Good Investing Talks - Are mining stocks a chance to profit from the green transition, Fabian Erismann?

Episode Date: September 27, 2022

Together with Fabian Erismann of the Earth Resource Investment Group I made a deep dive into the mining sector and its pitfalls. We also discussed how mining could be sustainable.

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And now, enjoy the video. Dear guests of Good Investing Talks, it's great to have you back after a smaller summer break. Today I'm having Fabian Erisman on. He's a specialist on mining and sustainable mining. It's a topic I haven't covered in good investing talks, but my idea is to give you insights into these topics because I think there is something interesting happening in mining now because there's a huge demand coming from especially the green transition to more electricity use and i think there's not enough capacity in this market but we are trying to

explore this um with fabian erisman in the coming um episode so fabian maybe you can help us or mr erisman you can help us um to understand a bit bit of your background more so what is your background as a specialist in mining. Good day, Mr. Wedge. Good day, everyone. It's a pleasure to be here. A little bit of myself. My background, I'm a geologist.

I'm a graduated geologist. Since I'm graduated, I've worked in the mining business all my professional life. I started my career in the deep South African gold fields, so in the deep gold mines in South Africa. Then I moved to Scandinavia. where I worked for multiple years for a Scandinavian mining company, Bowledon. It's one of

the largest base metal miners in Europe. And then I moved to Sika. And for 10 years, I led the mining business for Sika, which is a specialized material supplier to the mining industry and to the overall construction sector. And all my,

you know, for many years, I'm affiliated also on the financial side of the business. So I'm affiliated with a group I'm currently working and I'm a partner with Earth Resource Investment Group and we basically allocate efficient capital to the mining industry, exploration projects and mining projects in precious metals but also in the base metal fields. I will link your website below so people can find out more if they're interested.

I reached out to you because I found the green transition interesting and this green transition leads to a higher impact or demand for green resources like copper, for instance, nickel, all these resources. Do you have an overview what we need for the green transition? There are some studies out there and what is actual there in production at the moment? Well, it's, you know, it's already quite a tough question. So what we need for the green transition, I think no one really knows. because no one really knows what the technology will be in, you know, maybe 10 years from now.

So at the moment, we have a firm belief that solar or, you know, wind will play a critical role in this energy transition. But to be honest, you know, technology will lead the way. So we will eventually we will have to look back and we basically looked and back what happened with this whole energy transition. But what is clear, what's planned now. let's take solar, let's take wind. These are highly material-intensive ways to produce energy. And I can just give you a few examples, you know, like an offshore wind turbine, you know, producing maybe 10 to 15 megawatt of wind.

They do contain well over 10 tons of copper, for example. And it's equally material-intensive, if not more, when we look at electric drive motors and the attached batteries to it. So highly copper intensive, I would say, and also nickel intensive, the average Tesla battery or the average EV battery, so to speak, has maybe, you know, 20, 30, 40 kilos of nickel inside. So this gives you the kind of material intensiveness we are dealing with. And from a supply side, we know the copper space extremely well, also the nickel space or the sink space.

When we talk about copper, we talk here about, you know, 25 million tons of copper produced every year. And a few very large mines play a critical role here. We talk about Escondida, Chuky Kamata, El Teniente, Grosberg, now a large operation in Mongolia coming online before you talk always. So a handful or a few handful of very large mines are responsible for the large chunk of supply, of copper supply globally, and Latin America clearly plays here an extremely important role, particularly Chile and Peru. If you talk about large mines, is there a certain benefit to operate at large scale in the mining industry or do also medium and mid-sized mines make sense economically? I think it's, you know, it's economically, we especially like the smaller operations, you know, which have a big leverage to growth. So from an investment point of view, we like, you know, good quality deposits, such deposits with good grades, so good copper grades. We like deposits that are focused on underground operations, you know, they don't need, which have a small footprint, which don't need to move a lot of earth, you know, to attach the copper oil.

And this is what we like from, you know, from a purely economic perspective and how we look at companies. But the reality is obviously different. You know, in the 90s and late 80s, the world started to develop these very large copper porphyry deposits, mainly located in Latin America, but also in North American, also in Southeast Asia. And it was all about economies of scale, you know, moving. maximum amount of tonnage at a low cost to access even lower grade deposits. So, you know, what used to be 3% copper deposits in, you know, in the 50s, 60s and 70s or today copper deposits of 0.5, 0.6% copper. So this is the reality.

And, you know, economies of scales certainly work to a certain amount. You can deploy larger equipment. You can deploy larger machines. You can employ machine learning and do things more efficiently. But there is always a level where you can't push these costs further. And I think over the past decades, we have clearly seen that we have reached this limit at many deposits, including many deposits in Latin America. Maybe to follow up again on the point you made.

So how is the quality of resources evolving? Are there still many low-hanging fruits in mining? or are like the great deposits already mined? I think the great deposits have been mined or are currently being mined. And that's the biggest problem of the industry is that we have a strongly declining quality of ore deposits. So if you take Escondida, you know, by far the largest copper deposit on the globe, producing well over a million tons of copper annually. Escondida started production in the 90s, in the early 90s.

And, you know, mine the juiciest grade of the deposit about 3% copper. And over the last 30 years, this grade has declined well below a percent copper. So we have, you know, caught the grade, you know, by, you know, by more than three times. But at the same time, in order to keep the copper production up, we need to move three times as much dirt than we used to move in the 90s. And this just gives you an idea about, you know, the increased efficiencies you need to keep the costs down, but also in order what you need to move that tonnage of material. And it's also that gives you an idea about the capital intensiveness of the industry. And here billions at Escondido, tens of billions of U.S. dollars had to be invested to keep this mine going and running. is there any trend working against like the like you said it's going from free to 0.5 the concentration of copper

is there also like you need a lot of more materials but there are also technological trends like efficiency in production or better machines running against this trend yeah we have seen i mean especially over the last 30 40 years you know the industry came up with uh you know, leaching oxide, oxide deposits, especially in Latin America. This obviously brought a large kick in an additional copper supply, especially in the 90s and then towards the turn of the millennium. Froth flotation is quite a bit older, so we know how to treat proper sulfide ores for quite a longer period of time.

