Highly prospective exploration company
Resource projects cover more than 1,713 km2 in three provinces at various stages, including the following: hematite magnetite iron formations, titaniferous magnetite & hematite, nickel/copper/PGM, chromite, Volcanogenic Massive and gold.
Message: Mining Equity Bargains Abound, But Buy With Care: Ivan Lo
Mining Equity Bargains Abound, But Buy With Care: Ivan Lo
The Gold Report: Your newsletter, The Equedia Weekly Letter, talks mainly about Canadian companies you actively own. Why did you begin writing this newsletter and how do you choose the companies you invest in?
Ivan Lo: I've always been interested in the capital markets because they are the source of the world's growth. Without them there wouldn't be Google, Microsoft or Apple. My father was editor-in-chief of a prominent global newspaper, so I guess that's where I combined the two ideas. There are some extremely able men in our industry and I get to have some great discussions about investment philosophies, strategies and market outlook. We often trade ideas and go through what works and what doesn't.
These brilliant men don't think like the average person; their thought processes are often beyond that of the average investor. That's how The Equedia Weekly Letter got started. I wanted to bridge that gap and turn complicated investment philosophies into something simple that everyone could understand, from macroeconomics to mining 101. My job is to make it simple and start with macroeconomics, the big picture. For example, I believe the precious metal sector is undervalued right now.
First, I'll look at the project. Does it have value or is it just a crapshoot? When it comes to mining, drill results alone aren't enough. A company can drill spectacular numbers but if it is drilling in the middle of nowhere, those drill results are just shareholder dollars turned into geological numbers for reference. The likelihood of that project doing anything anytime soon is very slim. But if it is drilling great numbers near an already producing mine, its chance of success becomes a lot higher.
Then come the people behind it. If a project isn't managed by great people, I won't invest in it. I've been burned before by finding great projects only to have the management team destroy it because they didn't understand the capital markets. They raise a few million here and a few million there. They get excited. They spend it all and yet produce no shareholder value. Good drill results alone don't mean it's a success unless it brings shareholder value with the money that is spent.
After that comes the capital structure. Who owns the paper and at what price? The last thing a lot of people don't consider is management's marketing ability. If a company is public, management needs to market it. The shares are only as good as what The Street says they are worth. At the end of the day, someone has to buy your shares from you at a higher price for you to profit. That's how the stock market works. If no one knows about the company, no one will buy it and your shares are worthless.
TGR: Unfortunately, just because you get competent geologists running a company doesn't necessarily mean they know what they're doing when it comes to running a public company.
IL: Yes. I've seen it time and again, especially in the past couple of years where we had a bull market for about a year and all these geologists went out and spent all their money yet created no shareholder value. ...
Ivan Lo: I've always been interested in the capital markets because they are the source of the world's growth. Without them there wouldn't be Google, Microsoft or Apple. My father was editor-in-chief of a prominent global newspaper, so I guess that's where I combined the two ideas. There are some extremely able men in our industry and I get to have some great discussions about investment philosophies, strategies and market outlook. We often trade ideas and go through what works and what doesn't.
These brilliant men don't think like the average person; their thought processes are often beyond that of the average investor. That's how The Equedia Weekly Letter got started. I wanted to bridge that gap and turn complicated investment philosophies into something simple that everyone could understand, from macroeconomics to mining 101. My job is to make it simple and start with macroeconomics, the big picture. For example, I believe the precious metal sector is undervalued right now.
First, I'll look at the project. Does it have value or is it just a crapshoot? When it comes to mining, drill results alone aren't enough. A company can drill spectacular numbers but if it is drilling in the middle of nowhere, those drill results are just shareholder dollars turned into geological numbers for reference. The likelihood of that project doing anything anytime soon is very slim. But if it is drilling great numbers near an already producing mine, its chance of success becomes a lot higher.
Then come the people behind it. If a project isn't managed by great people, I won't invest in it. I've been burned before by finding great projects only to have the management team destroy it because they didn't understand the capital markets. They raise a few million here and a few million there. They get excited. They spend it all and yet produce no shareholder value. Good drill results alone don't mean it's a success unless it brings shareholder value with the money that is spent.
After that comes the capital structure. Who owns the paper and at what price? The last thing a lot of people don't consider is management's marketing ability. If a company is public, management needs to market it. The shares are only as good as what The Street says they are worth. At the end of the day, someone has to buy your shares from you at a higher price for you to profit. That's how the stock market works. If no one knows about the company, no one will buy it and your shares are worthless.
TGR: Unfortunately, just because you get competent geologists running a company doesn't necessarily mean they know what they're doing when it comes to running a public company.
IL: Yes. I've seen it time and again, especially in the past couple of years where we had a bull market for about a year and all these geologists went out and spent all their money yet created no shareholder value. ...
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