How has the transition towards renewables and technology altered IBK’s investments since 2018?
The big push for ESG takes the lead over the last five years as pressure and influence from stakeholders continues to mount. It gave rise to changes like immutability and transparency in supply chains with blockchain. It has us headed towards net-zero carbon emissions for all production activities. For example, Carbon Streaming Corporation offers investors exposure to carbon credits through a portfolio of streams associated with jungles and rainforests in southeast Asia and central Africa. The company trades publicly in Canada and has a US$250 million market cap. Another entrant into the Carbon offset market is Aurcrest Gold and its 100% owned subsidiary, Big Tree Carbon Corp. Aurcrest and Big Tree have First Nations leadership and ownership and are planning to create carbon credits through the preservation of Canada’s boreal forests. These companies plan to generate revenue from the sale of carbon credits produced through the preservation of forests worldwide. The revenue for this activity globally could exceed hundreds of billions of dollars per year and represent the largest transfer of wealth in history from those that pollute to those that ensure the preserve our planet’s biosphere.
How can juniors balance trying to please stakeholders and having a steady news flow as assay turnaround times have increased?
Delays cost time and money but it is challenging to improve the situation. Proper understanding of assay results is critical in guiding next steps of exploration. Without results, companies are searching in the dark. The companies that choose to skip steps are destined to waste valuable shareholders’ money and see their share prices fall. Those that choose to wait before taking next step arguably are doing the right thing but may suffer similar consequences from lack of news and impatient shareholders.
Some companies are developing creative ways to move exploration campaigns forward at a reasonable pace without sacrificing quality work. We are seeing the use of multiple labs in multiple jurisdictions, XRF guns to help guide exploration with a positive correlation between the assays and other indicator minerals and mineral ratios.
Can you elaborate more on how you see M&A activity unfolding in this new cycle?
We should expect increasing M&A activity. New money into exploration will result in new discoveries. These new discoveries will be bought. The larger mining companies use new discoveries to replace depleting reserves. To add fuel to the fire, large, world-class type discoveries are harder to find. World-class mining companies now have to focus on incremental growth in and around existing mine camps. In Ontario alone, we are witnessing high levels of exploration activities in Red Lake, Timmins, Wawa and other greenstone areas, led by juniors, seniors and mid-tiers. The results they produce will undoubtedly drive M&A activity through the consolidation of those areas by the incumbents or new entrants looking to “buy the district”. The same trend is unfolding in other mining jurisdictions around the world. The time is now. Demand for many metals is on the rise, especially in the EV space where metal demand is forecasted to double or triple over the next five years.
What are some of the most exciting projects IBK Capital is involved in?
We are most excited about the carbon offset market and its ability to help preserve our biosphere. A great example of this is our work with AurCrest and Big Tree Carbon. We are also excited about the increasing exploration activity in Ontario. One of our portfolio companies with great potential is New Age Metals, which has the largest palladium deposit in Ontario with four million ounces located just outside Sudbury. The company is heavily owned by Eric Sprott (24%) which is understandable given it is a prime acquisition opportunity. Large mining companies like geographical diversification, each location being centered around a world class deposit or cluster of deposits with infrastructure. This is not only good for New Age but others in the Sudbury area with similar style deposits like SPC Nickel. It is drilling very shallow high-grade nickel-palladium deposits not too far from New Age Metals.