Matt Geiger: For the Junior Miners, M & A Will Continue to Increase During 2020
Matt discusses the insights into companies and management that he gains from visiting mining sites. Once onsite, you learn a lot about a project’s infrastructure, accessibility, and the companies relationship with locals. Maintaining an impartial mindset with management is essential.
Matt has been blown away by the amount of high-quality merger and acquisition deals that are occurring in the market today. Also, we are starting to see some speculative interest trickling from investors, and overall, things are looking quite bullish.
The Balkan region is of particular interest to Matt for several reasons. There are fantastic mineral endowments and Soviet-Era history in this region. Governments in this area are in pressing need of economic growth and are increasingly likely to be friendly to new mining ventures. On the downside, there are corruption issues, fees can be high, and in some of these countries, new mining laws are mostly untested.
Matt invests from a value framework where he assesses the opportunities by calculating an intrinsic value for a company and comparing its actual share price. He prefers stocks that are undervalued by his metrics. Matt wants to be convinced of a long-term story. For that reason, he won’t invest in a company unless he is sure of its potential.
The price of nickel has pulled back some twenty percent in the last few months, disappointing many investors. The market, however, is doing quite well year to date, and inventories continue to be low with little capital spending on discoveries and mine development. Increasing E.V. adoption along with ever-increasing amounts of nickel being used in batteries makes for a compelling case.
You can find Matt’s latest Investment Letters at: http://mjgcapital.com
Time Stamp References
0:40 – Visting mining sites in person.
2:50 – Benefits of in field research.
5:20 – M & A has reached fairly impressive levels in 2019.
9:10 – Balkan mining jurisdictions in Europe.
11:30 – Soviet Unions involvement in the Balkans.
17:00 – Matts value investment strategy.
21:30 – Nickel and EV demand.
Talking Points From This Week’s Episode
• The benefits of going onsite.
• Increased merger and acquisition activity in mining.
• Opportunities in the Balkans.
• Calculating the intrinsic value of a company.
• Electric Vehicles and the price of nickel.
Mr. Geiger is Managing Partner at MJG Capital, a limited partnership specializing in natural resource investments. The partnership is long-only and holds a concentrated portfolio of resource equities. Investments include explorers, developers, and producers of energy metals, industrial metals, precious metals, and ag minerals. Matt is a graduate of the Wharton School at the University of Pennsylvania and previously founded a venture-backed technology company most recently valued at $150m.