PDAC "newsletter writers" summary

I'm going to try to keep this short.

1. Mickey Fulp

His talk was on "the good, the bad, and the butt ugly" of resource stocks.

Basically, he says you need to pay attention to a company's timeline, cost of production, access to capital, and exist strategy. Importantly, "selling to a major is not a generally viable exit strategy".

Some examples of "the good" that he gave were Curis, Goldgroup, Uranium Energy Corp., and Strathmore.

The bad? Smelters. Polymetallic VMS or Pb-Zn-Ag. Ni-Cu-PGMs-Co. And porphyrys - he says minimum 5 billion lbs Cu is needed, and they're so damn expensive in CapEx that all you can do is sell to a major - and as he said, don't invest in a company with only one exit strategy.

The butt-ugly? Moly - juniors can't compete. Tin - controlled by a consortium, you can't compete. Sub-economic deposits - he gave the example of Macusani, and says he doesn't think there'll ever be a mine there, there's no continuity or grade. And he says avoid "unconventional deposits" like the Duluth gabbro, or specialty and ferrous metals.

Now, even though he hates Ag-Zn-Pb, he loves Fortuna because they have a dirty smelter to send their ore to.

He also likes porphyrys if they're near mines or mills - he says Antares probably only works because of Las Bambas.

Most importantly, he says graphite is "the next big thing". He says "remember, I picked REEs in 2009! Well, now I'm telling you graphite is the next big thing!" And his pick there is Flinders Resources.

To which I have to say:




2. John Kaiser

This guy is good, real good. He kept firing digs at the goldbugs all through his talk. He's not a doomer after all! Gold, to him, is just insurance - which is just what I say.

Basically, he notes that the bias in the market right now is that gold has peaked as a bubble. DCF models are assuming $1300 gold. If it goes higher, the market thinks it can only be for bad reasons: and that means miners don't profit from increased gold price.

Now, he says all we need is for gold and silver to maintain current prices, and miners will do well. Again, this is the first hint of what was a constant through the day: people thinking that the miners just have to go up from here, they're undervalued, blah blah.

He notes China is the world's largest gold producer right now, and they keep their own gold.

Kaiser loves Nevada Exploration. He says McEwen thinks they have a way of finding sub-gravel gold, some sort of secret map, or even a codex stolen from the lizard people or something. So, he says, buy some NGE just in case cos McEwen's teh smrt.

He notes that gold's low came at the height of American supremacy, and gold went up as anxiety over US supremacy rose. Basically, there's structural change in the world, and while that's going on, gold will go up.

Oh, and he likes Geologix. Apparently. I dunno, it was on a slide of his, but he was running late so he just zipped past that slide.


3. The Cookie Monster

He noted Kaiser's figures re: the increase in gold production are wrong. He notes "these future production numbers being bandied about are coming from the miners themselves. And we know for a fact they're not meeting their production targets or timelines."

BTW, he said it'll take 10 years to get Atac into production. I guess that's why the price is going to languish for years?

Brent notes average cash costs have gone from $340 to $620 in 5 years. And all-in costs at the majors are $1200/oz. Meanwhile Brent asserts discoveries are declining, and becoming more expensive to find.

Oh, and he made fun of Lakeshore Gold. He also made fun of someone in Mexico who had recent drill results; he says (and the photo he posted makes evident) the topology means you can never have a mine there. Is that Geologix he's talking about? (EDIT: Cookie mails in via Otto Rock and says "no, it's not Geologix." See comments below. So stop selling Geologix!!!)

He says don't bother going after anything small, it'll never make any money for you anyway.

He likes Lydian as usual: at $1500 gold 5%, NPV=$1 billion, but it has a $270M market cap. He also likes Eurasian (EMX) - they have a revenue stream so they don't have to finance again, and he says Koonenberry could be a district scale deposit.

Cookie's on BNN Wednesday night at 7PM. Please, half a dozen of you ask him about Geologix. (EDIT: no, you don't have to ask him about Geologix. Um, ask him instead about zee beeyooteefool Daniela Cambone. Or maybe why Sabina Silver sucks so bad.)


4. Dominic Frisby

I only caught the end of him. Apparently, he buys and sells based on the chart. So Otto would hate him.

Basically, he follows the 21DMA and 55DMA (simple or exponential? I don't know). When the price is above both, both averages are flat or sloping upwards, and the 20DMA crosses the 50DMA, you buy. When the other thing happens, you sell.

Yes Otto, it doesn't matter what their deposit is like or how good their geo is and so on. You buy on a signal and you sell on a signal, end of story, say goodnight Gracie, goodnight Gracie.

Again, Frisby says the CDNX is brutally cheap compared to gold. To which we reply "so fucking what?" Things can remain undervalued for a long time. They can get even more undervalued.

Oh, and Daniela Cambone was in the room. And she's rather tall, and even more beautiful in person....


5. Adrian Day

His topic was "is the resource sector done for?"

He knows his economics.

He notes the LTRO boosted the ECB's balance sheet by E400B since last summer. Easy money is everywhere, and it's unlikely to change very soon.

Countries have been diversifying out of USD - not selling, mind you: just they now buy other things more and USD less.

He notes emerging Asia is increasingly independent from the US economy: now the largest destination for Asian exports is Asia. And he doesn't see this macro trend changing anytime soon.

As for resources? He notes that there have been long cycles for resources. The shortest over copper cycle has been 17 years from trough to peak: the present cycle only began in 2001, so we have many years left unless this time is different.

