He Poured Drinks for Mining Legends. Now He Beats Them (Rick Rule)

- David, the man that needs no introduction today is to Rick Rural. We ask him questions that I don't think he gets asked very often or all the time. We try and go deep about some historical things and I think the money miners will get a lot about this 'cause there's a lot you can learn from history looking back and then reflecting on where we are today. - I couldn't agree more on, mate. You know, I love my history delving back and we ask him about some of the greats of the industry, some of the stories, some of the characteristics that make people successful, the ups and downs, the various cycles that he's been subject to over 50 years in the industry. So I reckon the money miners are gonna love this one. - Mate, you and I just spent a week, a week over east, really. We flew into Sydney, we drove to Newcastle and from Newcastle, we spent a few days there and then even ventured our way to check out some wonderful coal mines, you know, past the Hunter Valley to be honest. - Through the beautiful hunter and it was all possible thanks to our fantastic partners, Sandvik, we got an even greater appreciation for the beautiful work that they do in the ground support industry, we got to see their Heather Bray little operation there and the rocks, the bolts, the plates that they supply to this fantastic industry and we got to meet a lot of the team there as well in Fort Scratchley. - The wonderful team and most importantly, mate, we got to give the billion dollar man Mr. Derrick heard a check for a billion dollars in person. - The man, the myth Derrick heard the leader of DSI/Sandvik ground support. If you're out there, you're running an operation, get an order in, use the app that Derrick coded up himself, the whiz and get on that today. - He loves being called a billion dollar man too, just say hey Derrick, I hear the billion dollar man, you love it. - That's a thank you to Sandvik ground support. Here we go. - That's a wreck. (rock music) - Has the last few months since with I spoke, treated you? - You know, I mean, I wish there wasn't a war and stuff like that but the truth is, it sure has been an easy three years to make money. - Oh yeah. - It's so interesting you say that. I was reflecting on some of your history Rick and I mean, there's that precious pool market, it was between '08 and 2011 that you intentionally sat out of and I am so curious, you know why that one was a decision to sit out and this one was easy to make money in. - Well I made a mistake. I mean, to be honest with you, I thought first of all that the circumstance would be more deflationary. I didn't understand the easy money would work as well as it did. And there were so many other opportunities, other than precious metals, that appeared attractive to me. Among other things, I was under invested in the broad economy. And the shares of Berkshire Hathaway fell by 52 or 53%. And one of the things I thought as well, this will be a real easy way to rebalance. I can throw a bunch of money at the best stock picker in recorded history and a guy who by the way, by stock in an insurance company rapper. So he, unlike me, doesn't pay tax, that seems like a pretty good deal. And so, you know, I whacked a bunch in there. And the bank that we had then, ever bank, we went into that early crash, pretty cashed up. And when the other banks were lending, we could. And the FDIC had a whole list of other banks that were empty that you could take over for dimes on the dollar. So, you know, part of it was, I made a mistake, plain and simple. And part of it was, there was just too many other opportunities. And now compare that to today. It, um, the opportunity set seems very different, right? Because, because a lot of stuff. The opportunity set is very different. There is nothing that I know of this hated today. I mean, nothing, let me rephrase that. There's nothing that I understand well this hated today. You know, I have two qualifications. I have to think that something's a good buy, but I have to believe that I know enough that I give a shit about what I think. And the conjunctions of those two circumstances is less rosy. We do have a banking charter. And I'm, you know, when the time comes to add more capital to this bank, I will certainly do that, but that's not going to be for six months. So I don't know what I'm going to do right now. I mean, I, if we talked about, if we talked about this six months ago, I was going to oil and gas business. But the oil price that I was hoping for in 2029 is here with us today. So I'm not complaining, you know, it's just, uh, allocating is getting harder. I'm curious on that, that period of time as well, Rick, if we go back to the, the 2010s plus or minus a couple years with, with the brokerage business as well, that eventually got, that wrapped up by Sprott. How did that tie in with the banking business that you had as well at that point in time? Well, the broken business was different. That bank, battle bank was public or ever bank. I'm sorry, it was public. So I was just a shareholder, um, a founding shareholder, but just a fair, a shareholder shareholder. The brokerage business was private. It was owned by me. Uh, and that means, uh, you know, it was run by a coward. It was in very good financial condition. Uh, in fact, I wanted to run an ad in November or December. No, no, I'm sorry, it was, actually, it was in 2009. I wanted to run an ad. You know, the US government was just given away these tarp loans. And I wanted to run an ad in the Wall Street Journal saying that global resource investment neither needed nor would accept a tarp loan. And I thought for my audience that that would be very good for business, but you have to, in the US, uh, present brokerage industry advertisement to the self-regulatory, uh, authority for approval. And they said, uh, Mr. Rule, that ad is not helpful. That will not be permitted. But, uh, but, you know, we were, we were able to do some things. We were able to press for some types of business relatively aggressively when our competitors couldn't, I think that ad, I think that ad probably could have added 10 or 15% to our client account. Had we been allowed to run it. I thought it was timely and cheeky. It was true too. You know, we, I remember our clearing firm used to say, you know, you guys should have, uh, more debit balances. Uh, you should offer more margin lending some punters money to speculate in