Compass Points to What You Want Most

Captain Jack Sparrow in Pirates of the Caribbean: "True
enough, this compass does not point north." "...Where does it
point?" "It points to the thing you want most in this world.”

Weathering the Storm
“Think Differently”
PDAC 2013
Jean-Pierre Colin
Capital Markets Strategies
JPColin@Sympatico.Ca
Mobile: 416-573-4300

2

Survival of an Industry
 Charles Darwin: “It is not the strongest of the species that
survive, nor the most intelligent, but the one most responsive to
change.”

 Is the financial crisis temporary?
 Who wants you to believe this?
 Is this a down cycle or a fundamental and permanent shift in capital
markets?

 If this is a temporary crisis
 For how long?
 What will make it revert?
 Who will survive?

March 6, 2013 Think Differently - Weathering the Storm - PDAC 2013

3

Juniors Lag Large Caps in Funding
and the financing window for juniors is shorter
Volume of Financings over Time

Large Caps
Juniors

time 2013


Sources of Funds Continually 4

Evolve

2013

Off-Takes
Royalty Deals
High Net Worth Governments and
Individuals large Corporations
Family Offices in Asia and Middle
Secondary Hedge Funds East
Fundraising Mainly newcomers New Wealth
to the industry Seeking
Retail Distributions International
Flow-Through Funds Still active but many Mining
IPO’s sitting on the Opportunities
Select Group of sidelines this year
VSE Institutional Investors Different
MSE and Banks with Negotiation Tactics
Expertise Longer Lead Times
ME
Canadian, USA and New Intermediaries
ASE European Portfolio
Grub Staking
1980 Seed
WSE Managers and Letter
Writers
Are Many of Our
Traditional Brokers
Investments Evolution to Becoming Obsolete?
TSX, TSXV, AIM
by Syndicates
of Private
Investors


5

When Survival is at Stake
 There is No Plan “B”

 Develop a Strategy

 Engage Shareholders

 Manage Dilution

 Maintain Ownership Title of Core Properties

 Goal, as always, is to advance towards building a mine

 Methodology? There is only one: “Think Differently”


6

Apple Computer Ad Campaign
 Apple once held an Ad Campaign entitled “Think
Differently”.

 It read like this:
 "Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in


7

Lofty Goals: Mines & Shuttles


Best and
Unique
Accomplish
-ments
Requires
500 thousands
of skill sets
person to build: no
team subset is
substitute
33
Successful
Mines
No one
Few people individual
have seen
it on TV can build
one

You can
name the
CEO!

March 6, 2013 Think Differently - Weathering the Storm - PDAC 2013 8

Best and
Unique
Accomplish
-ments
Requires
thousands
50,000
of skill sets
person
to build: no
team
subset is
substitute
33
Successful
Space
Shuttles
4 Billion No one
people individual
have seen can build
it on TV one

Can you
name the
CEO?


99% of a Project = Failure
the project must be 100% completed
and each time it is different than the last time
there is no cookie cutter formula

Mine Space Shuttle
Technologically Risky Technologically Risky

Large Team Required Large Team Required

No Margin for Errors No Margin for Errors

Capital Intensive Capital Intensive


Only 33 New Mines Opened in 11

Canada in the Last 33 Years
33 New Mine
Operators

Fewer Mining Companies
with Feasibility Study

Some Juniors with PEA

Many Juniors with Resources & Reserves

Thousands of Early Exploration Juniors


12

33 Mines are Outliers that think differently
 Distribution of thousands of Junior Exploration Companies
 or Distribution of thousands of Flying Machines

conventional “me too” conventional “me too” thinking
thinking

33 Mines and
33 Shuttles

thinking differently to achieve outlier status


13

Investment Check List
 The 7 “Ps” of Successful Investments in Mining
 Most juniors often fail to address what is most important to
investors
 In “feeding frenzy” capital markets, in the rising tide when all the boats go up, the
problem isn’t apparent

