# 50 Years of Mining Markets: What's Different About This Cycle? **Channel:** CLEAR COMMODITY NETWORK **Source:** https://www.youtube.com/watch?v=xnzGDDhGCfc **Transcript page:** https://www.withtranscript.ai/video/xnzGDDhGCfc ## Chapters - 0:05 — Opening Remarks and Guest Introduction - 3:47 — Lockwood's Entry Into Mining Markets - 8:24 — Mining Cycles and Investor Apathy - 13:36 — Capital Flows and Market Structure - 22:45 — Due Diligence and Critical Minerals - 29:20 — Royalty Models and Major Acquisitions - 37:03 — Uranium Market Lessons and Revival - 42:20 — Outlook for Metals and London ## Transcript **[0:05] Speaker A:** Good morning, everybody. Welcome into this week's long form episode on Mining Stock Daily. Special edition because we have our literally, I promise, our final interview out of the LME week coverage from a couple weeks ago. I know we've been busy from from London to New Orleans home this week and we'll be covering Precious Metals Summit in Zurich next week along with Deutsche Gold Mess in Frankfurt. So a ton of corporate updates coming your way over the next few weeks. And so this episode is actually going to finally conclude our coverage from LME week. And I'm would joined by Richard Lockwood of Arlington Group. He's a veteran of the mining investment industry whose career has stretched back to the Australian mining boom in 1969. So five decades of experience in the commodity cycles, financial markets, transformations, and he talks about the changes and how capital flows into the mining sector. **[1:10] Speaker A:** We discuss why mine equities have struggled to attract institutional investment despite strong commodity prices recently. We talk about the growing influence of China and critical minerals and the outlook for copper and uranium and why Richard believes the major mining companies could be preparing for a significant wave of acquisitions. A lot of insight here from a career veteran. Love these conversations. Thank you, Richard, for giving me some of your time back in London. Special thank you to Revival Gold, Integra Resources, Equinox Gold, and Visla Silver for their continued support of Mining Stock Daily. Also huge shout out to Tara Hutton who helped make the invisible investable. I will reiterate again, they are doing incredible digital site presentations for companies. If you're at all interested and getting your company highlighted and being able to tell your story online through the Terra Hutton platform, it is amazing and really engaging. **[2:14] Speaker A:** Go check them out at terrahutton.io. All right, let's jump into my conversation with Richard Lockwood of Arlington Group. Have a wonderful weekend, everybody. We will talk to you in Zurich next week. It's a great enthusiasm I get to welcome somebody who's been really a center of the London Metals Market in mining for many years and these conversations are one in a million. Not too often do we get to sit down with somebody who's seen multiple multiple cycles, who's seen multiple markets, the good and the bad. Especially important to have that here during LME week where we continue to provide coverage here on Mining Stock Daily. I'm happy to welcome in Mr. Richard Lockwood. He is with Arlington Group. Special thanks to my friend Simon Catter for making the introduction. But Richard, thanks so much for joining us here. Yeah. Thank you for doing this LME week. **[3:12] Speaker A:** It's always an exciting time. You know, a lot of people from all over the world getting to come **[3:17] Speaker B:** a big conference yesterday. A guy called Michael Gentili, who's a sort of a doyen of the Canadian mining industry. And he had about 25 companies in the Institute of Directors. So that was a good sort of start to the LME week. **[3:30] Speaker A:** Yeah, I was there in the afternoon. **[3:32] Speaker B:** And Michael Gentili, yeah. **[3:33] Speaker A:** Yeah, Michael Gentili saying. And you were there all day doing **[3:36] Speaker B:** I was there up to including lunchtime starting early in the morning. **[3:39] Speaker A:** Okay, so that I just missed you. I just missed you then. Um, but let's talk about maybe profile. **[3:47] Speaker A:** Are you are you are you from the London area originally? **[3:50] Speaker B:** I am most certainly, yes. And I set off almost fortuitously in the mining market in the end of 1969. There was a huge boom in the Australian mining market led by a company called Poseidon that went from a few few p to 125 pounds at one stage. **[4:06] Speaker A:** Wow. **[4:07] Speaker B:** And I've been living in South Africa and I joined a firm called Govett Sons and Co which became Hall Govett and by default they were brokers to just about every single Australian mining company. We never contacted them. **[4:20] Speaker A:** Hm. **[4:20] Speaker B:** So I sort of walked into a a ready-made audience as it were. So we were getting tremendous information from Australia. No one had ever contacted these people. So that was the start of my life in the mining market. **[4:32] Speaker A:** Yeah, so you were a finance guy before mining? Okay, did you have any aspect on how mining actually worked or just **[4:38] Speaker B:** no, but the firm I joined had a couple of mining analysts and a background so it was perfect as a salesman. I I I had the background and to help me out and so it worked pretty well. **[4:50] Speaker A:** Yeah, well you know I cut my teeth in mining for the last you know 12 years but I've had technology and the internet to help me do that. How difficult was that to become you know knowledgeable of the sector? **[5:01] Speaker B:** It was basically hugely difficult. If you go back to the 69 early 1970 you couldn't pick up a phone and ring Australia. You had to book a call. And then when we started to do a lot of business it's all done by telex. And sometimes the telex lines got full so you had to gauge your orders, put the big ones on and tell the small orders that wouldn't be put onto the next day. So communications were really difficult. I mean now it's a sort of but in those days communications were pretty tricky but you could turn that to your advantage because if you're the only person ringing a a Western Mining or a BHP you've got a ready audience. So I used to book a call a day in advance to whoever it might be. **[5:42] Speaker A:** Yeah, yeah. So you're focused on Australian equities at the **[5:46] Speaker B:** Mainly but