Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Digest Publishing Owner Nick Hodge on MineHub Technologies (TSX-V: MHUB)(OTC: MHUBF)

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the one and only, friend, colleague, and business partner and co-owner of Resource Stock Digest, Mr. Nick Hodge. Nick, it's been a heck of a month, a heck of a year. We just got back from the Beaver Creek Precious Metals Summit, and despite the upbeat atmosphere there, there was some really important news on a company that we're both shareholders of that I wanted to touch base on, that being MineHub Technologies (TSX-V: MHUB)(OTC: MHUBF). Before we get into that though, how are you today, sir?

Nick Hodge: I'm doing great, Gerardo. It's good to be with you. As you say, just back from Beaver Creek where the environment was very enthusiastic, given gold was then approaching $3,700. Of course, has gone over that now as the Fed cut rates into rising and then sticky high inflation. But that's not what we're here to talk about. We're here to talk about MineHub and how I got involved with it and drug you and other folks in with me and what they do and how it applies to the natural resource and mining space that we're all elbows deep in.

Gerardo Del Real: No look, and one, thank you, you described it as dragging me into it. I wouldn't describe it that way, but if that's the term we're going to use, I appreciate the dragging for the simple fact that year-to-date the stock is up some 143%. Personally, we're up hundreds of percents and frankly have a bunch. And when I say a bunch, it's a lot of warrants that are over 150% in the money or over 100% in the money. And so thank you for the dragging, but let's back up a little bit. I want to talk about the news that happened last week because it was market-moving and it's obviously commodity-related. So for those that are not familiar with MineHub Technologies, can you explain the model a bit and what I've described in the past as the moat that the company has that really sets it apart, frankly from anyone in the space?

Nick Hodge: Sure, yeah, and I'll take a giant leap back as it were before last week's news just to sort of set the stage for you. And I'll go all the way back to the mid-1990s and Bre-X, which was a massive scandal in the mining space. There was falsified assays and many people involved in it and geologists tossed out of helicopters, go ahead and Google that and read about it or watch the movie Gold with Matthew McConaughey.

Gerardo Del Real: Allegedly. Allegedly.

Nick Hodge: Go back to Mark Twain days where "A mine is a hole in the ground with a liar standing on top of it." And that's really what drew me to the MineHub story is the opaqueness of the mining space. And I just cited the famous Mark Twain quote and the Bre-X scandal, but there's literally dozens if not hundreds of examples of falsifying assays as recently as the last couple of years on the companies on the TSX-V, cargo containers of painted rocks showing up to metal exchanges supposed to be nickel or copper, but is just rocks. Or entities being short more commodities than physically exist, which almost took down the LME a couple of years ago. Certainly I think the readers remember some of these, and if not, they could Google them. But fraud and opaqueness and generally, lackluster note and record-taking antiquated processes, they hinder the industry. They make it tough to raise money. You hear about this all the time, how the industry is capital-starved. You hear Rick Rule talk about the cost of capital.

Gerardo Del Real: Yeah.

Nick Hodge: And so you ask me about the moat and what MineHub does. Essentially, they're a digital supply chain company. They bring transparency to the supply chain of mining from ore at the mine all the way to finished refined products. And they're doing this in a number of arenas that are super important. So maybe let me just touch on some of those before we get into what MineHub actually does. So for a couple of years you've heard me talk about battery passports and electric vehicles and the need to know where these minerals and metals are being sourced from. Is your cobalt coming from Idaho or is it coming from a child laborer in the Congo?

I think consumers and definitely governments are mandating this type of information. And then I mentioned the LME and the different types of metals on the exchange. We're migrating toward different types of exchanges and contracts for commodities. One, physical commodities that you have to take delivery of as opposed to just trading contracts, as well as wanting to know where these metals are and how they're sourced and the other data that goes along with that, emissions data, et cetera. And that's what MineHub provides, digital supply chain, and they're doing this for some of the largest metals, mining and refined metals companies in the world. Companies like Codelco and Sumitomo for example. So let me just stop there because that's a lot, and maybe you have a question that can suss out the next leg of this conversation.