penny stocks. It's not my idea of a good time. You know, I have credit criteria in the robb is strictly the new yours. And, uh, you know, that served me well over time. Yeah. It did amuse me that our clearing firm wanted us to allow people to use 50 cent more, you know, 50% margin to pay $2 stocks. Uh, and I didn't and don't think that that's a good idea. Uh, the, the perspectives on leverage have like certainly changed. I remember even starting in the industry or the forms and everything. They're still in corporate, you know, led for huge margin. How much, but it's much less, you know, pervasive these days than it was. But all you speak with all the guys in industry and therefore, you know, from when they were our age, like, travel my age, they were, they were punting on God knows how much time they have reached and paid the price through the various cycles and learned a few lessons. But it's interesting to see that sort of ingrained in the industry. Uh, my only guess is, uh, at that point in time was global. It was owned by me. Uh, I wasn't using somebody else's money. There was this wonderful saying on Wall Street. I, I, wonderful, the, the looser, but it's it, uh, the phrase when they do these goofy deals is, I won't be here. You won't be here. Uh, in other words, they were using the firm's money to try and generate quarterly cash bonuses. There was no real penalty for failure. Uh, I buy contrast to 100% of that firm, uh, or 80% after bonuses. Uh, and I would be here and they would be here. And I had no incentive to do something stupid with my own money. Uh, I think in a lot of financial services businesses, the people who run the business, uh, have a very healthy stake in the success and no stake whatsoever in the failure. The consequence of that is that they're maybe more aggressive than they might be in a different circumstance. You, you saw that business to sprout and by virtue became and still are there the largest shareholder today. And you've got this wonderful adage rig, which I remember from years ago, you talk about, um, your mentality, this, this, Eric's and you, you say, um, you know, your, your thesis through investing in resources goes something like, um, you always thought about protecting the, the downside, the upside was I care of itself. And Eric thought, um, if I, if I, you know, have us a pub winner and let it run, than you don't have to worry about the downside. And. Then you finish off that adage by saying, "Eric's a billionaire." You're not, but I've been the largest shareholder of a Sprout with a $5 billion market cap. I guess you might have joined Eric's club lightly, Rick. - Well, Eric's done very, very well. Eric's a unique human being in that he is psychologically prepared, and financially prepared now to take loss. I would say my first two years in Sprout, and by the way, when I joined, that was the second largest shareholder. He was the largest. Where I the largest, he would have gone to work in a place called Rule. (laughing) I went to work in a place called Sprout, which will tell you who was the largest shareholder. I suspect that Eric's portfolio, and I don't know this for sure, but I suspect in 2011, 2012, 2013, Eric's portfolio lost 85% of its value. There are not a lot of people who either psychologically or financially couldn't stomach that. - That's an enormous amount. - Eric spent about six weeks in solid condition. I remember it well, after that, he sort of dusted himself off and said, okay, let's restructure this portfolio. We're going back to where we came. He's an amazing human being. It is true that when he and I were visiting about our respective styles, I said, if you look after the downside, the upside takes care of itself and he laughs and said, I believe the other way around. I believe that a 20-bagger amortizes a lot of 35 or 40% losses. The efficacy of his theory, if you work as smart as him, and if you're as smart as him, is proven by how much money he's made. And by the way, the money he's made in this sector dwarfs, the money he made in the prior sector. The guy's hitting a long wall over the month. I'll tell you another funny Eric story. That's all on the same vein. When they took me over, they trotted me around Toronto to all these institutional investors. And Eric and Peter and them are basically saying, I'm the greatest things in the sliced bread, my sweat doesn't stink, all those kind of stuff. There was one, I think, pretty smart securities analyst, Chinese guy at RBC. And he said, so Mr. Sprott, just had a curiosity. We've heard all this stuff you like about Rick. What criticisms do you have? What's not so good? I think, "I'm just going to sky smart. I got to see how Eric answers this." And Eric started laughing. And only Eric would say this. He just has no fear. He says, the problem with Rick is that he's afraid to be right. He has these wonderful answers and he hedges everything. Some of the names he's talked about, when I hear about him, they're his names. I'm coming in after him and I buy five times as much. (laughing) Which says a lot, you know? He's got marvelous for Scapatot. It's rare to say someone that he's got aggressive in that size. And you know, he's absolutely, but he absolutely regards being wrong as the pricey pays to be right. You know, when he reviews his action psychologically, he says, I do him again. Now listen, I don't want your people at home doing this, by the way, you know? We're talking about a guy who works deceptively hard and is really, really, really smart, which is why he can make this work. And he has absolutely no personal remorse. If he loses by now, if he loses $10 million in a deal, it won't change his decision about anything, not the next deal, not what to have for breakfast. That requires a very stout financial condition, but it also requires an extremely mentally stable human being. There's no remorse around Eric. I think his background as a CA is chartered accountant is worth understanding too, in that he really, truly puts things in arithmetic terms. He is, I don't mean this in a human sense, in a human sense, he's very warm. Been in a professional sense, he's extremely cold. If you'll remember the Fosterville discovery in Australia, that discovery, you know, basically doubled the stock, and Eric made the point, which is very true. He said statistically is much cheaper now than before it doubled, because you have the information. Other people's minds aren't wired that way. Yeah. I'm also