Mining entrepreneur Ivan Bebek discusses Sombrero Resources, Torq Resources, Tier One Silver and Fury Gold Mines in this interview. He provides an update on Sombrero Resources and addresses the disappointment some investors have with Fury Gold’s share price performance thus far. Ivan also speaks to investor frustration with how long it has taken Tier One Silver and Sombrero Resources to relist after Auryn Resources’ merger with Eastmain Resources. He briefly shares about Torq Resources and the progress the team has made as well as provides his perspective on Chile and Peru as mining jurisdictions amidst possible changes to both country’s mining laws. Finally, Ivan shares his personal exit strategy for the investments he holds in the companies he is involved in leading.
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0:00 Introduction
0:38 Addressing unmet expectations for $FURY
4:50 Tier One Silver
6:13 Sombrero Resources
8:52 Torq Resources
9:30 Addressing spin-out shares frustration
13:32 Chile & Peru: political risk to be concerned about?
20:15 Ivan’s personal exit strategy
TRANSCRIPT:
Bill: Thanks for tuning into Mining Stock Education. I’m Bill Powers and joining me today is Ivan Bebek. I guess you could call this somewhat of a fireside chat as we feature Ivan’s companies and everybody knows I’m a fan of Ivan. He’s been a sponsor of the show for about two and a half years, was my second sponsor, and we feature four of his current companies, Torq Resources, soon to be Sombrero Resources, Tier One Silver as well as Fury Gold Mines.
So I’ve asking Ivan to come back on the show. We spoke to him about two weeks ago after the last Fury Gold interview. Many of you are very bullish and excited about the company, some of you are frustrated because you bought shares of Auryn right before the spin-out last year, the expectations in terms of Fury out of the gate haven’t been met and there’s also been some frustration which Ivan has heard outside of my show that the spin-outs are taking too long, and you do not see any dollar value in your account. So Ivan, could we start with addressing this? You’ve spoken to it in the past and you’ve acknowledged the need for patience and apologized because it’s taking so long, but what more would you like to say at this point with how things are playing out?
Ivan: Sure. Thanks Bill. It’s great to have this chat and clear as much up as I can and be as transparent as possible. First and foremost, the venture we took on last year is amidst COVID and everyone knows that, and there’s going to be implications on drill programs, movement to paperwork through exchanges, all of the above. And I don’t like excuses, I like solutions and we always look for solutions, but I have to couch it a little bit because there’s certain things we cannot do and when we were making those promises, which we still would make again if we were in the same situation, we missed a few things and the first miss was on Fury Gold Mines. We missed the actual assay turnaround time, which log jammed and we were dealing with 70 day turnaround. Even though we started drilling late October, November we were getting one news release every four to six or every six weeks, which, in a soft quarter in gold where gold went from $1950 to $1688, you’re putting one drill result press release versus one every 10 to 15 days. That was what we had originally thought we would be able to achieve.
So that was the first demise we faced coming out the gate. And I think Auryn was flying right before the spin-out, we were over $3 a share Canadian, not too far off of our all-time highs in terms of volume weighted highs of the stock, and we couldn’t sustain that and the other part was acquiring an asset like Eastmain that had a 25 year history that nobody should be proud of. It was regarded as a frustrating, fatigued investment which never got a chance to go.
But the good news on Fury is all of the reasons that we’ve spoken about, of where things could happen and we’re going to be advertising frequent news, you’re starting to see a news release a week out of us. You saw one last week, you saw spectacular results this week, we’re now seeing room to double the deposit and something like Snake Lake, today we showed 150 gram per ton of ore, so seven meters of 23 gram per ton gold. We’re showing the deposit has a lot of room to get a lot better and to get a lot bigger. If you read the press release today, and there’s a lot of holes with visible gold. There’s something called the hinge zone on the west side of the deposit, and generally hinge zones have been the source of a lot of limbs or the bulk of where the gold is in these types of systems. This one’s never been drilled before. We drilled it for the first time the other day and we’re really excited about the core we’re seeing come out. We think we’ve hit the hinge and Eau Claire is on its way.
