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  • Mark Lackey: What Happens To A Mine Deferred?

    Source: Brian Sylvester of The Mining Report (3/25/14)

    www.theaureport.com/pub/na/mark-lackey-w...

    Mark LackeyThe shuttering of huge copper and iron ore projects gives the Street the blues, but the resulting squeeze in supply can lead to explosive price hikes. Meanwhile, Mark Lackey, executive vice president of CHF Investor Relations, is eyeing infrastructure buildouts in China, Korea, Brazil and India that point to a swelling of demand. In this interview with The Mining Report, find out how Australian partnerships, the deepening of the Panama Canal and the South Korean-Canada trade agreement could result in major returns on investment, and why 2014 looks like a bounce-back year for potash.

    The Mining Report: Mark, the price of copper recently dipped to its lowest level since 2010. Are we going to end the year below $3/pound ($3/lb)?

    ML: We don't think so. We believe that the price of copper will actually recover as we progress through the year. In fact, we actually are still calling for the price of copper to trade in the $3.60-3.70/lb range by year-end. We really haven't changed our view because if we look at supply and demand conditions, we think there's definitely been an overreaction to some of the recent Chinese economic data. Investors are losing sight of the fact that there are reasons for demand to pick up later in the year, and that the postponed production projects will impact the supply side.

    TMR: Are weaker Chinese economic data the only reason behind this shortsightedness?

    ML: It's certainly a major factor. It's seems that the export data in particular got the market concerned, because if you look at retail sales and industrial production, they've been only a little bit weaker than analysts had expected. We're really talking about just two months of trade data here, so this is not necessarily a long-term trend. We would also point out that the Russian situation with Crimea has caused some concerns about European growth.

    TMR: In other words, prices will remain weak in the short term, but investors should be long copper.

    ML: That's right. If you look at the new infrastructure programs planned in China, South Korea, India and Brazil, they all are scheduled to kick off this year, so we should start to see more spending later this year. That's one positive for copper.

    Don't forget that China is by far the biggest consumer of copper in the world, and half the copper goes into the wire and cable business, which is growing at about 15-20%/year. We see China ending up with one of the biggest and best electrical grids in the world, but this growth should go on for the next five or six years. So there is a fairly significant built-in amount of copper consumption that's already in place. Whether the country grows at 8%, 7.5% or maybe 7% isn't nearly as relevant as some people think.

    TMR: Most of the copper heavy miners have been sold off. What's happening with the juniors?

    ML: Across the board, I'd say most junior companies have lower share prices than they had three or four months ago, although some have gone sideways. You'd be hard pressed to find a copper company, other than Augusta Resource Corp. (AZC:TSX; AZC:NYSE.MKT) or an Orvana Minerals Corp. (ORV:TSX), which were in takeovers, that's actually up.

    TMR: What are some of the juniors you're following reasonably closely?

    ML: We like NovaCopper Inc. (NCQ:TSX.V; NCQ:NYSE.MKT). It has a significant play in Alaska. It was once part of NOVAGOLD (NG:TSX; NG:NYSE.MKT), which is a very well-known gold company, and NOVAGOLD spun out its copper assets, which made sense because the market wasn't giving it really much value for the Upper Kobuk Mineral projects, which are some of the best copper projects in North America. What we like about NovaCopper, first of all, is that management knows the jurisdiction-the Ambler district in northwest Alaska-which is a very good jurisdiction. What's also appealing is that the Bornite deposit found in this area is a significant, high-grade project that also hosts some zinc, lead, gold and silver credits. We like the management team since it has a proven track record in Alaska. We think it's a good way to play copper when the copper price recovers.

    TMR: Does it have enough capital?

    ML: Yes, they have millions of dollars.

    TMR: It has an updated NI 43-101, right?

    ML: That's right. On March 18, the company released an updated NI-43-101-compliant resource estimate for the Bornite deposit. The new result contains 5.7 billion oz copper (5.7 Boz copper) Inferred and 334 million pounds copper (334 Mlbs copper) Indicated. In just under three years, the company has increased the scale of the Bornite deposit six fold.

    TMR: Can you share another name in that space?

    ML: Freyja Resources Inc. (FRA:TSX.V) is another one that we've recently started following after it took over an excellent near-term production project in Northern Mexico. Near-term producers appeal to us because the market seems to prefer those over companies with earlier-stage greenfield projects. Another positive factor about Freyja is that the management team has had two other companies in Northern Mexico that were quite successful, one in copper, one in silver. So the company knows the area very well, and it has a proven track record in the jurisdiction. Plus, Freyja has just been able to raise money in this market, which is positive because it hasn't been easy for small cap mining companies to acquire funds in the present market conditions. We see this as another very interesting play for investors who want leverage to a rising copper price.

    TMR: One of the management team members you refer to is Alain Lambert. What do you know about him?

    ML: Alain has been around Quebec business for a long time. He's been involved in quite a number of projects and is really well known, certainly in the Quebec financial community and is also known here in Toronto. I think he was an interesting choice to bring in to the operation because of his background and experience with capital markets.

    TMR: You mentioned that Freyja is a near-term producer. How near term?

    ML: We would expect production later this year.

    TMR: Moving on to iron ore, some market experts believe the steep drop in the price for iron ore in early March was based on poor economic data from China, while others believe it was largely caused by a speculative play gone wrong, likely at a Chinese brokerage. What's your perspective?

    ML: First of all, some of the economic data in China in the past two months clearly affected the iron ore price. But there was also a slight buildup in inventories before the trade numbers came out, so there had already been a little bit of weakness in the market.

    China also announced that it wants to shut down some small marginal steel plants that are not particularly positive for the environment, and that announcement got some analysts concerned about potentially less demand for iron ore. I think that concern is overblown. I expect bigger steel producers in China to make up for this modest drop in steel production. So we don't see a loss in demand for iron ore as a result of the consolidation that is taking place.

    As far as a speculative play gone wrong, there have been a few rumors of that out there. It's hard to know if that's true. We would suggest that if it is true, it's one of those factors that is not going to have any significant impact on the medium or long-term iron ore market.

