Rocks And Stocks News Report On The Importance Of The Lassonde Curve With Examples Of Companies And Where Their Projects Place Them On The Lassonde Curve

One of the primary indicators that I think is crucial for investors to understand, and mining company executives, is the Lassonde Curve. The second is the drill rig, or Truth Machine as many in the mining industry call it.

Unfortunately, when the sentiment is bad in the mining sector, like it is now, the key thing investors follow is the day to day movements in the stock prices. The stock is down so things are bad, the stock is up so things are good. This clouds their judgement and causes them to lose sight of the big picture and miss opportunities to position themselves for when things get better. 

Another problem is that it makes them think that things will never get better. Mining is a cyclical business, bad times create good times. Those that get ahead of these trends tend to be the ones that do extremely well investing in mining. 

I’ve been working in the mining sector for thirty years and seen many boom and bust cycles. One thing that remains the same is that those who make the most money are the ones that take advantage of the busts to buy quality on the cheap and then get rewarded when things improve.

Executives running explorers, developers and miners, can also fall for this same trap. They watch their stocks during the bad times and make decisions about how to grow their companies based on the stock action. They slow or stop drilling during the tough times, they do the same with opportunities to tell their stories because they think nobody is listening or cares. They become followers, not leaders.

The leaders are those that are relentless in growing their companies during the bad and good times. They tend to not get punished as badly during the bad times and are rewarded the soonest and often the most during good times that always follow.

It doesn’t matter what the sector, storytellers are crucial to explain what their company is doing to grow and about the benefits of their sector. In mining, there are a lot of executives that believe the drill results will tell the story. 

This ignores the reality that in today’s digital world, people are pulled in many directions and often have short attention spans. To get the story across they need to be constantly telling it, as the quote in Glengarry Glen Ross says, “ABC. A – Always. B- Be. C – Closing. Always Be Closing.” I would change it slightly for companies to make their stories resonate, Always Be Pitching. If they don’t tell their story often, they won’t get the attention they want.

Those that are able to get folks' attention and keep it long enough to tell their story are the ones that have their story resonate. I see this in the stats for interviews I do on Youtube. On the backend of Youtube they provide many statistics, the number most often paid attention to are the viewer count. Which can easily be juiced up by paying for viewers through ad campaigns. But what happens when viewers are bought is they click on play but then leave very quickly.

What happens with the best storytellers is that when an interviewer has built an organic audience and the guest is a good story teller, the viewer is engaged and sticks around. I do long form videos, let's say that average around 20 minutes. The average viewing time ranges from 30% watched to up to 60%, with an average for all my interviews around 40%. 

To be able to keep a viewer's attention for 8 to 10 minutes in the online world dominated by 30 second videos is remarkable. I have monitored these engagement statistics during the hundreds of videos I have published. I can say with absolute confidence, the ability to be a good storyteller is crucial for companies to get their story out and resonate with investors.

One of the great storytellers in mining is Pierre Lassonde, he is also exceptional at building companies and investing in the sector. He and his partner Seymour Schulich invented the royalty business in mining with Franco Nevada. It was bought out by Newmont and Pierre became the President of Newmont. He was also the Chairman of the World Gold Council. He is truly a legend in the mining world.

One of his great gifts to investors in mining is the Lassonde Curve. What it portrays is the life cycle of the discovery of a mine. I strongly believe that where a company plots on the Lassonde Curve and what they are doing with the drill rig are the most important things for investors in the sector to focus on.

On the left side is a junior prediscovery, then they make a discovery that moves them up the left side of the Lassonde Curve. They peak, then come down as the discovery goes through resource definition phases, economic evaluations, permitting and construction which is called the development discount window. Following that they go into the right side of the Lassonde Curve, the mining wave, which is another bullish trend that is often bigger than the exploration success trend represented on the left side of the Lassonde Curve.

I’m a treasure hunter at heart, I love the process of exploration drilling to explore for buried treasures. I love being immersed in the science of it all. I’ve had tremendous mentors that have helped me get an informed knowledge of the science of exploration and I have skills in being able to bring that science to life for investors. I love talking to executives of mining companies that are doing the drilling and want to tell their stories of treasure hunting to my audience. 

Often I see many investors believe that the development discount window is the boring part. I don’t agree, I think it can be very exciting as they move to put buried treasures into production. There are some company executives that are able to make this part of the lifecycle tremendously exciting. It can also be a less risky and lucrative place for investors in the sector to make impressive returns.

The second peak on the right side of the Lassonde Curve is where all the exploration to find a mine, that goes through the development stage and is built into a mine all comes together. This is where all the science of exploration and economic evaluations turn into hard numbers. 

In this phase, I like to follow the ones that have low costs of mining and grades that create high margins and lots of free cash flow. The reason is very simple, it is this kind of miner that often outperforms their peers. 