And then also machine learning improved, you know, the way we maintenance equipment, the way how we schedule equipment and then last but not least block caving have emerged in the industry so the way how we can mine large underground ore bodies today is completely different than what was what was deployed 50 years ago and this has certainly helped to come up with with more ore bodies hidden or bodies that don't surface that don't start maybe with an open pit operation but these large under underground operation, these caving operations that are planned now for Oyotogoi, which is implemented now in Grasburg, in Chukikamot and Elteniente, these are extremely complicated. And the risk, the operational risk attached to such block caves is immensely large. And what is especially challenging for the industry, it requires a huge amount of pre-production capital and only a few very large companies in the mining space are actually.

able to to provide and stem such large pre-production capitals are there any companies an investor should look into that have interesting technology that might also be listed on the production side that might be also interesting investments yeah as we look you know from from a technology perspective i mean there are a few new approaches how to how to treat special oars there are a few private companies with, you know, with patented, or they claim they have patent technologies to have come up, to improve efficiency, especially on the, on the or recovery process. But then, I mean, obviously, they are a whole suite, especially of material and equipment providers that usually are critical for, you know, the efficiency gains in the industry.

So just a few, at the moment, obviously, the whole transition, you know, from diesel power truck to electrified trucks is also emerging in the mining industry. For example, a good name is always Boole Eden. You know, Bull Eden in Scandinavia is at their large open pit operation at IIT or Kivisa, they're installing a trolley system. So basically, when the trucks hold inside the pit, they generate electricity and on the way up,

when they are heavy, when they are loaded with 500 ton of war, They are basically attached to an overhead electricity line. And like a tram is then basically driving the way up fully electricity powered. So that's an example. A few mining companies start to deploy, as I said, new ways how to maximize ore extraction. For example, we have an example is Ataliah mining, which is now deploying a new process that can liberate the sink. they are mining together with the copper ore, which the sink is currently going just into the copper concentrate, but they obviously would like to extract the sink that they can sell

them as ingots on the market, which is an interesting approach. But many of these new technologies, again, are capital intensive, so you need to develop then, and then you need to test them in large scale. And usually the scale up is usually the most critical step in this long road of implementing such new technology, especially if it's not used in wider scale industry-wide. Can you maybe give some numbers to understand the capital intensity that is needed in the mining industry? Yeah, we are talking here. You know, in the mining industry, if we talk about CAPEX, you know, we probably peaked, you know, 10 years ago. And these, the capital that has since

been deployed to, you know, to new mining project has started to decrease quite rapidly. So we are today quite, you know, I would say, 20, 30% below the KAPX figure that have been spent, you know, 10 years ago during the last pull cycle. And this is obviously for future metal supply. This is a picture that, you know, that hints towards a challenged raw material supply in the not so distant future. Is there, are there any numbers, like from what kind of base it went down this 20, 30 percent? If you don't have them, I'm.

No, I think it's, I think for the non-farers, you know, CAPEX botch was something like 50 billion in purely CAPEX related items per year. I would say about six or seven years ago and it came down quite a lot to about 20 or 30. So that's the kind of decline we are dealing with. And it's now, obviously, with the increasing, you know, commodity prices. This budget is now increasing again. So we see large companies and also smaller and mid-cat companies investing more in growth projects. But overall, the industry is very reluctant.

You know, investors want to see now after, you know, after decades of overspending and, you know, minimal dividends to investors, the investors really want to see now, you know, that capital, is returned to them and they are very skeptical towards capital-intensive, large projects, multi-generational projects that will bind a lot of capital and require a lot of capital from the beginning to begin with. So the industry got more and more capital efficient or got better at capital allocation? Yeah, no, the industry at what we see now, and this is the case for the last few years, the industry got, you know, very conservative in how they're going to spend

capital. So, you know, the push from investors and the pressure from investors to, you know, get capital back from their investment is immense right now. So the boards of these large mining companies are on the pressure to really, you know, allocate capital efficiently and return as much as much as possible to profits to investors. That's what that's the favor of the month, what we see, and it's likely to continue that way, especially now with the, you know, the cost inflation we see in the industry and the cost pressure we have right now. So we will see a bit more scarcity coming up and not like overspending and a lot of supply. Exactly. And that's, you know, we are, you know, and this is, we are talking here from a fairly conservative demand picture. So, you know, we still have, I don't know, 1.2 billion people without electricity.

We have way more people that still have no access to, you know, to reliable electricity or power supply. And, you know, this will drive, especially the copper demand further. And then, you know, the electrification of mobility and so on. This then comes on top. So we see even with, you know, more. conventional demand situation, we would be highly stressed. And now with the whole electrification topic, you know, the net zero targets of many companies and even states, I think the picture gets even more challenging, especially

for critical materials such as copper, nickel, sink, and quite a few others. So if you look on maps, I did study geography, so I have some basic geology. knowledge copper is often like in volcanic active spaces and you have a concentration on some areas of the world how safe are these areas if you think about like not only copper supply but also nickel and all the other minerals needed for the green transition I see if you ask me how safe you know then this is this is a multi faceted questions obviously so you're right I mean, the biggest driver for copper mineralization in the earth crust is volcanic activity. So we are talking here about these large, very large porphyry deposits which have been triggered by subduction zones.

And, you know, volcanoes that erupted or stalled during the process of their formation, this is certainly among the key drivers of copper millionization in the younger earth. crust but then we don't we shouldn't forget there are also other deposits like still one of the largest contributed to the world copper supply is the you know the central African copper belt which has a quite a different origin so how was the the this African copper belt built yeah these are more Redox Redox reaction you know like Redox reaction that triggered basin wide copper mineralization so we see that in the the Polish

Kupfer Schiefer, for example, it's a German-Polish deposit, you know, mined by KGHM mainly, which is a very large copper deposit on a global scale or several copper deposits on a global scale. And then we talk about these African copper belts, which, you know, run from the Democratic Republic of Congo down to Zambia and then even into Botswana. So these are then, this is then the other, quite similar to the Polish cup receiver, but, you know, which have very similar waste formation characteristics. So, but completely different from what we see in Latin America. And how safe? I mean, I guess you touch on, you know, geopolitical risk in many of these countries. You might touch on seismic risk. Obviously, Latin America is a seismic hotspot because, you know, of these, you know, plate tectonids that are going on there, especially also in Southeast Asia. But the risk is obviously one of the biggest topics when we talk about mining. So mostly people refer to geopolitical risk, but then we have quite a large portion of operational risk

because, you know, we quite often deal also with underground operations. And then, of course, we have also the, you know, seismicity, the seismic risk is. especially in Latin America. So risk is a complex theme, but immensely important when we talk about the mining and the mining industry. We just heard a bit about the different regions of mining, to what kind of mining types does this lead? So you have this open pit mining where you're mining like open the surface of the earth and like can extract this from the open pit. But you also have to go, sometimes you have to go down into the. mountain or into the surface of the earth and mine underground, is there any difference with the

different regions, the seduction zones and like the zones in Africa? Yeah, you know, from a mine type, I mean, obviously the large deposits on a global scale have been discovered because we call it outcropping. So they basically, you know, they surface. So you see, you know, you see the staining, you know, copper, you know, copper minerals. especially copper oxides have a very distinct, you know, staining patterns. So you can identify them on the surface if they surface. And this led to a lot of open pit activity, of course,

because you can obviously move a much larger tonnage when you can mine a deposit on surface. So the technical challenges are probably a bit less than or certainly are a bit less than when you have to mine the same volume from an underground operation. But what we see, and this is now not only in Latin America, but in Latin America, we see this trend towards underground. And this is not only reflecting, you know, the ore bodies, which are getting deeper and deeper, and they are blind discoveries, which they don't surface anymore. So that's why you need to go underground. But obviously also from sustainability point of view, obviously the footprint, if you mine a deposit underground, is much, much smaller. So, you know, the amount of volume you move, the disturbance on surface, the water that is required, and so on, you have a much, you know, better situation from an environmental footprint when you mine these deposits underground.

