RSD at Beaver Creek Interview Series: Mickey Fulp, the Mercenary Geologist

September 23, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today from the Beaver Creek Precious Metals Summit is the Mercenary Geologist, Mr. Mickey Fulp. Mickey, how are you today?

Mickey Fulp: I am very well, Gerardo,. Especially well, because I know you're a big Cub fan and I've got my Cardinal necktie.

Gerardo Del Real: You do.

Mickey Fulp: A gift from my significant other. Magic number of 15, and with 18 games left to play. So Cardinals are looking pretty good but we play 7 of our last 10 games against the Cubbies.

Gerardo Del Real: It's going to be a fascinating end to the season. We have the longest, oldest rivalry in all of baseball. It's a respected rivalry. It's a respectful rivalry. It's going to come down to the wire.

Mickey Fulp: It is respectful. We've always been respectful even though I'm a Cubby hater and you're a Cardinal hater, but there's mutual respect and there always has been. And it's interesting because we played 12 games already. We've got 7 to go. The Cubs have swept the Cardinals at Wrigley 6-0 and the Cardinals have taken 5 of 6 from the Cubs at Busch. But here's one thing I think we can both agree on is we both like this beer, Budweiser. Or I know Cub fans do.

Gerardo Del Real: Absolutely.

Mickey Fulp: Absolutely.

Gerardo Del Real: Harry Caray loved his Budweiser.

Mickey Fulp: Absolutely, and people may not know, but Harry Caray started his career for what,15 years, as a Cardinal announcer when I was a kid. So anyway.

Gerardo Del Real: Cubs legend. So listen, everybody that's watching and listening isn't watching to hear us talk baseball. Obviously, they want to hear your take on the markets, Mickey.

We're here at the Precious Metals Summit. It's a very different environment than it was last year for two reasons. Base metals have gone south. Precious metals have ascended. So I want to start with gold. The price, really, from $1,400 to $1,550 didn't have much resistance. Did it get too ahead of itself?

Mickey Fulp: Absolutely. I even go back further. On May 21st gold was $1,270 an ounce and it hit an intra-day high exactly a week ago at $1,552. That's a 20% gain in what, two and a half months, a little shy of three months. Absolutely went too high, too fast. We like to see markets that don't go hyperbolic or exponential, however you want to say it. We like to see markets that go two steps forward, one step back, or two steps forward and a pause. And we haven't seen that.

The downturn that came in immediately on Thursday and Friday, driven first by geopolitics, driven secondly by 3 million ounce paper sales, first starting in the London market and then the New York market. Paper gold knocked it back down. And as we speak now, it's below what it was this morning. I don't know what it is right now.

Gerardo Del Real: I think it closed $1,492 today.

Mickey Fulp: Yeah, $1,492, so it needed to do that. I would probably be of the opinion that we're going to see another down tick. There's extreme resistance at $1,430. It wouldn't surprise me if it tested that. And if it does do that, I think the catalyst could be US-China trade talks. Not resolution, absolutely not, but rumors. That's what took it down originally last week was a rumor that there were going to be more trade talks. So it's a really volatile, really iffy market right now with not a lot of support at $1,500 but significant support at $1,400 and above.

Gerardo Del Real: Excellent. Let's talk base metals. We were on the way to a raging copper bull market, in my opinion, and then the trade war knocked it back on its heels. Right? Where do you see base metals? I think we both identify as contrarians.

Mickey Fulp: Absolutely.

Gerardo Del Real: I think in three years we'll look at this moment in time and look at some of the prices of the better copper names in the space and just shake our heads that people couldn't see the value there. Are you of the same opinion?

Mickey Fulp: Oh absolutely. The mid to long-term fundamentals or copper are absolutely the most compelling of any of the commodities that interests us.

Gerardo Del Real: Including uranium?

Mickey Fulp: Yeah. Well that's a whole 'nother ball game. Uranium, there's no end in sight for what what we know is coming.

Gerardo Del Real: Right.

