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Shaun Usmar: The End of Globalization Will Drive More Inflation

Tom welcomes a new guest to the show Shaun Usmar. Shaun is CEO of Triple Flag Precious Metals a Royalty and Streaming Company. He began in the business as a metallurgist in steel and aluminum. After that, he ended up in a senior executive role at various companies. This gave him a broad perspective on the metal industry.

For many reasons conventional financing in the industry is difficult and this created an opportunity for alternative business models. Their Streaming and Royalty offerings function to help fill that gap.

Conventional financing has yet to return to the precious metals industry. It’s increasingly important for companies to secure supply chains.

Inflation and geopolitics are boosting gold. The sector is still underperforming but eventually, it will attract the generalist investor. We’re still early on in this bull market and inflation seems unlikely to normalize.

Shaun discusses the various factors including wages, commodity prices, energy, and supply issues that could affect mining operators. Liquidity is important in this environment and higher-cost operations could experience problems. Pent-up demand due to the pandemic could put further pressure on goods and services. He hoped to see more consolidation in the mining market.

When creating a Royalty program it’s important to work within the needs of the resource company and develop a good solution. ESG is also important today and it’s important to work with like minded companies that give back to the regions where they operate.

The industry needs new talent and disciplined young people to enter the mining sector. Technology and innovation are also lacking and hopefully, we see development. Hopefully, we could see an Elon Musk equivalent become excited about mining and perhaps revolutionize the industry. The world needs resources.

Lastly, he discusses some of his experiences and lessons from being in the industry.

Time Stamp References:
0:00 – Introduction
0:33 – Why Focus on Gold?
4:04 – Conventional Finance?
6:36 – Gold and Uncertainty
11:09 – Wage Price Spiral
12:30 – Commodities & Inflation
19:22 – Sanctions & Gold
20:06 – Consolidation and M&A
23:04 – Structuring Royalties
27:57 – Younger Generations
32:07 – Royalties & Risks
35:07 – Optionality
36:37 – Experience & Lessons
42:50 – Wrap Up

Talking Points From This Episode

  • How Royalty and Streaming provide an alternative to traditional financing.
  • Effects and impact of inflation and possibility of a continued wage-price spiral.
  • The mining industry needs younger technologically minded talent.

Guest Links:

Shaun Usmar is an international mining executive with over 25 years of experience working around the globe in operational, financial, and executive leadership roles in some of the world’s largest and fastest-growing mining companies.

Prior to founding Triple Flag, Mr. Usmar served as Senior Executive Vice President and Chief Financial Officer of Barrick Gold Corporation, from 2014 to 2016, where he helped restructure the company. He joined Xstrata in 2002 as an early senior executive member of the management team that grew the company into one of the world’s largest diversified miners at the time of its acquisition by Glencore in 2013. His roles at Xstrata included General Manager of Business Development in London, Chief Financial Officer of Xstrata’s global Ferro-Alloys business in South Africa, and Chief Financial Officer of Xstrata’s global Nickel business in Canada.

Before joining Xstrata, Mr. Usmar worked at BHP Billiton in Corporate Finance in London and started his career in mining operations in the steel and aluminum industries as a production engineer. Mr. Usmar is the Vice-Chair of Make-A-Wish Canada.

Shaun holds a Bachelor of Science in Engineering in Metallurgy and Materials from the University of Witwatersrand in South Africa, and an MBA from the Kellogg School of Management at Northwestern University, both with distinction.

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