The Honorable Ryan Zinke was born and raised in Montana and attended the University of Oregon. He then attended US Navy Officers Candidate School and completed Navy SEAL Training in 1985 and was assigned to SEAL Team ONE. Highlights of Commander Zinke’s 23-year career in Special Operations includes two tours of duty at SEAL Team SIX, Acting Commander of Special Forces in Iraq, Task Force Commander in Bosnia and Kosovo, and served as the “Dean” of Special Warfare training. He was awarded the Bronze Star for combat in Iraq.
He retired from active duty in 2008 and was elected as a Montana State Senator and later twice elected as Montana’s sole member of the US House of Representatives. He served on the House Armed Services and Natural Resources committees. In 2016, Congressman Zinke was nominated by President Donald J. Trump and later confirmed by the US Senate to serve as the 52nd US Secretary of the Interior.
As Secretary, he was a champion of restoring the voice of state and local communities in land and wildlife management decisions, established and protected wildlife corridors, budgeted for the largest investment in our Nation’s history for National Parks, increased public access for recreation and traditional use, and was the principle architect of the American Energy “Dominance” policy. After 31 years of public service, President Trump accepted his resignation in 2019. The Honorable Ryan Zinke serves on numerous boards. He holds an MBA in Finance, an MS in Global Leadership, and a BS in Geology.
Currently Secretary Zinke serves as a director of and consultant to U.S. Gold Corp. (www.USGoldCorp.gold). The audio of Secretary Zinke used for this podcast episode comes from a Live Investor Summit which Mining Stock Educators LLC hosted on May 14th, 2019.
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0:05 Introduction
1:24 Why Secretary Zinke joined U.S. Gold Corp. (USAU)
2:54 Comments on USA mining industry
5:59 With recent gold majors M&A, how does it affect USAU’s projects?
7:44 What will be Secretary Zinke’s role with USAU?
9:42 When you were Secretary of the Interior, was gold discussed as being a critical metal for the USA?
13:19 Can gold be considered a critical metal in an economic sense?
15:24 What would a democrat presidential win in 2020 mean for USAU and the USA’s mining sector?
17:18 What impact does the Barrick-Newmont Nevada JV have on USAU’s Keystone project?
19:14 At what stage would USAU consider a JV partner?
20:32 Legacy projects can carry significant liabilities
22:24 What can the mining industry do better to demonstrate its commitment to environmental stewardship?
25:49 Do you foresee increasing positive sentiment among Americans towards gold?
28:27 Do you see gold deposits being easier to find in the future?
TRANSCRIPT:
Secretary Zinke: I look at the three things, fundamentals. One is geology, leadership, and lastly, timing. Clearly U.S. Gold Corp. has exciting geology. We have a great team of geologists that have done this type of analysis in detail and before. And I’m very confident about the geology. The leadership. The core leadership is experienced. They had done a number of projects larger than this. This is a solid team.
And lastly, timing. In this area where a lot of the mining concerns have been under pressure, certainly the administration has looked at the regulatory framework to recalibrate. I don’t think there’s any administration ever in the history of a country that has done more on reconfiguring the regulatory scheme. So it does look at the environmental mitigation, but it also is, make sure that the regulatory framework is fair. There’s a process involved and it’s timely.
The market. Looking at the market, we’re in a strong economy. We think we’re going to be in a strong economy in the next, at least through this administration and the next term. And lastly, balance sheet. This company has a solid balance sheet.
This given in a background of nationally the president released a critical minerals report with, when I was formerly interior. That report looked at our nation’s capability when it comes to mining. It’s been challenging over the last couple decades. We’ve seen the coal industry on mining have enormous pressure. Some of our uranium extended across the spectrum. That is a national issue of national strategic importance. And make sure we have a robust mining capability, not only in critical minerals but minerals used for manufacturing. And certainly as a nation we don’t want to be held hostage by foreign entities for our critical minerals and those minerals that are used in manufacturing, et cetera.
Along with that, the core competency as in Wyoming for instance, enormous pressure on coal. Wyoming’s very excited about that find. And in Wyoming, the government is working hand in hand. Their balance sheet as a state as has been to under enormous pressure as of recent because of the diminishing coal demand. We think we can be very helpful in mitigating some of that pressure on expanding the opportunity, Wyoming.
Nevada has always been a mining state and remains so on both sides of the aisle. Very supportive of the mining industry. As well as there’s mines logistically that are operating in the area, so it’s a good fit. I’m excited looking at again at the geology. As a geologist from the University of Oregon that Dave Mathewson and the team has looked at this. I reviewed the analysis of it, which we think we’re in a very, very strong position. And I think looking at the accessibility and where the plays are, relatively straight forward, which is great.