we're doing in Arlington. We're doing a lot more in Canada now. Canada sort of got lost along the way and got caught up in in sort of weed stocks and and and cryptocurrencies but it's last year or two it's coming to its own in the mining market. So we cover both. **[6:05] Speaker A:** Yeah. Was there a time where you could feel the Canadian markets kind of up and coming and evolving where you were able to mix Australian equities with the Canadian equities? **[6:14] Speaker B:** And And the the the sharp Australian entrepreneurs, you'll find quite a few of them have got projects in Canada which were set up really before the Canadians realized how good their own industry might be. So it was So Australia is very very entrepreneurial, but now of course the the Canadians are doing it for themselves. **[6:34] Speaker A:** Yeah. What about Were there specific stories that really put Canadian markets on the map? And you know, I keep on thinking of something like Bre-X was a huge story that really grabbed a lot of capital and attention at the time. But was there Were there certain stories or or equities that maybe set the stage prior to something like Bre-X Bay? **[6:54] Speaker B:** Um not particularly. No, not as far as I remember them. And at that stage I was particularly geared towards the Australian market, but I wouldn't say that Canada played a big part in in in the portfolios of the average British institution at that stage. I mean, everyone was aware of it and aware of Bre-X Bay and of course massive nickel discoveries. **[7:13] Speaker A:** Mhm. **[7:14] Speaker B:** I think they might remember more the scandal that took place in Indonesia when I've got the name of the company **[7:21] Speaker A:** Bre-X. **[7:21] Speaker B:** Bre-X. Yeah. That That made bigger headlines because it was it was such an amazing story and then turned out to be a total hoax. So that probably got more than its fair share of publicity. **[7:33] Speaker A:** Were you involved in that story at all? **[7:35] Speaker B:** luckily not, but it was very It would have been very easy to get caught up with it. And the only caveat was they didn't encourage any analysts to go and have a look at it, which should have put people off, but it didn't seem to. **[7:48] Speaker A:** So walk us through kind of, you know, from that time from the late '60s, early '70s and walk us through, you know, continuing to work in this sector and how that market specifically each market has evolved over the last two or you know, three or four decades from there. I mean, what's Obviously the communication has gotten easier, but you've seen so many cycles of metals and in and miners. **[8:24] Speaker A:** it? **[8:24] Speaker B:** Um well I lived in Australia for a lot of the 80s and it was pretty bad then, but then I turned my my attention to other things but um I think you're always philosophical in the mining market. It is feast and famine and um everyone tends in the in the force of time to forget the the bad times and remember the good times, but um it's a bit like if you if you the biggest comparison you can make now is sort of the bull market in America. There's a whole generation that have never seen a bear market, whereas the cycles in the mining market are much shorter term um and and what makes it more unusual of course is that if you take the 70s when the mining market was really discovered when majors like Western Mining in Australia obviously BHP Rios um they were as far as I can remember they weren't really mining funds. **[9:18] Speaker B:** So all the stocks that were bought were bought by generalist funds. **[9:21] Speaker A:** Yeah. **[9:21] Speaker B:** So when we were going out selling we were selling really to the uninitiated. So you know you go go along with a company of analysts that could sort of got into trouble could could could explain the the details of the company. So I mean I I couldn't put a date on it, but it's certainly in the 70s that in London there were very few mining pure mining funds and they've only really developed in the last perhaps 10 or 15 years. **[9:47] Speaker A:** No, there still seems like there's not a lot of mining funds. Is that fair? You know? **[9:51] Speaker B:** and if I had to say perhaps one of the biggest mistakes I've made in recent recent history when gold went through 5,000 you know a couple of years or so ago that I thought would be the excuse for the generalist funds to come in, but strangely they haven't. This time round it's an unusual cycle um there's more mining funds that obviously embrace it, but the the as a whole, the general ist funds have not really got involved in the mining market. If they want to get involved, they'll probably buy three stocks, Rio's, BHP or or or Glencore. So it's it's um, you know, I'm generalizing, but it this is not what I call a widespread market as far as mining shares are concerned at the moment. **[10:33] Speaker A:** Yeah. Was there a part in your in your career where you transitioned from focusing on the producing companies and started getting intrigued and allocating capital and having conversations with the developers and explorers and did that come later in your education? **[10:50] Speaker B:** Um, yes, it would have come later um, purely because I said that the institutions were really only buying the producers. And I'm not sure if you look at today, um, we're we're getting some fantastic results from a lot of the smaller exploration companies, but very little response in terms of shares. And uh, I think we're in a very unusual situation, you know, whether it's telling us that markets generally are overpriced or whether just people refuse to embrace the mining market, but this is we should be with the copper price at or near an all-time high with zinc price the same and base metals generally and and gold is still a huge level if you gauge it say in Australian dollars, it's 6,000 an ounce. So it's still a bull market background, but you wouldn't think it's a bull market in terms of the shares. **[11:41] Speaker A:** Is that the biggest differentiation of what this market, bull market we're in now compared to other ones you've seen in the past just a confusion? **[11:49] Speaker B:** Definitely. **[11:49] Speaker A:** Is it confusion or just uh, apathy? **[11:53] Speaker B:** Well, I suppose it's probably apathy, but I know it's in my prime days of stock breaking with Hall Gabet, you know, I could