A great example of this is Goldcorp under the leadership of Rob McEwen. He built it from a small struggling gold miner that then made a game changing discovery with low costs of mining, and high grades, that was one of the best performers in the mining sector during his tenure leading the company.

When a well run company executes on these various phases they can follow the Barrick path to success. They were also a tiny company in their early days, they found and built very profitable mines and are now one of the largest gold miners in the world. 

Of particular interest to me are two sweet spots on the Lassonde Curve which is where I focus my attention to make picks and have sponsors in my reports. The first sweet spot is in the early days of a discovery when companies are on the verge of climbing the trend on the left side of the Lassonde Curve. The other sweet spot is as they transition from developer into producer. 

A third one that is not on the Lassonde Curve is when a new miner, or rapidly growing miner has aspirations to move from a smallish miner, into a mid-tier or sometimes even to become a major mining company. Keys to this are having the projects to pull it off, which usually includes low cost mines and high grades with high margins that generate a lot of free cash to be used to build them into bigger companies.

Not only should investors pay attention to where a company is on the Lassonde Curve, but also the management should as well. This sounds like a basic strategy but it is not.

Take for example a junior mining company that makes a discovery. I’ve seen many times when they are in a rush to get to a resource estimate, often before they understand the discovery or well before they have defined key geological aspects of the discovery. What this almost always does is cap the project's potential in investors minds and sends a message that they are ready to go into the development discount window. 

I’ve seen this play out way too many times well before they have had the chance to go up the left side of the Lassonde Curve. I think explorers should focus on exploration, and stay in that mode until they have clearly defined their discovery and are near or at the limits of the discovery. Only then pull the trigger on doing a resource estimate when they are ready to start running economics on it shortly after the resource estimate is completed, hopefully before the ink on it has a chance to dry.

The key goal of an explorer is to do one of two things. Make a discovery that is so impressive that a major mining company buys them out as they are climbing the left side of the Lassonde Curve. The other is to go all the way and take the project from exploration, through the development stages and ultimately become a mining company. The preferred path by most explorers is usually the former not the latter. 

For some reason, management of an explorer that makes an impressive discovery thinks they need to show a resource to be bought out by a major. I think this is wrong for two reasons. 

The first is that a major doesn’t need an explorer to produce a resource to evaluate what they have. Majors have excellent resource modelling software and technical people that are experts at modelling resources because they have much more important data from the mines they already mine. If a major is interested in a new discovery, they are modelling it, well before an explorer produces a resource estimate.

Secondly, majors understand the Lassonde Curve and know that an explorer that is in a rush to produce a resource will be punished because they send the message to the market that they are going to cap the potential in investors minds and also send the message that they want to go into the development discount window before they have climbed the left side of the Lassonde Curve. So, they don’t need to be in a rush to buy it, they can sit back and usually get it at a discount instead of a premium.

If managed well, an explorer can perform better if they wait to pull the trigger on a resource, drill it off as much as they can and be ready to run economics on it shortly after the resource estimate is completed. 

In the near term and over the long term, I strongly believe that the companies in the development discount window can be lucrative investment opportunities. Instead of a long painful waiting game for investors. Mainly, because the mining world needs more projects in the development discount window, simply because there aren’t enough in the pipeline to replace what the big miners are mining out every day.

A lot of investors in the mining space are focused on the first wave on the left side of the Lassonde Curve as they see that as a place to make a lot of money. I don’t think enough attention is paid to the companies in the development discount window or in the second wave of the Lassonde Curve when a mine is built and put into production. 

Even less attention is paid to those that can go from producer to building from a smallish miner to a mid-tier producer and on to a major miner. 

I follow companies as picks and sponsors in all of these phases. I believe it is important for investors to know where their companies are on the Lassonde Curve and how they plan to move through it.

The key driver to assess how they can advance through the Lassonde Curve is what they hit in their drilling with the Truth Machine. Then paying close attention to how a company tells their story and the actions they take with the information they get from the Truth Machine.

At this point, I want to look back at the story of Virginia Gold Mines that was led by Andre Gaumond. He is  one of the best CEOs I ever met at stickhandling his companies through the Lassonde Curve. I met Andre before his company made the Eleonore discovery. We had dinner in the evening at a mining conference. 

A few things struck me about him. He was focused on the geology of his projects, it was all about the science for him, he was an exceptional storyteller and a true gentleman. After that initial meeting, I would see him regularly at mining conferences and he would always take time to tell me about what he was working on. Even after he made the Eleonore discovery and would be swamped by investors, like a rockstar, he would spend time with me. 

I was fortunate that he also spent time with me on interviews to tell me and my audience about what he was working on. One time I travelled to his office in Quebec City and he welcomed me graciously while I spent time with him and his team discussing their projects. One thing he was always proud of was his team and the geological database they had compiled. 

