How has 2020 been so far?
2020 started out very good for us, and it has been a relatively good year. We have good, strong, organic growth in our company. A lot of our partners are growing and expanding their projects. We have new zones coming on. We have expansions coming into place. So 2020 was shaping up to be a very good year. And then this little thing called the pandemic hit across the world. Now looking back, we’ve actually done relatively well. For about a two month period, we had six different operations that were suspended, three in Mexico and three in Peru, but I’m happy to report that they are up and running again at full speed, along with all of our other assets. We’ve had some higher absenteeism rates that have had a bit of an impact, but even that seems to be pretty well managed now.
We just came out with updated guidance that dropped our overall production for the year by 5%. If you look around the mining space, we did very well on that to only be down 5%, relative to a lot of our peers and a lot of the other mining companies. Updated guidance is 670,000 ounces of gold equivalent production this year, with most of it gold but including a healthy dose of silver. Even with that drop, we have still maintained our five-year guidance of 750,000 ounces of gold equivalent production for the next five years including this year. This just highlights the strength that we are seeing in all of our projects around. We have a few other projects that are good for reinvestment across the board.
A lot of your projects are in countries like Mexico and Brazil, which have been quite badly hit by the pandemic. Have you managed to keep operations running throughout this time?
I wouldn’t say that we have managed to keep operations running. One of the perspectives of the streaming company is that we don’t actually manage these operations, but it is our partners who have managed to keep these operations running. In reality, one of the advantages of the mining industry is that when you have remote locations, you can really put in strict controls to manage the associated risks. You cut down a lot of transient visits, you cut down non-essential staff transfers, and you can really focus on minimizing that risk and get in some good physical distancing and other protocols in place. To date, we have had good success, even though we did have the six mines suspended. It was a government mandate to suspend operations. The sites themselves were doing relatively well otherwise. So for now, I’m happy to report that everyone is up and running at full speed again.
You’ve been helped by the gold and silver prices this year. What is your take on where that is going to go next?
It is hard not to be very optimistic about precious metals prices. My first question whenever someone asks me about silver and gold or other precious metal prices is where do you think the US dollar is going? If anyone believes there is any long-term value potential in the US dollar, it is unclear where they are getting that basis from. We just don’t see it. The fundamentals really point towards good, strong, precious metals prices for quite a period to come. We have not seen the full economic impact of this pandemic and the shutdown. I walk the streets here in Vancouver, Canada, and can see the number of businesses that are shutting down, the number of restaurants that are shutting down, and the lack of a tourism industry that this city has been dependent on.
When do you expect the impacts of these shutdowns to start to show themselves in the market?
I think they are gradually showing themselves in the market already. That is one of the reasons why we have seen such strong precious metals prices. You can look at the amount of stimulus or helicopter money that is going to be required to kickstart economies around the world. Here in North America, we are starting to go through our second wave of the COVID-19 virus and are going to see increased limits on trying to restart economies. We’ve seen impacts in Europe also. This is still building in terms of the full economic impact.
You are planning to list on the London Stock Exchange; Tell us a little bit about your plans there?
London just felt like a natural third home for us. We originally listed on the Toronto Stock Exchange 16 years ago, and a couple of years later, expanded onto the New York Stock Exchange. The bulk of our stock trades on the New York Stock Exchange even though we are a Canadian-based company. Around 65 or 70% of our stock trades are on the New York Stock Exchange. But we have a lot of investors based in London and there are a lot of funds over there and it makes it easier for them to invest in you if you are LSE listed.
As a streaming company, we are quite different from a mining company. Our risk profile is much lower than a traditional mining company. So we’re not there to replace the mining companies that are on the LSE. We are there to provide a new business model to LSE-based investors, and that is the streaming business model, which has such a low risk profile that it’s comparable to investing into bullion. The difference is that we deliver yield and we have organic growth. Streaming delivers all the upside of a traditional mining investment in terms of exploration, success, and expansion potential, and obviously the commodity exposure, but we do not have the cost risks that a traditional mining company has.
There is a lot of interest in us listing on the LSE. I’m actually quite excited about it. It is going to take us about another month or so to go through the full process in order to satisfy all the regulatory requirements. We hope to get this done by the end of November. I really do look forward to getting listed on the LSE. We like to think of ourselves as a global company and this is just another step in achieving that global status.
If you cannot get out right now to get boots on the ground and look at new projects due to travel restrictions, how are deals getting done?
There are certain areas where we can get boots on the ground, though most due diligence takes place on the computer nowadays. It’s a matter of working your way through the raw digital data and seeing if you can come up to similar conclusions that the operators or the project developers have. The bulk of the risk is taken out during that data analysis process and site visits for due diligence are more confirmatory in nature.
It is still a busy time for us. We have a lot of opportunities that we are working our way through. People are commenting about the fact that with higher gold and silver prices we must not be seeing as much opportunity because companies are not doing well on the cash flow side. What people are forgetting is that for us as a streaming company, the bulk of our precious metals actually comes from base metal mines, and we’re just not seeing the same level of support from that. What we are seeing with these higher precious metal prices, is that those base metal companies are more interested in crystallizing the value of their non-core precious metals byproducts.
So now we have a couple of good opportunities in front of us. When it comes to the actual due diligence itself, we still give it a good shake through from a digital perspective. Then we look at what we can do with respect to a site visit. It is something that I’m having a tough time with, and I sure look forward to getting back to doing site visits. As a geologist at heart, I love getting my hands dirty. So we will find a way to make it work.
Congratulations on being elected as Chair of the World Gold Council. What do you hope to achieve in that role?
I’m taking over from Kelvin Dushnisky and before him was David Hartwell, and in the last three or four years, we have all made a lot of progress with the World Gold Council. The crowning achievement is probably the release and the commitment of all the members of the World Gold Council to the Responsible Gold Mining Principles. With this implementation, each of us as members have a period of time to make sure that we’re compliant or exceeding the minimum requirements of the Responsible Gold Mining Principles, in terms of responsibly delivering sustainable benefits to all of our stakeholders.
Our stakeholders are essentially our neighbors, our communities, our shareholders. It covers the entire spectrum, including our employees. We just have to make sure that we get these commitments brought in. And so, it is all a matter of improving disclosure about all the good things that the mining industry does, and as we continue advancing that mandate, it allows us as an industry to have a cleaner record and hopefully progress in terms of bringing in some good, strong investment support.
ESG is so important for investors these days. What are some of the criteria that you are looking to get them to do?
It comes down to making sure that you are committing to sustainable practices and leaving long-term positive benefits to the communities and the neighbors that we have. The mining industry has an advantage in that we can deliver good, long-term, strong positive benefits to remote communities and remote jurisdictions, which are the communities that have lower standards of living and that suffer the most. It is a matter of taking that opportunity that we have and being able to deliver some of those benefits back, so that we can help a lot of these areas improve their standard of living, improve the education levels and overall confidence levels in terms of being able to move forward. What it comes down to is just higher standards of living across these communities.
