London Symposium: Rule, Roosen call for smarter junior mining investment

“No one ever won the Kentucky Derby with the best jockey on a donkey,” Osisko Development (TSXV: ODV; NYSE: ODV) founder and CEO Sean Roosen told an industry event last week in London. He distilled decades of mining experience into a single, memorable truth: “You need a good asset.”

Roosen joined Rick Rule, founder of Rule Investment Media, at The Northern Miner’s International Metals Symposium in London on Dec. 1-2. They tackled one of the industry’s thorniest issues: the inefficiency of the junior mining sector. Their lively discussion covered misallocated capital, regulatory hurdles and undervalued commodities. They also mentioned changing investor demographics.

Rule, marking 50 years in mining investment, didn’t hold back on the industry’s lack of performance.

“If you merged every junior mining company into one entity, it would lose billions annually, even in a good year,” he said. “The sector is over-capitalized and underperforming. Investors must back good people and strong assets, not the lame, the halt and the blind.”

Both leaders pointed to regulatory burdens and rising costs as major obstacles. Roosen called the industry’s structure an “inverse pyramid.” It has high overhead costs from accountants, lawyers, brokers and regulators. They dwarf the budgets for actual exploration.

“This kills the entrepreneurial spirit,” he said. “Exploration isn’t what it used to be.”

Hated sectors

The panel highlighted that bold, disciplined investment remains key to success. Roosen noted how Osisko Development focuses on brownfield projects to access data already assembled by others and could be worth some $100 million. He showcased the company’s approach with the Cariboo gold project in British Columbia. Drilling 800,000 metres has outlined 5.3 million oz. of gold, with potential for 15 to 20 million oz. more, he said.

“It’s the Canadian Malartic underground,” Roosen said, referencing Osisko’s earlier success that turned a 35¢ stock into a $12-billion company.

Rule, known for his contrarian style, described his strategy in simple terms.

“I look for good people and assets in sectors the market hates,” he said. “Take platinum, for example. It’s vital for auto catalysts, yet supply is constrained in South Africa and Russia. When production falters, prices will spike.”

Internal combustion vehicles using platinum are unlikely to disappear as soon as some analysts suggest, Rule said. Meantime, there’s potential for unrest in South Africa – which continually suffers 40% unemployment – and Russia, where the economy is faltering because of an expensive war with Ukraine.

The discussion also touched on how mining can attract new investors, how outreach through education can raise interest, and how the gold price surge has increased the appeal of metals and mining. Rule noted that over half his audience at Rule Investment Media is under 50, with 30% women.

“The industry assumes its constituency looks like me—old, bald and white—but that’s no longer true,” he said.

Mining must find a way to attract some of the circa US$750 billion invested in crypto-currencies, he said. People earning money from crypto have to put their new wealth somewhere and it’s an opportunity for younger generations to invest in mining, Rule said.

Pension funds, which have little invested in mining because they are wary of its risks, haven’t seen enough high returns, the video host said. Improvements in mining company earnings could entice more pension funds to invest in major and it should eventually trickle down to juniors, he added.

Roosen has raised $235 million from wealthy individuals in 60 countries via non-brokered financings. This shows the growing reach of this funding mechanism, he said.

Mining must perform

Silver, platinum and the energy transition metals dominated the commodities discussion. Rule predicted silver will outpace gold in bull markets. While gold investing is driven by fear, retail investors apparently drive the silver price, but decent silver mining company stocks are rare, he said.

Roosen called for renewed focus on tangible assets. He urged the industry to focus on mining and developing physical resources like gold, which have intrinsic, lasting value, instead of chasing speculative trends.

Both criticized the slow progress in developing critical minerals outside China. Roosen suggested the hype over green energy metals needs to be spread across more commodities.

“People need to know coking coal and iron ore are critical minerals because you can’t put a windmill on a wooden pole,” he said.

Rule warned that poor returns could alienate institutional investors further. He offered a parting note of practicality for symposium attendees.

“Mining must perform,” he said. “Support good people, fund good assets and deliver returns. It’s that simple.”

Roosen, with a grin, summed it up from the junior industry perspective with his maxim: “Shut up and drill, stupid,” he said. “Drill twice, mine once. If you get it backwards, you’re bankrupt.”