get on a plane and go to say Edinburgh where the well, home of of lots of investment trusts and they were all round the place called Charlotte Square and so you could get the early morning plane, have your first visit at 6:00 at 9:00 and walk your way round Charlotte Square, guaranteed you get at least a couple of orders, you know, have a drink at the airport and and go home the same day. And they were all generalist funds. None of them were mining funds. **[12:26] Speaker A:** Mhm. **[12:26] Speaker B:** Um and so, you know, you couldn't do that now. I mean, the whole background is different. **[12:32] Speaker A:** Yeah. So you've seen periods of extraordinary strength in precious metals, but investor enthusiasm in mining equities hasn't always kept the pace. And I may perhaps it seems like that's where we're at right now, but **[12:49] Speaker B:** is exactly where we are. **[12:50] Speaker A:** so the there there's an underlying disconnect in here someplace. And a friend of mine actually a number of years ago you know, when we felt a bull market kind of brewing up the in the in this metal space, he said to me, maybe this is one of those cycles where the metal prices rise, but the equities don't. And that's I guess there's an argument there that that maybe has been the case, but there's there's a disc there's still a disconnect there. So I'm just kind of curious, have you ever note has there ever been a similar time where there's that disconnect been problems as well where **[13:30] Speaker B:** Not for me, and I would say it it's why I'm still working at my age because it's so intriguing. **[13:36] Speaker B:** Um you know, we're finding lots of undervalued companies, but I think we're cognizant of the market which which doesn't really want to respond to them. And um I I could take the argument a stage further that if you go back in this I set up a fund management group in 2002 when the copper price went to a dollar a pound. And a dollar a pound, no one made a penny out of copper. And I was working for Invesco in those days and I and I was thinking of setting up my own mining fund and I I did a little survey of the half a dozen biggest consumers of copper. **[14:12] Speaker A:** Mhm. **[14:12] Speaker B:** And I said um you know, copper's a dollar a pound now. what do you think it will be next year? All about 90 cents. So I said you realize no one's making a penny, yes? So I said why if they're not making money now are they going to lose even more money in a year's time? And there was this tremendous naivety. Well of course they've got to keep it open. I said no they've got shareholders that don't want to make massive losses. They can close them down. And and although I wouldn't compare 2002 with metal prices now I would tell you that there are no new major base metal producers on the horizon because if you look at say the poor for instance in South America nowadays if they found one it would cost five or 10 billion US to develop and that money I don't think is available. **[14:59] Speaker B:** It's available possibly to to Rio BHP but they know Rio's have got the big development in in Mongolia but it's it's not the norm. So I I think we are in very unusual situations which makes me bullish perhaps for the next three years but short term uh you know it's very hard to be confident because markets generally I think there are more people who are cautious than bullish and the only bullish people are long on the high-tech sector in America and we were speaking in the office this morning and looking at the S&P. The S&P I don't know is eight or nine percent up during the this year but nearly 80 percent of the stocks are down and so that top 20 percent has carried the whole market. So tell you that there's a soft underbelly in the market. So I think there is an air of anxiety which is not really being manifested. **[15:55] Speaker B:** People say oh no the indices are all through the roof but the indices aren't necessarily representative of the market as a whole. **[16:01] Speaker A:** Yeah. It it's an interesting quagmire when where the market will go out and finance you know 50 billion dollars of of hyper scaler CAPEX data centers but 10 billion dollars for a brand new copper mine. **[16:17] Speaker B:** chance. **[16:17] Speaker A:** There's chance. Is is that just due to the Is it more of a risk appetite? You know, obviously, mining is a risky business. But you can make the same for a data data center hyperscaler build out. You know, what what happens if this thing dies? **[16:32] Speaker B:** I think most of the money that goes into that sector is in America, you know, bastion of free enterprise and uh and with sort of people like Elon Musk Musk who tells tremendous stories, you know, gets people worked up as to how the future will be. And and you know, these guys are geniuses, but you know, the the genius is in the price. And uh Now, when you hear of Anthropic that's going to come onto the market with a $2 trillion market capitalization, it's very hard to see how they can justify it, certainly in the shorter term in terms of earnings. So it's really a quest for the future. And you can take that argument a stage further, certainly in terms of energy. **[17:15] Speaker A:** Mhm. **[17:15] Speaker B:** They're hugely consuming of energy, these companies. But where's the energy coming from? You know, we're having huge troubles with um surprise of oil, gas, you know, America's got it, but the rest of the world certainly hasn't. So you can see a real dichotomy of uh of opinion as to those that are bullish and say it's going to carry on on those who are perhaps much more cautious and see a sort of a inflection point arising at some stage. **[17:41] Speaker A:** Right. Well, institutional capital used to play a huge role in the financing of building out uh not only mines, but obviously exploration development. Has the structure of the investment industry um fundamentally changed over the last number of decades? Can you Can you break that down and kind of give us some **[18:01] Speaker B:** I I mean, a lot of people would disagree with me. I think one of the biggest influences hedge funds because you never know how much influence a hedge fund will have. Some people say it's as much as a third of all turnover. And I I set up an and eventually sold a a closed-end fund business and I sold it to a hedge fund group in the 2008 and they were worried the pressure