He Poured Drinks for Mining Legends. Now He Beats Them (Rick Rule)

0:00Davey, the man that needs no introduction today is to Rick Rural. We ask him questions that I don't think he gets asked very often or all the time. We try and go deep about some historical things, and I think the money miners will get a lot about this because there's a lot you can learn from history looking back and then reflecting on where we are today. I couldn't agree more, mate. You know, I love my history delving back, and we ask him about some of the greats of the industry, some of the stories, some of the characteristics that make people successful, the ups and downs, the various cycles that he's been subject to over 50 years in the industry. So I reckon the money miners are going to love this one. Mate, you and I just spent a week, a week over east, really. We flew into Sydney, we drove to Newcastle, and from Newcastle, we spent a few days there, and then even ventured our way to check out some wonderful coal mines past the Hunter Valley, to be honest. Through the beautiful Hunter, and it was all possible thanks to our fantastic partners, Sandvik. We got an even greater appreciation for the beautiful work that they do in the ground support

1:02industry. We got to see their Heather Bray, their little operation there, and the rocks, the bolts, the plates that they supply to this fantastic industry, and we got to meet a lot of the team there as well in Fort Scratchley. The wonderful team, and most importantly, mate, we got to give the Billion Dollar man Mr. Derrick heard a check for a billion dollars in person. The man, the myth, Derrick heard the leader of DSI slash Sandvik ground support. If you're out there, you're running an operation, get an order in, use the app that Derrick coded up himself, the whiz, and get on that today. He loves being called the Billion Dollar man too, just say, hey Derrick, I hear the Billion Dollar man. You love it. That's the thank you to Sandvik ground support. Here we go. It's a wreck. Has the last few months since we last spoke, true, did you? Oh, I mean, I wish there wasn't a war and stuff like that, but the truth is, it's sure been an easy three years to make money. Oh yeah. It's so interesting, you say that.

2:06I was reflecting on some of your history, Rick. Is that that precious bull market, it was a between between 08 and 2011 that you intentionally sat out of and I am so curious, you know, why that one was was a decision to sit out and this one was easy to make money in. Well, I made a mistake. I mean, to be honest with you, I thought, first of all, that the circumstance would be more deflationary. I didn't understand that easy money would work as well as it did and there were so many other opportunities, other than precious metals that appeared attractive to me. Among other things, I was under invested in the broad economy and the shares of Berkshire Hathaway fell by 52 or 53% and one of the things I thought as well, this will be a real

3:07easy way to rebalance. I can throw a bunch of money at the best stock picker in recorded history and a guy who by the way, by stock, in an insurance company, rapper, so he, unlike me, doesn't pay tax. That seems like a pretty good deal, you know, I I whacked a bunch in there and the bank that we had then, Everbank, we went into that early crash, pretty cashed up and when the other banks were lending, we could and the FDIC had a whole list of other banks that were empty that you could take over for dimes on the dollar. So you know, part of it was I made a mistake, plain and simple and part of it was there was just too many other opportunities. And now compare that to today, it, um, the opportunity set seems very different right because,

4:08because a lot of stuff from the opportunity said it is very different. There is nothing that I know of this hated today, I mean, nothing, let me rephrase that. There's nothing that I understand well that's hated today. You know, I have two qualifications, I have to think that something's a good buy, but I have to believe that I know enough that I give a shit about what I think. And the conjunctions of those two circumstances is less rosy. We do have a banking charter and I'm, you know, when the time comes to add more capital of this bank, I will certainly do that, but that's not going to be for six months. So I don't know what I'm going to do right now. I mean, I, if we talked about, if we talked about this six months ago, I would say go 20 oil and gas business, but the oil price that I was hoping for in 2029 is here with us today. So I'm not complaining, you know, it's just allocating is getting harder.

5:09I'm curious on that, that period of time as well, Rick, if we go back to the, the 2010s plus or minus a couple of years with, with the brokerage business as well that eventually got, wrapped up by Sprott, how did that tie in with the, the banking business that you had as well at that point in time? Well, the broken business was different, the, that bank, battle bank was public or ever bank, I'm sorry, it was public. So I was just a shareholder, a founding shareholder, but just a fairholder shareholder. The brokerage business was private. It was owned by me and that means, you know, it was run by a coward. It was in very good financial condition. In fact, I wanted to run an ad in November or December. No, no, I'm sorry, it was, actually, it was in 2009, I wanted to run an ad. You know, the US government was just given away these tarplones. And I wanted to run an ad in the Wall Street Journal saying that global resource investment

6:11neither needed nor would accept a tarplone. And I thought for my audience that that would be very good for business, but you have to, in the US, present brokerage industry advertisement to the software regulatory authority for approval. And they said, Mr. Rule, that ad is not helpful, that will not be permitted. Well, you know, we were, we were able to do some things. We were able to press for some types of business relatively aggressively when our competitors couldn't. I think that ad, I think that ad probably could have added 10 or 15% to our client account. We've been allowed to run it. I thought it was timely and cheeky. It was true too. You know, we, I remember a clearing firm used to say, you know, you guys should have more

