The Next Bull Market Move Interview - Live from London - Collin Kettell, CEO & Partner, Palisade Global Investments Ltd - 6th May 2018

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Last week I was very fortunate to meet up with Collin Kettell in London while he was traveling through Europe. We discussed his early background, what he looks for in a resource company, the companies he’s bullish on, and what might be next for Gold. 

Welcome back to The Next Bull Market Move Collin. How are you today?

I’m good Kerem. Nice to finally meet you in person. It’s nice being down here in London with you.

Yeah. You too. So what brings you to London?

Well I’ve just done a weekend scotch whisky tour in Islay with my grandfather that I’ve been planning for a couple years. It’s quite a bit of fun and a nice break away from work and figured I’d stop in London to have some meetings on the way home.

Great. Let’s start with a bit of your background. People mainly know you via your show Palisade Radio, so how did you get started with Palisade Radio? And how did you get involved in the mining resource sector?

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Yeah. My background in mining goes back to a young age. My dad was in the resource space starting when I was about 10 years old. A long story short, I saw a fantastic amount of money being created in a way that allowed for a very interesting lifestyle not tied down to a 9 to 5 kind of arrangement, and it kind of caught my attention as a young, budding entrepreneur. 

It’s a space that you can make a lot of money if you catch the cycle right and, there are a lot of different avenues to go about making that money. So coming out of school I decided to start Palisade Global with my business partner, Sean. And that was about five years ago. So we’ve had a fairly successful track record so far.

The first three years we were in the depths of the bear market. And about two years ago of course we had the first leg of the bull market that started, so things really got more fun. I think it goes without saying that the most fun time you have during a resource market is during the bull market portion. 

So Palisade Radio came about four or five years ago as well. And that was my attempt to put a platform out there where people could go to and get content on the resource sector in specific. And it also allowed me to network with some of the brightest minds in the space and all of the people that we have on the show from time to time.

Let’s talk about gold. Over the last couple of months when we last did an interview, it was consolidating and it seems to be still consolidating at the current levels of around $1,300 to $1,350. So what are your views on gold for the rest of the year?

I think if you take a chart of gold and you look at it on a one year time horizon, what you’ll find is actually a very compelling chart. It is consolidating but it’s consolidating in a very upward and obvious pattern. So long as gold remains above the 1,300 mark or somewhere close to that, that upward pattern will continue. And I think that we’re getting closer and closer to a point where it’s gonna break out of that pattern to the upside.

The other interesting thing I’ll point out is that last year, while the junior resource stocks did not perform that strong, in fact most of them kind of slid on a downward path, the commodities as a whole had a very strong year. 

And so mix into the fact that retail investors, like we were talking about earlier, are bored with the space…They’re a very impatient group if they haven’t seen moves for two years, the fact that these stocks are down the same time as commodities are up, I think we’re gonna be in for a very exciting second half of the year.

So what do you look for in a resource company? What requirements do you look for?

I think this can result in a very generic answer, because most people will say that they look for the same thing and I would be in that camp. The most important one is gonna be management, of course. And you know, as we were having a discussion over lunch, Kerem, talking about the problem, the inherent problems that exist in the resource space - often times management doesn’t own very many shares of the company and yet, junior resource stocks are kind of like a fiat currency in that you can very quickly dilute them. 

These companies always need to raise money. They’re not revenue-generating. And so, as an investor coming in, you like to think or try to ensure that your value creation is in line with management. Management often won’t own any stock or a very little bit. And through options they can reincentivize themselves at the same time as your share position might get cut in half. So, making sure that management and the decisions being made are in line with shareholder value is very important for me.

Beyond that we’re looking for ideally exploration or development-stage projects that have value that can be unlocked. And we’re all so very in tune with the cycles that are playing out. You’re gonna wanna look for companies maybe that have the rubber band type effects, and every time that the bull market kicks into action, you will see a huge move in the stocks. So there’s a variance of different factors to look for, but I think management has to top the list.

Interesting. So can you give us an update on Goldspot Discoveries and New Found Gold Corp?

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Sure. Goldspot Discoveries is a leading machine learning and artificial intelligence company in the resource space. And we’ve certainly solidified ourselves as the leading group of experts that are applying machine learning to the big data problem that exists in the resource space. 

To put this very simply, a company, a big mining company, has terabytes worth of data and only a handful of geologists that are supposed to go through and understand that and interpret that data and then select which data is important and make very expensive decisions based on that. And we live in an era now where computers are getting cheap enough and fast enough to more intelligently analyze and implement the data that’s out there.

So Goldspot’s got an all-star team in terms of management and geoscientists. We have 14 full-time geoscientists on board and we’ve got clients, including Hochschild, Sprott, McEwen, Yamana, just to name a few, that are utilizing our team to take their big data and interpret it better. Goldspot’s set to go public in the next three months and we’re very excited about that. 

And New Found Gold is the second largest landholder in all of Newfoundland and Labrador. We also have a flagship project in Ontario, very much focused on gold exploration on a massive scale. And what that means is we’re not just looking for one million ounce deposits. We’re looking for multiple deposits across trends. And we’re very enthusiastic about the assets that we’ve accumulated in the company over the last couple of years.

