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Soar Financial Canada Corp. CEO Kai Hoffman Talks Financings in the Junior Resource Space

July 26, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Soar Financial Canada Corp., Mr. Kai Hoffman. Kai, how are you doing?

Kai Hoffmann: I'm doing fantastic. Thanks, Gerardo.

Gerardo Del Real: It's great to catch up. You know, we saw each other a few months back in New York at a conference. I know that you ruffled some feathers by sharing some sentiments that I feel and you said, and I don't want to quote you, but I'll let you go ahead and explain it in a second. You said something along the lines of, "We're in a bear market for junior resource stocks." You of course, through Oreninc, you track the financing activities and so you have your finger on the pulse as to what's going on out there. Can you elaborate on your comments from that conference and then let's talk about what you're seeing as far as financings go?

Kai Hoffmann: Oh yeah, for sure. And thanks again for having me on your show here, Gerardo. Actually since PDAC I've been carefully saying that we were in a bear market. It feels like saying Voldemort out loud and you've got to be careful with that, but since then others have joined. And one recent example or one of the perfect examples is actually John Kaiser who I talked to at PDAC and he said, "Nah, we're just in a lull. We're not in a bear market yet." And then come June, and I think that's where we saw each other, just early June in New York, doing a conference there and ran through some numbers and looking at them it was like we're definitely in a bear market.

It's just like the Oreninc Index where we track all the financings and sort of connect the dots as well is extremely low. The number of financings has dropped off, comparing 2018 to 2015. We've actually seen fewer financings happening. Only a couple, don't get me wrong, it's not a massive discrepancy, but it's definitely lower. The dollar amount raised is lower and it's just depressing out there to a degree.

Gerardo Del Real: Let me ask you this, and this is something you and I talked about in person, again, I think at that conference. I had asked you whether or not you were tracking the amount of warrants and the time length of the warrants being issued with the placements. Have you been focusing on that? Were you able to dig into that a bit?

Kai Hoffmann: Yes. Actually, I just looked at the numbers before our call here and one thing I've noticed is, and I call it peacocking internally here, is a lot of companies give out warrants nowadays. Just the last couple months of June 1st till today we've seeing roughly 81 deals closed, not open, just closed and that 70 of them came with at least a half warrant, most of them actually with a full warrant if I look at the numbers here. In terms of the length, I'm just actually looking at the numbers right now, I see at least 24 months. There's no 12-month warrants or rarely any, a lot of 36 and 48-month warrants, some 60-month warrants. So definitely a lot of peacocking going on and companies trying to pretty themselves up to attract investor attention and that lends me the idea or it gives me the idea that it might be the best way to not give out a warrant to show that you actually have a worthy deal and have people convinced of that.

Gerardo Del Real: Are there commodities specifically that are getting the bulk of the capital? Are you seeing copper deals? More gold? Typically, of course, you're going to see more gold and silver because there's more gold and silver plays, but as a percentage, are you seeing anything that stands out there?

Kai Hoffmann: As you said, it's predominantly gold, but we've seen quite a few base metal deals, so zinc, copper, but not the majority. It's definitely gold. I'm just looking at the list here as well right now. So we've seen Adventus Zinc close a financing recently over $12 million. That was quite impressive. But, other than that, it's all smaller financings and that's another point as well, the average dollar amount per financing has dropped off as well. So a lot of intermediate financings happening, keep-the-lights-on financings, wait until the gold price, which is the main indicator obviously, comes back a little bit and sentiment changes, hopefully after Labor Day. So, hoping that that trend reverses then as well.

Gerardo Del Real: How about regional activity? Are there certain regions attracting more capital than others?

Kai Hoffmann: I'd have to look into that, but my gut tells me that we're seeing more safe jurisdiction deals. I personally haven't invested into an Africa deal in like two years, just because there's so much opportunity out there in Canada and the U.S. I know you guys are quite keen on Idaho. I can't blame you. There's a lot of safe jurisdictions out there with a lot of good deals and just over the last six, seven, eight weeks, we've seen so many stocks discounted heavily. That was actually the title of my presentation there in New York as well, was the “Black Friday Discounts All Summer Long.” I'm saying you got four or five weeks left to get positioned, go out there shopping and then pray for the best, seriously.

Gerardo Del Real: Fingers crossed, for sure. What do you like company wise? What are you looking at?

Kai Hoffmann: What do I like company, that's a good question, I didn't expect that one. There is a few companies that I like working with and one company, I like it a lot, is out of Idaho as well, just one of the reasons I like it is management but also jurisdiction and it stands out is Integra, obviously. I'm predominantly looking at gold deals these days. It's just a simple way to play these markets. Another company we've been quite successful with here also with the Investor Magazin, my German newsletter, is Wesdome. It's a pure momentum play. We've had Kirkland Lake in the portfolio, but we've sort of downgraded it to a hold because that thing has run like crazy.

Gerardo Del Real: It has some great assays.

Kai Hoffmann: It's insane what's coming out of that company, but there's nothing wrong with taking some profits off the table from time to time as well and maybe distribute them to some smaller companies as well and get positioned for the fall rally that everybody expects.  There are a lot of juniors out there. It's really tough to pick single companies out of the crop there because so many are discounted right now. I've recently been on a site visit tour to Canada. We've seen Red Pine Exploration, Wesdome was the other one, and Kirkland Resources. They're all great companies. They're so dirt cheap, I actually don't have enough money to invest in them all.

Gerardo Del Real: Agreed, agreed. Kai, how can people get ahold of you?

Kai Hoffmann: Oh, it's very simple. TheCompanyNobodyCanPronounce.com, I just acquired that domain. It's easier than spelling Oreninc.com.

Gerardo Del Real: Right.

Kai Hoffmann: So please, feel free to reach out. Send us an email or get in touch with us.

Gerardo Del Real: Do you have an acronym for that yet?

Kai Hoffmann: No.

Gerardo Del Real: Let's work on that, Kai. Thank you so much for your time. Hope to have you back on in better times, maybe in the fall, fingers crossed, right?

Kai Hoffmann: Exactly. Thanks, Gerardo, thanks for having me.

Gerardo Del Real: Appreciate it as always. Thank you, Kai.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 25250.60 0.35%
S&P 500 2750.79 0.59%
NASDAQ 7430.74 0.89%
TSX 15409.47 0.03%
TSX-V 711.36 0.00%

Resource Commodities

Name Last Change
Gold 1227.20 0.02%
Silver 14.71 0.07%
Copper 2.79 0.000
Platinum 842.50 0.07%
Oil 71.34 0.52%
Natural Gas 3.16 1.93%
Uranium 27.50 0.29%
Zinc 1.21 0.00%

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