The Mining Exploration Boom Has Barely Begun | Major Drilling

0:04Trevor Hall: Good morning, everybody. Happy Friday. Welcome into Mining Stock Daily in our long-form episode here to wrap up your week this week, get you into the weekend. We got a pretty interesting episode. Actually, we're not going to talk specifically with an explorer or a financier. We're going to go straight to the drill rig with major drilling and my friend Ryan Hanley of the company. not necessarily talking about the corporate makeup of major drilling, but really what they're seeing with their position within this market right now in exploration and mining. There's a lot of really great insights here that Ryan explains that they're seeing from the drill rig and then their work on the global scale on the producer side, the major producer side, and then also the exploration side.

0:52Trevor Hall: So a lot of great insights here. Special thank you to Integra Resources, Visa Silver, Revival Gold, and Equinox Gold for their continued support of Mining Stock Daily. And also a big thank you to Terra Hutton. They help make the invisible investable. If you have not gone and checked out the platform that they are evolving with and creating there, please go visit them at terrahutton.io. It's very cool what they're doing. As I mentioned a couple of weeks ago, I got a little glimpse into it and it is very awesome. I'm just incredibly engaging. Anybody can make sense of it. So go visit our friends Tara Hutton as well.

1:31Trevor Hall: Okay. A unique conversation with Ryan Hanley from Major Drilling. I hope you enjoy it. I will be reporting from LME week in London next week. Ton of long form episodes in a schedule for that week as well. So more to come there. All right, everybody. Here's my friend, Ryan. Welcome to what's going to be a very unique, probably first of its kind conversation here on not only Mining Stock Daily, but specifically on the long form here episodes that we publish at the end of each week on the channel. Most of the time we're covering exploration results, right? What's this latest company? What they've been drilling?

2:09Trevor Hall: What's the grade like? Is it economic? Where are they at in their development plans? But never, ever, ever have we actually spoken to a company that actually supplies not only the drills, but the drillers. And we're going to do exactly that today with my friend, Mr. Ryan Hanley, from one of the biggest and best drilling companies out there in the world, I might say, if my editorial lies, major drilling. Ryan, good morning. Welcome to Mining Stock Daily. Good morning. Thanks for having me. Yeah. Listen, this is a unique beast for me. So I tried to do as much preparation as I could for this discussion, knowing it was going to be a little bit of a curveball for our listeners.

2:52Trevor Hall: But I do think there's going to be a lot of value in the conversation to get the perspective of a drilling company, the drilling platform, and really this unique position that a company like Major and your peers kind of find itself in in the exploration and mining sector. So before we dig in, you have an extensive history in capital markets. Maybe guac us through, you know, you are a big shot in Toronto. Like people know who you are. I don't know about that. Toronto's a big city.

3:25But no, to your point, I've been around for a little bit, probably going on, what, 16-ish years now? I started at the best time ever, right around the financial crisis. So I kind of started at, see, the old started at the bottom. And yeah, so I started mostly brief stint in banking, but more so equity research. I worked at a firm here in Toronto called Research Capital. I was there up until 2017, covering everything from kind of working as a two-person mining team with a former colleague of mine. We covered everything from the big guys, the barracks, the new months back when Goldcorp was around, Agnico, all the way down the food chain to the early stage Exploricos.

4:12And then from there, went over to help build up the mining platform at Laurentian Bank. It was a Montreal-based bank. Now, I think it's been acquired now or about to be acquired. But I worked over there, kind of did the same thing. Covered everything from, I'd say, more mid-tiers all the way down the food chain. and then as part of the sale, Laurentian got out of capital markets and then I found myself trying to figure out what to do next and I think that Major Drilling was, it was a company that I covered, I should have mentioned I covered all the drillers as well so just about all the publicly traded drilling companies I had under coverage so I covered Major for about 12 years as an analyst and it was my top pick for the last couple of years at Laurentian, I've known the crew for a long time great group of guys, great company, great way to play the mining sector.

5:02And it was just a really good fit just to go help them get out there and tell the story more. It is publicly traded. Ticker symbol is MDI, Mike David India on the TSX. But there's not a whole lot of publicly traded drillers or service companies. So I think it was a little under the radar. And so there's an opportunity to go over and help on the capital market side. And that's what we've been doing since I joined, uh, basically end of August or call it labor day of 2024. Uh, and we've just kind of been out on the road and getting a ton of interest just given where we are in the market and all that.

5:38So that's, I guess my, uh, my career in a nutshell so far. All right.

5:42Trevor Hall: So you are currently the director of capital markets for major drilling here, Ryan, maybe walk through your response, your responsibilities. It's more on the, more on the marketing, the equity approach to the market. Yeah. Yeah, for the most part. I mean, it's kind of, it sort of varies day to day. It's a bit of a kind of unique position in that there hasn't been a capital markets role at the company in its history, despite it kind of being around for 46 years now, about 30 and change as a public company. But the role itself is kind of, it's sort of mixed. There's a lot of things on the capital market side.

6:20So essentially call it anything to do with the fact that we're a publicly traded company. So dialogue with our major shareholders around the world, doing a lot of outreach and marketing, things like that. It really helps having covered it for a long time. So it's a bit of a unique perspective, kind of speaking on behalf of the company, but also being able to tackle a lot of the modeling questions and sort of answering things from the perspective of an analyst as well. And that's really helpful in dealing with the guys that cover us. So we've got five brokers that cover us right now. So having sat in that chair for a long time, it kind of helps out a bit there because I can see it from their perspective.

6:57So a lot of the buy side, kind of sell side interactions from that side of things. But given I spent so much time in equity research, at one point or another, probably covered about a lot of the guys that we currently drill for. So there's a bit of a business development angle as well. We don't go out and say you have to use us, we're the best guys in the world or all this. It's not a salesy job. It's just more of a, hey, we're out there. If you're looking for a contractor, just let us know. We'll send you a bid. And if it makes sense, then great. If not, no worries. But a lot of these guys I kind of grew up with and some of them that started in corp dev or whatever role have now gone on to lead junior mining companies or they've all kind of scattered around the street.

7:40So it's kind of being an extra touch point for a lot of our clients as well. So that's another part of it.

