Freddy Brick — Hunting for Value in Mining Stocks

1:31 No metal-price call — and a book run ~50% net

• Eight or nine years in the sector, yet "we actually don't have a huge view on metal prices" — the macro view is about why junior assets were "highly distressed and basically left dead."
• "We typically run the book about 50% net," leaving room to "accumulate more as things draw down."
• A 2% S&P down day "is a pretty mild day in junior mining" — plus-5% moves in the commodities or indices are routine.

3:21 Copper: the bull thesis is right, the timing is unknowable

• The story changes (EVs, now AI) but "I do believe the copper bull thesis makes sense. It's just I don't know at what point it actually is going to happen."
• Bulk copper discoveries are in "hairier and hairier jurisdictions"; the safe ones carry red tape — first drill hole to production "well north of 10 years," and big-mine expansions run late.
• Scrap can take up slack and China housing demand is gone, while the West builds infrastructure and data centers. If you just want the macro call, "you may as well just own the producers."

5:41 Bottom-up: gold turned momentum, silver "frankly insane"

• In theory copper and gold drivers offset, "although gold has clearly become much more of a momentumy risk-on trade than it previously was."
• "Silver is just frankly insane" — theories from corners of the internet that "make zero hedge seem very vanilla."
• Focus on iron, copper, gold, silver (occasionally uranium): long pricing curves to hedge, and an asset that works "at any commodity price observable within this metal in the last 10 years" — not "if gold goes to 6,000."

7:50 Origin story: the Asanko short

• A research report on a Ghanaian open pit listed in Canada showed "how this open pit mine was a fraud."
• Before it, resource shorts felt like "trying to prove the existence of God" — your geologist versus theirs, and people believe the company's.
• The breakthrough: overlaying the block model on the mine as it was dug showed rock coming out of the places the model "had been smeared" — fraud you can show "in real time."

9:34 Block models and smearing, defined

• A block model: drill holes ("skewers in the ground") with blocks built around them — the basis of the mine plan.
• Smearing: over-weighting a few metres of grade (2 g/t is "my wedding ring in a massive room") across a huge volume of rock, so a non-economic deposit looks economic on paper.
• Why nuggety gold deposits "often disappoint" once mined.

12:22 The pattern of deception, validated

• The market shrugged ("the usual poo-pooing"); the report probably scuppered an M&A process.
• What convinced a non-geologist: Darren's log of the company saying one thing, then an excuse three months later, then "we never told you that."
• They met the author, did their own work, published their own short — "a very successful short for us."

13:15 GT Gold: knocking down the consensus objections one by one

• A copper asset everyone disliked; they checked each objection — ravine too steep for a pit? No. Will the First Nations band allow a mine? Yes. Infrastructure? Yes.
• Built a ~10% stake, public letters followed, and a major acquired it at a price it "probably feels really good at" today.
• The question that became the fund: if it is this obvious and verifiable, "why aren't other participants doing this?"

15:22 Why juniors have been starved of capital since 2011

• Materials fell to "less than 1% of the S&P" (ex oil and gas, basically no metals and mining).
• The old financiers — generalist and sector mutual funds — lost to ETFs and their own underperformance.
• Talent went to Citadel, Silicon Valley and biotech; fewer mines built meant fewer people with reps; allocators "absolutely annihilated in '08 through '11" won't fund specialists.

18:20 The structural barriers that keep institutions out

• Concentration is impossible for a mutual fund in something trading "2 million bucks a day."
• Many interesting assets sit on the TSX Venture; many funds must wait for a TSX upgrade and can't own sub-$5 stocks.
• A manager who loves a 30-cent stock may "have to wait for the stock to go up 10x before they can even think about owning it."

20:18 Not contrarian for its own sake

• The book is not built from "everyone thinks it's a short, so we're long."
• The original Asanko report wasn't bad, just technical; Muddy Waters' job was to put it "in English that everyone can understand."

21:31 "Unspectacular but not hairy" — and the kill-factor check

• The market prices high-grade open pits well and "does less well with bulk projects" and decent-but-unspectacular assets: ~2 Moz with a path to 3–4 Moz, modest capex, reasonable permitting and local buy-in.
• Then ask what would kill it: next to "a one-of-one salmon fishery" it will never be permitted, whatever the valuation.
• In a hairy jurisdiction the mine "will either be stolen from you or the economics will be recut" — not worth 3–5 years of your life.

23:56 The quietly improving asset beats the flashy drill hole

• Operationally focused teams that "really care about share count" and aren't capital-markets savvy can de-risk an asset for years unnoticed.
• "The probability of this becoming a mine has actually significantly increased while the share price hasn't" — a better expected-value bet.
• Versus six spectacular holes that "pulled the same drill hole out of the ground" six different ways.