 In a financial crisis, it’s very easy to point to the lack of investors
instead of looking introspectively
 But, it isn’t just the pitch deck that needs attention
 It’s the entire corporate strategy that needs to change

 What criteria are used by experienced professionals?
 Research Analysts, Investment Bankers
 Retail Brokers, Institutional Desks
 Institutional Investors, Flow-Through Funds, Portfolio Managers


14

People Property
Mining Mining companies
companies with with good
perceived good properties
management

Price
Mining 7 P’s of Mining
companies with Investments Promotion
low market Mining
valuations companies with
perceived good
promotional
capabilities

Plan Patience
Mining Mining
companies with companies with
strategic plans credible
that appeal to timelines
investors
Persistence
Recognizable mining
March 6, 2013 companies Think Differently - Weathering the Storm - PDAC 2013

15

People Property Price Promotion Plan Persistence Patience
 The art of winning an unfair game

 Peter Brand in Moneyball: “Baseball thinking is medieval, they are asking all the wrong
questions and if I say it to anybody I'm...I'm ostracized. I'm a rebel, so that's why
I'm...I'm cagey about this with you, that's why I respect you Mr. Beane and if you want
full disclosure, I think it's a good thing you got Damon off of your payroll. I think it opens
up all kinds of interesting possibilities.”


16

 Wise & balanced board of directors
 Not just “my friends and drinking buddies”
 Consult with board members

 C-Suite (CEO,CFO,COO) who have survived crises
 Older executives with relevant experience
 Not people learning as they go along at your expense

 Forward-looking Technical Staff
 Exploration geologists, field geologists, engineers, metallurgists
 Continually review and question assumptions, don’t allow group-think

 Consultants to save funds and … think differently
 Moneyball = an example of success when funds are very scarce

 Change the way your company plays the mining game


17

 Hire Mentors

 It’s not uncommon in a VC office, or local coffee shop in
Silicon Valley to see the 20-something first-time entrepreneur
in jeans and a t-shirt sitting across the table from the 50-
something entrepreneur wearing jeans and sandals. It just
happens that the 50-something is a third generation
entrepreneur and ridiculously wealthy. He or she’s not helping
the first-time entrepreneur because of the money, but as
Randy Komisar would say; “he or she wants to be part of the
future”. They want to give back! They are paying it forward.


18

 Hire More Women


19

 Hire Locals & First Nations


20

 Hire Young People


21

 Pay Good Wages

 Robert Bosch: “I don’t pay good wages because I have a lot of
money; I have a lot of money because I pay good wages.”

 Simple Wisdom: “If you pay peanuts, you get monkeys.”

 Cut your expansive drilling budget a bit to stretch for
 The best of the best people
 Put some money into your thinking
 Not all the money in the ground
 Mines are made, not found


22

 BlackRock Metals Inc. is a privately financed Canadian mining
company:
 100% owned world-class iron ore, vanadium and titanium property
 In one of the most prolific mining regions in the world
 High-performance culture is guided by its core values of
 putting people first
 operating on budget in a safe environmentally sound manner and
 maintaining a high standard of social responsibility and social
acceptance of its projects
 BlackRock is still awaiting its newest final feasibility
study, yet:
 has commenced mine construction
 production will have been achieved in record time
 financed in part by off-take agreements

23

 Captain Jack Sparrow in Pirates of the Caribbean: "True
enough, this compass does not point north." "...Where does it
point?" "It points to the thing you want most in this world.”