7:44Trevor Hall: I do kind of want to go back. I want to dig into the analyst aspect of, you know, when you were back working for Laurentian and the others and analyzing these drilling companies, excuse me. You know, the one differentiation between analyzing a drilling company, a service company, and one of expiration filled with hopium and speculation is actually cash flow, right? Yep. So, you kind of have to remove the speculation from the analysis, right? If you are actually working with a company that provides a service and has real cash flow and money coming in the door, out of the door. I mean, it's very much a different beast, but does it make it easier or harder in your analysis?

8:28As an analyst, this is probably, I mean, I want to say it's the easiest company to build a model on and sort of kind of follow from that perspective. Because you're not like, you don't have to be a geologist. And even like, obviously the geos aren't always successful because otherwise every junior mining stock would go up 10 X. But, you know, like you remove a lot of the geological risk to your point. It's a nice, you know, self-sustaining company with the amount of cash flow being generated. So it's not reliant on, on capital markets. And in fact, I think it's been 15-ish years since we had to do an equity raise, which is never kind of a good point when you're talking to bankers, but it's good when you're talking to investors.

9:07So it's pretty, pretty different in that perspective. I'd say from the analyst side of things, it's a very straightforward sort of business model. Financials are a lot easier to understand. There's nothing complicated in there. The only real challenge with it is trying to forecast the key drivers, which are margins and revenue. And that is because it's all contingent on what senior mining companies want to do, the junior financing market. More so seniors, it's about 85 % of our revenue last quarter. but you know it's kind of you're trying to take a guess at what their budgets are going to do and logically with commodity prices being where they are I would expect them to keep moving up but by what order of magnitude and where are those dollars going to be allocated geographically into what projects and there's a lot of unknowns in there but on the flip side you know you don't have the risk of trying to deal with the operational challenges of a mine site whether that's again, geotechnical stuff, geological stuff, all that kind of stuff, grade profiles, CapEx profiles, all that kind of stuff that gets a lot more challenging to model and sort of estimate.

10:15All that's not part of the equation, but it's just really trying to figure out exactly how busy a lot of these mining companies are going to be on the exploration front and where that's going to happen by geography. Yeah.

10:28Trevor Hall: And I'm really hoping we can spend a lot of this conversation kind of going over what the signals from the drilling companies, what it represents for the exploration market itself. And if that's represented in just the news headlines coming from a company like Major, maybe it's the financials what it represents. You know, so maybe let's get that, maybe that blanket, that 30 ,000 foot view of why it's important to at least have some sort of understanding of specifically the publicly traded companies, the publicly traded drilling companies, is it important to maybe keep some sort of finger on the pulse of their news and the activity of which they are hired to do work?

11:15Trevor Hall: And how does that make any sort of representation of where we are, not in a commodity cycle specifically, but like the exploration sector here, Ryan? Yeah. So, I mean, for us, we're a little bit of a lagging indicator. so like you'll see our share prices moved up but not by the same amount that a lot of the you know producers have and definitely not the same amount that the junior miners have because essentially the way that it works is that as commodity prices go up you know the seniors get increased you know cash flow free cash being generated pretty quickly with the increased commodity prices then there's a bit of a lag before the equity window opens for all the juniors to go out and raise capital so given that there's that lag for both the seniors to build up cash typically they set their budgets on an annual basis.

11:58They're not too agile with them. But it takes a bit of time for them to build up that cash, increase their budget, go out and select a drill contractor, you know, start a new program or expand a program, and then for it to show up in our numbers. So because of that, like you'll start to see a bit of an increase, but where it gets a bit more interesting in terms of trying to get a sense as to what's going on in the market is more probably some of the commentary in our press release and on our quarterly calls where we discuss more of the outlook. And that can give you a bit of an indication as to, you know, what we're seeing in terms of where we're preparing for more growth.

12:33Is it with, you know, senior companies, junior companies, what commodities, what geographic regions, you know, maybe there's a new region where we've got a major that's looking to add more rigs in a certain country. Maybe it gives you a bit of a hint that, you know, the seniors are starting to take that part of the world a lot more seriously. Maybe it makes some sense to sort of brush off on your, your projects in that area just to see what else is out there. Um, maybe there's, you know, if they're, if they're going into, um, uh, a country that has been off the radar for a little bit, then, you know, maybe there's some juniors in there that could be MNA targets for them.

13:04So that might give you some ideas. Uh, there's a couple of different ways. I'm kind of going back to my analyst hat on here, but, uh, there's a couple of different ways to look at it, but, uh, in terms of the actual operating results, they typically trail the exploration budgets of the seniors and the financing window of the seniors. So we're only really starting to see the benefits now. So for us, I mean, we'll get into this, I'm sure, later. But from our perspective, I'd say we're in the pretty early parts of the cycle. We're only just starting to see increases in exploration budgets now.

13:36Trevor Hall: Interesting. I did want to ask you kind of from your chair exactly where are we in the cycle? And if we go back, if we go back six years ago, Ryan, 2020, you know, we had obviously beginning of COVID, we had a rising gold price, IPOs coming, you know, off the shelf. I've told the story so many times that the amount of paperwork, IPO, new listing ideas I had on my desk should have been very much a signal to me that we had reached the top. But at that time, going to 2020, 2021, what I was hearing specifically out of my colleagues in Nevada, that you couldn't find a drill rig. It was just boomtown for drilling companies in the Great Basin of the United States.

14:22Trevor Hall: And now, obviously, there's a lot of exploration work and drilling going on back in the Great Basin now. But I'm not hearing the exact same signs as it was, say, five years ago, Ryan. Um, but does that, what kind of like a signal does that say when, you know, you know, plebs like me are hearing there's no drills available? Yeah. I mean, right now I'd say we're very busy in Canada, the U S but maybe to take a step back and walk you through where I think we are in the cycle, um, to your point, you know, speak more to more to gold. I should say, just to kind of get this point out of the way as well, as a drilling company, for us, our job is to provide the drill core to the geos, to the mining company.

15:04So we're very commodity agnostic. From a high level, it's the same rig. We get this question a lot, so just to sort of throw it out there. It's the same rig for a copper or a gold or uranium project. If, you know, somebody's looking for a copper in Nevada or Arizona and they wrap up that program and there's a gold project next door, we just drive the rig over a couple miles down the road and keep going. So we're not picky in terms of commodity. But that being said, I'll just use gold as a bit of an example because it is the bulk of our revenue and kind of the bulk of, I think, the overall mining market.

