Rick Rule Of Sprott US Holdings On Why Investment Is Key To Mining’s Survival
Dig Deep – The Mining Podcast Podcast
Shownotes Transcript
Rick Rule is the President & CEO of Sprott U.S Holdings and a highly experienced investor and speculator, focused on sub $1,000,000,000 market capitalization public and private issuers in natural resource industries.
He has led and participated in hundreds of privately placed debt and equity issuances for resource companies operating internationally, and is also a sought-after investment conference speaker, having presented at hundreds of resource and investment conferences over the last thirty years.
In this podcast Rob talks to Rick about commodities in terms of bull-and-bear markets, what make good investments and how should CEO’s position themselves to raise funds? Also, they discuss the commodities and countries in which Rick believes there will be growth.
A must-listen-to episode for anyone looking to invest in the resources sector.
KEY TAKEAWAYS
- So determined was Rick to learn all he could about the finance side of natural resources, that he emigrated to Canada and attended the University of British Columbia. Rick enjoys his job and his chosen vocation so much, that he truly sees it as not work.
- Rick believes that no matter what the economic climate may be, investment is paramount to survival in the mining industry. He insists that continually investing even in the face of a few harsh years for the mining industry, have helped Sprott to cement their position as one of the largest investors and speculators in the business.
- Since the legalisation of cannabis in certain areas of the world, the cannabis market is attracting speculative capital at the expense of the mining business. Rick believes that this is actually a good thing as some junior miners and management teams who were perhaps not as devoted or as skilled in the art of mining, have chosen to move to the cannabis industry.
- When looking at companies to invest in, value is created by people. Rick and Sprott want to do business with people they know and believe in, or in companies in which those they already trust, believe in. But in addition to proven success, Sprott are also convinced that a company’s specific skill-set must match the task at hand.
- Rick believes the industry is in fact over-capitalised. Of the 1500 listings, Rick considers around 1200 to be non-viable, and the fact that they have bids in place is evidence of over-capitalisation.
- For those wishing to speculate or invest in mining projects, Rick advises looking for companies involved in large Tier 1 or Tier 2 projects in the early stage. Grade matters, and so does size. Expertise and a track record of success are essentials, as is alignment.
- When you set the price of a commodity below the cost of producing that commodity, over a long period of time the mining industry’s ability to keep producing it becomes constrained. When you balance supply-and-demand by reducing the supply element, as the market “firms”, the industry is no longer able to increase supply to meet demand.
- Copper is difficult to mine and expensive to initiate when it comes to new mines. There seems to be a lot of focus on copper at the moment as it’s a necessary component for the growing electric car market. But Rick advises that copper is required for way more than just electric cars. It’s also a vital component in providing material goods to those who have recently found wealth. This is why its value has recently risen, and will again.
- The Democratic Republic of Congo has a lot of what the world needs in terms of resources and is an area that will be highly valuable in terms of investment in the coming years.
- In Rick’s opinion, there is a tremendous challenge arriving for the mining industry in terms of skills. Many seem to be placing the responsibility for the future of mining on older shoulders, where he believes that a younger generation should instead be trained and instructed using the wisdom and knowledge of older miners, in order to ensure the prosperity and long term prospects of the business.
.BEST MOMENTS
‘I’m a born boy!’
‘Sometimes I resent going home at night. It’s a business that’s treated me very well’
‘This business is deeply, deeply cyclical and capital intensive’
‘You are either a contrarian or you will be a victim’
‘My personal expertise in cannabis ended four decades ago!’
‘The back side of a hockey stick is just as steep as the front side’
‘Mining is a knowledge business. Value is added by answering a series of unanswered questions’
VALUABLE RESOURCES
Dig Deep – The Mining Podcast on iTunes)
Rick’s Email: [email protected])
ABOUT THE HOST Rob Tyson
Rob Tyson is an established recruiter in the mining and quarrying sector and decided to produce the “Dig Deep” The Mining Podcast to provide valuable and informative content around the mining industry. He has a passion and desire to promote the industry and the podcast aims to offer the mining community an insight to peoples experiences and careers covering any mining discipline, giving the listeners helpful advice and guidance on industry topics.
Rob is the Founder and Director of Mining International Ltd, a leading global recruitment and headhunting consultancy based in the UK specialising in all areas of mining across the globe from first world to third world countries from Africa, Europe, Middle East, Asia and Australia. We source, headhunt and discover new and top talent through a targeted approach and search methodology and have a proven track record in sourcing and positioning exceptional candidates into our clients' organisation in any mining discipline or level. Mining International provides a transparent, informative and trusted consultancy service to our candidates and clients to help them develop their careers and business goals and objectives in this ever-changing marketplace.
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