was on hedge funds in those days and they wanted some diversification. And I knew nothing about hedge funds and I so I moved into their office and I'd sit with some of these guys and they'd they'd be transfixed in front of a television screen, well, 12 screens and those were divided up and then every now and then a buzzer would ring and that would polarize their mind and then another buzzer would ring and then if the third row rang that was a trend developing and they'd follow that **[18:49] Speaker B:** trend dispassionately and I think that's why perhaps you know we're not seeing this great investment in the mining market. It hasn't attracted interest from the hedge funds. Now I can't quantify there are a third of the business is done and people will almost certainly disagree with me but they are a massive influence and they're not necessarily governed by fundamentals, they're governed by momentum. That's how they're they're they're they're driven by the movement of of sectors and individual shares. **[19:22] Speaker A:** Well, the momentum in mining equities most of the time would be predicated I would say a on the metals price and then b on some sort of cattle catalyst news headline but that's that would be more you know specific capital that's focused on a specific **[19:41] Speaker B:** and perhaps you you would look at each country now you know those that almost cut my teeth in Australia and if you go to Perth Western Australia the mining market is everything you know they have every just about every single material including oil and gas they have it in Western Australia so the market's geared to that sector so you know everybody will be a trader or dealer in that sector. But if you go to London as I said before you know we don't have our own mining mining sector per se so we're either in or out of the mining sector but not because those companies are at home **[20:16] Speaker A:** Mhm. **[20:17] Speaker B:** and I think the biggest sort of irony and it's only just changing is America where it's been impossible under their rules to have exploration companies quoted. And Nasdaq had just beginning to put in a I think it's the third board where exploration companies can be can be listed. And that's probably Trump who said, you know, who never realized what the form was in the first place, but it seems to me that ironical that the home of free enterprise didn't have a mining market. And so it was Australian entrepreneurs, Canadian entrepreneurs that used to go around looking, but it is changing. And if I were 50 years younger, I'd be paying real attention to the to the American mining market. I think it could really burst into life. **[21:02] Speaker A:** Yeah, is it one of your favorite jurisdictions? **[21:04] Speaker B:** It is, but I as I say, I don't really do much work in it now, but um **[21:08] Speaker A:** Yeah. Is it is the market itself, the exchange the exchange and acceptance better or is it more **[21:14] Speaker B:** it's changing. It's changing, but a lot of the discoveries made in in America in the last few years have been, as I said, by entrepreneur groups from Australia or Canada. Um but now that the rules are changing and that you can quote a an exploration company on an exchange, albeit the third Nasdaq exchange, it's only a question of time before that market really develops. And of course, you know, the biggest gold mines in the world arguably are in are in in America. And then now that they're there's a lot more exploration work being done there. So I think America could be very influential in the mining market in the years to come. **[21:54] Speaker A:** Yeah. Well, I do think listen, for all the criticism that President Trump and his administration receives on a daily basis for numerous reasons, I do think what they have established for the mining sector in the United States has been a net positive. **[22:09] Speaker B:** Oh, it is. **[22:09] Speaker A:** And I'm not just saying because I have capital, my own capital there and invested, but just for the general growth in the supplying of resources for the American market and industry is going to pay dividends. And think that's very much still under-appreciated, because we get headlines of chaos instead of, you know, continued growth and movement towards industry. And it's not just mining, a lot of heavy industry and manufacturing probably feels the exact same way. It's just kind of subdued from other from other headlines. **[22:45] Speaker A:** I do want to ask you from your perspective, and if we can focus mainly on exploration development companies, you know, how has your your due diligence and your research changed? Is it Do you focus more on people and management before the rocks, or do you put the rocks before the people? And you know, what what's the checklist look like for investor **[23:08] Speaker B:** a lot more. I mean, and I'm far too old to go on these trips with someone like Simon Catt that you mentioned. And you know, he spends a lot of his time going to see mines in Australia, in America. He's been to America and looked at one or two of the emerging Tungsten mines. I think people now are are far more thorough in their outlook. You know, because as I say, when I started, there were hardly any people doing research in mining companies. So you go and see a mining company and you used to take really what they said as as the gospel whereas now you probably gauge it for yourself. And And And one thing I've noticed, which is is quite sad, I think, if you look at the average piece of research for mining on a mining company from a broker, it very rarely mentions where they see the **[23:55] Speaker B:** commodity going. So you'll find a myriad of of buy recommendations for gold, but it doesn't tell you on what basis they're they're basing that, you know. So I mean, we've had over 5,000 for the gold price. We're 4,100 now. And really I I I think the research should be as much based on what they think the metals are going to do over the next two or three years. **[24:20] Speaker A:** Yeah. **[24:20] Speaker B:** And of course, none of us know. **[24:22] Speaker A:** Yeah. Well, there is a a power Listen, I think most a lot of the focus has been on precious metals and base metals for so many years, but up until recently, we're starting to now, for lack of a better term, the critical metals space, the the rare earths and some of those very specific niche metals