Top Stock Picks at the International Metal Writers Conference
Published on August 11, 2017
00:00:08 We're going to do something different as opposed to me reading scripts about the panelists I'm going to make them introduce themselves. Gentlemen you're going to have 60 seconds to tell the people why they should care what your top picks are. What value you intend to deliver. Please take your seats over here.
00:00:35 These guys are setting each other up. They’re all lobbying me to make the other guy look dumb. First of all I'm delighted to see you all here on Sunday morning. This is really how you separate the wheat from the chaff. The people who actually want to make some money are here irrespective of the weather or church. You're to be congratulated.
00:00:53 The people who put something into the process of the people who get something out of the process and so congratulations for being here, as I say rather than reading a tired script pleasing these guys or flattering these guys. I'm going to have them introduce themselves and gentlemen each of you have 60 seconds to say, to tell people who you are what you do, what your service is, why they should care what your pick is and where they can find you later in the conference beginning right here on my immediate left.
00:01:17 Of course in Canada everybody is on my left.
00:01:20 John Kaiser: John Kaiser, Kaiserresearch.com. It's a portal. Has 1,500 companies you can do your own research but you want to follow my picks because I'm focused on two groups, the optionality place but more increasingly discovery, exploration. I think we're in a bull market second year of a four to five year discovery exploration bull market.
00:01:42 I'm focused on those. I've created a system to value these things well before they've delivered any success.
00:01:52 Jason Hamlin: My name is Jason Hamlin. I write for Goldstockbull.com doing a precious metals newsletter for about 15 years now and about 10 years before that in market research. My focus is on junior mining stocks specifically explorers and those growing their growth profiles rapidly, near-term producers. Just do a lot of research every month and try to do a lot of cross company analysis and find companies that are undervalued relative to their peers.
00:02:22 Nick Hodge: My name is Nick Hodge. I founded the Outsider Club in 2013. That's a free newsletter that comes out daily for retail investors. Has a contrarian vented sector agnostic. I've been able to grow that to about 400,000 retail investors over the past four years and I write a series of paid newsletters on the back of that focusing on early-stage speculative opportunities. Again sector agnostic and also a private placement newsletter in which I've been able to raise tens of millions of dollars over the past two years for private placements primarily in the precious metals but also in the cannabis space.
00:02:54 Brent Cook: Good morning my name is Brent Cook. I should probably one seat to the left. I'm an economic geologist. I've been doing it since 1978 when I graduated from Utah. I've worked in over 60 countries for major companies; junior companies everything from exploration up to feasibility studies and bank audits. I was Rick Rule’s analysts from 1997 to 2002.
00:03:20 Since then I've gone independent. I've got a newsletter called exploration insights which consists of myself and another geologist Joe Mazumdar. Our newsletters about what we are actually buying in the sector, selling, avoiding and that's how we make our monies through subscriptions and what – how our portfolio does.
00:03:43 David Morgan: David Morgan, founder of the Morgan report started about 1999 on the internet. Different than almost everybody to my right I show you what I invest in top-tier cash rich and hedge mining companies very similar to Frank's. Dissertation this morning of look at what we've held on to from the top-tier category. Royal Gold, Silver Wheaton, Franklin Nevada, I do have to play in the junior space because I have so much competition there.
00:04:15 For the panel I brought one it's based on people. I think everybody from Rick Rule on down will tell you it's all about the people. Engineering background, always passionate about the metals and mining, it's taken out of the industry for various reasons. I won't declare.
00:04:33 I've been passionate about the metals in mining for a very long time and I'll have to say and Nick great job. I watched most this morning. Jim Dines was definitely one of the major influences on me so thank you for that. For those that don't know Jim said that silver will be higher than the price of gold. When they wrote that in the annual report what people didn't understand was he meant that silver will be a higher price than gold from the beginning of this bull market which was $252 an ounce.
00:04:59 so Jim Dines is you pay attention to most of the time. Silver is going to be a 300 some point in time. I've said a hundred, we'll see.
00:05:11 Rick Rule: All right. Those are great introductions and much more colorful than I possibly could have done. I think what I'm going to do is a consequence of lobbying by John Kaiser is I'm going to begin the presentations at my far left. David despite the fact that you just had to speak you has to speak again. I want you to give me brief summaries because there're a lot of folks here.
00:05:31 I want you to give me at least pick two picks but preferably three pick. I want at least one of the picks to be present; I mean to be an exhibitor here. If you can't do that you can come back to me but it's important for – we have two things we have to do we have to make all these people some money because they came here early in the morning to see us. We have to give them picks that are here that they can study so that they can understand the process of making money.