curious to hear Rick, the other lessons coming out that late-chirna boom, 28 to 2012, taken an 85% haircut for him would have been pretty catastrophic for most people. Are there kind of lessons you noticed in how he changed how we went about the market and canter to hear your thoughts in the lessons you learnt coming out of that boom into the next one? Early on, he was in denial. You don't have to see that. When I joined Sprott, I found my horror that amongst all of us together we had 1,000 names. There was no way we could follow 1,000 companies. So in a director's meeting, I said, you know, we've got to cut this to the number of names that we know well enough that we feel is on his fiduciaries. That we can represent the people's money, which is to say, we had to get rid of 85 or 90% of our names. And that was pretty ugly. And for a while Eric frankly refused to participate. And I would say through 2011 part of 2012, he really believed in these companies. He believed in the people he believed that the what he saw as the aberrations in the market were temporary and he was wrong. But when he came around, then he began to allocate assets. He said, okay, my mistake was I own too many names. I didn't know the names well enough. I didn't have enough conviction. What I need to know now is figure out the names that will give me to the best leverage to recovery, eliminate the rest fairly ruthlessly and redeploy the money. And when he said about doing that, it was impressive to watch. There's lessons from that period of time. You know, one one one analog that's consistently made about the period of time we're in right now and you mentioned oil, oil being at $100 already. I mean, the parallels to the 70s is is is is is dark and rising. And if I go back to your existence in the 70s, Rick, which I understand is quite some time ago, but I know you've got great memory. I was surprised to learn you're actually a bouncer in the early 70s. So, you know, we were paying attention to markets enough to draw the parallels to today. Yeah, I mean, you know, I need to say I went into the hospitality business. If that's what you want to call it. Because I needed to go to school during the day. And I needed money and I had to work at night. The only skill I had was I was a big guy and I'd box for 10 years. So I was able to get a job in playing both of those skills at night. So I'd go to school today, but I was going to school today to study natural resource finance. You know, through an onset of circumstances, I won't bore your audience with. I proceeded very quickly from being a balancer to a bar owner. Probably do quickly in retrospect, but that's okay. And my bar was absolutely the epicenter. As it turned out, ultimately nighttime epicenter, then, cover stock exchange. So it was interesting to me. I'd go to school during the day. And these professors would teach me the way that finance was a linch to work in textbooks. And then at night, I would pour whiskey to the movers and shakers of the Vancouver Stock Exchange. And I would learn the way finance really worked. And they were not particularly well related. And it turned out that some of the empirical lessons I learned during the day, in other words, some of the tools that I was taught to know how to know I used to this day. But the skills that I learned at night, I use every waking hour. I joke that I left the University of British Columbia, which was where I was attending then. Because it got in the way of my practical education, given that my chosen vocation was natural resource finance, and given that I was making so much money and learning so much more at night, my academic activity has really, truly gotten the way of my education. I'm not suggesting, by the way, that particularly my minor, which was geology, or some of the lessons that I learned in finance weren't important. But I do believe that the practical education that I got with the Marie peasants and the Adolf Lendines and the Peter Browns of the world at night, people who turned out to be legends in mining finance weren't more valuable. I had the extraordinary good fortune of having a guy named Peter Cundle who was a globally noted value investor at that point in time, taking me under his wing. And he was really responsible for the synthesis of what I learned during the day and what I learned at night. Did you appreciate at that point in time those people, what was their reputation in the early to mid-70s already? I did appreciate them. I'm embarrassed now when I think about how aggressive I was as a young man. According mentors, I was absolutely shameless and I'm delighted that I did it. I wonder to this day why some of them tolerated it. I suspect as an old guy who likes to mentor now that just the sheer energy and ambition that I exhibited then made people want to help me. These are people who had a lot of experience. And I've come to learn at age 73, probably didn't have very much by way of legs left. Now that I'm in that position myself. And I think probably it was my energy that abused me. When people ask me today why I spend so much money and so much time mentoring, it's because it's my way of acknowledging the debt that I owe to those incredible people who mentored me. And I absolutely understood at that period of time that they were doing me an incredible favor. And I'm embarrassed to say I think that I continued relentlessly to ask them to do me more favors. I think that hits to something I actually wanted to bring up at the end of that chat. But I'll ask now because there's something there about legacy I think. And you, I mean, you're, I think you understand legacy better than most you invest in, in mining companies where there's family legacy involved. It clearly, it stands a lot for you yourself. The fourth Arthur Richard rule if I'm not mistaken. So there's legacy even built into your name. Tell me about legacy and your philosophy behind it. Well, legacy's one thing. Particularly for me, the legacy involving the debt I owe our community, the people who've taught me, that's important to me. Legacy is an investment strategy is important to two. I think that the three of us have talked before on your show about Preto's law. The sense that accomplishment doesn't conformably align. That's the social science dictum around the 80 20 rule, the suggestion that any given subject. 