Ross Beaty talks about the current gold price, investing, his companies over the years and the future of mining in an exclusive interview with the Investing News Network.
Speaking with the Investing News Network (INN) at the Sprott Natural Resource Symposium last week, Beaty said he wants his current project company, Equinox Gold, to be ready for the next gold run.
“Gold, like all metals, is cyclical. It will have runs, it’ll have corrections, that’s the way metals are. Right now, we’re in a down cycle, it’s going to turn, and when it has its next run I want to be ready with Equinox Gold with a fabulous asset base that gives investors great leverage to a higher price, so we’ll be the go-to stock for institutional or retail investors,” he said.
Beaty described Equinox Gold as a something he would probably “bookend [his] career on” as his first company was called Equinox. He added that he has great hopes for the company.
“I don’t want to wait another 10 years to do this, and I think I can do it more quickly, and I want to take advantage of today’s weak market in gold,” he explained.
Besides being a succesful businessman, Beaty is also an avowed environmentalist, and shared about his talk on a panel at the Resources for Future Generations conference in Vancouver in June, when he spoke about his take on the future of a society currently dependent on growth.
Beaty said that limits and barriers to growth are being hit everywhere, and it is high time the world transitions to a circular economy as the current situation is unsustainable, particularly mining, which plays a role but ultimately needs to be reined in.
“We need metals to do any kind of industrial society — whether it’s a slow-growth or a rapid-growth economy, we need metals. Particularly metals that fuel the transition, the transition to the electrical revolution that’s going on right now. We’re moving from fossil fuel-based energy to renewable energy. The digital revolution, which is of course part of the sustainability answer … is full of metal use, you know. So, metals are all part of that, but we just don’t need to consume them like we’re doing right now. I see a future where there will be less growth for most metals and it will be more. It’ll be better for longer even though it won’t be better in the short term.
“I think exploration wise there will always be a need for great deposits, there will always be success for exploration, but I think if we reduce our demand they will be less needed and therefore there will be fewer of those exploration projects that will be ultimately successful,” Beaty said.
Watch the full interview in the video above, or read the transcript below.
INN: So, you’ve just finished your talk: ‘I love gold equities’. Can you tell me a little about what you spoke about?
Ross Beaty: Sure. How do I start? Well, I think I’ll start at the beginning. I’ve had a long career in the mining industry, and my first company was a gold mining company that I had built from 1985 to 1994, and sold it. It was a happy ending for all shareholders. We had a couple of producing gold mines and a big gold discovery. And, that’s really when I really became in love with gold. Now, since then, between then and now, I’ve had a whole bunch of other companies; silver, lots of copper companies. And yet, last year, I also had a clean energy company that I ran for about 9 years called Alterra Power (now part of Innergex, TSX:INE), and I just sold that this year in February. And, after having sold that main business of mine, I sort of tried to figure out what do I do next, and do I have another company in me, and what should it be. And, I decided I would build, I’ll try to build a big gold mining company because I do love gold. I love it for all kinds of reasons, and I thought it would be a relatively straightforward manner to take a couple of assets, put them together, and then build this new company, and very much named after my first company. Equinox Gold (TSX:EQX) is something that I probably will bookend my career on, and I have great ambitions for it. I love gold for all kinds of reasons that maybe we can get into, but that’s what I’m doing now.
INN: Well, during your chat, you said that you were trying to build Equinox Gold quickly. I guess you might have just answered the question, but why the rush?
RB: I’m a very impatient person, generally speaking. I don’t want to wait another 10 years to do this, and I think I can do it more quickly, and I want to take advantage of today’s weak market in gold because when you’re trying to build something, you know, if you’re trying to do it through a merger and acquisition strategy, which really is what we’re doing, which is the way to do it quickly, by the way, you know, you want to be buying other companies or other businesses when the price of the commodity is low and when the market’s beat up, which is right now. The buyer’s market right now, we’re buyers, we want to try to accumulate several projects together into one company, create a mid-tier or even larger gold producer that pays great dividends, has a tremendous capital gain potential through rerating and then to the extent that the gold price runs, that’s going to be the real kicker for shareholders. So, for all those reasons.
INN: And speaking of gold price, I’m sure there’s plenty of theories around, but why is gold down at the moment? What’s your take?