7:13debit balances. You should offer more margin lending some punters, money to speculate in penny stocks is not my idea of a good time, you know, I have credit criteria that are obviously stricter than yours. And you know, that served me well over time. Yeah. It did amuse me that our clearing firm wanted us to allow people to use 50 cent more, you know, 50% margin to buy two dollar stocks. And I didn't and don't think that that's a good idea. The perspectives on leverage have like certainly changed. Remember even starting in the industry or the forms and everything, they're still incorporate, you know, led for huge margin, how much, but it's much less, you know, pervasive these days than it was. But all you speak with all the guys in industry and therefore, you know, from when they were

8:13our age, like travel my age, they were, they were punting on God knows how much times they've reached and paid the price through the various cycles and learned a few lessons. But it's interesting to see that sort of ingrained in the industry. My only guess is, at that point in time was global. It was owned by me. I wasn't using somebody else's money. There was this wonderful saying on Wall Street, wonderful and illusory, but it's that the phrase when they do these goofy deals is, I won't be here, you won't be here. In other words, they were using the firm's money to try and generate quarterly cash bonuses. There was no real penalty for failure. I by contrast owned 100% of that firm or 80% after bonuses. And I would be here and they would be here. And I had no incentive to do something stupid with my own money. I think in a lot of financial services businesses, the people who run the business have a very

9:20healthy stake of the success and no stake whatsoever in the failure. The consequence of that is that they're maybe more aggressive than they might be in a different circumstance. You sold that business to Sprott and by virtue, it became and still are the largest shareholder today. And you've got this wonderful adage rig, which I remember from years ago, you talk about your mentality, this, this, Eric's, and you say, you know, your thesis for investing in resources goes something like, you always thought about protecting the downside, the upside was I care of itself. And Eric thought, if I, if I, you know, have a superb winner and let it run, then, then you don't have to worry about the downside. And then you finish off that adage by saying, Eric's a billionaire and you're not, but I'm being the largest shareholder of Sprott with a $5 billion market cap. I dare say you might have joined Eric's club lightly, Rick. Well, Eric's done very, very well. Eric's a unique human being in that he is psychologically prepared and financially

10:21prepared now to take laws. I would say my first two years in Sprott and by the way, when I joined, I was the second largest shareholder. He was the largest. Were I the largest? He would have gone to work in a place called Rule. I went to work in a place called Sprott, which will tell you who was the largest shareholder. I suspect that Eric's portfolio, and I don't know this for sure, but I suspect in 2011, 2012, 2013, Eric's portfolio lost 85% of its value. There are not a lot of people who either psychologically or financially could stomach that. That's an enormous task. That's an enormous task. Eric spent about six weeks in sullen condition. I remember it. Well, after that, he sort of dusted himself off and said, okay, let's restructure this portfolio. We're going back to for more we came. He's an amazing human being.

11:23It is true that when he and I were visiting about our respective styles, I said, you know, if you look after the downside, the upside takes care of itself and he laughed and said, I believe the other way around. I believe that a 20-bagger, it amortizes a lot of 35% or 40% losses. The efficacy of his theory, if you work as smart as him, and if you're as smart as him, is proven by how much money he's made. By the way, the money he's made in this sector dwarfs the money he made in the prior sector. He's just, I mean, the guy's hitting a long wall over the months. I'll tell you another funny Eric story that's all on the same vein. When they took me over, they trotted me around Toronto to all these institutional investors. You know, Eric and Peter and them are basically saying, you know, I'm the greatest things in the sliced bread, my sweat doesn't stink, all those kind of stuff. There was one, I think, pretty smart securities analyst, Chinese guy at RBC, and he said,

12:27so Mr. Sprott, just had a curiosity, we've heard a whole stuff you like about Rick. What criticisms do you have? What's not so good? I was thinking, this guy's smart, I got to see how Eric answers this. And Eric started laughing at all the Eric would say this, he just has no fear. He says the problem with Rick is that he's afraid to be right. He has these wonderful answers and he hedges everything. Some of the names he's talked about, when I hear about him, they're his names, I'm coming in after him and I buy five times as much. Which says a lot, you know, he's got, he's got marvelous risk appetite, it's rare to say something like that, he's got aggressive in that size. And you know, he's absolutely, he absolutely regards being wrong as the pricey pays to be right.

