50 Years of Mining Markets: What's Different About This Cycle?

0:04Trevor Hall: Hey, good morning, everybody. Welcome into this week's long form episode on mining stock daily special edition because we have our literally, I promise our final interview out of the LME week coverage from a couple of weeks ago. I know we've been busy from London to New Orleans home this week and we'll be covering precious metal summit in Zurich next week. week along with deutsche gold mess in frankfurt so a ton of corporate updates coming your way over the next few weeks and so this episode is actually going to finally conclude our coverage from lme week and i would joined by richard lockwood of arlington group he's a veteran of the mining investment industry whose career has stretched back to the australian mining boom in 1969 so five decades of experience in the commodity cycles, financial markets, transformations, and he talks about the changes and how capital flows into the mining sector.

1:09Trevor Hall: We discuss why mine equities have struggled to attract institutional investment despite strong commodity prices recently. We talk about the growing influence of China in critical minerals and the outlook for copper and uranium and why Richard believes the major mining companies could be preparing for a significant wave of acquisitions. A lot of insight here from a career veteran. I love these conversations. Thank you, Richard, for giving me some of your time back in London. Special thank you to Revival Gold, Integra Resources, Equinox Gold, and Vizsla Silver for their continued support of mining stock daily.

1:51Trevor Hall: Also, huge shout out to Tara Hutton, who helped make the invisible investable. I will reiterate again, they are doing some incredible digital site presentations for companies if you're at all interested and getting your company highlighted and being able to tell your story online through the Tara Hutton platform. It is amazing and really engaging. Go check them out at tarahutton.io. All right, let's jump into my conversation with Richard Lockwood of Arlington group. Have a wonderful weekend, everybody. We will talk to you in Zurich next week. It's a great enthusiasm. I get to welcome somebody who's been really a center of the London metals market and mining for many years.

2:40Trevor Hall: And these conversations are one in a million. Not too often do we get to sit down with somebody who's seen multiple, multiple cycles, who've seen multiple markets, the good and the bad. Especially important to have that here during LME Week where we continue to provide coverage here on Mining Stock Daily. I'm happy to welcome in Mr. Richard Lockwood. He is with Arlington Group. Special thanks to my friend Simon Catt for making the introduction. But Richard, thanks so much for joining us here. Yeah. Thank you for doing this LME Week. It's always an exciting time. You know, a lot of people from all over the world getting coming.

3:17There was a big conference yesterday, a guy called Michael Gentile, who's a sort of a doyenne of the Canadian mining industry. And he had about 25 companies in the Institute of Directors. So that was a good sort of start to the LME week.

3:30Trevor Hall: Yeah, I was there in the afternoon. Michael Gentile, yeah. Michael Gentile, and you were there all day? I was there up to, including lunchtime, starting early in the morning. Okay, so I just missed you. I just missed you then. But let's talk about maybe profile. Are you from the London area originally? I am most certainly, yes. And I set off almost fortuitously in the mining market in the end of 1969. There was a huge boom in the Australian mining market led by a company called Poseidon that went from a few feet to 125 pounds at one stage. And I'd been living in South Africa. And I joined a firm called Govet Sons & Co., which became Horgovet.

4:14and by default they were brokers to just about every single Australian mining company never contacted them so I sort of walked into a ready-made audience as it were so we were getting tremendous information from Australia no one ever contacted these people so that was the start of my life in the mining market yeah so you were a finance guy before

4:34Trevor Hall: mining okay did you have any aspect on how mining actually worked not really no but the firm I joined had a couple of mining analysts and a background. So it was perfect as a salesman. I had the background to help me out. And so it worked pretty well. Yeah, well, you know, I cut my teeth in mining for the last, you know, 12 years, but I've had technology and the internet to help me do that. How difficult was that to become, you know, knowledgeable of the sector? It was basically hugely difficult. You go back to the sort of end, 69, early 1970, you couldn't pick up a phone and ring Australia. You had to book a call.

5:10and then when we started to do a lot of business it was all done by telex and sometimes the telex lines got full so you had to gauge your orders put the big ones on until the small orders that wouldn't be put on to the next day so communications were really difficult i mean now it's a sort of drop of an eye but um in those days communications were pretty tricky but you could turn that to your advantage because if you're the only person ringing a western mining or a bhp you've got a ready audience so i used to book a call a day in advance to whoever it might be

5:42Trevor Hall: yeah yeah so you're focused on australian equities mainly but we're doing in arlington we're doing a lot more in canada now canada sort of got lost along the way and got caught up in um in sort of weed stocks and um and and uh cryptocurrencies but it's last year or two it's coming to its own in the mining market. So we cover both. Was there a time where you could feel the Canadian markets kind of up and coming and evolving where you were able to mix Australian equities with the Canadian equities? Definitely. And the sharp Australian entrepreneurs, you'll find quite a few of them have got projects in Canada, which were set up really before the Canadians realized how good their own industry might be.