There’s more to Eau Claire than the deposit and these big extensions that could potentially double deposit, but that’s finally coming to fruition. We had a lot of cleanup to do on Eastmain. It’s still ongoing. There’s things that were just not done in a way that should have been done and we’re cleaning up administrative things. We’re finding a whole new amount of data that was not being used, a lot of hidden samples.
So to be short on Fury, how we started is finally happening now in terms of expectations and promises of what we thought could happen and how this company could get off the ground. We’ve kept ourselves in tact, we did not raise any capital at our lows, we’ve stayed away from that although we were offered a lot of capital, and going forward I’m still pushing for a double digit share price by the end of the year. I know many of you are cringing based on how it’s performed first quarter, but I see the drill results coming, I know what we have and I see what could happen. I’m a lot closer to the screen and geologically seeing what the guys are doing then the market is at this time, so I think that was turning a corner.
Tier One Silver, look, when we spun it out of Auryn on October 9th and you were going to get this Tier One share, it was a concept. It was a loose concept, we had some high-grade silver on a belt, we didn’t know many things about it that we know now. We didn’t know the age of the mineralization will be the same as the major mines next door. We did not know that the grade would be as high as it became, up to 300 kilos silver and up to a kilo gold, we did not know the geophysics would give us a third dimension, and so what I would say in rebuttal to the time that we’ve all endured that’s taken us to get listed is the company’s changed a lot in a really positive way from what it was October 9th, and it’s become something real, something that could be really big.
So I think you have to always measure what you have versus how long it’s taken to get there, and the more you have, the more time it’s going to take unfortunately to get there. The exchange has been bogged down. They’re all working from home. We didn’t anticipate how fast or slow that would go and they’ve had a huge log jam of mining companies because mining or commodities are supposed to do really well this year. So we’re a little bit of a victim of our own success that our project, putting in new information news releases about Tier One and trying to get an exchange to get a handle on it, on something that’s a moving part that’s getting better was why it took a bit longer.
Sombrero, I’ll recap here, and I know you have a lot of questions, Bill, real quickly. We’ve been trying to renew an access agreement and get an access agreement at the same time. We spent huge amounts of efforts in the communities. At Sombrero, we are right now looking at bringing in about 600 jobs and about almost three and a half, $4 million worth of agricultural programs that we’re sponsoring and raising money from the government to bring into these communities which solely rely on our presence. So if we’re not there, these things won’t go ahead. So about half of the entire population of the communities will have jobs and they’ll have these agricultural programs ongoing if they do sign these access agreements with us, as well as the money we’re going to give them for our access agreement, as well as the jobs we’re going to create from them in the exploration work we’re going to do.
We’ve been through a long patient process with Sombrero. It is a monster once we get to drill it. We are in the final stages here. We have a meeting this Sunday, May 30th, which should be the meeting to gain access. The good news on Sombrero is the relisting process has been a lot easier than what we experienced on the venture and I would say that once we get access, we’re probably within 30 days or less, able to list, but that’s going to be essential before we get listed. So I’m excited about Sombrero. I have not talked about it a long time. It’s something that was great. I think it gets a lot better once it starts out. And the news flow will be us trenching the richest part of the exposed system that’s never been trenched before in a new area. So we plan to show everybody at least double the impression that we had, or even stronger confidence with potentially really high grade copper and gold across hundreds of meters on this other target called Nioc.
So a lot of news to start, puts us with the drill program should we get access now at the end of May here in Q4, and a lot of news before that. We’ve considered adding another asset because we don’t want to wait five years to get access and not be trading. Michael Henrichsen and the team have identified something that rivals Sombrero in terms of copper and potentially nickel and this would be something that’s very low cost upfront, big district scale that comes into the portfolio and we would do it in the event that Sombrero is going to drag on. It’ll take the pressure off Sombrero, allow us to get back to trading, carry the same kind of upside potential, and in the spirit of any company we’ve created Bill, we’d like to add a lot of assets so that there’s a lot of what ifs or backup plans, or be greedy and get the things we can before copper goes for five or $6 a pound.