15:37And when you go back to your point to COVID, when the gold price first went up, you know, you would think that a lot of these guys would start spending more on exploration and all this kind of stuff. But you have to keep in mind that inflation went pretty wild. so a lot of these producers also happen to be either building or expanding projects at the time there are other things going on or even just operating a mine the cost of you know labor and reagents and like everything kind of going into a mill or like your your fuel like a ton of stuff just uh went up so the actual margin that a lot of these mining companies were making didn't really expand that much uh so they weren't really generating that much more free cash then when you kind of fast forward into call it 2022, when all the inflation subsided, call it 2022, 2023, a lot of the mining companies out there were then focused on balance sheet repair.

16:25A lot of these guys really levered themselves up at the peak of the last cycle back in 2011 or 2012. They've been sitting with a lot of debt on the balance sheet throughout that whole downturn. And then the focus became, okay, all this extra free cash for generating, we got to pay down debt. So that was really the focus there. And then when you get into 2024 and kind of 2025, then, you know, the balance sheets are kind of getting back to a nice, much cleaner position. And then a lot of the conversations turn to shareholder returns. And so you saw the initiation of dividends with some companies, buybacks or increases to either or both of those.

16:57That was kind of more of the focus. And it really hasn't been until I would say the end of last year, early this year, when going to a lot of these, you know, conferences, whether it's PDAC or, you know, we're just talking about Denver Gold a minute ago there. A lot of these, like now these companies are talking more and more about growth. And it's a bit of a focus on organic growth. And so when you look at global exploration spending, this is stuff that S &P puts out every year, usually, you know, the early calendar year, they put out their estimate for total global exploration spending budgets.

17:29And from 2021 to 2025, budgets globally were pretty flat. There wasn't really much of a change, Again, because of battling inflation at the beginning and then balance sheet repair, shareholder returns, all that, there wasn't much more money being allocated to exploration. When you fast forward to calendar 2026, if you go through everyone's sort of year-end results and forward-looking guidance that comes out in usually February, sometime right before PDAC is when a lot of guys like to get their year-end results out. There's usually in the guidance of a lot of these senior mining companies, there'll be a line item for exploration expenditures.

18:05And if you look at what they've outlined for 2026, on average, budgets were up somewhere by 30 to 35%. So using Barrick as an example, their exploration budget was up 35 % for 2026 year over year. So that's a pretty nice, nice increase. Now, are they going to spend every dollar? Hard to say. You know, where is it going to go? I think four mile for them is a big one. We're one of the drilling contractors there. But we're starting to see it, you know, in our results as well as a lot of these programs are either being initiated or expanding. And that's why you'll see last the last quarter that we put out, we had record revenue.

18:41So it's the highest quarterly revenue that we've had in our 46 year history. And it was up by about just over 22 percent year over year. So we're starting to see a lot of the benefits of these bigger exploration programs. But again, it's really only 2026 when we saw these big increases, which, you know, leads me to believe that we're kind of early in the cycle. And maybe just to give you some more, just throw more numbers at you, for calendar 2025, global exploration spending was estimated at$12.5 billion. The peak was 21.5 that was spent in 2012, and that's not adjusted for inflation. so if you there's a really good slide in our presentation if anybody has uh time later and encourage you to go to our website and look at our our deck um but there's one uh slide i think it's slide 11 in there um that outlines global exploration budget since uh 2003 and so i would argue that if you adjust for inflation we're probably kind of looking like we're the global exploration budgets are comparable to where they were at the beginning of the last cycle so i think we've got a lot of room to run are we going to hit that that peak that we did in 2012 I don't know about that, but I think that we're definitely in the early innings.

19:49Trevor Hall: Do you think the makeup, those exploration budgets are kind of put together differently now than they were last cycle? We see a lot of those majors doing a lot of JVs, earning agreements, kind of splits the cost there for a number of exploration expenditures. How much of that is happening now as opposed to the majors literally just writing those checks from their bottom line and doing it themselves? That's a really good point. So one of the things we've seen in this cycle over the last couple of years are a lot of the seniors are now taking equity stakes in the juniors and kind of using them as a bit of an exploration tool.

20:33I think, you know, Agnico is probably the best example of that. I'm not sure what they're up to now, but I was kind of going through some of their holdings at one point. And I think they got up to like publicly disclose there's like over 50 companies in there that they had some equity stake in. So they're probably like the best example of a company that does that. But I think it's a great way to sort of get some exposure to some greenfield projects at, you know, relatively low risk. and for a lot of these senior companies and I'll sort of use Agnico as an example again from the feedback I've heard it's been pretty positive for these juniors because you know they've got such a large technical team and guys with you know tons of experience a lot of really sharp guys over there to be able to have that knowledge and experience kind of chime in and sort of support or guide some of these junior exploration companies I think that that's really beneficial for them as well so I think the seniors using the juniors a bit of an exploration tool is is a big new theme that's come out.

21:28And really at the end of the day, one of the challenges is that we've gone through such a large, sorry, long downturn that there's really not a whole ton of, of companies out there that are attractive M and A targets. So I think you're seeing a lot of seniors use, you know, being focused on organic growth, but also using the, the juniors to hopefully go out and find some new discoveries. Cause I'm sure you've probably seen the data points or, you know, people that have been, you know, tweeting all the graphs about how, you know, there's been a lack of new large gold discoveries, new large copper discoveries, all that kind of stuff.

22:01So I think with the sharp decline in global reserves for either commodity that, you know, we're kind of due for a pretty good exploration cycle here because at the end of the day, all these companies are operating a portfolio of depleting assets. So the only solution to fix that is really exploration and that means more drilling.

22:20Trevor Hall: A lot of producers, they're finding pretty close to end of life on their assets, and that's being a little bit more difficult to replace some of those reserves. I know that's, I'm generally speaking here, Ryan, I'm not being specific, but does that show up in the drill programs that you're being asked to bid on? So I'd say there's a combination of things that happen. So on the one hand, you've got some of these, to your point, like kind of coming to end-of-life assets where they're starting to think of like closure plans and all that kind of stuff. And all of a sudden, the gold price goes up another$500.

