Rick Rule & Amir Adnani - Part 1 - Leverage to Gold: Acquiring 'Ounces in the Ground'
In the lead up to the Sprott Vancouver Natural Resource Symposium from July 26th-29th, Sprott’s Thoughts is excited to present to its subscribers exclusive interviews with the conference’s Platinum Sponsors. The Platinum Sponsors represent the premier companies in the resource space, and Sprott has invested meaningfully in all of them. We are proud to be able to connect our clients with our portfolio companies directly, and hope these interviews will help both to pave the way for a successful conference experience for all of our clients joining us in Vancouver, and to best inform all of our Sprott’s Thoughts subscribers on some world-class resource companies.
Rick Rule conducts our next interview with Amir Adnani, the founder of two companies invited to the conference, Brazil Resources Inc. and Uranium Energy Corp. As the head executive of both a uranium company and a gold acquisition and exploration company with projects spanning the Americas, Amir commands a strong view of the global stage, which gives him a unique perspective on the current state of the resource markets. Considering his purview over two companies, we thought it only appropriate to break his interview with Rick into two parts, with Part I describing Brazil Resources, the gold market, and what it takes to run a successful resource company. Part II is coming in a post that is soon to follow, and will highlight uranium, UEC, and the junior resource market.
Brazil Resources is Mr. Adnani’s gold company, with assets in Brazil, United States and Canada. Brazil Resources’ stock (BRI) has seen a large rebound in 2016, which is attributable to more than just a rising gold price. And as we’ve heard repeatedly over all our interviews these past weeks, Amir emphasizes the importance of the team. Brazil Resources has attracted Garnet Dawson as CEO and Paulo Pereira as President; the two professional geologists have combined 60 years of experiences working with majors and juniors in the Americas. They’ve also partnered with Mario Garnero, a founding director of BRI, and his firm Brasilinvest, who is one of the most prolific businessmen in the country.
He also credits the team’s shifting strategy over the past three years. Brazil Resources has been conscious about adding value and proactively fast tracking the most promising properties through the permitting process. Also, the Firm has recognized the shifting dynamics of gold exploration that occurred during the market downturn. Where Brazil Resources used to spend on exploration, they now prefer to spend to acquire already discovered ounces from distressed buyers. This strategic acquisition strategy has allowed Brazil Resources to unlock meaningful value, as they are acquiring already discovered ounces for a lower price than they could discover new ounces.
The management team has also been cautious in raising capital and maintaining a tight capital structure. Currently insiders control over 30% of the company, a high mark of alignment with other shareholders.
But in the current troubled markets, successful mining companies require management teams with well-informed views on the markets. Amir is cautiously optimistic on gold prices, but believes the market still has hurdles. Gold, he believes, is not yet in a bull market, but a recovering market with unprecedented actions fueling its rise: a third of the world’s government bonds are yielding negative interest rates, Brexit has rocked the developed world, and one of the most contested U.S. elections is in the offing. Gold is driven by pressures which affect other currencies, and can be an important factor in wealth creation and preservation. Uranium, by opposition, is a simpler story to tell. It is directly connected with demand for electricity generation, and has not had the benefit of a price resurgence, and it currently sits at a 10 year low.
To hear Amir’s thoughts on Uranium and the junior resource market in general, in Part I of this interview, please click below:
Part II will be sent in our next Sprott’s Thoughts installment.
About the 2016 Sprott Natural Resource Symposium in Vancouver:
How can you maximize your profits from the long awaited precious metals and natural resources bull market? One time tested way is by listening to respected experts in the industry at the 2016 Sprott Natural Resource Symposium in Vancouver, Canada, July 26-29. Our clients have consistently rated this conference as the finest investment conference they attend.
Join experts including Jim Rickards, John Embry, Doug Casey and Steve Sjuggerud. Join the “living legends” of mining, men who built billion dollar businesses, and are doing it again: Ross Beaty (who took Lumina Copper from $.50 to $140 in seven years); Robert Quartermain (who took Silver Standard from $.72 to $45in ten years); Rob McEwen; and Robert Friedland.
Meet and listen to fifteen of the most influential precious metals and natural resource oriented newsletter editors in the world. Meet over 50 public company exhibitors, who are allowed to exhibit because they are owned in Sprott managed accounts.
In the early stages of a resource bull market, can you afford not to go to the finest junior resource investing conference in the world?
For more information, please follow this link: Sprott Natural Resource Symposium
This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
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