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Imaru Casanova

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2024-09-06
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2024-09-06
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  1. “Gold min Yes, the gold mining universe is, you know, I don't think it gets to 500 billion. You can include a bunch of little companies there, still market cap slow. So the point being it's small gold mining universe. When you go to the silver universe, I don't know. I have the figures, but it's even smaller. There's less companies. There's a lot fewer primary silver producers. Silver is often produced as a byproduct of other metals. So to find pure silver producers or stuff, even the companies that are silver in our in our holdings produce a bunch of gold or other metals. So anyways, all that to say, we struggle to find a lot of opportunities in silver, even though we like silver very much because it's such a small universe.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  2. “Do anything, really. But yeah, I think I read this. I was like, oh my God, I read somewhere that in videos, market cap drop in a single day is the size of the gold market. I'm like, call it 400 billion, right? Like small.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  3. “That silver, the mine is fairly inelastic. We've gotten the same production out of silver production out of these mines for, I don't know, at least a decade or two. So an increase in demand could have very positive implications for silver price. And so, yes, we like silver, what I would say when it comes to silver producers is it's a tiny universe. Let's be clear. gold mining universe is pretty small, right? Relative to NVIDIA.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  4. “Silver could be set to outperform gold from here. So if gold asks well, I expect silver to sort of ride along with gold, but silver has an additional component of demand that could, you know, bode very well for silver relative to gold, which is an industrial component. So it's no secret that silver is using a lot of applications. More recently, though, the expected growth of solar power generation will translate to a lot of solar panels having to be built. And guess what? They're silver and they're solar panels. So there will be, if those projections are correct, then we are going to go to much higher levels of renewable energy, including solar. That could bode very well for silver demand. I think it's important to remember.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  5. “Because Yes, you're absolutely right. I honestly, I think of gold and silver as one of the same. I will make, there are some important differences, but silver has been lagging gold, playing a little bit of catch up this year, but after a few years of underperformance. We come into this year, I was very bullish silver prizes because of that underperformance. Just as I'm bullish equities because of the underperformance against the metal, silver has the potential to return to historical gold to silver ratios, right? Pay attention to that. Take the price of gold versus the price of silver, gold atop, silver in the denominator. Historically, that ratio has been closer to, I don't know, 65, maybe it's closer to 70. Today it's somewhere around 85. So if we were returned to historical levels, that means...”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  6. “We need a few quarters, and we had a very positive second quarter. The second half is supposed to be even better operationally for a lot of these companies. So hopefully that translates into also good results for the last part of the year.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  7. “And we're confident that the companies are doing the work to allow that margin expansion and also that they are going to invest the free cash flow that they are generating from this higher gold prices and value accretive way that will deliver significant returns to shareholders. So we're very positive in the space. Companies do have to focus on meeting expectations. The market is sort of obsessed with not just earnings and estimates, but production cost estimates. You put out at the beginning of the year the companies issue a guidance. They market once that guidance to be met to reassure markets that companies are being consistently delivering. And so I do think.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  8. “Could mean to gold another three four hundred dollars per ounce from hair. Just simple historical math, not making any forecast and projections, but it's easy for me to arrive at that figure just based on previous demand for gold out of that sector, which, like I said, has been the historical driver of gold prices and has been absent in this rally. So that's a pretty historic shift, in my view. Central banks being a main driver instead of investors. It's a historic shift. If we get both central banks and investors together, this could be the perfect store for gold. Let's not forget that gold is very underowned, something like 1% a global financial asset is invested in the gold sector. So, you know, just a little tweak, a little.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  9. “So, if you, because those holdings have actually been in decline since April of 22. So if you get that just that investment demand, which, you know, obviously we could exceed that depending on what environment we're in, but just getting back to those peak levels of global global inv holdings.