    "Freyja Resources Inc. is a very interesting play for investors who want leverage to a rising copper price."

    TMR: What's your forecast range for iron prices over the course of 2014? Is it above $120/ton?

    ML: We expect prices to get back above $120/ton, closer to the $125-130/ton range by the end of this year. Again, like copper, we do see this increase in infrastructure spending in China, South Korea, India and Brazil as a bullish signal for steel demand. We also expect China to produce over 20 million (20M) vehicles this year, so we see steel demand rising out of the consumer sector. Meanwhile, China is also trying to increase the quality of its steel. This generally means that there will be increased demand for iron ore. Finally, supply, which increased significantly last year, should level off this year since Australia is producing at close to full capacity given the infrastructure constraints currently being experienced in the country.

    TMR: Big iron miners, like Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK), produce iron at $30/ton or even $20/ton at some operations, but smaller miners generally have much higher production costs. Midtier producer, Cliffs Natural Resources Inc. (CLF:NYSE), is already experiencing a shareholder revolt over poor share price performance. What does all this mean for investors in this space?

    ML: It's true that Rio Tinto does have some production in that cost range. If you looked around the world, the cost production for the majority of iron ore mines is considerably higher. Some Chinese production has costs of around $100/ton. So the question becomes, will companies produce at a small profit, or will they take some of that iron ore out of the market? Our expectation is that the Chinese will take some of those smaller inefficient mines out of operation.

    TMR: What are some of the companies you're keeping an eye on, Mark?

    ML: One of the ones we like is Champion Iron Mines Limited (CHM:TSX), which has operations in the Labrador Trough. It's well run. It's also just recently done a deal with Mamba Minerals Ltd. (MAB:ASX), an Australian company. We like this deal and recommend that shareholders agree to it. We think bringing in Michael O'Keeffe and his people, as well as increased access to capital helps to derisk the projects, because now Champion Iron Mines has a major player behind it with a proven track record in Australia's iron ore business. From our vantage point, we think this merger really is a positive situation for Champion and its shareholders.

    TMR: Does Mamba bring enough cash to cover the capital expenditures (capex)?

    ML: Certainly, Mamba brings enough money to move the projects to the next stage. Ultimately, any company that is going to develop these mines is going to need more cash down the road, but once you have the Australians involved, the chances of getting offtake agreements with Chinese and Indian stakeholders goes up significantly. The problem for some of the Labrador Trough players, frankly, is that they don't have any big strategic partner. We're only following companies that have these partners. So this merger has made Champion a much more viable option.

    TMR: Any other names on that list?

    ML: We like Century Iron Mines Corp. (FER:TSX). Of course, Century is also an exploration and development company of iron ore projects in the Labrador Trough and Western Quebec. Century's management team, led by CEO Sandy Chim, has a background in the Labrador Trough, as it developed Consolidated Thompson Iron Ore Mines Ltd., which was ultimately taken over. That was one of the big developments that took place in the Labrador Trough. Century has a winning formula relative to most of the junior iron ore developers. The company is focusing on the production of Direct Shipping Ore (DSO), which has relatively low technical risk, does not require a large capex, and has a fast development time. Century is therefore a near-term producer, which appeals to us. In addition, Century has two key strategic partners in Wuhan Iron and Steel Co. Ltd. and MinMetals Resources Ltd., which are large state-owned Chinese companies. These corporations have the financial and technical resources to assist Century with the funding and technical expertise for the development and exploration of its projects.

    On a more general note, there are a number of factors that look good for the Labrador Trough, including the fact that the deepening of the Panama Canal will be finished by the end of the year. This will allow larger ships to leave Quebec and then go through the Panama Canal, thus cutting time and costs. The other recent development is the South Korean-Canada free trade agreement, which is actually very positive for Canadian iron ore producers because it eliminates the iron ore tariff. Canadian iron ore companies have a competitive disadvantage vis-à-vis some other producers who already had these trade agreements with the South Koreans.

    TMR: Let's move from metals to minerals and potash. Like most mined commodities, potash had a turbulent 2013. What do investors need to know about what's happening in the potash space in 2014?

    "If you have no exposure to equities in the commodity markets, you could miss an excellent opportunity over the next couple of years to enhance your portfolio return."

    ML: The basic underlying supply-demand scenario has not changed. In fact, we continue to see less arable land in the world per capita every year. As a consequence, there is a need for higher crop yields, and thus a continually growing market and demand for potash, particularly the muriate of potash (MOP), which is 90% of the potash market. We believe that potash prices actually will start to recover this year. There is also some other positive news on the demand side. It looks like this will be the best soybean-planting season in Brazil in history, and it looks like a strong year in the Midwestern U.S. Plus there's been less potash used in the last few years in India, and you cannot go more than a couple of years if you want to continue to have enough nutrients in your fields. So we see this as a bounce-back year for potash and the MOP market as we go through the year.

    TMR: One of the interesting names in the potash space right now is Western Potash Corp. (WPX:TSX.V). There seems to be something of a bit of a bidding war on for it. What do you know about what's happening there?

    ML: Western is not one that we follow, but we've also heard through the grapevine that people tend to look at Western and Potash Ridge Corp. (PRK:TSX; POTRF:OTCQX) as potential takeover candidates. We always try to take things with a bit of a grain of a salt, no pun intended.

    Potash Ridge Corp. has a potential mine in Utah with its Blawn Mountain Project. What makes it special is that it is in the sulphate of potash (SOP) market, as opposed to the MOP market. The SOP market represents only 10% of the world's current potash production. SOP is a vital nutrient for high value crops such as nuts, fruits and vegetables and is essential in nourishing crops and strengthening and aiding disease resistance. SOP performs well with crops that have a low tolerance to the chloride in MOP and in saline arid, and heavily cultivated soils. Thus, there is a growing market for SOP, which trades at about $600/ton as opposed to $305/ton for MOP. There are very few SOP companies around, so we think that Potash Ridge, with its SOP project in a very good jurisdiction, is an interesting opportunity for investors.

    TMR: So Potash Ridge is one. GreenStar Agricultural Corp. (GRE:TSX.V)?