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Altius Minerals announced last month that they had signed an LOI with New Found that’s going to see us go public with somewhere between seven and a half and ten million dollars in cash. And that’s gonna put us on the path to be the leading vehicle for investors seeking exposure on gold exploration in Newfoundland. 

Most people don’t know but Newfoundland’s been one of the few places that’s had a staking rush over the last year and a half. And there’s a lot of companies that have moved into the space. It’s still very fragmented and I think a company that secures a large land position like New Found is gonna be very attractive for investors.

Let’s move on to blockchain. What’s your opinion of blockchain space and Bitcoin in general?

I think I’ve been fairly positive on the crypto space since the beginning. I have not deployed a tremendous amount of capital into the space and that’s because I truly believe in focusing one’s capital on where their knowledge base exists. My knowledge base is certainly very much focused on resources.

Politically speaking I'm somewhere in the libertarian to anarchist spectrum. And I find it exciting to have a technology that could decentralize power away from the current structure. And this could very well create the next wave of freedom, kind of like going from the system of dictatorship and monarchy to worldwide democracy that we’ve seen unfold in the eighteenth century. 

So I think it’s exciting. You know, a lot of people get excited that Bitcoin dropped from 20,000 down to 7000. But if you look at the chart, that’s not anything unprecedented in terms of percentage moves. And I know that these cryptos are starting to get a bid again. I have no prediction as to if they’re ready to take off or if the consolidation is gonna be another year, but I’m certainly positive on it.

Okay. Can you give us an update on your involvement with Triumph Gold and Mexican Gold?

Triumph Gold and Mexican Gold are two public companies that we own roughly 19 percent of both. And we’ve been involved in the companies for about 24 and 12 months respectively. The two of these represent our largest public positions and we feel very confident on both of them, not just as a trade, but in fact the assets just having true value and holding these through and supporting them through to acquisition. 

Triumph Gold is back up now that the snow is starting to melt in the Yukon. And they’re drilling some deep holes to explore the potential for the gold-copper porphyry systems that may have been found last year.

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And the stock has performed really quite well compared to the overall market. It’s holding in nicely at 35 to 40 cents. As you know, Goldcorp came into the company last year and bought 19.9% of the company and expressed their intention to maintain that through subsequent financing. 

The property is very strategic in that it’s located just south of Goldcorp’s coffee project which they bought off of Kaminak for $550 million. We have the government-maintained road that goes from south to the north of our project and ends at the north of the project. And for just the infrastructure reason alone, we think that we’re a prime candidate for Goldcorp to take over.

We also have five and half million gold-equivalent ounces that are going to receive more and more value as the price of gold goes up. So I feel very comfortable there. You were saying earlier that you’ve been looking at the insider reports and you’ll notice that we’ve been continually buying more and more shares in the market as well as the chairman, John Anderson, who we are quite fond of.

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On the Mexican Gold front, that’s maybe an even more exciting story. We first got involved in that over a year ago. The company was at 15 cents. It needed to be recapitalized. We did that. We helped get the resource estimate out which showed over a million ounces of gold in Mexico in an open pit setting that happens to be one of the highest grade open pit models in the country.

Since then though, things got far more exciting. We hit a hole about six months ago that was 10 grams per ton gold equivalent over 38 meters. And once again, just last month, we hit an even better hole which was about 10 and a half grams per ton over a similar 38 meters. 

Both of those holes are in the center of the existing resource model, which means that our resources now are going to be substantially higher in terms of ounces and also grade. Internal estimates, and this is not from the company, but we would approximate there’s probably one and half to two million ounces now closer to three grams per ton instead of two grams per ton. 

So despite bad market conditions, Mexican Gold is getting a bid and I think that that’s the kind of company people wanna invest in to make multibaggers once the gold market reignites.

So just to end now, can you give us any updates on what Palisade Global Investments is up to for the rest of the year?

Yeah. Palisade’s plugging away. We’ve definitely shown a focus on really rolling up our sleeves and doing the dirty work and taking big positions in companies that we believe in. We just went over four of the companies that we helped to build. We’re gonna continue down that path. We’ve got some exciting properties in North America that we’ve been picking up and we’re building some new companies around. 

At the same time, we’re planning intelligently from a management fund perspective that we’re looking for the best of the best financings, companies that have good management teams, companies that have good projects and continue to show that they can build during good and bad markets, and we’re hoping to capitalize those, of course, always focusing on full, long-dated warrants.

Warrants are what you get for taking the risk of being a resource investor and I think anybody who is not investing this way that could be is making a vital mistake towards capital appreciation. Warrants are the most mispriced financial asset in these markets when looking at the junior sector. So that’s a focus and finding great assets and great people and supporting them and continuing to grow is our aim.

Great. Okay. Thank you very much for your time, Collin.

Absolutely. Thank you, Kerem.

I would recommend everyone to check out Collin’s show at http://palisaderadio.com/ as he constantly interviews the best people in the resource space.

Collin can be reached at http://palisadeglobal.com/

Companies mentioned:

http://www.triumphgoldcorp.com

http://www.mexicangold.ca

http://www.goldspot.ca

http://altiusminerals.com

The Next Bull Market Move

Disclaimer - Interviews are conducted in the name of research and learning from the best. Only you can decide what makes a good speculation/investment.