6:27So Australia is very, very entrepreneurial. But now, of course, the Canadians are doing it for themselves.

6:34Trevor Hall: Yeah. What about, were there specific stories that really put Canadian markets on the map? I keep on thinking of something like Voices Bay was a huge story that really grabbed a lot of capital and attention at the time. But were there certain stories or equities that maybe set the stage prior to something like Voices Bay? Not particularly, no, not as far as I remember them. At that stage, I was particularly geared towards the Australian market. But I wouldn't say that Canada played a big part in the portfolios of the average British institution at that stage. I mean, everyone was aware of it and aware of Oise Bay and, of course, massive nickel discoveries.

7:14I think they might remember more the scandal that took place in Indonesia when I've got the name of the company.

7:21Trevor Hall: Breaks. Breaks, yeah. That made bigger headlines because it was such an amazing story and then turned out to be a total hoax. So that probably got more than its fair share of publicity. Were you involved in that story? No, luckily not. But it would have been very easy to get caught up with it. And the only caveat was they didn't encourage any analysts to go and have a look at it, which should have put people off, but it didn't seem to. So walk us through kind of, you know, from that time, from the late 60s, early 70s, and walk us through, you know, continuing to work in this sector and how that market specific niche market has evolved over the last two or three or four decades from there.

8:05Trevor Hall: I mean, what's obviously the communication has gotten easier, but you've seen so many cycles of metals and miners. what was like maybe the worst cycle you've ever seen like in all that time that really you had to grit and bear it um well i lived in australia for a lot of the ages it was pretty bad then but then i turned my attention to other things but um i think you're always philosophical in the mining market it is feast and famine and um everyone tends in the in the force of time to I don't even remember the good times, but it's a bit like if you, the biggest comparison you can make now is sort of the bull market in America.

8:52There's a whole generation that have never seen a bear market, whereas the cycles in the mining market are much shorter term. And what makes it more unusual, of course, is that if you take the 70s, when the mining market was really discovered in majors like Western mining in Australia, obviously BHP, Rios. And as far as I can remember, they weren't really mining funds. So all the stocks that were bought were bought by generalist funds. So when we were going out selling, we were selling really to the uninitiated. So, you know, you go along with a company of analysts that could sort of got into trouble, could explain the details of the company.

9:35So, I mean, I couldn't put a date on it, but it's certainly in the 70s that in London, there were very few pure mining funds, and they've only really developed in the last perhaps 10 or 15 years.

9:47Trevor Hall: No, there still seems like there's not a lot of mining funds. No. Is that fair? And if I had to say perhaps one of the biggest mistakes I've made in recent history, when gold went through 5 ,000 a couple of years or so ago, that I thought would be the excuse for the generalist funds to come in. But strangely, they haven't. This time around, it's an unusual cycle. There's more mining funds that obviously embrace it. But as a whole, the generalist funds have not really got involved in the mining market. If they want to get involved, they'll probably buy three stocks, Rios, BHP, or Glencore. So I'm generalizing, but this is not what I call a widespread market as far as mining shares are concerned at the moment.

10:33Trevor Hall: Was there a part in your career where you transitioned from focusing on the producing companies and started getting intrigued and allocating capital and having conversations with the developers and explorers? And did that come later in your education? Yes, it would have come later, purely because I said that the institutions were really only buying the producers. and I'm not sure if you look at today, we're getting some fantastic results from a lot of the smaller exploration companies, but very little response in terms of shares. And I think we're in a very unusual situation, whether it's telling us that markets generally are overpriced or whether just people refuse to embrace the mining market.

11:20But we should be with a copper price at or near an all-time high with the zinc price the same and base metals generally. And gold is still a huge level if you gauge it, say, in Australian dollars at 6 ,000 an ounce. So it's still a bull market background, but you wouldn't think it's a bull market in terms of the shares.

11:41Trevor Hall: Is that the biggest differentiation of what this bull market we're in now compared to other ones you've seen in the past? It's just a lot of confusion. Is it confusion or just apathy? well i suppose it's probably apathy but i know it's in my prime days of stop breaking with hall gavett you know i could get on a plane and go to say edinburgh where the well home of lots of investment trusts and they were all around a place called charlotte square and so you could get the early morning plane have your first visit at six at nine o 'clock and walk your way around charlotte square guaranteed you get at least a couple of orders you know have a drink at the airport and go home the same day.