24

 Prioritize your properties and pick only one
 Limited funds impedes achieving a Valuation Milestone
 Spending on several properties reduces the impact of the
limited cash

 Consider the spectrum of investor segments
 Gold Bugs vs. Base Metal Investors
 Safe Jurisdictions vs. Riskier Higher Return States
 Early Stage vs. Advanced Stage

 Deal with investor risk
 Don’t build half bridges


25

Main Property Secondary
of Merit Property of
Expenditure Geological
Limited Funds Requirement Interest
Expenditure
Requirement
Do One Thing
Available Cash
and property fully
financed to
Do That Particular advance to a
Thing Very Well value creation
milestone

Fashionable Dormant
Property Properties
Expenditure Expenditure
Requirement Requirement



Only some Universe of Gold Universe of Base Only some
Gold Bugs like Investors Metal Investors investors like
base metals Gold


Only some Universe of Safe Universe of Only some
investors like Jurisdiction Complicated investors like
risky safe
jurisdictions Investors Jurisdiction Jurisdictions
Investors


Only some Universe of Universe of Only some
speculators Investors Investors in investors like
like early stage
production In Advanced Stage juniors
Early Stage Juniors
Juniors

29

 Maintain ownership title through the financial crisis

 Renegotiate with co-operative industry colleagues
 JVs
 Earn-ins
 Options

 Help industry colleagues maintain ownership title
 e.g. Celine Dion’s Golf Course in Terrebonne, Quebec

 Opportunity to acquire new properties


30

 Eli in The Book of Eli: “People had more than they
needed, people didn't know what was precious and what
wasn't, people threw away things they kill each other for
now.”


31

 Valuation Parameters
 If it costs $15 to find one oz. of Au then don’t raise exploration funds at $5 market cap
per oz.
 Low Capital Expenditures + Low Operating Costs are financed first

 Comparables
 You must not be better than your peers; you must be the best at something
 e.g. best in the region, best in a commodity, closer to markets, closer to
production, best grades at best cut-offs, lowest cost structure, lowest market cap per
lb. etc.

 Independent opinions of value
 News Letter Writers; Research Analysts; 43-101 reports
 Who else thinks you are undervalued and WHY?

 Address dilution head-on
 Reverse Stock splits are not the solution
 Stock Consolidations are not the solution
 Detour Gold emerged out of Pelangio Mines
 A new company was created
 Property was sold, stock was not diluted

32

Flow-
Through Future
Investors Pressure on
Stock Price

Rigorous Short Term
Investment Institutional Retail Investment
Criteria Horizon
Investors Investors


33

 Gordon Gekko in Wall Street: “I don't throw darts at a board.
I bet on sure things. Read Sun-tzu, The Art of War. Every
battle is won before it is ever fought.”


34

 What is your Value Proposition?
 Why will your stock price rise?
 Demonstrate this assertion with hard evidence

 Finance enough to reach a Valuation Milestone
 Do not build half a bridge; it is as useful as no bridge at all
 e.g. As disclosed in Barrick’s Q2 2012 Report, preliminary results of a
review indicated an increase in capital costs of its Pascua-Lama
project to $7.5-$8.0 billion and a delay in first production to mid-
2014
 Show evidence of your Valuation Milestone
 Formation Capital did everything right, they reached Full Feasibility, Full
Permits, but
 Without financing the stock price has languished
 Investors have not made money

 Liquidity is Value; Displace Peers; Exit Strategy


35

 What is good promotion?

 “I need to meet more investors because my stock is down,” says
the CEO
 “Well, how much promotion have you done so far?” says the Thinker
 “Oh, I do a lot, and I spend a lot on promotion, years of meetings, in
Canada, USA, Europe, many retail brokers too,” says the CEO
 “Well, maybe this proves your promotion isn’t working because your stock
hasn’t appreciated during this period of promotion. In fact, you have
proven beyond doubt that, whatever your promotion is, your methodology
isn’t working,” says the Thinker

 You don’t need to meet more investors yet, you must fix your story
first! That doesn’t mean a fancier PowerPoint, it means a new overall
business strategy, a new value proposition, basically, a new business!
When you are ready, then, meet new investors.


36

 JK Rowling: “I really don’t
believe in magic.”

 Ensure your strategic plan
adheres to strict logic.