    ML: GreenStar is not actually a potash play, but is in the agricultural sector. The company is currently trading around $1/share and it pays a 6% dividend. The company has a low price/earnings ratio, which is quite unique among small cap resource based companies. GreenStar produces various canned products-oranges, peaches and its biggest product, tomato paste. This is a growing market. The company had record agricultural shipments in 2013 and in the last five years has seen revenue and EBITDA both raise four fold.

    With its recent takeover of Beichen Tomato Products Co., GreenStar will produce about four times as much tomato paste in the next year as it does now. Given the drought in California and the fact that tomatoes are fairly water-intensive to grow, it looks like there's going to be some rationing of water in the agricultural system in California this year. This means that some farmers are not going to produce the same amount of tomatoes that they produced in 2013. We see GreenStar attaining a very large increase in revenue and earnings over the next few years.

    TMR: Can you share one more agricultural name with us?

    ML: Karnalyte Resources Inc. (KRN:TSX) is developing a major project in Saskatchewan that initially could produce 625,000 tonnes of potash per year and increase this to 2.125 million tonnes per year. We like the management; as they have considerable experience in the potash industry. Karnalyte is also a possible takeover candidate because it's one of the few midcap companies in the space, which will make it attractive to some of these bigger potash players, like Potash Corp. (POT:TSX; POT:NYSE), Agrium Inc. (AGU:NYSE; AGU:TSX) and The Mosaic Co. (MOS:NYSE). We also think it's very interesting that Karnalyte has a magnesium byproduct, which is actually in short supply in the world these days-95% of it is produced in China. This is an interesting company because it has a fairly low-capital expenditure project with low operating costs and a byproduct that could have a fairly significant impact on its bottom line.

    TMR: What are your parting thoughts for us?

    ML: Don't overreact to every data point that comes out of China such that your medium- or long-term view of the world changes. Clearly, one has to recognize that there are going to be ups and downs in the commodity markets. I would suggest we're still in a long-run bull market for commodities because at least 4 billion people in the world are trying to become middle class, whereas in the 1970s, it only took about 400M people to create enough demand to give us a very strong commodity cycle. Finally, in many commodities like copper and iron ore, we're seeing more and more deferred projects. So over the next five years, there is not going to be the supply that some people may anticipate. If you have no exposure to equities in the commodity markets, then you could very well miss an excellent opportunity over the next couple of years to enhance your portfolio return.

    TMR: Thanks for joining us today.

    ML: Happy to be here.

    Mark Lackey, executive vice president of CHF Investor Relations (Cavalcanti Hume Funfer Inc.), has 30 years of experience in energy, mining, banking and investment research sectors. At CHF, Lackey involves himself with business development, client positioning, staff team coaching and education, market analysis and special projects to benefit client companies. He has worked as chief investment strategist at Pope & Company Ltd. and at the Bank of Canada, where he was responsible for U.S. economic forecasting. He was a senior manager of commodities at the Bank of Montreal. He also spent 10 years in the oil industry with Gulf Canada, Chevron Canada and Petro Canada.

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    DISCLOSURE:
    1) Brian Sylvester conducted this interview for The Mining Report and provides services to The Mining Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: NOVAGOLD, Champion Iron Mines Limited and Freyja Resources Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
    3) Mark Lackey: I or my family own shares of the following companies mentioned in this interview: Century Iron Mines, Freyja Resources, Greenstar Agriculture, and Potash Ridge Corporation. I personally am or my family is paid by the following companies mentioned in this interview: none. My company has a financial relationship with the following companies mentioned in this interview: Century Iron Mines , Greenstar Agriculture, Freyja Resources and Potash Ridge Corporation. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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    Mar 25 4:09 PM | Link | Comment!
  • Michael Gray: Is Goldcorp's Bid For Osisko A Harbinger Of A Gold Renaissance?

    Source: Brian Sylvester of The Gold Report (3/19/14)

    www.theaureport.com/pub/na/michael-gray-...

    Michael GrayOptimism. Momentum. Buoyancy. Call it what you will, a positive current is running through the gold space. Macquarie Capital Markets' Canadian Mining Equity Research Team Head Michael Gray deconstructs some of the factors contributing to that newfound energy. Calling out merger & acquisition activity as a nascent trend, he shares with The Gold Report some of the names that could be on a senior gold producer's shopping list.

    The Gold Report: Many described the mood at the recent Prospectors and Developers Association of Canada (PDAC) conference in Toronto as something close to cautious optimism. You were there. Can you give our readers three reasons to believe a corner has been turned?

    Michael Gray: Number one is the gold price being in the $1,330-1,370/ounce ($1,330-1,370/oz) range. Few people expected that at the start of the year. Indeed, many were predicting gold below $1,200/oz. Number two, a number of companies have received a stay of execution. There is a fertile environment for raising capital. Equity deals and a number of small merger & acquisition (M&A) deals are being done. That leads to number three, and the most important, which is Goldcorp Inc.'s (G:TSX; GG:NYSE) bid for Osisko Mining Corp. (OSK:TSX). That is the kind of big M&A activity we haven't seen for a long time.

    TGR: As far as equity deals go, how does your deal flow today compare to January and February 2013?

    MG: I would say it's night and day. There was very little activity in the markets for most of 2013. The tax-loss selling that happened toward the end of 2013 put the squeeze on the juniors and there was a marked increase in small-scale M&A during Q4/13. In early 2014 a stronger gold price combined with further M&A and sector outperformance generated more optimism. That momentum continues. It has been important to see more deals come through on equity financing. We're seeing a healthy number of deals, many of them underwritten.

    TGR: Is a gold price above $1,300/oz sustainable for 2014?

    MG: Our house view is that the price will be softer in the second half of the year. However, a number of wild cards could come into play: increased buying of gold by China and the controversy over the official versus the unofficial gold sales in India along with the gold import tax dynamic, to name two.

    "Probe Mines Limited has a compelling new high-grade discovery at Borden."

    TGR: Every Canadian small-cap gold producer was trumpeting the benefit of a weak Canadian dollar at PDAC. Is the impact of a $0.90 loonie really that much of a boon?