Oh, I’m excited to be a part of the team. My name was mentioned before. I just like to win and a smaller cap company that does have the right leadership, strong balance sheet, good geology and what I think is to be a extraordinarily great future and run, excited to be a part of the team. Okay. Now I’m looking forward to questions.
Bill Powers: All right. At this time we are going to field some questions. This is Bill Powers, Secretary Zinke. There’s been a number of questions that have been submitted. Question with the gold mining, mergers and acquisitions. How do you see this cycle impacting your projects?
Secretary Zinke: I think as far as as the industry itself, there has been a lot of mergers. It is resource intensive. There has been a number of challenges worldwide on mines and and mining companies, particularly in Brazil that have been under pressure from not following best practices, best science and not looking at the risk portfolio. I think that separates out U.S. Gold Corp., is we have a team that fully understands the necessity to make sure we have best practices, use best science for the longest term, greatest good. And look at the fundamentals of the geology, and then make sure the mining plan and everything involved in that.
We don’t skip steps. We go through the process. We make sure we have local support, local and state support. We make sure that we go out and talk to the ranchers. We make sure we’re talking to the the folks around and we make sure we do it right. And I can’t overemphasize doing it right. That means we don’t skip any steps. We make sure we mitigate any environmental concerns. And we work with a team that makes sure that that U.S. Gold Corp. is elevated as the gold standard, pardon the pun, of the industry.
Bill Powers: Secretary Zinke a question for you is a investor wants to know what will be your role with the Copper King project in Wyoming? Could you elaborate? And what will be your role with the Keystone Project?
Secretary Zinke: My role is as a senior advisor. I have a degree in geology. And as a former state Senator, Congressman and 52nd Secretary of the Interior, I think there are few people that understand the process more than I do, about how to get from A to B to C all the way through to have a successful project of this nature. In Wyoming, Montana. Wyoming is a great state and certainly been hit hard on the economics because of the diminishing coal market, and miners are really, really good people. So being able to talk to people, look and make sure we have the right set of skills necessary to go forward. Make sure we don’t skip any steps.
And make sure that we go out and talk to the local community, talk to state officials to make sure that we’re transparent, they understand what our goals are. And be part of the leadership team and make sure that the balance sheet is strong. To made sure our investor base is well-informed. That we’re transparent about where we’re at in the business development model. But I’m happy and excited to be a part of the team. I have absolute full confidence in the team. I was asked to join and delighted to be a part of it.
Bill Powers: Secretary Zinke, this question is for you. When you were the Secretary of the Interior, was gold spoken of as a critical metal, or what discussions did you have about the gold mining industry as Secretary of the Interior?
Secretary Zinke: Well, gold is not considered a critical mineral per se, but there’s a lot about the mining industry that are components of a healthy and robust mining industry. Best practices, new techniques. To a degree, Australia has led the world most recently and promulgating what I would say cutting edge technology. And we can be beneficiary of that technology. We don’t have to reinvent the wheel.
But certainly having a robust mining industry in the US was talked about a lot at the highest level, to make sure that, again, as a nation we’re not held hostage, whether it’s from copper or gold or are any critical mineral. As a former Navy Seal, in regards to critical minerals, there is dozens of critical minerals that are required even to outfit a single Navy Seal or special operations personnel on the battlefield. And in many cases, China has monopolized a lot of the resources, either the mines themselves or the market.
And so having a healthy mining industry and using best practices, cutting edge science. I think is a component of having a overall healthy mining industry. And gold has it’s play. Gold has very similarity, a lot of similarity in the mining techniques as other minerals. But being able to look at the techniques of the different industry components and make sure we had the right skill, not only in the geology as an exploration company, but make sure that you have the right skill on those that are drilling the sites themselves. And it does take a lot of skill.
That’s why I’m excited about the leadership team. We work very, very hard. I’d say we work as hard as any Seal team I’ve been on, to make sure, Hey, we do it right. To make sure we look at the cutting edge technology and techniques that are out there, and we implement those techniques. One, to control costs, but also to get better results. So overall, mining industry is taking some hits in the last decade, but it is cyclic.