Mickey Fulp: So predicting a timeframe in uranium space is really difficult. It's much less difficult in the copper space because we know mid to long-term the supply demand fundamentals are so strong and we're not dependent on some sort of government intervention or startup of Japanese reactors, all these things that the US government doesn't really have control over, for the most part.

US government does have complete control over these trade tariff wars. I don't think copper's going anywhere, any upside or much upside to copper till that happens, you know. But this is a time that's confirmed that you want to pick up some really beaten up copper projects, really compelling copper projects.

Gerardo Del Real: Are there any names that stand out to you?

Mickey Fulp: Well, I can tell you two right now. One of them is Trilogy Metals (NYSE: TMQ). It came off a high of $3.14 in, what, late June? It trades it about $1.64 this morning. So it's lost, what is that? 45%?

Gerardo Del Real: Nearly half its market cap.

Mickey Fulp: Nearly half of its market cap, and there's no reason for that.

Gerardo Del Real: Trilogy Metals.

Mickey Fulp: Trilogy Metals. Now I cover the company and they're a sponsor.

Gerardo Del Real: Sure, we're always biased.

Mickey Fulp: And you know, I'm talking my own book here, no doubt, but that's probably my favorite copper company. And yesterday, we sat here with, with David Kelley at Chakana Copper (TSX-V: PERU) and I own that stock. It's a relatively early-stage copper play, but as contrarians, we want to position ourselves. Now we've got copper names.

Gerardo Del Real: And the bottom line is explorers have to explore or they're going to go away. Right? We see the complaints about liquidity on the exchange – the lack of, I should say. Right? And the bottom line is the majority of those 2,000-plus companies aren't doing anything but collecting checks sponsored by shareholders.

Mickey Fulp: Well, that's true. But the two companies I've mentioned are actively drilling, actively pursuing permits. And in Trilogy's case they're just about ready to get their EIS, and then it's going to be balls-to-the wall to get this thing developed. South32 is their JV partner. That decision comes in in late January. You can even speculate they may get taken out at that at that period of time by South32. How about you? How about you? You got some copper names for me?

Gerardo Del Real: I liked Chakana Copper as an early-stage explorer that's got a very competent management team, and that is out there working in a good community, developing community relations, aggressive exploration. They're out to answer the question of whether this can be an economic mine or not.

Mickey Fulp: Absolutely.

Gerardo Del Real: And I much prefer a company that is willing to answer that question than one that defers in order to not have to. Right?

Mickey Fulp: Exactly.

Gerardo Del Real: So we can agree on Chakana Copper.

Mickey Fulp: Anything else?

Gerardo Del Real: I can give you a very, very early-stage copper name that is trading at a market capital of about $3 million.

Mickey Fulp: I like that.

Gerardo Del Real: Has 20% of an asset that is robust, that has had some permitting issues, a permit denial, and has an exciting asset in Nevada that's also early stage but is also run by some very good people. I mean that would be Abacus Mining (TSX-V: AME).

Mickey Fulp: Absolutely. I knew that, and thanks for reminding me of that.

Gerardo Del Real: And again, I'm biased. They're a sponsor of Resource Stock Digest. They're a client that we're proud to help tell their story. I'm a shareholder. I've written a check, I think the last four financings. If there's another one in the near term, I'll absolutely be writing another check and I'll give you another smaller cap...

Mickey Fulp: Well let me say something about Abacus before. I have a strong history with their management dating back to 1992 so I've owned a bunch of companies that Mike McInnis has run. He's a top notch guy.

Gerardo Del Real: Top notch guy. All the way around, absolutely. Knows his stuff, knows his rocks, believes there's a fifth porphyry there in Nevada at Willow and again, the Ajax asset is not an asset that's going to be shelved forever. It's an asset that met some opposition by a particular group. I know behind the scenes there's still conversations there to be had. So we'll see in two years where we're my $0.05 shares land.

Mickey Fulp: Okay, and you were going to give another.

