Protect Your Assets From The Global Currency Crisis

Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller and today I have my dear friend Jonathan Awde.

Jonathan is the president and CEO of Dakota Gold, a publicly traded South Dakota based responsible gold exploration and development company that he started with precious metals, mining Titan, Robert Quartermaine. He has over 15 years experience in gold exploration and development and he's raised over $600 million for all his various investment opportunities in the gold industry during that period.

So what does this mean? Well, this means that John is changing the game in gold exploration and he's about to teach you the things that he looks for when investing in this sector.

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[THE GUEST]:  Jonathan is the president and CEO of Dakota Gold, a publicly traded South Dakota based responsible gold exploration and development company that he started with precious metals, mining Titan, Robert Quartermaine. He has over 15 years experience in gold exploration and development and he's raised over $600 million for all his various investment opportunities in the gold industry during that period.

Transcript

Ryan Miller  

My name is Ryan Miller and for the past 15 years have helped hundreds of people to raise millions of dollars for their funds, and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.

Ryan Miller  

The risk to all of us in the market lately is vast, one of the most prevalent risks that the top investors are looking at is the global D dollarization around the world. What's an investor to do and how can we mitigate this risk? Well, my next guest is a gold mining expert that has over $600 million under his belt and he's about to teach you and I key price points to look out for in your pursuit of Making Billions. Here we go. 

Ryan Miller  

Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller and today I have my dear friend Jonathan Awde. Jonathan is the president and CEO of Dakota Gold, a publicly traded South Dakota based responsible gold exploration and development company that he started with precious metals mining Titan, Robert Quartermaine. He has over 15 years experience in gold exploration and development and he's raised over $600 million for all his various investment opportunities in the gold industry during that period. So what does this mean? Well, this means that Jon is changing the game in gold exploration and he's about to teach you the things that he looks for when investing in this sector. So Jon, welcome to the show, man. 

Jonathan Awde  

It's a pleasure to be here. I'm a huge fan and go Oilers.

Ryan Miller  

Yeah, that's right, we're hoping for the cup. I love it. Man, another fellow Canadian, really great to have you here. I know mining and energy, and all these things are really big in a resource rich country than one that we live in. But we're speaking to people in 100 countries around the world and we've grown to the top 2% all because of great guests just like you. Maybe a 30 second introduction, who are you and what is, what is Dakota Gold?

Jonathan Awde  

Yeah, so Jonathan Awde, president, CEO, co founder of Dakota Gold, which is revitalizing the Homestake district in Lead, South Dakota and many people don't know this, but the Homestake Mine and Lead, South Dakota was and still is America's largest single gold mine in its history. So over 40 million ounces of gold has, was mined here, from 1876 to 2001. And we are revitalized in the district, we've made several discoveries. We came out with our first solar resource on April 30 in one of our projects, everything we're doing is on private land and we can maybe talk about that later in the show. And I spent over two decades financing small cap metals and mining. My last company was a company I was president & CEO and co-founder of called Gold Standard Ventures and we consolidated a lamp package in the Carlin Trend, which is a very prolific gold trend in Nevada. Made several discoveries and it was bought by a bigger company called Orla Mining, for about $300 million dollars. My business partner and I, Bob Quartermaine, started this company and merged with a public company that had a small land package in the Homestake District. And we've raised about $120 million US to acquire this land, to put the opportunity together and to and to explore and make these discoveries. 

Ryan Miller  

I love it. So you know mining for gold, or mining from any, for anything is, can be a challenge at times, there's so many things that are going on. But for people who are just starting out in this industry, maybe you can help them understand what are some things that they can do. Number one to get some early points on the board and number two, what are some things they should not do or look out for to avoid blowing it all up in the beginning? What would you say? 

Jonathan Awde  

I think one thing that has served me well over the last two decades is investing in people and I've said that repeatedly, you know, so people is really important to me, people who have experience, who are aligned. So people who are not aligned means they have not had their own money invested into their company. So I don't know how you can tell someone else to invest and it's so good, but yeah, it's not good enough for you to put your own money in. So that's something for me, that's one of those things I look for. You know, jurisdiction, there's just certain countries that I have no interest in being a, being an investor in or principle of, where rule of law does not apply. Typically going to parts of the world that maybe have been seen as mature or have been overlooked, these are places that I like to go. 

