Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Legendary Resource Investor Jeff Phillips on Why Real Assets & Real Teams Matter in This Metals Bull

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today on another historic day for precious metals is a longtime friend, contrarian investor, and one of the most successful resource investors in this space. I’m speaking with Mr. Jeff Phillips. Jeff, how are you today?

Jeff Phillips: I’m doing great, Gerardo. Thanks for having me.

Gerardo Del Real: We live in interesting times, sir. We have gold pushing $4,800, currently trading around $4,760. Silver flirted with $96 before retreating to the $94.50 level. Geopolitically, the turbulence and volatility are as kicked up as I’ve seen in my 47 years of life. What do you think about this precious metals market? Is it sustainable? Does it continue? What do you think the drivers are?

Jeff Phillips: Well, I think the drivers are discussed in many, many interviews daily. Essentially, we’re devaluing our currencies around the world, and people want to own something safe. Gold — and silver to a lesser degree — have always been hard assets that do pretty well during times of inflation and currency debasement.

They’ve had a good run here. Again, if you look long term, gold is going to be higher — long, long term — and so is silver, because they’re going to keep printing money. But in the short term, I can see gold and silver having a healthy pullback.

Right now, the mining stocks have not at all reflected this move in gold and silver, especially the gold and silver equities. You’ve got copper doing well, you’ve got uranium doing well.

But like you said, in the resource sector, beyond gold and silver, you now have this new dynamic where countries around the world are fighting over security of supply for the minerals they need. None of us mine all of these minerals domestically, and the United States is probably the worst offender at this point because we’ve played this “not in my backyard” game for the past 40 years.

So you’re seeing governments, large pools of capital, strategic initiatives — I can’t even keep up, Gerardo. There are so many announcements. Didn’t Australia just announce an antimony initiative or something?

Gerardo Del Real: Yes, that $1.2 billion critical metals fund — what I’m calling a critical metals bank — is focused heavily on antimony, along with some rare earths, gallium, and a couple of other metals. But it was very much geared toward antimony security of supply.

Jeff Phillips: Exactly. And I can’t keep track of all the announcements the U.S. government and banks have made around critical minerals funds. Basically, this resource market is going to be very good over the next 10 years. It will be highly volatile with ups and downs.

I’m not complaining — I do well in volatility. I finance companies with people I trust and structure deals carefully. I’ve actually had some of my biggest wins in the last five years before this bull market really took off. But I’m happy to be in a bull market.

You just have to be aware that there will be pullbacks. I tend to finance companies in the $10 million to $30 million market cap range — very high risk, but with good people and good structure. Those are non-negotiable requirements, and they narrow the field dramatically in this space.

The goal is for those companies to graduate into $300 million to $500 million market cap companies with a new level of investors financing them.

Some examples of companies I still like and still own include Bravo Mining (TSX-V: BRVO)(OTC: BRVMF). You just saw them raise over C$100 million at C$4.50 a share. As a shareholder, I’m happy — but I’m even happier because I financed that company pre-IPO at C$0.50 and less, and then did the IPO at C$1.35.

It’s a successful company proving that both the asset and the people deserve to be financed at much higher prices. You can look at companies like Regulus Resources (TSX-V: REG)(OTCQX: RGLSF) and PMET Resources (TSX: PMET)(OTCQX: PMETF). Those are companies I was fortunate enough to be involved with when they had C$15 million to C$40 million market caps, and now they’re much larger.

Those things happened — and have only gotten better — but many of them were substantially up even outside of a bull market.

Don’t get me wrong, I like the bull market. But I liken it to farming. I’ve got plants in the field — usually about a dozen. Some are already bigger and others are just starting out. I hope they grow into bigger plants over time.

So yes, I’m on the front end of the curve. I’m still looking… but it’s getting tougher in this market to find quality people, quality structure, real assets, and small market caps — which helps take some of the risk off the table for me.

Gerardo Del Real: Let me play devil’s advocate for a second. While it’s getting harder to find early-stage deals with quality people and quality assets, it’s getting easier for companies without those things to raise capital.

If I’m a typical promoter just adding “gold” or “silver” to a company name — pick your commodity — they’re all surging right now. Maybe I’m just looking for a quick double or triple. What’s the argument for someone wanting Jeff Phillips involved — not just for the capital, but for the network, the geologists, capital markets experience, introductions, and long-term support?

Why should people still pick up the phone when Jeff Phillips calls?

Jeff Phillips: Well, most of the people I’m not going to call because I don’t like their share structure and I don’t like the people involved. You’re correct — they can raise money right now, but I’m not competing with that.

I’m focused on a very small group of companies. Things change, new opportunities come up, but I’m still looking for real deals where the money is going into something real and the asset actually deserves that capital. That excludes a lot of exploration companies.

I had this exact conversation with a company this morning. I offered to lead a financing, and they had offers at about 20% higher pricing. But that’s just money.