 Demonstrate that
 if your plan is successful it will
make money for investors
 You have the ability to fulfill the
plan with aplomb…


37

 Demonstrate you have the ability to fulfill the plan with
aplomb

 A plum


38

 Zig Ziglar: "If you wait until all the lights are green
before you leave home, you will never get started on
your trip to the top.”

 Plan a strategy

 Measure Progress

 Eliminate Debt

 Think Big – Think Differently


39

 Develop a suitable foundation that inspires your
potential investors at the start of your presentation


40

 Reach a Valuation Milestone

 Do not build half a bridge


41

 99% of a Plan is not a strategy, it doesn’t work

 A beautiful car without a battery is useless


42

 It’s ironic that the most important instant in presentations is a tiny
fraction of the 30 minutes spent with investors but no effective
adjustments to the plan can be made at that very crucial moment

 Do not try to alter your plan during investor presentations

43

 Every detail is a major decision


44

$UCCE$$

Exit Strategy
Demonstrate you
Production or Sale can realistically
Quality of data is achieve an Exit
established Strategy.
Next Valuation throughout the
Milestone process before future
production and/or
Determine how you due diligence by a
survive the crisis that potential senior
follows even if you buyer or production
Value Creation survive the current
Milestone team.
one?
If successful, the
current
expenditures lead
to a significantly
Acquisition higher share price
and and value.
expenditure
Today… programme of
Property
Manage Capital
Spending.


45

 Hope for the Best
 The unexpected is always upon us

 Plan for the Worst
 Lightning strikes unexpectedly

 Adapt to the Financial Crisis
 Make your company robust
 Expect unusual setbacks
 Maintain flexibility

 e.g. Creation of NIM in 1980s


46

 NIM Limited Partnerships of the 1980s

 1st public Junior Flow Through Share funds
 raised over $730,000,000
 invested in over 400 mining companies in Canada
 9 public limited partnerships

 Created in the summer of 1984 in a very slow capital markets
environment, while sharing innovative ideas and thinking
differently
 aided by just the perfect amount of fine red wine
 on an outdoor patio
 on the island of Stanley Park
 one sunny afternoon
 on a seemingly very ordinary Sunday.


47

 Abraham Lincoln: “If once you forfeit the confidence of
your fellow-citizens, you can never regain their respect
and esteem.”


48

 Plan the Ultimate

 Sally Ride: “Even though NASA tries to simulate launch, and
we practice in simulators, it's not the same - it's not even
close to the same.”


49

 Voisey’s Bay Mine
 Even the best of plans are subject to change
 The 1993 discovery of Voisey's Bay by prospectors Albert
Chislett and Chris Verbiski, was almost accidental.
 The Diamond Field Resources managers were focused on
diamonds and initially showed little interest in the nickel-
copper prospect.
 Of course, they changed their minds when drilling revealed
core rich in massive sulphides, with stunningly rich grades of
nickel.
 The property fetched $4.3 billion in 1996 after a takeover
battle.


50

 Mark Zuckerberg: “There are people who are really good
managers, people who can manage a big organization, and
then there are people who are very analytic or focused on
strategy.”


51

 Wolfden Resources

 TSX listed and successfully sold (purchased by Zinifex, now
China MinMetals) for approximately 1/2 billion dollars.

 Ewan Downie created Wolfden which became an acquirer of
dozens of mining properties that no one wanted in Nunavut.
Wolfden adopted the strategy of the little fish eating the
even smaller fish and the little fish grew and grew. Then one
day an even bigger fish ate Wolfden and investors made a lot
of money.

 uNCONVENTIONAL tHINKING: we made money for investors by
being acquired instead of being the one doing the acquiring.


52

 Miyagi in The Karate Kid: “Wax on, right hand. Wax off, left hand. Wax on, wax off.
Breathe in through nose, out the mouth. Wax on, wax off. Don't forget to breathe, very
important. You learn plenty.”
Daniel: “I learn plenty, yeah, I learned how to sand your decks maybe. I washed your
car, paint your house, paint your fence. I learn plenty!”
Miyagi: “Ah, not everything is as seems...”


53

 John F. Kennedy: “When written in Chinese, the word
"crisis" is composed of two characters. One represents danger
and the other represents opportunity.”


54

 Caratax Management Ltd.
 Created in 1993, when the mining capital markets were dead
 FIRST ever diamond Flow Through Share fund manager
 FIRST fund manager ever to proclaim that there would be diamond
mines in Canada well before any such mines existed
 FIRST ever to proclaim that, ironically, Canadians would not own nor
control most of the diamond mines discovered by Canadians in
Canada and on Canadian soil because Canadian financial institutions
were not thinking outside the box.

 Foreign companies bought many of these mines with foreign
capital.

 "Those who think something cannot be done should not stand in
the way of those who are actually doing it." Farallon
Management Mantra


55

 Blue Note Metals Inc.
 $6,000,000 market cap, didn’t even own the asset
 We raised $150,000,000 at market via subscription receipts
 BN re-opened a mine all within 3 years, thinking differently

 Walter Duranty: “You can’t make an omelette without
breaking a few eggs.”


56

 Puget Ventures/Global Cobalt

 Thinks Differently because
 the acquisition of Karakul Cobalt Deposit in Altai, Russia, and current
corporate transition is a game-changing expansion of the company
 that will allow for the evolution of a leading strategic metals player

 focused on the creation of a new mining district in the
crossroads of Central Asia
 As first mover into this new region, the Company will be able to leverage
the world-class Karakul
 has the potential to become the world's largest primary-cobalt deposit
outside of Africa
 bring on stream a number of projects that are under right of first
refusal, creating a mining district with enormous potential


57

 Joshua, the NORAD computer, in War Games: “A strange
game, Global Thermonuclear War. The only winning move is
not to play.”


58

 Virginia Gold

 TSX listed and assets successfully sold to Goldcorp for
$1,300,000,000

 I was honoured that Andre Gaumond, President of
Virginia, asked me to join his board in 1993. Virginia was a
pure exploration play of very high risk mining prospects in
Quebec.

 For 10 years nothing great seemed to happen at Virginia and
Andre and I would tell each other month after month:

 "Never Give Up”

 It worked!

59

 Ernest Hemmingway: “The first draft of anything is
shit.”


60

 Detour Gold
 For me, the story of Detour Lake started in 2001, when I got
involved with an orphan company and relentlessly promoted
the opportunity in the mining and finance world.
 Ironically, no one on Bay Street, not even the best of
experts, seemed to think that this property could ever
amount to anything (except the Pelangio Mines board, Eric
Sprott, Franco Nevada and Gerald Panneton).
 Today, 10+ years later, Detour Gold is a $3 billion market cap
public company, perhaps one of Canada's largest gold mines.
 The lesson: "When you think differently or ahead of your
time, expect to be all alone for a long while."


61

 Winston Churchill: “If you have ten thousand regulations
you destroy all respect for the law.”


62

 Celebrate Our Outstanding Jedi
 A Very Incomplete List: Ray Goldie, Graham Farquason, Murray Pezim, Chuck Fipke, Ron Thiessen, Bob Dickinson, Gerald
Panneton, Bob Schaefer, Dick Whittington, Andre Gaumond, Ingrid Hibbard, Bob Wares, Erin Chutter, Ewan Downie, Jim
Gill, Charles Beaudry, Alex Stewart, Robert Cudney, Laurie Curtis, Stephen Stewart, Fred Archibald, Rob McEwen, Sean
Cleary, Jean Rainville, Edward Yu, Mark Monaghan, Abraham Drost, Jim Rogers, Lawrence Page, Roger Scammel, John
Cullen, Rene Galipeau, Frank Smeenk, Tom Larsen, Tom Meredith, Frank Callaghan, Scott Bending, Mari-Ann
Green, Natasha Blackburn, Alex MacDonald, Stan Bharti, Shawn Wallace, Jim Watt, Joe Conway, Pierre Lebel, Dennis
Milburn, Nicholas Colin, John Kearney, Judy Baker, Michael Judson, Guy Hebert, Michel Bouchard, Hugh Morris, Jacques
Perron, Pierre Gauthier, Emma Drapell, Gary Pelangio, and all the people in this room


63

What Can the Junior Mining Industry Do?
 Celebrate Industry Successes; it’s well-deserved!
 Honour our mining Jedi
 Heroic successes not well-known outside the industry
 Disasters like Bre-Ex are well-known

 Advocate why investment in Junior Mining is important; because it is!

