Actionable insights — Evaluates 9 Resource Stocks

3:42 1. Measure capital scarcity with your own fill rate, not with sentiment

1. Stop taking "capital is tight" from the industry, the newsletters or the tape. Get a primary measurement instead.
2. Place an indication of interest in a quality private placement — ideally a lead order, the first and largest commitment, the one that makes the book. That is the order a genuinely capital-starved issuer will fill in full.
3. Record the fill: what percentage of what you indicated for did you actually receive?
4. Interpret against your own standing in the market. Rick's control variable is that he is unusually attractive to an issuer — "I'm a high-profile investor. People like to talk about the fact that I'm a shareholder." If that order gets rationed, the book was oversubscribed by choice, not by necessity.
5. Repeat across several financings before concluding — he cites "increasing frequency," not one deal.
6. Segment the conclusion by quality. The read applies "at least for the higher quality companies"; it says nothing about the rest of the market, which is the subject of insight 3.

• Your fill rate rising back toward 100% on quality names — the first sign real scarcity is returning and the buyer's terms improve.
• Brokers reopening books or extending closing dates: the opposite signal, financings that can't fill.
• Consistency across metals — a cut-back in gold juniors but full fills in uranium or copper juniors localises the scarcity rather than describing the market.

3:18 2. Read financing terms as the price of money — warrants are the tell

1. For every placement you see, record one binary: were warrants attached? A warrant is a free call option handed to the placee to sweeten the deal — it is the discount an issuer pays when money is scarce.
2. Restrict the sample to "decent issuers." Junk always pays up; quality is where the signal lives.
3. Track the frequency over time. Warrants disappearing across quality issuers means the negotiating leverage has moved from the buyer of paper to the seller of paper.
4. Cross-check the equity tape against it. When share prices are soft but financing terms are tightening for buyers, the softness is in the secondary market only — "among the better junior companies, at least with regards to financings, that softness didn't occur."
5. Adjust your own behaviour accordingly: if you can't get warrants and can't get your full allocation, the private placement has lost most of its structural edge over simply buying stock in the market — so revert to limit orders in the open market (insight 7).

• Full warrants (one whole warrant per share) reappearing on quality deals — historically the bottom-of-cycle term.
• Warrant extensions on existing paper, which Rule has elsewhere flagged as a distress signal ("they need the money") rather than a market signal.
• Bought deals vs best-efforts: a shift back to best-efforts marketing means underwriters are no longer confident of filling.

4:36 3. Invert it: a bad company that can still raise money is proof it's overpriced

1. Identify the low-quality cohort honestly — for Rule, "the lame, the halt, and the blind, which is most juniors": no economic deposit, no repeat-success management, no partner funding the work.
2. Ask a single question about each: could this company raise money today on any terms?
3. If yes, mark it overpriced. The logic is that capital is only offered to a business with no prospects when the equity is priced above what a clear-eyed buyer would pay — "the fact that they can raise money on any terms means they're overpriced."
4. Treat failed financings as sector-positive, not sector-negative: "some of those companies, mercifully, weren't able to obtain capital. The sooner they go broke and go out of business, the better off the industry will be." Capital stops being wasted and the survivors' scarcity value rises.
5. Calibrate the whole cycle by counting competing bidders for quality paper. In the early 1990s, "for high-quality juniors there were five or six bidders in the market" — a wide field of bidders for good deals plus open taps for bad ones is a late-cycle configuration, not an early one.

• A rising count of shell-company financings, roll-overs and name changes — capital reaching the tail.
• Delistings, cease-trade orders and forced windups picking up: the clean-out he says the industry needs, and historically a precursor to better entry prices in quality.
• Promotional spend rising faster than exploration spend in the companies you screen.

33:31 4. The people screen: demand past success at the task at hand, not success in general

1. Write down, in one sentence, the exact job this company must perform — e.g. "find a porphyry copper deposit in British Columbia," "consolidate fragmented private ground in a Mexican silver district," "stake and farm out projects in Argentina and Chile."
2. Ask whether the management team has already completed that job — the same task, the same terrain, the same commodity. Rule's phrasing: "past success at the task at hand"; "a person whose prior successes are germane to the task at hand."
3. Count the repetitions. One success may be luck; his standard is a run — "this will be their fifth or sixth success in porphyry copper exploration in British Columbia."
4. Check whether the prior successes were fast or slow, and price your patience accordingly: "neither of those companies were overnight successes, but they were both spectacular successes."
5. Include the institution behind the individual, not just the CV — the group, the mentor, the partner. Diane Nicholson comes with Hunter Dickinson; Zach Flood with an apprenticeship under Robert Friedland and a geological family name; Keith Henderson with two decades of Latin American relationships.
6. Prefer the discipline that sobers the decision. "His background as an engineer makes him much more sober than he might be if his background was as a geologist" — engineers optimise a known asset, geologists chase the next hole.

• A CEO whose prior success was in a different commodity, country or stage of the mine life cycle — the most common way this screen is faked.
• Management pivoting the company into a new commodity or jurisdiction: the screen has to be re-run from scratch, and usually fails.
• The tell in the other direction: a promoter with a great story and no completed job. "Higher rhetoric" is his word for the exploration end of the business.