00:06:00 So your first David at least two picks preferably three picks short punchy why and at least one of them has to be present.
00:06:09 David Morgan: You remind me one had to write the ten rules of silver investing it had to be pithy and I hired an editor to do it. Al right, for the top-tier I will give you Silver Corp. They're here. They just reported earnings of 26 cents a share.
00:06:23 China Base one of the richest silver mines out there. One of the shows I came to early on they had a sample rock and they everyone was holding me by the collar, come look, come look, come look. I look at this rock, it was pure metal. I couldn't believe it and I thought its Vancouver. Someone bought that sucker for 800 bucks or 8,000 bucks.
00:06:45 Stuck in my hand. There's no way I'm getting near this thing. Of course it turned out to be very good. We did our own due diligence, we sent people over there. They walked the ground. Silver Corp is great company, great earnings. Take a look at that. That'd be a top tier.
00:06:57 On the other end of the scale people, people, people my pick here. I don't know if they're here. I think they maybe [inaudible 00:07:03] norm gold? That is a basically it's a silver company. It's brand new. Its people, its Peter Maga and my view one of the best geologists out there especially in Mexico. Wrote his whole dissertation on his analysis of Max Silver, his dissertation proved to be factually correct and he likes this company a great deal.
00:07:27 He's involved and therefore I'm involved and I own it. Sampling, this is sampling. This is not a bunch of drilling yet but they have identified 1,085 grams per ton silver. That’s look like 35 ounces a ton. That's about $300 rock at these rotten prices. That's on my junior end and Rick I'm not click enough on my feet to give you a middle one but I may and you can come back to me.
00:07:54 Rick Rule: Brent your turn.
00:07:57 Brent Cook: All right. I'll stick to companies that are here. That was the instructions to start with and a preview to that is Frank's talk was amazing and he talked about artificial intelligence and how quick things are moving. One real positive in our sector and in geology is the rocks are the same tomorrow as they are today and a week from now and a long time from now. That gives us actual time to evaluate the data and come up with new ideas and how to test them.
00:08:27 One thing for sure is let's say there're 1,500 junior exploration companies out there exploring right now. Give them each two prospects each. On average we find about 20 economic deposits a year and maybe two tier one deposits a year. That gives us odds in the order of one in a thousand to one and a hundred. The key to making money in this sector. One key is to get as many kicks at the can as you can.
00:08:55 Meaning for the same dollars so what I'm put you're going to talk about here is two prospect generators. What they've managed to do is been around since 19 – since 2007 I think 2004 and I've managed to keep their share dilution down. Run through a number of projects and are still around and still looking and that to me gives you the better – the safer kick of the can, kick a discovery.
00:09:20 The first is riverside resources. They've got a market cap about twenty million. They've got six million in the bank. They break even, they're not losing money. They're breaking even so that's the real positive there. They've got a joint venture with Sentara right now. They've got another 13 projects in the portfolio in Mexico and I think a couple -- one in Arizona and I've got a couple in Canada.
00:09:42 These are going to be worked through and processed. There're three drill programs going this year. Riverside Resources is one. The other one that's here is Eurasian Minerals. 96 million market cap, eight million in the bank. They've been around what 13 years with 79 million shares out and again that goes to show you that your dilution is really minimized here. They've got dozens of projects scattered across the world.
00:10:10 They've got dozens of royalties. They got two that are paying money right now one in [inaudible 00:10:13] Nevada and the other in Turkey on a base metal zinc deposit. They should be breakeven this year more or less and then on top of that they've got a billion plus pause at 36 percent of 51 percent of a billion ton copper deposit in Siberia.
00:10:32 It's worth consuming more than the market cap if they can manage to sell it. That's the second one just two prospect generators. I've got a number of meetings set up today and tomorrow. Companies I don't know so I'll hopefully come up with something by the end of the week, thank you.
00:10:50 Nick Hodge: I'll start with the top pick of Midas Gold who is here. They have a really big deposit in Idaho which is a very safe mining jurisdiction. I like to look at things as from a risk standpoint and then jurisdiction goes, Idaho is very safe. It's also very large and very high-grade open pitiable deposit. It's currently the 8th largest gold reserve in the U.S. and it's put into production today would be the fourth highest grade open-pit project.
00:11:17 There's a lot of things going for Midas Gold. It just filed its permit and that's been accepted so the permit process is underway. If you've ever looked at Brent's chart of where you are in the mining cycle that this is the orphan period for Midas gold and that no one really cares during the permitting process. As it gets approved and as it heads into development you'll see another upswing. I think the time to buy is during the orphan period. The billionaire John Paulson thought highly enough of this project to backstop a $50 million private placement in the company last year.