13:29You know, when he reviews his action psychologically, he says, I do him again. Now listen, I don't want your people at home doing this, by the way, you know, we're talking about a guy who works deceptively hard and is really, really, really smart. Which is why he can make this work and he has absolutely no personal remorse. If he loses, by now, if he loses $10 million in a deal, it won't change his decision about anything, not the next deal, not what to have for breakfast. That requires a very stout financial condition, but it also requires an extremely mentally stable human being. There's no remorse around Eric. I think his background as the CA is chartered accountant is worth understanding too, in

14:31that he really, truly puts things in arithmetic terms. He is, I don't mean this in a human sense, in a human sense, he's very warm, but in a professional sense, he's extremely cold. If you'll remember the Fosterville discovery in Australia, that discovery, you'll basically doubled the stock, and Eric made the point, which is very true, he's statistically as much cheaper now than before it doubled, because you have the information. Other people's minds aren't wired that way. I'm also curious to hear, Rick, the other lessons coming out of that late-troner boom, 28 to 2012, taken an 85% haircut for him would have been pretty catastrophic for most people. Are there lessons you noticed in how he changed how we went about the market, and canter

15:33to hear your thoughts in the lessons you learned coming out of that boom into the next one? Early on, he was in denial, you don't have to say that. When I joined Sprott, I found my horror that amongst all of us together, we had 1,000 names. There was no way we could follow 1,000 companies, so in a director's meeting, I said, we've got to cut this to the number of names that we know well enough that we feel is on his fiduciaries, that we can represent the people's money, which is to say we had to get rid of 85% or 90% of our names, and that was pretty ugly, and for a while, Eric frankly refused to participate. And I would say through 2011, part of 2012, he really believed in these companies, he believed in the people, he believed that what he saw as the aberrations in the market were

16:35temporary, and he was wrong. But when he came around, then he began to allocate assets. He said, okay, my mistake was I own too many names, I didn't know the names well enough, I didn't have enough conviction. What I need to know now is the figure out names that will give me to the best leverage to recovery, eliminate the rest fairly ruthlessly and redeploy the money. And when he said about doing that, it was impressive to watch. There's lessons from that period of time. You know, one analog that's consistently made about the period of time we're in right now, and you mentioned oil, oil being at $100 already. I mean, the parallels to the 70s is stark and rising, and if I go back to your existence in the 70s, Rick, which I understand is quite some time ago, but I know you've got great memory.

17:37I was surprised to learn you're actually a bouncer in the early 70s. So, you know, we're paying attention to markets enough to draw the parallels to today. Yeah, I mean, you know, I need to say, I went into the hospitality business, if that's what you want to call it, because I needed to go to school during the day, and I needed money, and I had to work at night. The only skill I had was I was a big guy, and I'd box for 10 years. So, I was able to get a job in playing both of those skills at night, so I'd go to school during the day, but I was going to school during the day to study natural resource finance. You know, through an onset of circumstance that I won't bore your audience with, I proceeded very quickly from being a bouncer to a bar owner. I'm probably too quickly in retrospect, but that's okay. And my bar was absolutely the epicenter, as it turned out, ultimately, nighttime epicenter of Vancouver Stock Exchange.

18:42So, it was interesting to me. I'd go to school during the day, and these professors would teach me the way that finance was alleged to work in textbooks. And then at night, I would pour whiskey to the movers and shakers of Vancouver Stock Exchange, and I would learn the way finance really worked. And they were not particularly well-related. And it turned out that some of the empirical lessons I learned during the day, in other words, some of the tools that I was taught to know how to know I used to this day. But the skills that I learned at night, I use every waking hour. I joke that I left the University of British Columbia, which was where I was attending then, because it got in the way of my practical education. Given that my chosen vocation was natural resource finance, and given that I was making so

19:46much money, and learning so much more at night, my academic activity has really, truly gotten the way of my education. I'm not suggesting, by the way, that particularly my minor, which was geology, or some of the lessons that I learned in finance weren't important. But I do believe that the practical education that I got with the Marie Pesns and the Adolf Lendines and the Peter Browns of the world at night, people who turned out to be legends in mining finance weren't more valuable. I had the extraordinary good fortune of having a guy named Peter Cundle, who was a globally noted value investor at that point in time, taking me under his wing. And he was really responsible for the synthesis of what I learned during the day and what I learned at night. Did you appreciate at that point in time those people, what was their reputation in the early to mid-70s already?

20:50I did appreciate them. I'm embarrassed now when I think about how aggressive I was as a young man courting mentors. I was absolutely shameless and I'm delighted that I did it. I wonder to this day why some of them tolerated it? I suspect as an old guy who likes to mentor now that just the sheer energy and ambition that I exhibited then made people want to help me. These are people who had a lot of experience and I've come to learn at age 73, probably didn't have very much by way of legs left. Now that I'm in that position myself and I think probably it was my energy that abused me. When people ask me today why I spend so much money and so much time mentoring it's because it's my way of acknowledging the debt that I owe to those incredible people who mentored me and I absolutely understood at that period of time that they were doing me an

21:56incredible favor and I'm embarrassed to say I think that I continued relentlessly to ask them to do me more favors. I think I think that hits to something I actually wanted to bring up at the end of that chat but I'll ask now because there's something there about legacy I think and I mean I think you understand legacy better than most you invest in mining companies where there's family legacy involved it clearly it stands a lot for you yourself. The fourth Arthur Richard rule if I'm not mistaken so there's legacy even built into your name. Tell me about legacy and your philosophy behind it. Well, legacy is one thing. Particularly for me the legacy involving the debt I owe our community the people who've taught me that's important to me. Legacy is an investment strategy is important to too. I think