Gerardo Del Real: Perfect segue, you mentioned the partners and these being global behemoths that they are partnering with. And so yes, it's great that we're up some 143% for the year, but MineHub still has a market cap of roughly $65 million Canadian. Yet it's partners, and we're talking many, many partners. It's not one off. It's not just one Sumitomo. They have market caps in the tens of billions of dollars. So when I saw the two pieces of news last week that came out, it struck me because MineHub is now developing an integrated digital solution for the iron ore market and it's also exploring the expansion of private digital title to in transit shipments. And it's being able to apply this real time digitization of the commodities market to basically every commodity on the planet. And so when we talk about upside and we talk about what the market is, the market literally is anything that needs a real world, real time modern solution to tracking commodities, as you mentioned from the mine to the delivery point and being able to track that in real time and being able to communicate with those partners in real time.

So where do you think the company continues to move towards with these types of partnerships? Because I really don't see the limit or anything that limits it to stick into just the commodity market. Now listen, the CEO, Andrea Aranguren is brilliant and she, former Goldman Sachs, supply chain expert, this is her expertise, this is what she does. Not a coincidence she's running MineHub, but we've had conversations, her and I, where she's made it pretty clear, "Yes, commodities is our focus right now," but there isn't a limit, is there, to where they could branch out to.

Nick Hodge: I mean, if you look at their company presentation, you'll see that the total addressable market or TAM is something like 10 or $11 trillion, that's with a T, global commodity market and they're approaching this as a software company. So that's an important distinction as well.

Gerardo Del Real: Yeah.

Nick Hodge: Software companies get valued much differently than mining and resource companies. They get much higher multiples when you're dealing with software as a service. And I think it's something like a $7 trillion addressable market for their software as a service. You mentioned iron ore. So far they've only tackled aluminum and copper. I mentioned Codelco, now they're moving into iron ore and these aren't small markets. I mean, you mine iron ore to make steel, which goes into everything that's made across the globe. And big Asian markets, China, this deal that you just mentioned was signed in Singapore. And so I think the world is their oyster because there's not a lot of folks that can do this one, and it's a very sticky business. So you mentioned how they're growing with partners. I think they've now got over 200 different companies and clients on the platform. And we talk about this fly reel effect. And I've talked about this a lot, but let me just sum up again.

So when you bring on a big company like Codelco, they've got literally hundreds if not thousands of suppliers and contractors, fuel suppliers, et cetera, that all need to be onboarded to this platform. And so it creates a network effect, that moat that you referred to earlier or a snowball effect where they're just accumulating all this data and building a head start or moat like you said, that no one can penetrate and so far only doing it for three commodities as mentioned, copper, aluminum and iron ore. But there is no limit to the metals that they can apply this to, whether it's nickel or cobalt or whatever it is on down the line.

And that's obviously becoming increasingly important in a world where sourcing matters, emissions matter, tariffs, which we haven't even mentioned yet matter, and MineHub is collecting a fee along the way. So how big could this go? I mean, I've read reports, prognostications and forecasts that talk about MineHub's ability to generate billions of dollars in revenue. And I think earlier you said it's sitting at a $65 million market cap and increasingly, other folks are seeing this too. You mentioned the iron ore deal, but we haven't mentioned Abaxx yet run by Mr. Josh Crumb who is building a new commodities exchange.

Gerardo Del Real: Yeah.

Nick Hodge: Physically deliverable, fully traceable commodity contracts. So far for lithium and gold, but obviously want to get into other places as well. And they see, Abaxx and Mr. Crumb, see the writing on the wall. They've already taken a 19% stake in the company. And I've become increasingly vocal about pointing them out as the natural suitor of MineHub as they've become tied together. And what they did last week, I believe it was September 11th, was they had a joint webinar where you can see how closely they're tied together, how dependent Abaxx is on MineHub for the data, and the path to monetization.