12:22And they were all generalist funds. None of them were mining funds. And so, you know, you couldn't do that now. I mean, the whole background is different.

12:32Trevor Hall: Yeah. So you've seen periods of extraordinary strength in precious metals, but investor enthusiasm in mining equities hasn't always kept the pace. And I may, perhaps it seems like that's where we're at right now. It is exactly where we're at. So there's an underlying disconnect in here someplace. And a friend of mine, actually, a number of years ago, when we felt a bull market kind of brewing up in this metal space, he said to me, maybe this is one of those cycles where the metal prices rise, but the equities don't. And I guess there's an argument there that that maybe has been the case. But there's still a disconnect there.

13:22Trevor Hall: So I'm just kind of curious, have you ever known, has there ever been a similar time where that disconnect's been prevalent as well? Not for me. And I would say it's why I'm still working at my age because it's so intriguing. You know, we're finding lots of undervalued companies, but I think we're cognizant of the market which doesn't really want to respond to them. and I could take the argument a stage further that if you go back in December I set up a fund management group in 2002 when the copper price went to a dollar a pound and a dollar a pound no one made a penny out of copper and I was working for Invesco in those days and I was thinking of setting up my own mining fund and I did a little survey of the half a dozen biggest consumers of copper and I said you know, copper's a dollar a pound now, what do you think it'll be next year?

14:17All about 90 cents. So I said, you realize no one's making a penny yet. So I said, why if they're not making money now, are they going to lose even more money in a year's time? And there was this tremendous naivety. Well, of course, they've got to keep it open. I said, no, they've got shareholders that don't want to make massive losses. They can close them down. And although I wouldn't compare 2002 and two with metal prices now, I would tell you that there are no new major base metal producers on the horizon. Because if you look at, say, the porphyries in South America, nowadays, if they found one, it would cost five or 10 billion US to develop.

14:57And that money, I don't think is available. It's available possibly to Rio BHP. But they know Rio's have got the big development in Mongolia, but it's not the norm. So I think we are in very unusual situations, which makes me bullish, perhaps for the next three years. But short term, you know, it's very hard to be confident because markets generally, I think there are more people who are cautious and bullish. And the only bullish people are longer the high-tech sector in America. And we were speaking in the office this morning and look at the S &P. The S &P, I don't know, is 8 % or 9 % up during this year.

15:40But nearly 80 % of the stocks are down. And so that top 20 % has carried the whole market. So I tell you that there's a soft underbellish in the market. So I think there is an air of anxiety, which is not really being manifested. People say, oh no, the indices are all through the roof. But the indices aren't necessarily representative of the market as a whole.

16:01Trevor Hall: Yeah, it's an interesting quagmire where the market will go out and finance, you know,$50 billion of hyperscaler CapEx data centers, but$10 billion for a brand new copper mine. No chance. There's no chance. Is that just due to the, is it more of a risk appetite? You know, obviously mining is a risky business. But you can make the same for a data center hyperscaler build out. What happens if this thing dies? I think most of the money that goes into that sector is in America, you know, based in a free enterprise. And with sort of people like Elon Musk, who tells tremendous stories, you know, gets people worked up as to how the future will be.

16:45And, you know, these guys are geniuses, but, you know, the genius is in the price. and when you hear of Anthropic that's going to come onto the market with a$2 trillion market capitalization, it's very hard to see how they're going to justify it, certainly in the shorter term in terms of earnings. So it's really a quest for the future and you can take that argument a stage further, certainly in terms of energy. They're hugely consuming of energy, these companies, but where's the energy coming from? We were having huge troubles with supplies of oil, gas. America's got it, but the rest of the world certainly hasn't.

17:27So you can see a real dichotomy of opinion as to those that are bullish and say it's going to carry on on those who are perhaps much more cautious and see a sort of inflection point arising at some stage.

17:41Trevor Hall: Right. Well, institutional capital used to play a huge role in the financing of building out not only mines, but obviously exploration development. Has the structure of the investment industry fundamentally changed over the last number of decades? Can you break that down and kind of give us an example there? I mean, a lot of people would disagree with me. I think one of the biggest influences is hedge funds, because you never know how much influence a hedge fund will have. Some people say it's as much as a third of all turnover. And I set up and eventually sold a closed-end fund business, and I sold it to a hedge fund group in 2008.

