Brent Cook & Rick Rule Keynote at Precious Metals Summit

Webcast  1 Hour    ....... notes below .......

• Seeing M&A, seeing financing.
• Majors will have to buy quality deposits. Mining more than finding (see Goldcorp's Chuck Jeannes on Peak Gold). Gap in skills in exploration, best people get distracted from exploration and mining.
• Need to understand the data
• Drive  Rocks  >  Paper  >  Money. Too many focussed on the paper-stock. Cook: good deposits win out in the end.
• Rule criticises letting market opinion sway geological opinion and expertise.
• When the ducks quack feed them. Print shares when market excited. When the Quacks duck, eat them. When the pros running for cover, if have cash and courage can clean up, we are at that point like 2000 - professional capitulation. Rising tide won't float all ships. Industry has self inflicted wounds.
• Financiers, mining companies have been paid too much.
• Fault goes back to 1970s, 10c to $61 stocks. Leverage to commodity price worked. Exhibit leverage to the gold price, whole industry become marginal. Free cashflow not kept pace with price. Is being marginal a good enough task. Have financed many marginal projects. 
• G&A : Total Expenditure ratio over 5 years, change of control fees etc, Sprott will publish markets at a glance paper.
• Look to companies to make money. 
• Pace of new discovery, flaws in discovery process. Separate wheat from chaff. How many companies needed, finance the best.
• Companies don't recognise when to quit, money wasted that way. Can have 20m oz anomalies not economic. What is the fatal flaw?
• Rule had 1982 negative net worth after roaring bull in 70's
• Taking 1:1000 chance to get 10:1 return. Occasional big successes still attract.
• Exploration is R&D business not asset intensive. Intellectual capital. Prospect developers keep 30% of something bigger.
• What is most important unanswered question where the answer adds most value - thesis for development. What question from success. How will you know failure, or just raising money to spend it? How much money to answer the questions?
• Previous successful teams still working on similar endeavours?
• Technical Due Diligence. Handle on earlier stage projects, on site evaluations. Concept, geologist interpretation, draw section.
• In bull markets investors leave common sense. Enough money to answer the question?
• Good markets colour expectation
• G&A : Total ratios.  Management Capital in the company blood on the table?
• Brent - something did well, Reservoir minerals, knew management, good ground, had funding, partner with Freeport, deep drilling. Knew what success should look like jumped in, stuck with it.
• Bad experiences, concept goes bad, hoping maybe. e.g. High Desert Gold Nevada. Indications but drilling didn't confirm.
• Good examples Southwest gold to sell as not what they thought it was. Francisco Gold knew the rock types.
• Rule - doing right, determined contrarian, deeply out of favour late 90's uranium, early but worth it, Paladin. but went 12.5c to 1c. more at 1.5c then to $10. 
• Attached to good exploration people, Lundin, Dickenson, Beaty, Quartermaine and staying with them in bad markets.
• Bad Hubris, markets overpriced. Think management and projects are better. In a market falling by 75% doesn't matter how good "your" picks are. 2010 clear nothing to buy but held didn't sell enough.
• Really like a property Hope - e.g Ram. Already owning and liking the property stopped from selling.
• Is lack of discovery related to price? Outcropping orebodies well explored unless in poor locations. Now looking and drilling deeper, more expensive and then will be deeper to mine.
• Fewer economic deposits. Gold price up with other costs?
• Spending on exploration through good markets and bad can deliver success - Friedland
• Confidence to explore, spend and risk locations. Too much time twinning known holes and releasing as "news".
• How can companies set up to deal with cyclicality. Take the money in good times at reasonable prices. Innovation with money available, using partners. Money goes further in bad times. Raise and spend money on good but relatively 'marginal' projects at the bottom, e.g. Beaty at Lumina.
• Knowing to have courage in poor times. Must learn to take money off in good times.
• Size vs profitability, capex costs. 
• Geopolitical risk: more than we realise by "rule of law" in developed countries.