is coming into in vogue, I guess you can say. Has this Has this Have Is this cycle recognizable? Have you seen these rare earth cycles? **[24:51] Speaker B:** And what's made it unusual is that a lot of these commodities, the rarer commodities controlled by Sorry, controlled by by China. And China's, you know, best friend, of course, is China. And so they you know, if they need it themselves, they'll limit any export. And we've seen that in tungsten. Tungsten, of all the commodities, had the biggest rise and virtually held all of the rise because China won't release any to the free world. So we're getting a plethora of exploration companies that are, you know, on the look for for tungsten. So, you know, certainly in our office, we've been sort of trying to find situations that that, you know, are going to benefit from this in the fullness of time. But I would say that's one of the big changes. The China has been very instrumental in backing other companies, certainly in Africa. They own a lot of African mining industry. **[25:46] Speaker B:** I think they just about precluded from from Canada. But they are a huge influence, especially in rare earths and and rare rare metals generally. **[25:56] Speaker A:** Mhm. **[25:58] Speaker B:** And I think Trump has realized this and trying to get them to open the supply gates, but you know, I believe the Chinese tell you one thing, but they don't necessarily do it. **[26:07] Speaker A:** Well Well **[26:07] Speaker B:** So that's that's been a big change. As the advance of the high-tech sector has taken place, so has the demand for commodities, we, you know, metals, rare earths, we wouldn't have spoken about really 10 years ago. **[26:20] Speaker A:** Was there ever a time you spoke about rare earth exploration? **[26:22] Speaker B:** Very, very rarely. Very rarely. **[26:25] Speaker A:** Well, maybe that's more emblematic of the technology advancing and the demand for it, right? **[26:32] Speaker B:** And it's not going to go away because, you know, **[26:35] Speaker A:** Right. **[26:35] Speaker B:** that age is with us now for the future. **[26:37] Speaker A:** But there's still it feels like there remains a gap on the supply chain for for rare earths. And I mean, full transparency, I'm I'm on a I'm an independent board member of a rare earth exploration company. But there is, you know, there's a lot of there there's capital that's moving into the exploration development of projects, but the processing and fine tuning to the final product is still there's there's a gap there for demand. **[27:07] Speaker B:** Of course there is. There's a major time scale. **[27:09] Speaker A:** Right. **[27:09] Speaker B:** Um and I think that's one of the Again, what we're seeing in the market at the moment is that I said before, there are a lot of really exciting exploration companies, but the institutions are saying, well, when when can they be in production? And if they are in production now or perhaps next year, they'll certainly look at them. But if they're four or five years away, that I think brings hesitation. And you know, it's a it's a general comment, but I believe that's what's happening. And I think that's why some of these exploration companies that are coming up with really good results aren't getting the response that they might have anticipated. **[27:46] Speaker A:** Is that because I mean, there's also an opaqueness with the economics of these projects? You know, we've seen a little bit of a price floor on a few of these metals, but does it need to be expanded throughout the rare earth complex to where the US government will come in and provide a floor to price so now not only those companies, but capital allocators can start, you know, sharpening the pencils and putting some economics on it. **[28:13] Speaker B:** it's a bit of an unreal world because some of these things I mean, you know, one of the 27 rare earths and most of us have never heard of, but they all play their part. And of course, so that means there's really no secondary market. So it's very much ad hoc. And that's why the Chinese are such an influence because they at at they're probably sole supply. Now, Australia, Canada, America, they're all looking for new projects. So, money is going into the sector, but you know, from day one of starting it up, it's probably five years before there'd be a producer. So, it's not surprising a lot of these commodities, and I I highlighted tungsten, um you know, which is more of a you know, metal hardening agent. **[28:56] Speaker A:** Mhm. **[28:56] Speaker B:** I mean, there just isn't enough to go around. And and with with sort of countries um spending much more on defense, yeah, so the so the demand for for tungsten going into these elements is increasing. And and the supply is hard to find. If you look at a chart of tungsten, it's sort of a straight line with a huge rise and holding most of that rise. **[29:19] Speaker A:** Yeah. **[29:20] Speaker A:** You had mentioned earlier that uh the capital for mining, the cycles are are pretty fast. They don't last very long. And I think obviously we saw it in kind of end of 2024 into 2025 and then an abrupt seemed like an abrupt end in February of this of this year, 2026. **[29:39] Speaker B:** we had this huge rise in the gold price that took it above 5,000. **[29:43] Speaker A:** Right. **[29:44] Speaker B:** Um but I I'll stand to be corrected, but I think the fall in share prices is greater than the fall in the bullion price. **[29:53] Speaker A:** Mhm. **[29:53] Speaker B:** sort of just a lessening of of interest. **[29:55] Speaker A:** Yeah. Well, it might so might so I want to ask you if it seems like the playbook's always the same. When the cycle begins, when the bull cycle begins, heavy capital moves into the most liquid names, the producers, the biggest companies, and then eventually starts trickling into royalty companies and maybe the the developers and then the explorers are kind of get the last leg of capital. Um is that pretty much rinse and repeat for any other cycle you've been part of? **[30:25] Speaker B:** you know, we we didn't mention royalty companies, but I mean they hardly existed 10 years ago, but they they're really smart operators because they they they they give the royalty. They don't have to take any of the risk. And they just lend the money and get a really good rate of return as and when the company goes into