80% of the utility is contributed by 20% of the dis the participants. There are two things that you need to know about. Preto's law to make a work for you as an investor. The first is that it's a bell shaped curve. And there isn't 20%. There's 220%. There's the good 20. The generates 20% of the utility. I'm sorry, 80% of the utility. And there's the bad 20. The generates 80% of the aggravation. And they're both there. So your first job is to hang out with the good 20 and avoid the bad 20. Legacy comes into play because if you run either lip, either good lip or bad lip, that 20. What you'll find is that if you put them through the same performance dispersal curve, they conform will be aligned. Which suggests that 20% of the 20 does 80% of the 80 or 4% of the population base generates about 65% of the utility. I found and it took me till I was 40 to figure this out. That. That dispersal curve conformably aligns at least one more time. Which is to suggest that 1% of the population base generates between 40 and 50% of the utility in any given activity, including mine finance. Which means that the legacy contributions of the Lundin family or a Robert Friedland. Are just stupendous. The value of aligning yourself with someone and a team who has a proven legacy of success at the task at hand. Is of almost immeasurable value. And that's important. You get tempted to invest in early stage companies for a variety of reasons, but particularly efficacy of the storyteller. But the truth is that the most important determinant of your success is the applicability of the team. Particularly the ownership team. Engaged in solving the task at hand. And that comes to legacy. I'm having the good fortune right now to study. Operating parameters of the third generation of the Lundin family. I started doing business with the cyan of that clan Adolf Lindin in 1975. If my memory serves me correctly. And I did billions of dollars of business with his sons. Lucas and Ian. It amazes me that their grandsons. The grandson of a billionaire. Is as humble and hard working. And smart. As those young lads are, you would expect them to be, you know, dissipated with white powder coming out of their nose and some brothels somewhere. Not the case. And you wonder about the legacy of a family. Like that, the cultural legacy. It allows them not merely to continue their fathers and grandfather's legacies. But in many senses to improve on it. I'm very interested in how that works. Can you share a bit more about Adolf and what made him kind of special at the time. Like the no guts, no glory. You know, family tradition. Shine through and people throughout the industry kind of know that. I think perhaps sometimes people take the wrong lesson and they just go and gamble kind of dramatically. So what was it that stuck out about him? A few things to struck me of an Adolf. First of all, he was deceptively smart. People paid attention to the fact that he was a good business man and he was a good negotiator. All those things are true. He was also a really good geologist. He was really, really smart. Adolf loved it too. Adolf liked money. Don't get me wrong. But his goal was never to spend money. His money, his goal for money was to be able to get bigger to invest it. Adolf knew in his heart of hearts, although the world never did. He was four times, he was broke. But he kept going. And when he hit something, I mean, occasionally he'd do something nice for himself or more, more likely he'd do something for Ava, his wife. But it was never about that. I mean, absolutely positively, never about that. My finest meals with Adolf and we had many. We're not at the world's finest restaurant. We're not getting out of the rain together, have decent food and have a good time. He was just, you know, he was just not about that. Adolf also absolutely reveled in the success of others. He was the boss because he had to be the boss. But the idea that somebody else came out of a transaction with a lot of money. Is something that Adolf really, truly liked. Adolf also had a, he had an adult sense. A measured sense of political risk. Adolf believed, which I believe is very true, that the most dangerous government is the one closest to you. And he didn't believe that jurisdictions ruled by white people in English, according the rule of law, were safer than other countries. So Adolf was perfectly comfortable in Ethiopia or New Guinea or Argentina or Sudan or Congo or Russia. All places that I did business with him in. And that is to say, it always worked out for him. But nothing always works out for anybody. I remember Adolf telling me once, having a great asset in a country that you're afraid will steal it is much better than having an asset in a country. And that's not worth stealing in some country that wouldn't bother. And that always struck me. also told me the exploration risk no matter what you do is always high. So why would you take big risk for a small project? A small project could only ever make you small money, but they carry big risks. While a big risk, although it carries, you know, a big deposit while it carries big risk can make you big money. Why would you juxtapose small money with big risk? And Adolf and his son Lucas in particular were never afraid to be wrong. I could remember probably 10 times in my life in discussions with either Adolf or Lucas where we'd be discussing something going through the pros and cons of the group of us. Finally, a lundine fist would pound on the table and say, "Okay, enough talk." We know as much as we're ever going to know. We have to make a decision. And if we screw it up, we'll fix it. Up or down, yes or no, right now. To the extent that Lucas staff gave him a chair that had a stich of the back of it, the decider. At a certain point in time, the whole and dean family has always been very pragmatic about the fact that they make mistakes. Correct. We talked earlier about Eric Sprott, the same thing. At some point in time, when you figure out that the odds are against you, you fold. Or if you figure out the odds are with you, you go. And there's no remorse if you leave. Lose, you fix it. It reminds me of this story that somebody told Trevor and I kind of recently. It was about Chairman Chan, the later of Xi Jinping, and they were debating, they were endlessly debating to build a decline or build a shaft. I think I might get the details wrong, but directionally it's kind of right. And the team eventually sort of says, "Okay, we're going to build the decline and it just slams his fist on the table. We're building the shaft. You can