    MG: It is as long as the operating costs and the sustaining capital costs are in Canadian dollars. Typically reagents and some materials are in U.S. dollars, so producers don't get the same leverage on those costs.

    For example, Richmont Mines Inc. (RIC:TSX; RIC:NYSE.MKT) has more than 95% exposure to the Canadian dollar as far as its operating costs, sustaining capital and exploration go.

    We have to analyze it case-by-case, but we're finding that the majority of the small-to-intermediate Canadian asset producers have great leverage against a weakening Canadian dollar.

    TGR: Can you elaborate on the Goldcorp-Osisko merger?

    MG: There are very few 500,000+ ounce/year (500+ Koz/year) assets out there for the seniors to buy, let alone in North America. Out of the 11 operating mines in Goldcorp's portfolio, on a pro forma basis, Osisko's Canadian Malartic asset would be among the top three production-wise, if the bid succeeds. This is the biggest dollar value deal we've seen for a long time.

    "Tahoe Resources Inc.recently achieved commercial production at the Escobal mine."

    It also speaks to Goldcorp's increased focus on Canada, and with the Éléonore development project in Québec in particular, as it will be in production in November 2014. No question in our view, Goldcorp is highlighting the value of being exposed to a weakening Canadian currency.

    Of all the seniors, Goldcorp has the best pipeline of quality assets. After getting through this particularly high initial capital cost (capex) year-2014-the Street will increasingly shine a light on Goldcorp, in our view. With Osisko in its portfolio, the light would shine even brighter.

    TGR: Is this a harbinger of further M&A?

    MG: Yes, in the sense that the seniors are looking to buy quality production and pipeline assets. If the Goldcorp-Osisko deal goes through, other producer targets in the 500+ Koz gold/year category in the Americas include Detour Gold Corp. (DGC:TSX) and in the eventual 300+ Koz/year category AuRico Gold Inc. (AUQ:TSX; AUQ:NYSE).

    Among the 300 Koz/year undeveloped projects out there, Midas Gold Corp. (MAX:TSX) with its 100%-owned, 7-million-ounce (7 Moz) Golden Meadows project in Idaho, along with Torex Gold Resources Inc. (TXG:TSX) and its ~5 Moz, 100%-owned Morelos project in Mexico are attractive high-margin assets. We don't cover Romarco Minerals Inc. (R:TSX), but its 4.8 Moz Haile project in South Carolina, certainly has 200+ Koz/year production potential.

    "MAG Silver Corp.'sJuanicipio project in Mexico is one of the best, highest-grade silver development projects out there."

    Probe Mines Limited (PRB:TSX.V) hasn't reached critical mass yet with its 100%-owned Borden Lake asset, but Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) has put its marker down for an equity interest in Probe. Probe has a compelling new high-grade discovery at Borden that signals that Canadian gold belts have lots more new, raw discoveries to give.

    Latin America has struggled to some extent. Even in Mexico, the new mining tax reform package forced companies to make adjustments. In terms of M&A, precious metal assets in Latin America need to be carefully scrutinized.

    TGR: Probe is aggressively drilling the new high-grade zone at its Borden project in Ontario. When do you expect Probe to issue a preliminary economic assessment (PEA)?

    MG: Our analyst who covers Probe, Pierre Vaillancourt, believes Probe could be in a position to publish a PEA as early as before the end of 2014. Probe has plenty of cash and the ability to raise more. Its share price has defied a lot of investors who might have taken money off the table on its run up.

    TGR: You have Outperform ratings on several Canadian producers. One is Richmont Mines, which had issues in 2013 with rising costs due to processing lower head grades. Is this a turnaround story in 2014?

    MG: In our view, it's definitely a turnaround story. Richmont found a new deposit of just above 1 Moz of approximately 10 grams per ton (10 g/t) gold immediately below its Island Gold mine near Wawa, Ontario. This deeper zone (Deep C) at Island Gold transforms the company from one that was living on a small reserve base to one with the potential for a 10-year mine life with higher margins.

    Despite the issues on grade it encountered in the upper portions of the Island Gold mine last year, the company has ramped down to the top of its Deep C zone with nearly 1 Moz of high-grade ore. It is drilling that off to 20-meter (20m) centers right now. This is a perfect scenario: the development is getting put in place; Richmont just has to extend the ramp infrastructure, develop stopes and feed the mill with higher grades.

    The true thickness of the Deep C zone averages 4.5m versus 2.7m in the upper portion of the mine. That will mitigate dilution, bring higher grades to the mill and increase production, based on our analysis.

    TGR: What caused the problems in 2013?

    MG: At the Island Gold mine, Richmont was mining lower grades in 2013 of 4.65 g/t; recoveries were also lower and milling costs were higher than expected. Its cash costs were fairly high at CA$946/oz in Q4/13. That grade just isn't going to cut it at $1,200/oz gold once sustaining costs are added.

    The high-grade Deep C deposit is the game changer. Approximately 60% to 70% of the drill holes have documented visible gold, at a depth between 450m and 1 kilometer. This can be a prolific vertical depth window in a lot of Canadian gold belts.

    We believe that the more robust continuity and geometry of this Deep C zone, in terms of thickness and grade, make it a winner. Richmont is also starting to document parallel veins with good grades on the flanks of the Deep C zone, including those getting incorporated into the latest resource statement.

    TGR: What other companies do you rate Outperform?

    MG: Tahoe Resources Inc. (THO:TSX; TAHO:NYSE), which recently achieved commercial production at the Escobal mine in Guatemala and has issued production guidance of 18-21 Moz for 2014. The company has an A team at Escobal. It delivered with minimal slippage in the timelines. It also delivered on corporate social responsibility initiatives. Escobal is an underground mine where the company has brought to bear all the latest technology to ensure that it is an environmentally responsible underground mine as it lies in the region of a farming community. That was a really important box ticked for Tahoe.

    TGR: Is Tahoe's $75 million ($75M) debt an issue?

    MG: It's a minimal debt for the production profile and the cash flow we see coming from the asset. At the same time, we would expect to see management address the debt before instituting a dividend policy.

