Trust, But Verify*

*A Russian proverb made famous by President Ronald Reagan in the 19080s when he was negotiating against the Russians for a nuclear arms treaty.

A lot of trust has been lost in the mining space, specifically amongst investors and also by regional mining stakeholders. We need to get to a “trust, but verify” position with investors and stakeholders at a minimum if we are to survive…

Here’s my “State of the Union” in Mining.

A year ago I wrote an article on making mining cool again. And, boy, did it launch a fantastic discussion in the comment section! I hope we can do that again because while many of the topics I discussed last year still have merit, there’s more we need to discuss…

Over the next few months I want to dig deeper. Some of you may agree with me and some of you won’t. “We live in interesting times…” as they say. History is being made in the resource business and we are only in the bottom of the 2nd inning…

Industry Consolidation: Blessing or a Curse?

Nothing is grabbing our attention – and our clicks - more than this topic right now.

Here’s my quick take. Consolidation is ultimately good for the industry as a whole. The benefits of big cap M&A will trickle down to the juniors eventually. Mega-mergers will only reaffirm and accelerate the need for juniors to explore for majors. Huge value is created as assets transition from majors to juniors – I’ve been part of a few – on both sides. Worried about how an already strained industry will pay for the billions of assets that might come free for us juniors? Have no fear, some very smart people are working on this right now. It’s Darwinism at its best.

Financing: Prepare to Ride the Wave

Given it looks like we’re heading into an intense period of M&A in the sector it’s time we talk dollars and cents. As either an executive or director, I’ve been part of six mining M&A transactions totalling over $2 billion in value. When the markets turn in the resource biz, they turn quickly. And when the majors appetite for junior assets switches on, it happens VERY quickly. This is not the first time we’ve seen low or zero premium offers in our industry. And it won’t be the last. It’s all part of the cycle. Major funds capitulating, zero premium offers, M&A… all signs that we are bouncing off the bottom of the cycle – which is good news.

For a junior, standing still and waiting in the wings is a losing position. I’ve got a lot of advice for juniors living this dance right now. Stay tuned.

Canadian Regulatory System: Broken

On my recent trip to Europe a constant theme emerged. Mistrust. There is a LOT of mistrust of Canadian miners - both juniors and seniors - and our Canadian regulatory regime.

The world of 43-101 protection is firmly in place. However, the issuers (the bad ones…) are finding ways around 43-101, exploiting loopholes in the regulatory rules, burying the detail in the fine print. And some of the more prominent retail financiers (again, the bad ones…) exploit all of the above under the cloak of being non-material / non-reporting shareholders. The rest of us hold the bag.

There’s a sense of “cowboy” syndrome of our system and not enough accountability. Just as I constantly shout from the rooftops that mining needs to “disrupt” so does our regulatory system. For starters, how about some real “SEC-style” fines instead of simply a slap on the wrist….?

We need to strive to be better; we need smarter regulation to re-build our reputation. We must do this so we can reposition ourselves for the coming wave.

I’ve only scratched the surface here but if I’ve sparked a comment, leave it down below. I want to hear your view – your “state of the industry.” Stay tuned for more…

Happy PDAC everyone!