18:21And they were worried the pressure was on hedge funds in those days, and they wanted some diversification. and I knew nothing about hedge funds. And so I moved into their office and I'd sit with some of these guys and they'd be transfixed in front of a television screen. Well, 12 screens. And those were divided up. And every now and then a buzzer would ring and that would polarize their mind. And then another buzzer would ring. And then if the third one rang, that was a trend developing. And they'd follow that trend dispassionately. And I think that's why perhaps, you know we're not seeing this great um investment in the mining market it hasn't attracted interest from the hedge funds now i can't quantify that a third of the business is done and people will almost certainly disagree with me but they are a massive influence and they're not necessarily governed by fundamentals they're governed by momentum that's how they're they're they're they're driven by the movement of sectors and individual shares.

19:22Trevor Hall: Well, the momentum in mining equities, most of the time would be predicated, I would say, A, on the metals price, and then B, on some sort of catalyst news headline. But that would be more, you know, specific capital that's focused on, as I said. Yeah, and perhaps you would look at each country now, you know, I almost cut my teeth in Australia. and if you go to Perth, Western Australia, the mining market is everything. They have just about every single material, including oil and gas, they have it in Western Australia. So the market's geared to that sector. So everybody will be a trader or a dealer in that sector.

20:04But if you go to London, as I said before, we don't have our own mining sector per se, so we're either in or out of the mining sector, but not because those companies are at home. And I think the biggest sort of irony, and it's only just changing, is America, where it's been impossible under their rules to have exploration companies quoted. And NASDAQ are just beginning to put in, I think it's the third board, where exploration companies can be listed. And that's probably Trump who said, you know, who never realized what the form was in the first place. But it seems to me that, ironically, the home of free enterprise didn't have a mining market.

20:47And so it was Australian entrepreneurs, Canadian entrepreneurs that used to go around looking. But it is changing. And if I were 50 years younger, I'd be paying real attention to the American mining market. I think it could really burst into life.

21:02Trevor Hall: Yeah. Is it one of your favorite jurisdictions? It is. But as I say, I don't really do much work in it now. Yeah. Is the market itself, the exchange and acceptance better, or is it more - Well, it's changing. But a lot of the discoveries made in America in the last few years have been, as I said, by entrepreneurial groups from Australia or Canada. But now that the rules are changing and that you can quote an exploration company on an exchange, albeit the third NASDAQ exchange, it's only a question of time before that market really develops. And of course, you know, the biggest gold mines in the world arguably are in America.

21:45And now that there's a lot more exploration work being done there. So I think America could be very influential in the mining market in the years to come.

21:54Trevor Hall: Yeah. Well, I do think, listen, for all the criticism that President Trump and his administration receives on a daily basis for numerous reasons, I do think what they have established for the mining sector in the United States has been a net positive. Oh, it is. And I'm not just saying because I have capital, my own capital there and invested, but just for the general growth in the supplying of resources for the American market and industry is going to pay dividends. And I think that's very much still underappreciated because we get headlines of chaos instead of, you know, continued growth and movement towards industry.

22:35Trevor Hall: And it's not just mining. A lot of heavy industry and manufacturing probably feels the exact same way. It's just kind of subdued from other headlines. I do want to ask you from your perspective, and if we can focus mainly on exploration development companies, you know, how has your due diligence and your research changed? Do you focus more on people and management before the rocks, or do you put the rocks before the people? What's the checklist look like for investment? A lot more. I mean, and I'm far too old to go on these trips with someone like Simon Catt that you mentioned. He spends a lot of his time going to sea mines in Australia.

23:18In America, he's been to America and looked at one or two of the emerging tungsten mines. And I think people now are far more thorough in their outlook. Because as I say, when I started, there were hardly any people doing research in mining companies. So you go and see a mining company and used to take really what they said as the gospel, whereas now you probably gauge it for yourself. And one thing I've noticed, which is quite sad, I think, if you look at the average piece of research on a mining company from a broker, it very rarely mentions where they see the commodity going so you'll find a myriad of of buy recommendations for gold but it doesn't tell you on what basis they're they're basing that you know so i mean we've had for over 5 000 of the gold price we're 4 100 now um and really i i think the research should be as much based on what they think the metals are going to do over the next two or three years yeah and of course none of us know yeah

24:22Trevor Hall: well there is a power listen i think most a lot of the focus has been on precious metals and base metals for so many years but up until recently we're starting to now for lack of a better term the critical metal space the the rare earths and some of those very specific niche metals is coming into, in vogue, I guess you can say. Is this cycle recognizable? Have you seen these rare earth cycles? And what's made it unusual is that a lot of these commodities, the rare earth commodities, controlled by, sorry, controlled by China. And China's best friend, of course, is China. And so they, you know, if they need it themselves, they'll limit any export.