And this is certainly adding to the underground activity you see today. And I would say this is true for all world regions. We see that in Latin America. We also see that in Africa. Many deposits are currently mined or started to being mined underground. And we also see it in Southeast Asia, in Australia. So with the advent of caving, of block caving, it has been, it became possible to mine, you know, these deposits in very large scale underground. And it is expected that about, you know, 20 to 30% of the global copper supply by 2030 will come from these deposits.

is very challenging on the ground deposits going a bit away from or like i started with trying to map out the big picture on mining and i want to go a bit deeper on production phases to understand like to go on the mine level but as a last question for the big picture on which minerals are you especially bullish personally personally i really like you know i'm an absolute copper bull i i see a great future for this for this metal because at the end of the day you can't beat physics copper is just such a you know they have copper has such nice property in terms of you know how you know how it deals you know how it handles an electrical current you know how it behaves with heat so it's an excellent conductor for heat it's an excellent conductor for electricity and it has an excellent long-term

you know durability instability and at the end you can't beat these problems And you have to stick with these metals that can provide these properties for your needs. And when we talk about electrification, copper is certainly the go-to-metal. But also nickel, you know, nickel is compared to copper a much, much smaller market. Nickel mines tend to be much smaller, much more condensed, much harder to find. And they are very just, you know, a handful new sizable projects out there that are dealing with nickel. hence our, you know, our bullishness about nickel. But we also believe, you know, the battery technology we have today,

which is immensely intensive on nickel, needs to change. There is no way we can source the amount of nickel, you know, the battery outlook or the EV outlook that currently stands has to absorb. And, you know, so we need also from the technology side, what is required, you know, from an electrification point of view, that certainly needs to change. We like nickel. Nickel is also, you know, a metal that has, you know, fascinating properties, but then also, you know, more standard minerals or metals like zinc.

We are fairly bullish on zinc. Then silver, you know, silver is used a lot, especially in solar applications for solar cells. And so, you know, this is kind of the core group of metals. like but then also from a probably more from a global finance perspective or from a global macroeconomic perspective gold is gold is and was always a metal we are we like because a lot of our team's background is strongly affiliated to to gold and gold mining so I would say this is the core group of metals that we really like at this stage and now I want to do a deeper dive on like the mining level and maybe we can keep a copper mine in mind because it was the first

manner you said like what are typical faces of a mine i think it's exploring building and operating a mine or have i missed something you are closing the mine is then a it's probably equally important to the all of the steps before these days so um it's a it's a good question actually and uh actually no one really asked me about this question before but I think it goes to the core of what we are dealing with you know because before it actually comes to a mine and before you actually start any kind of exploration work you know you should have a really good understanding with whom you're dealing with and with what you're dealing with in a particular region especially the you know the communities occupying this property before

before a mining or exploration company even has come to ground is extremely important and extremely delicate. So the better you deal with these communities and the better you cut them in in your, you know, in your prospective work or then maybe later on in your development work, you know, to understand their needs and to understand their situation is extremely important these days. If you don't have the social license to operate, either for the exploration work or for the development work, any kind of mine permitting is increasingly difficult these days, especially as in developed countries like Australia, Canada, the states, many Latin American regions, the inclusion of First Nations, of indigenous groups, of communities, of communities. that border the mining or exploration projects is extremely important. And I would say if you don't put a maximum amount of effort into this stage, everything that comes later will be burned or potentially will be burned because you have neglected critical steps early on. And we see that many times.

That's part of our daily work. That we see mistakes that have been done in the past, maybe different companies, different people. And to correct these mistakes is immensely. is immensely difficult. And I think good companies, with sound corporate practices, really put their emphasis on their projects early on.

And these are really the companies we like, and we would like to support. And then, yeah, of course, then later on, once you identified a sound project through exploration that is economically viable, but it's also viable, viable from a you know from from from from from from from an ethical point of view so if you also include the the governance the the social components the

environmental components then a mine can be permitted and constructed and you know over obviously it the impact will be you know will be the the longer the life of mine the greater the impact will be on the region so multi-generation multi-generational projects which has a certain scale or certainly can be very positive for the region or for a specific country can be country makers and we have seen mines like ohi to go in mongolia grassburg in Indonesia those those projects you know were defining cornerstone investments for for whole countries and they can have a lasting effect on societies and and whole countries. And closure, closure is extremely important these days. You need to have a sound closure plan. And not only what you see on surface or what you see, you know, when you look at the footprint,

but, you know, closure also including the communities around the mine. So, you know, how you leave a certain society behind once the mining operation has long been closed. That's a very tricky and challenging part of the whole process. I don't want to ask you to call someone out, but what kind of mistakes have you observed that have caused problems for new and developing mining projects? Yeah, many mining companies they believe, you know, if they operate within the rules which were set by, you know,

a country or a jurisdiction. or by a certain agency, you know, they are, and if they comply with that law, they are free to operate. But if they neglect, you know, the people around the project, which maybe don't need to be, you know, included early on over the exploration phase of the project, but they should be because they are eventually the people that need to deal with their project. If you neglect this very important step, this is a key mistake because we have seen again and again, you might have done a lot of exploration because you're allowed to because the state says, okay, you fulfill the rules, you can now start to drill your holes, but you always neglected the society around your project. And then eventually you say, okay, we identified a very nice copper deposit, and now we would like to start to mind this. And only now you start to engage with the people, because now you have to, because now you need to come up with your environment statement, you need to come up with your socioeconomic studies. Now it's already too late because you have not included these people from the start.