And I think with better techniques and again, incorporating the best technology in the industry, whether it’s US technology or looking at Australian technology and the pace and the tailings and even when you’re doing exploratory holes, that’s an important aspect of U.S. Gold Corp. And many of us have been around the world. We’ve traveled a lot. We’re familiar with the mining industry. And when we come across a great technique, we’re willing to adopt that, what I would say, for greater good of the industry as a whole
Bill Powers: Secretary Zinke, the follow-up question is do you think that gold could be considered a critical metal in the sense that it adds to the economic security of the United States because it is considered money?
Secretary Zinke: Well it is an argument that certainly those that deal with portfolio management look at diversity, and gold is one of those key components of a portfolio to a degree mitigates the risk of economic downturns back and forth. Our nation itself, I would rack and stack gold probably below lithium, cobalt and some of the hot minerals that are being used for the energy sector. But gold has been a stable. And I don’t see gold going away, not in my lifetime and all my grandchildren’s lifetime.
I think as far as the stability of the market, gold certainly has its role. And those companies that mine well have succeeded. And a lot of it is controlling costs, and to make sure that when you look at a project, you do a very detailed assessment of all of the geology. You make sure you have a great leadership team in place.
And lastly, does the overall federal and state governments, do they support that activity? In this case with the Trump administration, there is no doubt that mining and having a robust mining industry is part of the agenda at the top of the leadership. And in the case of Nevada and Wyoming, both traditionally a strong mining state with good support both at the private and public levels.
Bill Powers: One more follow-up question, Secretary Zinke. If Trump is not reelected in 2020 and you get a Democratic president that’s not as less restrictive in terms of overseeing the US Secretary of the Interior the way you did, could that hinder greatly some of U.S. Gold Corp.’s projects?
Secretary Zinke: It’s hard to say. In Nevada, in a state that’s very pro, Wyoming, I don’t think there’s much risk either way in Wyoming on top of … there’s always policy at the highest level. When a policy is made, how much is that trickled down to a specific project? Certainly very supportive, though, of the administration. I think the reset on a lot of issues, trade, trade imbalance, our ability to access resources on public land provided you do it right and you follow the rules and you mitigate the environmental impacts and all those things. Multiple use of properties. Making sure you have local and state support. I think the fundamentals remain strong regardless of which administration. I prefer the Trump administration because I was a part of it. And I agree with where the President has placed his priorities. So I’m fairly confident that these projects won’t be severely affected and I’m fairly confident, quite frankly, that the president will get reelected.
Bill Powers: What influence, if any, do you see on the Keystone Project from the Barrick-Newmont Joint Venture in Nevada?
Secretary Zinke: There is an influence because it’s close by. The proximity is close. Certainly, I think they’re looking at resources. Every mine has a beginning and end, based on resources for those operations in close proximity. I’m sure they’re looking at it very closely. So they’ll look at the proven reserves, the economics of it, as their play eventually diminishes available resources. It makes sense in many ways for an adjacent concern to look at nearby assets without, and incorporating the infrastructure they have in place. So I think it works in our favor to have operating concerns and interests within a close proximity.
So it’s degree. You’re not too far isolated. With mining it’s just not only mine itself, it’s making sure you have the infrastructure in place to move the material to where it’s going to be processed. And in cases where you’re isolated, that becomes more problematic. So I think it works in U.S. Gold Corp.’s favor. They have interests particularly in Keystone nearby.
Well as Ed Karr (CEO of U.S. Gold Corp.) has pointed out, is that an analogy of an elk, if you’re looking at a enormously large elk, sometimes it’s better to hunt closer to a road so I can get it out.
Bill Powers: At what stage would you look at bringing on a JV partner and, in Nevada typically, when do you see exploration companies partnering with the major gold companies?
Secretary Zinke: I would say that, yeah, this is why a leadership team is so critically important. Because joint ventures, junior or senior partners, has to be a good match. It has to be a good match for shareholder value, for the culture of it. And also you want to have a good match between the leadership and make sure you have common objectives and goals. And that’s why at the heart of it, I mentioned you have to have good geology. But the leadership portion of it is so critical to have the right team to make sure that shareholder value is looked at in terms of making sure the team is suited to the task, that has the right resources, conducts the right practices, uses best science. And if a partner or a joint venture should appear, making sure that match is well vetted and in the interest of the shareholder.
Well in some of the background of the industry as a whole, as you have mergers, some of the mergers have carried with it the legacy projects that have liability, from either environmental liability, from reclamation to lawsuits on these previous mining techniques that mining itself, the industry has evolved. So how mining techniques were used in the turn the last century, the use of Arsenic, the use of toxic chemicals. The treatment it. the environmental impact and downside as some of the balance sheets have an enormous amount of liability. Looking forward, U.S. Gold Corp. doesn’t really share that, doesn’t have that liability on legacy projects.