25:11and we've seen that in tungsten. Tungsten of all the commodities had the biggest rise and virtually held all the rise because China won't release any to the free world. So we're getting a plethora of exploration companies that are on the look for tungsten. So certainly in our office, we've been trying to find situations that are going to benefit from this in the fullness of time, but I would say that's one of the big changes. China has been very instrumental in backing other companies, certainly in Africa. They own a lot of African mining industry. I think they just about precluded from Canada, but they are a huge influence, especially in rare earths and rare metals generally.

25:58And I think Trump has realized this and tried to get them to open the supply gates, but I believe the Chinese tell you one thing, but they don't necessarily do it. So that's been a big change. As the advance of the high-tech sector has taken place, there was a demand for commodities, you know, metals, rare earth, we wouldn't have spoken about really 10 years ago. Was there ever a time you spoke about rare earth exploration? Very, very rarely. Very rarely.

26:25Trevor Hall: Maybe that's more emblematic of the technology advancing. Of course. And the demand. for it. Right. And it's not going to go away because, you know, that age is with us now for the future. But there still feels like there remains a gap on the supply chain for, for rare earths. And I mean, full transparency, I'm, I'm on a, uh, I'm an independent board member of a rare earth exploration company, but there is, you know, there's a lot of, there's capital that's moving into the exploration development of projects, but the processing and fine tuning to the final product is still, there's a gap there for demand.

27:07Of course there is. There's a major timescale.

27:09Trevor Hall: Right. And I think that's one of the, again, what we're seeing in the market at the moment is that, I said before, there are a lot of really exciting exploration companies, but the institutions are saying, well, when can they be in production? And if they're in production now or perhaps next year, they'll certainly look at them. But if they're four or five years away, that, I think, brings hesitation. And, you know, it's a general comment, but I believe that's what's happening. And I think that's why some of these exploration companies that are coming up with really good results aren't getting the response that they might have anticipated.

27:46Trevor Hall: Is that because, I mean, there's also an opaqueness with the economics of these projects. We've seen a little bit of a price floor on a few of these metals, but does it need to be expanded throughout the rare earth complex to where the US government will come in and provide a floor to price? So now, not only those companies, but capital allocators can start sharpening the pencils and putting some economics on them. It's a bit of an unreal world because some of these things, I mean, you know, one of the 27 rare earths and most of us we've never heard of, but they all play their part. And of course, so that means there's really no secondary market.

28:25So it's very much ad hoc. And that's why the Chinese are such an influence because at the moment, they're probably the sole suppliers. Now, Australia, Canada, America, they're all looking for new projects. So money going into the sector, but, you know, from day one of starting it up, it's probably five years before there'd be a producer. So it's not surprising that a lot of these commodities, and I highlighted tungsten, you know, which is more, you know, a metal hardening agent. I mean, there just isn't enough to go around. And with sort of countries spending much more on defense, you know, so the demand for tungsten going into these arguments is increasing and the supply is hard to find.

29:12If you look at a chart of tungsten, it's sort of a straight line with a huge rise and holding most of that rise.

29:19Trevor Hall: Yeah. You had mentioned earlier that the capital for mining, the cycles are pretty fast. They don't last very long. I think obviously we saw it in kind of end of 2024 into 2025 and then an abrupt, seemed like an abrupt end in February of this year, 2026. We had this huge rise in the gold price. It took about 5 ,000. Right. But I'll stand to be corrected, but I think the fall in share prices is greater than the fall in the bullion price. It's sort of just a lessening of interest. Yeah. So I want to ask you if, it seems like the playbook's always the same. When the cycle begins, when the bull cycle begins, heavy capital moves into the most liquid names, the producers, the biggest companies.

30:09Trevor Hall: And then eventually starts trickling into the royalty companies and maybe the developers and then the explorers are kind of get the last leg of capital. Is that pretty much rinse and repeat for any other cycle you've been a part of? Well, you know, we didn't mention royalty companies, but I mean, they hardly existed 10 years ago. But they're really smart operators because they give the royalty. They don't have to take any of the risk, and they just lend the money and get a really good rate of return as in when the company goes into production. And they usually only lend to companies either in production or very, very close.