00:11:47 The state wants the project. It will generate 700 jobs and a billion dollars in revenues. They're going to remediate the brown field site. They're going to open up a fish package. They've created a local Idaho subsidiary that is actually run by an environmentalist. This is actually a project that people want and it's run by high quality people.
00:12:10 Steven Quinn has put copper projects into production in the past. He knows how to get it done and now I think is the time to look at Midas Gold and if we're looking at a second pick I'll switch commodities to uranium Skyharbour Resources is here. Its run by a real young kid named Jordan Trimble, a real go-getter. He’s been able to bring in some highly strategic investors over the past year and raise money in a quality way that's not extremely dilutive.
00:12:38 He's got major players, Jay [inaudible 00:12:40] projects including Francis Arriva which is one of the biggest nuclear companies in the world. He's also had a fantastic track record of early discovery at their flagship Moore Lake Project. There's more catalysts to come I think throughout the rest of the year for Skyharbour not to mention the base uranium price that could potentially give it many multiples higher if the commodity itself, the underlying commodity itself begins to rise.
00:13:05 Those would be two companies I'd go take a look at their booths here at the show, Midas Gold, Skyharbour Resources.
00:13:13 Jason Hamlin: My top pick over the last couple of years has been Integra Gold. I believe they're here today as you probably know. They're getting bought out by El Dorado at a 52 percent premium. As an investor we like to see that. Not bad to wake up and see a 52 percent overnight return on your investment. The stock has tripled over the last few years of course they're operating in the Val-d'Or region of Quebec.
00:13:38 This region is a prolific rich gold producing region in Canada. 70 million ounces produced over the last century. 25 million ounces discovered in the last 15 years alone. I really like this region. Integra was able to grow a resource from around 680,000 ounces to 3.3 million today in just three years. Gives you some indication of what kind of ore is up there.
00:14:05 It came from the bottom of the sea floor billions of years ago and it's hosted in volcanic rock along the Cadillac break there. If you like the story of Integra and why not, just across the border from Integra's property is Alexandria Minerals. They've grown their resource by 4x over the last seven years. High-grade intercepts including just the last couple of months and they've done so at a discovery cost of under $20. You like to look for that their operational efficiency of what cost they're finding the minerals just not how much they have alone.
00:14:40 Management, solid there. They have skin in the game, six percent inside ownership. Magna Code Tech and IAMGOLD have also taken equity positions in the company as has Sprott who recently increased his position to 8.5 percent of outstanding shares. The thing I really like about Alexandria right now is they're being valued at around $15 per ounce of gold that they have in the ground. Integra was taken out at over $150 per ounce of gold to give you some kind of comparison.
00:15:13 That doesn't mean Alexandria is going to go up 10x or is worth 10x they have somewhat lower grades and more of the resources inferred versus indicated. I think it does have the potential to go up two, three times over the next 12 months. Check out Alexandria Minerals. I think it's a AZK in the Toronto exchange in AlXDG and the OTC in the U.S.
00:15:39 John Kaiser: Only two of my spec value hunter recommendations is present at this show. They happen to be at the opposite end of the spectrum so I'm glad to hear we're allowed to talk about two of them. I asked Rick to start at the other end because one that I knew Nick Hodges will also shares my view on Midas Gold corp. It is the best optionality gold play out there. Four million ounces will go into production eventually over a 12 year period but also a hundred million pounds of antimony a strategic metal of which China produces the most.
00:16:14 It is something of a reclamation project funded by a future gold mine. At the current gold price, the project would not be developed by that $1,600 gold that's it turns into a four to $8 stock. This is a stock here at 75 cents where they're funded to deliver the feasibility study [inaudible 00:16:36] through the American permitting system. This is only a very modest increase in the price of gold. That is realistic. A real price increase not some fiat currency debasement increase to the moon.
00:16:51 A simple move over the next few years and Donald Trump is doing his best to make this happen by convincing the world that America is no longer great and that they can all start behaving badly and accelerate the chaos and instability that his policies are going to unleash. There's a good case for the real price of gold trending higher. Midas gold is that pick you should check that out. At the other end of an extreme is a very young company, Arizona Silver Exploration Inc which I only recommended a week ago at 61 cents and it closed up at a dollar on Friday when some shorts panicked and covered in the last five minutes.
00:17:32 There are an assay pending it's the Ramsey Project in Arizona. It's an old high-grade vein system that had about 50,000 ounces dragged out from 30 to 40 ounce per ton 2 meter wide vein. Not very interesting, very small but Greg Hahn developed a theory that there is a huge fault offset. A much bigger part of the system that they only mined and found the edge and it's under gravel cover. Hundred meters of gravel cover.