22:54And it's kind of, okay, hang on a second. Now all this fringe mineralization is now economic. So it's - I'm saved. Yeah. And where I'm concerned, and this is as an analyst, so I'm going to completely switch off the major side and go to the analyst side, is when you start seeing a lot of these, you know, updated, you know, reserve and resource statements at, you know, year-end reserves and resources, and you start seeing PEAs, tech reports, you know, feasibility studies, all that, keep an eye on the gold price assumption because you always want to have that nice, safe buffer. And then, you know, if you start building a mine where your gold price assumption is like$4 ,000, then we're going back to like zero margin projects all over again.

23:33And then things will get caught offside when you have a slight pullback. So having that kind of conservatism in there, I think is really important. But despite that, I mean, we've had such a run in gold price that a lot of these things are now becoming, you know, a bit more economic again. So that's kind of the what would make things a little bit interesting. But yeah, to your point, I mean, given that there's just not been a lot of new discoveries, I'd say that we're getting more into what we call specialized drilling. And this is really our niche and our focus. Every drilling company has got their own strategy, way of doing things, projects that they target or try to target more, geographies they try to target more.

24:11For us, years and years and years ago, we decided that, you know, we're going to focus more on what we call specialized drilling. And what that is, is it's things that are much more complex where you're not going to get every mom and pop drilling company bidding on it because they don't have the ability to tackle that kind of work. And what I mean by that is stuff where you're in really challenging conditions geographically. So it could be like way up north in the Canadian Arctic where you're dealing with, you know, minus 50 temperatures and you got to make sure your water lines aren't freezing and just all the other harsh conditions of being out there.

24:41Could be down in, uh, in South America where you're at, you know, 15, 16 ,000 feet of elevation. You've got low oxygen levels. So making sure the, the crews, the equipment, all that kind of stuff can work in those conditions. Uh, deep hole drilling is another big one for us. We've set a couple of records for the deepest drill holes in the mining space. uh to give you an example uh we did a bunch of drilling for osisco 1.0 at windfall uh we're doing 3 ,500 meter holes and to be able to recover the core yeah exactly to recover the core and hit a target that's you know three and a half kilometers away uh without much deviation is uh like there's i don't think anybody else even bid on it i'm pretty sure we're the only ones that got a phone call and it was this is what we want to do and uh and so we had a couple of uh of crazy drill holes there.

25:26And I mean, I know you probably have a lot of listeners that are out on the West coast, but in case there's anybody in Toronto, if you go from Union Station, downtown Toronto, all the way up to Bay and Bloor, that's three kilometers. So go another 500 meters past that. And that's how long that drill hole is. It's insane when you put it in that perspective, or I mean, it's kind of like standing on the top of the CN tower and trying to hit a coffee table. It's a very, very technically complex thing. So that's really more what our focus is. and given that now as we're going through the next cycle because a lot of these deposits are more and more remote deeper at depth all this it sort of plays into our specialty so we've seen to your point of how things have changed outside of the deposits that are now becoming a bit more economic given the gold price or copper price the other thing that we're seeing is just people are going way farther out into remote parts of the world or there's programs where they're doing deeper targeting of look you know there's a drill program here back in the 80s or the 90s only went down two, three, four, 500 meters, uh, we think that the system's much deeper.

26:27Let's drill some 1500 meter holes. Uh, so I would say on average, in a lot of cases, you're seeing a greater, uh, vertical extent of, of drilling to try to uncover some of these, uh, new deposits.

26:39Trevor Hall: It's amazing. Um, you, what, you know, one of the most romantic things about this business are the guys at the drill rig who will be the very first people to ever see rock from three and a half kilometers below the earth's surface. Yep. Isn't that amazing? And like, I feel like we take that for granted. It's wild when you think about it. And I mean, you and I have been on, you know, mine sites and things like that before. And I think, you know, for the average person, uh, just to be able to wrap your head around the scale of these things, like the depth that you go to when you're kind of going down a shaft, a couple kilometers underground and like just the amount of work and technical complexity and like the scale of some of these things like it's really hard to sort of get your head around what it's like to be three and a half or getting rock from three and a half kilometers underground like it'd be the first one it'd be the first one to see it like you are like they are the explorer they are the first explorer to see that right and then praying like crazy that you see some gold in there uh so oh i mean that's over the geos, but, uh, yeah, I mean, for them, it's, and like, you have to keep in mind too, like the tough thing.

27:49So there's probably if some people may, maybe that, uh, are listening in that they're familiar with the oil and gas space or the energy space and, you know, that type of program, they're, they're drilling, you know, a lot deeper, but you have to keep in mind that in that case, you're just kind of hammering away at the rock to get to a target, whether it's like a pool of oil, like whatever, whatever it is that you're drilling at, uh, at depth, the mining space is a lot more challenging because you have to actually recover all of the rock intact to give over to the geo. So the core recovery becomes a really big challenge.

28:18And as you're going down, because in this case, you're hitting such a small target, uh, deviation becomes a really big issue because, you know, as you're drilling deep down, I mean, no one really knows with, you know, complete certainty, what you're going to intersect, you know, 2000 meters down a hole. So as you're going through a lot of these faulted and fractured systems, like you've got to deal with that, which kind of makes the hole want to deviate or you could be going through you know some really hard greenstone rock and then all of a sudden you hit something that's a lot softer so it's kind of like the the drill hole wants to take the path of least resistance so if it finds something softer it'll deviate and kind of go off in that direction so you have to prevent that you're going through you're you're encountering you know water sporadically like all these different factors that you know you don't really know what you're going to be going through by the time you get to 3 ,500 meters so to be able to get through all these different rock types and you know water and all these other different things, it's really quite a, it's an art form for a lot of these drillers and definitely a very unique skillset.

29:14Trevor Hall: Yeah. Let's do talk about the personnel because this is always an interesting conversation, what it takes to be a driller and what it takes for a company like Major to find the right people. It's tough. It's not a glamorous job. We know that. And I literally just tried to romanticize the whole thing about being the original explorers on deep drills. I think that's important. And like as an investor, and somebody who made a career out of this sector, like for any drillers out there listening, like I certainly appreciate you more than you will ever be able to tell you. But thank you. And I understand how difficult it is to be out there day in, day out, in remote areas, burying the environment, and delivering, doing your job.