production. Right? And and they usually only lend to companies either in production or very very close. They're not going to back a company that's sort of five years away. So that that's been another major development. You know, there there sort there was sort of Wheaton and one or two other **[30:59] Speaker A:** Well, Franco Nevada, the famous story of Pierre Lassonde buying buying the seeing the advertisement in the paper. **[31:05] Speaker B:** Yeah. **[31:05] Speaker A:** Yeah. And then **[31:06] Speaker B:** and and those two were really the only two I don't know five five 10 years ago. Now there are probably if I said 50 royalty companies, there are a lot of small ones set up, but there's some in the UK royalty companies, you know, there and they'll back a certain company, but it's it it's a good business. You invest in if you invested in Franco Nevada, you'd have made a huge amount of money. **[31:28] Speaker A:** Mhm. Yeah, I keep on thinking of did you ever meet Stan Dempsey? Uh from Royal Gold. **[31:36] Speaker B:** No, I remember the name of the company, but **[31:38] Speaker A:** yeah. No, he in the he he's he's I saw a picture of him. He's he's still with us you know, and just one of the godfathers of the royalty space, but you know, that was a financial asset that was creatively brought on by the likes of your generation, right? And so I'm just kind of you know, it makes me wonder, okay, if we can continue to evolve and figure out new business ventures and assets within the space, what's next? You know, is there you know, and this isn't necessarily a question as it is just a statement, but there's there's probably some other creative ways that will continue to evolve this sector one way or another into other assets if it's not if it's got to be just the actual metal or an actual equity. You know, what what potentially could be next? **[32:27] Speaker B:** not necessarily the answer to your question, but I would point out that if you take the major companies, Rio's, BHP, Glencore in America, Barrick, Newmont, they have immense balance sheets. And a lot of the gold companies have billions on their balance sheet. So, I think the next influences that they will be buying, there'll be a lot of corporate activity. I expect a huge amount of corporate activity next year. Because again, as a generalization, mining companies aren't particularly generous in paying out dividends. Um **[32:56] Speaker A:** You don't say. **[32:57] Speaker B:** Yeah. And um but they're they're they're pretty smart operators. So, you know, they can see these emerging mining companies which might struggle to raise money. Um at the moment it's been relatively easy, but it is getting harder. **[33:13] Speaker A:** Yeah. **[33:13] Speaker B:** So, I think a few of the major mining companies are absolutely rubbing their hands in anticipation of doing some pretty good deals. **[33:20] Speaker A:** Yeah, but they're not blowing out and doing silly deals like they did in cycle 2011, right? **[33:26] Speaker B:** No. **[33:26] Speaker A:** Is Is that a lesson learned from their mistake? **[33:28] Speaker B:** I think so. Yes, I think so. They got carried away a bit, but **[33:31] Speaker A:** Yeah. And we But we have seen I mean, you're right. The dividends isn't anything like earth-shattering, you know, like You know, I'm not retiring based on my dividends that I'm getting from mining companies by any means, but they are moving that that direction. They're allocating capital to share buybacks. **[33:47] Speaker B:** Yeah. **[33:48] Speaker A:** Um there is a little bit There has been ideas that maybe even that's gone too far that consolidation. **[33:55] Speaker B:** What's the biggest mining company of all? It was NRZ. Uh and the firm was an assistant to a director, so I used to know what was going on. And if you go back to perhaps the '70s, early '80s, they had huge exploration teams of their own. And then they worked out that probably if they had a very small team of experts in St. James's Square, um they could let all the other people do the work for them. And if a really thing came along that was obviously made a major discovery, they'd go and buy it. **[34:27] Speaker A:** Mhm. **[34:27] Speaker B:** So, they It was rather I think rather shrewd of the big mining companies. They They still have exploration teams, but they're much smaller than they used to be. And And the exploration teams, as a generalization, are looking to see what other people are doing. and if there's a really undervalued company emerging that they'll probably have a go at it and that's where I think will happen next year. **[34:47] Speaker A:** So you think they will start allocating they'll they'll be some more M&A **[34:51] Speaker B:** Yes. **[34:52] Speaker A:** from the you know majors acquiring developers or early stage exploration. And what why next year? Can you give me the framework of why do you think next year is going to be the **[35:01] Speaker B:** Well only that we're I mean a lot of people share my view that you can never put a time on it but current level of base metals is probably fair but that there are no new significant ones coming on lots of smaller ones you know doing 10 or 20,000 tons of copper but none of these huge South American porpheries that that you know **[35:22] Speaker A:** Right. **[35:22] Speaker B:** are doing hundreds of thousands of uh of pounds of copper so it's um it's a world where the majors can afford to to sit back and watch what's going on and I as I said unless you think there's going to be a recession or worse a depression I think they'll work out that the time is right for them to spend some of their balance sheet. **[35:43] Speaker A:** Yeah. But there those projects remain very expensive and we had a conversation about where the risk capital is um **[35:51] Speaker B:** Well mining companies as a whole are coming out with pretty good figures and you know if you look at the the three I've mentioned they're all pretty good figures. Some of them have different emphases we've seen Glencore is just listed in um Australia um and I think probably quite a smart move because although every country has its woke attendees as it were but Glencore have have worked out that whatever is said generally coal is is is is here to stay certainly for the foreseeable future so they they did a huge bargain buying a lot of the coal at assets out of Anglo American. They got