Categories: Precious Metals
Topics: General Precious Metals

Rick Rule on Building Wealth Through Discipline, Structure, and World-Class Resource Investments

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is a man who really needs no introduction — he’s one of the most successful contrarian resource speculators in the space… none other than Mr. Rick Rule. Rick, it's great to have you back on. How are you?

Rick Rule: Pleasure to be back with you, sir. Thank you for having me.

Gerardo Del Real: Listen, we had some great feedback from the last time you and I chatted, and a lot of it centered around the Rick Rule Symposium and the excellent conference that you put on. 

I spoke with a mentor and friend of mine, Mr. Jeff Phillips, and my business partner and friend, Mr. Nick Hodge, who both attended, and they had nothing but glowing remarks about the networking, the quality of the presenters, the quality of the companies that were there, and just top-to-bottom phenomenal networking — so congratulations on that. 

I would love to get your take on how things went.

Rick Rule: Well, thank you for all that. The only thing that was missing was you. We hope we can correct that problem next year. The conference was a success. It's important to note that the conference is almost 30 years old. If you do something for that long and make it a little bit better every year, after three decades it gets pretty good — and in fairness, we were pretty good.

We do things differently over time. When we do big-picture macro commentary, we don't have failed journalists or even successful journalists — we have players. So we had Danielle DiMartino Booth, former partner at Goldman Sachs, talking about Wall Street. 

We had Jim Rickards, former general counsel for Long-Term Capital Management. We try to have players — David Stockman, who talked about the budget, ran the Office of Management and Budget under Reagan — real guys. 

And then from there, we move to analysts who have made money in natural resources for three or four decades, people who have seen bull markets and bear markets, not some junior from a brokerage firm that paid to be a sponsor, who failed as a tech analyst, and failed as a supermarket analyst. You get where I'm going.

Gerardo Del Real: Absolutely.

Rick Rule: The other thing we do is we don't permit any companies on our floor that aren't owned in the accounts of the conference promoters. Now, there's no guarantee that because I own a stock, it goes up — sadly. But there is a guarantee that, unlike any other conference on the planet, every single exhibitor has been vetted. You know them before you invest your time, treasure, and reputation in them. 

And finally, unlike any other investment conference on the planet, we give our attendees — whether they attend live or via livestream — two things: conference tapes, which they can play for a year (because there's no way you're going to get all the content that happened over four days in four days), and we also give them a gold-plated money-back guarantee. 

If you think, for any reason, whether you attended live or livestream, that you didn't get your money's worth, we give you your money back. The truth is, we had well over 2,000 attendees between live and livestream, and only two people didn’t think they got their money’s worth.

Gerardo Del Real: That's incredible.

Rick Rule: But it is our guarantee that we're going to work for you. We're going to make it better next year — make no mistake. One of the things we do, Gerardo, that I'm delighted my competition doesn't do, is we poll the hell out of our attendees and our exhibitors. 

What I've found is that rich people are very generous with advice as to how you can serve them better and make them richer — and we will get good ideas this year that we will implement next year to be sure.

Gerardo Del Real: No, listen, it's impressive all the way around. As you said in the previous interview, you mentioned you have people there that have been and are in the trenches. And eating your own cooking, I think, in our business, and in any business, is critical to success. It doesn't guarantee it, as you mentioned, but it absolutely is a necessary ingredient. 

Speaking of eating your own cooking, the last time we chatted, we talked about Empress Royalty Corp. (TSX-V: EMPR)(OTC: EMPYF). All that has happened since is the company, with the very insightful competitive advantages that you cited last time, has hit new all-time highs and has delivered another phenomenal quarter. 

I know Empress was one of the companies that was vetted, I know it's one of the companies that we're both biased about because we're shareholders, but I'd love your take on the recent news, the execution, and where you see the company, as it touches new all-time highs, moving forward, given the precious metals bull market that we seem to be in.

Rick Rule: I got long a couple of years ago because I was impressed with Alexandra Woodyer, the CEO. I've known her dad for decades, and I know that fruit doesn't fall far from the tree. 

She started apprenticing under her father when she was 14 years of age, so despite the fact that she's fairly young, she's been in the space a long, long time. When I bought the company, she made the case that the company was selling for half what it was worth and that, because of their connection to Endeavor, they had a durable competitive advantage in terms of recycling the cash. 

She made the case to me that the company was undervalued because the two royalties that were closest to production were not producing and there was some market uncertainty around them, and if I was willing to anticipate success, that I would enjoy a capital gain, which has happened. I would argue that the company is no longer as dramatically undervalued as it was because the stock is up by 300% from where I bought it. That's not a complaint, by the way, Gerardo.

The other advantage is this incredible management team and the competitive advantage they have in royalty acquisition because of their attachment to Endeavor Financial. For the record, they've raised $8 billion in resource-based businesses. 

Those two things, I think, and the franchise that she now enjoys in the investment community, which means that when they identify a good royalty, she will be able to finance it because she's done what she said she was going to do in the last three years, suggest that although the company is not as dramatically undervalued as it was, it is much better positioned to go forward. 

A lot of it will have to do with her deployments in the next 12 months. If she is able to demonstrate to the market that she's able to recycle the revenues that she's enjoying now from decisions that were made five years ago and redeploy the capital, increase the size, scope, and scale of the company — this has the potential to be a real winner.

Gerardo Del Real: Impressive stuff. I know Alex presents a heck of a case. It sounds like she was speaking your language when she presented to you. And congrats to her and the team in just exceptional execution thus far, and I anticipate and suspect that execution will continue. 

