Mark Brown of Pacific Opportunity Capital on the Resource Markets: Otis Gold, Avrupa Minerals, Lincoln, Midas Gold, Almaden Minerals, Alianza Minerals
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President of Pacific Opportunity Capital Mark Brown. Mark, thank you for joining me this afternoon.
Mark Brown: Thanks very much for having me, Gerardo. It's a pleasure to be here.
Gerardo: Fantastic. Well Mark, I would like to have you introduce yourself and the company and kind of explain to the listeners what it is that Pacific Opportunity Capital does.
Mark: Well, I'll go back. The problem I have is that I'm unemployable. I started working at Price Waterhouse many years ago. I enjoyed my time there and learn a ton, but I always wanted to go out and do things on my own a little bit. I run Pacific Opportunity Capital and I have two other partners here who both are also CPAs. We basically do two things. We help manage and run companies, all sorts of different industries, but there's still quite a focus on the resource exploration companies. That comes from my background working with Miramar Mining and El Dorado Gold years ago.
Then the other thing we do as well as managing these companies is we raise money and we invest our own money in them as well. We end up as big shareholders of our client companies if we like what they're doing, and of course we have very good insight into what they're doing because we're involved in their day-to-day operations.
Gerardo: Fantastic. I love the approach that Pacific Opportunity Capital takes because you do take a hands-on but long-term approach. You mentioned resource exploration, and that discovery process, for a lot of shareholders, can be a four month and a day process, right? I know that Pacific Opportunity Capital likes to invest and speculate for the long-term. Can you share a little bit about that philosophy and why you take that approach?
Mark: Yeah. I mean, we've never been just as a transaction-based investor, which is what a lot of people are that enter the market today, and that's fine, we understand that. We've been more taking a longer term approach, and looking at building companies. It's still about making money, but we just believe that making 5% on a four-month hold isn't going to do it. What we want to do is build companies. Our biggest success was a company that took us 12 years to build. That started in 1997 and we listed it with half a billion dollar market capital on the NYSE Amex. I got to ring the bell on New York Stock Exchange. The shares started at ten cents, and there was a lot of tough times in there, I'll tell you, but they were at $15 for the better part of a year, so that was a great success. That's the kind of thing we're looking to do again. We're not looking to take stocks from five to ten cents.
Gerardo: That's a heck of a return. Now, you mentioned it being a tough business at times and having the rough spots. Obviously the last four and half years prior to this year were ... It was tough, it was tough on the resource sector. It seems like we're in a much better market, and I know that there's a lot of financings that have occurred here in the last six to nine months, just capital that wasn't being allocated before in the resource sector. What are you seeing with the company? What are you seeing out there as far as the markets go, Mark?
Mark: Two things. The first thing, is you know how we invest. Because we back our companies that we like, and we're confident in what they're doing, in those down turns we tend to buy a lot of stock. It's done very well for us. One example of that is Otis Gold (TSX-V: OOO)(OTC: OGLDF). It's not a company that we even do any work for here, but I'm closely involved with a friend there, Craig Lindsay who runs it. In the down turn, he went down to three cents a share. But he's got ... I think they're up to 800,000 ounces plus in Idaho, a gold deposit. They've got a decent grade, and they're well-financed, and that's the kind of thing that we got behind and backed because we really like the management group and we bought a lot of stock. We were at 10% insider holder there for awhile. That's one thing.
You see those opportunities going on. Right now, we see that's golds run up a ton this year. It's on a bit of a pull back, and that's another one of these times when people are looking at what to do. What they need to look to do is look at the longer term picture and say, "This is a small pull back for the gold price, and it's going to keep going." Everybody's saying that. Probably starting in another month or two here, and it's a great time to be accumulating stocks and shares of good companies with good management teams that have really good projects.
Gerardo: Excellent. You mentioned Otis Gold. I think they recently doubled their land position, and they've had some pretty interesting drill results here the last few releases. That's definitely a company that I'm watching. It's an interesting exploration package they have out there.
Mark: It is. You can't control everything, but they did have some great draw results and that's exactly what you want to be looking for in these things. Another company that just announced some outstanding draw results is Nevsun (TSX: NSU)(NYSE: NSU) and I have nothing to do with that company, don't own any shares of it. They have a project in Serbia, which is just across the border from some of our projects in Kosovo and Avrupa, and they hit some just fantastic base metal results there.
Gerardo: You mentioned Avrupa. Can you share with us a little bit about Avrupa (TSX-V AVU)(OTC: AVPMF): ? We had Paul on the show about a month back, and hopefully we can have him back on soon, but how are things progressing on that front?