Jonathan Awde  

And when I'm investing in the US, I try to do as much as I can on private ground, so you're not dealing with the federal government, because it triggers a different permitting process. Permitting and mining around the world is becoming a problem and it's taking longer to get a permit, you know, from discovery of whatever metal you're looking for, to production, you know, is now over 12 years. And you talked about, you know, mining and you know this whole decarbonization and electrification of the world, everyone, everyone wants that, but you know, a lot of people don't want mining. And the only way we get to this electrification and essentially redo the grid, and decarbonize is through safe and responsible mining, and I think the world is waking up and saying, Wow, we underestimated how many hundreds of billions of dollars that will take or trillions and infrastructure, updating the grid to get to that carbon zero, net zero.

Ryan Miller  

Okay and you mentioned people, what kind of thing so I'm assuming you're talking about like when you make an investment with an operator of a mine, that's what you're talking about. As far as people you're talking about operators, I'm assuming you keep me honest. If that's the case, what kind of things do you look for when you look for good operators? I know you mentioned skin in the game. Is there anything else you can unpack that? 

Jonathan Awde  

Yeah, I think you know, all commodities have, you know, have cycles and I think anyone can make money in a bull market when metal prices are going up or when the Dow or the S&P is going up. But it's what you do in bad times that I think defines and separates good management from great management. And I think when you look at my business partner, for example, you know, he co-founded two companies, Silver Standard in 1987, it had a market cap of 2.5 billion, or sorry, 2.5 million. And when he left the company in 2010, it was a 2.5 billion, he started a new company called Pretium, went public with it with a quarter billion dollar valuation and it was sold for $3.5 billion to the world's third largest coal producer. And he did it for the second company called Pretium, from discovery to gold pour in under seven years. So those kinds of operators who are able to think in more than just one dimension, so he can think like a mining engineer, like a geologist, like a financier, strategist. People who have that ability, and we've done it time and time, again, through up cycles and down cycles and everything in between.

Ryan Miller  

Brilliant think we all agree that yeah, sure, when the market’s doing good, I mean, if you're not making money, something's really bad. But most people can, but when those that timing or the market shifts, that's where I would say it really starts to separate the wheat from the chaff so to speak. And so what do you look for, what advice can you give as far as what signals to look for, or at least information to look for, for those changes in market cycles?

Jonathan Awde  

So I think, I think when you when you look at what's happening right now, in the US, with the US Federal Reserve, at least, you know, this, this rates, higher rates for longer narrative certainly playing out, and are they going to raise one more time before they start cutting, you know, if you recall, Q4 of last year, they were pricing and seven rate cuts for this year. Now, it's one, and it might be zero, it could be one more rate hike and I think gold has inversely, you know, historically had an inverse relationship with the US dollar. So the US dollar has been strong, but I think, as I was saying earlier, I mean, the gold represents less than 1.5% of global assets. And there are very, very significant trends that are happening right now that no one is paying attention to. And that is, you know, for example, over the last two weeks, you know, this 50 year relationship that the US has had with Saudi Arabia for the petro dollar, that's not happening anymore and you're seeing this massive D dollarization. Now, the US dollar will still be the world's reserve currency for years to come. But every year, I think you'll see a gradual erosion away from that. And I think the fact that we're having this discussion and gold is $2,350, when the Fed does cut, whether it's Q4, Q1 or Q2 of next year, I think that's where gold could go significantly higher. And then you will likely see money flow into the gold ETFs and trickle down into the gold equities. And I think that's a really, really interesting time and gold stocks from a historical basis have never been cheaper. That to me is really interesting and that's the real value proposition for people who are looking at entering the space.