He also gave me one of the nicest compliments I ever got. It was at the PDAC one year, I was a guest speaker and after finishing my talk, I rushed over to another room where Andre was doing a talk. The room was packed and I arrived a few minutes late because of my talk. He stopped his presentation, and said one of his company’s biggest supporters just arrived and he greeted me. I doubt he remembers that, but I will never forget it.

I met him before he became a big success with Virginia Gold Mines that was bought out for their Eleonore discovery, which they spun out assets and created Virginia Mines which was also bought out. It always impressed me that he never changed after his successes. 

He always remained passionate about the science of exploration, as well as toward his team and geological database, was a fantastic storyteller and a true gentleman. I consider myself blessed to have met and interacted with Andre over the years as I learned a lot from him.

Next I will present picks and sponsors that are at different phases of the Lassonde Curve to explain where I see them on it and the actions they are taking to move through it.

Another very talented executive that is adept at moving his companies through the Lassonde Curve is Rob McEwen. He turned Goldcorp from a small explorer that used the drill rig to transform the company into a huge success during his tenure running the company. 

He was an innovator by conducting the ‘Goldcorp Challenge’, they opened up their data to be open sourced amongst contestants throughout the world offering a substantial cash reward to the winners. The result was that they drilled deeper below the mine workings, where they hit extremely high-grade gold.

When they moved to mining that high-grade gold, it was low cost to mine, with high margins and generated impressive free cash flow. This made Goldcorp one of the lowest cost gold miners in the sector, they were highly profitable and the result was they were one of the best performers in the gold mining business.

Goldcorp was an interesting story in the context of the Lassonde Curve. They were a small gold miner not getting the traction to move up the right side of the curve. Then they had exploration success which made it important where they were on the left side of the curve. This ultimately led to them flying up the right side of the curve. Which shows that there are nuances to where a company plots on the Lassonde Curve.

McEwen Mining is following a similar path to the Goldcorp journey through the Lassonde Curve. They ran into issues at their gold mines a few years ago, which put their valuation under pressure. Thus stalling their move up the right side of the Lassonde Curve. Then around a year ago, the success they had at their copper project held by their subsidiary McEwen Copper started to be recognized.

What helped the valuation was two key investors. One was Nuton, a Rio Tinto venture that invested several million. This venture of Rio Tinto has proprietary technology that has the potential to increase copper recovery and increase the time of recovery. They are assessing if it can be used on McEwen Copper’s Los Azules project. The second big investor was Stellantis, which is one of the leading global car makers. The first car maker to invest in a copper project.

Los Azules is an exceptional copper project in the development stages. It is one of the top 10 undeveloped copper projects in the business which is also in the lowest quartile of costs for mining of projects in the development stages. Having Nuton and Stellantis as key investors brought a lot of attention, rightfully so.

What is not being as well understood are the efforts at McEwen Mining’s gold mines. Just like Goldcorp did in its days as a struggling miner, it hasn’t rode the wave up the right side of the Lassonde Curve. Yet, they are spending a lot of money on exploration drilling and having excellent success that is for the most part being ignored. I think this is a mistake because the exploration drilling clearly shows the potential that it could be an important engine of growth for McEwen Mining.

Like Andre Gaumond, Rob McEwen is very talented at storytelling and is a true gentleman. He regularly comes on Rocks And Stocks News for interviews. In them, he is generous with his time and offers insights into what they are doing to grow McEwen Mining and McEwen Copper. 

In addition, he has been a very successful investor in mining stocks. I’m always thankful on behalf of myself and our audience as he shares his insights into what he looks for as an investor in mining stocks. Which provides information to the audience of what can help investors be more successful in mining stocks.

Another regular guest on the Rocks And Stocks News shows is Ewan Downie, he is the CEO of i-80 Gold. Ewan has had plenty of success in the mining sector. The first was Wolfden Resources, which made important base metals discoveries that resulted in them being bought out by Zinifex.

Prior to the takeover, Wolfden spun out their gold projects to Premier Gold which had a group of gold projects in Ontario and Nevada. They were an explorer/developer that turned into a mining company that was also bought out. As part of the buyout, they spun out the gold projects in Nevada to shareholders creating i-80 Gold.

I-80 Gold has projects in various parts of the Lassonde Curve. They are a gold miner, with projects in the advanced stages of development and are having a lot of success with exploration drilling. 

The work they are doing to advance their various projects is the foundation to grow their production to become one of the top Nevada focused miners. Additionally, to have a peer leading production growth profile. 

Wolfden Resources, Premier Gold and i80 Gold were all sponsors of my research and reporting. So for around the past twenty years, I’ve had a front row seat to watch closely the success that Ewan Downie has had leading these companies. I’ve interviewed Ewan many times over the years. He is always generous with his time and makes it a point to come on the Rocks And Stocks News show whenever i-80 Gold has important news. 