29:58Trevor Hall: It's not glamorous. It's very difficult. But I appreciate you for doing it. But with that said, Ryan, I will also admit, on a few site visits, specifically up north, there's been a few plane rides where I've been on where a driller couldn't, he was done. He wanted to go home. It was enough. Uh, you know, it's difficult. So talk about the mentality it takes to be a driller. Yeah. I mean, so for us, for, for the, for the industry as a whole, um, labor right now is the biggest challenge. So our utilization rate right now is 58 % on a max of 75. We've got about 683 rigs. 75 % is our theoretical max because we've got a very conservative definition that a rig has to be generating revenue for us to consider it utilized.

30:43So if it's in transit, it doesn't count. So because we've always got rigs moving or seasonal programs, routine maintenance, all those different things, by our own definition, our highest utilization rate should be in and around 75%. So we're at 58 right now. So basically what that means is we've still got capacity. There's still rigs that are available. Where the bottleneck is, is finding drillers. And it's not just us, but it's the industry as a whole. And to your point, it's not an easy job. You're going, you know, out into the wilderness and it's, you know, the conditions can be challenging.

31:15You're kind of off on, you know, one to two week rotations. It's a little tough on the living conditions. It's not for everyone. But we've got training schools set up all over the place. The other thing I should mention on our specialized drilling is that we've also got sort of best in class or very high safety standards. That's what gets us onto a lot of these sites. Rio Tinto is our biggest customer, so we mirror our safety standards off of them. So to be able to do work for the Rios, the Newmonts, the Barracks, you've got to have a lot of safety things in place. And so because of that, we are very focused on, you know, our training schools and making sure that people are comfortable before we send them out into the field.

31:53and it's hard to get, you know, people that are, have that level of interest. And really, I mean, you're not looking for anything too specific when you're looking for a driller. It's just, you know, somebody in some cases just coming out of high school or hasn't figured out what they want to do, but they like being outside. You know, you get a lot of guys from certain parts of, you know, the prairies and parts of the U.S. where they're just really big into hunting and fishing and camping and all that stuff where it's, all right, so you're pretty comfortable outdoors. Ideally, maybe a little mechanically inclined.

32:22and then you go through the training school. And then some people decide, you know what, it's not for me. And then they kind of drop out at that point. And then some people go through their first rotation. And at that point, they kind of go, you know what, this is way more out there, way more challenging than I expected. And they drop out at that point. But by the time you've got someone who's had a few rotations in, then you feel like you've got yourself a driller there. And the compensation is quite good because it is hard to find people. and you know we get basically the way that drilling contracts work is we charge per meter so the way that the compensation works for a driller is that you've got your base hourly rate and then you get a productivity bonus so typically you know where we end up being the employer of choice is because we've got an industry leading balance sheet we spend a good bit of cash taking care of the rigs making sure they're in great shape we've got tons of inventory a lot of that kind of stuff because you could be the best trainer in the world, but if you're on a rig that hasn't been properly maintained and randomly breaks down, or if you're stuck waiting for drill rods for a week or whatever the case is, you're not going to get your productivity bonus.

33:28You're going to get frustrated pretty quick and you're going to look for somewhere else to go. So we try to give all the guys all the tools possible to maximize the productivity bonus, knock out the most amount of meters. They get paid more. They're happy. We get paid more. We're happy. Client gets more done in a shorter period of time. They're happy. So it's kind of a win-win for everybody. But it is hard to find people that have that kind of, are willing to be out there and have that skillset. Um, the only other, like the other benefit I'll throw out there too, is that because we're the biggest drilling company in the metals and mining space, uh, globally, uh, one of the advantages too, is that sometimes you'll get younger guys who want to get paid a little bit more and they're willing to go really far out into the field, um, which is great.

34:10And then they kind of get to a point where they're, they've got a young family. They want to be closer to home. The benefit for us is we've got the ability to sort of move guys from, you know, the Arctic and say, all right, you live in North Bay now, we'll find you a project in North Bay that you can work at. And you kind of go back and do that and you can drive home every day. So there's some guys where it's, we try to be pretty flexible. Same thing with, we're in the process of adjusting rotations to try to make it so that guys don't have to be away from home for as long in one shot. But it is really, really challenging to find people that are comfortable going out and doing that.

34:41And sometimes the money only gets you so much. It's just a, it's a lifestyle thing.

34:46Trevor Hall: What about underground drilling? Does it take a specific type of breed of driller to say, do a lot of people go from surface drilling to underground or vice versa? Yeah, they do. I mean, being in the dark for 12 hours sometimes is not the most fun thing to do, but it's a different kind of drilling. The only type of drilling that we do not do a lot of is production drilling. That's typically done by a mining company. That's where you drill a relatively short hole. It's not very complicated. You load it with explosives, you do a blast, whether that's underground or in an open pit. That's really the only stuff that's done in-house.

35:23That question comes up a lot too. Outside of that, everything gets outsourced because they offload that risk on if we lose a hole, if we don't get the meters, whatever, that's on us. So they get to sort of offload that technical risk and, you know, having to find, again labor being a challenge all that kind of stuff but um yeah you get jewelers that'll that'll switch from you know wanting to be close to home to going away for an extra couple bucks an hour uh guys that will go from you know working underground and getting paid really well and decide they want to try surface for a bit maybe they do that for a couple months and realize it's really cold up top and go back underground again um but it's uh like you've got some some flexibility and we try to place people where they're they're most comfortable or kind of give opportunities for them to try different things.

36:05So, uh, there's a lot of flexibility, but in terms of the actual driller themselves, um, typically you don't get trained on like one type of driller, one type of drilling, and that's it. It's, you're, you're pretty well versed in, in all the equipment and in all the different, uh, situations.

36:19Trevor Hall: Okay. Very good. Um, you know, I think the, uh, the, the reason I, you and I are having this discussion actually goes back to a conversation, you and I had back at PDEC, actually over a beer, shocker. You know, and we were coming out of a time where the last quarter of 2025, obviously, you know, money was flying off the shelf into all these exploration financings. Those explorers were cashing up, doing big drill programs here. So I'm just kind of curious maybe where we're at now now with that. And my expectation is that that capital is being put to work, is being put into the ground. Our friend Paul Gurney has noted that typically from financing to field work is typically six to eight months.

37:13Trevor Hall: Is that a pretty accurate statement? And if that's the case, is all that capital from 2025 being put to use now? Given that he just got stuck with me in London for the last three days. His numbers should be pretty up to date, or at least I hope they are.