So this is this first set foot concept, which is really important today, especially in the mineral exploration and mining industry. this is a key mistake many many companies do and maybe to to come up with the big picture again what time does it my need from like exploration to getting into production what time frames do do you usually see more than 50 years these days more than 50 years 15 years 15 years so it's not like making a snip and then new demand comes on no that's not at all the case and obviously this is, you know, this is what many automakers today make to have, you know, sleepless nights because they know we are dealing with such an amount, such a coming amount of metal amount in the years to come.

And we know this project takes, you know, well over a decade to build. So there is this, obviously, this supply gap that is looming. And many people, especially from the industry side, are very worried about this supply gap. I think that even VW is thinking about buying mines right now to ensure supply for the EV production. Yeah, I heard that too, you know, that there was this visit to Canada, obviously, to line up some supply. But I'm sure VW is not the only automaker that wants to do that. Elon Musk is the other one. You know, he's actively supporting or, you know, organizing off-take agreements with on the nickel side in there's a larger project in the in the in the u.s which is

about to get the might be developed in the not so distant future and so also tesla is very active on that side so let us take a look at the early stage of a mine if you do research in the explorer space where a lot of like mining explorers are clustered as invested sometimes feels like you're in a super noisy place everyone is there talking about first-class projects and everyone is great and is a world-class leading resource there's a lot of advertising and a specialized media outlets are advertising for retail investors it's very easy to get access to to a CEO and it's a very interesting space what are your observations here yeah i think you touch in a very important point I think the noise, especially in the small junior cap exploration space is extremely high.

So you need to see through the marketing talk and what is really of substance behind these names and attached to these projects. And I think the key really here is to do a proper bottom-up analysis or really look at the projects. You know, what's, you know, how do the technical details fit together? Is there really an expiration upside or is the expiration upside that largest the company is indicating? So these are really extremely important questions that you need to tackle early on. So we are a purely technical team. So most of our teams are geologists, geophysics, geophysicist, mining engineers. So we really look at these projects, bottom up, and then if we, you know, we rank them and we really try to filter through.

And, you know, the few projects that remain, they basically get a much closer look. We, you know, we go to site frequently. We really start to work with these companies developing these projects. We model the projects from a geological point, but also from a financial point of view. And this is, you know, how we get deeper and deep. into these projects and eventually find hidden gems but as you said many projects that are marketed these days they are around for a very long time you know different names different management teams so we obviously see this

recycling of projects every bull market and if you have certain experience in the sector you obviously you then start to know these projects and I would say We know many projects out there. And so for us, it's, you know, the longer we are in this industry, it also gets a bit easier to validate these projects and to select hopefully the right ones. We're also not always right. So we always, you know, there are always projects we really like and then, you know, eventually they will not get developed. They run into problems or, you know, they disappoint also from the geological point of view. So the things you expect, so the metals you expect are just not there.

So that's part of everyday life of a geologist in the mining space. But if you're around in the exploring space, they often say there are a lot of world-class resources around. Again, everything is world-class. Yeah, that sounds familiar. So how does the financing of explorers works and why they take such a focus on retail investors? Yeah. Yeah, it's, you first need to consider, you know, there are thousands of listed exploration, you know, expereco, we call them. So expiration companies listed on the, mainly on the Canadian Stock Exchange, but also on the, on the game in London, but also in Australia.

So the amount of companies that are active in this space is extremely large. But most of these companies are also very small. And so that's one thing. And then the second thing is compared to other sectors. You know, the material sector, also containing all these mining companies, is just a very, very small fraction. Let's take the S&P 500, the fraction of materials, I think, is in the order of below 2%. So it's quite amazing.

So mining companies make up way less than 2% of the S&P 500. So that tells you the sector is very small, but the sector is highly capital intensive. And for these junior exploration companies to survive because they don't have any income, they need sort of venture capital. And retail investors have and still have and have been over the past be a very important contributor of such venture capital. you know to keep these exploration companies going and you could say now okay most of these companies are you know run by gangsters and you know these is just marketing talk you know it's

you know that's blue sky potentially they're talking about there's no substance behind but the reality is also most new projects are identified and very often also developed by these junior exploration and mining companies. So they play a critical role in the future supply of these materials. And, you know, despite all the negative comments that are around in this space, these companies still have, you know, have their space in this microcosmos, in this whole microcos of mining. And they play still a very important role, especially for these future projects we need.

Retail investment or retail money is an important source of funding for these companies, especially at the very early stage, you know, when many funds would say, well, you know, if I run a $2 billion pension fund, you know, I can't deploy money to a market cap company of $5,6 million US dollars, you know, the amount I could contribute to this company would be insignificant for my assets undervalue, hence smaller, you know, probably retail money or smaller funds, you know, like ours, can do, you know, can play this game a bit differently than the very large capital providers. So what is your way to value exploring companies then in your approach? Well, a value, so. Economic value.

You know, the project, depending on the stage of the project, you can, you know, the quality of an identified volume of metals or minerals, you know, can be evaluated and will have a certain quality. So the more you drill, the more information you will get from a certain project. and, you know, the tighter you can build around an economic model around such deposit. And so we usually start, you know, with expiration results. Well, we first see what kind of deposit is eventually, you know, involved in this exploration work the company is doing. How, you know, how does it fit in the academic understanding of such deposit? you know, what characteristics are fulfilled, where is something missing.

And then very important is, you know, how can we compare such deposit, which has he seen before? So all of us work with, you know, with different mines, different deposits in the past. And, you know, to compare and to have some, you know, to put it some yardstick, you know, how big this could be. And, you know, how could this develop is very important from the beginning. And then, you know, the more capital is invested, mostly through drilling and geophysical surveys, the picture gets clear and clear. And eventually we will start, you know, to build a financial model around this ore body. You know, we put a KAPX figure behind, we put a cost behind, and we eventually put a life of mine behind. And eventually such a project that we'll meet, you know, an investment.

investment hurdle and might get developed further. And, you know, this is how we come up with a target price of such a project. And if this target price is attractive in our view, obviously, then, you know, an investment could be done into this company. And if you think, well, you know, this target price is now reflecting borderline value in our view, then we put, you know, we probably stand on the break and then would say, well, it's not meeting our investment criteria. What are ways to make an exploration project sustainable?

First, we need to, you know, to address the question, you know, sustainability in the, in the raw material sector, so sustainability in mining, you know, can mining be sustainable? So, because it's a finite resource, we are mining. So it won't sustain production for an endless amount of time. We are a firm believer that a mining project can be sustainable. It can have an extremely positive impact on societies, on the jurisdiction, the project is located, and a lasting impact, even beyond the life of mine. And it starts with exploration, as you say, you know,

the exploration stage sets the stage, you know, for the whole project. And this first set foot concept is critical. So the better the terms from the very start, you know, with the communities around, you know, how the whole work is integrated into the, you know, the daily life of these people, you know, how nature is, you know, is reflected at the final stage of the mining project. can be already sketched very early on and it's an extremely important step. So the more diligent, this exploration is constructed and carried out, the higher the benefit for the overall projects later on, and hence the exploration stage is absolutely critical.