big assets in Australia I think Australia will appreciate Glencore perhaps more than we have over here. **[36:34] Speaker A:** Mhm. **[36:35] Speaker B:** So um yeah that I mean it's all it's a changing market but it's you know I I think if you you keep on your toes there's going to be a lot of money to be made, but perhaps not necessarily in the way next year, you know, if if the US dollar stays in decline and and people get less convinced that the US dollar is the world's reserve currency. Who knows what effect it'll have on precious metals? **[37:02] Speaker A:** Yeah. **[37:03] Speaker A:** I want I want to ask you about uranium. Can we talk about uranium? **[37:05] Speaker B:** can. Yeah. I actually set up when I had my fund manager group, I set up the world's first uranium fund. **[37:12] Speaker A:** Yeah. **[37:13] Speaker B:** And a great friend of mine named I said, we want a good name. He said, well, let's call it Geiger Counter. **[37:17] Speaker A:** Yeah. **[37:18] Speaker B:** And and it became it became synonymous with the with the uranium market and we were the first people to to really embrace it. So it was a and I managed to put performance fees in the in the M&A. And the first 18 months, I think we got I think at least three performance fees. So it was an absolute money spinner. And then of course, it peaked. And then the the debacle happened in in Japan. And again, we always get things terribly wrong. I I looked at what had happened in Japan and I thought it was a triumph because the plant was built in 1980. And so I said, well, no one's actually died. You know, they they they responded pretty quickly and they've closed it down. And I said, you know, there are no 1980 Toyotas on the market. You know, they've gone. But what I underestimated was the Japanese psyche. **[38:10] Speaker B:** They saw it as a disaster. So my opinion was worthless. So I that was a period when I got the uranium market very wrong. I thought it would recover pretty quickly. And it's only really in the last year or so the Japanese have gone back to uranium, mainly because they what else have they got? You know, they're big importers of energy generally. **[38:29] Speaker A:** Well, the sentiment in uranium is net positive over the last five years, right? **[38:34] Speaker B:** But again, the it's this anomaly. The uranium shares haven't really responded. If you look at the majors, Cameco, Denison in in Canada and some of the other ones in Australia, they're okay, but they you wouldn't have made the money you might have anticipated. And and I think most people And and the other thing that really perplexed me when when the situation arose in Japan, it was always an absolute disaster, you know, they're limit building again. And it was like several course technology hasn't moved on since 1980. And the major change in the uranium industry is the recycling of spent uranium. It goes back in the system and it's used I think about 10 times. And what comes out is a fraction of what used to perhaps more concentrated. But it's much you know, the the technology has improved enormously. It's a it's a different uranium industry to one in 1980. **[39:28] Speaker B:** But people haven't really appreciated that and mainly because it's it's not that widely a covered market. **[39:34] Speaker A:** Yeah. Well, it's there's also some similarities in uranium market like there is say in the gold market where uranium made this huge run up recently to like, you know, $120 a pound and it's at $90 basically a pound right now. But the equities are trading trading like that's back to $30 a pound, right? **[39:51] Speaker B:** Well, it's not that low, but it's and there are a lot of people who've taken a sense of appraisal of the situation. And America, you know, is I think is stepping up on its program of building nuclear powered power station. We got a couple coming in the UK. **[40:05] Speaker A:** Yeah. **[40:06] Speaker B:** Um in countries like France, well especially Germany, where the greens have outlawed anything to do with it. And and I mean, basically, you know, I would argue it's a safe industry, you know. And Chernobyl well, that was that was Russians and and all programs we've seen on Chernobyl, there was a gung-ho attitude **[40:26] Speaker A:** Yeah. **[40:26] Speaker B:** which there wasn't in in in Japan. And so in there there was virtually no mortality after after what happened in Japan. But they saw it as a disaster. **[40:37] Speaker A:** Yeah. **[40:37] Speaker B:** But it was the worst tsunami in in living memory. You know, I mean the damage it done everywhere was huge. So, you know, it it it closed the power stations, but there wasn't a huge release of of of spent energies it were. **[40:51] Speaker A:** Yeah. And so I I co-host another uh podcast called Going Nuclear with my co-host Justin Hune and we just talk about uranium and nuclear energy and kind of this early days uh maybe perhaps it's a renaissance of nuclear energy early days and but I think what's happening but it's a little bit concerning from what I stand is obviously sentiment has improved in nuclear energy and the need to produce more uranium to feed you know to to provide the feed for the uh the energy. But it almost kind of feels like it's uh like a a railroad boom in so many ways where you have all these independent small modular reactor designers and each of them has the best type of design and capacity to provide that energy but there's so many of them it's still it's hard to decide okay we don't need a hundred different types of designs and models but how do you kind of funnel out the winners from the **[41:50] Speaker A:** losers to provide a functional response. **[41:52] Speaker B:** has been the realization that you don't have to build a monster nuclear power station in the first place because you can modularize it. **[42:00] Speaker A:** Right. **[42:00] Speaker B:** So you'll build a smaller one and when that's up and running you can add the next next um plant on top of it. Um and that was never done say back in 1980 so it's like anything else technology changes all the time but there are certain sectors that the market is very slow to embrace and uranium is certainly one of them. **[42:20] Speaker A:** Yeah. Uh so if you look ahead three to five years uh I'm still going to assume you're going to be working. You're not going to retire. **[42:29] Speaker B:** well I I regard it as my