Oft repeated mantras from Rule but a couple of new angles and details
- Bear markets are a great time to buy, hoping will stay weak for 2 years. 2010 high prices set up today's bear. His success has been to outperform in poor markets.
- Volatile market moving 25% for even the best names, for no reason whatsoever.
- 4000 juniors, 3500 valueless will go to intrinsic value of zero over 18 months. The good companies will still "feel" bad, the market is bifurcated.
- 1:30. The best of the juniors have probably already bottomed and the trends are up.
- Exploration companies don't "have" gold, so why should they move with gold
- Operating performance has been terrible. Free cash flows have not soared, share counts have.
- Rule's suspicion" that the capital intensive phase largely passed, thinks he may be early in that call.
- Interested in development stage producers with high margin deposits, thinks will see 20 or so acquisitions in next 18-24 months. Larger mining companies will take over juniors. Last cycle saw takeovers of large low grade, "optionality" deposits, this cycle he believes smaller deposits with lower capex and better IRR will be taken over.
- (JGMS - Note: looking at recent acquisitions fairly low grade bulk tonnage targets are still being bought, but with a focus on infrastructure, capex and jurisdiction risk, no more Pasua Lamas but Trelawny, Richfield and Prodigy come to mind. Queenston probably fits well with the Rule model)
- Interested in earlier stage quality explorers, especially project generators using other people's money.
- Thinks the real surprise will be that we coming into discovery cycle. 10 years of funding coming to fruition. Took 10 years on the Carlin and in Chile.
- Discoveries - Goldquest in Dominican after 15 yrs, Reservoir Minerals in Serbia
- Expects big discoveries in
- Mexico "under cover"
- Northern Andes, Ecuador, Peru, Colombia
- Tethyan metallogenic belt from Turkey to Mongolia, first time modern exploration and smart people applied here.
- Good geologists in India, China, Africa.
- Speculative business, use money you can afford to lose half of.
Map of the Tethyan Belt referenced