RB: Gold is just inversely correlated to the US dollar. Strong US dollar, weak gold and almost every other metal. The reverse is true, too. The US dollar’s not going to stay high forever, it’s going to crack. When it cracks, gold’s going to have another wonderful run. Plus, gold has all kinds of other good demand and supply fundamentals. So, I’m quite bullish on gold’s prospects in the medium term. Of course, gold, like all metals, is cyclical. It will have runs, it’ll have corrections, that’s the way metals are. Right now, we’re in a down cycle, it’s going to turn, and when it has its next run, I want to be ready with Equinox Gold with a fabulous asset base that gives investors great leverage to higher price, so we’ll be the go-to stock for institutional or retail investors.
INN: Moving to another conference, last month, you attended the Resources for Future Generations conference in Vancouver as well. You spoke a lot about the future. Now, you said that the numbers around growth of economies and debt in the world are unsustainable. And, you said that it’s time to recognize that we cannot go like we have today and to build new economy-based on permanence. Can you just talk a little bit about how mining fits into that?
RB: Well, it really doesn’t, to be perfectly honest. The future has to be a world where there’s a circular economy, where we consume less, we conserve more, we have fewer mines, fewer developments, and all that. So, there’s no great, quite frankly, correlation between what I’m doing to the mining business and what I’m doing on the green side, you could say on the sustainability side. But, don’t shoot the messenger. Just accept that there’s a certain amount of, you could say confusion, or you could say, ‘comfortable with ambiguity’ is how other people have put my own view of things. I’m firmly of the view that our world is unsustainable, what we’re doing now is unsustainable. We are on a growth, we’re obsessed with growth. You cannot continue to grow forever in a finite world, and we’re hitting limits all over the place. Lots of people know that. Lots of people are doing good things about it. We are moving the needle to lower growth, less consumption. It’s super critical because otherwise, we’re not going to have a world for my kids and their and their kids. It’s just not going to happen. Mining is part of that. I mean, to be perfectly honest, we need mines, we need metals to do any kind of industrial society, whether it’s a slow growth or a rapid growth economy, we need metals. Particularly, metals that fuel the transition, the transition to the electrical revolution that’s going on right now. We’re removing from fossil fuel based energy to renewable energy. The digital revolution, which is, of course, part of the sustainability answer at which is full of metal use, you know. So, metals are all part of that, but we just don’t need to consume them like we’re doing right now. So, I see a future where there will be less growth for most metals and it will be more. It’ll be better for longer even though it won’t be better in the short term.
INN: But, okay. So, you say that the world is changing quickly, and that we can’t assume that it’s going to be like the future, and that there are barriers to growth everywhere. What do you think of all of the exploration projects happening around the world when you said that cheap oil is gone and probably cheap copper, too?
RB: Yeah. Well, I think most everything, the cheap has gone. The cheap oil. The cheap everything. The easy deposits have been found in other words, the easy deposits have been mined, and that goes back a hundred years. So, things are more expensive now, and the wealth that’s created in them is less as well. So, a barrel of oil today, you know, you might make US$30 a barrel, you know, a hundred years ago. Sorry, 10 years ago, you might have made US$50 a barrel, and so that wealth is less, and it’s going into the economy in diminished ways as well, and that creates fewer taxes and less investment, and so on. So, these are all barriers to growth, and from the standpoint of the metals industry, I think exploration-wise, there will always be a need for great deposits, there will always be success for exploration, but I think if we reduce our demand, they will be less needed and therefore there will be fewer of those exploration projects that will be ultimately successful. Still, we’ll have, be it business and investors will be rewarded in, but maybe not as much as it has in the last 30 or 40 years.
INN: Okay. So, they might be a fewer mine because of less demand, but there’s always going to be lots of investors. So, where do you think they’re going to move their money in the future?
RB: Well, they’re going to invest in a space because there will be great successes, and just because we have less growth, doesn’t mean we have no economy. We are still consuming a lot of metals, and the one thing about the metals industry, just like the oil and gas industry, you know, you eat your future. In other words, all mines deplete, and that means there’s always going to be a market for good exploration success. Always. Always. Always. Every company depletes without increasing its reserves developed in either through expiration or to buy another company’s, so we will always be a market for good companies.
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Securities Disclosure: I, Scott Tibballs 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 contributed article. 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.