37:30We had a good few days through there. And I mean, well, maybe we'll chat later just on sort of maybe some of the investor sentiment and interest too. But in terms of how things are going, yeah, you're spot on. It typically takes about, there's about a three quarter lag between when the juniors raise a lot of capital and when we start seeing the revenue. And the one thing I'd point out too is one thing that's a little bit different about this cycle that took certainly me off guard is the length of time it took between the increase in commodity prices and the time before that junior financing window opened.

38:05In prior cycles, it was a lot quicker between gold price rocketing up and all of a sudden there's more capital available, all these new juniors, guys IPO-ing or RTO-ing and launching all these programs. This time around, it was like years before we really saw a meaningful or substantial amount of capital going into the juniors. And looking at the data for, I'd say it was really more back half of 2025. I was looking at some of the, speaking of our buddy Paul there, they had put out a note a little while ago saying that dollars raised by mining companies on the TSX venture, I think it was up, it was over 100 % year over year through the first half of 2026.

38:46So it's really just starting to build on that side. But anyway, going back to the original point there. So by the time, you know, a junior kind of announces the financing, they close the deal, the cash comes in. The geos then might spend a little bit of time just, you know, finalizing drill targets, making sure they know exactly what they want to go after. And then you go out and you get bids from all the drillers. You eventually select a contractor. Then you mobilize the rig. You get there. You start drilling by the amount of time. Like it's that whole process. and then we get, you know, issue an invoice, we get paid.

39:17That whole process, I would say is about, yeah, seven, nine months, somewhere in there. So call it three quarters before we start seeing the benefit. And to that point, like if you look at our revenue, like right now I mentioned that last quarter, 85 % of our revenue came from seniors. If you look at the last few quarters before that, like the prior quarter was 13 % of revenue. Sorry, 15 % came from juniors last quarter. Quarter before that was 13%. Before that, it was 10. Before that, it was eight. So the juniors are really just starting to pick up. At the peak of the last cycle, juniors were at 35 % of our revenue.

39:53So we're still pretty far away away from, you know, the juniors being that active. So what closes that gap? Yeah. So it's really just more the acceleration of junior spending, more financing, more of that. And when I say we've gone from eight to 10 to 13 to 15 % of our revenue coming from juniors, you have to keep in mind that's not just more work from juniors that means they're also outpacing all the increased budgets of the seniors too so that really shows you how how much more robust that junior mining market is right now so i think they're continuing to catch up and i think you know one of the good things we've seen over the last little bit is just a bit more m &a activity and you know we i think we're chatting at uh at beaver creek there about our buddies at uh orion in there.

40:36They just got acquired by by Nico. The other day, we just had rocks more yesterday getting taken out by SSR. So in my experience going through the last cycle, you know, why that's really positive outside of the obvious is that when you've got investors, whether it's institutionally or retail, or even myself, you know, if you put a dollar into a stock, and you get taken out for 10 bucks, then I'm going to take that$10, I'm going to find 10 more stocks and put a dollar into each one of them. So it's a bit of a snowball effect. And I think that's what we're starting to see in the junior financing market is that you've had a lot of exploration success.

41:11You've had some M &A where companies have been taken out. And then now all that capital is coming back and it's being reinvested in, you know, what's the next idea? And that's, as an analyst, I used to get that question all the time. It was when there was an M &A event, it would be, you know, either I own this thing or like, what's another like takeout idea? Now I've got cash coming in. So like, what do I find that's comparable that might be the next kind of take out target. And so it just rolls into a new company.

41:33Trevor Hall: So I think that's been a nice sort of tailwind for the junior market on top of just, you know, obviously commodity prices being a big benefit too. Yeah. Come off a big win. Why do something smart, like buy property or something safe? You just rolled into the next degenerate speculation, right? Yep. That's welcome to my life. God, I love this business. That's exactly. It's pretty much it. You make your best next, educated guests on a junior and we hope to be right again. And I mean, even if you throw, like we used to have this strategy of, you know, we'd find a whole bunch of early stage, highly speculative watch list companies and we'd try to do our best to pick what we thought were winners.

42:14And you take 10, you'll hopefully hit one or two home runs, maybe get a couple singles and doubles. And, you know, if a couple of them end up, you know, not being successes and going to zero, then the other, like your big wins more than make up for it. So it's just about, you know, that old kind of diversification strategy, but, uh, but all the capital, uh, just usually rolls back into more juniors.

42:34Trevor Hall: So replicate your success. I want to, I do, I, we talked about the junior side of things. Obviously you feel like we're still in early days, just given where, uh, the expenditures of junior exploration and other drill programs are going at. Obviously you can use those numbers as context here, but let's talk about the seniors a little bit and where we're at, from your seat where we're at in this cycle? Are they asking for anything differently now here, Ryan? What's different than from past cycles? Obviously, you mentioned deeper holes, any more brownfields work. Yeah, what's different now? I'd say it's not too different compared to prior cycles.

43:15Maybe we're starting to see programs expand, all that. The kind of interesting thing with seniors is that pricing is always a bit of a tough one because you get some, maybe it's more juniors that can be a little bit challenging, especially people that haven't been through a cycle before. And it's, you know, we're not charging more just for the sake of charging more. Like our labor costs have gone up, our consumables have gone up. Like we do have costs that we have to pass along. But in the case of, I guess on the seniors, it's kind of interesting because in the bad times you go from, you know, talking more with procurement guys who are trying to do everything as cheaply as possible to now you deal a little bit more with geologists because they're willing to pay up, you know, a couple more dollars a meter, uh, just to make sure that the rig that they get isn't going to have unexpected breakdowns.

44:01It's been properly maintained. They're going to get a properly trained crew. Not some guys that just got hired, you know, by a mom and pop trailer off the street. Like it's, they're paying a bit more for quality. Whereas in the trough times that they're just, you know, the cheapest guy available and just get me the meters, you know, ideally as quickly as possible, but whatever. Uh, so now it's more about efficiency and, you know, getting stuff done productively and all that. And there's a bit more of a willingness to pay for quality. That's kind of similar to the last cycle, but that's sort of what's emerging a bit more right now.