 Ensure Governments understand the problems of raising capital and the
consequences; they need votes every once in a while!
 Should we foster flow-through style deductions for hard dollar expenses? i.e.
“20% Hard Movement”

 Demonstrate value to the investment community; they are greedy!

 Attract international capital; they get it!

 Insist on regulatory simplification; it’s way out of control!


64

What Can the Junior Mining Industry Do?

Discredit Lies of Naysayers
 Illegitimi non carborundum

 Discredit the unfounded rhetoric of Naysayers
 It is loud and powerful, threatening Junior Mining Survival
 It spreads negativity about Juniors and with no remorse

 Where do cowardly naysayers hide?
 Canadian banks (not all) and other large financial institutions
 They are among senior executives and decision-makers
 Investment funds, mutual funds and portfolio managers (not all)
 Some executives of large mining companies! They roam among us. They are “inside the tent”

 How can the industry discredit rhetoric of naysayers?
 The Junior Mining Industry needs a public debate on its survival
 Discredit negativity publicly with well-researched facts and denounce unfounded prejudice

 Don’t give your business to organizations that hide the naysayers


65

 At Capital Markets Strategies my colleague,
Emma Drapell, and I inspire our clients
 to change,
 to think differently,
 to create,
 to make a mine where just before there was

 … absolutely nothing.


THANK YOU
"Would you tell me, please, which way I ought to go from here?" asked Alice. "That depends
a good deal on where you want to get to," said the Cat. “I don’t know where I want to go,”
said Alice. “Then, it doesn’t matter which road you take,” said the Cat.

Weathering the Storm
“Think Differently”
PDAC 2013
Jean-Pierre Colin
JPColin@Sympatico.Ca
Mobile: 416-573-4300

67

Jean-Pierre Colin DCS, LL.L., MBA – Mining Executive

Jean-Pierre Colin is a Mining Executive and provides corporate strategy consulting services
to boards and shareholders of public companies and serves on audit committees, corporate
governance committees and compensation committees. He is a Director of Premier Gold
Mines Limited (TSX: PG), Director of Xmet Inc. (TSXV: XME) and Director of Global Cobalt
Corporation (TSXV: PVS). For 30 years, Mr. Colin was an investment banker responsible for
corporate finance and M&A from 1980 to 2010, formerly Director and Head of Corporate
Finance at Octagon Capital Corporation, an investment banker with Desjardins Securities
Inc., Executive Vice-President of Deacon Capital Corporation (now Dundee Capital), and
Senior Vice President of Richardson Greenshields of Canada Limited (now RBC). Mr. Colin
was also the founder of JP Colin Securities Inc., a securities dealer focused on corporate
finance services to public mining companies. He is the former Faculty of Arts Co-Chair of
the Waterloo Advisory Council of the University of Waterloo, former founder and President
of Caratax Management Ltd., the manager of Canada’s first diamond exploration public
flow-through share limited partnerships, a founder of NIM Management, the manager of
over $730 million of flow through funds, a co-founder of Detour Gold Corporation, and a
former director of numerous other successful public mining companies in Canada including
Wolfden Resources Inc., Pelangio Mines Inc., and Virginia Gold Mines Inc. He is a Member of
the Bar of the Province of Quebec and holds a Master of Business Administration from the
University of Western Ontario, a Civil Law Degree from the University of Ottawa and a
Certificate in Comparative Law from the University of Manitoba


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