Paul’s Notes #3: Junior talk
Intel from events: BMO, PDAC
The BMO and PDAC conferences in latge February and early March are industry bellweathers. The former is where the producers and developers gather, the latter is where the explorers do the same. A raft of news is typically issued on the Monday of each event, but this year was notable for what I perceived as a lower amount of news, and fewer BIG NEWS releases.
Please note, that these comments are relatively unfiltered and so IN NO WAY SHOULD BE TAKEN AS INVESTMENT ADVICE or recommendations. Many of the things mentioned below are speculative and may not come to pass.
Some of these companies will be participating in the 2026 Rule Symposium in Boca Raton, Florida July 6-10, 2026. To register, click the button below.
The aim of Paul’s Nores is to continue to build your knowledge and understanding of mining investment themes, to be used in conjunction with the Rule Classroom, the Rule Bootcamps, the Rule Investment Media YouTube channel, and, of course, the annual Rule Symposium.
Arizona Sonoran Copper (TSX:ASCU)
The biggest news was Hudbay Minerals (NYSE:TSX:HBM) acquisition of Rule Symposium participant Arizona copper developer Arizona Sonoran Copper (TSX:ASCU) in a US$1.5B deal at a 30% premium for the shares HBM does not already own. HBM will obtain the Cactus copper development project in Arizona that hosts reserves of 513Mt @ 0.52% Cu containing 5.3Blb. It will produce copper cathodes, and could result in synergies with HBMs Copper World development project. These include the strategic redeployment of the Copper World construction team, using sulphuric acid produced at Copper World to leach oxide ore at Cactus and an estimated $5-$10M in annual corporate synergies. It will also help grow HBM copper production from ~125,000tpa to more than 350,000tpa. These makes strategic sense for both sides, and is an example of well-thought and value creating M&A.
ASCU removed a potential roadblock to deal in February when it mutually agreed with Rio Tinto subsidiary Nuton to the early termination of its JV option on Cactus and the termination of Nuton’s investor rights agreement. The deal is due to close in May.
Talk at PDAC was about whether Rule Symposium Company, Robert Friedland’s Ivanhoe Electric (NYSE-A:IE), will make a competing bid. IE owns the Santa Cruz project that is literally the other side of I-10. It seems unlikely HBM will bid to take out the US$2.5B IE, and although Cactus and Santa Cruz are on the same geological structure, most people I spoke with think it unlikely IE will look to go over the top of HBM, especially since it has been a ASCU strategic shareholder for some time.
Liberty Gold (TSXV:LGD)
Fresh from PDAC, it seems appropriate to use an ice hockey metaphor to identify things that may occasionally give us a line of sight as to where the puck is going to go. Did ASCU do this just prior to the HBM takeout announcement? In the week between its January 14 and 21 news releases, it promoted its IR person from director to VP. Liberty Gold (TSXV:LGD) just did something similar, so is a transaction afoot?
This is a superficial observation of an overactive imagination, and in no way suggests any impropriety or lack of talent. On the contrary, both individuals are well-deserving of their promotions, and presumably, they allow for greater change of control benefits accruing to them should a transaction occur. While correlation does not imply causality, the gold price at record levels is doing wonders for the possibilities and leverage of low grade gold oxide projects such as LGD’s Black Pine in Idaho. LGD aims to complete a feasibility on Black Pine in October, which promises good things, president & CEO Jon Gilligan told me:
“We will see an improvement in gold production and annual production rate. We will see increased costs with pressure on construction labour and materials, and on operating labour. We expect the feasibility study to be better than the prefeasibility study.”
The October 2024 PFS detailed 135,000 oz/y of gold production for a 17-year mine life following a $300M initial capital investment, with 183,000 ozpa during the first five years from the high-grade core that hosts 2 Moz grading 1 g/t. Gilligan said the net present value at spot prices is about US$4B, about twice that shown in the PFS. A bid for the company would not come as a surprise.
Signals
Another signal that something is afoot is when companies announce they have entered into electronic marketing services, with some big-ticket contracts. I get the feeling that companies only announce these because they are forced to, as they are often little more than a short-term sugar rush to bump the share price, rather than efforts to attract long-term sticky investors. Kooteny Silver (TSXV:KTN) just announced a three-month contract for C$1M! This following two similar contracts in 2025 for C$250,000 each. Such services aim to attract eyeballs on the digital super highway that millions of people will see. An executive familiar weith the practice told me:
“If a company has tens of millions of warrants expiring, it needs to incentivise holders to exercise. Spending C$1M brings in millions from warrant exercise, so that is an appropriate thing to do. Similarly, with M&A that is a share-based deal, you want to get your price up before the deal terms are fixed.”