A company that is new to my radar — and again, I'm a biased shareholder here, and I know you are as well because you recently led a financing with the company — is Kincora Copper Ltd. (TSX-V: KCC), and I am very much a copper and gold bull. 

I love finding companies that have big ideas and partner-funded exploration mitigating dilution, and I know you of all people find the project generator model as an exceptional model when executed correctly, so I'd be remiss if I didn't ask you your thoughts on Kincora Copper.

Rick Rule: I talked to our mutual friend, Jeff Phillips, some years ago about prospect generation — probably five or six years ago — and I said the idea that you build a company not with sole-risk exploration but rather by third-party exploration, is just good arithmetic. 

Prior to this last five years, as of five years ago, if my memory serves me correctly, I had invested in 65 or 66 prospect generators, and I had participated as a consequence of that in 23 discoveries. That's a 40% success ratio in a world where the economic geologists tell you 1 in 3,000 exploration efforts becomes a mine — that's three standard deviations better in terms of expectation. 

And some of those hits from prospect generation — things like Arequipa from C$0.30 to C$30 in 19 months — were real wins.

So if I can find a management team that has enough respect from the industry that they can generate intellectual capital ideas and attract physical capital from sophisticated investors, I really like it. One of the things I really like, Gerardo, is despite the fact that I like doing securities analysis and I like employing the Brent Cooks and the Justin Tolmans of the world to do geology for me, what I particularly like is when the due diligence is done for me for free by Rio Tinto or Newmont. 

When a major mining company farms into an exploration project, it means that the junior that's farmed out the project has access to 200 or 300 earth scientists that work for the big company for free. I really enjoy the fact that my due diligence is done by somebody who doesn't send me a bill as a consultant but rather writes me a check as a joint venture partner.

Kincora is exploring the Macquarie Arc in Australia, which is a place that I've been familiar with and spent money in for 40 years. They're employing a lot of intellectual capital with a team that's made enough discoveries there that the industry listens. 

There's basically nobody in the world in mining that won't return these guys' phone calls. And four times fairly recently, people have said yes and written them big checks, which will result in a carried interest for them. So as you suggest, big ideas from smart people in promising terrain with high-quality joint venture partners. 

A lot of people seem to invest — if that's the right word — in junior mining companies because they want excitement. That's not what I want; I want to make money. People criticize prospect generators by saying that they're boring, and I would suggest that the contrary word to boring is terror.

And I would prefer not to be terrified — I would prefer to be bored — and the consequence of that is that the prospect generator as an exploration model is a model I am particularly attracted to.

Gerardo Del Real: If I don't bring this up, our mutual friend and a mentor of mine, Mr. Jeff Phillips, will let me hear about it. I have to touch on the share structure because one of the things that really stood out on the term sheet was the fact that the stock would be locked up for at least 12 months. That, to me, along with the share consolidation, is really attractive. I'd love your thoughts on that.

Rick Rule: Well, Jeff has taught me something — it’s important that old guys like me learn from younger people. I've always been a value investor. I've always looked at the market capitalization of a company relative to its liquidation value and relative to what I think the value could be in the three- to five-year timeframe, and I hadn’t paid much attention to structure. 

What I learned from Jeff is that structure is important because it affects subsequent cost of capital. If 60% or 70% of the stock can’t be sold, the gap between the bid and the ask — which is to say the price at which they raise additional capital — is much more efficient. In that sense, I’m an ideal customer for these prospect generators. A 12-month hold doesn’t matter to me because I anticipate holding the stock for five years.

I’ve now come to understand that market structure has nothing to do with me — my job is to use the market structure. It is almost certain that Kincora will have to come back to market, and it’s almost certain that Empress will have to come back to market. 

The fact that the effective float of Kincora is 30% of the total float suggests that when they do come back to market, they’ll likely be able to do so at a better price, which lowers my cost of capital as a long-term shareholder over time. So I’ve become a subscriber, if you will, to the structure theory propounded by Jeff.

Gerardo Del Real: Well said, and I couldn’t have articulated it better myself. Before I let you go, where can people, because they can still benefit from all of the presenters and companies that were at your conference, find the material if they weren’t able to attend, like myself, and want to digest the many, many guests that you had?

Rick Rule: A couple of ways to do it. Maybe the best way — because you get an added bonus — is to go to Rule Investment Media and list your natural resource stocks, and I’ll rank them for free.

Put “symposium recordings” in the comment section, and we’ll send you information on the symposium recordings. Alternatively, you can go to Rule Symposium 2025.

It’s important to note that there were 55 hours of programming over four days — more than anybody could possibly absorb. 

It’s also important to note that there were lots of timeless lessons at the conference: hearing David Stockman who ran the Office of Management and Budget under Reagan talk about Trump’s Big Beautiful Bill; hearing Nomi Prins, Danielle DiMartino Booth, and all of my “living legends” talk about how they built multi-billion-dollar mining companies from scratch. 

And the same guarantee that existed before the conference exists now: if you buy the recordings and think for any reason they aren’t worth the price I charged you, I’ll give you your money back. It’s the only riskless transaction in investing.

Gerardo Del Real: That’s a heck of a guarantee, folks. Rick, always a pleasure having you on. Thank you so much for your time. Excited for our next chat and thankful for this one. I appreciate it!

Rick Rule: My pleasure, Gerardo, and I look forward to seeing you in Boca Raton in 2026.

Gerardo Del Real: Looking forward to it, sir. Cheers.