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Mickey Fulp is a Gold Mine of Mining Industry Insight

on 4/24/2010

Sitting down with Mickey Fulp, the Mercenary Geologist, is always entertaining and informative. He's deeply experienced in both the geology side of the industry and the business/economics side of the business and he's never short of refreshing, insightful (and sometimes provocative) opinions.


Mr. Fulp has an M.Sc. in Geology and over 30 years as an exploration geologist. Today he is a well-known and respected analyst in the exploration and mining industry who writes a newsletter and speaks on radio and television. We caught up to him shortly after he spoke to the Prospectors and Developers Association of Canada (PDAC).


We started by asking Mr. Fulp about his current projects and what he spoke about at PDAC. He told us, "I gave a chapter of my upcoming book called 'The Trouble with Geologists.' It bemoans the fact that in our business, so many field geologists have no business skills and no idea of what being an economic geologist is all about." He publishes a chapter of his book periodically on his website and this chapter discusses a serious problem in the industry. He continued: "It describes what geologists do and how we're trained in college as scientists. For example, I never had a course in English or in Economics – and I have a Masters degree – yet I write every day and I'm an economic geologist. Those skills I've learned through 30 years of experience. Many field geologists, though, have only been in the field and they've never been on the business side."


Indeed, this is a serious problem in the industry, especially since many of these field geologists move from their area of expertise (the field) into an area where they have little experience at all. "At the beginning of the boom in 2003, many of my peers became CEOs of juniors. They brought field geology skills but no business skills, and many of the companies have failed. There are many companies that will never succeed because the geologists that run the companies have no basis in business and economics. As exploration geologists, our chances of success are miniscule, so because of that, we become eternal optimists and are blinded by it. As a result, projects go on way too long and juniors choose projects that are either too small to make a mine or too big and without the financial backing to develop that mine. Selling to a major company is not a viable exit strategy. Less than one in one hundred juniors will ever sell to a major mining company."


We asked him for an example to explain further. "What we find is that many geologists do not understand the fundamentals of the business and what a junior company is capable of doing, both in terms of timeline and in terms of the ability to raise money to build a mine. For instance, I dislike porphyry copper deposits as flagship projects because there are only 5 or 6 major mining companies in the world that you can sell them to and that assumes that you can drill out a billion tonnes and take a deposit to a development stage to attract a major. This process takes a minimum of 10 years and most juniors do not survive that long."


"If a company is in that position, I just won't look at them. Most of these juniors don't have a future. We started to see a lot of them wash out during the recent financial crisis," concluded Mr. Fulp.


Next, we started talking about Mr. Fulp's thoughts and recommendations in the industry. He gave us a quick overview of his position before we dove into specifics: "I tend to play explorers versus producers. I play stand alone juniors and prospect generators. Certain advance gold explorers are attractive to me. I'm very bullish on the rare earth elements sector."


That launched us into speaking about rare earths and whether or not it is a bubble. Investors seem to either approach it as a bubble, which makes them overly cautious, or they approach it as a bubble that they can profit from in the short term, which tends to increase the appearance of a bubble. Mr. Fulp said: "Of course it's a bubble, but look who's behind it: The US government and Goldman Sachs. We're in a very early stage and the bubble is being blown up and it's a long way from bursting. There are several catalysts in the market that are going to be bullish for rare earth elements." He listed a recent congressional hearing, a bill introduced in Congress, a Department of Defense report, and rumors that Molycorp will go public in early June. "Those four catalysts make me very bullish in this sector."


Mr. Fulp identified Avalon Rare Metals (AVL), Rare Element Resources (RES), and Quest Uranium (QUC) as three companies he likes. More of his writing on some of these companies can be found on his website (see References for available links).


Next, our conversation moved to uranium. "The uranium sector has been beaten up. The supply and demand fundamentals are compelling with the world consuming 1/3 more than mines produce.  We've seen some recent rise in the spot price. The demand for uranium will only increase in the future. The Russians are ending their megatons-for-megawatts program (where they convert high enriched weapon-grade uranium to low enriched supply for nuclear power plants) in 2013.

So, we asked Mr. Fulp what he likes in uranium. "My favorite company in this space is Strathmore Minerals (STM). They recently completed a sale of a project that put $20 million in their coffers and are very undervalued compared to their peers."


Like every recent conversation in the industry, we then spoke about gold and why gold companies are a good investment right now: “It’s no secret that when the price of gold is robust, the junior resource market is robust. The Toronto Venture Exchange is driven by gold. We have a good gold price right now, there’s every reason to think that will continue, and gold mining companies are going to be making money… even if there is a major price correction. All in all, I'm neutral-to-slightly bullish on the near term gold price."


"I've recently covered   these gold exploration companies:
Amarillo Gold (AGC). They have two advanced projects in Brazil and are extremely undervalued compared to their peers.
 Another one that's undervalued is Otis Gold (OOO); they have a resource in east-central Idaho with good management and share structure.
 Eurasian Minerals (EMX). They have new, exciting discoveries in Haiti. Their projects and infrastructure are located in the north of Haiti and quite far from the earthquake. JV partner Newmont Mining is very pleased with the quality of recent discoveries.
Pediment Gold (PEZ) is another one with two advanced properties in Mexico. They are slightly undervalued compared to their peers. What really excites me is the tremendous exploration potential on their projects.
 And finally, trading near yearly lows is Animas Resources (ANI) exploring in northern Mexico for a big Carlin-type deposit with many targets in a formerly producing district. They recently took on two advanced exploration plays in Nevada thru a joint venture. Management always has the ability to raise money when needed.”


Mickey Fulp's experience as an economic geologist gives powerful insight to investors who are looking for junior companies that can make significant gains. "I tend to stay away from producers and go to the explorers because that's where you can get the 2- and 5- and 10-baggers." His insight and his opinions are insightful, and even provocative, but there is no doubt that he knows the industry and continually produces good ideas for his readers.






Mickey Fulp's Mercenary Geologist website:


"Mercenary Musings" newsletter:


"The Trouble with Geologists" PDF chapter (from Mercenary Musings):



Mickey Fulp's picks in the Rare Earth Elements space:

Read Mickey Fulp's most recent report on this company: Listen to Mickey Fulp’s most recent interview:

Read Mickey Fulp's report on this company:



Mickey Fulp's pick in the uranium space:

Read Mickey Fulp's most recent report on this company:


Mickey Fulp's picks in the gold space:

Read Mickey Fulp's report on this company:

Read Mickey Fulp's report on this company:

Read Mickey Fulp's most recent report on this company:

Read Mickey Fulp's most recent report on this company:

Read Mickey Fulp's most recent musing on this company:



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