44:32I'd say outside of that, maybe just kind of looking at different geographies. I feel like every cycle, there's new regions that come up. At the beginning of the cycle, similar to prior ones, everyone sort of focuses on their backyard. So Canada and the US gets the most attention right off the bat. But then as that risk reward kind of trade off roads a little bit and the Canadian juniors will trade a bit more of a premium to juniors in other countries, then people start going to look for opportunities. And we're starting to get there. We're not quite there yet. I'd say North America for us is by far the busiest market that we have.

45:07We're pretty nearly flat out in Canada and the US. But you're starting to see some other regions where things are picking up. I mean, Argentina has been quiet for a long time, but now that some of the capital controls are kind of changing a bit, we're starting to see seniors are starting to take a bit more of a look into countries like that. So you're starting to see some potential new geographies emerge. Places like I'd say Guyana is a pretty hot market now. So it's just more, I guess, new countries that are coming online that might have been off the radar for the last few years through the down cycle.

45:40Trevor Hall: Yeah, well, definitely the South American politics, I guess, quote unquote, melee effect that's kind of rolling through South America and opening up those countries for exploration, obviously, has been very positive. Colombia has been extremely constructive there for exploration and mining as well in the last couple of months. But I'm glad you mentioned the jurisdiction because obviously you would have a good sense of maybe new areas. I mean, so outside of the Western hemisphere, which I think you've done a really good job of describing, are there new districts on the Eastern side of things, say Middle East or Asia, that might be pertinent for us as speculators to maybe start maybe following attention to?

46:26On the Asian side, we pretty much just drilled for the seniors there. We've been at Grasberg for Freeport for 20 plus years. We've been at OT for Rio and Mongolia for 20. We were back there for originally, we did the initial drill program with Friedland like 25 years ago or whatever it was now with a couple of rigs. And then now that's one of the biggest copper gold mines in the world. So, uh, those, that's kind of, we don't have too much emerging exposure there. Uh, we're all throughout, you know, Southeast Asia as well. Australia is kind of our big cornerstone market. Um, but to your point, like some other areas in the middle East are starting to look a little interesting.

47:04I mean, there's obviously a lot of stuff going on there right now, but from what I've heard, you know, that the mining stuff is, is continuing to, to move forward. I think, you know, Saudi is a pretty interesting opportunity. the guys at modern have been really talking a pretty big game in terms of the amount of dollars they want to allocate to exploration and their focus you know diversify away from energy and get into more of the the copper critical metal space i think geologically there's a lot of interesting opportunities there and you know i've kind of heard more rumblings from i'd say just the being in in toronto side and circles of mining guys than the major side just about guys that are getting out there and staking ground and kind of looking for opportunities and rumblings of you know the barracks of the world out there, either doing JVs with modern or kind of, you know, going out and staking their own stuff.

47:50So I think that might be kind of a nice new up and coming area. But I think it might take, it also might take a little bit of time as with any other country that's kind of on the emerging side in the mining industry, where just to sort of set up the framework and all that kind of stuff to get the processes in place so that there's a bit more of a path of, okay, like how do you do all the staking? How does this work? How does the permitting work, how does like all the approvals for things work and all that, like that might take a little bit of time. So you have to be patient, but I think that that patience has a pretty good chance of being rewarded in the long run.

48:24So I think there's a lot of interesting stuff out there.

48:26Trevor Hall: All right. I'm going to start kind of closing this up here, Ryan, but you know, I think a lot of people really respect your, your experience in, not only from the analysis from, excuse me, an analyst seat, but also now from a driller's position. on what separates a well-run exploration company from the rest? Oh man, how much trouble do I want to get into on this? I'm going to get fruit thrown at me when I walk up Bay Street later. Yeah, I mean, really, I would say, maybe I'll put it this way. Throughout all parts of the cycle, there are certain companies that have always been funded. They might not have been huge equity raises, but they're always able to raise some equity to keep things going.

49:14And there's a reason for that, in my opinion, is that if you've got a good team that's either had success in the past or has worked at a larger company and they've kind of gotten to know the street and they've got a very good track record with ideally a good project and a good location, those guys will get funded. And that's kind of if you look at Mr. Ogilvy there at Arizona, Sonoran had a good record and I think he had a lot of love when he went over to Hercules, that share price did well. Another buddy, Dave Palmer, has done very well at Probe. Like there's guys out there that are sharp people that, I'm leaving a bunch out, so nobody get too offended here.

49:53But there's a lot of sharp people out there that have had success in the past where, you know, they'll have a really good thesis. Even if the thesis doesn't pan out, you know that they're kind of putting their best sort of efforts into it and they're managing the company responsibly. So I'd say what makes some exploration companies better than others, in my opinion, and hopefully we don't lose too many clients over this one. Um, but I would say, uh, just, uh, when you're going through the financials, look at, you know, what are the exploration expenditures over the past year versus what's the GNA over the past year?

50:23Um, like there's a lot of, uh, marketing that's required to get out there and tell the story. And trust me, I'm, I'm learning that one as, as, you know, we're taking major around and letting people know it's a large, you know, billion dollar public company. That's a great way to play the space. And, you know, we do attend a few conferences, but there's a certain limit of, you know, what you should, like you do want like these, these geos and junior mining companies to be spending time on the ground, exploring a project, allocating money to, you know, if I'm investing in a junior, I'm hoping that most of those dollars are going to go to a drill program because I want to see what the results are.

50:54um so it's more just sort of looking at you know making sure that the company is being responsibly run and that the gna is not getting out of hand you don't have you know ceos on private jets flying around the world uh non-stop and not spending time on the project so it's more um i'd say those are more the things that uh that i used to to look at a lot more um but really again like just good people good projects uh safe stable location uh and then don't bet on things like a favorable geopolitical outcome, a higher gold price or commodity price, or some change in permitting that's going to happen.

51:27I don't like betting on the unknowns. I like betting on the team and sort of what's more within their control.

51:35Trevor Hall: This might be putting you on the spot here because obviously you're running a drilling company and you're running a drilling company and they've got bills to pay and you provide a service. But there's got to be times where a drill program has just been a little bit preemptive. Like targets need to, you know, when is a good point for a target to be really defined well, de-risk before a company like Major comes in and drills it? Because that doesn't, that responsibility of de-risking a target doesn't rely on a company like Major. I mean, you'll come in and do the work as the contract is signed. my understanding.

52:16Trevor Hall: However, what happens after that, you know, you do what you do, whether you hit or miss is, you know, there's so much data that has to go into this thing. How do those teams collaborate between the exploration company and the drilling company to really help refine what that target is? So you're both successful. Yeah. I mean, that's kind of a question that we, that's a really good point because one of the questions we get is that as there's more implementation of things like AI and all that kind of stuff to refine drill targets, does that mean that there's going to be less work for us because there's going to be fewer meters required to find where the deposit is or the limits of it or any of that kind of stuff?

52:53And the answer, surprisingly, is actually no, it's better for us. Because where we really do better as a drilling company, where we make more money, where people are happier, there's more rigs being used, all that kind of stuff is after a discovery is made. And to give you one example, I'll use OT in Mongolia as a good example. So Friedland went in there with us. We sent two drill rigs in. And so you've got a two-rig campaign where you're sort of testing out a target, which is, you know, it's a program. It's great, going well. But when they initially made that discovery, we pretty quickly ramped up from two rigs to 20.

53:28So we're hoping that, you know, we want guys to be successful. We want to be partners. We want to be there to support you and ramp up the program and to kind of keep this thing going. and kind of build up the scale of it, that's really where it's kind of win-win for all of us. And so I'd say in terms of like stage of doing all that, where maybe things are different in this cycle is we've seen a lot of junior companies that take, they do all the geophysics, you fly your airborne, you do your IP, all that kind of stuff. And then they take all their geochem data, they pop it all into some sort of, you know, there's different AI providers out there.

54:03And then they can kind of spit out, okay, based on the geology, based on all this data, here's where, you know, AI thinks you're going to have the highest probability of success. So I think there's a lot of like target refining that's now happening that, you know, used to be done in the old days was a bit more guesswork. Uh, so I think there's more tools out there now to hopefully refine those targets, uh, and then hopefully lead to more success. And then it's obviously better for the exploration company. It's better for us and all that. Um, I haven't personally, I mean, we, we focus again, most of our revenue comes from like our biggest clients are Rio, Barrick, Newmont, Kinross, you know, FMG, Freeport, like all the big guys.

54:41But of the juniors that are coming in, I think that they're pretty well kind of equipped and they sort of know what they're doing. Because at the end of the day, a lot of these guys have just raised a bunch of capital. They've got to get out there and drill as quickly as possible. And they've got to demonstrate that, you know, this was a good company to put money into to all their new shareholders and hopefully put out some good results. So I don't think they want to, while there's pressure to go out and kind of get results as quickly as possible, I don't think they want to rush it too much. I think it's sort of the amount of time it takes and money to secure a rig and a crew and get this stuff done, especially when you're looking at assay turnaround times of six to eight weeks.

55:18It's, you know, by the time we're going to get results out, just ahead of PDAC, Beaver Creek, whatever the conference is, we need some good results here before we're going up on stage in front of a room full of people. So I think they're taking their time to make sure that they've got hopefully the highest probability of success.

55:35Trevor Hall: Ryan thanks so much for doing this oh thanks for having me this was a great conversation I'm glad we did it like I said different perspectives than what we're typically used to I mean what do you enjoy more like do you miss covering the microcap shitcos I think I've gotten that question a lot I think that was kind of the most common question I got at Beaver Creek there's pros and cons to both I mean I'd say coming over to major I'll give you like the sales pitch on major drilling is really, look, I mean, I covered it for a long time. It's a great group of guys. We're based out of Moncton, New Brunswick.

56:09So very nice East Coast. It's a, our market cap today, I think is 1.4 billion Canadian, but it's run like a small company. Everyone's great. It's a great team. Everyone's very sharp, but nice from that perspective. And it's a great way to play the mining sector. It's, I don't have to worry as much about the geological risk and trying to assess probability of success with the drill program. There's no modeling out mining companies where the grade profile, like suddenly the reconciliation screws up and you're getting, you know, your grades dropped 15 % that you didn't see coming. And then all of a sudden your share price falls off.

56:43We're a much more diversified and I'd say much relatively lower risk way to play the cycle. So from, I guess, an investor or really from a career perspective, it's a bit of a great way to get exposure to mining, stay in front of everybody, but do it in a way that doesn't have the risk of what happens if we don't have good drill results, what happens if the equity window closes and we're out of money, what happens, like all these other types of risks that you have with a mining company. So, uh, I made a bit of a safe, uh, step over, I guess, uh, laterally to, uh, to a drilling company. But I mean, I do miss, uh, I was up in, uh, in Timmins a month or two ago, just kind of tagging along with a couple of guys.

57:26Cause it was just doing the whole, like, I really miss doing some of these site visits, like getting underground and actually seeing stuff in motion. And, and I think that I don't know if I'll get invited back again, cause I'm sitting in the, uh, man carrier going down. I'm kind of like, oh, why is the ramp like this? What's the reconciliation on that? And they're like, Ryan, you work at a drilling company. Stop asking those questions. There's a lot of research stuff that I miss, but it's, there, there's kind of, you know, nice new opportunities being, being on the major side as well.

57:53Trevor Hall: Well, if you miss it so much, why don't you just go take a, take a drill shift and NWT for a week and. I, yeah. This winter, preferably. This winter, actually. Yeah, yeah, exactly. I was going to say, like, like you were saying earlier, I've got a lot of respect for the drillers and, and it is, I love spending time. on site. Our CEO does a really good job of getting out to all these different branches and getting one-on-one time with the drillers. And I'm trying to kind of do the same and just to hear about the day-to-day and all that stuff. And it's, I mean, some of these guys get compensated very well and I think they fully deserve it.

58:25Like to be out there in those conditions and do that kind of work and be away from home and you're stuck in the elements. Like it's, I'm a wimp in Toronto, man. It's, I don't know, I'd be able to pull that one off. So it's a different lifestyle.

58:39Trevor Hall: Yeah. All right, Ryan. Thanks so much again, man. We'll see you down the road probably next conference or something. Look forward to that one. Sounds good, Trevor. Thanks for having me. Thank you. All right, everybody. That's a wrap here this week. Real quick programming note. I will be reporting from the LME week in London next week. Got a full schedule lined up. In my absence, Mike and Ian will have you taken care of here on normal scheduled MSD, but we will be sprinkling in interviews from London as well. So have a wonderful weekend, everybody. We'll see you next week. Be well. The information presented should not be considered investment advice.

59:16Trevor 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.