Saturday, 5 October 2013

Rick Rule Interview - Divergent Opinions at Sprott?

Interview with Rick Rule - HERE
A lot of the same as always quotes - "Be a contrarian or be a victim" etc, some truth. Also
But what it also says that’s very beneficial for the long term is that the mining industry is beginning to understand that they have to deliver something besides production. They have to deliver profits............I think the damage in the juniors has been extensive enough that I am personally of the view that the very best issuers are cheap enough. It isn’t to say that they couldn’t get cheaper but my own personal bias is much more on the long side than on the short side with the best issuers.
there is a dearth of projects that make really good returns on capital employed at these gold prices. So the juniors ......that make good discoveries or the companies that are still advancing on very economic feasibility studies will get taken over in the next 18 months. 
 Interestingly points to divergent opinions within Sprott. ........more....
There isn’t a consistent sentiment in the firm. Eric Sprott who runs the firm is as aggressive as I have seen him since the year 2000.
Eric believes that we are truly at a tipping point with regards to precious metals prices and as a consequence, he is as is his style, the style that has made him a billionaire, very aggressively going into the marginal junior producers. He’s looking for companies that aren’t going into production but are in production.
Eric believes that gold within 12 months will certainly be above $2000 and could be above $2500. So he’s looking for companies that barely make money at $1400 but would be making $800 or $900 an ounce if the gold price went higher that are producing 100,000 ounces a year.
Eric believes that this is the year where his portfolio will see ten to fifteen, 10 to 20 baggers. So he is at the most bullish end of the internal spectrum of the firm.
I am probably the most conservative in the firm. I am enjoying not so much my inability to attract equity placements but I am certainly enjoying the ability that the firm has had in participating in debt and mezzanine markets and lowering our return outlooks in return for obviating most of our risk.
We are also within Sprott I think universally sanguine about the fact that our own balance sheet is unblemished by debt and we have a lot of working capital and a lot of spare cash. So we see ourselves really uniquely equipped to deal with a range of market circumstances that we could see ourselves in over the next 12 to 24-month period although as I said at the beginning of this monologue, there isn’t a sort of a unified Sprott outlook as to the state of the markets, in particular the junior precious metals markets.

1 comment:

  1. It is not news that Sprott minions take a different opinion from its master, it happened before: