We would like to first thank Brian Leni, P.Eng Editor at Juniorstockreview for his insights.
Check out Junior Stock Review for more great insight.
Discovery or cash flow, what excites you the most as an investor?
“I would be lying if I said cash flow excited me more than discovery. In fact, I don’t think anyone could honestly say that cash flow excites them more than discovery. The upside potential associated with new discoveries is unmatched – it can be life changing. That said, I think what you’re really asking is, as an investor, which do I prefer speculating in considering the risk of exploration. The risk in mineral exploration is very real; most targets end up producing nothing of value. I’ve had more than a few losses associated with high-potential drill targets producing dusters – nothing. What this has taught me is that if I want to participate in the excitement and potential of mineral exploration, I need to find a way to reduce my risk.
How do I do that? The project generation (PG) business model. To me, it’s the prudent way to capture both the excitement and a portion of the upside potential of a new discovery. Project generation companies are run by management teams with high geological acumen. They use their knowledge and experience to assemble portfolios of high- potential projects. These projects are then joint ventured (JVed) to senior mining companies that can acquire majority ownership at the project level. Often, the senior mining companies will pay the junior PG company a 10% management fee to run the exploration programs. The PG companies are, therefore, able to pay their salaries via this management fee – cash flow. In essence, the PG business model done right gives you both the upside of discovery and the cash flow of a real business. Not all PG companies are created equal, but when you find a good one they’re something to get excited about.”
Could you give 2-3 early-stage exploration plays that you find attractive currently?
“Sticking with the project generation business model or a hybrid of the sorts, here are 3 companies that I think have the potential to make a discovery in 2025;
Inflection Resources Ltd. (AUCU:CSE) – Inflection has staked a massive land package in Australia’s Macquarie Arc and has attracted a premiere JV partner in AngloGold Ashanti. Recent drilling suggests that they could be on the cusp of making a new porphyry discovery. I highly suggest investors check their latest news release.
Ridgeline Minerals (RDG:TSXV) – Ridgeline owns an extensive portfolio of projects in Nevada – arguably the best mining jurisdiction in the world. They have 2 projects, Swift and Black Ridge, which are JVed with Nevada Gold Mines. Another, Selena, JVed with South32. Their remaining 2 projects, Big Blue and Atlas, are 100% owned. All of these projects are set to see drilling in 2025 and, to me, given RDG’s MCAP, offer investors great risk-to-reward potential.
Irving Resources Inc. (IRV:CSE) – Irving owns an extensive project portfolio in Japan. Their flagship projects, Yamagano and Omu, are JVed with Newmont and JX Mining. Both projects, but especially Yamagano, exhibit the geological potential that you want to see with any gold exploration target. In fact, geologically, the Yamagano target is analogous with the world’s highest grade gold mine – Hishikari.”
Are you bullish on any commodity that is currently at rock bottom..lithium..nickel?
“Contrarian investment is the way to continually make money in the resource sector. That said, it’s very hard to actually do. Very few investors have both the conviction and long-term horizon to buy things when they’re cheap, ‘rock-bottom’, and hold them until the price goes up. Right now, I hold a junior nickel company in my portfolio. My reasoning for owning it is centered more around the specific aspects of the company than a bullish view of the metal price. In my view, investors are best to make investment decisions based on the company and the value proposition it exhibits outside of the metal price going up. Over time I think most long-term resource sector investors see that no one can predict the direction of a metal price with any consistency.”