30:48They're not going to back a company that's sort of five years away. So that's been another major development. You know, there was one or two other…

30:59Trevor Hall: Well, Franklin, Nevada, the famous story of Pierre Lassonde. Of course, yeah. Seeing the advertisement in the paper. Yeah. Yeah. And those two were really the only two, I don't know, five, ten years ago. Now, there are probably, if I said 50 royalty companies, there are a small one set up, but there's some in the UK royalty companies, you know, and they'll back a certain company. But it's a good business. If you invested in Franklin, Nevada, you'd have made a huge amount of money. Yeah, I keep on thinking of, did you ever meet Stan Dempsey from Royal Gold? No, I remember the name of the company.

31:38Trevor Hall: Yeah, yeah, no. I saw a picture of him. He's still with us, you know, and just one of the godfathers of the royalty space. But, you know, that was a financial asset that was creatively brought on by the likes of your generation, right? And so I'm just kind of, you know, it makes me wonder, okay, if we can continue to evolve and figure out new business ventures and assets within the space, what's next? You know, is there, you know, and this isn't necessarily a question as it is just a statement, but there's probably some other creative ways that will continue to evolve this sector one way or another into other assets.

32:20Trevor Hall: If it's got to be just the actual metal or an actual equity, what potential could be next? Well, it's not necessarily the answer to your question, but I would point out, if you take the major companies, Rio's, BHP, Glencore in America, Barrack, Newmont, they have immense balance sheets. A lot of the gold companies have billions on their balance sheet. So I think the next influence is that they will be buying. There'll be a lot of corporate activity. I expect a huge amount of corporate activity next year. Because, again, as a generalization, mining companies aren't particularly generous in paying out dividends.

32:56Trevor Hall: You don't say. Yeah. But they're pretty smart operators. So, you know, they can see these emerging mining companies which might struggle to raise money. At the moment, it's been relatively easy, but it's getting harder. Yeah. So I think a few of the major mining companies are absolutely rubbing their hands in anticipation of doing some pretty good deals. Yeah, but they're not blowing out and doing silly deals like they did late cycle 2011. They don't have to, no. Is that a lesson learned from their mistakes? I think so, yes. I think they got carried away a bit. Yeah, but we have seen, I mean, you're right, the dividends isn't anything like earth shattering.

33:36Trevor Hall: You know, like, you know, I'm not retiring based on my dividends that I'm getting from mining companies by any means. but they are moving that direction. They're allocating capital to share buybacks. There is a little bit, there has been ideas that maybe even that's gone too far. Well, if I take what was the biggest mining company, it was then RTZ, and the firm was an assistant to a director, so I used to know what was going on. And if you go back to perhaps the 70s, early 80s, they had huge exploration teams of their own, and then they worked out that probably if they had a very small team of experts in St.

34:17James's Square, they could let all the other people do the work for them. And if a really thing came along that was obviously made a major discovery, they'd go and buy it. So it was rather, I think, rather shrewd of the big mining companies. They still have exploration teams, but they're much smaller than they used to be. And the exploration teams, as a generalization, are looking to see what other people are doing. And if there's a really undervalued company emerging, they'll probably have a go at it. And that's what I think will happen next year.

34:47Trevor Hall: So you think they will start allocating, there'll be some more M &A from the majors acquiring developers or early stage exploration. And why next year? Can you give me the framework of why you think next year is going to be the... Well, only that we're... I mean, a lot of people share my view that you can never put a time on it, but the current level of base metal is probably fair, but there are no new significant ones coming. Lots of smaller ones, you know, doing 10 or 20 ,000 tons of copper, but none of these huge South American porphyries that are doing hundreds of thousands of pounds of copper.

35:26So it's a world where the majors can afford to sit back and watch what's going on. And as I say, unless you think there's going to be a recession or worse, a depression, I think they'll work out that the time is right for them to spend some of their balance sheet.

35:43Trevor Hall: Yeah. But those projects remain very expensive, and we had a conversation about where the risk capital is. Well, mining companies as a whole are coming up with pretty good figures. You know, if you look at the three I've mentioned, they're all pretty good figures. Some have different emphases. We've seen Glencore is just listed in Australia, and I think probably quite a smart move because although every country has its woke attendees, as it were, but Glencore have worked out that whatever is said generally, coal is here to stay, certainly for the future. So they did a huge bargain buying a lot of the coal assets out of Anglo-American.