22:58the three of us have talked before on your show about parental's law. The sense that accomplishment doesn't conformably align that's the social science dictum around the 80-20 rule the suggestion that in any given subject 80% of the utility is contributed by 20% of the participants. There are two things that you need to know about parental's law to make a work for you as an investor. The first is that it's a bell-shaped curve and there isn't 20% there's 220%. There's the good 20 that generates 20% of the utility. I'm sorry 80% of the utility and there's the bad 20 that generates 80% of the aggravation and they're both there. So your first job is to hang out with the good 20 and avoid the the bad 20. Legacy comes into play because if you run either lip either good lip or bad lip that 20 what you'll find is that if you put them through the same

24:02performance dispersal curve they conform will be aligned which suggests that 20% of the 20 does 80% of the 80 or 4% of the population base generates about 65% of the utility. I found and it took me until I was 40 to figure this out that that dispersal curve conformably aligns at least one more time which is to suggest that 1% of the population base generates between 40 and 50% of the utility in any given activity including mine finance which means that the legacy contributions of the Lundin family or a Robert Friedland are just stupendous. The value of aligning yourself with someone and a team who has a proven legacy of success at the task at hand is of almost

25:06immeasurable value and that's important you get tempted to invest in early stage companies for a variety of reasons but particularly efficacy of the storyteller but the truth is that the most important determinant of your success is the applicability of the team particularly the ownership team engaged in solving the task at hand and that comes to legacy. I'm having the good fortune right now to study the operating parameters of the third generation of the Lundin family. I started doing business with the cyan of that clan Adolf Lundin in 1975 if my memory serves me correctly and I did billions of dollars of business with his sons Lucas and Ian. It amazes me

26:09that their grandsons the grandson of a billionaire is as humble and hardworking and smart as those young lads are you would expect them to be you know dissipated with white powder coming out of their nose and some brothels somewhere not the case and you wonder about the legacy of a family like that the cultural legacy that allows them not merely to continue their fathers and grandfather's legacies but in many senses to improve on it I'm very interested in how that works. Can you share a bit more about Adolf and what made him kind of special at the time like the the no-guts, no glory you know family tradition shines through and people throughout the industry kind of know that but I think perhaps sometimes people take the wrong lesson and they just go and gamble kind

27:11of dramatically so what was it that stuck at about him. A few things to struck me of at Adolf. First of all he was deceptively smart. People paid attention to the fact that he was a good business man and he was a good negotiator all those things are true. He was also a really good geologist. He was really really smart. Adolf loved it too. Adolf liked money don't get me wrong but his goal was never to spend money. His goal for money was to be able to get bigger to invest it. Adolf knew in his heart of hearts although the world never did. Three or four times he was broke but he kept going. And when he hit something I mean occasionally he'd do something nice for himself or more more likely he'd do something for Ava his wife but it was never about that.

28:17I mean absolutely positively never about that. My finest meals with Adolf and we had many. We're not at the world's finest restaurant. It was someplace that we could duck in out of the rain together have decent food and have a good time. He was just not about that. Adolf also absolutely reveled in the success of others. He was the boss because he had to be the boss but the idea that somebody else came out of a transaction with a lot of money. Is something that Adolf really truly liked. Adolf also had a he had an adult sense a measured sense of political risk. Adolf believed which I believe is very true that the most dangerous government is the one closest to you. And he didn't believe

29:17that jurisdictions ruled by white people in English according the rule of law were safer. None of their countries. So Adolf was perfectly comfortable in Ethiopia or New Guinea or Argentina or Sudan or Congo or Russia. All places that I did business with him in. And that doesn't just say it always worked out for him but nothing always works out for anybody. I remember Adolf telling me once having a great asset in a country that you're afraid will steal it is much better than having an asset in an asset not worth stealing in some country that wouldn't bother. And that always struck me. Adolf also told me the exploration risk no matter what you do is always high. So why would you take big risk for a small project? A small project can only ever make you small money but they carry big risks while a big risk, although it carries a big deposit while it carries big risk can make you big money. Why would you juxtapose

30:24small money with big risk? And Adolf and his son Lucas in particular were never afraid to be wrong. I can remember probably 10 times in my life in discussions with either Adolf or Lucas where we'd be discussing something going through the pros and cons with a group of us and finally a londine fist would pound on the table and say okay enough talk. We know as much as we're ever going to know we have to make a decision and if we screw it up we'll fix it. Up or down yes or no right now. To the extent that Lucas staff gave him a chair that had a stitch in the back of it the decider. At a certain point in time the whole londine family has always been very pragmatic about the fact that they make mistakes. Correct. We talked earlier about Eric Sprott the same thing. At some point in time when you figure out that the odds are against you you fold or if you figure

