a formula and more juniors should take note of what he does and the way he does it, from company structure all the way up. It gets results like this:
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Oh my stars I've just fallen in love with music again.
Do your ears a service and listen to this. If you do you'll want to listen to the whole thing.