see the all body goes on forever, end of decision and they just crack on." And that kind of foresight and ability just to make a decision and get on with it kind of stuck out to us pretty dramatically. I had a similar discussion which I can share now that Lucas rest in pieces no longer amongst us. I pitched Lucas an exploration idea in the 90s. Maybe it was early 2000s, but you know, 20, 30 years ago. I said, "Lukas, you know, I own all these prospect generators. At all of these guys are turning up five or six prospects a year. You're a prodigious consumer of prospects. Why don't we co-invest in all these things together? And the condition of me investing in you investing is that you'll get informal first look at every project that they do. But they'll probably have an easier time raising money because you and I are invested in them, which means that likely they'll be able to do financings at higher prices and we'll leverage off other people's money. Lucas says, "Rick, that's a really good idea." He says, "But you know, things aren't the way they used to be now. We have to go to the board. You have to explain this and the board has to, you know, vote." I said, "Okay, you know, I'm happy to that. I present a lot of boards." So we trundle into this board meeting. I forget what board it was, but we sit down and Lucas says to the example, "Okay, now here's what's going to happen. Rick has this really good idea and he's going to explain it and you're going to vote for it." That was his idea of a democracy. He was, in fact, decisive. It was, it was a very amusing incident in corporate governments, but I do think it said something about the fact that people who independent directors who existed in the Lundine orbit had to be confident enough in what they do and understanding enough that exploration involved risks, that they were willing to do that sort of thing. There's a lesson, there's many lessons from the Lundine family and one of them, I think, relates to like a topic you've talked about, and that's the value of mispriced or embedded optionality. And for them, there was this geopolitical arbitrage and some respects that could pick up an asset like Fruit of Belmolta from a major for peanuts and it was clearly mispriced in the fullness of time with their own, with its incapability have been able to build a tremendously variable business off of that asset. That point of optionality though, I think about it a lot today, to find opportunities where there's embedded optionality, there needs to be very specific market circumstances or or political disparities between jurisdictions. Where do you look for these cases of mispriced optionality because they're spectacular returns that can come off the back of it? There also is a requirement that one acts. Too many times I've seen managements that weren't entrepreneurial and they, an opportunity is presented to them by the staff and they consider it and they consider it and they consider it. The American parlances ready aim, aim, aim, fire. One would suggest that some of the great entrepreneurs, the Lundines, Warren Buffett, folks like that, short circuit a little bit, even Eric Sprott, ready fire aim. But the truth is that you have to have the maturity and the confidence and the education and the staff to look at opportunities where they see problems, an act. I've done some really truly great entrepreneurs, Jim Bob Moffat who built Freeport, Mac Moran. It was the same circumstance. Jim Bob used to say, I'm sorry, that's American parlance, James Roberts Moffat, not Jim Bob. When he would see an opportunity, he absolutely had the courage to capitalize. Amazing. I mean, imagine seeing a bunch of green copper stain at 13,000 feet above sea level, 550 kilometers from the coast in Papua New Guinea, where a labor dispute met that some of your workers wanted to eat some of your other workers. And you build the biggest copper mine in the world up there. You have a 220 kilometer long trommel to carry ore. At the time that Jim Bob fought through Hertzberg and Grassberg, I mean, not one thousand, not one and one thousand people thought he wasn't utterly, utterly, deft. And I suspect that that mine makes $3 million US a day after 40 years. When Idolf Lundin went into Argentina to do Baja de la La Vera, he had a fairly short fuse to make that project work, where else the Argentine government would take it back. Every other company in the world that had the opportunity said, well, the project's been there for 20 years. Why didn't it work? I asked it all that and he says, because the government wouldn't allow it to work. I mean, this is really simple. The circumstances changed. So your response to the circumstance has to change. That ability to look at things factually, not let your own prejudice and not let that part of history, which is no longer relevant, guide your decision. There's been a wonderful set of circumstances in the last 15 years, where entrepreneurs have looked at assets that were redundant in the bowels of major mining companies. Projects had been stripped for cash, rather than had cash care and attention spent on maintaining the project. And they have taken projects out of majors, where the majors couldn't make them work and made them work in spades. What this has to do is looking at an asset with different eyes. And the great entrepreneurs that I've seen have had the ability to look at assets with that same different eye. I remember my own mentor, Peter Cundle, when I was a very young man, throwing a case study down at a desk. And he said, I want you to tell me why this works or doesn't work. And unfortunately for me, it wasn't a resourcing. It was a brewing company. And I will admit that at that point in time I did do some due diligence on brewing, but not from the producing end, rather from the consuming end. And I looked at this thing and for the life of me, I couldn't figure out the attraction. I mean, it wasn't going to go broke. The company was a bit over-capitalized. But they had a brand that was well-duurable. The sales chart looked like the electrocardiogram of a corpse. You know, like just sideways. The brand wasn't growing. It wasn't shrinking. It was making okay money. But it wasn't cheap. Relatively amount of money it was making. And I was just mystified. You know, there's something here, but my training doesn't allow me to see it. And finally, I mean, it probably took me two weeks going through the balance sheet. I learned that this