Ryan Miller  

So speaking of gold's never been cheaper, I really liked that and maybe we can unpack that because this can be a problem for people, we mentioned the second part of my question is, what are some of the things you can do to not lose? And I would say sometimes, whether it's gold investing or other investing, sometimes there's things that we call maybe a value trap, or catching a falling knife. And so sometimes when you see on the outside, you're like, oh, it's such a good deal. The price is low, maybe I should buy, how do you treat that as far as declining prices? Is it a value? Maybe? Is it not? Maybe? What advice can you speak to a beginner who's looking at this historically low price? What would you say?

Jonathan Awde  

I would say that fear is always a more powerful motivator than greed and so people have a much easier time chasing stocks, and they do, you know, averaging down or buying stocks. And sometimes there are liquidity events that happen, you know, a fund has a redemption, it has to sell and puts pressure on a stock or, you know, the Fed comes out with a surprise announcement and the gold price gets slammed down, you know, but I look at those things and I say, okay, have the fundamentals of the company changed? No, okay. And I have an opportunity to buy a stock at a 20 or 30% discount. You know, I love that, that's fantastic, and during that period of time, are the insiders, are they buying or selling? You know, what, when insiders are selling consistently, that's obviously something to look for. But if insiders are buying and putting their own capital to work, I think that speaks volumes to where the stock will ultimately go.

Ryan Miller  

I love that, to tack on to this, maybe can walk through something, there's a little number I know, you know, it's called AISC, and maybe walk people through what is AISC? And how does that help with pricing and understanding whether you should get into a deal or not? 

Jonathan Awde  

Yeah, so AISC stands for, All In Sustaining cash, Costs, or All In Sustaining Costs and when you're looking at a gold producer, the lower the number, the better. So arguably, you know, or in my opinion, the best run and the best managed gold producing company in the world is Agnico Eagle, trades both in Canada and in the US, and they are now the world's third largest gold producer, and second largest gold producer by market cap. Most of their assets are in Canada, and assets in Australia, Mexico, Finland, you know, they're all in sustaining costs around $1,100 per ounce. So they've got a you know, over 50% margin, and they're just really, really good operators and they think long term, and then when they commit to being in, in a mining camp or jurisdiction, they have multiple operations feeding one central facility. So they can realize economies of scale, they know the workforce, they know the government, they know the social issues that exist. You know, and then you've got higher cost assets, that require a higher gold price environment to make any money. Those are typically, you know, in that 16-17 $1,800 an ounce, so you're still making money, but not the kinds of margins that Agnico Eagle would make. And then if you want to look even further, a model that a lot of people like is the royalty model. So let's take Franco Nevada, for example, which is F&V in, in New York, or in Toronto, and they take a certain percentage off net mining sales, metal sales from a company's mind. So they don't actually have any operational risk, they have no commodity risk, they had no people risk, they just got a flat fee. So if a company has $100 million in revenue for a mine, and they have a 2.5% royalty on that, they got $2.5 million, regardless of what the gold price is, they get that off the top.

Ryan Miller  

Awesome and so would you say that like 16-1700 AISC number is about a standard benchmark? And like, how do you gauge above the line below the line? What's the line?

Jonathan Awde  

I would say you want to be in that bottom quartile, which would be in that, you know, anywhere from 1000 to like, 13- 1400. So you have a lot of margin, because the gold price, you know, historically can be volatile. You know, let's not forget here in 2001, 2002, the gold price was below $300, an ounce part of you know, you know, the challenges, people look at this, this gold price environment think these gold producers should be, you know, Making Billions of dollars, and some of them are. But the challenge is the cost to explore and develop and permit and mine and reclaim the social issues in the government, those costs have risen as fast or faster than the gold price itself. And COVID created a lot of supply chain issues, you know, labor issues, inflationary pressures. So it's, you know, these deposits are getting harder to find a lot of the time they're remote parts of the world that require massive investment, investments into infrastructure. But once you get that first mine built, and you have this sort of, you know, Hub and Spoke where you have, then you build your second one, your costs are lower, because you already have the infrastructure, and you build your third one, your costs are lower, because you already have two and then you can get economies of scale. Some of these companies that had the ability to look out 10 years, 20 years, 30 years, and how they sequence bringing on new mines, you know, that's great. And then as you come down the food chain, they're, you know, call it the small to mid cap gold producers. Then there's the developers, guys who are building mines and then there's the Explorer company, the exploration companies that are looking to either make a discovery, or move something from discovery to a resource to development to production.

