The Conversation (0)
At the recent Canadian Investor Conference in Vancouver, the Investing News Network spoke with Brent Cook of Exploration Insights about where he sees the market heading, what it will take to spark change, and where investors can find value in the meantime.
At the recent Canadian Investor Conference in Vancouver, Brent Cook of Exploration Insights presented his views on the state of the market and answered questions about a number of mining companies.
The Investing News Network (INN) was able to speak with Cook to get a bit more insight into where he thinks the industry is headed. For starters, Cook said that he sees the market continuing to bounce along the bottom, explaining that he anticipates mining companies capitulating one by one, rather than all at once.
Overall, Cook suggested that “this is the time to start accumulating those few stocks that makes sense.” He spoke a bit more about what to look for specifically in a mining stock and about which companies he’s watching right now. Check out the interview below for more of what he had to say.
INN: Investors are still waiting for a change in the market. Should they stop waiting? Is this the new status quo?
BC: Stop waiting? No, I mean we’re all waiting. Is this the status quo? I think it is for awhile. I think what we’re looking at is fairly stable metals prices. We’re looking at a period of time when there’s not much new money coming into this market, the mining market. But I think we’re also looking at a period of time bouncing along the bottom where this is the time to start accumulating those few stocks that makes sense.
INN: What’s it going to take to spark some change in the market?
BC: You know, I don’t know. I don’t think it’s going to be rising metals prices, at least not for a year or two. I don’t think it’s going to be a discovery. I don’t think there’s going to be new money coming into it. I think what’s really going to happen is that down the road, we are not finding enough new deposits to replace what’s being mined, it’s just not happened. When we find something, it’s taking 20 years to put these big projects into production. So even if we find a new deposit there is 20 years maybe before going into production.
What that tells me is the major mining companies right now are lowering all their costs, all-in sustaining costs, but they’re not sustaining the business. So next year or the year after they’re going to wake up and have to go out and buy the very few projects that work. And that’s what I’m looking for.
INN: And what can investors do in the meantime? How do they find value?
BC: I think you look really, really hard at these companies and projects [and] understand the economics behind them. Don’t believe every PEA or 43-101 report. Do the due diligence. And be very critical. Really, if you own 10 solid companies that are doing solid work and have the money to stay alive and have a deposit or discovery that looks like it’s going to work, that’s all you need. You don’t need 50 companies.
INN: We’re coming up halfway through the year, five months in now. What’s been the biggest surprise for you in the gold space so far?
BC: There hasn’t been. It’s been pretty much what I expected, to be honest, although we had a little rise early in the year which we made some money on. Just this year — I just did this last week or so — our portfolio is up about 15 percent. So we’re doing okay. Just a couple of discoveries we’re into. But I think the market, it’s just what we were expecting. It’s just almost flatlined, and one by one we see people capitulating. That’s what this is. It’s not going to be an event, just one by one dropping to the side. That’s what I’m seeing.
INN: You’ve mentioned this already a little bit, but you talk a lot about the lack of discoveries and how that’s a serious issue for the mining space. Is that something that can be solved with more funding for juniors?
BC: No. This is not something we can solve with more money. The problem is as an industry we spend way too much money already on projects that don’t stand a chance of working. The biggest flaw that I see in this industry is mining exploration companies’ geologists not knowing when to cut pay. They continue going after something that doesn’t work because they don’t understand the economics of it, and there are so few really good prospects that if you only stuck with the very few prospects, most of these guys would be out of business.
INN: That’s quite a pickle.
BC: It is. Which gets back to my theme that the very few ones that are going to work are going to be really valuable. Because so few do.
INN: And speaking of ones that are valuable, you recently mentioned Pilot Gold (TSX:PLG) as a company that you like. Can you give some more insight into that story?
BC: Good team. They’ve got about $15 million in the bank. They’ve been successful in the past. They know how to raise money. They know the market. I was just in Turkey looking at their projects.
They have got one, Halilaga, that if you give them about a third of what the PEA says that copper-gold deposit’s worth, that’s about their market cap. So if that’s true, you’re getting the rest of the company for free. They’ve got a whole other belt adjacent to Halilaga and they’re finding so far small pods of mineralization, but this year they’re going to really go at it, and then they’re active in Nevada as well.
So I think there you’ve got a company with $15 million in the bank, they can show there’s something of value they hope they can sell, and they’re doing great work finding the next deposit. That’s what I like a lot.
Mirasol’s (TSXV:MRZ) more or less the same type of company where they’ve got $20 million in the bank. They just struck a joint venture with Yamana Gold (TSX:YRI,NYSE:AUY) on a really, really prospective project in Chile a year and a half ago. And you’re not paying hardly anything for this. So these are the sorts of early stage exploration companies I’m looking at.
INN: What is the last stock you bought and why?
BC: The last stock I bought is a company called Mariana Resources (LSE:MARL). It’s listed as AIM in London, so it’s a bit harder to buy. I bought it because the second hole, which was a scissor hole through their discovery, returned 80 meters at 20 g/t gold and about 2 percent copper.
I was just there looking at it. It’s pretty darn interesting. It’s certainly a discovery. It’s got high-grade potential. It’s VMS. That’s the nice thing about it. We’re up pretty good on that one. I bought it as soon as I saw the hole come out that confirmed that there was some width to it.
INN: Finally, can you talk about the uranium companies you’re interested in?
BC: I own Fission Uranium (TSX:FCU), I own Denison Mines (TSX:DML) and I like Energy Fuels (TSX:EFR,NYSEMKT:UUUU) because they’ve got a lot of resources drilled out, permitted, ready to go. I would not spend a dime looking for uranium. There is so much uranium out there. It’s just waiting on higher prices. So if you think the price is going to go up, go buy a company that has the uranium in the ground in a place that could be developed and is permitted ready to go. I’m not interested in looking for uranium.
For full disclosures, or for more information, please contact Brent Cook via his website, Exploration Insights.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Energy Fuels is a client of the Investing News Network. This article is not paid-for content.
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