brewing company owned a brewery. And if I remember correctly, that brewery was in downtown San Francisco. The brewery was carried on the books at the acquisition cost in 1910. And by 1971 or 72, that real estate was worth a lot of money. But given that the brand was going nowhere, it made perfect sense that you would use that brand and have somebody else contract manufacture your beer. And you could sell that real estate. What Peter Kondo was trying to teach me was that there's often virtue or risk hidden in plain sight. If you are willing to work hard enough and be intellectually flexible enough to see the opportunity, I remember very well in the middle part of the decade of the 90s. There was a truly ugly civil war going on in Congo. If my memory serves me correctly, two million people died, not merely of gunfire, but AIDS, Ebola, starvation, all that, a truly ugly, ugly, ugly fight. And Adolf in the middle of that went to Congo. And he managed because there was no competition or little competition to get control of the largest undeveloped composite in the world. Take a few grooming. There were a whole bunch of lessons there. I remember saying to Adolf, I mean, what's the chance you can pull this off? He says, you know, at least 50, 50. If I can't pull it off, I lose X. And if I do pull it off, I change the fortunes of my family and every investor who goes with us for all time. It seems like I need to try that. And he was absolutely correct. The question is to quote Robert DeCrapney, the size of the prize and the cost of the test. That's what it's all about. And the really, really, really good investors understand that very simple juxtaposition. And they don't create their own realm for failure. Similarly, when Adolf Lundin went into southern Sudan, he didn't make that big discovery. Chevron had made it. And I remember teasing him. I remember teasing him. I said, oh, so you're financially more durable than Chevron, right? And Swedish and Swiss foreign policy is stronger than American foreign policy in Sudan. He said, no, I'm willing to try. And they aren't. That's my competitive advantage. For whatever reason, I'm much more willing to lose 30 or 40 million dollars than Chevron years. And hence, that's the success. Another person that has ventured into the Congo a bit more recently is Rob Pradeland. I'm curious to hear how he first came on on your radar. He tried his hand at many different ventures through the 80s into the 90s before Boise's Bay was an outrageous success. And he played his cards marvelously there. But what were the first kind of interactions you had with him? I first met Robert in the middle of the decade of the 80s. And I was struck, first of all, by the fact that he was the single best salesman I ever met, even that early. He was astonishing. And because I lived in Vancouver at the time, a hotbed of good salesman, I decided that I would never give this guy any of my money. He was just too good. Really, really, really, really good. I mean, the story of just him convincing Steve Jobs, and they went to the same college university to go and spend time on his uncle's orchard farm. Yeah, I mean, there's just a bit of. You will see in Steve Jobs' biography, wonderful biography, by the way, by Isaacson, that Apple computer was named for Steve Jobs' internship at Robert Friedland's Apple Farm. Amazing. Robert had an old comment. Now, it turns out it was an odd commute. All these other guys did all the work and Robert got all the money. But Robert was very important to Steve Jobs. So I think in terms of qualifying Robert as a human being, the fact that he was at the same age, a mentor of one of the greatest businessmen in human history, says a lot for Robert Friedland. So I came to watch him very early on, and he got an asset that Hunter and Dickinson tried to get the summit bill mine in Colorado. And he made for a while a spectacular market success out of it. I went and looked at summit bill, and I said, "This just isn't going to work." You know? I mean, this really, truly isn't going to work. So I first met Robert by being prominently short his first company. And at the beginning to say that he wasn't fond of me was a grievous understatement. And it turned out that maybe for the last time in my career, I was right, and he was wrong. He took the stock from a buck to 20 bucks, and then he round-tripped it to zero. So in my first trade, I made a lot of money with Robert, but not the way that he would have preferred. His second swing at the bat was something called cornucopia that I later took over as a shell. It was a good idea, but Robert in Canadian parlance just couldn't put the puck in the net. The third story was Courts Mountain, which was an okay deposit, but it was in Oregon, California, a state that he loved, but a place where they spell shop, SHOP, P-P-E, not a good place to build a mine. So I passed on that. Then, and he wouldn't talk to me anymore, by the way. But then he was going around to people I knew very well. And he had this thing called Fairbanks Gold up in the tombstone terrain in Central Alaska. And although Robert wouldn't pitch me, or because perhaps Robert wouldn't pitch me, I fell in love with it. I just love the geology. I love the fact that the market was really skeptical of Robert. The only reason I could think of that this stock wasn't working was because I thought the market didn't trust Robert. So I could see the problem. And I absolutely fell in love with the deposit. As the consequence of my falling in love with the deposit, I was redeemed in Robert's eyes, which is very fortunate. More for me than for him. I have supported him at various times in his career in bear markets when he needed it. But he has made me look much smarter than I am as an investor. He has been responsible for leading and financing teams that have found more tier one deposits. Than anyone else I know in my generation. If you look at what he's done, the Fort Knox deposit, he doesn't credit for it, but the gross rose bell deposit, the voise is bay deposit, the Oyo toll going deposit, the flat reef, Kamoa, Kakula, what's that? Six or seven tier one deposits, one guy. There's nobody else in the world who's close in terms of exploration. The landings, if you combine oil and gas and mining, and if you combine acquisition and development and exploration, have likely been more successful, but no human being has ever organized that much success in my life that I know of. It's a remarkable