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so we're not replacing what we're mining in the gold space bottom line is i think exploration and discovery going to become more and more important and sought after and profitable as we move into the next few years hey everyone this is elijah k johnson with the miles franklin market update and with us today is brent cook the founder of exploration insights he is an economic geologist brent thank you so much for joining us today thank you appreciate it definitely and we really wanted to get your take first on the precious metal markets the price we're seeing right now and kind of your outlook for the rest of the year yeah i mean with the caveat that nobody knows what's going to happen although it does seem we've returned a bit of stability here in the u.s which is a positive my sense is that we're going to see a pretty much range-bound gold price probably for a few months going out but once the stimulus and the effect of the stimulus on the on the dollar start kicking in i'm anticipating a higher gold price by the end of the year than that continuing into 2022 and i suppose silva will more or less mimic that so i'm pretty positive on on this precious metal prices uh quite positive on the base metals particularly copper and nickel what's really fascinating to me and what i i've talked about this for a few years now is the the dearth of new discoveries deposits and mines to replace what we're mining right now that's that's kind of the important point i think that people are overlooking yeah and if you can expand on that like with respect to yeah how are we mining really to replace metals because i know especially in silver a lot of the silver that's been mined is just kind of thrown away because it's used in technology but then it's not worth it to recycle it because it's such a little bit of silver and then it's just ends up in landfills yeah exactly with civil rights i suppose that's the case um i guess you know the bigger picture is that right now the industry is mining 90 plus million ounces of gold a year which is about all the gold has been pulled out of nevada's carbon trend since discovery so we're going through one karlin trend a year in terms of resource depletion and we are not finding 90 million ounces a year to replace that we're finding it at best at best half that probably close to uh more of a third of that so we're not replacing what we're mining in the gold space likewise in the copper space we're mining the equivalent of one bingham copper mine which is that big mine outside of salt lake one of the biggest in the world a year and we're not finding and putting in production of bingham canyon a year and right now most of the mines you know they're they're they're incrementally adding as they mine on the outskirts and this and that but that's not replacing going to replace what we're mining it's it's a stop gap measure if you will so i guess bottom line is i think exploration and discovery going to become more and more important and sought after and and profitable as we move into the next few years that's really interesting so essentially what you're saying with some of the metals and especially with gold we're not producing enough right now so it it seems like in my perspective wouldn't that mean that the price would have to rise to encourage uh more mining then yeah under extent i mean we're producing i'll call it 90 something million ounces a year and that's going to run down unless we add to it with new discoveries there's a lot of deposits sitting out there that are we call their marginal at best mediocre deposits that some of which with an increased gold price will become economic but most of those from my perspective and joe as well who you know is now writing exploration insights um most of those deposits have some sort of fatal flaw the ounces are there if you will but either the metallurgy is too complex the strip ratio meaning the amount of waste you've got to move to get to the ore is too much too costly it's in environmentally sensitive areas there's geopolitical issues all those things come into building a mine and on average now it's taking probably 10 to 15 years to find develop and put a gold mine in production a big one and a large copper mine is taking 15 to 20 years i mean here in arizona resolute copper a resolution copper there that's been on the books now for over 20 years and they still aren't even close to putting it in production getting into that with respect to where you see the mining sector going in the future do you see that mining stocks are going to be a good way to ride the rise in precious metal prices well hopefully that's what i'm doing yeah for sure i think i think that's the way to play it i mean you know it's very cyclical business and metal prices are cyclo and they rise up and down from your commodity metals copper zinc that sort of thing they rise up and down with the economy gold's a bit counter to that but but certainly there's going to be a lot of money made in in this sector and there has been in the past too i mean it's not tesla or bitcoin um but in my view that's probably positive right now when it comes to investing in mining stocks you know one of the big things you do is kind of you know looking at them critically and saying is this really a good investment so can you kind of walk us through some of the things that you look at to figure out yeah is this is this company a good one to invest in sure i think i think the important thing to realize especially with with precious metal and gold projects in particular is on average and this is a study that newmont did years ago one in 10 000 prospects which is a showing which all these junior companies have is some sort of you know anomaly of surface they found a rock with alteration or some gold in it turned into an actual mine so the odds of making a successful discovery and mine are extremely low which is why gold sells for 1800 something an ounce right now it's not easy to find so it's critical and you know this this is a whole section on itself but the important thing in evaluating a junior exploration company is probably number one in my view is what the company is looking at looking for searching for the type of deposit does it offer a big enough risk to reward to take that speculation all too often i see these junior companies that are after a discovery that even if they're successful it doesn't impact the share price which is ultimately what we're after something impacting the share price so the project the company's going after has to offer the potential of a large enough discovery to offset all the risks and costs to get to actually documenting that is the legitimate discovery and hopefully a major mining company buys it out and you're you're good um so that's probably the first thing uh is it a legitimate target is it big enough to make a difference second are the people running it do they know what they're doing is this the type of deposit that they're familiar with and can evaluate properly is it a country or a jurisdiction that they're familiar working with i mean i see people jump from finland to mongolia same company to malawi there's it takes time to work up the experience of knowing how a country works how a jurisdiction you're getting to know the people so you want to be the company that knows where they're at knows the people knows how to work the system whatever country it is so the people number three i think is probably financing are they competent in terms of how they're going to continue financing this project ideally at a higher share price each time and that goes back to the point of what are the hurdles where are there no go no-go decision points in this project what do you as an investor need to see in terms of results to say yes this is working i'm going to stick with it versus this isn't working i'm out so i think that's the three really important things to keep track of you mentioned jurisdiction and i think that's really interesting because if we look