Ryan Miller  

Got it, you wouldn't have a show called Making Billions and I'm talking about the market. So I'm just curious, what are you seeing out there in the market now? What's what's going on? As far as gold and everything, all the headwinds, tailwinds, what do you see?

Jonathan Awde  

I think this is an incredible time to be looking at this space and you know, you've got 150 central banks around the world that are accumulating physical gold, so I think very interesting. So when Russia invaded Ukraine, you know, the US put all kinds of sanctions seized a bunch of assets. So what the US did is they gave the rest of the world the playbook that if you do something that's against US foreign policy, and again, I'm not I'm not going to say what Russia did was right. So a lot of countries are saying, we have, you know, our gold stored in your country, we want to take that back to our own country. So you can't expropriate that, you know, so you're, and China's doing that and this, you know, formation of the britts and I don't think there's going to be a currency because there's too many cultural and social issues. But there's this desire to have an ability to settle transactions into something else other than US dollars and I think gold is going to play a pivotal role. So I think you have gold priced at $2,350 and there still isn't a lot of interest in the gold equities and I think that is this huge opportunity. 

Jonathan Awde  

Again, if you've got a view that in the next five years, the US dollar is lower than where it is today and that these deficits are becoming, you know, becoming a problem, they will be a problem at some point. You know, you look at 2 1/2, 3 trillion a year in deficits, a trillion dollars on military and a trillion dollars to service your debt at some point that is unsustainable. And there's, so I love the position that, that the resource industry is in and I think that when you look at, take the copper market, for example. So copper is, you know, the essential metal to electrify, decarbonize the world. Without copper, none of this works, solar doesn't work, wind doesn't work, EV,s don't work. The largest copper mine in the world is called Escondida, it's in Chile, and the world needs a new Escondida every year to meet demand. If you were to find, if you were to be so fortunate enough to find an Escondida from discovery to production 12 to 14 years. If you have a Brownfields project, so big copper resource, and you're looking to get it permanent and financed to production 7 to 10 years, so there's no pipeline. So I think you will see materially higher metal prices and a lot of these different commodities over the next 5 to 10 years.

Ryan Miller  

All right, so we gotta, we gotta get you into the asteroid mining here pretty soon here, all these commodities is floating around in space. But in the meantime, you know, so I was just gonna ask where do you what's your opinion on where the smart money is going. So it sounds like precious metals that comes at no surprise, or just metals in general. You know, and one of the things that you taught me, when we spoke offline is there's about $6 trillion of cash or dry powder sitting on the sidelines and what do you believe is the catalyst that's going to unlock that 6 trillion? 

Jonathan Awde  

Yeah. So I think when the Fed clearly pivots from, you know, raising rates to easing, I think you will see that money looking for more attractive returns. And depending on what kind of, you know, cutting cycle we go into, you know, I think one of the, you know, executives that I follow, he's, he's not a mining guy, but Jamie Dimon, CEO of JPMorgan. You know, a year ago, he was talking about, look, I think rates are going to be higher for a lot longer, people should prepare for that, that they should have strategies in place to prepare for that. So you know, but you're not coming a situation where it's, it's getting to a point where it's, you know, that this can keep getting kicked down the road, but you keep raising the debt ceiling, you know, and you've got your debts $35 trillion, it's just, it's not sustainable. So I think that money is going to want to go and chase the hot sector. So you know, AI is a big one, but the whole I think you'll see another leg up and the whole EV, battery metals, again, anything to do with the electrification, green energy, decarbonization, that's going to catch a bid all day long. 

Ryan Miller  

Perfect. So as we round third base, I'm just curious, you know, let's give some people the competitive edge some of some of the the secret sauce. Maybe two or three pieces of competitive advantage that you can provide to people if they're saying, I love what you do. I love everything you're talking about, how do I become you in a quarter of the time? What would you tell him?