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  10. “Like I said at the beginning, we are very constructive on the gold price. We do think there is room here for gold to continue to climb once we get investment demand out of the West to return. You know, I look for your audience. I look at the global gold bullion ETFs as a proxy to investment demand. If you look at where those levels are today, they're very well off their peaks.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  11. “It doesn't have to be three or four if you're processing technology, if you're heat bleaching, which is you take rock, you stack it. Then you throw fluid on top, and the gold just leaches out. That's not nearly as expensive as building a whole facility to process the gold. So you might be processing, you know, 0.3, 0.4 grams per tonne because this stuff is cheap. So it's a combination of factor. The economics have to work.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  12. “Expensive technology that you might need to extract the gold. And you can do that and you can build all this facility if you've got four or five, you know, three million S. If you just got 500,000 ounces or a million, then it doesn't work. The economics don't work. So it's a bunch of different factors that can determine that, you know, this money is going to be in production or not, but more and more it is regulation and environmental considerations and communities take Panama, take Guatemala, where there's one of the best silver deposits in the world with a beautiful, fresh mentade, you know, plant ready to go. That mine is shut down. It is not in production because, you know, the government and the community having come to an agreement. So, many different factors can prevent gold deposit from becoming a mine.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  13. “Work to get two little gold, so it is not economic. It could be that once you get some samples and you process them, you say, yeah, the gold is actually there, but to get it out, it is so trapped in a sulfide or in some other element that to extract it, we're going to have to do some very complex metallurgical oxidation pressurization process that is too costly and the recoveries are going to be, you know, we're going to get, you know, a certain amount of ounces out of the ground. 40, 50% of it unless we spend all this capital, which is not justified because we don't have size. So that's why size is so important. Because you can pay for a lot of this processing and equipment.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  14. “Many thanks. I mean very high level. It could be a country could stop you from developing a mind. A community could stop you if you're going to do it in an area that is sensitive, that has fisheries, that have archaeological issues. And obviously you try to get all that out of the way, but the permitting can be very long and sometimes there are regions that just refuse to let you build a mine. So that could prevent you from building a mine. But we typically try to assess those risks early. It could be, you know, once you drill more, you find out that the goal that you thought was there is there, but the great is so low that it's not worth digging however many meters to get it out of the ground.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  15. “That allows us to look at those early spatial opportunities, make an assessment. You know, we got the drill data, we look at it, we don't wait for them to tell us, oh, we think there is X here in the ground. We trust their data. You know, we can't go and produce the data ourselves, but we take their data. They'll drill holes. We understand how these deposits work. And we say, oh, this could actually be a good deposit. It looks like it could be mined economically. And we'll go ahead and make very early stage investments. Historically, we have been really good at making this early stage investments and benefiting from the rerating and the share price appreciations that comes after these companies prove that, yes, indeed, we have a deposit that can become a mine. There's a lot of deposits, right? They're not all going to be mines.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  16. “And then you got down to spectrum, your developers. And those are you guys, like you said, who are just busy drilling. I talked a lot about drilling and why that's required to define a gold deposit. You have to go and drill it so that you can show me that this deposit is in fact there. And so these guys are not generating revenues. They're just busy defining their project. And just to give you an idea about 15% of our active portfolio right now is invested in those companies. So it's quite a differentiator for us. We have about 30% of the portfolio, a little less 20, maybe 27 of the portfolio today is in junior space. About more than half of that is in developer space. So it's been a sweet spot for Van Ek. I think it's not coincidence that we are team does have technical expertise. We have geologists and engineers in the team.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  17. “Let's define some things here. So obviously large producers and miners and midiers have brownfield and greenfield projects. So we are exposed all across to both brownfield and greenfields. I think what you're referring to is how often do we invest in those companies that are only now developing a greenfield project. Yes. And those are usually referred to as developers. So in our space, we have our seniors, the large companies with ton of minds. The mid tiers, less market cap, less mines. And then we got this junior space, some of which”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  18. “How often do you invest in very, very new projects? I believe they're called greenfield as opposed to brownfield projects where the shovels have already gone through the ground, as well as companies where their business model is to create a mine and then have it be bought by a bigger company.