36:27They've got big assets in Australia. I think Australia will appreciate Glencore perhaps more than we have over here. so um yeah i mean it's always a changing market but it's you know i i think if you keep on your toes there's going to be a lot of money to be made but perhaps not necessarily in the way next year you know if if the u.s dollar stays in decline and um and people get less convinced that the u.s dollar is the world's reserve currency who knows what effect it'll have on precious metals

37:02Trevor Hall: Yeah. I want to ask you about uranium. Can we talk about uranium? We can. Yeah, I actually set up, when I had my fund management group, I sent up the world's first uranium fund. And a great friend of mine named us, we want a good name. He said, well, let's call it Geiger Counter. Yeah. And it became synonymous with the uranium market. And we were the first people to really embrace it. And I managed to put performance fees in the M &A. In the first 18 months, I think we got, I think, at least three performance fees. So it was an absolute money spinner. And then, of course, it peaked. And then the debacle happened in Japan.

37:43And again, we all get things terribly wrong. I looked at what had happened in Japan, and I thought it was a triumph because the plant was built in 1980.

37:53Trevor Hall: And so I said, well, no one's actually died. You know, they responded pretty quickly and they've closed it down. And I said, you know, there are no 1980 Toyotas on the market. You know, they've gone. But what I underestimated was the Japanese psyche. They saw it as a disaster. So my opinion was worthless. So that was a period when I got the uranium market very wrong. I thought it would recover pretty quickly. And it's only really in the last year or so the Japanese have gone back to uranium, mainly because what else have they got? You know, they're big importers of energy generally. Well, the sentiment uranium is net positive over the last five years.

38:33It's hugely positive, but again, it's this anomaly. The uranium shares haven't really responded. If you look at the major ones, Kamiko and Denison in Canada and some of the other ones in Australia, they're okay, but you wouldn't have made the money you might have anticipated. And I think most people... And the other thing that really perplexed me, when the situation arose in Japan, it was always an absolute disaster, you know, then Liverpool and them again. And it was like, of course, technology hasn't moved on since 1980. And the major change in the uranium industry is the recycling of spent uranium.

39:10It goes back in the system and it's used, I think, about 10 times. So what comes out is a fraction of what used to, perhaps more concentrated. but it's much you know the technology has improved enormously it's a different uranium industry to one in 1980 but people haven't really appreciated that mainly because it's not

39:32Trevor Hall: that widely covered market yeah well it's there's also some similarities in the uranium market like there is say in the gold market where uranium made this huge run up recently to like you know 120 a pound and sent 90 basically a pound right now but the equities are trading trading like that's back to$30 a pound, right? Well, it's not that low, but it's, and there are a lot of people who've taken a sense of appraisal of the situation. And America, you know, is, I think, is stepping up on its program of building nuclear-fired power stations. We've got a couple coming in the UK. Yeah. In countries like France, most particularly Germany, where the Greens have outlawed anything to do with it.

40:13And, I mean, basically, you know, I would argue it's a safe industry. and Chernobyl. Well, that was Russians. And all programs we've seen on Chernobyl, there was a gung-ho attitude, which there wasn't in Japan. And then there was virtually no mortality after what happened in Japan, but they saw it as a disaster. But it was the worst tsunami in living memory. You know, I mean, the damage it'd done everywhere was huge. So, you know, it closed the power stations, but there wasn't a huge release of sort of spent energy, as it were.

40:51Trevor Hall: Yeah. So I co-host another podcast called Going Nuclear with my co-host Justin Hewn. We just talk about uranium and nuclear energy and kind of this early days, maybe perhaps it's a renaissance of nuclear energy early days. But I think what's happening, but it's a little bit concerning from what I stand is obviously sentiment has improved in nuclear energy and the need to produce more uranium to feed, you know, to provide the feed for the energy. but it almost kind of feels like it's like a railroad boom in so many ways where you have all these independent small modular reactor designers and each of them has the best type of design and capacity to provide that energy.

41:39Trevor Hall: But there's so many of them, it's still, it's hard to decide, okay, we don't need a hundred different types of designs and models, but how do you kind of funnel out the winners from the losers? Well, I think the biggest development has been the realization you don't have to build a monster nuclear power station in the first place because you can modularize it. Right. So you'll build a smaller one, and when that's up and running, you can add the next plant on top of it. And that was never done, say, back in 1980. So it's like anything else. Technology changes all the time, but there are certain sectors that the market is very slow to embrace, and uranium is certainly one of them.

42:20Trevor Hall: Yeah. So if you look ahead three to five years, I'm still going to assume you're going to be working. You're not going to retire. Well, I regard it as my hobby as much as anything. You don't work a day in your life if you love what you do. But where do you see the greatest opportunity as a resource investor today? What's really going to play? I would say the base metals because I don't see, I can't see any major new copper mine on the horizon. I said before, there are a lot of smaller ones, but if the economy, if we get over the current sort of lack of enthusiasm about world economies generally, and we come out of it with growth being established, where are those base metals coming from?

