What the Mining Industry can Learn from the Boston Red Sox

 | MARCH 11, 2019 | NO COMMENTS

The mining industry can learn a lot from the Boston Red Sox. I just learned that lesson at PDAC 2019, the greatest mining show on Earth. More than 25,000 people attended in Toronto to meet, mingle, learn, look at core, party, buy, sell and schmooze.

I’ve been attending the mining show annually since 1992. I’ve missed two years. Before I go I have a list of goals that I want to achieve. Overall, it was a very good year at the show as I ticked off all the items on my to-do list and as always found a few more.

Wandering the booths and hallways and seminars, one of the things I learned was that there is a dearth of good projects under development. Simply put, we are consuming metals and not replacing them, causing analysts to believe the world will be in a deficit position over the next few years. This 2015 infographic from the Visual Capitalist makes the case for the coming copper crunch or you can read it in The Mining Journal.

Similar alarms are being sounded for silver and gold. The shortages in the battery metals (nickel, manganese, lithium, graphite and of course perennial bridesmaid cobalt) are obvious as the world decentralizes grid electricity.

Refined zinc metal output is expected be 13.81 million tonnes in 2019. The problem is, the output estimate for 2019 is lagging behind the expected metal usage of 13.88 million tonnes for the year.

We are consuming the metals faster than the mining companies can replace them.

How does this relate to Boston Red Sox, winners of last year’s World Series?

The Bosox over many years invested heavily in scouts to find a larger pool of young possible players, signed players at a young age, developed them patiently through the system, and brought them to the major leagues at the appropriate time. Not downplaying Steve Pearce’s World Series, the most important players on Boston’s championship run throughout the season and the playoffs were homegrown, like Mookie Betts, J.D Martinez, and Jackie Bradley Jr., Xander Bogarts was signed when he was 16 years old and made major contributions to the team’s success.

The cost of finding and developing young talent is far less than the cost of trying to acquire that talent once developed. Look at Bryce Harper’s USD$330 million contract with the Phillies after spending the first 7 years of his professional career in Washington. In Year 1 of that Washington contract, Harper was paid a total of $3 million and had a tremendous year, earning a spot in the All-Star game and winning NL Rookie of the Year. His 7 years in Washington were very cost-effective for the team and the returns he provided. Once developed, he priced himself out of the Washington budget.

There’s also Mannie Machado who in 2012 was paid $112,786 by the Baltimore Orioles. Drafted and developed by Baltimore, Machado provided Baltimore with gaudy numbers and strong defence. For you data geeks, his Wins Above Replacement (WAR) is 5.7. He was a bargain for what he contributed to the team. He just signed a 10-year, USD$300 million contract with the San Diego Padres, priced out of Baltimore’s budget.

Finding, drafting and developing your own players allows a team to control costs, keep these players under contract for a (relatively) low cost for an extended period of time, provides some degree of economic stability for the team, and de-risks the overall organization.

And that is one of the things that’s missing in the mining industry. There are few large projects in development to replace the copper, gold, copper, nickel, tin, silver, and battery metals that are needed. The majors have failed to invest in their minor league systems, leading them to have to effect risky M&A transactions to replace lost ounces.

This failure to invest in development started in about 2013, after the mining industry blew up following an acquisition spree. You remember Kinross’ 2010 free agent acquisition of Red Back Mining to acquire ownership of Tausita Gold Mine in Maruitania? Kinross paid $7.1 billion for an asset that was written down by $3.2 billion in 2013, crushing Kinross’ share price with it. There are other examples as well, but this write-down was massive and caught the market’s eye. Fear crept into the market and brought an end to M&A activity.

Following the fear came severe cost-cutting. The majors dramatically scaled back in all areas of operations, including not investing in the intermediates and juniors. If the juniors aren’t being funded they can’t explore (scout), the number of development opportunities shrinks, which reduces the number of opportunities for the intermediates to shepherd good projects along. And that decreases the odds that a major deposit would be found. And that of course means that fewer deposits are making it to the Major Leagues.

The cost of acquiring already-developed properties is extremely expensive. Grabbing proven ounces is what is driving the current $17.8 billion attempted takeover of Newmount Mining by Barrick Gold. It’s like the Phillies acquiring Bryce Harper for $330M after he was cheaply developed by Washington.