31:25out the odds are with you you go and there's no remorse if you leave. Lose you fix it. It reminds me of this this story that somebody told Trevor and I kind of recently it was about Chairman Chen the the leader of decision mining and they were debating they were endlessly debating to to build a decline or build a shaft I think I might get the details wrong but directionally it's kind of right and the team eventually sort of says okay we're going to build the decline and he just slams his fist on the table we're building the shaft you can see the all body goes on forever end of decision and they just crack on and that that kind of foresight and ability just to make a decision and get on with it kind of stuck at to us pretty dramatically. I had a similar discussion which I can share now that Lucas rest in pieces no longer amongst us I pitched Lucas a exploration idea in the 90s maybe it was early 2000 but you know 20 30 years ago I said Lucas you know I own all

32:28these prospect generators at all of these guys are turning up five or six prospects a year you're a prodigious consumer of prospects why don't we co-invest in all these things together and the condition of me investing in you investing is that you'll get informal first look at every project that they do but they'll probably have an easier time raising money because you and I are invested in them which means that likely they'll be able to do financings at higher prices and will leverage off other people's money Lucas says Rick that's a really good idea he says but you know things aren't the way they used to be now we have to go to the board you have to explain this and the board has to you know vote I said okay you know I'm happy to that present a lot of boards so we trundle into this board meeting I forgot what board it was but we sit down and Lucas says to the assembled okay now here's what's gonna happen Rick has this really good idea and he's gonna explain it and you're gonna vote for it that was his idea of a democracy he was in fact decisive it was it was a very amusing incident in corporate governments but I

33:35I do think it said something about the fact that people who independent directors who existed in the London orbit had to be confident enough in what they do and understanding enough that exploration involved risks that they were willing to do that sort of thing there's a lesson there's many lessons from the one-deen family and and one of them I think relates to like a topic you've talked about nausea about and that's the the value of a mispriced or embedded optionality and for them there was this geopolitical arbitrage in some respects they could pick up an asset like fruit of delmorte from a major for peanuts and and it was it was clearly mispriced in the fullness of time with their own you know wits and capability have been able to build a tremendously valuable business off of off of that asset that point of optionality though I think about it a lot today like like to find opportunities where there's embedded optionality it there needs to be very

34:37specific market circumstances or or political kind of you know disparities between jurisdictions like like where do you where do you kind of look for for these these cases of mispriced optionality because because they're a spectacular return that can come off the back of that there also is a requirement that one acts too many times I've seen managements that weren't entrepreneurial and they an opportunity is presented to them by the staff and they consider it and they consider it and they consider it the American parlances ready aim aim aim fire one would suggest that some of the great entrepreneurs the londines Warren Buffett folks like that short circuit a little bit even Eric's brought ready fire aim but the truth is that you have to have the maturity and the confidence and

35:42the education and the staff to look at opportunities where they see problems an act I've done some really truly great entrepreneurs Jim Bob Moffat who built Freeport Mac Moran it was the same circumstance Jim Bob used to say Jay I'm sorry that's American parlance James Roberts Moffat not Jim Bob when he would see an opportunity he absolutely had the courage to capitalize amazing I mean imagine seeing a bunch of green copper stain at 13,000 feet above sea level 550 kilometers from the coast in Papua New Guinea where a labored dispute met that some of your workers wanted to eat some of your other workers and you build the biggest copper mine in the world up there you have a 220 kilometer long trauma to carry ore at the time that Jim Bob fought through

36:51Hertzberg and Grassberg I mean not one thousand not one or one thousand people thought he wasn't utterly utterly deft and I suspected that mine makes three million US dollars a day after 40 years when Adolf Lundin went into Argentina to do Baja de la La Vera he had a fairly short fuse to make that project work where else the Argentine government would take it back every other company in the world that had the opportunity said well the project's been there for 20 years why didn't it work I asked it all that and he says because the government wouldn't allow it to work I mean this is really simple the circumstances changed so your response to the circumstance has to change

37:52that ability to look at things factually not let your own prejudice and not let that part of history which is no longer relevant guide your decision there's been a wonderful set of circumstances in the last 15 years where entrepreneurs have looked at assets that were redundant in the bowels of major mining companies projects that had been stripped for cash rather than had cash care and attention spent on maintaining the project and they have taken projects out of majors where the majors couldn't make them work and made them work in spades what this has to do is looking at an asset with different eyes and the great entrepreneurs I that I've seen have seen have had the ability to look at assets with that same different eye

38:56I remember my own mentor Peter Cundle when I was a very young man and thrown in case study down in the desk and he said I want you to tell me why this works or doesn't work and unfortunately for me it wasn't a resourcing it was a brewing company and I will admit that at that point in time I did do some due diligence on brewing but not from the producing end rather from the consuming end and I looked at this thing and for the life of me I couldn't figure out the attraction I mean it wasn't going to go broke the company was you know a bit over-capitalized but they had a they had a brand that was weldurable the sales chart looked like the electrocardiogram of a corpse you know like just sideways the brand wasn't growing it wasn't shrinking it was making okay money but it wasn't cheap relative to the amount of money it was making and I was

