Upner: Your specialization is junior mining companies. Could you define the term “junior mining company” and could you also describe a little bit a sector of these companies?
Brent Cook: I consider “Junior Resource Companies” to be small exploration or mining companies with market capitalizations of less than US$500 mil and usually less than $100 million. These are generally small groups that are hoping to find an economic mineral deposit or develop one. They usually have no revenue and therefore have to raise money through financings. The sector is highly speculative and risky. The odds of success are low but when successful the rewards can be huge. Ideally a small exploration company finds a mineral deposit that will profitable enough to attract a buy-out from a major mining company at a significant premium to its share price.
Upner: If you should define an “ideal” junior mining company what are its basic features and how difficult is to find an “ideal” one?
Brent Cook: There are many business models in the junior mining sector so there is no single ideal junior. Because these are such small companies, management are key. They have to be competent, honest, committed and able to steer the business end of it while keeping the geology side on track as well. I look for companies with sufficient funds to take them through the next two years and, those with a property that offers the real chance of a major discovery.
Upner: We introduced to our readers your opinions that it is very difficult not only to find gold but also economically to mine it. Why is the gold sector so special?
Brent Cook: Mining and exploration are very cost intensive businesses. It takes considerable time and money to get to the point where an economic decision can be made with regards to a mineral deposit. Because mining is such a complex business that requires everything to go in its favor there are few deposits that actually make it through a positive economic evaluation. Bear in mind that the rock has to be blasted, crushed, ground, then the metal extracted from the rock. This requires very large and expensive facilities and also has to be environmentally and socially acceptable. Hence the mining costs are quite high
Upner: And what about silver? Is it the same situation in silver?
Brent Cook: Yes silver mining is just as complex. The difference with silver is that about 70% of its production comes from mines that are primarily extracting lead, zinc and copper. Hence, the production is not dependent on the silver price.
If somebody wants to invest into the junior mining companies, what should be aware of? What are main risks? What kind of gains is connected with the risk?
Brent Cook: The junior mining sector is an extremely high risk venture for speculative money only. Because the odds of success are so low, the few real discoveries are extremely valuable. A person can may 10 times their money in a week–or lose it all. The most important thing to keep in mind is that most speculators in this field are not experts. Get good honest advice from someone respected in the industry and know why you bought a particular stock. If things go wrong, sell.
Upner: We know that in your portfolio is also one Slovak mine. Why did you decide to put it into your portfolio?
Brent Cook: I purchased Global Minerals after visiting the property. It appears to offer a modest economic silver/antimony deposit that could grow. I felt the political situation was positive and based on its relatively low market capitalization there was room for the share price to increase as they de-risked the property.
Upner: If you could make some advice to our readers about junior mining stock, what should they search for or what should they look out?
Brent Cook: Talk to company management and know what it is the company hopes to accomplish. Look at the website and news releases. They should be providing you with all the information including drill maps, cross sections and assays. Even if you do not understand the details, the fact that they are providing them is re-assuring.
Look at the Brent´s Cook webpage.
Matúš Pošvanc thanks for the interview.