So let's take the next step and look at the stages of building a mine. What are typical costs of building a mine? Like think of a copper mine, for instance. Well, if you have, you know, like, let's say if you, you know, build a small mining project and small, we're talking here maybe 40, 50,000 tons of copper per year, you know, through a small open pit, you know, having limited impact on land and required. a limited amount of capital for equipment and for the processing facility. We are talking here maybe between two and four hundred million US dollars,

cap-ex-wise, but if we then talk about these very large projects, you know, projects that really have an impact on global supply, they usually start between, I would say, two to four hundred thousand tons of copper, and they will have significant capital requirements. We're talking here between one to five, billion US dollars but these are then also multi-generational project so they will you know they will be mined for 20 30 40 years and so this is the kind of capital range we are talking about

strongly dependent obviously on the scale and size of the project like especially for the smaller mid-sized projects where does the funding usually come from yeah that's you know this is then obviously for for junior companies which have a very interesting project but which are still small by market cap this is usually a problem so if you're a hundred million market cap exploration company and you need to finance 500 million capes for for your project you know that's that's quite a that's quite a sporty gap and this usually then you know results in quite significant dilution to shareholders so the company need to raise money first you know to to keep uh to keep the development work going to keep the you know to cover the cost for studies

for further drilling and at some stage then we will talk about project financing so this could be that um very um what is often done these days because usually all deposits are not just containing a single metal so in copper we usually also have a gold credit We might have silver credit. We might have other base metal credit, like zinc or potentially even nickel, depending on the style of mineralization. You can then do like streaming deals. So especially for the precious metal, these streaming deals have become very popular over the last few years. So a streamer, like, you know, we have many of these streaming companies,

they would provide you upfront capital to receive than such a life of mine stream. on this operation and this could then provide additional capital to close this funding gap. And then a very important factor, obviously, especially for juniors or JVs, especially for large projects. So juniors are then obviously always, or not always, but very often juniors need to engage them into joint ventures with large mining companies. these joint ventures are usually quite tricky for junior mining companies because usually they involve some sort of participation and the risk of being squeezed out of business because you can't meet these investments further down the line is quite a risk to these junior companies. But JVs are also quite an important part of the development phase of such large mining

projects these days. So let's think of physical infrastructure you need to build at the place of the mine. What does it like a copper mine usually need when setting up the production? Yeah, with copper, you know, we have two different ways of extracting the copper and processing the copper. So if you talk about copper oxides, you can leach it. It's quite simple, you know, you mine the oxides, you pile them up on. on an impermable liner, which is usually high-density polyethylene, and you then irrigate this material with sulfuric acid.

This sulfuric acid takes up the copper, and what we call then this pregnant solution is then treated in an electro-winning plant, and elemental copper is basically produced out of this solution. So because it's a fairly simple setup, the KAPX requirement is comparatively low. When we compare this with copper sulfide, so really non-oxidized material in the earth that contains copper. This requires, you know, a lot of crushing, milling, froth flotation. So the process is much more capital intensive. But it's also easier to scale up.

and eventually most oxide deposits will transition into sulfide deposit. So with the decrease in oxidized deposits on surface, because they have been found and mined already, sulf, you know, sulfitic ore is getting more and more common and more and more mines today are mining and milling and concentrating fresh, fresh copper ore these days. So we have these two two. different ways of mining these copper deposits. One is a bit less capital intensive and the other one is

higher higher in the capital intensity. So if you think about the area around the exploration space, how important is access to infrastructure there, especially like also trains and ships to ship the goods? Yeah, I think, you know, infrastructure is critical. I mean, if, you know, the further away you are from, you know, from your power tie-in, from your ports to export your concentrates, you know, from roads in Latin America, water is a critical issue. The further away you are from these items and these critical infrastructure components, the trickier it gets to, you know, to develop such a project because the costs are increasing exponentially if you don't have access to these components or you are very far away

from these components. The prime example, you know, prime example would be the development of the Grassberg deposit in West Papua or in Irian Jaya back in the day, what it was called. So, you know, the amount of infrastructure that had to be put in place, you know, to just, you know, access the mine, power the mine, and then, you know, supply the mine was just immense. And if companies will rate projects accordingly, you know, if a company has a list of projects that they could develop, they will always go for the ones, you know, which are easier to access than the ones which are in a complete greenfield terrain, you know, in the middle of nowhere. And also from an ESG point of view, you know, from a sustainability point of view, it's much better to develop projects within reach of existing. infrastructure then you know develop this purely greenfield projects far away from everything so let's say

you've started the mine and it's operating now and what are typical costs of a mine um to run it like if you see like the the costs a mine has to to produce copper yeah because you know we are it's it's a good question because of economies of scale you know when you utilize these very large whole trucks, you know, mining costs for very large operation, they can be below a dollar a ton, so to blast, to mine, to move it. And then on the processing side, we talk about, you know, a few tens of dollar per ton or even below. So, you know, these are the times, these are kinds of costs that are involved with mine, with mining a deposit and processing the deposit. And then, you know, G and A cost for such large operations are then, you know, neglectable because the sheer mass,

the sheer mass you're moving, you know, is then basically the impact of GNAs then not that large. But really, the important thing is really the mining cost because a large volume of material is involved and the processing side of the business, so which is energy intensive. And we all know energy prices are going through the roof, right? now huge problem for the mining industry which is a large consumer of energy and so these are by far far the two largest cost components but then obviously also what you know these companies pay in taxes and royalties this is then the other side but not related to the operational side of the business

like on the cost curve you sometimes see cost curves of different mines which are there any projects that come to your mind that are especially like cheap in production and why are they that cheap yeah i mean the cost curve correlates directly with the with the quality of the deposit you know if you can mine a 2% copper deposit from surface i mean the cost will be so much lower than if you need to mine you know a deposit at 0.5% copper at the strip ratio the strip ratio is what we're referring to an amount of waste to the amount of ore at a very high strip ratio. So the quality of the deposit is directly infracting the cost that is involved in mining these deposits.