00:18:04 They developed this hypothesis, started drilling about three four weeks ago. Put out a geological mumbo-jumbo news release which was basically code yes, our hypothesis is right the system is there. They don't have assays yet. They're looking at an open pit scenario. Not a little high-grade mining underground lining thing. I've done outcome visualization and my talk tomorrow 11:40 is a must-see for especially for the companies here as to how you go about visualizing a potential outcome and assigning a price to the current market stage.
00:18:41 This is just target drilling. I've come up with a vision where this could be worth 400 million U.S. if everything falls into place. Right now the company is 33 million shares fully diluted. It's priced at $33 million. You can see the 510 bagger upside especially if s-curve activity comes in and silver is a target metal. If David Morgan is right about silver not being a dog forever in the 15 to 20 dollar per ounce range. That type of project absolutely goes to the moon.
00:19:13 Two opposite ends of the spectrum Midas Gold Corp and Arizona Silver Exploration.
00:19:19 Rick Rule: Great start gentlemen. Thank you. We had the benefit before this panel of Frank Holmes wonderful talk about really the difference between quantitative analysis which is driving the market and qualitative analysis. What he said is the arbitrage between reality and the way the market works is the way that individual investors are going to make my in this market.
00:19:41 The consequence of that with money being driven by quant until something goes right or wrong is where I want to go to with you all next. We have about a minute each. What I want each of you to do is talk about what the unanswered question is with regards to your top pick. What's the catalyst that can take it higher? What we look at you actually did part of that already. Then I also want you to talk about what could go wrong in other words what could make your vision, what could make your crystal ball cracked and cloudy.
00:20:12 John we'll start with you what's the cattle is to take a pick higher and what's the thing that keeps you up at night with regards to your pick?
00:20:20 John Kaiser: Well in the case of Midas, it is the possibility that the Republicans end up imposing austerity in the United States and put it into a depression decline which is negative for gold in my view and that gold sags below $1,000 in which case Midas Gold is worth nothing.
00:20:36 Rick Rule: To put it in context, that’s what could go wrong. You have to tell me if we're going right or wrong.
00:20:41 John Kaiser: I thought we already said everything that was supposed to go right now we're supposed to say what's going wrong?
00:20:45 Rick Rule: Well you could also tell me what the unanswered question is that could take it higher in the near term too.
00:20:49 John Kaiser: Okay well I just repeat, it's the geopolitical instability in the fact that the United States is in relative decline. It's forfeiting its leadership role which is going to make the U.S. dollar in the long run not the reserve currency. It's going to take a long time but in the meantime there's going to be more and more accumulation of gold and gold $1,200 is $400 1980 gold adjust inflation adjusted to the center. It's like -- it's been awash this fantastic game.
0:21:21 So three billion ounces mined in the last 30 years. The low-hanging fruit is gone. If the world wants more physical gold, a higher real price has to happen to get it out of the ground. As far as the other one like Arizona Silver, well if the assays come through and they're like horrible like 50 meters of over 10 gram silver well then – then the open pit mining scenario is a bust. With discovery exploration it's the assays or even the next step out hole.
00:21:52 You have a great zone and you step out and you get something less. With discovery exploration, you have to be brave. You have to really.
00:22:00 Rick Rule: Confining John to a minute is tough, next.
00:22:03 Jason Hamlin: Not much keeps me up at night but in regards to the metals I don't think there's a lot of downside with precious metals. They're already near their cost to produce and I don't think anything goes below the cost to produce for too long specifically with Alexandria minerals. The upside is as they continue to define the resource, move it from inferred to indicate that they'll get an upward revaluation similar to what happened with Integra Gold. The risk or the downside there is that they just gotten lucky and hit some good intercepts and that the rest of the property doesn't have a lot of high-grade gold on it.
00:22:36 I find that to be highly unlikely given the history of the region and given what their neighbor Integra has done just across their border.
0:22:46 Nick Hodge: For Midas Gold, the upside is John Touchstone is the leverage to the gold price. It's sitting at an $800 million NPV for the PFS and 2014. That climbs quickly with the gold price that goes to over a billion dollars at a $1,600 gold and then north from there. Additionally the upside is further exploration I think there's more than the six or so million ounces that are currently on the books. I think that deposit could go quickly if the company puts money into additional drilling as opposed to just advancing the project.