39:58just mystified you know there's something here but my training doesn't allow me to see it and finally I mean it probably took me two weeks going through the balance sheet I learned that this brewing company owned a brewery and if I remember correctly that brewery was in downtown San Francisco and the brewery was carried on the books at the acquisition cost in 1910 and by 1971 or 72 that real estate was worth a lot of money but given that the brand was going nowhere it made perfect sense that you would use that brand and have somebody else contract manufacture your beer and you could sell that real estate what Peter Kondo was trying to teach me was that there's often virtue or risk hidden in plain sight if you are willing to work hard

41:06enough and be intellectually flexible enough to see the opportunity I remember very well in the middle part of the decade of the 90s there was a truly ugly civil war going on in Congo if my memory serves me correctly two million people died that not merely of gunfire but aids of bowl you know starvation all that a truly ugly ugly ugly fight and Adolf in the middle of that went to Congo and he managed because there was no competition or little competition to get control of the largest undeveloped copper deposit in the world take it from the grooming there were a whole bunch of lessons there and I remember saying to Adolf I mean what's the chance you can pull this off he says you know at least 50 50 if I can't pull it off I lose X and if I do pull it off I change the fortunes of my family and every investor who goes with us for all time

42:09it seems like I need to try that and he was absolutely correct the question is to quote Robert de Crapney the size of the prize and the cost of the test that's what it's all about and the really really really good investors understand that very simple juxtaposition and they don't create their own realm for failure similarly when Adolf Lundin went into southern Sudan he didn't make that big discovery chevron had made it and I remember teasing I remember teasing Adolf I said oh so you're financially more durable than chevron right and Swedish and Swiss foreign policy is stronger than American foreign policy and the in Sudan he said no I'm willing to try and they aren't that's my competitive advantage for whatever reason I'm much more willing to lose

43:1130 or 40 million dollars than chevron is and hence that's the success another person that is ventured into the Congo a bit more recently is is Rob Pradland I'm curious to hear how he first came on on your radar you know he tried his hand at many different ventures through the 80s into the 90s before Boise's Bay was an outrageous success and he played his cards marvelously there but what were the the first kind of interactions you had with him I first met Robert in the middle of the decade of the 80s and I was struck first of all by the fact that he was the single best salesman I ever met even that early he was astonishing and because I lived in Vancouver at the time a hotbed of good salesman I decided that I would never give this guy any of my money he was just too good you know he really really really good I mean the the the story of just

44:16him convincing Steve Jobs and they were they went to the same college university to to go and spend time on his his uncle's orchard farm yeah I mean there's just you will see in Steve Jobs biography wonderful biography by the way by Isaacson that Apple computer was named for Steve Jobs internship at Robert Friedland's Apple Farm amazing I'm paid and I know it turns out it was an odd commune all these other guys did all the work and Robert got all the money yeah but Robert was very important to Steve Jobs so yeah I I think in terms of qualifying Robert as a human being the fact that he was at the same age a mentor of one of the greatest businessman in human history says a lot for Robert Friedland so I I came to watching very early on and he got an asset that Hunter and Dickinson tried to get the summit bill mine in Colorado and he made

45:18for a while a spectacular market success out of it I went and looked at summitville and I said this just isn't going to work you know I mean this really truly isn't going to work so I first met Robert by being prominently short his first company and at the beginning to say that he wasn't fond of me was a grievous understatement and it turned out that maybe for the last time in my career I was right and he was wrong he took the stock from a buck to 20 bucks and then he round tripped it to zero so in my first trade I made a lot of money with Robert but not the way that he would have preferred his second swing at the bat was something called cornucopia that I later took over as a shell it was a good idea but Robert in Canadian parliament just couldn't put the puck puck in the net the third story was courts mountain which was an okay deposit but it was an

46:23Oregon California a state that he loved but a place where they spell shop SHOP PPE not a good place to build a mine so I passed on that then and he wouldn't talk to me anymore by the way but then he was going around to people I knew very well and he had this thing called Fairbanks gold up in the tombstone terrain in central Alaska and although Robert wouldn't pitch me or because perhaps Robert wouldn't pitch me I fell in love with it I just love the geology I love the fact that the market was really skeptical of Robert the only reason I could think of that this stock wasn't working was because I thought the market didn't trust Robert so I could see the problem and I absolutely fell in love with the deposit and as the consequence a consequence of my falling in love with the deposit I was redeemed in Robert's eyes which is very fortunate more for me