35:17 5. Value a prospect generator as a technology company — then count the staff you don't pay for

1. Reclassify the business before valuing it. "Prospect generators are basically technology companies… companies that use their human capital to develop exploration theses around tracts of land and then sell the concept to third parties. Very much like the way a molecule for a drug company… might be done." So the asset is intellectual property and people, not ground.
2. Confirm management knows this about itself — "they recognize that their skill sets are technical but that their most important capital is human capital. They use their talents and other people's money." A prospect generator that starts drilling with its own cash has abandoned the model.
3. Count the leverage explicitly: for each farm-out, how many of the partner's geoscientists are now working on your ground at the partner's expense? "You have 200, 250 geoscientists at Newmont that are working for you indirectly and you don't have to pay for them."
4. Score the partner quality, not just the partner count. A major's technical department is also a due-diligence stamp — Rule calls a Freeport JV "adult supervision."
5. Model dilution differently from a conventional explorer: the share count should be roughly flat through an exploration cycle because someone else pays for the drilling. Check that it actually is.
6. Check the float. "The share float relative to the total outstanding issuance is fairly tight. So, any good exploration news can be expected to generate an outsized share price move" — with his own honest condition, "assuming, of course, that there is some successful news."

• Partner count and third-party exploration dollars per year — the actual revenue line of a prospect generator.
• A partner walking away from a project after spending: read the reason, since majors abandon ground for portfolio reasons as often as geological ones.
• The model breaking: management raising equity to self-fund drilling, which converts a technology company into an ordinary explorer.

37:32 6. Price the one saleable asset, then check what you're getting free

1. Find the single asset in the company that has an observable market — a royalty, a stream, a producing mine, a stake in a listed peer. Something a third party would write a cheque for tomorrow.
2. Value it on its own terms: here, a 4% uncapped royalty on a project he expects to produce "at least 4 million ounces of gold." Uncapped matters — the royalty never expires with a fixed quantity.
3. Sanity-check that value against real bidders rather than a spreadsheet: "I'm very confident that they could sell that royalty to Franco or Wheaton or Osisko or anybody else that they wanted right now." If you cannot name the buyer, you do not have a market value.
4. Compare it to the whole market capitalisation. If the one asset covers most of it — "most of the value in Kenorland, most of the pricing in Kenorland is accounted for by the value of the Frotet royalty" — then everything else in the company is being handed to you at no cost.
5. Then ask whether the free part is worth having. Here it is a team "absolutely superb at developing very large grassroots concepts… then bringing in a major mining company once they have derisked it to drill it."
6. Do not confuse this with a sum-of-the-parts model. It is a floor: one liquid asset that caps your downside, plus an option you paid nothing for.

• The anchor asset actually being monetised (a royalty sale) — it converts your floor to cash and reveals whether your valuation was right.
• The operator's construction decision and timeline at the underlying project: a royalty on a mine that never gets built is worth nothing.
• The free option starting to be paid for — when the market re-rates the exploration team, the margin of safety has gone.

26:55 7. Never chase a company that just starred at a conference — use good-till-cancel limit orders

1. Flag every name whose share price rose sharply after a conference appearance, roadshow, luncheon or podcast — the move is attention, not news.
2. Diagnose the order book rather than the story: "I think we've used up every seller in the universe right now. And if you only have buyers and no sellers, the market in the very near term can get very very strange."
3. Do the valuation work before looking at the screen — "form an opinion as to the value of the company."
4. Express it mechanically: "then use good till cancel limit orders." The order rests at your price until it fills or you cancel it, which removes the decision from the emotional moment. "Don't chase this one when it's ripping."
5. Apply the same rule to any name with a visible retail following — Rule uses the word "cult" for both a conference favourite and a well-loved CEO, and treats it as a pricing risk regardless of company quality.
6. Be willing to miss it. Both host and guest state the discipline explicitly: "I'll just wait until it comes to my liking where I like the price and I'm comfortable averaging in."

• Volume normalising after the event — the point at which sellers reappear and your limit has a chance of filling.
• The company financing into the strength: a placement after a conference run resets the float and often the price.
• Your own behaviour: raising a resting limit because the stock keeps moving away is the failure mode this rule exists to prevent.

23:48 8. Buy assets that closed on price, never on geology — then check they were improved

1. Screen for past-producing mines and ask the single diagnostic question: why did it shut? "They didn't shut down because they ran out of gold. They shut down because that gold wasn't economic at 250 or 300 dollars an ounce." An asset closed on price comes back with the price; an asset closed on geology never does.
2. Check the purchase price paid by the current owner — the whole point is that these were bought when nobody wanted them ("they bought them dirt cheap").
3. Verify the owner improved the asset rather than just holding it: "they re-engineered the projects… they made the deposits better than they were when they bought them," and both are "substantially larger as a consequence of drilling and delineation."
4. Prefer the shadow of a headframe. "There's a truism in mining that the best place to look for gold is in the shadow of a head frame of a gold mine" — the highest-probability ground is next to a deposit already proven.
5. Check permitting status early and specifically. Patented (privately owned) ground is materially easier than public land: "at least Mercur is on patented land."
6. State your commodity-price assumption out loud, because it is the thesis: "if you assume as I do that gold holds at the $4,500 level or goes up from here, these assets are very very very cheap… The gold price skated these assets on side and could skate them off sides, too."