00:23:12 Of course as John also said the price of gold going southward is the thing that would keep me up with Midas Gold. Concerning Skyharbour, they have many catalysts ahead and the exploration program has gone well so far so I think upside stems from additional positive drill results and as a uranium bill, I think the thing that keeps us all up at night is another Fukushima or event of that nature.
00:23:33 Brent Cook: Besides the things that are outside of our control political, economic and such. The two picks I did Riverside and Eurasian pick because they're relatively safe. The upside is they make a discovery through a partner. The downside is probably boredom as they work out their business plan over the next two years. In terms of Eurasian the possibility of selling their 30 percent of the 51 percent of the deposit in Siberia the copper deposit it can pull in a hundred million bucks on that, that's the upside.
00:24:10 The downside Russia takes it. With Riverside again it's just boredom. There's the downside if you ignore the economic and political implications there. These are very safe picks although not terribly exciting.
00:24:26 Rick Rule: David?
00:24:28 David Morgan: Silver Corp its good great right now at these very poor silver prices. There is a Chinese discount on it. I don't see a lot going wrong although there's a possibility I guess that silver could go lower. No I'm a different story, it could be and if it could not would district size play but much more has to go into the ground to determine that. It's a possibility that I'm wrong there.
00:24:56 Rick Rule: Ladies and gentlemen it's arguable that this conference rather than saving the best for last put the best first. One of the things I've noticed with conferences like these is that the speakers want to be educational in a biblical sense which is the right thing to do on Sunday of course. The speaker's believe that their job is to teach the attendees how to fish and what the attendees teach us the speakers is that that's not what they want. They want us to catch the fish, clean the fish and serve up the fish with proper garnish which our group has done a very good job of today.
00:25:30 But you haven't heard enough to make a buy or sell decision so gentlemen very, very quickly starting from the left to the right. David where at this conference can people find you, what's your next speaking engagement. How can people learn more about your pick? Tell the people where you're going to be and how they can find you in the next two days.
00:25:49 David Morgan: Came in booth 107 straight out this door and I did reserve a half hour after this to be there so I'll be there personally to answer any of your questions. Again I focus more on the streaming companies. My initial philosophy was buy and hold through the whole time and that's not proven to be exactly correct although I can make a case still. Then we go into the mid-to tier companies where the first one is zinc story and we had a zinc company Trevali that's not here would be my mid tier.
00:26:19 Then on the other asset allocations just see me at the booth.
00:26:24 Rick Rule: Brent where can people find you and talk to you?
0:26:27 Brent Cook: All right. I'm speaking at one o'clock I think it workshop too I'm not sure. What we're going to talk about is something different. The idea that Trump and Kellyanne Conway and such have invented this alternative fact idea we've beat them to it in the mining industry and exploration industry. We're going to be talking about alternative facts and getting in some real hard nuts geology examples that thing at one o'clock.
00:26:55 In terms of promotion. I'm stealth, find me. Explorationinsights.com is the website. There's lots of information there and, yea just stop by. Just stop me out there. I'm happy to talk to anyone.
0:27:09 Rick Rule: Brent markets by scarcity. Nick.
0:27:11 Nick Hodge: I'll be on the future of energy panel this evening that's I think a 45-minute or hour-long panel that's divided up into commodities. I'll be on the uranium part of that panel and then I speak tomorrow I have a workshop at believe its one o'clock or 1:20 and I'll be breaking down the way I approach a new investment or whenever I receive a slide deck. The things that I go through to decide whether or not I want to pursue that company further.
0:27:34 Jason Hamlin: I have a booth just on the other side of the curtain right here. I'm speaking at 2:20 I believe its workshop two on gold, silver and Bitcoin the perfect trifecta. Early adopter of crypto currencies and I have been writing about them in the newsletter for the past few years so come check it out.
0:27:54 John Kaiser: You can catch me two times tomorrow after my 11:40 talk at noon. Catch me there I'll be hanging out to answer questions. That talk will be about the share collective which is something I'm building that's the John Kaiser cloning machine that will enable all of you to become independent newsletter writers and start doing everything that we do except under as an anonymous individual. I'll be talking -- I want to talk to people about that. Right now after this I have an interview at 10:15 with investing news network. I'm going to park myself at the end of this row here for the next 45 minutes.
00:28:31 You guys can hit me with questions about stocks and stuff in general.
0:28:35 David Morgan: Rick if I may add. I speak at one o'clock, precious metals and block chain a banking game-changer.
0:28:41 Rick Rule: Ladies and gentlemen a conference record we actually ended on time which is phenomenal accomplishment. I'd like you to thank these gentlemen it's easy to have a great panel with great panelists. I hope they made you some money.