Policy is the new geology, panel hears

[Ben Graham]

Beaver Creek, Colorado – The single biggest driver of returns now isn’t what’s in the rock, it’s what’s on the books, a panel heard on Tuesday at the Precious Metals Summit in Beaver Creek, Colorado. Permitting timelines, disclosure discipline and where the world’s metals are refined are set to be the gatekeepers to industry success.

Moderator Anthony Vaccaro, president of The Northern Miner Group, framed the discussion against a backdrop of record bullion, fragile geopolitics and a scramble for “strategic” metals. The panel featuring hedge fund manager Warren Irwin, Bear Creek Mining (TSXV: BCM) chair Catherine McLeod-Seltzer, and CEO Jonathan Goodman of financier Dundee – told a packed room the industry should streamline rules, rebuild trust and put capital where the crowd isn’t.

“It shouldn’t take seven years to permit a mine. That’s ridiculous,” Goodman said. “We can finance our own companies, but [governments] need to get out of our way and make this industry easy to work in.”

Goodman’s starting point was speed and predictability. Standards need not fall, he said, but decisions must come faster. He urged coordinated review tables that bring Canadian federal, provincial and First Nations authorities together on a single project file so issues are identified early and resolved in sequence rather than in series.

Jurisdictional certainty, coherent timelines and a credible route to processing now command a premium that rivals grade, panelists said. Two projects with similar geology will diverge quickly in value if one can show a realistic path through community agreements, environmental approvals and smelting, and the other cannot.

Processing chokepoint

Even if the West builds new copper mines, concentrates still need to be smelted and refined. For decades that capability migrated to China, leaving supply chains exposed to trade friction.

Goodman argued the market can fix the imbalance – treatment and refining charges will rise to justify new Western smelters – if governments focus on timely permitting for both mines and downstream plants and resist price-setting schemes.

Irwin, a contrarian investor who’s made lucrative bets on juniors, cautioned that many critical metals sit in thin, non-London Metals Exchange markets with few buyers. They are easily swamped by by-product streams from large mines focused on other commodities.

Price floors and similar interventions, he warned, invite disappointment when unexpected supply arrives or a sponsor later walks away. The Trump administration invested into rare earth miner MP Materials (NYSE: MP) in July and imposed a 10-year price floor of $110 per kilogram for neodymium-praseodymium oxide.

“If governments want a strategic metal, the surest public role is to reduce permitting friction, support infrastructure and enable bankable offtakes – not to backstop prices,” he said.

“It shouldn’t take seven years to permit a mine. That’s ridiculous,” Dundee CEO Jonathan Goodman says. Credit: Henry Lazenby

Technical credibility

The panel was constructive on gold’s long-cycle set-up. McLeod-Seltzer, the independent chair of the Kinross Gold (TSX: K, NYSE: KGC) board, drew parallels to the 1970s – geopolitical tension, heavy debts and a rotation into hard assets. She expects volatility in bullion but sees a longer shift towards gold equities.

In her view, many producers’ shares still do not reflect the free cash flow potential implied by current prices, particularly for disciplined operators with low sustaining costs.

So why haven’t equities kept up? Goodman put much of the blame on credibility.

Technical studies prepared under Canada’s NI 43-101 standard are often read as valuation documents; they are not. They are stage-gate studies showing whether a project can advance, he said.

When those studies lean on best-case inputs, and operating results later fall short, generalists conclude they are safer owning the metal than the miners. Goodman’s prescription: a pragmatic approach.

“Use conservative assumptions, publish reconciliation data, hit guidance quarter after quarter and explain – plainly – what has changed when plans do,” he said.

McLeod-Seltzer offered a pre-43-101 example to underline the point. At the Arequipa discovery in Peru in the 1990s, a veteran director insisted on independent verification of samples. When those assays confirmed the original work, confidence followed – enough for Barrick Mining (TSX: ABX; NYSE: B) to launch a hostile $1-billion bid based only on nine drill holes.

“The lesson – verify, don’t hype – translates directly into today’s disclosure framework and remains the fastest route to a higher multiple,” she argued.

From paper to producers

Developers are a special case. Many single-asset stories have not re-rated with bullion’s rise because investors want delivery, not just ounces on paper.

Projects most likely to move are in tier-one jurisdictions, with credible community agreements, realistic capital expenditure guidance, clear processing paths and management teams that discuss constraints as candidly as upside.

The metal has done its job; for equities to follow, companies must do theirs.

The contrarian case

While policy and trust dominated, the panel also weighed where outperformance may come next. Irwin’s answer was metallurgical coal, not a fashionable battery-metal  theme. Years of under-investment and slow approvals have constrained new supply even as India targets a larger steel footprint from a low base, he said. That combination can support durable returns for high-quality hard coking coal with rail and port access.

Coal divestments, such as Glencore (LSE: GLEN) picking up Teck’s coal business, also drew debate. Irwin called it a strategic error for some majors to exit met coal just as steel demand looks durable.Buyers of those assets, he said, are positioned to harvest strong cash flows for longer than consensus assumes.

McLeod-Seltzer also warned that head-office location matters because it anchors the engineers, geoscientists, bankers and accountants who turn studies into mines.

As Goodman put it: “make it easy to work here and let the market do its job.” McLeod-Seltzer and Irwin agreed: “do that, and the capital will follow.”