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  19. “Still happen. And so markets for a bit, we're not convinced that the mine was going to show down because it seems so unreasonable. But we wanted to manage that risk and reduced our Franco exposure in anticipation. It is still a very good business. They have gone ahead and written down Cobra Panama entirely. So it is fair to assume that the market is basically deleted Cobra Panama from Franco Valley. And there is opportunity now that they get re-rated again after what was a pretty obviously big hit to the stock. But that's why today we're underweight. But, you know, we're always reassessing the outlook of these companies. And next thing, you know, we could be overweight, Franco. We do like the business model and the company.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  20. “But the cover Panama, mine and Panama operated by first quantum represented approximately about twenty percent of Franco Nevada's revenues and valuation. So pretty large exposure to a single asset. And you may or may not have heard or your audience, that mine was shut down by the Panamanian government. And so after as we wasn't shut down and day one, the news came out that there was the risk that the mine was going to be shut down. We reduced our exposure to Franco given the risks that the mine would be shut down. It made absolutely no sense for that mine to be shut down for the Panamanian people. But some things happen or things that make absolutely no sense.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  21. “Yeah, we like all of the streaming companies, I think, at least in my view, are well-run businesses. So it's the big four, right? Royal gold, Franco Nevada, or Cisco gold royalties and wheat and precious metals. We own all four. We are a little underweight. Franco, it's been the, we were able, I think Franco was one of our largest holdings a couple of years ago. And they did face pressures after really a chunky asset for them. We talked about diversification.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  22. “See your active strategy is invested in a C skill gold royalties and weaken precious metals, which are also precious metals streaming companies. But I also notice a smaller percentage is in a very large streamer, Franco Nevada. So tell us, why are you overweight, OSCO, and why are you underweight, Franco Nevada?”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  23. “Streamers and royalty companies are getting pretty smart about structuring their deals so that they don't put too much pressure on the cost structure so that the small obviously can successfully operate. And yeah, so diversification and not having that cost exposures is what makes this model so attractive. And then on the flip side, it means they're not as leveraged to the gold price. So as the gold price increases, yes, their earnings increase, but not quite as much as they do for the producers, which have cost exposure. But it's a brilliant business model in our view. And for the reasons I outlined, and so we maintain exposure to that sector in our active strategy.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  24. “But as long as the mine is operating, you get your 20% and you get your if it's a stream, you get your 2, 3, 5%, if it's a royalty, and happy you go, you get your gold or your cash, whatever you're delivered. And whether the cost weren't, you know, to 1900 or whatever the figure might be, it's really not impacting you. And so that is the attractiveness of the royalty and streaming model. It's to me, one, that they're very diversified. So, you know, if you're a two, three, four mind producer, what happens in every mind has a pretty large, obviously effect if you own 20, 30 streams or royalties, you know, there's a lot more diversification. Two, you don't have the cost side to worry about for the most part, unless obviously costs get so high that the mine is going to shut down, then that's not good for you.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  25. “Can be 10 20 30 producing assets, and they invest early, so they have also assets that are in development and assets that are early stage. But the idea is that they own that production. So once that mine goes in production, you come to me and I tell you, okay, Jack, the mine is now in production and you don't really care at what cost I'm doing that. All that emphasis I put before on cost because, you know, that's what impacts your profitability. The royalty and streamers are fairly shield and protected from cost because all they get is 20%. You don't care what cost I'm doing it. You don't care. The mine has to be in production to be clear. So it's not like these streamers and royalty companies are risk free. The mine stops producing, which sometimes they do, you're not going to get your stream.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  26. “So I'm about to build a new mine, and clearly I need capital. And you are a royalty of streamer and you say, you know, well, Ema, if Unicapital provides some of that capital for you in exchange for a portion of the production of that mine, and let's say I'm producing a copper producer, but I have a gold, you know, comes with some gold or some silver or the opposite. I'm a gold producer and comes to it, whatever the mix. I'll say, you know what? You can take my gold and that's, you know, whatever. You can take 100% of my gold. Or if I'm a gold producer, I could say you can take 20% of my gold. Give me the capital to pay for that. And you get that goal no matter what. So these streamers do that with tons of acets. I mean, the larger the company, the more assets. But, you know.