Lastly, Torq Resources. Torq has been something we’ve worked on for 11 years. I wrote my first check into Torq back in 2010 and that’s how long we’ve waited. We had a couple of false starts with it today. We just announced the second acquisition, Andreas, and it is a phenomenal acquisition. Both of them are. They’re an elephant country. There are two more acquisitions we’re working on for Torq, but that train is getting ready to leave the station and the one thing good about Chile from a drilling perspective is you can get permitted within three and a half months. Having said that, I’ve talked about projects in Canada, Peru and Chile.
Bill: So Ivan, part of the frustration with the spin-out shares in our accounts where we just see numbers but we don’t see any values, there’s no ability, part of the feedback I received is, “Bill, it’s zero value to me. Don’t talk to me about implied value. The value to me is zero unless I see it in my account and I can liquidate it at will.” Point number one. Point number two on that is, did Ivan and the team do everything they could do? Did they put all their ducks in a row in order to expedite this according to the timeline they laid out?
Ivan: Answer to point A, we raised money, $1 Canadian per share for Tier One and I think it would be really reasonable to assume that’s close to the opening price, and you can speculate on a bit of value because it’s been established through financing with some real serious investors that have come into that funding. That funding was double subscribed, we’ve taken half and honestly, we’ve had more complaints about people that don’t own us that would like to buy shares in Tier One than existing shareholders who are frustrated with us and the time it’s taken to list. And I say that with a lot of excitement because this project became something incredible on us and it’s got more of a global attention, a global audience now than what it had before. Second part of your question, you were asking about-
Bill: Was there a prospectus you didn’t fill out or-
Ivan: Yeah, if you call my lawyer and ask Bernie how many times I call him a day on the file, how quick we responded to comment letters from the exchange and how much we’ve been on top of them without causing issue to offend them or push too hard, we pushed as far as we can. I’m a 5:00 AM to 5:00 PM type of guy, that’s how I work, that’s my schedule, and you could imagine me in the listing process, how I’m pushing ahead working those kinds of hours. I apply the same and so does Peter, so does everybody on the team. We have given this as much as we could.
We did drop Huilacollo for Tier One Silver. This was an expensive option agreement, we were going to monetize it, it didn’t work out, it became expensive on us in June. We didn’t want to kick out $14 million of our trade… oh, sorry, $2 million US of our $14 million treasury and carry this burden to try and squeeze $10 million out even a sale on it. And so dropping that asset, acquiring Hurricane Silver and plus all the progress at at Tier One, it’s been tough. Trying to run your company in a wait to get listed, we don’t sit on our hands and where shareholders can have some consolation or the silver lining is we’ve made Tier One Silver a real serious exploration company with a pipeline of opportunities to deliver. It’s as good as Auryn was before Auryn split, in my opinion, but we have a drill permit in hand and we’re ready to drill here in a couple of weeks, around June 10th here, a week or two after we get listed here in the near term.
So my point to you there, Bill, is you always have to measure your consequence, what went wrong with what went right. What’s the risk, what’s the reward, or what was the downside, what’s the upside? I think the upside of all this, delays and everything, is we built a much more compelling investment. We have a way better opportunity at Curibaya than we originally thought, we were under marketing it in January, February, but now we really have a handle and we can speak with conviction technically about the opportunity and we’re seeing, even as I speak to you today, we’re seeing big extensions to that high-grade footprint and we think the system is even bigger than we’ve advertised.
So getting there is really important, because I get asked the question a lot, “What’s your end game on Tier One? What are you guys going to do?” And my response today on a comment to a gentlemen was, “We look for things that are big enough that the end game is spoken for us already, meaning a takeover is going to be obvious if we find it. And that’s the kind of investments, that’s the kind of caliber of projects we’re going after is the world-class ones, the ones that everyone’s going to want to buy if you find them and that’s our end game. So yeah, things have gotten a lot better Bill, in that timeframe.
Bill: So Ivan, the projects have definitely advanced, but many concerns have arisen with Peru and now Chile recently, so we have to address this. This is especially in Chile. Now I have investments there with your companies and outside of your companies, so this is more than just a theoretical thing to me when I look at my brokerage account. I talked to Ross Beaty about this last week, but share with listeners your perspective on the events that are occurring in these two countries.
