Marin Katusa: Keynote: Major Gold Discoveries are Becoming Increasingly Rare
Marin takes a contrarian viewpoint on several issues that many may find controversial. Unlike most resource investors, he feels that there is sufficient capital in the mining sector. However, it is getting more challenging to find good resources. There is a problem with not enough bright minds in the space since finding a job in the sector was bleak for a long while. Gold discoveries have declined, but money has been going into the industry. If you compare declining reserves in the oil sector to that of gold, it isn’t that much of a concern.
The average median cash position of a TSX Venture company was just over 400k. That is just enough to pay the CEO’s salary and office rent. You can filter the companies with more than five million in cash to just 92 companies.
He discusses how gold producers used to be one of the highest dividend stocks, but that changed when the focus went to executives and accountants. Today upper management makes 30-50 times that of a mine manager whereas in the past that was generally less than five. Starting this year, a lot of cheap debt has to be restructured at much higher rates. That wall of worry will have serious consequences for the mining sector.
The US is still the largest consumer of uranium, and Marin’s analysis of the demand picture shows that may not be good place for investors. Marin cautions that Section 232 will likely occur gradually and will not be a sudden game changer. Finally, Marin says, “The world is not running out of oil or natural gas, and we are not running out of commodities. We are, however running out of areas that respect entrepreneurial capital.”
1:30 – Marin’s Background and Views
2:50 – Government’s fear deflation.
4:00 – Gold is getting harder to find.
9:00 – True growth of mining.
10:30 – There is still money in mining.
13:00 – Executives are being overpaid.
15:30 – Cost of capital is increasing.
18:00 – Boom, bust echo cycle.
26:30 – Why uranium will continue to be flat.
30:20 – Section 232 will be a gradual quota.
32:30 – US Dollar will outperform for two years.
35:00 – Vanadium needed for green energy.
39:00 – The internet of things.
40:45 – Innovation will solve most bottlenecks.
Talking Points From This Week’s Episode
• Internet-of-things devices will reduce energy needs.
• Innovation is staggering and will solve most bottlenecks.
• No mine comes online easily, and a lot can go wrong, stocks can go down.
• Short positions are the new norm, and exploration operates on hopium.
• US Dollar is likely to strengthen for the next couple of years.
• Vanadium will be essential for utility green energy projects.
Marin Katusa is the author of the New York Times bestseller, The Colder War. Over the last decade, he has become one of the most successful portfolio managers in the resource sector, such as his 2009 Fund Partnership (KC50 Fund, LLC) which has outperformed the comparable index, the TSX.V by over 500% post fees. Katusa has been involved in raising over $1 billion in financing for resource companies. He has visited over 400 resource projects in over 100 countries. Marin publishes his thoughts and research at www.katusaresearch.com.
Mr. Marin Katusa, B.Sc., was the Chief Energy Investment Strategist at Casey Research, and the Managing Editor of Casey Energy Confidential, Casey Energy Report, and The Colder War Letter. He also managed a portfolio of international real estate projects, using advanced mathematical skills. He created a resource market tool that analyzed and compares hundreds of investment variables. Earlier, Mr. Katusa was a Mathematics Professor. He was Teacher of Fraser Academy from August 2003 to August 2006.
He has been an Independent Director of Copper Mountain Mining Corporation since April 04, 2007. Previously, he served as a Director of Gold Mountain Mining Corporation until July 2011 and Beanstalk Capital Inc. since March 2010. He has extensive relationships within the Canadian financial community. Mr. Katusa graduated from the University of British Columbia with a Bachelor of Science degree and a Bachelor of Education.