47:27than for him I have supported him at various times in his career in bear markets when he needed it but he has made me look much smarter than I am as an investor he has been responsible for leading and financing teams that have found more to your one deposits than anyone else I know in my generation if you look at what he's done the Fort Knox deposit he doesn't grit credit for it but the Gross Rose Bell deposit the Voices Bay deposit the Oya Tolgoy deposit the flat reef Kamoa Kakula what's that six or seven tier one deposits one guy there's nobody else the world is close in terms of exploration the Lundines if you combine oil and gas and mining and if you combine acquisition and development and exploration have likely been more successful but no human being

48:29has ever organized that much success in my life that I know of it's a it's a remarkable contribution to society to to bring that you know that value on earth at fire exploration there's yeah a lot of reflections on these like grand entrepreneurs of our our industry and what do you think of the next generation of entrepreneurs what do you see out there that doesn't give you um they're better than we were really yeah the youngsters are amazing every now and then I get frustrated with some young person in my domain and then I think back to what I was doing at their age I've become much more tolerant you know I I didn't begin my career knocking rocks or pitch and stocks I began my career whack and drugs over the head and maybe that was useful for the time and place I was in the mining industry but the top tier of the youngsters now at least the youngsters

49:34in finance are they're much better than we were I think it's the sign of the maturity of the junior sector the amount of capital has been available in the sector for 30 years that we're attracting a different caliber all the way through and I also think and this is going to sound politically correct which you too know I'm not but your audience may not but the industry is much more inclusive what I was young the whole industry looked like me which is to say old fat bald white you know you have red yellow black brown also white entrepreneurs you have male entrepreneurs you have female entrepreneurs the truth is that we have in the sector now every facet of humanity and the idea that 5% of the earth population was going to generate 100% of the world's utility was a pretty stupid idea but we were too dumb to question it now I'm running in and by the way

50:43when I say that I'm talking about the best of the best right I'm not talking about the length and file of young entrepreneurs or young people in the mining or energy business but the best of the best are more numerous than we are they're better educated than we are with the exception of me who is extremely well mentored they're better mentored than we are when I look at the human resources in the mining and oil and gas industry I'm incredibly encouraged how does that kind of contrast with the numbers we say coming out of WA School of Mines here at Colorado School of Mines like they're they're going in the wrong direction for for a lot of our kind of perspectives you think people just getting different education along the way I was going to say people in finance the entrepreneurs the business people seem to me to be better yeah um with the geologists I'm not so sure there used to be a lot more in the year that I entered University of British Columbia

51:45in 1970 if my memory serves me well there were 290 incoming undergrads and I think last year there were 11 that's a problem however it's only a problem if you limit yourself to white folks if you look in India or Nigeria or China or Indonesia or Brazil there's less of a problem and we have to look all those places the future of the industry and it'll look like the three of us and that's good not bad a different problem with geologists is that I don't think they're getting mentored as well they're much better at using tools they're much better desk job geologists they have access to much better databases uh the geologists of my epoch usually had to spend five years out in

52:46the field uh getting dusty and getting beat up uh with other people that had seen those rock sequences a lot in their life I think that uh the geos in my experience got better training even if they weren't inherently as smart or well educated as the geos today it may be that as a consequence of the improved datasets today and the improved tools for analyzing them that we can have better outcomes than we did in my day but I do think that the field expertise of young geologists the amount of training in particularly the amount of mentoring that they're getting is probably insufficient it used to be that a young person uh I may as well say it a young man because they didn't have young women doing it then that would come out of school in W.A. and they'd go to work for you know CRA or Rio or something like that uh they served a pretty rigorous five-year

53:51apprenticeship getting their boots cuffed before they could do any real damage and that doesn't happen to my knowledge very much anymore if you know we started we started this chat somewhat talking about yeah how you cut your teeth in the industry rig and I do wonder like if you were if you if you were in your 20s today like the the financial institution landscape looks it looks different it's evolved um they serve different purposes a lot of things have changed like what would what would you be doing to carve your way in an industry if you if you I would find I would find the best family office in extractive industries that I could and I do exactly what I did with Peter Cundle I'd say I want to work for you so I'll work for free unless and until at some point in time you find an excuse to pay me uh not the cell side guys the cell side guys may not know the truth or they may know the truth but they don't always have the incentive to say it gets in the way

54:53of their fee income uh and not the buy side guys using other people's money either uh but rather the buy side guys who are using their own money uh specifically I guess if I had the choice I'd go to work for the Lundines or Ross Speedy or Robert Friedland or failing that one of the big US oil and gas private families and I'd say you tell me what it is I have to do to add value for you and I'll do it and you don't have to pay me until you've decided that I've added sufficient value for you that's exactly what I did with Peter Cundle after I met him uh he gave me some career advice I went back and said he don't I'd like to accept his career advice and I'd like to intern with you and I understand that my career is a bar owner and restaurant owner uh doesn't qualify me to be a financial analyst but you told me yourself I'd be a good one so I want to go to work for you