And the lowest cost mines we see today are also the highest grade mine. So for example, Kamua Kukula now developed in the DRC in the Democratic Republic of Congo, has very low, you know, cash costs, also costs to develop a ton of ore. we are talking here about a cost, a total cost to mine and treat your of maybe, you know, a dollar 20, $30, $40.40. So if you compare this to the copper price, it's slow and it's very attractive for the company to mine at these levels. But then when we have a copper mine in Latin America, which has, you know, 0.4, 0.5% copper in it, you know, you can easily then get if you, if you are less, tracking efficiencies and you have high power costs if you have labor shortages if you have shortages in supply and cost inflation you might easily be trapped in a you know in a

cost that is very close to the current spot or even above the the spot price of copper and this is in a very uncomfortable situation what can companies do to like reduce energy costs yeah for for copper projects it's a bit easier you know to find alternatives because as I said copper mines have usually a much larger life of mine than you know precious metal projects or you all like precious metal projects so if you have a copper operation that will continue for the next 30 years you know you can think about solar you can think about wind you might you know think alternative power supplies and but if you have a very short life of mine you know installing a

large solar power plant might just not be economic so I think the longer your time horizon, the more you can do about alternative energy sources and obviously shield yourself a little bit from these very increased power costs. And is there anything like wind and solar, we currently have a problem like that it's not like all the time they produce energy at the same level, but there are peak loads and like when a lot of wind blows and a lot of sun shines. Is this a problem with mine? like that they have or like with copper mines that have certain processes that have to run 24-7 seven days a week otherwise they would be like you can't keep them up or is it just like

they could like do more production when the sun shines a lot or the wind blows a lot no I think you need you know your your mill has a certain energy draw and you can fulfill this you know energy supply through alternative surface but you always need your base load you know like Reglin Glencole mine in the Canadian Arctic is an example. They have a few wind towers, so they produce wind energy, but they always have a base load supplied by, you know, preferably from the grid or then through power generation to do diesel or heavy oil or gas. So you always need this base load.

Exactly as you mentioned, you know, if the wind is not blowing and if the sun is not shining, especially in the Canadian Arctic, I don't think it's going to be a very wise idea to have a lot of solar capacity because well over half of the year you will not have any output from that solar capacity. So you always need to ensure you have a base load, preferably from the grid, but then obviously facing in solar and wind might be a good idea. And many mining companies are doing this these days. You know, we have companies in Spain, in Australia and Latin America. They all, you know, think, certainly, you know, thinking about solar, maybe also thinking about wind, you know, maybe tie into the gas grid.

These are all, you know, this is all part of their daily business and they're thinking strongly, especially in these price environments, how to bring these power costs down. In Russia, you know, a few examples now from the small modular reactors, you know, from, you know, powered by nuclear fuels, you know, this might equally well be also a component of the future, you know, where you have much smaller modular reactors that can power, you know, individual mining project or other industrial projects, especially on remote, in remote sites. And if you think about the workforce, especially from the background that you said that KAPX investments went down and investments in new prices went down, might this be a problem to find geologists and people working in mines that are specialized? Absolutely. If you talk to mining companies in Australia, this is one of the biggest issues today, you know, finding people, finding contractors, you know, finding, you know, especially also qualified

people, you know, to do the job, you know, working on mines, you know, for, you know, the new generations, you know, the millennials and, you know, generation wine, that's how they're all called. It's not the most sexy thing these days, you know, so. And the labor shortage in the mining industry is intensifying now for well over 10 years. So I remember. I remember the discussion more than 10 years ago where, you know, this discussion came up, we can't find enough people, you know, to do these fly-in, fly-outs to these remote mine sites because they all have families. They want to, you know, they want to have a work-life balance and so on.

So finding the right amount of people for these immensely complex projects is getting a challenge. But I guess it's not only so for mining, but it's also for many other industrial sectors, days and what I hear from the news and from research reports what could go wrong running a mine like think of accidents or other things that you see saw as mistakes in your career yeah many you know the list of things that can go run in a mining operation is is long and you know most things can be prevented by you know by proper planning by best demonstrated practices by you know, you know, good stewardship and good governments. But there is always, you know, if you work in such a large industrialized area, you know,

employing large equipment, you know, moving large amounts of rock masses, there is always, you know, a risk that something can go wrong. You know, we saw, you know, pit failures, so, you know, where entire flanks of an open pit start to collapse. So, you know, something, you can't prevent. It's sometimes, you know, it's everything is according to design, but something happens because you're still dealing with nature. There's always a risk factor when dealing with nature. And, you know, Bingham Canyon, one of the largest copper mines in the US had such a pit wall failure quite a few years ago. And, you know, this, this is well known as a mine to be run in the most, the highest standard, industry standards. And but such pitfall. failures occur every now and again. And for us, it's more important how you deal with such a matter, you know, even if it occurs, what are your steps taken to, you know, prevent from happening again?

What are your lessons learned? How do you, you know, employ and deploy your skills that you learn from such exercises? That's much more important to us that we have this dialogue also with the management teams that we understand what caused. you know, such a failure. And obviously mining, you hear it every now and again in the news, also fatalities. You know, sometimes people die in these mining environment because big equipment, you know, we are dealing with nature, fall of ground, we are deep down in the earth. We have stresses that we not often, often we can't 100% control these stresses. And despite the technologies we have today, you know, we've shot creed, with yielding underground support, with bolts,

with mechanized bolting rigs and everything, there is always this, you know, there's not, you can't prevent 100% of things happening in such an environment. But this is not only for mining, you know, this is also the case for every industrial environment. But it's about the culture how you handle these risks and how you communicate this risk and how every employee in your organization is,

is aware of what can happen and how he needs to report and prevent such risks is much more important than the knowledge that actually something could happen. What kind of mining projects or companies come in mind when I say best practice in sustainability? What are names that people should look into? Hey, Tillman here. I'm sure you're curious about the answer to this question. But this answer is exclusive to the members of my community, Good Investing Plus. Good Investing Plus is a place where we help each other to get better as investor day by day.

If you are an ambitious, long-term-oriented investor that likes to share, please apply for Good Investing Plus. Just go to good minusinvesting.net slash plus. You can also find this link into show notes. I'm waiting for your application. And without further ado, let's go back to the conversation. Like the resources I needed to do good. If you want to electrify everything, you need copper and like, you need batteries. It's a quite challenging thing to maneuver.

But like, yeah, the last weeks have shown that energy is a topic again in Europe especially. If you think about mines, there's also this idea of mine life, like not extinction, but like, expansion and also the idea of reuse of like mines that have been already processed but there's some good way you might with new technologies get some more or copper out of it like how often does this happen that you can like if you already have a like a project explore that something is next to it you could also extend a mine life to to this with the new new infill or how you can use, like, process goods again and get more copper out with new technologies. Yeah, it's, you know, in ESG or within the sustainability discussion, we talk about circular economy, which is extremely important in mining.