Gerardo Del Real: I'm going to give you a second one and I'm biased on this one as well. Hannan Metals (TSX-V: HAN).

Mickey Fulp: Yep. Well I'm a shareholder so you don't have to give me anything.

Gerardo Del Real: District-scale land package in Peru, a pivot from Ireland with how a project there. And I think that Michael Hudson is a top notch guy.

Mickey Fulp: I agree.

Gerardo Del Real: Extremely good management team there. I think it's a project that frankly befits a major better than a junior, and it wouldn't surprise me if there was a move to somehow...

Mickey Fulp: Maybe a strategic investor or something like that.

Gerardo Del Real: Possibly.

Mickey Fulp: Or maybe a combination of a couple of juniors and one maybe one with cash.

Gerardo Del Real: That would make sense. But again, these are companies that because of the quality of management, don't let the $0.05 share price fool you. They're far from zombies.

Mickey Fulp: Well, by reason of disclosure, I think we both own this stock. We have both written multiple checks. We're both extremely underwater on these stocks, but we have a vested interest in talking about it.

The pivot from zinc to copper, I think was a good one. This is a really exciting, very early-stage grassroots exploration project on the east slopes of the Andes and Peru.

Gerardo Del Real: A region that hasn't seen mining.

Mickey Fulp: No, and never seen exploration, even.

Gerardo Del Real: It's not a coincidence that they're sampling 11, 15, 18% copper at surface.

Mickey Fulp: Well, yeah. Also the model, which as a geologist, models are very important to a geologist. It's African style copperbelt or even a Rivet style, US copper-silver. It's copper and silver.

Gerardo Del Real: For those not not familiar, those systems are humongous. They're massive.

Mickey Fulp: They're huge. Arguably a significant portion of the world's copper resources and reserves are in this type of deposit, specifically in the Congo and Zambia.

Gerardo Del Real: A lot to like for a company with a market cap south of $3 million Canadian. Right?

Mickey Fulp: Absolutely.

Gerardo Del Real: Companies in the gold space. Can you give me one?

Mickey Fulp: Yeah. Well, you put me on the spot. I'm going to give you two. First one being Ely Gold Royalties (TSX-V: ELY). Now, once again, a sponsor and significant shareholder. We've watched that company go from $0.09 as a prospect generator, now rebranded as a junior royalty company trading in the low thirties right now. Has been, I think $0.38, maybe $0.41 recently. We really liked that because we think it's due to now be re-rated to meet its peers in junior royalty space.

And then the other one is a private company right now with a gold play in the Kyrgyz Republic, a Carlin-type gold play. It's called Realgold Resources. It will be public soon. I can't give you an exact date, but there may be an opportunity. The geology of this is absolutely compelling. 250 kilometers of strike length of documented Carlin-type gold occurrences. Best drill hole as a private company – of which I am a significant or a two-time private placement shareholder – 21 meters of 33 grams per tonne gold. You could take that core and throw it in the middle of a box of core from Getchell or Turquoise Ridge in Nevada. It would fit right in.

Gerardo Del Real: Excellent, excellent. I like it. Mickey, anything else you'd like to add?

Mickey Fulp: It's good to talk to you again.

Gerardo Del Real: Where can people follow your work?

Mickey Fulp: Mercenarygeologist.com. @mercenerygeo. 52,000 Twitter followers. And go Cardinals.

Gerardo Del Real: Go, Cubs. Thank you, sir.

Mickey Fulp: Thank you.

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INDICES

Name Last Change
DOW 26770.20 0.96%
S&P 500 2986.20 0.39%
NASDAQ 8089.54 0.83%
TSX 16377.12 0.30%
TSX-V 542.43 0.00%

Resource Commodities

Name Last Change
Gold 1490.25 0.18%
Silver 17.53 0.06%
Copper 2.63 2.625
Platinum 901.00 0.67%
Oil 53.78 0.28%
Natural Gas 2.32
Uranium 24.88 0.00%