My name is Louis James. I'm the "senior metals and mining strategist" here at Casey Research, and editor of the Casey International Speculator and Casey Investment Alert. But what does that really mean?
When people ask, my quick reply is "I kick rocks and stocks." Well, that's not actually useful as a quick reply because it invariably generates a large number of questions. If I have only a few seconds left before the elevator ride is over, I say, "I'm an editor."
But I do kick rocks and pick stocks. I travel every month, literally kicking rocks all over the world, on intense, due-diligence trips that are essential for distinguishing between the doers and the talkers in the mining industry.
Granted, sometimes kicking rocks is just an unimportant consequence of climbing a vertical rain forest in the mountains of Panama (with Ngöbe-Buglé Indians running circles around me, laughing and encouraging me not to fall), but sometimes it's because the rocks have visible sulfide minerals in them, and I want to see what's underneath, as you can see below.
This was the easy part of the climb in Panama, which quickly grew so steep and slick, I was using my rock hammer like a mountaineer's ice pick to help me climb. Despite that, I confess I fell more than once, though only once in the stream.
The climb was worth it, however, as the geos cleared away a swath of cliff, exposing the type of "stockwork" veining you see above, shot through with exotic copper sulfides.
Mountain climbing is fun (well, it would be, without the squadrons of Panamanian attack-mosquitos), but more often I'm kicking rocks underground, examining mine workings, new, old, and ancient. I did a lot of this in 2013, such as my recent trip to Peru, where I inspected a gold company that made record profits at the very same time that gold retreated most sharply last year.
Underground with Peruvian miners, looking at samples from a very high-grade gold discovery. That's not actually gold you see on the rock; most of it is pyrite (the iron sulfide known as fool's gold), but in this case, the gold occurs with the pyrite, so it was a very good sign.
The tunnel above continued past the vein, allowing the explorers to drill back into it, intersecting the mineralization at nearly perpendicular angles. That's important as it yields widths closer to the true thickness of the vein and helps define variations in orientation.
Based on what I saw in the tunnels above, I was pretty confident the company I was inspecting would hit high-grade gold, and just a couple weeks ago, they reported doing exactly that. The stock was one of our best performers in 2013.
Not all due diligence results in a recommendation to buy, of course. For example, I also went here last year, in British Columbia:
This glacier I visited last August sits atop a valley in British Columbia, Canada, where several mining companies are exploring for gold, silver, copper, and other metals.
Where I found this old mine…
Mining in this part of BC goes back 100 years. Many geologists will tell you that the best place to find a new mine is next to an old one. It's not just that the old timers lacked today's technology—they did incredibly well with what they had—but that they were interested only in bonanza-grade mineralization, whereas today, much lower grades can be mined profitably.
Which led to these old workings…
You can see the "dip" of the veins in this photo of old mine workings underground. That's a pretty big space to mine out with picks and shovels, so it's clear the old timers found some very high-grade material.
Where I found some spectacular rocks…
This rock is what we call a "breccia," which results from violent geological action breaking up rock, the pieces of which ("clasts") then get caught in a matrix of new rock being deposited, usually in veins or "pipes" through the pre-existing rock. This breccia shows very large, angular clasts, indicating a powerfully explosive event that left a lot of room for mineral-rich fluids to deposit metal sulfides around them. In this case, the clasts have smaller clasts within them, indicating multiple events—and multiple events are very good for making high-grade deposits.
Including visible, high-grade silver in drill core…
The company I was visiting was drilling around the mineralization I saw underground to see how much might have been left by the old timers. This hole hit high-grade silver and other metal sulfides in a new area, showing what they did. We had to wait for official assays to know how high the grade was, but with that much visible metal, I knew the report would be good.
If these photos from British Columbia look pretty exciting to you, you're not alone. I was very encouraged by what I saw, and was certain the company would have good news to report to the market soon. Unfortunately, I also knew the company was almost out of cash, which meant that even if the news were as good as I expected, and the stock did go up, they'd have to raise money, which would likely knock the share price right back down again.
What actually happened was that the company did announce bonanza-grade results, but the market didn't react much at all, and management had to raise the money anyway on terms that were dilutive for existing shareholders.
Moral of the story: Due diligence is essential, not only on the ground, but on paper and in the boardroom as well.
This is what I do. I'm not always right, but I work hard, bringing the most valuable information possible to readers of Casey International Speculator, which is included in the Casey Club package now available for a limited time. It's hard work, but it's fun, and it has produced a lot of wins over the years. I'm proud of all the hard assets investors I have helped. It's an interesting plus that this also benefits the people in the (usually poor) communities we invest in, as well as handing us handsome profits.
I encourage you to join us in what is often quite literally a win-win treasure hunt.