26:26 Like venture — but more like distressed investing with a venture payoff

• Unlike a startup pitch, holes in the ground can be modelled: metal content, mining cost, capex ranges.
• No skill in hoping for a lucky 600 m at 2% copper; the value comes from fixing a capital structure, a people problem, a wrong narrative, or a metallurgy test that lifts recoveries.

28:21 Capital raising is a skill — the Faraday example

• Juniors constantly raise, so they want strong, proven backers: Faraday Copper, owned "at much lower prices," was Lundin-backed with a CEO they knew.
• If no one else writes the cheque, "you're either going to write the whole check yourself or the project's not going to move forward."
• Promoters who raise at ever-higher prices "reduce the number of shares outstanding by the time the mine is built" — lower cost of capital, better for shareholders.

31:01 Shorts find you; drill holes are public

• In mining, shorts surface while diligencing a long that "really screens nicely" and then doesn't hold up — unlike the firm's bad-actor screens elsewhere.
• "You can have bad people and a good asset" — a transformational hole is still real.
• "Post X [Bre-X] you have to log all your drill holes": lots of observable data for anyone willing to model it, which big funds find uneconomic.

34:39 Sentiment dead at $4,000 gold

• A few months of gold slipping from January levels back to June–July levels and "the sentiment in the sector is just dead" — at prices that would have had champagne "pouring from every fountain" three or four years ago.
• He wonders how much speculative debasement money went to crypto instead.
• "A symptom of a really prolonged bear market"; "the projects and the opportunities at the moment are amazing."

35:49 Denver Gold Show, three years ago: Artemis and "IM Gold"

• At a miserably attended show, Darren's read: "these projects are just going to work. They're going to get built."
• Others cited capex blowouts; the projects were built by competent teams, rerated, "and now everyone thinks they're awesome."
• "Very few people are there as the value is created."

37:32 Miners bounce; the real driver is depletion-forced M&A

• Host: GDXJ fell 41% and GDX 39% from January peaks; now ~15% and ~12% off the highs after a strong August.
• Maybe Bessent's attempt to move the long end or rate comments — "that obviously can all change next week."
• Producers "are eating themselves from the inside… similar to drug companies and patent cliffs"; majors rarely discover, so expect "some sort of M&A wave" for permitted or in-construction projects that got funded in the quiet years.

39:35 Snowline Gold — the no-brainer takeout

• "Robert was acquired earlier this year" (unidentified caption) as a sign of early M&A.
• Snowline: "a no-brainer takeout for a whole number of players" that could open up a Yukon district; probably needs a major.
• But "somewhat consensus," long-lead, needs infrastructure — and the stock probably needs to rise so a buyer can pay a premium "that upsets" no one.

41:35 Why majors are slow to pay up

• The last super cycle's premiums, cost overruns and write-downs cost CEOs their jobs; balance sheets are now clean, many net cash.
• M&A discipline is "a remnant" of that; nobody wants to be first to pay top-of-cycle.
• Owners who know what they have won't sell without a premium that "accelerates my return several years" — inertia on both sides.

44:22 Patience, the lock-up, and why GDXJ is a bad hedge

• Something that ran away often comes back in 3, 6 or 12 months; "sitting on your hands and being patient is pretty well rewarded," and the lock-up makes that possible.
• Hedging mismatch: an orphaned junior sold down by a new fund manager while GDXJ gets macro inflows — short leg up, long leg down.
• Instead: underwrite permanent-impairment risk, size binary events small, trim when beta outruns the thesis (one court-case asset recently trimmed), and hedge with index shorts, the metal and option structures.

47:24 Long activism — twice, and not the preferred route

• One supporting role, one led campaign; initial asks "were far, far less than we ended up with in terms of outcome."
• The aim is always "the fewest shares outstanding when the asset's built" — drilling optimisation, explaining the asset, capex sequencing, stakeholder engagement.
• The hope: their capital becomes "a signaling mechanism" that lowers a project's cost of capital.

50:34 Subscale by design; talent is the constraint

• "We're really good at building subscale businesses" — the test is insane edge and good net returns, "if it doesn't scale, it doesn't scale."
• A later vehicle could be hybrid public/private with earlier, more concentrated positions and a longer lock.
• Good engineers and metallurgists are scarce and motivated by building real things — relationships take time; "you can't just throw money at that problem."

55:31 Alpha takes 3–5 years — Mayfair Gold

• Long-side wins have taken "somewhere in the range of 3 to 5 years" and are "pretty agonizing."
• Mayfair: ~20% owned, proxy battle won, new CEO and CFO, straightforward project, Oaktree and family offices joining — yet "the share price just is what it is."
• Permitting, environmental and engineering work "takes years"; "you spend years wondering if you are just the stupidest person involved."