https://youtu.be/eyhEfKgw6tI
Exploration Geologists: “[Properties] Are Available That You Don’t See For 10 Years—And There’s No Competition”
Sprott's Thoughts
Wednesday, August 12, 2015Tekoa Da Silva
>>Group Discussion: Exploration Geologists (MP3)
Exploration activity in the resource sector is down dramatically.
Some of the world’s top exploration geologists are calling this an ideal time to shop for new prospects.
With fewer junior resource companies around, it’s easier to get your hands on some of the most coveted exploration targets, they believe.
Tekoa Da Silva took our recent Sprott Symposium as an opportunity to speak with a handful of highly-respected exploration geologists and junior mining CEOs.
Tekoa Da Silva: Hi. I’m Tekoa Da Silva with Sprott Global Resource Investments and I’m sitting down here today with four gentlemen who have dedicated their adult careers to natural resource exploration and prospect generation businesses.
The theme that we’re going to discuss here today is: Where are we in the resource exploration and prospect generation business markets? Where are we going? What is the path of lowest risk and highest reward?
With me here to discuss the topic is Mr. Alain Charest, VP of Exploration with Evrim Resources, Mr. Stephen Nano, CEO of Mirasol Resources, Mr. Brent Cook, Publisher of Exploration Insights and Dr. Simon Ingram, CEO of Reservoir Minerals. Gentlemen, thank you for joining me here.
So to start out, please mention a few bullet points about yourself, your background and why your perspective is significant for the person watching in the resource and exploration businesses. Mr. Charest, if you could start please.
Alain Charest: Well, I’m a geological engineer and have been working in Mexico for the last 22.5 years, basically specializing in grassroots exploration, and finding new prospects. My knowledge is based on everything that goes from finding new properties and bringing them up to a level where it’s a feasible mine, and my experience is exclusive to Mexico. I have a lot of experience in Mexico and I believe Mexico is a great country to explore.
Stephen Nano: I’m the CEO and one of the founders of Mirasol Resources, and a geologist by training. I have over 25 years of experience in exploration and the majority of it in the Americas, where Mirasol focuses its exploration. I think this is an interesting and opportune time for project generators, and so by extension I think this will be an interesting interview.
Brent Cook: I’m an economic geologist, and have been doing this for over 30 years now. Mostly I worked as a consultant to many major mining companies up until 1997 when I joined Rick Rule as his mining analyst. I was there until 2002. Subsequent to that, I started an investment letter called Exploration Insights which covers what I’m doing with my money in the exploration sector -- what I’m buying, what I’m selling, and what I am avoiding. I don’t get paid by anyone to say anything, but rather I earn money based on my investments and paying subscribers of the service.
Dr. Simon Ingram: I’m the CEO and founder of Reservoir Minerals. We’re a project generator that has been working in the Tethyan Belt for nearly a decade now. We have probably one of the best discoveries made in the last decade in that region, and I think we can clearly demonstrate the value of the prospect generator model at this time.
Tekoa Da Silva: Simon you recently made a comment to me that, “[Exploration] ground is coming up that you don’t see for 10 years and there’s no competition.” For the person reading that may be new to the resource exploration market—why is that the case? What’s the current climate?
Dr. Simon Ingram: The climate is we’re going through another downturn. We have an industry that is a cyclical industry. We’ve been through quite a long boom and we’re going through quite a long bust right now. So commodity prices are falling to all-time lows and the appetite for commodity exploration is low. The appetite to build new mines is low right now. And with that, there’s less money coming into the sector. In some cases, there is no money coming into the early stage exploration sector.
So is a company able to continue to explore in this sector and at this time? We, as an example, have the opportunity to go out and pick up ground because there’s just no competition. There are few people exploring for that ground and companies are giving up ground because they can’t afford to hold it. So this is a time of opportunity. People get very negative in downturns and can’t see the light at the end of the tunnel, but the reality is this is a time of superb opportunity if you have the courage and the financial backing to take advantage of it.
Brent Cook: Certainly Simon makes a good point, and what I’ve realized is the mining industry is cyclical. It has always been cyclical and the commodities are cyclical as well. It’s the supply and demand fundamentals, but what’s really interesting this time (as compared to the past) is that we are now consuming so much metal— 90 million ounces a year of gold and 19 million pounds of copper -- and we’re not replacing it.
A supply demand pinch is coming, and where it’s going to get interesting is that we’re not finding enough new deposits to replace what we’re mining. There’s not enough exploration, and with this downturn going on now, the pinch point will be much more severe. When we consider it takes 10 to 20 years to go from discovery to production, it’s going to get really interesting.
So I’m very positive on the space despite it being ‘bad’ out there now. I think it’s going to stay ‘bad’ for a while in terms of share prices, but this is when you make your money—by buying during times like these. As an example, during the 1997 to 2002 bust was when I made most of my money, by buying resource stocks when it was the hardest thing in the world to do. So I’m positive here.