Mark: They're going really well. Avrupa's a great example of a company that, throughout the downturn, we managed to finance it with small amounts. It was all led by us here in our office, and keep the work going because we followed a prospect generator model and a lot of the funding for exploration came in from our partners. During that downturn, we made actually two discoveries. Gold discovery in Kosovo, and copper-lead-zinc discovery in the Iberian Pyrite Belt of southern Portugal. We're working on those projects and they're upgrading them. You make those discoveries, Gerardo, and what happens is is takes a few years for them to advance, and you have some holes where you're going to miss. Then you have some holes where you're going to hit. As long as you keep hitting more and more and more, these things get more and more exciting, and you can actually build something into a deposit that's going to add a lot of value for shareholders. It's been quite exciting. Just so you know, the word Avrupa is Turkish for Europe. We are totally focused on historic mining areas in Europe. These are areas that have been producing for thousands of years.
Gerardo: Excellent, excellent. What else do you see out there that's attractive to you at these levels, Mark, that present some interesting speculation at these price levels?
Mark: I think the first thing that's going to move is probably the gold price. The base metal prices are catching up. I think maybe later in 2017, except for zinc, which has already had a fantastic year. In terms of stocks, the ones I like ... Midas Gold (TSX: MAX)(OTC: MDRPF) is another fantastic one. The reason is they have a huge gold deposit, but also I used to work with Stephen Quin, who is the CEO of the company. He's a guy just like Craig Lindsay at Otis, and Paul Kunan at Avrupa, who makes things happen and gets things done. They're well-financed, well-backed, and I worked with Steve for about three years at Miramar Mining. It was a pleasure to work with him and saw what he could do there. Fantastic guy. Another one I really like. There's a couple of hidden ones. There's a little one called Lincoln Gold, and their share structure is all messed up, and their information is all messed up, but they've got a fantastic group of technical people behind that company that can actually do well. I bet you've never even heard of Lincoln Gold.
Gerardo: It's funny that you mentioned them. I've looked at them before, but the share structure kind of turned me off a little bit, to be perfectly honest with you. The projects looked interesting enough and there's some good people behind the company, but I agree that maybe you could help them out with the share structure part of it, Mark.
Mark: Stay tuned.
Gerardo: Sounds good, sounds good. How about Alianza? Alianza (TSX-V: ANZ) a company I used to follow, Estrella Gold, and if I remember correctly, Estrella merged with another company and it became Alianza. What are your thoughts on them?
Mark: That's right. So I'm a big shareholder of Alianza, to be upfront. I act as chairman, executive chairman of the board. I'm actively involved. The president is in our office here, Jason Weber. Geologist used to run Kiska Metals. Fantastic guy. Very well-known in the industry. He's actually just got on a plane to Peru today because we merged ... We created Alianza by merging Tarsis and Estrella in the downturn. It was a way of cutting out some of the overhead, saving some money, but getting Jason to run projects that are diversified. You've got the Yukon, a big focus on Nevada, and a whole bunch of stuff down in Peru. We've had a lot of joint ventures, a lot of interesting life in that company. Right now we're out actively trying to get some of these projects joint ventured out, and that's one of the reasons Jason's going down to Peru right now. It's got a good share structure because we rolled it back. It's a brand-new opportunity for people to look at it again.
Gerardo: Interesting. So Alianza, A-L-I-A-N-Z-A, correct?
Mark: That's right. It's Spanish for 'alliance', meaning it's following the prospect generator model. We're focused really on Peru on a lot. We've got some really good projects in Nevada, acquired a couple of them from Almaden Minerals (TSX: AMM)(NYSE: AAU), which I'm also a director of. Another big portfolio from Sandstorm, actually, that were projects that were kind of orphaned, and we found out about them and we managed to buy them pretty cheaply and put them into Alianza. That's a really nice gold focus. We've actually got some work going on, early-stage exploration of those projects right now.
Gerardo: Excellent. I look forward to that. You mentioned Almaden and Midas, those are two companies that I follow and that have very exciting drill programs that they're in the process of executing and looking forward to results from Midas Gold, hopefully soon, and continued success at Almaden. They've done very, very well and it looks like they're on some new potential discoveries and zones.
Mark: Well, those guys have done fantastic on the exploration side. Midas is a more advanced project, and that's been fantastic. Morgan and Duane Poliquin at Almaden I've known for many, many years. I act as the financial director of both Almadex and Almaden. They continue to hit it out of the park by making discoveries on really good projects. They're focused in Mexico, and they know Mexico, they know the cultures, they know how to get stuff done down there. I'm a big supporter of what they're doing there.
Gerardo: Excellent. Mark, I want to thank you so much for you time today. Hopefully, we have you back on here soon as progress happens at Alianza and Avrupa and some of the other companies you mentioned and have you back on and get your general take on the markets. I really appreciate your time.
Mark: That's great, thanks so much Gerardo.
Gerardo: Take care.