    TGR: What other companies that you cover with Outperform ratings would you like to talk about today?

    MG: MAG Silver Corp. (MAG:TSX; MVG:NYSE) is one of our high-conviction calls in the precious metals space. The Juanicipio project in Mexico, the joint venture between MAG Silver and Fresnillo Plc (FRES:LSE), is one of the best, highest-grade silver development projects out there. We visited the asset five weeks ago to confirm that the underground development access to the vein is progressing. It will take 3.5 years or so to fully access the ore and establish production at Juanicipio.

    We believe this mine will have a production profile close to 15 Moz silver/year for the first seven years. Its all-in sustaining cash costs will be approximately $3/oz silver. The PEA shows a 21% internal rate of return at $10/oz silver. This is all on an initial capex of approximately $320M. MAG Silver has a 44% share of that to contribute.

    TGR: There was talk about Fresnillo eventually buying MAG Silver out. What are you hearing?

    MG: There is a lot of history there. Back in 2008, a "takeunder" bid caused some acrimony. There are different faces on the joint venture technical committee now. George Paspalas is now the CEO of MAG Silver; Octavio Alvidrez is CEO of Fresnillo.

    From our vantage point, it makes sense for Fresnillo to consolidate the other 44% Juanicipio interest it does not control. It would have to be a friendly transaction, given that Fresnillo owns 17% of MAG Silver. Bottom line: things are more positive from a relationship point of view by our estimation, but that doesn't mean a takeover is imminent.

    TGR: You mentioned Midas Gold as a possible takeover target. What is the premise there?

    MG: Midas Gold's 7 Moz 100%-owned Golden Meadows gold project is an attractive asset and potential pipeline project for an intermediate or senior producer as it a North American asset that could be producing 300-400 Koz Au/year by 2019 or 2020. There are very few assets like this in North America. The closer Midas gets to submitting its environmental impact statement (EIS) and gets into Idaho's joint review process (late 2014/early 2015), the more it will be on the radar screens of intermediate and senior mining companies, in our view.

    Golden Meadows is a past-producing brownfield open-pit operation. The company will have some permitting challenges, including restoring a former salmon stream that currently flows into the Yellow Pine pit. However, it is our understanding that the environmental groups aware of the project recognize that mining the deposits at Golden Meadows will ultimately transform and remediate the legacy issues toward a more natural state at the end of its life as a mine and is a good news story.

    Midas will issue a prefeasibility study in midyear. We estimate that the company will be in a position to submit its EIS and essentially put a pin in the project scope and permitting toward the end of the year. That might be the time for a producer to take on the project via M&A.

    The other angle that we think is important is that we see Golden Meadows as a Donlin Creek analog. Both have similar geology, and Donlin Creek has more than 40 Moz of gold [in the Barrick Gold Corp. (ABX :TSX; ABX:NYSE) and NOVAGOLD (NG:TSX; NG:NYSE.MKT) joint venture]. We believe on this basis Midas' Golden Meadow asset has the pedigree to be very big.

    TGR: When it comes to taking positions in these companies, do you recommend accumulating on dips or taking full positions when possible?

    MG: It varies by company. If it's a high-conviction call and you take a 12-month view as we do, we would gain exposure to the best of breed assets, companies like MAG Silver and Midas Gold.

    Among our Outperform ratings, companies we consider buying on the dips include Elgin Mining Inc. (ELG:TSX), which we recently moved from a Neutral to an Outperform rating. At 166%, it has one of the highest year-to-date returns in our coverage universe. Elgin is a bit of a show-me story when it comes to its Björkdal gold mine in Sweden.

    TGR: Any final words of wisdom for us?

    MG: Even though we've turned one corner, investors need to be aware that we could turn another corner-not necessarily a positive one. I think we should be very prudent. Focus on quality companies with low cost structures, attractive assets and good management.

    TGR: Michael, thank you for your time and your insights.

    Michael Gray is a mining equity analyst with Macquarie Capital Markets and covers a range of precious metal explorers and producers with an emphasis on North and South America. He is an exploration geologist and holds a Bachelor of Science in geology from the University of British Columbia and Master of Science in economic geology from Laurentian University. His career of more than 25 years in the mineral exploration business started with senior mining companies including Falconbridge, Lac Minerals, Cominco and Minnova where he worked throughout Canada and the USA. He co-founded Rubicon Minerals in 1996. He is also a past President of the 5000+ member BC & Yukon Chamber of Mines (now AME BC). Gray joined the mining analyst world in 2005 where he brought to bear his technical skills to identify new precious metal opportunities at an early stage with outstanding exploration potential; he has covered a number of these opportunities that were subsequently taken over by gold producers.

    Read what other experts are saying about:

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    DISCLOSURE:
    1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of The Gold Report: Richmont Mines Inc., Probe Mines Limited, Tahoe Resources Inc., MAG Silver Corp. and NOVAGOLD. Goldcorp Inc. is not associated with The Gold Report. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
    3) Michael Gray: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: All except Goldcorp Inc. and Barrick Gold Corp. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

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    101 Second St., Suite 110
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    Mar 19 6:04 PM | Link | Comment!
  • Rick Rule: Which Companies Will Bring In The Green?

    Source: Karen Roche of The Gold Report (3/17/14)

    www.theaureport.com/pub/na/rick-rule-whi...

    Rick RuleThoughts turn to green on St. Patrick's Day. Rick Rule of Sprott US Holdings believes the resources bull market is about 18 months from arriving and there could be multiple promising entry points in the market this summer. But in this interview with The Gold Report, he says that this rebound may not look like the one investors are expecting and shares tips on how to spot companies that may have pots of gold at the end of the rainbow.

    The Gold Report: In a call with Sprott clients last week, you said that the junior resource market is at an intermediate-term top right now and there will be good summer entry points. Why is the market at a top now instead of May, which is more typical? Should investors wait until the summer entry points to get into good juniors?

    Rick Rule: The top could continue through mid-May. If investors have positions in their portfolios that they aren't thrilled with, they should use this market to sell. One of the things I've noticed is that if an investor paid $1 for a stock and the stock is at $0.35-even if the stock was valueless-they are unwilling to sell it for $0.35. In many cases, the stocks that fell from $1 to $0.25 or $0.35 are now selling at $0.50 or $0.60. My suggestion is that this is a great time to take advantage of it.