Faraday Copper (TSXV:FDY)
Faraday Copper also announced a notable deal with BHP (LSE:BHP) to acquire the San Manuel and Kalamazoo deposits across the valley from its Copper Creek deposit in Arizona, USA. FDY will pay stock equivalent to a 30% of the company, some $330M. San Manuel produced more than 4.5Mt of copper between 1955 and 1999, when it closed due to low copper prices, with a large resource unexploited. Copper Creek hosts 18-20Blb of copper and the historical resources at San Manual total about 14Blb, giving FDY a large district and infrastructure. FDY CEO Paul Harbidghe told me:
“The last resource at San Manuel graded about 0.9% copper, with reserves calculated at US$1/lb and resources at 80c/lb. Having two projects with scale means we can think much bigger, perhaps up to 150,000tpa of copper production.”
Coming back for more
One of the standout M&A transactions in 2022 was Kinross Gold (NYSE:KGC) buying Great Bear Resources for C$1.8B, pre-resource. I caught up with Great Bear’s CEO, Chris Taylor, and learnt about two projects he is involved with.
The same forces that are making LGDs Black Pine more interesting by the day are3 doing the same for Tiernan Gold (TSXV:TNGD) where Taylor is a director. TNGD owns the 11Moz Volcan gold project in the Maricunga district in Chile. The deposit has been around for years, a large, low-grade resource that was marginal until the gold price popped. It has M&I resources of 9.8Moz @ 0.66gpt. In 2023, Hochschild Mining (LSE:HOC) completed a PEA with a gold reference price of US$2400-2600/oz. A PFS is due in 2027, and it will almost certainly include much more of the resource than the 3.8Moz in the PEA mine plan. What does Taylor think it looks like now?
“The thing is huge. It is sitting there, completely undeveloped, and hasn’t seen exploration for over a decade. It was very clear to me that in the right gold price environment, this was going to be an absolutely monstrous potential project for shareholders. At $3600/oz you’d get an IRR of about 47% on the project as it is currently designed, and the NPV on an after-tax basis would be about $3.6 billion.”
The Maricunga district is getting a second wind, with Rio2 (TSX:RIO) having declared commercial production from the first phase of its nearby Fenix Gold project, and KGC to grow its La Copia mine.
Taylor’s main gig however, is Aquitane Metals (private), where he has been CEO for just over a year and is preparing for an IPO later this year. Aquitaine has the Limousin gold project in Nouvelle-Aquitaine in France, a historical gold producer that produced about 1.5Moz with a cutoff grade of about 12g/t underground and 6g/t open pit in the late 1980s to 2002. What does Taylor have to say about this?
“I was under pressure to do something that could be bigger than Great Bear. This project stood head and shoulders above everything else I looked at, and I probably looked at over a hundred different projects, all of which were pretty good. This one simply had the grade and size potential I hadn’t seen anywhere else. We drilled 70m above some of the historical workings, and hit 1.5m @ 350g/t within an envelope of about 35g/t over about 15.5m. What is left in the ground is amazing.”
Recent months have seen with several goldco CEOs stepping down. While some CEO’s have decades at the helm, the industry average is somewhere around six years. Presumably, current times provide an opportunity for going out at a market high and presumably cashing in stock options that are well in the money. For many, this is well deserved. Do mining entrepreneurs really retire, or is the mining business one they cannot let go of? Eric Sprott, Ross Beaty, Robert Friedland, Robert McEwen and Rick Rule are all still going strong despite not having the financial need to work.
Likely to appear in the coming back for more column in the future are Peter Marrone who told me he will be back for a three-peat once Zijin Mining completes the all cash acquisition of Allied Gold (TSX:AAUC). B2Gold’s (NYSE-A:BTG) Clive Johnson announced he will step down as CEO in June, and after some R&R and family time, may return to his exploration roots. I also bumped into Nick Mather, one of the founders of SolGold (LSE:SOLG) which will soon complete a £867M sale to Jianxi Copper. While Mather said he thought BHP and Newmont (NYSE:NEM) sold the company on the cheap, with the money he will make, he is looking at early-stage copper, gold or silver assets, to build another company.