So I mentioned software as a service, I haven't mentioned fees which MineHub can collect on multiple facets of their business. So another announcement they had was with a company called Surecomp who was in the trade finance sector. And this has to do with, again, cost of capital and shortening timelines to get that capital with MineHub scraping a fee along the way. So the example here is, let's go back to my painted rocks, which are on a ship going to some exchange. Before, you couldn't take a loan on that cargo. You couldn't finance based on that cargo because again, so opaque and so many scams and frauds. With what MineHub does and the partnerships that they're building, you can shorten the time to get a letter of credit from multiple days to just hours. You can do loans and finance on cargo that is in transit because you have a transparent supply chain and you know exactly precisely what you're dealing with with no risk. That's very valuable to many players on all sides of the table.

It's valuable to banks, it's valuable to traders, it's valuable to exchanges, it's valuable to metals producers, it's valuable to exporters, to importers, to smelters on down the line. And all those entities I just mentioned can become clients and partners of MineHub from which they collect fees. So you can see how this is highly scalable and I haven't even talked about other commodities yet, like even other metals or soft commodities like agriculture, et cetera, on down the line. So still very early days, even though we've been involved in this story for a couple of years, and you mentioned Andrea, who is now the CEO. MineHub made an acquisition to bring her and her company on board. Her company was called Waybridge, which brought new technology to MineHub that has allowed them to become the platform that they are today. And I don't suspect that MineHub's acquisition ambitions are depleted yet.

I think there's more things they can bolt on, more companies, technologies that they can bolt on to widen that moat even further. And I'm pretty sure we're on the cusp of that now, given the flurry of news that has come out over the past couple of weeks, I called it a coming out party in my Thursday letter, Hodge Family Office. I'm really telling the world, look, hey, this is what we got. You're not going to be able to really trade metals in the way that this is going without our data and come and get it.

Gerardo Del Real: It's going to be interesting to me how many companies MineHub is able to partner and acquire before it's acquired itself. Because Abaxx, as you mentioned, is absolutely a natural suitor. It's not going to happen at these prices folks. It's going to happen at higher prices. This is as close, and I hate to say this, but this is as close to a no-brainer as it gets. You have a 19.9% partner that you're literally hand in hand with developing these platforms. You're reliant on each other's skillset and they happen to complement each other beautifully. Clear path towards much higher prices. Couldn't be more excited as a shareholder. Thank you for coming on. Anything else you want to add to that, Nick? I know we could talk for hours about the potential markets. I think we should probably do this again because I suspect more announcements into different commodities and subsequently announcements into other sectors.

Nick Hodge: Well just say when. I would just close by giving you a shameless plug. You mentioned having warrants and financing the company. We did that at 22 cents most recently with a full warrant at 40 cents as shares are trading at 75 cents right now and have been over a dollar this year. So we come into these stories early, we stick with them for a while. I think the track record speaks for itself, whether it's digital supply chain technology in the mining space or uranium or copper exploration or whatever it is. So by all means stay with Resource Stock Digest to get updates like this from us and then the companies and then check out the paid products at Digest Publishing to follow along with how we invest in these companies and keep tabs on them as they develop and grow.

Gerardo Del Real: Yeah, and look, I understand, and everybody's gleeful about the fact that we have a bull market. We've been able to do this. Again, not to pound our own chest too much, but we've been able to deliver these types of returns during bear markets. So I couldn't be more excited to be able to operate and deliver those types of gains for ourselves and family and friends and subscribers. In a bull market, it still will require the due diligence and the vetting that we apply to bear markets, folks. Don't mistake a bull market for brains as Mr. Rick Rule has always so elegantly stated. Nick, it's been an absolute pleasure. I'll let you get to it. You and I have a podcast, Bizarro World to record here shortly. So thank you so much for your time and yeah, great chatting MineHub. Appreciate it.

Nick Hodge: Thanks Gerardo.

Gerardo Del Real: Cheers.

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