back at what just happened with the pandemic you had some jurisdictions that considered uh mining to be an essential resource like in canada so how did that play in how did the pandemic play into kind of those evaluation criteria it's had an effect for sure um particularly in the more advanced type stages i mean at exploration insights where our exit strategy is more or less sell have the company be bought by a larger company so a takeout if you will but with uh all the travel restrictions most of the major companies are unable to go and evaluate a project so that's put a real kill on the m a unless it's something where they're familiar with you know where they're in country they're working they can go to the project without having to leave the country so that's put a real crimp on a lot of the mergers and acquisitions so you know by default what we've seen is a number of those in canada us and australia because they've got you know the mining companies are stationed there and they've got their people there but there's a project that we're invested in in idaho liberty gold and they have you know the canadian companies have not been able to come down and review their data on the ground so that's been that stalled any sort of you know emerging acquisition potential from canadian companies or australian for that matter so it has a bit of effect and then in the exploration side um peru was locked down for quite a while so people couldn't go there and do the exploration work so an exploration program has been delayed by six months plus same thing in alaska company were invested in trilogy last summer they had a big program planned and they cancelled the whole thing because the risk of taking the infection to an indigenous community was too high and they they wouldn't go there so the whole program was put off until this year so it has a defect yeah good point it is an interesting situation because hopefully i mean our hope is that these kinds of restrictions are just temporary right we want to return to normal what do you anticipate do you anticipate the pandemic continuing to have an impact on the mining sector going forward for years to come or how how long do you see this actually being of importance well really it really comes down to how quickly we can get the vaccine out to the countries you want to go to i mean i think it's starting to get progressed here in the u.s europe's starting to move on canada's surprisingly far behind so i don't see much happening until at least this summer um in south africa they've just blown up with this this new variant that doesn't may not be work with the one vaccine they were using so it's going to be a while before people can go to or come from a lot of third world countries probably late this this year because my guess i'm just guessing one of the questions that we've gotten in the past is one of the reasons to invest in precious metals is to combat inflation right it seems like when there's inflation coming you know precious metals rise now with respect to mining stocks how does that work because it seems like inflation would also push up the cost of production right all the things you have to put in to get the gold that's a really good point uh a lot of people missed that i think we saw that during the um the metals boom in the you know 2009 1011 where the prices were going wide up but every input into building and running a mine went up too the steel the labor the petrol all that went up as well so the profits that were anticipated never came because your cost of production went right up along with the price of the metal so that's a really good point and that is one of the problems with these marginal plays that we were talking about earlier is that yeah maybe the price goes up but but if unless you can keep your input costs flat you're not going to make any money so that's that's a good point in terms of inflation i don't know i've been you know the past 20 years i've been hearing bad inflation i don't know not my not my area of expertise and it certainly doesn't seem to be rolling into people's considerations i mean you know i you and i have seen the price of food medical insurance assets all go up but that's not really being recorded somehow i don't know understand that you said how maybe towards the end of the year you could see precious metals rising and we talked about how mining stocks often do give you that leverage they often if they're good ones they rise more uh what kind of considerations i mean do you see that happening this time and or could there be a situation that you know you said we've seen in the past where the input costs rise as well so the the precious metal mining stocks don't really rise along with the metal so far we haven't seen costs rising and we're actually right now uh the precious and base metal producers are doing better than they've done in a long long time in terms of profitability and this is sort of unusual and that the input costs haven't risen that much and i'm i think i suspect that what that's going to do once we see a few quarters of continued profitability in the mining sector we'll start to see the generalists come in and take these companies higher based on that so that's that's another positive i think we're going to see this year one of the things when investing in like physical precious metals is that it's really for for a long term you kind of have to have a long-term perspective what kind of perspective do you need to have with respect to mining stocks cautious um things can go wrong really quick really quick uh so you've got to keep track of it i mean the larger the company the more diversified it is the less volatility you're going to see if if one mine gets shut down by the government or there's a disaster one mind they've got four or five others going it's less of an impact is if you've got a one mind company and the government decides they're going to take it over you're down to zero i don't know if that answers your question but that's sort of how it works so definitely a cautious approach would you say in most circumstances would you want to be holding for the long haul no i think you've got to do it on a company by company basis i mean a company like franco nevada which is just has royalty streams uh that's as safe as you can get and there's you know they're diversified everywhere commodity wise jurisdiction wise et cetera and they're not really on the hook for the cost they just get a little bit of the the gold or whatever being produced that's definitely the safest way to go yeah i mean that's that's as good as it gets but you come down to one company with one project they're trying to develop in say mexico and they've got a resource now comes time where the evaluation their evaluation based on a technical study shows it's worth 500 million dollars they need to raise 200 million dollars to build it and they need to permit and the government says no permit you're not getting permit that stock's worth zero just about and that can you know that's that's the downside that's the the other end of the spectrum if you will all right well brent cook thank you so much for your time today before we let you go did you want to share with the viewers where people can find you online and yeah any last thoughts you'd like to add yeah thank you um again explorationinsights.com is where we're at joe mizundar who is an economic geologist like myself and uh knows a lot knows more than me actually i writes the letter now i'm just sort of an advisor um that's where there's information lots of free stuff on the site letter comes out every weekend plus updates and alerts he basically letters about what joe is buying selling and avoiding with his own money no one pays us to say anything so that's the website and i guess final cost is i i do believe that this year as it rolls on the mining stocks should be a good place to be at least for a portion of your portfolio and yeah thank you i appreciate the opportunity well thank you so much and god bless all right thanks bye you