So, as I said, the industry is now, again, the copper industry is dominated by, you know, a few handful of very large operations. Some of them are already over 100 years old. I mentioned here, Chucky Kamau, Delteniente, Bingham Canyon, well over 100 years old. And what they did in the past was certainly not done to the level what we do today in terms of processing. So there is ample opportunity around that you can process these stockpiles to process these tailings to extract to extract further minerals with the technologies we have today. And it's done at several operations. Elteniente, for example, there is a special company actually retreating the tailings to extract more copper.

So if it can be done in an economic way, it will be done. And if it's not possible to do it in an economic will, you know, people will stand away from such an endeavor or such an operation. but it is done frequently. South Africa as well is one of these hotspots of reworking tailings, especially on the gold and platinum side. But also in Latin America, it's done quite frequently. The other thing is, how are you dealing with the waste? Obviously, when mining and processing, you will just extract the fraction of the total volume

that has been mined, you know, a few percent in the copper industry. the large mass, you know, that is remaining as finely grinded waste material will end up on landfills, what we call tailing storage facilities. If you have an underground operation, you can take maybe half of this volume to, you know, to use it as paste backfill, as, you know, mix it with cement and water and pump it back underground as a structural and non-structural fill. But you can also use these tailings if they are viable, you know, you could, produce construction materials. You could produce mortars. You could produce bricks. You might even use this as an alternative binder. So we have now projects in Scandinavia where the smelter slag,

so the waste product of the smelters is activated through grinding and used as an alternative binder. So you don't use cement anymore. You now use these waste products. And you might know cement is one of the key drivers for CO2 emissions on the globe, about six, seven percent of global CO2 nations are caused by the productions and use of cement. And obviously if you can come up with such an alternative binder system from your mining operation, this will have a dramatic impact on your operation because you suddenly are more or less CO2. You might end up as a CO2 neutral operation.

But the impact on the industry as a whole might also be quite dramatic because such a best demonstrated practice from one side could be implemented all over the globe, you know, where you have similar, similar type of preconditions. And so this circular economy is, especially in mining, is important because it reduces the footprint, again, of the mine. The footprint, very important for, for everything, for permitting, for operating the mine, and also in terms of energy use. So, you know, this circular economy is extremely important. And I would say mining companies are really specialized specialists in this circular economy or are becoming specialists because they had to do it from the early days on. They had to think about how can we use this stuff that we mine in large quantities every day, every hour, every minute. How can we use this? How can we put this material for good to good use? Is there any, could some mining companies make this as a source of revenue? that they sell the products they get while exploring copper?

Yeah, you know, it's a question, you know, obviously if you, I also worked for, you know, a material supplier. So we produced a lot of these materials that we, that we sold, you know, to the industry, to mining companies and so on. I think that the business model would be more, the mining industry gets rid of waste. And these waste can be used by other companies to produce other products. So this would be the win-win situation, you know, because in many countries, you are charged on the amount of waste. You are putting on landfills, on tailing storage facilities.

So if you are able to reduce that amount of, again, the footprint, you will be charged less money by the regulator. This can be a large benefit for mining companies. How do you value in operating mine, like to find out the economic value and also having in mind that this, mine is something that runs out so as it doesn't get better all the time it gets it gets worse and you have to take care of like the closing costs and the liabilities that might come after you have done the mine mining yeah it's in this i can tell you it's a hot topic right now how to best evaluate especially you know long life of mine projects like these block caves i mentioned if you have a project that runs for 40 50 years you know a discount the cash flow

model will look not so attractive because you're investing billions of dollars early on before you start producing. And once you start producing, let's say, in 10, 15 years time, you know, and using a discount rate of 5, 6, 7, 8%, you know, you will have a fully discounted. Your cash flows, you know, from year 10 to whatever, 40, 50 will be fully discounted. So a mining company will tell you, well, if I use a discounted cash flow model, I would not build these big projects anymore because it just doesn't make sense. But if we talk about, you know, short the lives of mine, 10, 15, 20 years, I would say discount the cash flow model is certainly the standard.

So, you know, you build your model with your capital requirements and the tradeoff is basically the revenue you get from your metals that you sell. And if this NPV, this net, you know, net present value of this operation is then positive or meets your investment hurdle, then such a project that would be developed or not. So that's the standard way of evaluating a mining project just, you know, based by the financial figures. But for us, much more important is, you know, the exploration upside. You know, what's in here that is not yet reflected in the share price. So is there a good potential to find much more, you know, eventually? Can we, you know, can we double the resources maybe over the next five years?

What's the potential for that, you know, does this sound familiar to what we have seen elsewhere, you know? Do we like the geology? Do we like the, you know, the vectors that we already have? So for us, this is much more important when we look at a project, especially exploration project. And this will eventually guide if we like a certain project or not. How often have mining companies made it to, like, they have a project. It runs out of the lifetime and they were able to extend a lifetime or buy something new. Or how often is it just like the end of lifetime has happened and now they have to close the project and it's gone?

The vast majority of mines run much longer. than the initial, you know, projected life of mine. Mexico is a prime example. You know, Mexican, you know, 10, 15 years ago, Mexican mines always had three-year or two-year life of mine. It was always two years. The operation was running since 50 years, but always two years remaining life of mine.

Because it's just silver mines in Mexico are usually, you know, fairly small, quite complicated from a structural point of view. And it's quite hard to, you know, drill a large amount of resources, you know, five, 10, 15 years of resources to add to the mining life. And, you know, these Mexican miners were extremely skilled just to mine from, you know, these two years life of mine, but continue these operations for decades to come. And this is now an extreme example, but the vast majority of mining projects, they do run much longer. than what was initial stated in the feasibility study or feasibility stuff or you know when the decision was taken to build the mine but you know it's still it's nature you know nature is unpredictable in that way you know these or deposits can grow much larger or these deposits you know it can suddenly stop because of you know because of a certain structure that cuts it off or because the fertile fluids were just not recharging the system.

