We've had a busy 12 months combining 4 businesses in Brazil including PDGM which we acquired from Equinox Gold, Faina Gold, Poconé Gold and most recently Bodó Tungsten. Diversification is key and we are now very focused on restarting both the Caiamar and Sertão mines to increase our current production from 4,000 to 8,000 ounces per month.
Last weekend I spent some time listening to Michael Saylor Youtube interviews. Mr Saylor is regarded as the most successful Bitcoin investor over the last decade who talks with such calm and hypnotic confidence. The nitty gritty of Michael’s ideas are a little harder to grasp but I wanted to listen to this god like messiah just to be sure I wasn’t missing anything. After my 8th Michael Saylor interview my view has not changed – Bitcoin and cryptocurrencies in general appear to be gigantic ponzi schemes that make the Tulip Mania seem sensible. What is also evident is that Bitcoin seems to have a negative correlation to inflation. Every time the market worries about inflation, Bitcoin seems to trade down rather than up.
At Pilar we prefer to invest in real gold operations with long mine lives. We also think it is better to buy developed mines than build them from scratch and use the same principal as every happily married couple should always follow - "Always buy another couple's dream home than build your own", to avoid the stress of builders, architects, government approvals and budget blowouts. We think M&A is the best way to build a mid tier gold producer and like to grow with limited use of debt that can often bite you at the most unexpected time.
To be frank, I don't think most commodity prices are high enough at the moment to take on the risks of building a greenfield mining operation because of the inflationary pressures that now confront our industry. Tungsten West recently announced that due to rising inflation it has put its UK based Hemerden tungsten and tin mine on ice until it gets a better handle on the true capex. I take my hat off to their management for being upfront and not drawing their agreed debt facility.
This is a theme we wrote about for tungsten and its looming price spike due to the ongoing delay of the Big 3 mines including Hemerden. I am guessing the situation is probably the same for copper, nickel, tin, oil and a whole host of other commodities. Years of bear markets since 2011 started this problem due to a lack of funding, as low prices and a move to ESG funds shut the door on new mines. Now inflation is making it more difficult to build much needed capacity, even after funding seems secure.
Hope you enjoy OldGold’s video and his music selection. I suggested that he use some more modern songs like the ones the Korean boy band BTS sing. He growled at me and said he “preferred to stick with Neil Diamond and Glen Campbell because they have stood the test of time over many decades like gold has over 1000’s of years”. He said “BTS is a fake band created in a studio plied with lots of marketing like Bitcoin”. I could see his point.
Thanks again for your support and call us anytime.
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