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  27. “Royalty and streaming companies, and we're getting out these days a lot more streams than actual royalties, but these sectors known as the royalty and the companies and streamers, sometimes companies refer to them as streamers, are companies that do not themselves own and operate mines. They're a bit more like us, you know, mutual fund manager. They own portions of the mines of other portions of the production of the operators mines. So let's say, you know, you got Barrick, Newman, Agnico Eagle, Jack, your royalty or streaming company.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  28. “Okay, so if the current grade is lower than the average grade, it could get better. So maybe just keep that in mind. And if the current grade, it could get worse. That is something, Ima, that I don't think a lot of people invest in gold stocks know. So I'm really glad you said that. It's critical.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  29. “Yeah, so let me explain. So let's say you have this box, you drilled a hole here and a hole there and a hole here. And the greatest, you know, it's not a homogeneous box. The deposit, it's 10 grams here, four grams here, six grams here. And you say, okay, on average, it's five. If you're in the high grade zone today, at some point you're going to have to go to the low grade zone. And when you do because you're moving more rock to extract less gold, your cost will go up. So that is why, and the reason we know this number is because the companies publish this number. When they put out a mine plan, they tell you, here's what we got. We got a deposit with this average grade. And so always compare current grade. Average grade of the deposit and the impact that it has in costs.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  30. “That's very interesting. So, I understand if the grade is high and you continue to mine, the grade will go down, so less gold per square foot or however you measure it. But why can you start with a low grade? You say it goes up because you're just, you hit a part of the mine that happens to be lower grade.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  31. “That if it's higher one year, that grade is going to have to come down in future years. The opposite is true. If they're mining lower grade, the costs are going to be higher, which means it would be unfair to assume that the costs are going to be that high for the entire life of the mine because the grade should come up and costs should come down. So that's one that we have to watch out for all the time in our models.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  32. “Because obviously, you know, more gold for the same amount, a lot of the expenses moving rock and processing rock. So if you're moving and processing less rock to obtain more gold, your cost per unit are coming down. And so then if you're an investor that is about to make a mistake, you go, oh, cost or, you know, 900, $1,000 per ounce, perfect. Let me make that assumption for the other 10 years that this company is producing. But wait, because that grade eventually, if the model is right, that grade is going to come down in the next few years so that the average is the lower average that they initially said. And when that grade comes down, their cost per unit are going to go up. So investors have to be, if you're getting to that level of modeling a company, pay attention to the grade versus reserve grade.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  33. “Average grade, obviously it varies, right? Some rock is a little bit higher, some of the rock is a little bit lower, but you average it all out, and this deposit that has a million ounces in there, it's, you know, five grams per ton. But in 2025, these guys are mining a zone, a high grade zone that is 10 grams per ton. Also, guess what? Because you're moving a lot less rock to produce this higher content of gold. Your costs are going to be a lot lower that year.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  34. “Let's say a common mistake could be: let's say a company is producing out of an asset. And in this year, next year, in 25, they are going to produce at a much higher grade. So let's say your model says you're grade. And to be clear, grade is grams per ton or ounces per ton. It's how much gold is concentrated in a ton of rock. And that just goes to point that there's very little gold, right? Gold is very scarce. So you have to move and process a lot of rock to extract a gram. You know, a high grade, you know, grades could be up to 20 grams per ton, but like a lot of the mines that are in production are four, five grams, if they're high grade or they can be, you know, less than a gram per ton. Anyways, that's great for those that. So that's a very important parameter. And what happens is your model could say, oh, you know, the”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  35. “Yes. And what are some things that people who like me who are not a veteran of conducting financial analysis via spreadsheets and valuing gold companies? What are the most common mistakes that gold mining stock investor newbies or even intermediaries make?”