• An updated study that carries current construction-cost inflation, not a stale capital estimate.
• Permit milestones on the non-patented parts of the property.
• The gold price itself — this is an explicitly price-dependent thesis, and he says so: "if you're a believer in the fact that we're going to have a balanced budget… then you might not want to own these things."

29:39 9. Separate the political constraint from the technical one — and find the politician's real incentive

1. When a project is stalled, establish which kind of obstacle it is. "The property has been permittable for 3 and 1/2 years. The constraint has been Mexican federal politics." A technical problem needs engineering; a political one needs a different currency entirely.
2. Read the politician's stated position and their actual incentive. "The president of Mexico is anti-mining, which she says, but she's pro-vote" — the stated position is ideology, the operative one is electoral.
3. Find what converts the incentive. Here it is local support: mines "that had the substantial support of the community that they existed in would be permitted."
4. Audit the company's spending on that currency over years, not months — "GoGold has done a good job of community relations in the last 5 or 6 years," which is why it is "one of four or five mines permitted in Mexico this year."
5. Then read the permit narrowly. Ask exactly what was approved and what was not: "what was permitted was the first of what I think will be two underground mines… the open pit mine has not yet been permitted."
6. Price the remaining sequence into your holding period. Success at the first mine is the precondition for the second permit and the pit — "people who have trauma holding stock over a long weekend will be people who don't have the patience to see that permit evolve into mine construction and then mine operation and a second permit and then a third permit."

• The second underground permit and the open-pit permit — the two milestones that validate the thesis.
• Community-level opposition or consultation votes, which are the actual gating mechanism, not the federal rhetoric.
• Mexican federal election cycles, which change the price of the political currency.

1:54 10. Map the near term as a two-branch rates fork, and hold both branches at once

1. Anchor the near-term commodity view to one variable — US long rates — rather than to a forecast of the metal itself: "I think the near-term market depends on US interest rates."
2. Write branch A, the market-controlled branch: if the market "continues to assert control over the long bond" and the 10s and 30s rise, "that'll be tough on commodity prices. It'll result in a stronger US dollar. Commodities including gold are priced in dollars, so it should be hard."
3. Write branch B, the politically-suppressed branch: pressure from Congress, the president and an active Fed pushing rates down "will signal to the market, to savers, that the US government is more concerned about short-term US politics than they are the sanctity of the dollar. If that happens, you'll see gold scream. Absolutely scream."
4. Note the asymmetry rather than picking a side. Branch A is a headwind he expects to self-correct — "I think unfortunately that corrects itself" — while branch B is a regime change. A temporary headwind against a permanent repricing is not a symmetric bet.
5. Layer in seasonality and base effects for position sizing, not direction: a "fairly soft market" for the balance of the year, equities recovering better than metal off the February–July contraction, and "August is traditionally the worst month in precious metals equity."
6. Use the soft branch to accumulate rather than to exit, which is the only way to be positioned for branch B when it arrives without timing it.

• The 10-year and 30-year yields, and whether the dollar strengthens with them — branch A confirming.
• Explicit political pressure on the Fed and a cutting cycle into firm inflation — branch B confirming.
• Precious-metals equity seasonality turning after August, the specific window he flags.

47:13 11. Buy the jurisdictions people can't pronounce — but rent a local godfather

1. Look first where two layers of hate overlap. Layer one, the business: "nobody cares about conventional oil and gas exploration… They don't believe the juniors belong there." Layer two, the geography: "people don't like jurisdictions that they can't pronounce or spell, like Colombia, Venezuela, Namibia, Guyana."
2. Verify the discount is about unfamiliarity rather than about a real, current expropriation risk — and be honest when it isn't. Rule's own Venezuelan record is four exploration successes and "all four successes nationalized."
3. Require a person, not a thesis, as the risk control: someone with decades in that country whose money is in beside yours. "I have my godfather. I have Keith Hill, who is also invested in the company, monitoring it on my behalf."
4. Separate the business from the option. Fund the position on the boring cash-generating jurisdiction — "there is a lot of work for them to do in Colombia" — and treat the frightening one as "the icing on the cake."
5. Identify who really controls the outcome. Here it is an unnamed US family that is "a household name in the energy business," which is why "it stands to reason that they are likely to get this Venezuelan concession."
6. Gate the position on your own temperament before sizing it: "don't own this one if bad headlines out of Venezuela will freak you out, because you will get them."

• The Venezuelan concession actually being awarded — the binary that defines the upside.
• Colombian production and cash flow holding up on their own, which is what makes waiting affordable.
• Your monitor's position: if the person watching it for you sells, the risk control is gone.