The Bosox are 6/1 favourites to win the World Series again, due mainly to the core of highly talented home-grown inexpensive players. It would be cheaper for the majors in the mining industry to invest more broadly in the juniors, knowing there will be winners and losers along the way, than to continue relying upon free-agent signings.


Peter Clausi

EDITOR: 

Mr. Clausi is an experienced investment banker, executive and director. A graduate of Osgoode Hall Law School called to Ontario's bar in 1990, Mr. Clausi ... <READ MORE ABOUT PETER CLAUSI>

Fatal Flaws In The Junior Mining Sector

I Like the Penny Stocks Right Here and Right Now

May 16, 2018 By Dudley Pierce Baker http://JuniorMiningNews.com http://CommonStockWarrants.com Hello Investors, Crazy as it may sound, I love this game of investing in the penny stocks and possibly some of the stock warrants trading on resource companies. While some of you may believe this is a crap shoot there is actually some logical reasoning that could make you a substantial amount of money in the up coming bull market in the resource sector. Higher gold, silver and copper prices are coming believe it or not. Yes, gold has just plunged below $1300 for the first time in many months but as I write, it is holding around the .618 retracement of $1290 or so. True, I do not want to see much more of a decline from here and we really need to get back above $1300 ASAP. So, my cautionary warning for you, is that you should be prepared … Continue reading

I Don’t Own Any Shares Selling Over 50 Cents

April 17, 2018 IT’S TRUE Dudley Pierce Baker, here, founder and editor of Junior Mining News and Common Stock Warrants for well over 10 years. I just reviewed my portfolio and I currently do not hold any positions, be they, shares or stock warrants, which are selling for over 50 cents. And since most of my positions are in Canadian shares and Canadian dollars, that is only about 40 cents in U.S. dollars. You can call me crazy but, crazy like a fox, as I am out to hit many home runs in the resource sector as gold and silver breakout, which is coming soon. My portfolio has a balance of oil and gas shares, gold and silver companies, several of which are small producers. I also own several of the uranium companies. While I may be known to investors as ‘the warrant guy’, only 25% of my portfolio is … Continue reading

Where Can Investors Find Stock Warrants (Options) On Marijuana Stocks?

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By Dudley Pierce Baker

Investors in the marijuana and cannabis sector might be surprised to know that there are stock warrants trading on several of the companies.

For those not familiar with stock warrants they are very similar to stock options. The principal differences being that stock warrants are a security issued by the company and the options are a derivative and written/created by other investors.

Typically call options have a maximum life of 12 months where stock warrants frequently have a life from 2 to 5 years.

If you want more information on stock warrants I encourage you to visit http://CommonStockWarrants.com to receive a Free copy of The Stock Warrant Handbook, Your Personal Guide to Trading Stock Warrants.

Currently there are 6 stock warrants trading on very interesting companies in the marijuana/cannabis space.

There are only two places that you will find the details on these stock warrants:

Common Stock Warrants provides a detailed database for all stock warrants trading in the United States and Canada in all investment sectors.


Marijuana Speculator
provides a complete listing of all stocks and stock warrants trading in the marijuana and cannabis sector.

Either or both services will be a valuable addition to your investment knowledge.

The Stock Warrant Handbook – Get Your Free Copy Now


Dudley Pierce Baker
Founder – Editor
Common Stock Warrants
Junior Mining News

 

 

 

 

 

I’d like to invite all investors to visit my website and get your free copy of  “The Stock Warrant Handbook: Your Personal Guide To Trading Stock Warrants”.

I see in some of the chat rooms and blogs of investment websites, that there is little to no knowledge of stock warrants.

Don’t be left out in the cold and ignorant of the facts and opportunities with stock warrants.

I have provided my warrant databases to investors since 2005 and welcome you to join me as a subscriber once you understand the details and particulars of trading stock warrants.

Stock warrants are trading on many companies in the United States and Canada and in virtually all investment sectors from resource companies, marijuana companies, banks, pharmaceuticals, bio-techs, and many more.

There is something here for all investors.

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Canadian Mining’s Zeolite Effective in Municipal Compost Odor Control

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