When people work with me, they know I’m not here for a “four months and a day” hold, collecting warrants. I’m involved — helping build the company, supporting milestones, and being there when they need to raise C$5 million, then C$10 million, and hopefully C$50 million down the road.

That’s how you get outcomes like Bravo, raising C$120 million at C$4.40 a share. That’s what I’m trying to help build.

Companies need to understand that when everyone’s offering them money, they’re just renting capital. You want to know who you’re renting it from. I only look at companies where management and the board own at least 25% of the company — fully reporting, visible ownership. That means they’re locked in. They have to make the company work.

They’re not here just to flip options and stock during a bull market like 90% of companies. These are real teams, building real companies. That’s what I want to be involved in.

Sure, you can make money faster doing some of the other stuff — but I want to be part of a real deal, working with real people, as part of a real team.

Gerardo Del Real: Excellent.

Jeff Phillips: And shareholders are part of that team. Companies need to treat them that way. Don’t just take money from anybody. If you’re a good company, take the best money. That’s a whole separate interview.

Gerardo Del Real: I couldn’t agree more. Before I let you go, I have to ask — are there a few names you’re involved with, helping, or simply own as a shareholder that check the structure box, the people box, and ideally the asset box as well?

Jeff Phillips: Sure. First, I consult for many of these companies and I’m a large shareholder, so I’m obviously biased. This is not investment advice… it’s simply what I’m doing with my own money.

It doesn’t guarantee success but it does mean these companies are doing the right things and have assets that can move forward.

Do you want to focus on higher-risk exploration, or higher-risk but more advanced companies in the C$300 million to C$500 million market cap range?

Gerardo Del Real: You know me well enough — I live almost exclusively in the highest-risk exploration sandbox. Good teams, good structure, maybe still looking for the asset but proven integrity and a track record of execution. Especially in a bull market like this, that’s where I get excited.

Jeff Phillips: Fair enough. Let me give you a few.

One company I really enjoy working with and am a large shareholder in is Daura Gold (TSX-V: DGC). I believe the market cap is around C$35 million. They recently raised C$7 million at C$0.25 a share, and the stock is now around C$0.40 a share. 

They have several projects. They’ll be drilling the Cerro Bayo project in Argentina in February — a joint venture from Latin Metals, a very strong prospect generator. I really like that property.

More importantly, Daura also has a project in Peru right next to Highlander Silver, which has been delivering fantastic drill results. Those structures extend onto Daura’s ground. Hopefully, Daura will be drilling that property later this year.

I think Daura Gold offers significant upside in a precious metals bull market.

Another company is GreenLight Metals (TSX-V: GRL)(OTC: GRLMF). I’m a shareholder and consultant. They were private for too long, in my opinion, and recently went public at C$0.30. The stock dipped initially due to legacy shareholders but I liked the deal.

They’re operating in Wisconsin on properties that Rio Tinto worked on before mining laws changed. Wisconsin is now mining-friendly again, and for the first time in my career, the U.S. federal government is actively supportive of mining.

GreenLight recently raised about C$12 million at C$0.35 with no warrant. That capital will fund a major drill program starting in February or March, pending final permitting.

They’ve already had strong drill results. It’s a copper asset with additional critical metals. I wouldn’t be surprised to see fast-track federal support there. The market cap is around C$35 million, and I think it’s very compelling.

Another is T2 Metals (TSX-V: TWO)(OTC: TWOSF), run by Mark Saxon, who I’ve known for 15 years. I originally financed a company he was involved in — Tasman Metals — back in the 2009 rare earth boom at C$0.10. That stock went on to C$7 or C$8.

Mark runs T2 Metals now. They have a strong Canadian project that I hope they joint venture along with newer exploration properties. They recently announced sampling results and I expect them to add more assets in that district.

The property came from Shawn Ryan, a well-known figure in the mining space. T2 Metals trades around C$0.35, with a market cap around C$15 million. Mark is a straight shooter, and I suspect the stock trades higher over time.

Gerardo Del Real: Always a pleasure having you on, Jeff. We’ll both be at the Vancouver Resource Investment Conference. Hopefully we’ll see some of our audience and subscribers there.

Before you go, any final thoughts on how to play this market?

Jeff Phillips: In any market, avoid liquidity traps. Don’t risk more than you can hold through volatility. Especially in mining, focus on people and structure.

Look for management teams with meaningful, reporting ownership — they’re locked in and have to build the asset properly. Be cautious of third-party advice, including mine. Everyone’s situation is different.

This is a high-risk sector. You’re going to see a lot of people with no mining experience getting pitched deals because of high metals prices. Many will buy turkeys — and when the wind stops blowing, the turkeys can’t fly.

If the wind stops, I know the companies I’m involved with will still be standing — because they’re real deals.

Gerardo Del Real: Well said, as always. Appreciate the time and insight. Thank you, Jeff.

Jeff Phillips: Thanks for having me, Gerardo.

Gerardo Del Real: Cheers.