    "Tahoe Resources Inc. has one of the finest silver deposits in the world."

    I want to draw people's attention to the fact that the market is up 40% in some cases from its bottom. Amazingly, people are more attracted to that than a market that exhibited bargain basement prices.

    Although I believe that the market has bottomed, we're going to be in an upward channel with higher highs and higher lows, but we are certainly going to exhibit the volatility that the market is famous for. It's my suspicion that the summer doldrums will see lows that, while higher than last summer, are substantially lower than the prices that we're enjoying today.

    TGR: Gold has been above $1,300/ounce ($1,300/oz) for several weeks. Is that influencing the market?

    RR: Gold certainly is a bellwether commodity for the junior resource sector. For 25 years, people have referred to junior mining in many circumstances as junior gold. That's misinformation because the junior resource sector encompasses a variety of commodities. My suspicion is that we have put in lows in the precious metals and they will trade higher, but not straight up. The gains will need to be consolidated. It will be volatile on the way up.

    TGR: If it's a misconception that gold is the bellwether commodity, what key commodities do you look at to support the claim that we bottomed out in the summer of last year?

    RR: Virtually the entire complex, with the exception of copper, which has stayed pretty weak. Zinc has begun to cooperate. While uranium hasn't cooperated, the sentiment for uranium juniors and the premium associated with Uranium Participation Corp. (U:TSX) has certainly done better. The energy complex has seen oil up $10/barrel and natural gas doubled. Platinum and palladium are up substantially, although that may be a consequence of fears about an embargo against Russian palladium supplies and a response to labor unrest in South Africa. However, generally, the whole commodities complex, including the soft commodities, even in the face of bumper grain crops, is doing well since last summer.

    TGR: What do you attribute that to?

    RR: There are a couple of reasons. The whole sector was oversold. We've participated in a bit of a dead cat bounce. The long-term thesis has a lot to do with the increasing ability of the bottom of the demographic pyramid to increase its standard of living, which involves more commodities. I'd say that the great unsung hero of a rebound in the fortune of commodity producers has been the increasingly constrained supply of resources. The demand side on resources has been very slow because this recovery in the West has been a false, paper recovery. It hasn't been accompanied by capital spending or jobs. It's an interest rate-led recovery with flat auto sales and home starts.

    What has kept commodity prices stronger than what some investors thought they would be has been the constrained supply growth in the face of constrained demand. In sectors that were regarded as horrifically oversupplied, like natural gas, two things have happened: Cheap natural gas prices have led to more utilization of gas for power generation at the same time that Mother Nature threw the polar vortex at us.

    This sort of supply response isn't limited to natural gas. On the precious metals side, the industry has spent tens of billions of dollars during the past 15 years on exploration, construction and production. The production numbers for precious metals have been going sideways for gold and silver and going down for platinum and palladium. Supply constraints on a global basis led to the bottoming and then the recovery of commodity pricing.

    TGR: If we don't have enough supply to meet demand, even if demand stays flat, we would see commodity prices going up. But aren't we still seeing some growth in developing countries as the poor become richer and invest in commodity-intensive products?

    RR: That will be evident in future years. This year is simply a recovery from the oversold conditions of 2013. That's normally the way bear markets become bull markets; they normally are a reaction to oversold situations.

    TGR: Are the capital markets coming back to the commodity groups now to finance them? Will that financing ultimately result in increased supply?

    RR: There is an increasing amount of equity available for the better companies in the junior resource space. This is precisely the set of circumstances that we talked about in our interview last summer, which we referred to as bifurcation. The best 20% of the issuers have begun to find bids, not just in the junior capital markets, which is where the share prices are up, but also in financing markets. An increasing number of bought financings are getting done. For the bulk of the juniors, of course, that capital isn't available-and good riddance. They'll go away.

    Probably a bigger question is going to be where the project and development financing will come from. The large private sector banks that used to fund construction and permanent finance for major resource projects have been less willing to take those loans onto their balance sheets, choosing instead to become financial arrangers. A situation where everybody's a financial arranger and nobody's a funder means that projects haven't been getting funded.

    We believe that the likely lenders going forward will be sovereign wealth funds and superannuation or pension funds with a long-term horizon. But that hasn't worked itself out yet. While there is a refreshing ability for the better juniors to get stop-gap equity financing, what is still missing from this market is the senior project financing. That's something that Sprott is working very hard to address.

    TGR: What will be the catalyst that will move sovereign wealth funds, pension funds or Sprott into doing those large capital financings?

    RR: The time horizons of 10-20 years that are required in project finance correspond well to the needs of pension, superannuation and sovereign wealth funds. Because they are already equity investors, the balance sheet risk with being a senior secured lender will fit well with their needs. It's just something that they haven't done before. This is a natural progression that hasn't occurred yet, and we hope to facilitate it.

    TGR: Why is there a natural progression of moving these large project capital financings to a pension or sovereign wealth fund?

    RR: Legislation in place now on a global basis for large banks forces them to be providers of capital to sovereign governments. If JPMorgan Chase has a loan to Greece on its books that is selling at 70% of par, European Union rules allow JPMorgan to carry that bond at 100% of par if it says it intends to hold it to maturity. In other words, the rules allow the bank to mark the loan to myth as opposed to the market. If the same sort of loan was made by JPMorgan to a private party, even a solvent private party, unlike an insolvent sovereign, the carrying value on that loan would have to be reduced, which would reduce the capital base of the bank.

    As a response, the banks have become conduits that accept deposits on a global basis and borrow very short-term money from sovereign lenders and then relend the money to sovereign borrowers on a longer-term basis. They profit from the same type of arbitrage-borrowing short and lending long-which was the demise of the U.S. savings and loan business. This may or may not be a great business strategy. It's one they've been, in effect, forced into as a consequence of banking regulations that came about after the 2008 liquidity crisis.

    TGR: How might that play out over the next decade?