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  36. “You capitalize that whole million dollar every time you produce an ounce, you depreciate a buck, a dollar per ounce. And so if you produce 100,000 ounces this year, you would depreciate $100,000 of your $1 million. Units of production. So you take your capital spent in the numerator. I mean, your denominator is all of the ounces that you're going to produce or at least your estimate of the ounces that you're going to produce. Usually it's your model, right? The deposit has 3 million ounces. And every time you produce an ounce, you depreciate the corresponding figure. And that will have, like I said, an impact on your earnings, clearly. So it's pretty what houses are in the denominator may vary from analyst to analyst and so forth. But overall, that's the method employed in the industry for. Calculated depreciation. Since you”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  37. “And it gets accumulated. So as you develop these assets, not all of that capital gets expensed. Some of it gets put into the capital section and eventually needs to be depreciated. And the way it is depreciated is you take the accumulated capital expenses and every year you look at how much you have produced and you expend the depreciation that by the units that you produce. So it's units of production. So you said you build a mine and you spend a million dollars building it. Generally, but to keep numbers easy because I can't do a lot of numbers in my head anymore. I need my spreadsheets. So you spend a million dollars and you're going to produce a million ounces. So every”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  38. “Yeah, so I'm looking at my model here, and obviously there is the depreciation has cash flow ramifications because at the end of the day, you know, the companies met the depreciation expense against their cash for their pre-tax, you know, cash flow. And they're going to pay taxes on that figure that excludes depreciation. So the higher your depreciation, which is a non-cash effect, you know, the less taxes you're going to pay. So it does impact, you know, that quarter to quarter cash flow on the basis of taxes, although obviously gets tricky because some taxes are deferred, etc. But let's ignore that. So we do need in our models, we do try to, you know, do our best to estimate that depreciation. So that we can take into account the impact that it has on taxes paid.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  39. “And I just want to say sometimes people go on TV and they say we're not interested in earnings. We're interested in this other thing that's non-fundamental. When you say cash flow, that is a fundamental basis. So you're doing very fundamental work. It's just you have a, you prioritize a different model. Us about so I think a few of the key differences between net income and cash flow is cash flow doesn't include depreciation and it doesn't include CapEx CapEx being a minus for free cash flow and a positive for depreciation. So I guess a key difference between free cash flow and net income is that basically depreciation minus CapEx. Can you tell us just about that difference and how you think about the importance of depreciation and capital expenditures and how that impacts the value of the mine?”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  40. “Quarter, and they miss 20, but they'll produce 140 next quarter works for me. Just, you know, as long as you're producing those ounces at some point, an understanding that there is so much they have to manage. You know, like I say, you drill a hole and you make estimates. When you get down to the mine, you might find that the grade in that part of the deposit that you're mine in this quarter, it's a little bit lower than your model suggested. Well, not really shocking, right? You don't have data for every point in the mine. There is bound to be variability. And as long as it over the longer term, over a five, ten year period, they are demonstrating that their model, their average grades, their average costs are within the model that they deliver to the market, then the value proposition remains the same. And so I am.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  41. “That's the reason why I'm not obsessed with net income and earnings, but I just want to get to the bottom line. Also, I hate the variability quarter to quarter. And I know the markets are very focused on what's the earnings for this quarter. Did they meet estimates? It's so hard to estimate because so many little things can change that are going to throw off your earnings estimates. And honestly, have zero impact on the valuation of these companies. If you tell me, you know, they depreciate a little bit more this year. So the earnings were higher. I don't care. I want to know how much they produce and at what cost. And so the variability quarter to quarter, it's also very distracting to me because I'm looking at this company. We're long term value investors. I'm looking at this company, like I said, for the next 20 years. And so what they, you know, whether they produce 100,000 ounces this.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  42. “I'm just, you know, you want to know just what this company is worth to me, they're worth the level of free cash flow they produce. I don't really care how you do the math. I just want to arrive of how much money are you making for me on analysis, you know, how earnings are subject to quarter to quarter variations on how they decided to account for stripping. They have to move all this rock. Part of it goes into the expense side, the other goes into the capital side, so it gets depreciated over time. To me, that just pollutes my thesis. I want to go to the bottom line. Forget all this cash and non-cash activity that gets put in your income statement. Just show me the money, free cash flow. What is that this quarter? And also, I'm...”