So in that case or in that sense, nature is unpredictable and you need to understand what has formed this deposit quite well in order to make a qualified judgment on the size or the potential or future size of such a system. But it's also like from economic perspective, it's quite attractive if you already have like this initial investment of setting up all the infrastructure, which is extremely costly and then to explore around it. You know, the best way to find a new mine is in the shadow of an old head frame. So, you know,

that's the saying in the mining industry. So if you have an existing mine or a mine which has closed, the best opportunity, you know, to find, you know, extension to this mine or to find a new why is in the vicinity of these operations which might still running or which might have closed decades ago but this is you know this is what is done if you can do it as a junior expiration company you will you will start with that step and it's also like attractive because you have a mine that has a cash flow and this cash flow can be invested in like exploration around the area and they know it's comfortable to travel to this the spots and it's like they already have the high capsule cost of investment and like

yeah. Absolutely. And you know, you know the metallurgy, the metallurgy might be similar. You have the electricity tied in, you have the roads going there, you have the water connection, you might have permits already, you know, you know you have a labor force in the vicinity that might support you. So there's a lot of positive things when you work in an environment, we call it in a brown fields environment that has seen a mining activity before let's think a bit about the

afterlife of the mine and are there any like if you've closed operation are there any liabilities you have to pay for sometimes like in it's not like copper exploration but if you think about like oil sands and stuff like this you have this huge seas of toxic water and stuff like this is something also like and topic in the copper space? Yeah, so most, most regulators, especially in Western nations, they require to have a reclamation bond in place. So basically money, you put the sound aside, you know, for the expected closure cost of the mine.

And, you know, a closure cost is not just, you know, it ends with, you know, closing the hole or, you know, closing down the operation. You know, these reclamation costs, usually they go on for, you know, for decades. because once you have, you know, created this scar in the ground, you know, sulfide, so, you know, sulfitic ore is exposed to weathering, so to oxygen and water. And as these sulfide starts to oxidase, we call it acid mine drainage. So there is a natural process triggered, you know, to produce these acids that will be released into the environment. And to control this acid drainage, quite a long-term monitoring is usually.

required for these large operations. So there are some follow-up costs. They are follow-up costs, but usually this is well-organized, especially in mining jurisdictions that are familiar with that problem. And the problems we see today are usually from operations that have been closed, you know, decades ago. So these are legacy projects. No one is really responsible anymore.

And this is where we usually see the big problems. And, you know, these projects that end up in the press and, you know, that have negative press and associated feelings towards them yeah there was this one that still fascinates me and there was this one coal mine in denver and they were in january there were this fires hitting denver and some outskirts and i think they might have been also caused by this coal mine which was burning like for 200 years underground because there was a fire so it's not like the copper space but the mining is fascinating in this way what it can cause copper ore doesn't burn usually that's a good thing but you know coal i mean you're touching on coal i mean everyone hates

call these days but you know germany is burning this year as much coal as they did in 84 1984 so 21 was a record year for coal production and you know 22 will be another record year for coal production so despite the very negative press towards coal it looks like to be you know the savior during these years when we have a shortage in energy and so yeah so the society these days is very you know hypocritical towards these energy sources so and suddenly no one cares about the climate anymore as it seems and this is to me sometimes quite disturbing it's it's the last two years have been lessons in things you haven't dreamed about in fiction that happen now in reality absolutely let's come back to

My last questions on the mining space, what role does management play for you in the analysis of mining companies? You have this physical structures that determine a lot and you also have to play with nature as a key component in a mining investment. But what role does management play? Usually like in my investing space

have been before management is like a lot or everything sometimes. What is the importance of management in mining? I think management, you know, track record of management is very important, especially in this junior space. So we need to feel comfortable about the management. There are many, you know, they are quite a few teams we would not go close by because we know their history and, you know, their track record in the past. So management team certainly is very important for us. So we need to feel comfortable with these people.

Preferably, we know them for a long time. This is usually the case because we are well connected with the industry. But it is only one side. You know, the nature, the deposit side needs to be equally good. And if we have this merger of good management teams, skills, hungry teams, you know, they know what they're doing. They've done it before. And, you know, a good foundation with, you know, with good exploration ground, with good deposit preferably already. I think this is then a really good combination to hit the road and to get going and to create some real excitement.

Is there a big chance in mining to profit from the volatility you have in the sector? Because if you think about economic downturns and copper prices going down a lot and some mines get attractive takeover targets at the current prices and stuff like this, Are there people who are just like acquirers in this space knowing that they take chances of the volatilities? Yeah, so M&A activity in the space is still fairly active. I mean, we just said now, Os Minerals, you know, which B.HP made an offer. We had the Rio Tinto made an offer for Turquoise Hill. You know, we had the Agnico-Chirclem merger.

So the activity, M&A activity is, you know, I would say is healthy. might be already, you know, might be elevated already, but this is also not surprising, considering, you know, the elevated raw material prices we have seen over the last, you know, couple months, years. So M&A, for us, it's clearly is an important driver for, you know, for the performance of our products. And, but what, you know, the reality is you need to live with the cyclical nature of the industry, you know, if you, the cure for high prices or high prices, you know, usually if the prices are high, you know, supply gets motivated, gets nourished, and this new supply will then, obviously, will have an impact on prices again.

And, you know, despite, you know, the speculations we have now about the future and the lack of supply, it won't be any different in the future. But we are firm believers that we have now a little bit of a perfect storm for these commodities that they might go much higher than what we see today. And this is certainly very attractive for mining related equities that are mining these commodities. Can you maybe name some very impressive management teams or companies in the mining space? I don't want to mention here too many names. but we you know we we like skin in the game we like you know you know personal interest in their companies that also put money on the table to you know develop especially in the junior space

where this capital is required to you know to get these companies going and keeping the lights on and track record you know track record is important so if you have you know if you have found the junior company you have identified a deposit this was a successful story story, it was brought into production. You know, these people know what they're doing. They have tacit knowledge, you know, what I often refer to. So they have done critical steps over and over again. And I think it's critical in any business to have such kind of experience.

And those are the people we, you know, we follow as well. I think there's no, there's no secret about it. What do you see a skin in the game? like usually if you have an exploration company if someone has like granted one million dollars in stocks and yeah but that's you know that's what we don't if if the you know if the founder of an exploration company is just in for the stock options you know that's not something we like but if you know during the IPO he put up you know i don't know three or four percent of you know of equity you know at the at the issue price you know this is a commitment and you know this is

This is a, we see this is a true belief that, you know, this stock or this company could be much more successful in the future. And we want people in these companies that believe in their future and that they, you know, that they are not just in for the free, right? Then, thank you very much for answering all my questions, like for the end of our interview and I give you the chance to add anything. Is there anything you would like to add? No, that was a pleasure. I this was a good hour with you and I think well put questions and I hope I could shed some lights, shed some light into the world of mining. Yeah, you did for sure and it was very helpful. Thank you very much.

And thank you very much for the audience staying till here. Bye-bye. As in every video, also here is the disclaimer. You can find a link to the disclaimer below in the show notes. The disclaimer says always do your own work. What we're doing here is no recommendation and no advice. So please always do your own work. Thank you very much.