So that’s why we look at the cutting edge techniques even on exploration holes and mining plans, to make sure that we don’t carry that long-term liability. And that’s why the making sure we’re cutting edge, look at proven techniques, using best science. That’s the part of the U.S. Gold Corp. legacy that we bring to the table is we don’t have the burden that has, to a degree I think, adversely affected the mining industry. Certainly from a narrative and a PR point of view. I’m from Montana, and a lot of people still look at Butte, Montana as how not to do it. We’re not in that position. And that’s a good thing for U.S. Gold Corp..
Bill Powers: An investor writes, U.S. Gold Corp. benefits from a very accomplished and talented management team and board with emphasis on ESG (Environmental and Social Governance). What do you think the mining industry can do better to demonstrate its commitment to environmental stewardship? And how can US Gold play a role to change public perceptions of extractive industry?
Secretary Zinke: Well, I would say the mining industry, pursuant to the earlier conversation on legacy, from a Montanan that grew up, the mining techniques, the past, have created, a lot of problems today in reclamation. There’s somewhere in the order of maybe 1,500 or 2,000 mines that have yet to be reclaimed. That still have toxins, a number of clean-ups. So I think the mining industry itself needs to reflect on the modern techniques. Needs to reflect on how a technology similar to the oil and gas revolution in this country, looking at the best techniques, using the best science. I think that’s an important aspect of it.
And also not, on national scale, we don’t ever want to be held hostage for critical minerals, or not have the capacity for copper, iron, gold, and for the key components of mining. So I think to a degree, the environmental movement has certainly I think put a highlight on some of the earlier practices. And Americans responded. And I think the mining community has responded. It’s not just about jobs. It’s making sure you do the job right.
And on the social side, this is why it’s so critically important to make sure you have local community and state support. I’ve seen projects where well-funded projects will go in and they really don’t have the local support. Some of it was lack of transparency. Some of it’s not working with the local communities, not working with the Indian tribes, looking at the cultural aspects of the project. So that’s, I would say, critically important.
So look at where the project is and cast a wide net to talk to local people. Make sure you’re transparent. Look at the data and the project as a team rather than the mining concern and everyone else. This is where I’ve seen some great projects over or my tenure, and I’ve seen some projects that could have been great, but they were fumbled and mishandled because they didn’t take the time to do the process right. And they didn’t put the resources behind it to make sure that you do communicate with all the stakeholders.
Bill Powers: In your opinion, do you think that the general perception of gold among Americans and its historical basis of value could change to the positive, and therefore the future share price of U.S. Gold Copr. would benefit from it?
Secretary Zinke: Well, a lot of people just love gold, and I’m one of them. So I, gold, the price has ebbed and flowed so that in times of instability gold tends to rise. But I think gold has been, over time, to be a solid investment, and certainly gold remains the standard worldwide for a lot of reasons. And so I think a lot of it has to do with continuing to explore and to continue to look at the right and left boundaries of the find, to continue to do the assessment of what the deposit looks like in detail. That then transcends to the ability to go to the market and look at the options.
What are you going to … as Ed Karr talked about before, the options are you can always joint venture. There’s advantages and disadvantages to that. You can go it alone, requires capital. Or you can outright sell. Those value decisions, a lot of it has to do with what is the deposit? What is the geology? In the case of U.S. Gold Corp., both in Wyoming and Nevada, very, very positive, very competent geology. So that works in our favor.
Certainly the leadership part that has looked at the balance sheet continues to have great fundamentals. And lastly looking at the market and what’s the future of gold mining. I think it has been cyclic. I do think the mining industry itself can play a role of making sure the public relations and folks understand that we’re not a Berkeley Pit type of operation in the latter part of last century. This is a different techniques and mining has evolved too.
Bill Powers: This question is as technology continues to advance and gold deposits become easier to find, do you worry gold will flood the market and therefore lose its value? So it’s a question beyond just U.S. Gold Corp. as a company.
Secretary Zinke: Well, and I would say to Ed’s point that the easy access to gold primarily has, that phase has been completed globally, with the possible exception of, that’s what I was reading the paper yesterday, a couple was out walking their dog named Lucky in Australia. Came of one a 20-ounce gold nugget. I don’t think that happens a lot. But I think now we’re looking at the accessibility of where the gold is. Gold is still rare, geologically speaking. Gold is rare. And when you have a deposit of, you can do an analysis, of this size that I think you’re always going to be in a good position.
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