Soar Financial Group CEO Kai Hoffman on Gold, Uranium and M&A in the Commodity Space

Gerardo Del Real: This is Gerardo Del Real here from the 2021 Precious Metal Summit in beautiful Beaver Creek. Joining me today is the CEO of Soar Financial Group, Mr. Kai Hoffman. Kai, it's been a few years.

Kai Hoffman: It's been awhile. It's been a while. It's great to see you again, Gerardo.

Gerardo Del Real: It's great to see you as well. How have you been?

Kai Hoffman: Been well. Been well. Been quite busy entertaining and creating opportunities in this market. The market offered some opportunities, so it was good. It was fun to fill some voids.

Gerardo Del Real: Let's talk about it. We haven't caught up in a few months at the very least. Tell me about those opportunities. What have you been looking at? What have you been personally invested in? And what are you looking at here moving forward?

Kai Hoffman: Yeah. Good question. So you might have seen it. We've done a lot more online. Obviously, we had to so we transitioned. Started doing interviews as well online. It's great. But also financing-wise, we've been tracking the market quite well. We've been doing quite a few private placements, not as of late because that died down quite a bit, but the last 12 to 18 months, we've been quite active. We bought positions, developers also, but also early stage juniors, companies that are just drilling. So we've been active in that sector as well. Just keeping ourselves entertained a bit.

Gerardo Del Real: Are you still a commodity, agnostic, or are you really focused on... Is it copper-centric? Is it gold-centric? Or is it just share structure, people, assets, and teams, right?

Kai Hoffman: All of the above.

Gerardo Del Real: Okay.

Kai Hoffman: So we're quite agnostic when it comes to that, but mostly focused gold, silver, copper. I'd say that's where the expertise lies where I'd say, "Okay, that's where I try to have an advantage."

Gerardo Del Real: Right.

Kai Hoffman: Right? When it gets too specific like battery metals, and I do exclude copper from that...

Gerardo Del Real: Sure.

Kai Hoffman: ... When it comes down to lithium graphite, I feel a bit lost.

Gerardo Del Real: Okay.

Kai Hoffman: Because also I've been a burned child. The years 2015, 2016, there was a lot of garbage around.

Gerardo Del Real: Sure.

Kai Hoffman: Fortunately, we haven't seen that come back yet, so the good companies prevailed. We've seen a couple of takeovers in the lithium space, so it's good to see. But I'm waiting for Howe and Bay to catch on and come up with some more garbage, so I'm a bit cautious in that regard.

Gerardo Del Real: Okay. A gold company. What do you look for in a gold company? For the audience that may not be familiar with you or the audience that is familiar with you and wants to know what's Kai Hoffman's checklist look like when he evaluates a deal.

Kai Hoffman: You mentioned a couple of things. So people management is key, but assets, of course, as well, and I want to be able to make money.

Gerardo Del Real: Sure.

Kai Hoffman: Right? So it's, okay, if you have a $250 million market cap, that might not be for me.

Gerardo Del Real: Right.

Kai Hoffman: Because where's it going to go?

Gerardo Del Real: Sure.

Kai Hoffman: What's the upside a typical mid-tier gold producer might be trading at $500 million and that's without...

Gerardo Del Real: Yeah. It's not your market.

Kai Hoffman: That's not even factoring in dilution and additional financings, so that's not for us. So I prefer the smaller end of the scale, I guess. So I do like the junior explorers, but I want to see a clear route for it to become something.

Gerardo Del Real: Got it.

Kai Hoffman: So that means management needs to be capable at least to take you to a certain point, meaning feasibility study, before maybe handing off the reins.

Gerardo Del Real: Excellent.

Kai Hoffman: So that's what we like to see. We love drill plays. I'm not a geologist, but I do understand the upside in drill plays. Right?

Gerardo Del Real: Same.

Kai Hoffman: So we don't mind playing that as well. We look at that. There's some opportunities out there and the market right now is just granting us pretty much. It's like shooting fish in a barrel it feels like a bit.

Gerardo Del Real: So it kind of sounds like you kind of feel the way I do. It sounds like the opportunities are phenomenal. Right? I'm buying stocks right now that should be trading at multiples of where they're at. I can't believe I'm getting the prices I'm getting.

Kai Hoffman: Yeah. So we've been talking to some of the investors out here as well and just the PE ratios of some of the producers. You don't have to go high-risk right now.

Gerardo Del Real: You don't.

Kai Hoffman: Look at Barrick. The dividend yield is 4.8% right now.