Ivan: Okay, so in Peru’s case, let’s start there. This is an election. We’re in the middle of an election and I think the whole world just went through a very unpredictable election in the US, where you’re from and I spend half my time. I think that the noise that’s been made is more political than realistic. In a country like Peru where including impacted services, economy, footprint, and whatnot, I think around 40% of the GDP comes from mining. About vast majority of the Peruvian population outside of Lima relies heavily on companies. I talked earlier in this interview about us bringing in about $3.5 million US of agricultural programs to a community in the Andes and creating 600 jobs. If Peru was to derail their mining industry, overnight, in one hour, there would be millions of people that would be unemployed, they would lose these social programs, they would lose the fees from the mining companies. They would lose everything and they would be not able to support their families. There’s logic and pragmatic effort there.
We as a group, and I’ll say this for Chile, we are very sensitive to go into countries that have major mining companies that are ahead of us, because generally the fight between political influence goes up on the majors, not so much in the junior explorers. And I’ll requote what Ross said, it takes a decade or longer to put one of these mines in production, and there’s probably going to be two or three government changes, maybe more, between now and then. But the business of Peru, the business of Chile, it’s mining. So I will revert back to what I’m hearing about not just Peru and Chile, let’s talk a little bit about Biden. Let’s talk about Trudeau. We’re hearing of these egregious tax numbers coming, which are more concerning for me than if there’s a slight tweak in the mining code in either one of those two South American countries, because it’ll hurt me a lot more if I have to pay double the capital gains tax that I paid previously or get no capital gains treatment.
So I think we’re all at a state post-COVID where there’s going to be a little bit of reaching from governments. I don’t expect it to be detrimental, and in terms of an election in Peru, other leftists have been in power before, mining carried on, there was no issue. It would be a lot more than one guy saying to nationalized it, to cripple Peru in that sense, and they’ve already retracted that statement. So we’ll wait and see for June 6th. I don’t really want to comment on who I think is going to win. I just don’t have any reason to think we’re not going to be drilling in June. No matter who wins, we’re going to thrive ahead and we don’t have immediate concerns.
On Chile, it’s something that they’ve gone as far as they’re going to rewrite the constitution again to go and change and give more to the indigenous people in Chile, and I support that, by the way. I think everybody should benefit. If the miners are benefiting, everyone should benefit a bit more as well. And I think in that case, I think you’ll see an adjustment, but I don’t think it’s going to be egregious for the same reasons in Peru.
Bill: If in Peru things are worse than we think, and it gets difficult, it’s going to hit the major miners first. They’re going to feel it before you. So if we bring to the market the argument that, “Hey, we have this great asset, we’re developing it. Yes, the majors are feeling the pain, but look at what we have, the resource we have that we’re advancing.” Even if you’re advancing your project and everything looks good geologically, technically, won’t that cause the majors to back off because capital is going to leave that jurisdiction and go find a place where it’s received with open arms?
Ivan: Well, it’s a great question. That will be a factor and if you look at what Lukas Lundin has done in Ecuador post the nationalization of mining last bull market, and if you’re looking at companies like Lundin Mining or if you look at Solaris and see how well they’ve performed and how quickly they reversed that decision, I don’t think anybody in South America will go that far, because others have failed recently and it’s caused issue right in that same equation. When I look at the opportunities in the metals and to promote the timeline that it takes to go from exploration development, I go to the bigger picture. And so far it’s a speculation, so we’ll hang out in the speculation land because there’s been no cratering share prices. Do people leave? Well, there’s a very competitive environment between Peru and Chile. They’re both competing for foreign investment and they have for decades. And so a call I got out of Peru and Chile announced that they’re going to redo their constitution by our country manager was, “Ivan, this is great for Peru. We’re going to get so much more money in our country, provided ours continues better.” That is the competition that has existed for a long time and it’s going to continue to exist. I think it will keep both countries pretty close, neck and neck there that no one goes somewhere way off side. I think that’s a healthy thing.