43:04Trevor Hall: Yeah. China doesn't have any major copper mines. A lot of copper coming out of Congo, but that's always a law unto itself. Rio's have got this big one in Mongolia. But the traditional hunting ground, South America, that money isn't there to spend, as I say, five or ten billion on building a new major mine. Yeah. The Chinese moving into Africa, it's been a real center stage for production. I used to be very connected with Zambia, and they're in Zambia with a vengeance. It's not always to the advantage of the locals, because very often they bring their own workforce. And that workforce might well be people who have taken out of prisons.

43:49I mean, I'm sure a lot of people won't agree with me, but you can see it firsthand. They're not necessarily a great friend to the country concerned. They tell a good story. we're going to help you develop this but they keep control of it all and very often they bring

44:07Trevor Hall: their own workforce in so i asked you the greatest opportunity you see on the flip side of that what's the biggest risk you see for the mining sector in the next five years perhaps the economy is not picking up setting off the recession going into depression you know it's you know i'm not forecasting it but there are a lot of similarities about what led up to 1929 it's always different per se, but, you know, UK, Europe is hardly a growth area anymore, which it was going back 50 years or so ago. You know, America, the economy looks good, but is it that strong? I mean, it's fairly sort of sporadic in areas.

44:48What's the best economy in the world? China. Who's China's best friend? China. you know and they I mean they're producing pretty reasonable cars at half the price that Europe can produce them you know they're putting putting special taxes on them but it's it's a worry yeah

45:11Trevor Hall: yeah if if you had half a billion pounds to go and start a new fund today where would you allocate that? Well, I wouldn't be clever. I'd buy the majors. I would buy the Rios, BHP, and Glencore, and one or two others because they have the assets. And if you try and second gauge the market, the institutions will initially, if they come into the market, will follow the big ones, the big producers. So if you're setting up a big fund now and it had to be invested, you know, a lot of people would keep the cash, but if it had to be invested, I don't think you'd be very brave. If I was doing it again, I wouldn't be going for smaller exploration companies, even though they might represent the best value.

46:01All the time we try and second-guess the market, what our individual opinions are, it's not really worth very much. Where is the big money going? And I think that's where it will go. And we did see it for a while. I mean, you know, Rios and BHP are both about 15 % off the top, but that top was, you know, it was a big level. You know, Rios went through 80 quid, and now, what, it's 72 or something, and same sort of percentage with BHP. Yeah. So you can move them, you know, if the big money goes in.

46:34Trevor Hall: Is there hope for the London Exchange and the miners? Well, we still manage a lot of money. Yes. And a lot of Canadians come around, this Michael Gentile thing, you know, they wouldn't come over here unless they had a receptive audience. And the answer is yes. Perhaps it's quite hard to portray it at the moment, but there's probably more entrepreneurialism in the city of London than anywhere else in the country. So the answer is yes. Thank you so much for your time. It's great to sit down with you. It's been a real honor. I'm so glad Simon could make the introduction. And hopefully we can maybe do it again even next year.

47:17Trevor Hall: Sure thing. Yeah, yeah. Yeah. What's on store for LME week for you? You have a lot of meetings and seeing friends? No, we've had, funny enough, it brings a lot of mining companies over. So we've had a plethora of mining companies into the office. Oh, yes. So, I mean, probably, but we're a small company, you know, there's Simon and Charlie Catterbrooks, and then three or four of us that are sort of, and I'm in the twilight of a career for obvious reasons. but we don't necessarily have the personnel to spend the week at the AME conference. So we'll get the feedback from what's going on. Again, it's only an opinion.

47:56Any of us can only express what we think might happen. Do we know? I don't think so.

48:01Trevor Hall: Yeah, well, and being okay with being wrong is also a strength and a talent. It's something that we all need to learn, like it's okay. Well, you have to, if you run funds, you certainly aren't going to get all the stocks right, that's for sure. Thank you so much for your time. It's really good to see you. All right, that was Richard Lockwood, everybody, with Arlington. We'll be covering more here from LME Week. And special thank you to Tara Hutton for their support of this podcast. They do make the invisible investable. We'll have more here in the next couple of days. The information presented should not be considered investment advice.

48:39Trevor Hall: Mining Stock Daily and its affiliates are not responsible for any loss, arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.