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  43. “Risk to the operation. So both factors play a role, but I think at the end of the day, great is king, the higher the great of your deposit, the lower your cost, the better mine you have.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  44. “Or the currency. And so we do make those distinctions aware that despite our assessment and the fact that these companies will produce and will be profitable and would do it in a stable manner, their stock price is still going to be under pressure. So it's a balancing act and it comes in waves sometimes, you know, depending on what's happening in the country. But we will not invest in areas where clearly there is risk that your mind is going to be expropriated by the government. We won't go to those areas. And the quality of the deposit, it still plays, you know, a big role. We won't invest in mines that are in Canada and Natura and have a great jurisdiction profile when we think their minds are not high quality. Costs are too high or there are other.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  45. “Headline risk as an area, a region that could be considered by the broader market as very risky because of what's happening at a political level, at a social level. We find some regions where this is all true and then it puts that valuation discount, but that we know these companies that are operating gold mines do so successfully and without trouble. And so they're generating free cash. They're operating in this environment more broadly for the region that isn't perceived as positive. But we have the expertise to know that they can actually get the production out of the ground and operate. And so we have to be very careful not to confuse, you know, mining out the outlook for miners versus the outlook for the country or the country.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  46. “It's very tricky. It's probably when it comes to, I think, I like to think a lot of it as risk management. A lot of our job in picking stocks in the sector is risk management because honestly there are a lot of risks for this industry. Whereas jurisdiction risk from a government or a community demanding or it's changing terms to theological uncertainty, metallurgical uncertainty, there is a lot at play. We had a company report results today that had to downgrade guidance.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  47. “How do you deal with the fact that a lot of the companies that are in the riskiest jurisdictions happen to have the lowest cost mine? Because you would want the lowest cost mine with the best jurisdictional risk or the lowest jurisdictional risk, but you kind of have to choose one or the other. So when you're presented with that choice, as I imagine you often are, how do you think about it and what process do you use to make the decision?”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  48. “Operating model, I think I can get really tricky, but qualitatively it enters our assessment. And so, you know, when I say we look at relative valuations based on our models, you know, somebody that plots TEP, then you see that their assets are in, you know, Burkina Faso versus, you know, let's say the exact same company as far as quality asset cost, but they're in Canada or in Australia, clearly one is going to trade at a discount relative to the other based on the risk profile affected by where these mines are located. So a very important consideration. And, you know, we can think of many examples where being in the wrong jurisdiction. has impacts share price reforms.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  49. “And to answer your second part of your question, that's on Mexico, and there is a new administration coming. We're, you know, cautiously optimistic that maybe that can lead to enhancing the attractiveness of Mexico for gold mining. But to answer the second part of your question, yes, jurisdiction has a big impact. So when I say Canada is not Mexico, Canada has processes rule of law, agreements, things that allow you to operate within. Yes, it takes time to permit mines in the US and Canada, but once you have your permit, you have security. It's business as usual. And so investors do pay a premium for assets that are in more stable jurisdictions. And that plays a significant factor in our evaluation. We don't quite try to build country risk into our financial and, you know,”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT

  50. “Mining permits have been new, mining permits have been basically non-existent. And so those that are operating are doing okay. There are security risks in Mexico. There's a lot of factors that make today Mexico a lot less attractive than it used to be. Just give you an example before 2008, our fun or active strategy would have been we do our numbers on a weighted basis based on the reserves that each of these companies have in each jurisdiction and based on our position size, we average weight average this exposure and before 2008, before the end of 2008, we would have been 13, 14% Mexico. I don't know what the numbers today, but it might be closer to 5. So we've significantly reduced our exposure to Mexico because of this.”

    2024-09-06 · Forward Guidance · Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4) · IDENTIFIED FROM THE TRANSCRIPT