contribution to society to bring that value on Earth, that via exploration. There's a lot of reflections on these like grand entrepreneurs of our industry. What do you think of the next generation of entrepreneurs? What do you see out there that doesn't give you a. They're better than we were. Really? Yeah, the youngsters are amazing. Every now and then I get frustrated with some young person in my domain. Then I think back to what I was doing at their age. I become much more tolerant. I didn't begin my career in Akhenrox or Pitchin Stocks. I began my career whack and drugs over the head. Maybe that was useful for the time and place I was in the mining industry. The top tier of the youngsters now, at least the youngsters in finance, they're much better than we were. I think it's the sign of the maturity of the junior sector. The amount of capital that's been available in the sector for 30 years that we're attracting a different caliber all the way through. And I also think, and this is going to sound politically correct, which you too know I'm not, but your audience may not. But the industry is much more inclusive. What I was young, the whole industry looked like me, which is to say old fat bald white, you know. You have red, yellow, black, brown, also white entrepreneurs, you have male entrepreneurs, you have female entrepreneurs. The truth is that we have in the sector now every facet of humanity. And the idea that 5% of the earth population was going to generate 100% of the world's utility was a pretty stupid idea. But we were too dumb to question it. Now, I'm running in, and by the way, when I say that, I'm talking about the best of the best, right? I'm not talking about the length and file of young entrepreneurs or young people in the mining or energy business. But the best of the best are more numerous than we are. They're better educated than we are with the exception of me, who is extremely well-mentored. They're better mentored than we are. When I look at the human resources in the mining and oil and gas industry, I'm incredibly encouraged. How does that kind of contrast with the numbers we say coming out of WA School of Mines here, Colorado School of Mines, like they go in the wrong direction for a lot of our kind of perspectives. Do you think people just getting different educations along the way? I was going to say people in finance, the entrepreneurs, the business people seem to be better. With the geologists, I'm not so sure. There used to be a lot more in the year that I entered University of British Columbia in 1970. If my memory serves me well, there were 290 incoming undergrads. I think last year there were 11. That's a problem. However, it's only a problem if you limit yourself to white folks. If you look in India or Nigeria or China or Indonesia or Brazil, there's less of a problem. And we have to look all those places. The future of the industry isn't going to look like the three of us. And that's good. Not bad. A different problem with geologists is that I don't think they're getting mentored as well. They're much better at using tools. They're much better desk job geologists. They have access to much better databases. The geologists of my epoch usually had to spend five years out in the field. They had to get in dusty and get in beat up with other people that had seen those rock sequences a lot in their life. I think that the geos in my experience got better training, even if they weren't inherently a smart or well educated as the geos today. It may be that as a consequence of the improved data sets today, and the improved tools for analyzing them, that we can have better outcomes than we did in my day. But I do think that the field expertise of young geologists, the amount of training, in particular, the amount of mentoring that they're getting is probably insufficient. It used to be that a young person, I may as well say it a young man because they didn't have young women doing it then, that would come out of school in W.A. and they'd go to work for, you know, C.R.A. or Rio or something like that. They served a pretty rigorous five year apprenticeship, getting their boots guffed before they could do any real damage. And that doesn't happen to my knowledge very much anymore. We started this chat, some I'm not talking about, how you cut your teeth in the industry rig, and I do wonder, if you were in your 20s today. The financial institution landscape looks different, it's evolved. They serve different purposes, a lot of things have changed. What would you be doing to carve your way in an industry if you were working on that? I would find the best family office in extractive industries that I could. And I do exactly what I did with Peter Cundle. I'd say I want to work for you so I'll work for free, unless and until at some point in time you find an excuse to pay me. Not the cell side guys, the cell side guys may not know the truth, or they may know the truth, but they don't always have the incentive to say it, gets in the way of their fee income, and not the by side guys using other people's money either. But rather the by side guys who are using their own money. Specifically, I guess, if I had the choice, I'd go to work for the Lundines, or Ross Bede, Robert Friedland, or failing that, one of the big US oil and gas private families. And I'd say, you tell me what it is I have to do to add value for you, and I'll do it. And you don't have to pay me until you've decided that I've added sufficient value for you. That's exactly what I did with Peter Cundle after I met him. He gave me some career advice. I went back and said, "Do I like to accept this career advice?" And I'd like to intern with you. And I understand that my career as a bar owner and restaurant owner doesn't qualify me to be a financial analyst. But you told me yourself I'd be a good one. So I want to go to work for you, and you don't have to pay me until you decide I'm worth paying. And that worked. Rick, I've really enjoyed this conversation hearing all the anecdotes of the history. I get a lot out of it, and I'm sure the audience has as well. I understand you've got your course coming up in July. I want you to share a bit of the information about that as tickets are running out quickly. You lost a much it. Well, thank you for that opportunity. The event is the Rule Natural Resources Investments Symposium. It's going on for about 30 years. I'm sorry, I'm seen aisle enough not to know exactly when we started