If you look at Argentina, which has largely been considered somewhere that’s even more difficult, more challenging than Peru or Chile, that’s its reputation, there’s been a lot of challenges there. Filo Mining, and this is a great indication of a South American country that’s not perfect, where it’s gone from a few hundred million market cap to over a billion today on a discovery hole, an incredible discovery hole by the Lundin family.
So I think if you look at Ecuador, left and came back. Okay, we understand countries can make mistakes and they can fix them. I think that you have to factor in. If you look at Argentina, which would rank third between Chile and Peru right now in the way I see it, but if you can create a billion dollar market cap company off of a drill hole, that’s substantial. I’m not going to get too concerned on the short term because I think there’s a long term view and we still face a bigger problem than geopolitical risk in the metals industry. No one’s finding metal unless you go to these countries, and I think that there’s going to be a way for them all to work. The point I made, all the majors are in these countries. This is their political presence, this is their influence that’s going to really shape communities, but both in Chile and Peru where communities are largely impacted, if they go to adverse with their code, they don’t ruin it for some, they ruin it for all and it puts the country in a place, especially post-COVID when we’ve seen major economic hits here that have happened in every country around them.
Bill: Ivan, have you ever sold a share of a company that you publicly run? I think the answer is no, isn’t it?
Ivan: No, I haven’t, except for last year on Auryn. I had some options being exercised and I did the cashless exercise. I don’t know if that counts. But at the time it was too many moving parts and writing too many checks at once, but I’ve never sold a share and taking money out until company has been taken out, and that’s the way it’s gone for me. Or the company’s matured and it was a success for everyone in Keegan, right? So I stay loyal and I’ve created an environment for myself financially where I have enough staying power to ride these right to the end, to the point where they get to mature, and the end goal for us is liquid, double-digit share prices for all investors, preferably a takeout at the end of the day and we aim for that. But you don’t choose that. You can’t choose a takeout. There’s so many variables that happen there. However, we can choose the swings we’re taking and going for a grand slam versus base hits or versus a home run is the kind of swings we’re taking here.
We’re looking for the kind of things that could take people into the $20, $30 a share price range. And those are the kinds of swings that whether we sell the company or not, you can make a fortune. And that’s where I want to spend time accommodating my staying power and driving my 12 hour days is to go after those kinds of things. The better question I think in my mind is, is every project you’re going after in your portfolio of companies, is it worth it for you to go through the long road that you’ve been on, the constant fight, the capital raises, the share price maintaining, the whole industry coming out of the bear market? And every project and every company has the blue sky that I dream about as an investor could achieve that goal of the double digit share prices.
Bill: Ivan, you’ve told me in the past that Auryn took longer than you expected. When you did the merger with Eastmain and the spin-outs, you didn’t think you would be there after five years. So if someone sees you sell a share sometime in the future, what should they think and what would cause Ivan Bebek to sell a share of one of these companies he’s leading?
Ivan: Well, let’s talk about it this way here is I would say that a lot of people are really loyal shareholders and I love you all, and I treat shareholders as I treat my own share position and my family’s shares. So we all get treated the same way. However, some people never sell and they don’t sell until you get bought out and that puts a lot of pressure on us. Keegan went to $9 then back down to sub-dollar, now it’s back over. There is volatility. Africa changed rules, they increased royalties egregiously and markets have changed.
And so in terms of that, in terms of these companies, if I do sell a very small percentage of my shares as an insider along the way, 2-3% of my position, it’s just so all my loyal supporters take a little bit off the table and so they can sit and ride profits with us versus riding the whole entire long position. I know many of you are smart enough to take it off and you’re going to behave that way, but I just want to see everyone ride profits with us, and once we can get to a magnitude of return in share price, then I can go on an interview like this and you can say, “Hey, Ivan, in all of your four companies you’re associated with, everybody had a chance to keep 80% of their position and they’re all riding profits right now.” That’s a great way to start and that would be my goal and Sean’s goal and Peter’s goal and Michael Timmins’ goal across the group. We want to create that return so you can hold us as a free lottery ticket with no costs.
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