    RR: That's a many headed question. If we have a situation where short-term interest rates go up-where central banks are less able to manipulate short-term interest rates-it will have an extremely unpleasant outcome for the large banks.

    TGR: You mentioned earlier that Sprott was looking at playing a role in that natural progression from the large banks to other types of fundees. What specifically is the role for Sprott there?

    RR: Sprott has had discussions with many of the largest sovereign and pension investors in the world, including the National Pension Service of Korea, for which we manage some money. We have begun the process of educating these very large investors about the nature of project finance and how project finance might solve some of their investment needs. It's an area that these very large investors hadn't had much experience or interest in.

    TGR: We've been talking about major debt project funding. Might these also come up in private placement opportunities, or do private placements fund other types of resource opportunities?

    RR: Private placements have traditionally been on the exploration, development or preconstruction side of junior natural resource companies. This range of companies enjoyed unprecedented access to capital in 2003-2011. The consequence of that access to capital was a spectacular bull market that gave way to a spectacular bear market where the excesses of that period had to be exorcised. The issuers confused the optimal conditions with normalized conditions. The consequence has been that companies believe that the pricing circumstance that they enjoyed in 2003-2011 was normal as opposed to optimal. Issuers will be forced to be rational in 2014 simply as a consequence of their need for capital.

    TGR: Are the latest financings discriminating or financing broadly across the sector?

    RR: It's been very discriminating, and it has to be. The junior resource business taken as a whole is valueless. Almost three-quarters of the issues on the exchange have no net-present value (NPV). The arithmetic consequence of that is any financing these poor quality companies do takes place at sub-$0 cost of capital. The better companies have found a bid. The better companies have been able to attract the financing. We need to take the bottom half of this industry and we need to flush it so that more money is focused on better projects and better companies.

    TGR: Are you feeling a bit cautious about the potential continuing upmarket?

    RR: I feel great about it. My experience has been that bear markets are always the authors of bull markets. While history doesn't repeat, it certainly rhymes. The severity of the decline that we have experienced was at once the consequence of the extraordinary bull market that preceded it, but it's also indicative of the type of response that we're going to enjoy.

    Make no mistake, the magnitude of this decline was as spectacular as anything I've seen since the mid-1980s. I feel the bull market that we are going to come into sometime in the next 18 months to 2 years will probably be as good a bull market as any I've ever experienced, and I've experienced some spectacular ones.

    TGR: I was looking at the performance of the Sprott funds. The energy fund returned 23.4% in Q3/13 and Q4/13 while the gold and precious metals fund had a return of -4.2%. If the resource market bottomed in the summer of last year, how do you explain the difference between these two funds?

    RR: The uptick in oil and gas equities happened faster because free cash flows recovered more quickly and because these energy issuers are generally better companies. It was easy to measure the impact of higher natural gas prices on the oil and gas juniors because they were producing. When the natural gas price went off its $1.90 million British thermal units ($1.9 MMBtu) low up to $4 MMBtu, the impact on producers' income statements on a quarterly basis was immediate and dramatic.

    An increase in the gold price from $1,100/oz to $1,300/oz for a company that is not yet producing gold is one that has to be factored in an NPV calculation to future cash flows. It took longer to work its way through the system.

    TGR: There have been some really dramatic turnarounds so far this year in the gold and precious metals fund: Tahoe Resources Inc. (THO:TSX; TAHO:NYSE) was down 9% in Q4/12 and is up 48% year to date (YTD); Guyana Goldfields Inc. (GUY:TSX) was down 36% in Q4/13 and is up 67% YTD; and Silver Standard Resources Inc. (SSO:TSX; SSRI:NASDAQ) was up 25% last year, and is up 44% this year. What do you attribute this dramatic turnaround to over the last few months?

    RR: It's a turnabout in market sentiment. The middle part of last year, the stock charts went sideways on no volume-exhausted sellers, exhausted buyers. At the end of last year, those stocks began to catch some bids. The people who had to sell, sold. We began to notice small inflows of cash at Sprott into our resource-oriented mutual funds at the end of last summer. We were no longer forced sellers, and we became nominal buyers.

    I think our experience mirrored the experience of the rest of the institutional investing community. The consequence was fairly dramatic moves up on small volumes in some ludicrously oversold equities. We've come into a period where there's a better balance between buyers and sellers.

    TGR: Are you expecting to see modulation in increases in the fund because it had a dramatic turnaround?

    RR: That's the theme of this call. My suspicion is that we've been through the worst of the bear market, that the bear market bottom will not be a "V," it will be saucer shaped, and it will take 12-18 months from now before we're truly in a bull market. The gains that we've just enjoyed will need to consolidate. They may go a little higher before they go lower, but the truth is that a recovery will see higher highs and higher lows, and will also feature the volatility that this sector is so famous for. The recovery is in its very early stages.

    TGR: Can you comment on some of these companies in the fund that have had large YTD performances?

    RR: I think we have a combination of circumstance here. Tahoe is, if not the finest, then one of the finest silver deposits in the world. It answered the question of "could it overcome its social license issues and mine construction issues by getting into production." It delivered value. The naysayers were proven wrong. The small increase in the silver price certainly helped it, too.

    Similarly, Primero Mining Corp. (PPP:NYSE; P:TSX) outperformed production expectations and then announced an acquisition of a development project that allowed the market some visibility as to how it might grow going forward.

    Guyana Goldfields simply was a recovery from a ridiculously oversold level.

    Silver Standard delivered improved performance in Argentina. It added some meat to the bones. The market liked the fact that it, in the last six months of last year, seemed to get its hands on the production difficulties that it was having at the Pirquitas mine.

    More recently, the company enjoyed a tremendous share price spurt as a consequence of its acquisition of the Marigold mine in Nevada from Goldcorp Inc. (G:TSX; GG:NYSE) that shows the way for it to increase cash flow and profits on an accretive, per-share basis. It might allow Silver Standard to develop the rest of its portfolio internally without external funding.