it. But the truth is, it's been going on for that period of time, which means we've stood the test of time. It's gotten a little better every year. Pretty good. If I must say so myself. This is a natural resource seminar. So if you come to learn about crypto or AI or something like that, please don't come. This is also very hard work. So if you buy the Sunday paper for the funny, so the crossword puzzles, please don't come. But if you're prepared to work and you want to learn about natural resource investing, please do work. Please do come. Here's why it works. First of all, we have great, great, great, big picture thinkers. People who tell you about the world, the way the world is, not the way that, uh, in your country, the, uh, the ABC would have you believe it was. But really, the way the world works. Uh, after that, we have great natural resources analysts. People who've been through bull markets and bad people who've made money for 40 years. Then we have portfolio managers who are different than analysts. People who are where the rubber meets the road, who have also been there for 40 years. At these conferences right now, you're getting newsletter writers who made their career in the last 15 months, wherever they was up. Of course, they did okay. You want to take advice from people who've been there when things are down. And we do that. Our exhibitors are different too. Every single exhibitor has to be owned in our accounts. At most conferences, the qualification to bid exhibitors, the check that cash is, which in a bull market is hardly a challenge. Doesn't mean that every stock we own goes up, but it does mean that every single exhibitor has been vetted. We have a great feature called the living legends where we bring in entrepreneurs who built multi billion dollar companies from scratch. Frequently named quarter main or Friedland or London or I'll give you an Australian Stephen Deans. People who've been severely successful building multi billion dollar natural resource companies from scratch. This is useful because they teach you how they did what they did. They teach you how to find the younger person, how to find the $25 million market cap. It's going to become a $5 billion market cap. This year, we're instituting a new program called future legends where we find people in their 30s and 40s and 50s who have already been serially successful enough that their past suggests that they'll be successful in the future. And who unlike me have a future. It's one thing to predict a 40 year, there'll be a success. It's another thing sadly to predict to find a 70 year old that's going to die. It's going to be a very useful feature. Finally, at our conference, unlike any other investment conference I know on the planet. If you think for whatever reason that you haven't got your money's worth, no worries, give you your money back. It's the only money back guarantee that I know of in the education business, but we've been doing for 30 years now mercifully. Our content's been good enough that we've had to refund about one tenth of one percent of the tuition so we've charged. We've got a couple other notes. We're going to give our attendees more information in four days than they can assume that they can assume. that they can get in 40 days. We deal with that two different ways. I, myself, interview every exhibitor and every speaker before the conference. And I post those interviews on YouTube. That means that you can allocate your time at the conference much, much, much more efficiently. Nobody else that I know of does that. Every single exhibitor in speaker at my conference is going to be interviewed by me before the conference. And all of that data is going to be posted, which is very useful. The second thing is that the whole conference is going to be recorded. Because when I say four days to get the most out of the conference, you're going to spend more than four days. You're going to spend the four days. You're going to take a lot of notes. And then you're going to go back and refresh your memory on the conference notes. I'm delighted to say for the first time in 20 years that the live seats at this conference are sold out. The conference is July 6 through 10 in Boca, Riton, Florida. But live stream, which is to say the ability to attend the conference remotely from anywhere in the world, last year, by the way, 1,400 people from 33 countries attended, that's open. That's available. In order to get your money's worth out of the conference, though, it's important that you pay attention to the pre-conference interviews. It's important that you access the conference recordings because you cannot assimilate 46 hours of material in four days. You cannot do it. I put on the conference, and I have to view the recordings. Finally, it would be advisable if you use the conference and the pre-conference recordings in conjunction with all of the free material at the rule classroom. For those who don't know, the rule classroom, ruleclassroom.com has over 300 hours of recorded material, including introduction to natural resource investing, which is a five and a half hour short course. Using the information at the classroom, using the tools that are taught at the classroom and around securities analysis, in real time at the conference, and before the conference, in the interviews, makes the conference an invaluable resource for natural resource investors and speculators. Thank you very much, Rick. It's always a lot to speak with you, and we look forward to doing it again in the near term. Thanks, Rick. I look forward to that. And by the way, next year, I'll be coming down under to the conference season there. I haven't done it for four or five years. So I look forward to catching sight of y'all in the flesh. You tell us that every time, and we never say it. That's true. Kerry Stevens has come over to my conference for six years in Iowa. While I'm there, I'm going to do the I'm art conference. Then go out and visit friends on the art written table and so I'm looking forward to it. Ah, fantastic. We'll make it happen. Cheers, Rick. Thanks, Rick. Great. Huge thank you to Rick. I love going into the history there. And also a huge thank you to Sandvik Ground Support, Ex-Eed Capital, Intro Links, and Focus, the platform by Market Tech. Peter, Peter Roo. Now remember, I'm an idiot, JD's an idiot. If you thought any of this was anything other than entertainment, you're an idiot. Any need to read out a disclaimer.