Gerardo Del Real: Yeah.

Kai Hoffman: You'd be stupid to buy a junior explorer. I'm sorry to say that. Right? But with that return.

Gerardo Del Real: Sure.

Kai Hoffman: That's what attracts the general investors at some point again.

Gerardo Del Real: Sure.

Kai Hoffman: We're being handed that opportunity pretty much free of charge right now. Downside is fairly limited unless you believe that gold is going to crash.

Gerardo Del Real: Right.

Kai Hoffman: But at some point, then the PE ratio is 4.

Gerardo Del Real: Right.

Kai Hoffman: Right? Instead of two and a half.

Gerardo Del Real: You can do both. Right? You can buy the producer and you can buy an explorer?

Kai Hoffman: Yeah. You can hedge your bets a bit. Right?

Gerardo Del Real: Absolutely.

Kai Hoffman: But the producers... Especially the mid tiers are dirt cheap right now. We see PE ratios of 2 to 3. Right? That's worth collecting or accumulating right now.

Gerardo Del Real: Excellent. Jurisdictions. Are there places that you favor right now?

Kai Hoffman: Yeah. Jurisdiction, I can easily travel to. So that still makes a difference.

Gerardo Del Real: Yeah.

Kai Hoffman: We are still in a pandemic. So it's not that easy yet to travel maybe to South America.

Gerardo Del Real: Sure.

Kai Hoffman: They're great assets down there, but of course, I like going to Canada. I've been on a bunch of site visits the last few weeks. So that makes it a lot more grabbable. What do you call it when can grasp them?

Gerardo Del Real: Tangible.

Kai Hoffman: Tangible. Right. Yeah.

Gerardo Del Real: Absolutely. There you go.

Kai Hoffman: Right. So you could do that, and that's what I prefer. I do see still a lot of M&A opportunity in North America.

Gerardo Del Real: Do you see producers with those rich balance sheets coming for some of these exciting explorers that have good assets already in robust reserve bases?

Kai Hoffman: Yes and no. No meaning I just recently saw a Kitco interview enough to quote the competition there. Mark Bristow was on it.

Gerardo Del Real: Okay.

Kai Hoffman: It was really informative because he said, "Well, organically, we have five to seven years. We can just do and explore our own stuff."

Gerardo Del Real: Yeah.

Kai Hoffman: So he doesn't have to do anything.

Gerardo Del Real: Sure.

Kai Hoffman: I'm sure he's going to be opportunistic when the right opportunity comes along, but the majors don't have to do anything right now. That's why we haven't seen much yet because at $1,800 gold, all their projects are pretty much making money.

Gerardo Del Real: Absolutely.

Kai Hoffman: It's worth that brownfield exploration, and that's the easiest.

Gerardo Del Real: Okay.

Kai Hoffman: All right? Those are the easiest and cheapest ounces for them to have.

Gerardo Del Real: What commodity do you see the most M&A happening on?

Kai Hoffman: It'd be interesting to see what happens in the copper space. Gold is just like gold...

Gerardo Del Real: Yeah. It would be striking. You referenced that. Right?

Kai Hoffman: Right.

Gerardo Del Real: You said copper, gold is what you would see.

Kai Hoffman: So copper, gold, and Bristow. That's what I mean. He might be opportunistic, but when it comes to that...

Gerardo Del Real: But Bristow's also cautious. Yeah.

Kai Hoffman: ... But you need size. Right? But you need size. But I do see the copper space. There could be a little more action. Also, on the junior end, so there's a couple of copper, gold juniors we're looking at as well that do have some upside, and production scenarios, or potential production scenarios as well.

Gerardo Del Real: Okay. So you're CEO of Soar Financial Group. You wear multiple hats. How can people get a hold of you?

Kai Hoffman: Yeah. is the website. Twitter is the best as well. We're really active there @soarfinancial. Just follow us there. We've recently been on site visits as I mentioned so we just posted quite a bit of content from that and our impressions.

Gerardo Del Real: I see.

Kai Hoffman: So follow us there.

Gerardo Del Real: S-O-A-R, everybody.

Kai Hoffman: Exactly. Not the sore throat. It's soaring like an Eagle. So glad to clarify.

Gerardo Del Real: Kai, pleasure.

Kai Hoffman: Gerardo, it's so good to see you again.

Gerardo Del Real: All right. Great catching up.

Kai Hoffman: Thanks.

Gerardo Del Real: Thank you.