    Bear Creek Mining Corp. (BCM:TSX.V) got social license in Peru. There had been questions as to whether either of the company's development projects would be able to be developed given local opposition in Peru. Bear Creek got the backing of every prominent local group and a landmark agreement between the central government of Peru and the local government that would allow for more equitable distribution to the region of tax, royalties and the social rents from mining. Historically, in Peru, the regions have borne all the costs of mining while the center has collected all the social rent.

    Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) continues to impress with its ability to operate midsize silver mines. Its two operations have consistently met its promises. That set it apart from an industry where probably 75% of the project news has been disappointing. Fortuna, as a consequence of meeting projections quarter after quarter, has begun to develop a loyal shareholder base among silver speculators.

    TGR: With St. Patrick's Day on the horizon, what company is really going to have the luck of the Irish and bring in the green?

    RR: For your readers in the West and the Southwest, water will be a real important topic of discussion. We've had a situation in the West and the Southwest where water has been priced politically, which means it's been delivered as a right irrespective of its supply and the cost of distributing it. The consequence of that has been gross misdistribution, which has worked as long as nature has cooperated. But nature this year has ceased to cooperate. We're going to see tremendous distortions in water pricing across the West and the Southwest, and that will have spinoffs in areas like food cost. The very low cost of food that Americans have enjoyed in the last 40 years has had to do with the subsidies afforded to farmers for water supply.

    Here in California, there are now several water districts whose allocation of water from the state and federal government is zero. Growing, as an example, almonds or pistachios or plums-pick a crop, really-in the summer in California with zero water allocation is very difficult. This is going to be a subject that is going to play very large among investors. It's something that Sprott has been involved in through my own efforts for two decades. It's something that we're trying to get a lot more involved with in the next two or three years.

    California had a pretty good drought in 1977 that caused us to do things like flush our toilets on alternative days and not wash our cars. It had much more profound economic consequences than that. The interesting thing for Californians to note is that since 1977, two important things have changed: There are 12 million more of us with our straws in the sponge, but the sponge hasn't increased at all. At the same time, the safety valve Californians had from the Colorado River is gone. The consequences will be very dramatic.

    Since 1977, people have moved to places like Phoenix, Tucson, Salt Lake City and Las Vegas. We don't have the ability to overdraw our allotment anymore. The way that we got out of the predicament in 1977 is not a way out this time. It's going to have profound consequences. I don't know what they are, but it's going to have profound consequences.

    TGR: How do you play the water sector and this drought? You can't get more rain. Are we looking at desalination? Are we looking at better water conservation?

    RR: There is no play in the near term. The answer in the intermediate term is going to have to be more market pricing for water-and people are going to hate that. The way I'm playing it is to buy shares of companies that own water rights associated with their agricultural operations. My bet is that the California legislature does something that's logical. I realize that's a bet that plays against history. But my hope is that farmers are allowed to cease doing stupid things such as growing rice in the desert and are allowed to sell the water that they would have wasted growing rice in the desert to people who want to use it to flush toilets and brush teeth. If that takes place, there's as much as a 90% arbitrage in the converting of agricultural water to urban and municipal use.

    If we did that, by the way, we wouldn't have a water crisis in California. We'd have a lot less agricultural production. But the truth is, if we had a market-clearing price for water in California, we wouldn't be having this discussion at all.

    TGR: But if we had a market-clearing price for water in California, what would happen to the agricultural component of the California economy? What would that mean overall for the state?

    RR: Remember that California agriculture contributes less that 4% of state GDP and consumes 85% of the state's water. I suspect that gross farm receipts would stay the same. We would have 25% or 30% of the farmland in California fallow, and we would have higher crop prices across lower production. That's the inevitable consequence that we have to face. The idea that we take water and we irrigate a desert to cut eight crops of alfalfa and we export that alfalfa in bales to China for its dairy industry is the equivalent of us exporting water below our cost of production to subsidize the Chinese dairy industry. If you say to suburban homeowners, the Cadillac communists in West L.A. or Mill Valley, that they have to sacrifice $150,000 worth of landscaping at their houses, or be willing to pay 300% or 400% more for water so that they can subsidize the production of dairy in China, the political equation regarding water pricing in California could change. And that would confer enormous benefits on the people who understood the arbitrage of marking privately held agricultural water rights to market.

    TGR: What's to keep the California government from taking away those agricultural water rights or redefining them so that that arbitrage is minimized or eliminated?

    RR: Zero. The People's Republic of California will ultimately confiscate the product of intelligent savers but, mercifully, California is extremely inefficient, and it won't get around to fashioning the political compromise necessary to steal that wealth for three or four years.

    TGR: Can you share with us some of these companies that have water rights that can turn agricultural water into urban-use water to take advantage of this arbitrage situation?

    RR: Sure, with a caveat that these are companies I own as opposed to companies that I recommend to your readership. I own J.G. Boswell Co. (BWEL:OTCPK), which is the largest of the California corporate farmers; Limoneira Co. (LMNR:NASDAQ), which is a grower and developer in Ventura, Calif.; and PICO Holdings Inc. (PICO:NASDAQ), which is the Physicians Insurance Company of Ohio, a water-rights owner in Nevada and Arizona.

    TGR: That's ironic. The Physicians Insurance Company of Ohio owns water rights in Arizona and Nevada?

    RR: That's a story for a different interview.

    TGR: I appreciate your time, Rick.

    RR: My pleasure. Thank you.

    Rick Rule, CEO of Sprott US Holdings Inc., began his career in the securities business in 1974. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. His company has built a national reputation on taking advantage of global opportunities in the oil and gas, mining, alternative energy, agriculture, forestry and water industries. Rule writes a free, thrice-weekly e-letter, Sprott's Thoughts.

    Read what other experts are saying about:

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) Karen Roche conducted this interview for The Gold Report and provides services to The Gold Reportas an employee. She or her family own shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Tahoe Resources Inc., Guyana Goldfields Inc., Primero Mining Corp. and Fortuna Silver Mines Inc. Goldcorp Inc. is not associated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
    3) Rick Rule: I or my family own shares of the following companies mentioned in this interview: Tahoe Resources Inc., J. G. Bozwell Co., Limoneira Co. and PICO Holdings Inc. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
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    Mar 17 3:42 PM | Link | Comment!
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