Brent Cook: Investors Should Get Boots on the Ground
In this interview with Maurice Jackson of Proven and Probable, Exploration Insights' Brent Cook discusses the value of site visits to determining the potential of a prospect, and offers insights into various metals markets.
Maurice Jackson: Joining us for conversation is Brent Cook. He's the founder of the highly regarded Exploration Insights. Mr. Cook, you're one of the most trusted, highly regarded names in the natural resource space, so it's a real pleasure to be speaking with you today sir.
Today we will address the positives and negatives for the mining sector in 2020. Sir, from a macro perspective, please share with us what is your view on the current state of the mining sector?
Brent Cook: For my colleague Joe Mazumdar and me, the overriding issue that the mining sector faces is they're just not finding enough economic metal deposits to replace what's been mined. To put that into terms that might make sense, we are producing on a global scale, 90 million ounces a year, which is about what's come out of the Carlin Trend in Nevada since 1980. We're not finding 90 million ounces a year. Ditto for copper. We're burning through one Bingham Canyon deposit just outside of Salt Lake a year. We're not putting in production one of those a year. So that's the real issue they face. It's real positive for those of us in the exploration sector.
Maurice Jackson: Speaking of positives, are there any catalysts that you see that will enhance the value propositions of companies in 2020?
Brent Cook: Well, certainly metal prices. We expect gold to do well, platinum, palladium, nickel—but the lack of production we really see as the catalyst for the metal prices.
Maurice Jackson: And where do you see the best value propositions in 2020? Is it the precious metals or is it the base metals?
Brent Cook: We're going with precious metals for a lot of reasons, from a shortage of deposits, to global geopolitical risks that keep increasing with every threat, to global debt. There's just so much going on that I think gold is going to act as a safe haven more and more.
Maurice Jackson: And regarding base metals, which base metals have your attention and why?
Brent Cook: Copper for the future is certainly something that's going to be in deficit—the demand for copper with the increase with electric vehicles, electrification, green energy, etc. So copper, further down the road. Right now, probably the one base metal we're most interested in is nickel. Fortunately or unfortunately, there're not many decent nickel plays out there, so nickel is a good one. Palladium, I think, is also going to do well again this year. So those are the base metals we're sticking with. Zinc, lithium, lead; sort of so-so on those.
Maurice Jackson: I'd be remiss if I didn't ask you about uranium.
Brent Cook: Not keen on the uranium price, per se. I started off the business in the uranium industry, working in the Colorado Plateau, and I've done work in Australia and Africa as well. There is no shortage of uranium out there. It's just waiting on an increase in the price. So I don't see uranium as a good investment.
Although, having said that, we recently purchased Energy Fuels (NYSE: UUUU), just based on the potential for the U.S. to start stockpiling uranium bought from U.S. uranium producers, which requires about a $50–60 a pound price for them to even break even or make money. So there's that play, but that's not really a play on uranium. It's more a play on a political event.
Maurice Jackson: Speaking of that political event—Section 232? Do you think it will pass?
Brent Cook: I honestly, give it a 50/50 chance. I think it's a dumb idea. There's no shortage of uranium in the world, and it doesn't make sense for the U.S. government to subsidize industries like that. Having said that, anything could happen.
Maurice Jackson: Moving on to physical precious metals: You alluded to gold earlier, and palladium. What are your thoughts on platinum, and silver, and rhodium?
Brent Cook: Platinum is not used as much as palladium, so I don't think it's got that much of an upside to it. Rhodium is such a small market, we don't even consider it. I think the price is great, but there's no rhodium deposits. It all comes with the platinum group metal mining anyway. I mean, there's no way to play, in my mind, rhodium.
Maurice Jackson: And if you don't mind me asking, because readers like to follow your work. . .what are you buying at the moment, as far as physical precious metals? Or are you buying anything at all?
Brent Cook: I've got some physical gold—coins, basically, I store in a safe deposit box in two countries, just in case. And I don't own a lot of precious metals, personally.
Maurice Jackson: Moving onto Exploration Insights. Sir, you run one of the most successful newsletters in the space. For someone not familiar with your work, please introduce us to Exploration Insights.
Brent Cook: Love to. I bought Exploration Insights from Paul Van Eaton back in early 2009, as everything was collapsing, and I switched over. His was more of a macro picture sort of thing. And I did the geology forum, so I rebranded it Exploration Insights. The letter's basically about what. . .I was buying and selling and seeing in the metals exploration market.
Recently, I brought on Joe Mazumdar, who is an extremely smart economic geologist who worked and studied in Australia, Argentina—basically all over the world, including Canada and the U.S. It's now his letter, and so he writes almost all of the letter. He and I communicate back and forth. I'm sort of a senior advisor there. The letter is about what he is buying, selling and seeing in the exploration industry.
We make no money from companies. Everything we make is based on subscriptions and how we do in terms of our purchases. And it's pretty technical. That's a positive and a negative, because sometimes we get pretty far in the weeds explaining what exactly is happening in terms of the geology, the metallurgy, the geopolitics, all that sort of thing. We get pretty heavy into the weeds, but it's our money, so we don't want to make any mistakes, or as few as possible.
Maurice Jackson: Prior to this interview, you shared with me that if you're going to be in the space, the importance of attending site visits, specifically on early-stage exploration and development projects. Please share why access to site visits are paramount for speculators in the natural resource space.