Jonathan Awde  

Well, there's a famous investor, resource investor in the mining industry in his name is Rick Rule and he's had a, you know, I think, a five decade career. And he will talk about if I just invested in six people, and he calls those people that, you know, six mining legends, living legends, I would be infinitely wealthier than I am today and he's already a very wealthy man. So again, I keep coming back, you know, people who have a track record, who have alignment with their shareholders who put the shareholder first, who can articulate their strategy and what they're trying to do, I think if you invest in good people, you will save a lot of capital, and a lot of headaches. And I think that, for me is a big one, you know, we talked about jurisdiction and location, there are certain, you know, countries that I have no interest in being an investor in or principle of, because it's just too hard to take on social risk or permitting risk, or when the government can say, you know, what, we want a bigger piece of the asset, or we want the asset. And I've had friends who have been in those situations, and it's horrible, you know, you can lose 5-10 years of your life and all your money. 

Ryan Miller  

Okay, and so finding good operators, working with them and we talked about some of the things that you look for early on in the show, we talked about things you look for, it's finding operators. What else would you say, could really accelerate people and as far as being an expert investor in this space?

Jonathan Awde  

Again, during periods of extreme pessimism, where you essentially have that for a lot of the mining equities, and where there's just not money flowing in and I think now, that's why now is an excellent time to be looking. And you've got this massive disconnect, this bifurcation where you've got strong metal prices, and you know, somewhat weaker equities, when you look at relative on a relative value basis, where gold is, looking at where it has been historically. So I think just again, understanding kind of cycles and fund flows and again, just looking at so when the Fed starts to pivot in the market will typically front-run that. So at some point in the next year, you likely will have a Fed pivot to an easing cycle. Another interesting thing that I find, you know, just fascinating is that the world's two biggest economies are doing opposite things with interest rates, one is cutting and one's hiking, so I find that super interesting. So I think, I think the longer rates stay higher in the US, ultimately, the higher gold is going to go. That's my, that's my strong strong conviction and strong belief. Now there might be a lag of money coming into the ETFs and that's really where you will see some of these equities materially higher than where they are today. 

Ryan Miller  

Yeah, okay, love it. So, as we wrap things up, is there anything else you'd like our fans to know and how to reach out to you or anything at all? 

Jonathan Awde  

Yeah, so we've got a great website that's a phenomenal resource for what we're doing and who we are and it's and its dakotagoldcorp.com. We have a LinkedIn page where we post a lot of things we're very active in our community in Leads in South Dakota. Those two pages are great, you know, look, my email address is jawde@dakotagoldcorp.com. So jawde@dakotagoldcorp.com. We are the kind of company that I don't care if you own 100 shares or a million shares, you're an investor. You've taken the time and you've taken your own capital, and you have many places to put that capital and you've chosen to put it with us. I'll give you all the time you want because without investors, you know this concept that started from a flight down to South Dakota and looking at wow, this is the most significant Goldmine in the history of America. And we have an opportunity to do these deals with Barrick Gold out of their closure group because when Barrick came in and bought Homestake it wasn't for South Dakota. It was for other assets they had in their global portfolio, and we bought it out of Barrick's closure group, and then grew the opportunity from 5,000 acres to 50,000 acres. So we are aligned with shareholders, I mean, my business partner and the co chair, Bob Quartermaine, doesn't take any salary, he works for free and he's the biggest shareholder. So he's super aligned with all of our investors, our other co chair, Steve O'Rourke, he ran global exploration for petroleum for BHP. So this is a guy that had multibillion dollar budgets every year. So we've got people who have taken assets from, from discovery to development to production, and you have a lot of skin in the game, you know, between Bob Quartermaine, and I, we have almost $10 million around money into the deal. 

Ryan Miller  

Brilliant, so just to summarize everything that we talked about, so find excellent operators to invest alongside of them that is one of the keys Jonathan's talking about. The other thing that you mentioned, Jonathan, is look for metals, the value of those metals, and how it compares to the value of equity and use that as a position, kind of a launch pad if you will. And then finally, one of the last things that we mentioned was, seek operations with an AISC around 1,000 an ounce or better, you do these things and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better and make sure to come back for the next episode where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.