These interviews help the audience learn about i-80 Gold as it evolves in real time. Ewan has for many years been the best supporter of my work. He is a very talented company maker with unique skills in deal making and then advancing projects with the drill rig. He also has that special skill of being an excellent storyteller.

Goliath Resources has a very exciting exploration story evolving in the Golden Triangle of British Columbia. Their Golddigger project was covered by glaciers that receded and their team noticed the exposures of mineralization at the surface. 

This led them to surface sampling, then drilling in 2021 that hit an important gold discovery. Additional drilling in 2022 expanded on the two key zones Surebet and Bonanza. They are very large zones and are in the sediments. The size of the zones suggests that the feeder system is big, with a long-lived mineralizing system that has the potential to be very high-grade.

The exploration drilling in 2023 was a game changer. Right below the sediments that host the Surebet and Bonanza zones are volcanics. They drilled into those volcanics and found that the system continues with high-grades over thick intersections. They call the zone in the volcanics Golden Gate. They feel this is the top of the feeder zone in the volcanics and call that area the Golden Gate Feeder.

Another reason this can fairly be called a game changer is because the Surebet and Golden Gate zones are parallel with a slight offset. They look to be part of the same mineralizing system that is the farthest extension from the heat engine that caused the mineralization in the Surebet and Golden Gate zones. 

As the grade gets higher in the volcanics, it is reasonable to think, based on zonation of grade in a mineralizing system that as they drill deeper into the volcanics, it could show that the mineralization in the sediments is the opening act, and the big show is in the volcanics. 

Next year's drilling will be focused on drilling into the volcanics. Another exciting element of drilling into the volcanics is that they have geological indications of the potential to find stacked zones in the volcanics.

They still have around 100 holes to report assays on from the 2023 drilling season. They have also done metallurgical work this year that shows a very high recovery rate. 

All of these factors combined are strong indicators that Goliath Resources has made one of the most important discoveries in the Golden Triangle of British Columbia in many years. This is very exciting because the Golden Triangle is a prolific mining jurisdiction well known for high-grade mines.

Hercules Silver is a new pick in the reports that has burst onto the scene with an exciting high-grade copper discovery. They have only reported one hole from the discovery, yet have already had an investment by Barrick of over $20 million.

I was fortunate to make them a pick in the reports prior to the Barrick investment which has made them one of the most talked about discovery plays in the sector. Barrick wants to mine more copper, but they are so big that a project needs to be very large to move the needle for them.

When they announced the discovery hole the key things that stood out to me was the amount of sulphides, the continuity of the sulphides and of course the grades coming from the sulphides. It obviously stood out to the people at Barrick as well which caused them to make the unusual move to invest in the company off one drill hole.

Hercules Silver had been focused on a near the surface silver zone, but noticed a large geophysical anomaly right below it. They drilled to reach that anomaly and made the discovery. When they announced the discovery hole they also gave crucial geological information that suggests they are still way out on the distal portion of the zone.

They drilled additional holes and the assays from those holes are pending. They expanded the geophysical survey grid to get better resolution of the anomaly. They are also doing 3D modeling of the anomaly. I’m looking forward to seeing the pending assay results, the 3D modelling of the geophysics and their next round of drilling that will use all this data to pick targets. I would guess that some key people at Barrick will offer advice on picking new drill targets.

Another exploration story that recently caught my attention is Benton Resources. Their high-grade copper project is in Newfoundland. The project had seen past drilling, but their CEO Stephen Stares mentioned in a recent interview that the past drilling was done with a small diameter drill core, and it had core recovery issues.

They felt that using the small diameter drilling with recovery problems could have understated the grade. So they twinned some of the holes from past drilling using larger diameter drill holes. The first thing they saw was that the core recovery was excellent. Importantly, they also found that the grade was significantly higher. They have continued to drill with some holes inside the known zone and some outside it into the unknown with step out holes.

Stephen Stares is part of the award winning Stares family of prospectors and explorers. Stephen is a very talented exploration guy and has a discovery that will keep the family tradition going. They are boots on the ground prospectors that know how to do exploration drilling and how to find important deposits.

I love high-grade discoveries and I’m looking forward to seeing the pending drill hole assays and where that will take them.

I wanted to use this group of companies that run the gamut of projects that plot on the Lassonde Curve to emphasize why it is important to understand where companies are on the Lassonde Curve. 

McEwen Mining, Hercules Silver and Benton Resources are featured picks at Rocks And Stocks News. i-80 Gold is a sponsor at Rocks And Stocks News. Goliath Resources is a sponsor at Rocks And Stocks News, I own shares in them and own warrants to purchase more shares.  

All the best,

Allan Barry Laboucan

Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. This funding helps cover the costs of research and reporting on the sponsors and picks that aren’t sponsors. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes.