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Podcast Notes: Relentless Episode #29 - Ted Feldmann, Founder & CEO of Durin
Episode Overview In Episode 29 of the "Relentless" podcast, host Ty interviews Ted Feldmann, the founder and CEO of Durin, a company focused on building and operating automated drill rigs to enhance mineral discovery in the United States. Ted shares his journey into the mining industry, insights on current trends, and the innovative approaches his company is taking to modernize drilling processes.
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Key Takeaways
Introduction to Ted Feldmann
- Background: Grew up in a family involved in mining; early exposure to the industry.
- Career Start: Internship at Hyperion X sparked interest due to concerns about the titanium supply chain and national security.
- Further Experience: Worked with MP Materials, gaining insights into rare earth mining and processing.
The Current State of the Mining Industry
- Workforce Shortage: Significant shortage as half of the US mining workforce is expected to retire by 2030.
- Need for Innovation: The industry is seen as outdated and in need of modernization to attract younger talent.
Historical Context of Exploration Drilling
- Evolution of Technology: Drilling has evolved from manual methods to diamond drilling in the late 1800s, with minimal major innovations since then.
- Current Drilling Costs: Drilling ranges from $200 to $250 per meter, with labor constituting 50-60% of costs.
Durin’s Approach
- Automating Drilling: Ted's vision is to automate drilling processes to cut costs by 80-90%, reducing reliance on manual labor.
- Initial Goals: Focus on building first-generation rigs capable of operating remotely and gathering data effectively.
- Unique Selling Proposition: Combine drilling services with data analysis capabilities to provide more comprehensive insights to clients.
Challenges and Opportunities
- Cultural Barriers: Resistance to change in an industry that typically relies on traditional methods.
- Building Relationships: Emphasis on networking and trust-building within the mining community is crucial for success.
- Government Support: Recent executive orders from the US government aim to bolster domestic mineral production and expedite permitting processes.
Future Plans for Durin
- Rig Development: Plans to develop larger, more efficient rigs that can drill deeper and gather more data.
- Financial Goals: Aiming to achieve substantial revenue growth by leveraging automation and innovative business models.
- Market Positioning: Aim to position Durin as a one-stop solution for mining exploration, reducing costs and increasing efficiency.
Reflections on Entrepreneurship
- Startup Journey: Ted emphasizes the importance of work ethic and passion in building a successful startup.
- Mentorship and Learning: Highlights the influence of various mentors and experiences that shaped his entrepreneurial journey.
- Advice for Aspiring Entrepreneurs: Encourages young entrepreneurs to immerse themselves in their industries, network, and remain persistent in their pursuits.
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Conclusion Ted Feldmann's approach to revolutionizing the mining industry through technology and automation offers hope for a sector in need of modernized practices. His experiences and insights highlight the potential for growth and innovation, making a compelling case for the future of mineral exploration in America.
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Additional Notes
- Marketing Strategies: Discussed innovative guerrilla marketing tactics including a billboard across from SpaceX.
- Legacy and Impact: Focus on making mining "sexy and cool" to attract a new generation of workers.
- Cultural Shifts: Emphasizes the transition from traditional methods to tech-focused solutions in an often stagnant industry.
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This episode provides valuable insights into the challenges and opportunities within the mining sector, as well as the innovative steps being taken by companies like Durin to address these issues.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00We were thinking, how do we get creative with some guerrilla marketing? saying, what are other startups not doing? And we found that there's a billboard right across the street from the Falcon 9 booster, which says you can't have rocket science without rock science. It's really a broader thing around how do we make mining sexy and cool. Mining needs a facelift. I also thought that there's like a massive shortage of like people and like they're just aging out. Between 2023 and 2030, half the US mining workforce is expected to retire. This is Ted Feldman, the founder of Durin. Let's start off with how did you initially get interested in mining?
0:34Yeah. Thank you for having me on, Ty. This is a long time coming. I first, I grew up with family in mining. My dad and my uncle worked in the sector for much of their career. And so I grew up talking about it. I think the earliest I remember, probably six or seven, my dad and my uncle working on a mining project together. And so I remember it was a cool project. My dad got us some hats with the company name on it. And so I'm wearing that around. And so that was the earliest. And I thought it was cool, but it wasn't really my primary interest until towards the end of high school when I started an internship with a mineral exploration company.
1:11This company, Hyperion X, they were looking for titanium in a mineral sands deposit in western Tennessee. As part of my internship, I was doing meeting minutes, helping with presentations for investors, press releases, doing research on regulation. regulation, got to learn a lot. But as part of that, I went really deep on the titanium supply chain and saw that basically all of the titanium we're using for defense applications was flowing through the rush hour of China. And as a 17-year-old, that was extremely concerning to me. So that's what sort of sparked this interest in mining was a passion for the national security aspect of critical minerals.
1:50Alongside that, I learned to love and really fell in love with geology and the treasure hunt that is mineral exploration. Going from, it's really a puzzle that you need to solve where you need to figure out whether there's something underground. And you have all these different tools. You can do soil sampling, analyze soil under the surface, geophysics, look for magnetic or gravity anomalies, and then drilling to actually look at the rock that you're taking out of the ground. And you have to figure out what's the right mix of all these tools to maximize your data collection and if a geologist interpret that data to figure out if there's a deposit or deposit that would be economic to mine.
2:26And so exposed to mining for most of my life, really fell in love with it towards the end of high school. And then through college, did another internship with a mining company called MP Materials. And I worked for MP for nearly two years. I was remote with them and then in person a little bit. I was further downstream on their magnet side of their business. So MP is a mining company. They operate the only rare roots mine in the United States, Mountain Pass in California. I think it's the closest mine to where we're sitting now in LA. It's about 45 minutes southwest of Las Vegas. And why is there only one?
2:58It's geology. There's rare earths and every mineral is everywhere, but in extremely low concentrations. And so you need to have a high enough concentration and grade is what we term, like the term we'd use in mining for percent of a resource and then big enough deposits. You need to have high grade, so it's concentrated and a large enough amount of that concentrated element or whatever resource you're looking for to justify building a mine. So were they just lucky to find a massive deposit? This mine has been known about, I think we started mining it in the 1940s. And so the Mountain Pass mine, a book should be written on this mine.
3:37And the book's probably only two thirds of the way through. We started mining it, I believe it was the 40s or 50s, something like that. I believe Chevron owned it at some point. They divested. Eventually there's a company in the early 2000s, early 2000s, called Mollicorp that bought into it. They took it public. They were at a billion or two billion market cap. And they basically spent a whole bunch of money bringing this mine back into production and building out separation, refining facilities for this deposit. And they ended up going bankrupt. Why was that? I think it was just after the GFC.
4:10The technology didn't work. Rare earths are extremely tricky. And so rare arts are a subset of critical minerals. Let me just run through a few definitions that we'll be probably using throughout the conversation. So critical minerals is a group of 50 elements, resources that, I forget, one of the US federal agencies designates as important to national security that are strategic and that we don't have much mining or processing of domestically. And now rare arts is a subset of critical minerals, which is the lanthanide series on the periodic table, plus ytrium. And some say often there's scandium in there as well.
4:46And so out of the rare earths, there's 15 of them, something like that. Neodymium and praseodymium are the two that get talked about the most. Those are two of the lighter rare earths that are 15, 20 % of rare earth magnets, which are the permanent magnets in electric vehicles. The dysprosium and terbium are also very important on the heavier side. And those are about an order of magnitude rarer than neodymium and praseodymium. But those are the four that make up the bulk of the economics of a rare earths mine. Now the thing about rare earths is that they're clumped together for a reason. That reason is because they're chemically similar, which makes them very tricky to separate from each other.
5:20Neodemium and prazeodemium, we don't even separate. They're so close in terms of like... Their chemical properties are so similar. You just find them in the same place. They're found in the same place. They're quite a bit difficult to separate. And we just chuck them into the magnet together because they have similar properties. They work the same. And so yeah, the Molincorp's attack ended up not really working. And so the company went under. And then in 2017, the mine was bought out of bankruptcy by a hedge fund guy out of Chicago. I believe it was Chicago, Jim Latinsky, who was, I guess, my former boss.
5:52He bought the mine for$25 million and brought it back into production, raised a few hundred million to restart it, including a small amount from a Chinese investor, Shungha Resources, which was the leading manufacturer of these sorts of rare earth magnets. And now we obviously don't love having China invested in these critical projects. The thing is, Molly Corp's separation facility failed for a reason. We don't know how to process rare earths in the US. We have lost that capability. And so I think it was smart what Jim did, was partner with the Chinese, bring them in in eight or 9 % of the company, I think a little bit less now.
6:26They're basically going to get all the rare earth offtake, but they're a technical partner. They're helping us bring this American asset into production. At the end of the day, it's on US soil. And they don't really have any control over the company. And now MP is going further downstream, separating and building their own magnets. And so eventually MP Materials will stop shipping rare earths to Shanghai and China. They signed a deal with Sumitomo, a big trading house out of Japan. They're getting some of the offtake, but eventually most of it will stay in the US into magnets that MP is manufacturing.
6:57And all of that is to say, I worked with MP Materials downstream, helped them build of software determining the optimal composition of magnets to manufacture. We got a lot of visibility into the mining and processing side as well. Can you give me a background on almost the history of exploration drilling? Yes. Yeah. So mineral deposits, how do we find them? Historically, you have a guy walking around. If you look at the Roman copper mines, there's copper near the surface. or from originally England, you have Cornwall known for their tin. And so there's tin near the surface there, or I spent a lot of time in North Wales with copper near the surface.
7:38One of the biggest ancient copper mines is on the Great Ormond Wales, which is where I spent a lot of time on vacation as a child. And so you can see it under the surface. And historically, it'll be like pure copper. You can see it. Nowadays, most of the copper is found in some of oxide or sulfide. And so people just find the deposits and they start mining. They're not sure how big it is. When the mine runs out, the mine runs out. Nowadays, you kind of start out broad surveys over, say, thousands of acres. You could do a big soil sampling campaign. So that's where you're digging down like a foot or a few feet, taking a small amount of soil, sending it to a lab.
8:19The lab will tell you the exact composition of that. You know that hundreds or thousands of times, look for some sort of anomaly. Do aerial geophysics, you fly a plane over and you're looking for some sort of magnetic anomaly or something like that. But it all comes down to drilling. You actually have to look at the rock to figure out if it's going to mine, if you're going to be able to mine it. And so the first kind of major technical innovation here was, I guess, the steam powered rock drill, but more so for underground mining than exploration. When was that? Was in the 1850s, 1860s, something like that.
8:47And that's more like just shoving something into the rock to try to break it up. And so we've been using that for a while, but then about 30, 40 years later in 1893, the first diamond drill hole was drilled, which was by Edmund J. Longyear at a site in Minnesota. And so this was the introduction of diamond drilling, which is where you use a cylindrical drill bit. And these drill bits are a soft iron matrix with tiny diamond particles impregnated into them. The diamond, hardest material, it's doing the cutting. The diamond eventually is going to dull. And so the iron matrix, it is in - It's soft enough to let it - Exactly.
9:21It's designed to kind of recede at the same rate as the diamonds are being dulled. And so that was the first diamond drill hole, 1893. That technology was fairly similar until 1958. And so pre-1958, the way this drilling would work is you're sort of drilling down these rods that you're screwing together with the drill bit at the end. And then when you drill a certain length, you'll pull up the entire drill string, unscrew all the rods, then take the core out, which is at the bottom. And then you can analyze that sample. in the lab and every geologist look at it. In 1958, the wire line drill rig was introduced.
9:54What this enabled you to do is not have to take up all these rods in order to recover the sample. And so we could probably put up a diagram of how this all works. But think of it like this. You have your drill bit at the bottom, and then you have your drill rods above that. Within those rods, you have what's called the inner tube, and that's the part that the core slides into. Then you have a couple of locking coupling and adapter coupling just above that, and And you can send down what's called an overshot, which latches into the top cufflang above the inner tube. And you send this down on a wire line, like lower a metal wire on a winch, and then it latches into place.
10:28And you can pull up this inner tube containing the core sample. And so it saves a ton of time because you don't have to trip up every rod. So that was the last kind of major technical innovation. Today's rigs are not too dissimilar from those used in 1958. They're much safer, more efficient, easier to transport. But there hasn't been a major - There hasn't been major innovation. It's the same - So why do you think that is? Yeah. This sort of drilling works. There is not that many ways to recover a perfect cylinder of rock. You basically have to spin something around it. Maybe you could put really high pressure water down there, or there's companies in geothermal, like look at Quaid.
11:02This is essentially melting the rock with millimeter wave technology. It's going to alter the rock and you're not going to cut a perfect circle. And so it pretty much has to be mechanical, given with what we know today. And so you have to spin the entire drill string with the drill bit on the end to cut into the rock. And so there aren't really any, there haven't really been any open areas to expand to from there for this type of drilling, where you're recovering a three meter core sample. There are some ways I think we can modernize it so that you don't have to spin the entire drill string that we'll be looking into later, get massive efficiency gains.
11:33But really where I think the technology opportunity here is in automation. Today's drilling and mineral exploration is ridiculously expensive. You're looking at$200,$250 a meter in the Western US. Today's drilling contractors are... They're very high margins. And where do you... How much less do you think you can get it to? Yeah. I think you can cut the cost 80, 90 % eventually. So labor is 50 to 60 % of the cost today. And so I think we can cut out 80, 85 % of that in the next couple of years. You basically have a couple jobs for the guys on the rig. You have two or three guys on the rig at all times.
12:09You have the driller. He's the one who's basically listening to the rig and looking at a bunch of gauges on like a control panel on the machine. And he's basically in real time adjusting the RPM that you're drilling at and the amount of weight on the drill bit and the pressure amount of the drilling fluid that you're pumping down hole. And so based on the sort of rock that you're going through, you want to drill the different RPM and weight on bit. So that it doesn't wear it down as fast. So that you don't fracture the core that you're drilling through or don't wear it down the bit too quickly.
12:40Because then you're still going to... To change the drill bit, you're going to need to trip up every single drill pipe. You still have to do that to change the bit. And that takes a lot of time. And so you don't want to wear the bit down too quickly. And then you have a couple of guys, helpers, and their job is basically putting the drill rods into place, setting the overshot down hole to retrieve the inner tube, taking the core out of the inner tube, putting it in boxes to hand over to the exploration company who's the customer. They're adding additives into the fluid that you're drilling with, benton iron polymers to adjust the viscosity.
13:10So a bunch of these manual tasks. And what we're really trying to do is starting out, getting rid of the driller's job. And so adjusting all of these variables in real time. And this is not an only gas today. It's a well-studded problem. It just hasn't been applied to the mining industry yet. And is this because no one's tried it? It's largely a cultural thing. So a couple of things. Today, you have the OEMs, the manufacturers of these drill rigs, and they sell to drilling contractors. Their customers are the guy kind of between the manufacturer and the exploration company. The drilling contractor owns the rigs.
13:45An exploration company or mining company hires them to drill the holes. And so the separation for most companies, there are a few that are vertically integrated. And so the manufacturer isn't really incentivized to drastically cut the cost. They make money selling equipment, not by drilling. Two, they make a lot of their money on maintenance. And so it disincentivizes them to make better - Kind of like the McDonald's ice cream machine. Exactly. Exactly. When you're making all your money on spare parts and maintenance, you're sort of incentivized to have it break, or at least have it break just enough to where they'll stick with you as their supplier.
14:21Three of these companies really aren't making that much money, 10, 15 % profit margins, margin on maintenance. for you have a whole bunch of products within these larger OEMs fighting over the R &D dollars. And a lot of the money is going towards mining equipment, not equipment used in exploration. And especially the last 10, 15 years, the R &D focus has been electrification of equipment used at mine sites because of the focus on green energy and making these mine sites really electric. The thing about these rigs is when you're out in the middle of nowhere, you can't just plug it in. You don't have grid power.
14:51And so you have to bring in diesel. And so it'll be burning fuel for the foreseeable future when you're in the middle of nowhere. Now we're going to, we'll swap in an electric motor for the hydraulic motor that conventional rigs are using, get a bit of efficiency gains there. Use the programming, use the read data, simplify the machines a little bit, but we're still going to get a diesel generator. Yeah. Okay. So like when you're thinking about starting a mining company, what's the first step? Like what is going through your head of like, here's the, I don't know, 10 steps from here to actually having an operating company that's drilling holes and stuff?
15:26Yeah. So I'll answer that in two ways. So I'd say we are a mining technology company or a drilling services company. And so our customers are mining companies, producing mines or exploration companies that own land. They think there's some valuable mineral deposit underground. Their job is to collect enough data to put out basically a proposal to build a mine and either sell the company, sell the project or raise capital and finance it themselves. And so what I was thinking about a couple of years ago was basically what is the technology company to start in the mining industry? Where is technology not being applied?
16:00Where is it going to be most useful? And so I kind of did this by going to a whole bunch of conferences, some site visits, talking to thousands of people in the industry and asking like sort of the standard, like, well, I see startup school playbook almost, like, what are your biggest problems and why has nobody solved them yet? And so I talked to thousands of people. And what kept coming up, particularly in exploration, was drilling is ridiculously expensive, slow. Contractors are, for the most part, unreliable. You need to plan kind of months to half a year ahead to actually get contractors on site.
16:33And so that got me very interested in this drilling problem. And then I talked to a bunch of the engineers at these manufacturing companies, figured out, okay, well, why haven't you automated yet? And kind of discovered the few reasons I just laid out a couple minutes ago. And so I incorporated during about a year ago, we're in March 25 recording, started during April last year. I was during my junior year at Georgia Tech and just after doing the Disciples Ventures Accelerator Program in El Segundo. And the goal was to build autonomous drill rigs. And so put it out by building a few small ones, going down like five, six feet last summer, and then brought on the team to build a full scale rig.
17:10Now to answer your other question, Like, okay, if you were to, let's get in the exploration company's head. So if you wanted to build a mine, how would you do that? Let's go through this exercise. And so you'll start out, you need a brilliant geologist. A geologist is the core of the team of an exploration company. They're the expert. And these geologists often have a theory or expertise in some particular jurisdiction or region. And so geologists often know where to look just from being in the industry for a while. There's a saying that goes, the best place to find a mine is next to an existing mine.
17:45And so a lot of exploration projects are near where we know there are valuable resources already. Often what happens in exploration companies is you might stake a bunch of land and you don't want to put out any announcement about where you're looking until you've staked all the land around where you think it is. Otherwise some other company will come in and buy the land next to you. And if you think the deposit extends there, you're better off giving it a secret. And so you have a theory about where something is, and you go through the steps I described earlier, soil sampling, geophysics, drilling.
18:16You basically have this continuous cycle of raising capital. Most of these exploration companies are public, the TSXV or the ASX. So they're reliant on retail shareholders to keep their stock price high so they can raise capital and not be diluted down to zero. And so it's this weird dynamic where you need to constantly have news flow, keep retail happy and then raise largely through private placements through brokers. And so it's a constant cycle of going out to the market, raising capital, spending that capital on drilling and analyzing those results, updating your geological model, figuring out where to drill next, and then raising more capital.
18:49So you often have like 10, 15 of these cycles before you know there's a mind to be built there. At the same time, most exploration projects fail, depending on kind of where you draw the line on what is an exploration project, somewhere between one and a hundred and one in a thousand exploration projects end up becoming a mine. So most of these companies go to zero. And do most of the exploration companies incorporate any sort of new technology, or are they basically just taking an old playbook and trying to repeat it? Yeah. These are not technology companies. Their value is in the asset that they own.
19:23Their IP is the geological data that they've collected. Yeah. Yeah. And then I should say, largely due to lack of new technology in the space and a whole bunch of exploration companies that are just sort of milking the asset and like, no, there's something isn't there. That happens a lot. Exploration returns 98 cents for every dollar invested in it. This is not a good place to invest historically. One of the most well-known mining entrepreneurs, Robert Friedland, has a great quote from a conference I saw him out a couple of months ago, he said mining is not an industry for smart people. This is not the industry to invest in if you want to make a lot of money.
20:00Now, I think we're going to change the economics by doing drilling a lot quicker, dropping the cost of it, and then doing the same across the analysis. And then now you have a whole bunch of AI companies working on analyzing the data we're collecting. And so I think exploration and mining can have substantially higher returns. You just need an engineering-focused organization building technology fit for the 21st century. Yeah. I'd be curious. So you saw on your website, you have nine different parts of effectively starting all the way to the finish, like reclaiming the mind or whatever. How many different companies are in that process and different layers of not bureaucracy, but in efficiency?
20:41Yeah. We'll talk exploration first. The exploration company, they might first of all hire some geologists as contractors or a contract geology firm. They'll normally have full-time employees, but supplement that because you're only drilling some of the year only collecting samples some of the year it often doesn't make sense to hire a team of five or six an early stage project if there's only going to be five or six people's worth of work at like a few months of the year they'll hire a drilling contractor a geophysical contractor um they'll use some sort of geological modeling software they're paying extremely high license fee for um they'll work with some other company to help them raise money, some broker.
21:20And then they'll often hire a contract or consulting firm to help them put out their pre-feasibility study or feasibility study. They'll use some lab service provider that they actually send their samples to that has the lab equipment to figure out what's exactly in the rock that they pulled out of the ground. So that's already like six or seven companies they're working with in the exploration stage. Now, when you're permitting, So I often use a consultant to help with that. Construction, you have a whole bunch of contractors there helping actually build the mine. And then normally the mining company will operate the mines themselves.
21:55So buy the equipment, they'll do the mining. There's some mining companies that use contractors to actually take the rock out of the ground. And then some mining companies will process the ore on site or ship it to someone else. And how long does it typically take from saying, I'm going to go start exploring, to actually turning on a mine? Yeah. So the exploration process, I believe this is ex-permitting in the US, about 15 years on average. And so that's one of the highest amounts of time anywhere in the world. That's like more than a nuclear reactor. Oh, yes. It's absurd how long exploration takes.
22:31And it's because you have this constant cycle of not having enough capital to deploy. Once you have it, you need to drill, analyze. It's all done in series. And none of this can be done in parallel because it's also much so expensive. And so these exploration companies are capital constrained. Where I think you can get exploration down to three to five years is A, if you have a bigger budget. So I think exploration companies will become larger and more will be private, so not subject to the whims of the public markets. And so they'll be able to continuously deploy capital and really drill to kill.
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23:01The exploration will have higher returns if you have a portfolio of projects and you're looking for what are the ones we can eliminate quickly and move on and focus our resources on the best one. If you're an early stage exploration project, sure, maybe you think this is a massive deposit, but if you only have one project there, you're incentivized for it to keep the company alive as long as you can compared to a broader portfolio where if you can find out quickly, this isn't going to be valuable. Kill it. Let's focus on the more promising ones. And so if you have capital deploy, you can get rigs on site and basically have constantly drilling from first, basically first kind of discovery when you intercept mineralization until you have a feasibility study or you determine the project should be killed and kind of just send more rigs.
23:45You really want a flexible contractor that can have a small team on site with two rigs. Okay, it's going well. Let's send two more. Maybe you only need one more guy. And that's really what we're trying to build is a business that can flex up and down the number of rigs we have on an even project and operate them with a lean crew. Oh, that's smart. Okay. So I know that for at least right now, I assume that you're going to be working with like other partners in the industry to like deploy your first rigs, right? Okay. How do you like, this is somewhat of a stagnant industry, I believe generally, like there's not a whole lot of people trying to shake things up.
24:19Yeah. So how do you build those relationships with people that don't typically embrace change? Yeah. A couple answers. One is through my existing network, a family, but then also many other good friends who are mining technology founders. And so finding people who have already identified the mining and exploration companies that are willing to adopt technology is a huge benefit that we have. And so our pilot customer, an exploration company based in Quarterly in Idaho called Scott Discoveries. They have about a dozen projects in Southern Idaho and Northern Nevada. One of my friends who runs another mining technology company introduced us to the founder, got along well, and now we're drilling some holes for them at one of their projects in Northern Nevada.
25:03By the time this comes out, we will have already drilled a few holes for them. And it's time of recording, mid-March, we'll be about two weeks away from drilling our first hole with them. But mining is a relationships-based game, particularly for these sorts of contracts, which are generally like million or multi-million dollar contracts people want to trust. And so that's one of our challenges as a startup drilling contractor is that, yes, we're building our own rig and we have this broad vision, but we haven't drilled a hole yet. And so we're very lucky to find a first customer that is willing to trust us, having us on site at their project.
25:37And then once we've drilled a few holes for them and show the market that like Dura knows how to drill, get customer acquisition. should be substantially easier, particularly if we can come in at lower cost with greater flexibility. Do you have any good stories about hustling for something that you shouldn't have gotten, but you got it because you just showed up in person or something like that? I would say my job with heavy materials. I started my sophomore year of college, and I went to this rare earths conference in Las Vegas. There's 150 people at this conference, all industry veterans. This is my first ever mining conference.
26:11I was, I think, the only student there, or maybe there were some masters or PhD students when I was 19, when I went there and just started talking to people and happened to talk to an engineer at MP and her team happened to need some software help. And I was sitting in computer science and so ended up just by coincidence getting a job with them. And so that was like the room that I felt most out of place in. The other funny story is I went to another conference in Montreal, this was like November of my junior year. And I signed up, the conference was a couple of days and they had some short courses to learn about various things the day before.
26:50So I signed up for the short course about applying AI and mining. The website had a toggle between French and English. And I figured, okay, this might be in English. I just wasn't even thinking about Montreal in Quebec, they speak French. I show up and this talks in French and I do not speak French. And so it ended up being more of a French mining vocabulary lesson, actually learning about AI and mining. So that was a little bit awkward as well, but it made some great connections there. Oh, that's great. And I think a lot of these old timers appreciate someone who's young, who is enthusiastic about the industry, very passionate about it and wants to learn.
27:30But you need to go into these things with humility. Yeah. I also saw that there's a massive shortage of people and they're just aging out. Yeah. So between, I believe the numbers between 2023 and 2030, half the US mining workforce is expected to retire. Most of these guys are very, very old. It's less than, I think, 5 % of the US mining workforce is under the age of 30. And so we have a very, very acute labor problem. You're able to do more with less people. You need to bring so many more people in the industry, but you just can't fill this gap. And do companies see this and then see you're trying to make it a little efficient, and they're like, we actually do need this.
28:10I forget who said it. It's a great quote. It's like mining does not have an automation problem, a labor problem. And it's like, how do you reduce labor? And automation is one way to do that. But that's really what we're trying to do at Turing is make it such that you can operate a few rigs for two to three people, whereas you normally need three or four people per rig. And so making it such that - Double E efficiency. Yes. So we're still going to need people on site to drill, but you're not going to have a person by the rig 24 seven listening to it and toggling some levers or manually picking a broads and putting them into place.
28:42What's your master plan? So you start off with making drilling rigs more efficient. What is three and five years or even 10 years? So here's the Tesla plan phase one. So start out with drilling. There's about seven, eight billion a year spent on drilling and mineral exploration. And so - Is that globally or in the US? Globally. Yeah, about a billion in the US and two billion in Canada. So take over that market. Then once you actually have your rock on the ground, you need to maximize the amount of data you're getting from this rock. And so as the driller, basically the rig is the one piece of hardware you have to have on site.
29:17Everything else you can do somewhere else or just not do. But if we are already there in the field with this hardware, we are best positioned to then do core scanning. So scan the core with hyperspectral or XRF to kind of tell the mineralogy or some of the elements. Not as accurate as an assay will tell you. It's a good kind of first step. We can do downhole geophysics. You can stick a probe downhole and figure out gravity anomalies extending from it or magnetic anomalies or some structural features with GPR. And so... Are there lots of things that are currently done offsite where you have to ship stuff?
29:49Yeah. So that would be this core scanning. Everything on site. Both downhill geophysic and core scanning are generally separate contractors, sometimes on site, sometimes off. But if we can have the machine, just take the core out and feed it into this machine to scan it. And then do some other stuff with it. We're best positioned to do that as the driller, as well as downhill geophysics. It's a matter of just throwing up an arm, picking up a tool, lowering it down hole. It's historically going to need a contractor there, kind of making sure you're lowering it at a constant rate, whatever rate is optimal, analyzing the data, making sure it's clean, less people in your on-site, fewer contractors.
30:23We want to be the one-stop shop for exploration companies. And really make it such that the economics work to do core scanning and downhill geophysics. Most exploration companies, they're cash-strapped. They would love to have more data, but they don't want to pay for more data. And so if it's just a very small marginal cost to us, we want our customers to love us. And so we'll be able to undercut other contractors. And really, I want to make a whole bunch of these things like the airplane Wi-Fi of mining, like have it included by default. Like we're not just a driller, we're helping you get data from your rock.
30:55That's actually a great analogy because the Wi-Fi experience on most planes, X, like Delta is terrible. Exactly. You have to pay an absurd amount for it. And then once you do that, you have to actually analyze the core in a lab. And so historically, you'll send the core to what's called a core shack, which is like the office where they store all the core. there. Once there, they will have a saw to basically cut the core lengthwise. You always want to keep off in storage. The other half, you'll basically decide what increments you want to assay it in. So generally, somewhere between a foot and a meter.
31:27Sometimes it's kind of consistent every meter. Other times, there's this one two-foot zone you're interested in. And so assay that, figure out what the hell that is. And so you'll have kind of your your geologist or geology tech use a hammer break it break these rocks into like a few pieces bag it up roll a pallet ship it to the lab the lab's going to do is grind it down into a powder and then stick it in some machine that'll tell you the exact composition now they're only using 100 to 200 grams of say a 12 kilogram rock sample and so you're moving a lot more mass than you're actually using and so at larger mine sites what you have is a kind of mobile sample prep lab um Well, they'll do this sample prep lab and they have some analytical equipment as well.
32:08What we want to do is make it so that we can have that sort of infrastructure for exploration companies. So have like one trailer or container that has your scanner and then your kind of small rock crusher to crush these samples. So you have like one or two people on site, your drilling rig and all the like stuff to analyze the samples. Exactly. All in the same place. So it's super fast. Exactly. And then you can FedEx overnight your envelopes of rock dust. Do you think that you can meaningfully impact the amount of time that it takes to go from like trying, first starting exploration phase to actually turning online?
32:40Yes. How long do you think you can save on that? Yeah. A multi-year process? Yeah. So I think it all comes down to kind of availability of capital for exploration companies because like, okay, maybe we can do all this 25, 40 % faster, which I think is about the speed up we'll be looking at, but just tightening some of these timelines and shipping and optimizing how we're drilling. That's okay. But then these companies are still going to have to raise capital. And so if we can work with the larger exploration companies that already have the capital and then flex it down with them, we're going to help them move a lot faster.
33:12Or if we can lower cost and help the smaller exploration companies with limited budgets get more done within one kind of capital raising cycle, reducing those number of cycles is I think how you accelerate exploration. Sweet. Okay. How difficult has it been to educate? I imagine that there's not a whole lot of venture investors that are excited about mining or know much about it. And so what's the experience been for you on educating investors and their feedback and stuff? Yeah. Like, are you excited? Yeah. A funny story from the start. This was before I started the company, but one of my now investors happened to be in London at the same time as me, as I was there for a mining conference.
33:46And so took her to the mining conference four hours and showed her around. Ended up being one of my first investors. And so that's one way to do it, is like actually bring them to meet people in the mining industry, help them kind of discover what your, kind of how I came to this thesis. I just take them to my companies, ask the right leading questions, and now they can hear from other people why this business is going to work. It's been a lot of time explaining kind of what we're doing here about how the exploration process works. What are the bottlenecks? Show them data about what are these timelines?
34:20How much does trillion cost? What are the unique economics for today's contractors? And then what does our tech enable that today's contractors don't have. And so it's a process. There are some that get it, many that don't. But those that get it end up becoming very passionate about the mining space. Yeah. I know that you're spending a meaningful amount of energy to create a brand. I have not seen this in any other, even most of the El Segundo hard tech companies. You've done a very good job at making it cool. How are you doing that? What's your process or thinking around that? Yeah. The team has done an incredible job on branding and marketing.
35:01It's really a broader thing around how do we make mining sexy and cool? How do we bring the SpaceX brand to mining? And how do we pull SpaceX engineers or any sort of top caliber engineer to a company in a historically like in a dirty and slow industry, mining needs a facelift. And so we want to bring this sort of tech edge to it. Exactly. Exactly. And part of that is design. And like all we've done so far is put out some graphics and put up a billboard outside of SpaceX. And so - Tell me about that billboard. How did that come to be? That was David, my head of ops idea. We were thinking, how do we get creative with some like guerrilla marketing?
35:40What are other startups not doing? And we were like, oh, let's do a billboard. And we found that there's a billboard right across the street from the Falcon 9 booster at SpaceX's headquarters in Hawthorne, just three miles down the road from where we are now. And it wasn't that expensive. They're like, let's rip it. And so the billboard says you can't have rocket science without rock science. And the reaction is very well. I heard from friends at SpaceX that we were the top of the office. And so great for awareness. And we'll see how it goes for hiring. Did you end up actually having people apply to during that?
36:11We've had people reach out, no, like people saying they love it. No, like really top tier candidates yet, but it's gotten people talking and got no word out about us. So it makes our next calls easier. The other thing is, we should have booked it for longer than a month because once we did that, it's now booked for two years. Oh. After, like from March, it's booked for two years. We can't get it again. And so it's going to be really funny if Andrew or someone ends up putting something up there like we did. We should, yeah. That's smart. Do you ever wear Silicon Valley? I don't even know if this could be the episode.
36:46I've seen Silicon Valley through like two or three times. Yeah. They put up a fucking billboard of Pied Piper right outside the Hooli office. Yes. And that's what it reminded me of. I completely forgot about it. It's been a few years, but yeah. Yeah, that's awesome. Okay. How have, like outside of just trying to find great SpaceX engineers, what's been your process for hiring so far and like what traits are you looking for? It's talking to hundreds and then thousands of people. You need to find someone who is like gets this problem. And I'm not expecting anyone we hire to like be an expert in mining.
37:17We're hiring drillers and geologists who know this stuff. But for like a top tier mechanical engineer, there's not that many who are experts in mining or mining equipment. And so we need to first like tell them what we're working on. What is the importance of it? And if that resonates with them, great. Then it's a matter of finding out like, okay, how down are they to work incredibly hard at an early stage startup where we are here all the time trying to push this equipment into the field with a very small team and incredibly short timeline. And so like interest in mining and then intensity are likely two top traits, like seriousness and work ethic.
37:51How do you like measure that? Yeah, you got to talk to them for a while and meet them in person and grill them on like, show them kind of our design, what we're working on now, see how would they react to it, go through some of the technical problems they've solved. make sure that they like react well to criticism and feedback is one of the most important things you're hiring engineers and that they jam well with our current team it just takes time yeah particularly at this stage when we're five as we're talking about or five full time and a few other contractors yeah how um so i think trump just signed like some executive order that basically says we need to bring more mineral production into the united states uh and it's like expediting permits and all this stuff.
38:35So what is that going to have on the mining industry? There is the best time to start this company is probably 10 years ago, because then we like would not be in as dire of a situation as we are in now when it comes to critical minerals. But the current administration is, from what we're seeing so far, incredibly supportive of mining and mineral exploration in the United States. So Trump just signed an executive order a few days ago on March 20th, I forget what it was called, all about how do we bring mining back to America. Basically, what it has is the National Energy Dominance Council, which I think it created in January.
39:08The focus then was on energy, oil and gas, and nuclear, bringing some mining aspects into that. And so basically ordered the head of a whole bunch of federal agencies to figure out what are the projects that are stalled and permitting right now, in the next 10 days. He wants a list of mining project that's stalled in permitting and how do we do bottleneck that and then i think we should do that in 10 days from there or 30 days or something like that i think it was the secretary of the interior or something like that how do we or what are the areas on federal land that are best for mining at this point most perspective then how do we bring in private partners to do this um he's leaning heavily on uh development finance corporation um to help finance a lot of these projects, Exim, the export import bank, to basically figure out how do we secure more feed from abroad for minerals that we don't necessarily have abundant deposits of here.
40:04Because that's the thing, America is incredibly blessed, many resources, most, but we don't have everything. We shouldn't be mining everything domestically. Take aluminum, for example, we don't really have any good sources of bauxite in the US. And so a lot of primary production we import from overseas or from Quebec, they're ramping production there a lot of aluminum recycling but no primary production or cobalt there's a few companies in the us planning on building cobalt lines in indaho for example those are not going to work uh the congo the drc has incredible um cobalt resources so like 50 or 75 some massive percentage of global production now um and prices have been incredibly low so low that they uh banned exports a couple weeks ago and should now price to back up and then probably loosen that ban but they want to sell to the entire world.
40:51Cobalt is not a big supply chain risk. We just need to make sure that we can import the ore and refine it here. Are people, like, is the current kind of administration's policies helping like US-based mineral production companies? Yes. Yeah. So basically, I think they want to figure out how can we fund mining projects, projects that are ready to be built, and then hopefully fund exploration projects as well. One of the things, I think the Biden admin did a very good job at, or an okay job at, was they had the Inflation Production Act, which they spent a whole bunch of money, some of it for good causes, like building mines and refineries.
41:29Some companies that probably shouldn't have gotten money, but then some good projects got funded as well. What was really good was through the Defense Production Act, some money went towards actually funding mineral exploration. So for example, Talon Metals, which is a nickel explorer in Michigan, Minnesota. They have a Tamarack project in Minnesota. They got$20 million to help fund exploration. Basically most of that is going to end up going to the drillers. And so that's what I think we need more of is funding exploration, particularly later stage exploration. It's difficult to get capital at the earlier stages, but it's there.
42:03Where I think it's most important to have the government involved is in the feasibility stage projects. But we know there's a resource here. Now we've just got to spend$50 million drilling it out to figure out, is it going to be economic to mine? is it a big enough deposit in these later stages like a few years where um there's like not a ton of exciting news flow like the discovery's been made we know there's a resource there but you've got to drill hundreds of holes to figure out like okay we know we intercepted mineralization here here and here now let's we got a drill with 100 meter 50 meter spacing between everything to make sure everything's there and then go out to figure out the exact bounds of the deposit that's where the projects are most likely to succeed still most are going to fail but retail is excited about this project, but that's when most capital is needed.
42:49So that's why the government gave money to metals. Their share price is very depressed. They're going to struggle to raise a ton of capital. 20 million helps them get a bunch more drilling done. And that's frankly why I think the government should be engaging with us as a drilling technology company. If this is the place capital should go in expiration, they should be engaging with the drilling technology companies trying to reduce the cost and give the government more bang for back. Yeah. What's your process for iteration on starting off with your first prototype, sending it out to the field, getting feedback, whatever, data?
43:23How are you thinking through that? Yeah. So our priority for our first rig was what is the simplest thing we can build that drill a hole? Yes. And so we started designing this rig mid-December. We should be drilling our first hole in March, start of April. So about three and a half months to build this rig, 17 feet tall, we have six tons. It's like, yeah, 15 feet long-ish. This thing is a beast. And so move incredibly quickly. Now, our goal here was not build an automated drill rig. It was build a drill rig that can drill and that is programmable. So basically we have an API to read all the data coming off the rig and then send commands to it.
44:00So instead of having a kind of physical control panel with levers, we'll have iPad or computer screen actually over Starlink here. So it'll sort of be the first tele-remotely operated drill rig of its kind in the world. And so then we can make it super easy for us to store all the data. And then as we're in the field with these drillers, learn how are they reacting to a pressure spike or a drop in the rain of penetration and build that autopilot software once we're actually in the field looking at this data. In parallel, we're building a rod handling system, which will basically robot arm that can automatically grab a drill rod and put it into place so that you can resume drilling.
44:37that should be ready for testing in May. And then once we get all that done and integrated, we'll be designing our next larger rig as well as a system to grab the overshot, send it down hole, pull up the inner tube, take the core sample out of the inner tube and eventually get to mud mixing, greasing the rods. It's a bunch of sub problems. Yeah, a bunch of sub problems we want to tackle one by one. But really what we want to do is get rigs in the field with human operators earning us revenue as soon as possible. Like we're going to be starting a drilling contractor, basically with zero automation.
45:09And it will still be profitable for us because drilling is an incredibly profitable business. As a technology company with a great brand, we've had a great time so far attracting drillers who want to work for this and want to build the future of their job. And I think that's one of our advantages of the brand beyond hiring the best engineers in LA is hiring the best drillers and geologists in the mining industry. There's just no drilling company with a brand anywhere like us. So it's basically just the entire industry is not at all sexy. And so because you are, you just get a flood of talent. People want to work for an exciting company that is calling their shot and they are building the future of the industry.
45:46So I want to know, I think you said or mentioned briefly that your first actual drill or whatever that you created only drilled like six feet down. And it was just, I imagine it just goes into dirt. How did you end up deciding, I'm going to go just build a drill? Yeah. So that was just with a friend that I brought on as a contractor last summer. That was super simple drill, basically an auger. It was an auger bit, actually rented from Home Depot. And that was a question of like, let's just get a few feet down. Let's measure our rate of penetration, our fluid pressure. But it's just like building something.
46:17Oh, yeah. Just welding some parts together. And it's basically, all a drill is, it's basically a hydraulic press or something that spins. And so it looked like a hydraulic press. We crushed some stuff with it. It was fun. That's awesome though. Okay. Awesome. Did you do that before you raised any money? That was after I raised a little bit of money, but before I'd raised. That was after Angel Round going into the pre-seed. Okay. Interesting. Okay. What is the next, let's say, I think you're doing some major announcement in April-ish. What is the next year and a half or so going to look? So we'll be announcing our pre-seed round and a first pilot, once we've been in the field for a little while and drilling for a customer, that'll be mid to late April.
47:00After that, we'll be designing and building our next rig. So this first rig we built capable of going down about 300 meters, collecting a core sample size HQ, it's kind of the industry term, a two and a half inch core sample. The next version we want to go down about a thousand meters, collecting the same size core sample. So it'll be substantially larger, more powerful, As well as this first one, skid mounted, you'll need a telehandler to put it into place out in the field. This next one will be crawler track mounted. So basically on tank treads, make it easier to put it into place. You don't effectively afford it.
47:32Just drive it over and just... Yeah. You ship it in a flatbed until the flatbed can't go anymore. And then you just drive it in. These things are normally remote control. You walk next to it as you're putting it into place. And so it'll be more mobile, larger. That's the one that we're going to be drilling for revenue with. And so for the next couple of months, we're going after contracts. There's a few that are in the works right now. And so we should be drilling and get our first revenue in like August, September of this year, once we build this next version. Raising our seed round in May, that'll fund a lot of an R &D.
48:02And basically between our seed and series A, I want to build five of these larger rigs. Basically get the form factor to a point where we're ready to mass manufacture these kind of mid to late 2026. What do you think you can actually, like on a per unit basis, so you have like, let's say five drill rigs before the series a yeah how much does each drill rig driven yeah like actually cost so it's a rate in revenue yeah so materials for these larger rigs would be like 400k um including all the robotics kind of stuff next to it probably half a minute each these are when they're operating they're doing about ten thousand dollars a day in revenue okay and so um these are honestly they cost to operate today like 5k a day okay these are incredibly high margins and you think you're going to get that down too.
48:45And labor is like 3K of that. And so we'll drop that to like 1K when we have - So suddenly you have like 65 % margins or something? Yeah, exactly. Crazy. Yes. Very, very early. That's like these bigger drilling contractors don't have as high margins. They have way too much overhead and massive fleets, so not as high utilization as like a smaller, well-connected operator. So there's plenty of drilling contractors today making 50 % margins. The problem is drilling is cyclical. There's a more drilling done in the summer and in the winter, particularly in Canada. And so it's a matter of utilization, uptime is you might have very high margins when you're operating, but then if you're not doing anything for a few months, that becomes an issue.
49:26And so that's why building this kind of sales pipeline early on is incredibly important to us. As well as having a software backbone that can figure out how can we flow balance these rigs in different places? How do we bring the rigs that are in Canada in the summer down to Arizona or Southern Nevada in the winter, where you just want to get more drilling done there, or even like that in New Mexico, anywhere where it's crazy hot. Or like, okay, we know you have this rig in Nevada, there's not going to be doing anything for two weeks. What's the customer there that like, hey, we say, hey, we have this rig.
49:55Do you want a few holes put over to discount just to have higher uptime? Having a - Yeah, because it's better to be generating some revenue, even if you're charging like$7 ,000 a day or something instead of zero. It's how do you. Okay. How do we just maximize our uptime with these? Cool. Okay. Do you have any awesome stories that I just didn't know to ask? Let's see. Drilling problem is non-trivial because rock is non-homogenous. You need to adjust your parameters, you're going through different rocks. But also, when you start drilling, you're not just going to hard rock. You have kind of soil and then kind of loosely compacted rock varies highly and eventually you get into hard rock.
50:35And so what that means is you have to drive casing. And casing is like an outer drill rod that you put around the drill rod that you're normally drilling with. And that basically you drive that down and that means that you could spin freely and so that kind of lets it collapse around it. And so what sometimes happens is you don't try the casing deep enough or even downhole, something's loose. And you have rock that collapses around the drill string. And so this, what you'll first do is kind of rotated at max RPM, try pulling it up, pushing it down. If nothing works, you're stuck. And now these drill rods, your downhole tools are very expensive.
51:14And so what you do is you kind of predict where the kind of cave-in was. You can send down a tool. You can basically cut the drill string, pull up the rods above that. The worst thing that happened, this happened in a project I worked on last year, was like the cabin happens just beneath the casing, and you basically can't recover anything. And so you have this very interesting dynamic. And it's one of the reasons drilling contracts are somewhat difficult to negotiate between the, or interpret at least, between the exploration company and the driller, which is whose fault is it? Because the driller is always going to say that this is bad ground, but that's not our fault.
51:51There's nothing we could do. This is on you. The exploration company is always going to say, skill issue. Y 'all could have done better. And so what ends up happening is you have this fight between them and it ends up most of the time being like 50-50. That's just an interesting dynamic of this. And what we want to do is predict what sort of rock you're going to before you're going through it. Try to reduce that incidence rate. But yeah, it's only going to get expensive when you make mistakes. Interesting. okay do you guys have like special insurance just to kind of cover not yet but we will get some sort of insurance all right uh final question what's the hardest thing you've overcome i had had these role models that basically taught me that like hard work brings success and it's like the only thing that determines success is your work ethic um so i'm incredibly grateful to my parents for giving that to me um i don't think there are that many people who were both fortunate to like yeah not have something incredibly tragic in their lives but then also build an awesome company but yes but then also like have that example in front of them where like life does not need to be incredibly depressing for you to be successful but you do have to be driven well i would also say that like all great companies are outliers in some major way and so it's very possible that like your life experience or life story is somewhat unusual and you still go on to succeed and it's it i think it was a very toward like junior and senior high school were incredibly formative for me when i like a got on twitter started talking to young people on Twitter and Discord who are building companies, get into reading and watching everything Kurtila said, going through all the YC stuff, and kind of go into have this kind of tool framing of my dad running mining and manufacturing businesses and seeing him work incredibly hard, but also knowing, or at least learning on paper, what needs to go into building a technology company.
54:00And I think there are just so few people that have worked on the factory floor in a family business, stayed late doing that, thinking about technology, and then also having the unique insights, being able to learn the secret, as Peter Thiel talks about. Did you apply to YC? I did not. You did not. Why didn't you? I think by the time... I knew I wouldn't get in for a while. it was like just me and an idea and then so you didn't believe that they'd accept you i i it honestly didn't really cross my mind as like a a hard tech founder i knew i was going to but the time i incorporated i knew i was going to come to el segundo um and then right after i incorporated i just raised a pre-seed or raised an angel around that went into a pre-seed and so maybe they'd be helpful but i think i got a lot of the they were incredibly formative for me junior high school watching all the startup school videos but it like really didn't cross my mind to apply recently um i did apply for the teal fellowship and then i ended up graduating and so didn't get that there you go um yeah if i dropped out maybe i would have gotten it maybe yeah i'd have another hundred grand to spend i applied for the teal fellowship as well it did not materialize yeah this is it was it was interesting my uh in february last year at a mining conference and uh was talking to one of my dad's friends and then i was planning on dropping out and he called my dad and my dad ended up driving down to atlanta to get dinner with me and to like convince you otherwise this is basically like you're not will support you're doing a company but you need to graduate yeah and so i was like okay fair um do you just always like when did you first kind of realize that you just really wanted to build build something of your own yeah i was probably towards the end of high school i knew i was going to start a company junior senior year yeah probably junior year um maybe like just before covid um is when did i read zero to one like january february 2020.
56:03um you get one-shotted by like peter teal a little bit uh this is the best thing that ever happened to me um i remember i like came back from dinner and started reading at like 11 p.m and then just read it all the way through it's not that long in the book a couple hours um it was it was also just a little bit before that then i got into programming and like started to actually build software um then the mining stuff came in in college and it all sort of coalesced into mining technology and then the i think maybe the luckiest break was coming to la tech week in 2022 um which is where i met augustus and cameron um zane steinman a bunch of other people and then over the next year i met phil and isaiah and many others who are now very dear friends in the El Segundo ecosystem.
56:54And so meeting that group and becoming friends with them, that and then doing the Discipulus Accelerator last March are what sort of made me realize I can start a company now. I was initially going to wait until I graduated college. You just decided to go for it. Then I was like, okay, I'll just incorporate.
From the publisher
My first interview with Ted Feldmann, founder of Durin. Durin builds and operates automated drill rigs to accelerate mineral discovery in America.