Insights from Q125 Resource Conference Season
The start of the year is always a very busy time for the Resource Fund. Conference season kicks off mid-January with the AME Roundup conference held here in Vancouver followed by the BMO Mining conference in Hollywood, Florida and then The Prospectors & Developers Association conference (PDAC) in Toronto which was this week. While we can’t attend every conference, we focus on the ones that offer the most value.
Roundup is a very technical junior company-based conference that allows us access to the geological teams and gives us the ability to drill down on what the companies are finding on the ground. Our goal is to look at the data and question the companies on criteria like continuity, size, and metallurgy to determine what the economics might be of the deposit. Our mantra is “what is it worth, what can we buy it for, what’s our conviction, and what are the risks.” When considering investment in early-stage geology companies, it can be difficult for us to determine the valuation and risks. These conferences are a great resource for researching new & up and coming companies by comparing multiple projects simultaneously and assessing the geological potential of each project.
Compared to Roundup, the BMO mining conference is a bit difference because it gives us exposure to all the major mining companies. We not only meet with senior management and ask them questions about their operations but also growth opportunities in terms of what type of projects they may be interested in. Most major mining companies are looking for tier one assets which for gold are loosely classified to have a potential annual production of 400-500koz/yr. Anglogold Ashanti recently discovered the Silicon and the Merlin deposit which is categorized as tier 1 deposit. We are fortunate enough to have exposure to this world class deposit via royalties through our core positions in Altius Minerals Corporation who holds a 1.5% royalty on the project and through Orogen Royalties who hold an additional 1% royalty on the project. Knowing what senior mining companies are looking for allows us to hone in on junior mining companies that may have that tier one potential.
Conferences can be demanding but extremely insightful. We met with over 30 companies at Roundup and then at the BMO conference, we met with 24 companies for 30 min meetings (speed dating) over 2 1/2 days. We decided to bypass PDAC as most of the companies at that conference we had already met. There will be additional conferences in the fall as exploration results come out over the summer restarting the cycle.
“This means that” day to day individual meetings are very important to our selection process; however, attending conferences that allow access to the top minds in the industry gives us insight to their criteria. By knowing what the senior mining companies are looking for, it allows us to refine our investment criteria towards high quality projects that majors would be interested in.”
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
Changes in Leverage. We are increasing the asset ceiling to 2.0 times the market value of equity for Pathfinder International Fund and Pathfinder Conviction Fund to be consistent with Pathfinder Partners’ Fund and Pathfinder Resource Fund
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
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