hobby as much as anything you know. **[42:33] Speaker A:** Well you don't work a day in your life if you love what you do. But uh where do you see the greatest opportunity as a resource investor today? What's really going to play out? **[42:41] Speaker B:** I would say the base metals because I don't see I can't see any major new copper mine on the horizon. I said before there are a lot of smaller ones. But but if the economy and then we get over the current sort of lack of enthusiasm about world economies generally, and we get come out of it with growth being established, where are those base metals coming from? **[43:04] Speaker A:** Yeah. **[43:05] Speaker B:** You know, they're China doesn't have any major copper mines. Uh a lot of copper coming out of Congo, but that's always a a law unto itself. Um Rios have got this big one in um in Mongolia. But the traditional hunting ground, South America, that money isn't there to spend, as I say, 5 or 10 billion on building a new major mine. **[43:28] Speaker A:** Yeah. But the Chinese moving into Africa has been a real center state for production. **[43:33] Speaker B:** I used to be very connected with Zambia, and they're in Zambia with a vengeance there. **[43:39] Speaker A:** So I actually **[43:40] Speaker B:** It's not always to the advantage of the locals because very often they bring their own workforce. And that workforce might well be people they've taken out of prisons. I mean, I'm sure a lot of people won't agree with me, but you can see it firsthand. They're they're not a great necessarily a great friend to the country concerned. They they tell a good story. We're going to help you develop this, but they keep control of it all. And as I say, very often they bring their own workforce in. **[44:08] Speaker A:** So I asked you the greatest opportunity you see. On the flip side of that, what's the biggest risk you see for the mining sector in the next 5 years? **[44:16] Speaker B:** Perhaps the economy's not picking up, setting off the recession going into depression, you know, and it's There are I'm not forecasting it, but there are a lot of similarities about what led up to 1929. It it's always different per se, but you know, UK, Europe is hardly a growth area anymore, which it was going back 50 years or so ago. Um you know, America, the economy looks good, but it's is it that strong? I mean, it's it's fairly sort of sporadic in areas. Um What's the best economy in the world? China. **[44:51] Speaker A:** Mhm. **[44:51] Speaker B:** Who's China's best friend? China. You know, and they I mean, they are producing pretty reasonable cars at half the price that Europe can produce them. You know, they're putting putting special taxes on them, but it's Is it It's a worry. **[45:10] Speaker A:** Yeah. Yeah. If if you had half a billion pounds to go and start a new fund today, where would you allocate that **[45:23] Speaker B:** I wouldn't be clever. I'd buy the majors. I would buy the Rios, BHP, and Glencore and one or two others because they have the assets. And if you try and second-guess the market, the institutions will initially, if they come into the market, will follow the big ones, the big producers. So if you're setting up a big fund now and it had to be invested, you know, there's a lot of people would keep the cash, but if it had to be invested, I don't think you'd be very brave. If I was doing it again, I wouldn't be going for smaller exploration companies, even though they might represent the best value. All the time we try and second-guess the market, what our individual opinions are is not really worth very much. It's is what is where is the big money going? And I think that's where it will go. **[46:12] Speaker B:** So And we did see it for a while. I mean, you know, Rios and BHP are both about 15% off the top, but that top was you know, was a big level. You know, Rios went through 80 quid and now they're 72 or something and the same sort of percentage with BHP. **[46:29] Speaker A:** Yeah. **[46:30] Speaker B:** So you can move them. You know, if the big money goes in **[46:34] Speaker A:** Is there hope for the London Exchange and the miners? **[46:38] Speaker B:** Well, we we still manage a lot of money. **[46:41] Speaker A:** Yes. **[46:43] Speaker B:** And a lot of Canadians come over this Michael Gentry thing, you know, they wouldn't come over here unless they they had a receptive audience. And the answer is yes. And we perhaps it's quite hard to to portray it at the moment, but um, you know, there's probably more entrepreneurism in in the city of London than anywhere else in the country. So, the answer's yes. **[47:06] Speaker A:** Thank you so much for your time. It's great to sit down with you. It's been a real real honor. I'm so glad Simon could uh make the introduction and um, you know, hopefully we can maybe do it again even next year with you. Yeah, yeah. What uh what's on store for LME week for you? You got a meetings and seeing friends? **[47:22] Speaker B:** We've had funny enough it it brings a lot of mining companies over, so we've had a a plethora of mining companies into the office, which we've got. So, I mean, probably we're a small company, you know, there's Simon and and Charlie Cander Brooks and then three or four of us sort of sort of and I'm I'm in the twilight of a career for obvious reasons, but you know, we we don't necessarily have the personnel to spend the week at at the at the LME conference. **[47:50] Speaker A:** Mhm. **[47:51] Speaker B:** Um, so you know, we'll we'll get the feedback from what's going on, but again, it's only an opinion. Or any of us can only express what we think might happen. Do we know? I don't think so. **[48:01] Speaker A:** Yeah. Well, in in in being okay with being wrong is also a a strength and a talent that it is. Uh, you know, it's something that we all need to learn that that it's okay but **[48:12] Speaker B:** you have to if you run funds, **[48:13] Speaker A:** Right. **[48:14] Speaker B:** you you certainly aren't going to get all the stocks right. That's for sure. **[48:16] Speaker A:** Right. Thank you so much for your time. It's really good to see you. All right, that was Richard Lockwood everybody with Arlington. Uh, we'll be covering more here from LME week and special thank you to Tara Hutton for their support of this podcast. They do make the invisible investable. We'll have more here in the next couple of days.