He notes the longest copper/resource bull cycle came about because of the industrialization of the UK, Germany, and then the United States. He notes with China (and all the other Asian countries), we're still a long way from the end of this cycle. In fact, he put up a "typical copper per-capita consumption" curve for industrializing countries - and noted that China has only gone half way so far. China right now uses 40% of world Cu. So he thinks we can see China's Cu use doubling from here because they have longer to go on the curve. The copper industry is simply unable to meet this demand.

So there you go. Be long copper.


6. Jeff Berwoahyougottabeshittingme

I only caught the last few minutes of the Anarcho-Capitalist Freedom Fighter And Hero Of Ayn Rand's Next Dystopian Novel.

But holy fuck.

#1, the guy does not understand ratios. You cannot do analysis until you go back and finish grade 6 math, Jeff.

#2. He really really really really really went out with a bang. Sure, he talked about moving your gold to foreign countries (so that when society collapses you just have to walk to Zurich to get your money and... wait, what?). And he can help you get a fake passport - it's a little gray-market, but it'll only cost you $30,000. (I know a guy in Canada who does it for 4 figures, Jeff. Too bad you hate socialists.)

And then it went off the rails. Collapse is only a few years away! Get in shape! Take self-defense! Arm yourself! Maybe move to a farm! Canada is as bad as Hitler & Mao! Etc.! Etc.!

Holy shit dude. I used to follow the US Aryan patriot movement, I used to listen to Sean Kennedy, Heck I even listened to Alex Jones once in a while. Dude, Jeff - you're an extremist to these guys.

Oh - and by the way? Good move, moving to Latin America to your little Libertopia. That will truly safeguard your liberty and freedom, yup. Cos it's not like every single fucking Latin American country has had both a fascist dictator and a communist insurgency during my lifetime. Real smart move.

Oh - and by the way? When societal superstructures fall apart, we devolve into a localized traditional society. Where everyone looks out for each other and co-operates. I know, I've seen it first-hand. The guy with the guns? He starves to death. Actually, he diesn't get to - he's the fucking target. "Hey, there's a loony over in a bunker in the countryside, and he has a bunch of gold coins and 50-gallon barrels of soy." "Oh, does he have guns too?" "Yup, quaint eh?" "I wonder when he sleeps?"


7. Marino Pieterse

Loved the guy. He doesn't know how to use a mic (they can't pick up your voice when you're off-axis, dude!). And he's obviously one of the Reformed Dutch, not Catholic Dutch, since he carried on at length about how you've all got it wrong, gold's not going up from here, I've seen all this before, you young people should just shut up and listen to your elders when they tell you how things happened in the past. He was truly scolding us at the end.

He says it's stupid to look at gold pre-1971, because gold wasn't even free-trading before 1971. So all pre-1971 data on gold is meaningless. Throw it out. Got a point there, sir.

He says China doesn't want gold - they want commodities of productive value. He noted, all through Japan's boom, their central bank didn't buy gold. He says the fixation on gold by central banks is entirely a Western phenomenon. He says "Asian banks don't buy gold! Lishen to me! I have been here beforh! You musht lishen to your eldersh if you are to profit in dish vorld!"

He predicts gold bullion will be down at the end of the year. He says Asia buys more silver than gold. He jokingly (maybe?) notes the USD is backed by the Yuan.

He's expecting gold miners to start hedging again.

He notes U will be in shortage by 2013. There was no material impact on U demand by Fukushima.

Marino Pieterse is truly a measure of men. As in, I now refuse to take any newsletter writer, or analyst, seriously, until they beat him in an argument. And watch it guys - this guy will crush you.


8. Vin Maru

Caught the last couple minutes. He seemed like a perfectly normal guy, a kind of brown Otto, -

But then I found out he works with Berwick.


9. Paul Burton

His talk was on evaluating juniors in Ontario and Quebec.

Again, he's one of the guys noting "miners aren't keeping up with gold. So miners must be undervalued." Cough cough. To me, if everyone's saying the market's wrong, then the market must be right and all these guys are missing something big. When I find it I'll let you know, but it probably involves Agnico and Kinross stinking like shit.

His fave producer is Aurizon. Fave developing property is Detour. He also likes Prodigy, Rainy River, Rubicon, and Premier.

But then there was this:



Globex, Eastmain, Bayfield? I seem to remember hearing stuff about those before. And... um... Clifton Star? Do they still trade on an exchange?

So... I'll leave that one for Otto to comment on.


10. JoJo Byrne

He looks like some young kid from a garage band or something.

He had some interesting points. He notes the $HUI once had a trailing PE of 28, and now it's only 15. So, while it's still "gold stocks are undervalued", it's at least a different take.

He thinks there's a bull coming: 2011 was a retest of the breakout from the crash. Yup! A technical analyst is he!

He thinks silver is in a cup & handle - and he thinks it's good that silver stocks are leading the metal. And yes, miner equities can sometimes outperform the advance in the metal being mined.

(I wish I remember which of the talkers it was who pointed out that in a bear, you can have 10-15 PEs, but in a bull, they can go to 40-50. Was that him too? The guy was pretty good.)

He likes AR, MAY, and KOR for gold. He likes SVL, FR and FVI for silver. He wonders what FVI's going to do with all their cash - buy someone maybe? And he calls SWD one of the premier development plays out there.

Anyway, after him I left. He's pretty good though - I might subscribe to him. I'm pretty sure I'll be unsubscribing from Bespoke, since I get enough off their RSS and don't use their daily updates.

So maybe sometime soon I'll post the photos I took. But right now it's time to go. Don Cherry!