55:56and you don't have to pay me until you decide I'm worth paying and that worked. Rick I've really enjoyed this this conversation hearing all the anecdotes of the history it get a lot out of it and I'm sure the audience has as well understand you've got your you course coming up in in July why don't you just share share a bit of the information about that as tickets are running out quickly you lost a magic. Well thank you for that opportunity uh the event is the rule natural resources investments symposium it's going on for about 30 years I'm sorry I'm senile enough not to know exactly when we started it uh but the truth is it's been going on for that period of time which means we've stood the test of time it's gotten a little better every year so after 30 years it's pretty good if I must say so myself uh this is a natural resource seminar so if you come to learn about crypto or AI or something like that please don't come this is also very hard work so if you buy the Sunday paper for the funnies

56:59or the crossword puzzles please don't come but if you're prepared to work and you want to learn about natural resource investing please do work please do come here's why it works first of all we have great great great big picture thinkers people who tell you about the word the way the world is not the way that uh in your country the the ABC would have you believe it was but really the way the world works and that and that's important uh after that uh we have great natural resources analysts people who've been through bull markets and bad people who've made money for 40 years then we have portfolio managers who are different than analysts people who are where the river meets the road who have also been there for 40 years at these conferences right now you're getting newsletter writers who made their career in the last 15 months where everything was up of course they did okay you want to take advice from people who've been there when things are down uh and we do that our exhibitors are different too at our conference every single

58:03exhibitor uh has to be owned in our accounts at most conferences the qualification of in exhibitors is a check that caches which in a bull market is hardly a challenge doesn't mean that every stock we own goes up but it does mean that every single exhibitor has been vetted we have a great feature called the living legends where we bring in entrepreneurs who built multi-billion dollar companies from scratch frequently named quarter main or Friedland or Lundin or I'll give you an Australian Stephen Deans people who've been severely successful building multi-billion dollar natural resource companies from scratch this is useful because they teach you how they did what they did they teach you how to find the younger person how to find the $25 million market cap that's going to become a $5 billion market cap this year we're instituting a new program called future legends where we find people in their 30s and 40s and 50s who have already been

59:04severely successful enough that their past suggests that they'll be successful in the future and who unlike me have a future it's one thing to predict a 40 year it'll be a success it's another thing sadly to predict to find a 70 year old that's going to die uh it's going to be a very useful feature finally at our conference unlike any other investment conference I know on the planet if you think for whatever reason that you haven't got your money's worth no worries I'll give you your money back it's the only money back guarantee that I know of in the education business but we've been doing for 30 years now mercifully our content's been good enough that we've had to refund about one tenth of one percent of the tuition so we've charged a couple other notes we're going to give our attendees more information in four days than they can assume that they can assimilate that they can get in 40 days we deal with that two different ways

1:00:04I myself interview every exhibitor and every speaker before the conference and I post those interviews on youtube that means that you can allocate your time at the conference much much much more efficiently nobody else that I know of does that every single exhibitor and speaker at my conference is going to be interviewed by me before the conference and all of that data is going to be posted which is very useful the second thing is that the whole conference is going to be recorded because when I say four days to get the most out of the conference you're going to spend more than four days you're going to spend the four days you're going to take a lot of notes and then you're going to go back and refresh your memory on the conference notes I'm delighted to say for the first time in 20 years that the live seats at this conference are sold out the conference is July 6 through 10 in Boca Raton, Florida but live stream which is to say the ability to attend the conference remotely from anywhere in the world last year by the way 1,400

1:01:07people from 33 countries attended that's open that's available in order to get your money's worth out of the conference though it's important that you pay attention to the pre conference interviews it's important that you access the conference recordings because you cannot assimilate 46 hours of material in four days you cannot do it I put on the conference and I have to view the recordings finally it would be advisable if you use the conference and the pre conference recordings in conjunction with all of the free material at the rule classroom for those who don't know the rule classroom rule classroom.com has over 300 hours of recorded material including introduction and natural resource investing which is a five and a half hour short course using the information at the classroom using the tools that are taught at the classroom around securities analysis in real time at the conference and before the conference in the interviews makes the conference

1:02:12an invaluable resource for natural resource investors and speculators. Thank you very much Rick we've um it's always a lot to speak speak with you and we look forward to doing it again in the in the near term thanks Rick. I look forward to that and by the way uh next year uh I'll be coming down under the to the conference season there I haven't done it for four or five years so I look forward to catching sight of y'all in the flesh you tell us that every time and we never see it. That's true. Kerry Stevens has come over to my conference for six years and I owe her while I'm there I'm going to do the iMark conference and then go up and visit friends and the afterton table and so I'm looking forward to it. Ah fantastic we'll make it happen. Cheers Rick thanks Rick. Great. Huge thank you to to Rick I love going into the history there and also a huge thank you to Sandvik Ground Support X-Aid Capital Intralynx and Focus the platform by market tech. Hey Rick. Hey Roo. Now remember I'm an idiot Jay Gays an idiot if you thought any

1:03:13of this was anything other than entertainment. Door an idiot and you need to read out a disclaimer.