Mickey Fulp, The Mercenary Geologist, Interview by Dr. Allen M. Alper
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By Dr. Allen M. Alper
on 2/14/2019
The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years of experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, coal, uranium, oil and gas, and water in North and South America, Europe, and Asia.; http://www.goldgeologist.com
Mickey Fulp at VRIC 2019 at Cambridge house in Vancouver.
We caught up with Mickey Fulp at VRIC 2019 at Cambridge house in Vancouver. We can always count on Mickey to give it to us straight. See his VRIC2019 presentation below:
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in Chief of Metals News, here at VRIC 2019 talking to Mickey Fulp, the Mercenary Geologist, who likes to make money on geology and exploration. Mickey, could you tell our readers /investors your thoughts on what's happening in the mining industry right now?
Mickey Fulp: We had a brutal 2018 except for a couple of metals, uranium and palladium, which did well. I thought we would have a bull market in 2018 but it didn't happen. I am cautiously optimistic that we will see a better 2019.
Dr. Allen Alper: Well, it seems like we're having some signs that it's getting better. What do you think?
Mickey Fulp: The gold price is up, and that's always good for our business. The Toronto Venture Exchange is up, since mid-December, but that's a seasonal thing with tax loss selling, and then the usual recovery. We would expect the Toronto Venture Exchange to be flat until the end of January and then see another rise as we approach PDAC. The gold price is up, pushing 1290, encountering resistance in the mid-1290s. If it gets about 1300, that's will be significant. For it to happen, we probably need a bit of a weaker dollar or some more turmoil in the markets. This is also the season that gold always performs the best. We expect gold to give positive returns from the first of December into the end of February. When gold goes up, the resource industry will generally do well.
The industrial metals end of this business is in the doldrums, held hostage by China-U.S., trade talks. Until that's resolved, I don't see base metals doing well. Hedge funds have left hard commodity space so they're a bit directionless right now, and that's not going to change until they come back in. I think they're waiting as they don't want to be in the game until there's some indication of a resolution (or not) on trade tariffs. If they end up being resolved, and I'm convinced it will be in U.S. terms because the Chinese need us more than we need them, then the base metal complex will soar. It's backed up by very strong supply-demand fundamentals at this stage.
Dr. Allen Alper: Well, thank you. That sounds great. What areas would you advise investors in the mining sector to consider, maybe what companies?
Mickey Fulp: Don't invest in the mining industry. Speculate in the exploration industry. Mining is a tough business. Mining has not rewarded shareholders since the bull market began in 2003. I am convinced miners do not have shareholders' best interests in mind most of the time. They are driven by quarterly earnings, by growing reserves and resources, and not by the idea they need to reward shareholders on a consistent basis by mining high-margin deposits.
Dr. Allen Alper: So what you would advise investors, who want to speculate in the exploration area.
Mickey Fulp: An investment is defined as a vehicle where you put your capital and it delivers profits on a repeating basis. The mining business historically hasn't done that. You cannot buy into any mining company and expect a consistent return. So let’s look at pure speculation: it's really gambling and I think you want to speculate in explorers as they give the greatest risk-reward leverage. The advantage for a smart speculator is you can skew the odds in your favor if you have an idea what makes a good company, you do proper due diligence, and you determine the time to buy it.
Dr. Allen Alper: And what would you say are the factors that speculators should consider and what about the timing?
Mickey Fulp: Well, you want a tight share structure where the management and insiders own a significant amount of stock so they will operate in shareholders’ best interest. You want management to be technical and experienced with a record of success and not failure. You want a good flagship project in a geopolitically favorable jurisdiction, and you want a company that has cash in the bank or the ability to raise working capital with minimal dilution. Finally, you must have the timing, so you want to buy stocks that are unknown, unwanted, unloved, and undervalued. If you can do all that, you will be rewarded.
Dr. Allen Alper: Now are there any particular stocks that you think people should investigate or review?
Mickey Fulp: Yes, I currently cover three companies. I'll leave it to the reader to determine whether or not these companies match his speculative criteria. They are: Ely Gold Royalties (ELY.TSXV); Trilogy Metals (TMQ. NYAM); and GoldMining Inc (GOLD.TSX). I am biased because I own these stocks and paid fees to cover them. Go on my website, read what I’ve written about the companies, go to their websites, look at the corporate presentations. Determine if any are fits for you.
Dr. Allen Alper: That sounds good. What do you feel about royalty companies?
Mickey Fulp: Well, I cover Ely Gold Royalties, so obviously I like the business model. Royalty space at the higher end is taken up, but there're still lots of good smaller companies and smaller royalties that can be purchased. For example, ELY bought two within the last couple of months. If I were a speculator, I'd be looking at smaller royalty companies with smaller revenue requirements from small miners.
Dr. Allen Alper: Is there anything else you'd like to add, Mickey?
Mickey Fulp: To read more visit my site http://www.goldgeologist.com/.
My twitter feed is at https://twitter.com/mercenarygeo.
Thanks for your time, Al.
Dr. Allen Alper: Thank you. I appreciate you sharing your insights with our readers.
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