Discovery Group - Capital Is Back and It's Rewriting Junior Mining Timelines

Jim Paterson (0:00)

Hi, I'm Jim Paterson. I'm principal of Discovery Group. I'm here with Matt and Tom at the Beaver Creek Conference.

And I think we're going to have a great conversation today talking about all the people, the state of the industry, and perhaps some hard-hitting questions for Matt.

SPEAKER_2 (0:18)

Perhaps.

Mostly what I want to get at, some learnings. I'm going to learn some stuff out of this conversation. You better believe it. I hope folks at home are going to learn something from this as well.

Different times, different strikes and all of that. We are at Beaver Creek. It's the calendar event of the year for NIH Jr. Explorers and my favorite developers. It's great. Great setting. But it's not just the setting. It's who comes here. People like to come here. People like to come here to talk and learn and share. And investors come here. Real investors come here. So that's what I like about it. You're here as the principal of Discovery Group.

Jim Paterson (0:54)

One of the two principals.

SPEAKER_2 (0:58)

The better one couldn't make it, so you're here.

Jim Paterson (1:00)

I'm second best, but still pretty damn good.

SPEAKER_2 (1:05)

So you're here with some of the companies?

Jim Paterson (1:09)

Most of the companies that are members of Discovery Group are exhibiting here and presenting here.

SPEAKER_2 (1:14)

Fantastic. Now, we've been holed up in here doing interviews. We've managed to walk the streets somewhat and shake hands, but you really have been out there, pressing the flesh and wearing your shoes down.

What are you hearing? What are you excited about?

Jim Paterson (1:30)

I've definitely been in the mix. I mean, I would think that you've probably seen 50 companies or something here, I would imagine, but you've brought them here to your studios. But out there, I've been at lots of dinners, lots of meetings, and lots of reconnecting with people that I've known for almost 30 years. And certainly, everybody is doing better now. And that could be the nature of the cycle that we're in right now. And it could also be that people that stick around for 30 years generally know what they're doing. So they deserve that success. So it's pretty cool to talk to people and hear what the...

The main theme is capital is in the business now.

I'm going to talk about that a little later. But that's making a huge difference in just to shorten timelines and the deploying of the capital means you can execute.

SPEAKER_2 (2:18)

Right. You're going to come out from one angle. I'm going to come out from another. Okay. Because I've seen a couple of cycles like you.

What worries me about the good times is people do dumb shit with their money. So poor management teams make poor decisions and possibly damage good projects along the way. But the good news, flip side of that, is good management teams who've always known what to do, even in cash trap times, are able to do what they need to do. So maybe we can look at the pluses and the minuses. I think house investors recognise that just because there's a lot of money involved doesn't mean everything's going to be a winner.

Jim Paterson (2:58)

Correct.

SPEAKER_2 (2:58)

Is that fair to say? Yeah.

Jim Paterson (2:59)

And we're not completely overwhelmed with capital yet.

SPEAKER_2 (3:03)

Yeah.

Jim Paterson (3:03)

And I think that the projects that send money to heaven, like burn money, are when there's too much money.

SPEAKER_2 (3:11)

Yeah.

Jim Paterson (3:12)

And a lot of the generalists don't understand the business, but really want to participate. They're sold a line by a banker or a promoter, and they allocate capital to projects that don't deserve to be advanced.

SPEAKER_2 (3:25)

Right.

Jim Paterson (3:26)

And nothing good can come of that. I don't think we're there yet.

SPEAKER_2 (3:29)

I don't think we're there yet, but there seems to be a lot of political will which has changed. I think that's another big shift here. We've seen generalists step in as metal prices rise. It's hard to ignore gold and silver at the moment, even coppers are on a bit of a run.

Critical minerals, critical metals, mineral security have been worse, have been banded around for the last three years, and are starting to gain a share of attention at least, if not capital. So I think it's coming, so we can have a chat about what to look for when it does come.

Jim Paterson (4:07)

Yeah, I think there's a reason why some of the niche metals really never catch a bit. They're challenging projects, they're challenging perhaps the metallurgy, or the location of the world where they're located. And regardless if there's political will or not, if a project doesn't work, you're just going to throw a bunch of money at it, it's still not going to work.